MILESTONE FUNDS, 485BPOS, 1996-02-23

MILESTONE FUNDS
485BPOS, 1996-02-23

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As filed with the Securities and Exchange Commission on February 23,1996

File No. 33-81574
File No. 811-8620

SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

FORM N-lA

REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
Post-Effective Amendment No. 3

and

REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT OF 1940
Amendment No. 6

THE MILESTONE FUNDS
(Formerly LEARNING ASSETS Trademark)
(Exact Name of Registrant as Specified in its Charter)

One Odell Plaza, Yonkers, New York 10701
(Address of Principal Executive Office)

Registrant's Telephone Number, including Area Code: 800-941-6453

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

Timothy J. Overzat
90 Washington Street
New York, New York 10286
(Name and Address of Agent for Service)

Copies of Communications to:
Susan Penry-Williams, Esq.
Kramer, Levi, Naftalis, Nessen, Kamin & Frankel
919 Third Avenue
New York, New York 10019

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

It is proposed that this filing will become effective:

X immediately upon filing pursuant Rule 485, paragraph (b)
__ on [ ] pursuant to Rule 485, paragraph (b)
__ 60 days after filing pursuant to Rule 485, paragraph (a)(i)
__ on [ ] pursuant to Rule 485, paragraph (a)(i)
__ 75 days after filing pursuant to Rule 485, paragraph (a)(ii)
__ on [ ] pursuant to Rule 485, paragraph (a)(ii)
__ this post-effective amendment designates a new effective date
for a previously filed post-effective amendment

Registrant has registered an indefinite number of shares of beneficial interest
under the Securities Act of 1933 pursuant to Rule 24f-2 under the Investment
Company Act of 1940. Accordingly, no fee is payable herewith. A Rule 24f-2
Notice for the Registrant's fiscal year ending November 30, 1995 was filed with
the Commission on or before January 31, 1996.

CROSS REFERENCE SHEET
(as required by Rule 404 (c))

PART A

Form N-lA Location in Prospectus
Item No. (Caption)
<S> <C>
Item 1. Cover Page Cover Page

Item 2. Synopsis Expenses of Investing in
the Portfolio

Item 3. Condensed Financial Financial Highlights
Information

Item 4. General Description of Registrant Prospectus Summary; Investment
Objective and Policies; Other
Information

Item 5. Management of the Fund Prospectus Summary; Management
of the Trust

Item 5A. Management's Discussion of Not Applicable
Fund Performance

Item 6. Capital Stock and Investment Objective and Policies;
Other Securities Dividends and Tax Matters; Other
Information

Item 7. Purchase of Securities How to Invest in the Portfolio;
Being Offered Other Information; Management of
the Trust

Item 8. Redemption or Repurchase How to Invest in the Portfolio;
How to Redeem Shares of the
Portfolio

Item 9. Pending Legal Proceedings Not Applicable

</TABLE>

CROSS REFERENCE SHEET
(as required by Rule 404 (c))

PART B

<TABLE>
<CAPTION>
Location in Statement
Form N-lA of Additional Information
Item No. (Caption)
<S> <C>
Item 10. Cover Page Cover Page

Item 11. Table of Contents Cover Page

Item 12. General Information and History Other Information

Item 13. Investment Objectives and Policies Investment Policies;
Investment Limitations

Item 14. Management of the Fund Management

Item 15. Control Persons and Principal Management; Other Information
Holders of Securities

Item 16. Investment Advisory and Other Management
Services

Item 17. Brokerage Allocation Portfolio Transactions
and Other Practices

Item 18. Capital Stock and Other Securities Determination of Net Asset Value

Item 19. Purchase, Redemption and Pricing Determination of Net Asset
of Securities Being Offered Value; Additional Purchase and
Redemptions Information

Item 20. Tax Status Taxation

Item 21. Underwriters Management

Item 22. Calculation of Performance Data Advertising

Item 23. Financial Statements Other Information
</TABLE>

<PAGE>
THE
MILESTONE
FUNDS

THE MILESTONE FUNDS
TREASURY OBLIGATIONS PORTFOLIO

ADVISER
Milestone Capital Management, L.P.

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

PROSPECTUS

FEBRUARY 23, 1996

INSTITUTIONAL CLASS

<PAGE>
THE
MILESTONE
FUNDS

THE MILESTONE FUNDS

TREASURY OBLIGATIONS PORTFOLIO
INSTITUTIONAL SHARES

One Odell Plaza Yonkers, New York 10701
(800) 941-MILE

This Prospectus offers Institutional Shares of the Treasury Obligations
Portfolio (the 'Portfolio'), a diversified, no-load money market portfolio of
The Milestone Funds (the 'Trust'), an open-end investment management company.
The Portfolio seeks to provide its shareholders with the maximum current income
that is consistent with the preservation of capital and the maintenance of
liquidity. Milestone Capital Management, L.P. serves as the Portfolio's
investment adviser.

TREASURY OBLIGATIONS PORTFOLIO invests only in short-term obligations of the
U.S. Treasury and repurchase agreements fully collateralized by obligations of
the U.S. Treasury.

This Prospectus provides you with information about the Trust and the Portfolio
which you should know before investing in shares of the Portfolio. A Statement
of Additional Information, dated February 23, 1996, has been filed with the
Securities and Exchange Commission ('SEC') and is available free of charge by
contacting The Milestone Funds, One Odell Plaza, Yonkers, New York 10701, or by
calling (800) 941-MILE (6453). This information contained in the Statement of
Additional Information, as amended from time to time, is incorporated by
reference into this prospectus.

INVESTORS SHOULD READ AND RETAIN THIS PROSPECTUS FOR FUTURE REFERENCE.

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

SHARES OF THE PORTFOLIO ARE NOT DEPOSITS OR OBLIGATIONS OF, OR GUARANTEED BY,
ANY DEPOSITORY INSTITUTION. SHARES ARE NOT INSURED BY THE FDIC, THE FEDERAL
RESERVE BOARD, OR ANY OTHER AGENCY, AND ARE SUBJECT TO INVESTMENT RISK,
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.

<PAGE>
<TABLE>
TABLE OF CONTENTS
PAGE PAGE
---- ----
<S> <C> <C> <C>
Prospectus Summary.............................. 2 Management of the Trust......................... 7
Expenses of Investing in the Portfolio.......... 3 How to Invest in the Portfolio.................. 10
Financial Highlights............................ 4 How to Redeem Shares of the Portfolio........... 11
Investment Objective and Policies............... 4 Dividends and Tax Matters....................... 12
Risk Considerations............................. 6 Other Information............................... 13
Additional Investment Policies and Practices.... 6
</TABLE>

PROSPECTUS SUMMARY

PORTFOLIO HIGHLIGHTS

INSTITUTIONAL SHARES. This prospectus offers shares of the Institutional Class
of the Treasury Obligations Portfolio ('Institutional Shares'). The Treasury
Obligations Portfolio (the 'Portfolio') is a money market fund that invests only
in U.S. Treasury obligations and repurchase agreements fully collateralized by
U.S. Treasury obligations. Institutional Shares are designed for institutional
investors as a convenient investment vehicle for short-term funds. The Portfolio
also offers an Investor Class of shares ('Investor Shares') by separate
prospectus. The Investor Class is subject to different expenses that affect its
performance. For information about Investor Shares, speak to your sales
representative or call (800) 941-MILE. See 'Other Information'.

MANAGEMENT. The Portfolio's investment adviser is Milestone Capital Management,
L.P. (the 'Adviser'), One Odell Plaza, Yonkers, New York 10701. See 'Management
of the Trust'.

ADMINISTRATION, UNDERWRITING AND SHAREHOLDER SERVICING. The administrator of the
Trust is The Bank of New York, 90 Washington Street, New York, New York 10286.
Bear, Stearns & Co. Inc. ('Bear Stearns'), 245 Park Avenue, New York, New York
10167, is the primary dealer of the Trust's shares and, under a separate
agreement with the Adviser, services the accounts of those shareholders of the
Trust who purchase their shares through Bear Stearns. Fund/Plan Broker Services,
Inc., P.O. Box 874, #2 Elm Street, Conshohocken, Pennsylvania 19428, serves as
statutory underwriter of the Trust's shares. See 'Management of the Trust'.

PURCHASES AND REDEMPTIONS. Investors may purchase and redeem shares of
beneficial interest in the Portfolio without any sales loads or other charges
any day the New York Stock Exchange and the Federal Reserve Bank of New York are
open ('Fund Business Day') between the hours of 9:00 a.m. and 6:00 p.m. (Eastern
Time). To allow the Adviser to manage the Portfolio most effectively, investors
are encouraged to execute as many trades as possible before 2:30 p.m. If the
Trust receives a firm indication of the approximate size of a purchase by 2:30

p.m. (Eastern Time), and the completed purchase order by 4:15 p.m., the shares
purchased will earn dividends on the same day. If the Trust receives a firm
indication of the approximate size of a redemption by 2:30 p.m. (Eastern Time),
and the completed redemption order by 4:00 p.m., redemption

2
<PAGE>

proceeds will ordinarily be wired that day, and the investor will not receive
that day's dividends. The minimum initial investment is $10,000,000. The Trust
and Fund/Plan Services, Inc. each reserves the right to waive this minimum
initial investment limitation. There is no minimum subsequent investment. See
'How To Invest In The Portfolio' and 'How To Redeem Shares In The Portfolio'.

DIVIDENDS. Dividends of net investment income are declared daily and paid
monthly by the Portfolio and are reinvested in Portfolio shares unless the
shareholder has elected cash distributions. See 'Dividends and Tax Matters'.

EXPENSES OF INVESTING IN THE PORTFOLIO

The purpose of the following table is to assist an investor in understanding the
various costs and expenses that a shareholder of the Trust will bear, either
directly or indirectly.

SHAREHOLDER TRANSACTION EXPENSES:

<TABLE>
<S> <C>
Maximum Sales Load Imposed on Purchases........................................................ None
Maximum Sales Load Imposed on Reinvested Dividends............................................. None
Deferred Sales Load............................................................................ None
Redemption Fees................................................................................ None
Exchange Fees.................................................................................. None
</TABLE>

ANNUAL PORTFOLIO OPERATING EXPENSES (as a percentage of annual net assets):

<TABLE>
<S> <C>
Advisory Fees.................................................................................. 0.10%
12b-1 Fees..................................................................................... None
Shareholder Servicing Fees..................................................................... 0.05%
Other Expenses................................................................................. 0.10%
------
Total Operating Expenses....................................................................... 0.25%
</TABLE>

The Adviser has voluntarily agreed to waive up to 100% of the shareholder
servicing fee for the Institutional Class and may waive up to 100% of the

advisory fee of the Portfolio. This voluntary limitation may be terminated at
any time. For a further description of the various expenses incurred in the
operation of the Portfolio, see 'Management of the Trust'.

EXAMPLE

<TABLE>
<S> <C> <C> <C> <C>
You would pay the following expenses on a $1,000 investment in
Institutional Shares of the Portfolio, assuming a 5% annual return 1 Year 3 Years 5 Years 10 Years
and redemption at the end of each period:............................ $3 $8 $14 $32
</TABLE>

This example is based on the fees listed in the table and assumes the
reinvestment of dividends. The example should not be considered a representation
of past or future expenses or performance. Actual expenses may be greater or
less than those shown.

3
<PAGE>
FINANCIAL HIGHLIGHTS

The following financial highlights of the Institutional Class have been audited
by McGladrey & Pullen, LLP, independent certified public accountants. The
financial statements and independent accountant's report thereon of the
Portfolio are incorporated by reference into the Statement of Additional
Information.

<TABLE>
<CAPTION>
JUNE 20, 1995
(COMMENCEMENT OF
OFFERING OF SHARES) TO
NOVEMBER 30, 1995
----------------------
<S> <C>
Per share operating performance for a share
outstanding throughout the period

Beginning net asset value per share............................................. $ 1.00
-----------
Net investment income........................................................... 0.03
Dividends from net investment income............................................ (0.03)
-----------
Ending net asset value per share................................................ $ 1.00
-----------
-----------
Total return (a)................................................................ 5.76%

Ratios/supplemental data

Ratios to average net assets (a):
Expenses (b).................................................................. 0.20%
Net investment income......................................................... 5.69%
Net assets at the end of period (000's Omitted)................................. $229,159
</TABLE>

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

(a) Annualized.

(b) Net of advisory, shareholder servicing, and administration fees waived and
expenses reimbursed of 0.17%.

INVESTMENT OBJECTIVE AND POLICIES

INVESTMENT OBJECTIVE

The Portfolio seeks to provide investors with maximum current income consistent
with the preservation of capital and the maintenance of liquidity. As with any
mutual fund, there is no assurance that the Portfolio will achieve this goal.

INVESTMENT POLICIES

The Portfolio invests ONLY in U.S. Treasury obligations and repurchase
agreements fully collateralized by U.S. Treasury obligations. The Portfolio may
purchase U.S. Treasury obligations on a when-issued or forward commitment basis.
The Portfolio will maintain an average maturity, computed on a dollar-weighted
basis, of 90 days or less.

4
<PAGE>
The following permissible investments and investment restrictions are
fundamental investment policies of the Portfolio that may not be changed without
shareholder approval:

PERMISSIBLE INVESTMENTS.

The Portfolio seeks to achieve its investment objective by investing ONLY in:

U.S. Treasury obligations maturing in 397 days or less. U.S. Treasury
obligations are securities issued by the United States Treasury, such as
Treasury bills, notes and bonds, that are fully guaranteed as to payment
of principal and interest by the United States Government.

one-to-seven days later. The resale price reflects a market rate of
interest that is not related to the coupon rate or maturity of the
purchased security. The Portfolio enters into repurchase agreements ONLY
WITH PRIMARY DEALERS designated by the Federal Reserve Bank of New York
and the Trust's custodian bank which the Adviser believes present minimal
credit risks in accordance with guidelines established by the Board of
Trustees of the Trust (the 'Board'). The Adviser monitors the
credit-worthiness of sellers under the Board's general supervision. If a
seller defaults on its repurchase obligation, however, the Portfolio might
suffer a loss.

The Portfolio may invest in U.S. Treasury obligations or repurchase agreements
without limit. Although the Portfolio intends to be fully invested in these
instruments, it may hold a de minimus amount of cash for a short period prior to
investment or payment of the proceeds of redemption.

In the future, the Portfolio may attempt to achieve its investment objectives by
holding, as its only investment securities, the securities of another investment
company having identical investment objectives and policies as the Portfolio in
accordance with the provisions of the Investment Company Act of 1940 or any
orders, rules or regulations thereunder adopted by the Securities and Exchange
Commission.

INVESTMENT RESTRICTIONS.

The Portfolio WILL NOT:

1. Invest in structured notes or instruments commonly known as
derivatives;

2. Invest in variable, adjustable or floating rate instruments of any
kind;

3. Enter into reverse repurchase agreements;

4. Invest in securities issued by agencies or instrumentalities of the
United States Government, such as the Federal National Mortgage
Association ('FNMA'), Government National Mortgage Association
('GNMA'), Federal Home Loan Mortgage Corp. ('Freddie Mac'), or the
Small Business Administration ('SBA'); or,

5. Invest in zero coupon bonds.

The Portfolio will make no investment unless the Adviser first determines that
it is eligible for purchase and presents minimal credit risks, pursuant to
procedures adopted by the Board. The Portfolio's investments are subject to the
restrictions imposed by Rule 2a-7 under the Investment Company Act of 1940.

5
<PAGE>
RISK CONSIDERATIONS

Although the Portfolio invests in short-term Treasury obligations, an investment
in the Portfolio is subject to risk even if all securities in the Portfolio's
portfolio are paid in full at maturity. All money market instruments, including
U.S. Treasury obligations, can change in value in response to changes in
interest rates, and a major change in rates could cause the share price to
change. While U.S. Treasury obligations are backed by the full faith and credit
of the U.S. Government, an investment in the Portfolio is neither insured nor
guaranteed by the U.S. Government or any other party. Thus, while the Portfolio
seeks to maintain a stable net asset value of $1.00 per share, there is no
assurance that it will do so. For a discussion of the risks associated with
particular investment practices of the Portfolio, see 'Additional Investment
Policies and Practices'.

ADDITIONAL INVESTMENT POLICIES AND PRACTICES

THE PORTFOLIO MAY NOT CHANGE ITS INVESTMENT OBJECTIVE OR ANY INVESTMENT POLICY
DESIGNATED AS FUNDAMENTAL WITHOUT SHAREHOLDER APPROVAL. Investment policies or
practices of the Portfolio that are not designated as fundamental may be changed
by the Board without shareholder approval, following notice to shareholders. The
Portfolio's additional fundamental and nonfundamental investment policies are
described further below and in the Statement of Additional Information.

BORROWING. As a fundamental investment policy, the Portfolio may only borrow
money for temporary or emergency purposes, including the meeting of redemption
requests, in amounts up to 33 1/3% of the Portfolio's total assets. Interest
costs on borrowings may fluctuate with changing market rates of interest and may
partially offset or exceed the return earned on borrowed funds (or on the assets
that were retained rather than sold to meet the needs for which funds were
borrowed). Under adverse market conditions, the Portfolio might have to sell
portfolio securities to meet interest or principal payments at a time when
investment considerations would not favor such sales. As a nonfundamental
investment policy, the Portfolio may not purchase securities for investment
while any borrowing equaling 5% or more of the Portfolio's total assets is
outstanding.

but the securities are delivered on a future date beyond the customary
settlement time and paid for upon delivery. The Portfolio assumes the risk that
the value of the securities on the delivery date may be more or less than the
purchase price. Failure by the other party to deliver a security purchased by
the Portfolio may result in a loss or a missed opportunity to make an
alternative investment. Commitments for when-issued or delayed delivery
transactions will be entered into only when the Portfolio intends to acquire the
securities. Although there is no limit on the amount of these commitments that
the Portfolio may make, under normal circumstances it will not commit more than
30% of its total assets to such purchases.

ILLIQUID SECURITIES. The Portfolio may invest no more than 10% of its net assets
in securities that at the time of purchase are illiquid, including repurchase
agreements having a maturity of more than seven days and not entitling the
holder to payment of principal within seven days. Under the supervision of, and
pursuant to guidelines established by, the Board, the Adviser determines and
monitors the liquidity of portfolio securities. The Portfolio will not purchase
a security if, as a result, more than 10% of its net assets would be invested in
illiquid securities. If a security becomes illiquid and, as a result, more than
10% of the Portfolio's net assets

6
<PAGE>
are invested in illiquid securities, the Adviser will take reasonable steps to
reduce the Portfolio's holdings of illiquid securities to 10% or less of its net
assets.

TEMPORARY DEFENSIVE POSITIONS. Under abnormal market or economic conditions, the
Portfolio temporarily may hold up to 100% of its investable assets in cash.

MANAGEMENT OF THE TRUST

BOARD OF TRUSTEES

The business of the Trust and the Portfolio is managed under the direction of
the Board of Trustees. The Board formulates the general policies of the
Portfolio and meets regularly to review the Portfolio's performance, monitor its
investment activities and practices, and review other matters affecting the
Portfolio and the Trust. Additional information regarding the Trustees, as well
as the Company's executive officers, may be found in the Statement of Additional
Information under the heading 'Management--Trustees and Officers'.

THE ADVISER

Milestone Capital Management, L.P. (the 'Adviser') serves as investment adviser
to the Portfolio pursuant to an investment advisory agreement with the Trust.
Subject to the general control of the Board, the Adviser continually manages the
Portfolio, including the purchase, retention and disposition of its securities
and other assets. The Adviser is a limited partnership organized under the laws
of the State of New York on August 1, 1994, and is a registered investment

adviser under the Investment Advisers Act of 1940. The General Partner of the
Adviser is Milestone Capital Management Corp., a New York corporation.

Janet Tiebout Hanson is President and Chief Executive Officer of the Adviser.
Ms. Hanson is also President and Chief Executive Officer of Milestone Capital
Management Corp., in which she holds the controlling interest. She is a former
vice-president of Goldman, Sachs & Co., a leading investment banking firm.
During her fourteen year tenure with Goldman Sachs, Ms. Hanson held significant
sales, marketing, and management positions in both the Fixed Income and Asset
Management Divisions, including co-manager of Money Market Sales in New York in
1986 and 1987. Ms. Hanson was responsible for developing many of the firm's key
relationships with major institutional investors. In addition, she was
instrumental in raising assets for Goldman Sachs Asset Management's money market
and bond mutual funds. Ms. Hanson holds a BA in government from Wheaton College
in Massachusetts and an MBA in finance from Columbia University.

Marc H. Pfeffer is Chief Investment Officer of the Adviser. He is primarily
responsible for the day-to-day management of the Treasury Obligations Portfolio
and heads the Adviser's portfolio management and research team. Before joining
the Adviser, Mr. Pfeffer was with Goldman, Sachs & Co. for eight years. In 1989,
he joined Goldman Sachs' Asset Management Division ('GSAM') in portfolio
management, and became a vice-president of the firm in 1993. At GSAM, he was
responsible for managing six institutional money market portfolios which grew to
over $3 billion in total assets as of November 1994. Mr. Pfeffer holds a BS in
finance from the State University of New York at Buffalo and an MBA in finance
from Fordham University.

For its services, the Adviser receives a fee at an annual rate equal to 0.10% of
the Portfolio's average daily net assets. The Adviser is responsible for payment
of salaries of its portfolio manager and staff as well as other expenses
necessary to the performance of its duties under the investment advisory
agreement. The Adviser may, at its own expense and from its own resources,
compensate certain persons who provide

7
<PAGE>

services in connection with the sale or expected sale of shares of the Portfolio
without reimbursement from the Trust. The Trust, on behalf of the Portfolio, is
responsible for all expenses other than those expressly borne by the Adviser
under the investment advisory agreement. The expenses borne by the Trust
include, but are not limited to, the investment advisory fee, administration
fee, transfer agent fee, and custodian fee, costs of preparing, printing and
delivering to shareholders the Trust's prospectuses, statements of additional
information, and shareholder reports, legal fees, auditing and tax fees, taxes,
blue sky fees, SEC fees, compliance expenses, insurance expenses, and
compensation of certain of the Trust's Trustees, officers and employees and
other personnel performing services for the Trust. Should the expenses of the
Portfolio (including the fees of the Adviser but excluding interest, taxes,
brokerage commissions, litigation and indemnification expenses and other
extraordinary expenses) for any fiscal year exceed the limits prescribed by any
state in which the Portfolio's shares are qualified for sale, the Adviser will

reduce its fee or reimburse expenses by the amount of such excess.

ADMINISTRATOR

The Bank of New York, 90 Washington Street, New York, New York 10286 serves as
the administrator of the Trust, pursuant to an Administration Agreement with the
Trust.

The services The Bank of New York provides to the Trust include: coordinating
the activities of any third parties furnishing services to the Trust; providing
the necessary office space, equipment and personnel to perform administrative
and clerical functions for the Trust and preparing, filing and distributing
proxy materials, periodic reports to shareholders, registration statements and
other documents.

As compensation for services performed under the Administration Agreement, The
Bank of New York receives a monthly fee calculated at the annual rate of .04% of
the assets of the Portfolio as determined at each month end, with a maximum fee
of $100,000 per annum.

UNDERWRITER

Fund/Plan Broker Services, Inc. serves as statutory underwriter of the
Portfolio's shares pursuant to an Underwriting Agreement with the Trust.
Fund/Plan Broker Services, Inc. is a wholly-owned subsidiary of Fund/Plan
Services, Inc., the Trust's transfer agent. See 'Transfer Agent'.

Under the Underwriting Agreement, Fund/Plan Broker Services, Inc. serves as
statutory underwriter of the Portfolio's shares, and as the agent of the Trust
in connection with the offering of shares of the Portfolio. Fund/Plan Broker
Services, Inc. receives no compensation for its services under the Underwriting
Agreement. Fund/Plan Broker Services Inc. may enter into arrangements with
banks, broker-dealers or other financial institutions ('Selected Dealers')
through which investors may purchase or redeem shares. Fund/Plan Broker
Services, Inc. may, at its own expense and from its own resources, compensate
certain persons who provide services in connection with the sale or expected
sale of shares of the Portfolio. Investors purchasing shares of the Portfolio
through another financial institution should read any materials and information
provided by the financial institution to acquaint themselves with its procedures
and any fees that it may charge.

PRIMARY DEALER

Bear, Stearns & Co. Inc. ('Bear Stearns') serves as primary dealer of the
Trust's shares. Bear Stearns is a full-service securities broker-dealer and
investment banking firm with global distribution capability. It is a member of
all major national securities exchanges with its headquarters at 245 Park
Avenue, New York, New York 10167.

8
<PAGE>

Under its Primary Dealer Agreement with Fund/Plan Broker Services, Inc., Bear
Stearns promotes and arranges for the sale of shares of the Trust. Orders for
the purchase or redemption of shares of each series of the Trust are directed by
Bear Stearns to Fund/Plan Broker Services, Inc. for execution. Bear Stearns
receives no compensation for its services under the Primary Dealer Agreement.

SHAREHOLDER SERVICES

The Trust has adopted a shareholder service plan under which it pays the Adviser
.05% of the average daily net assets of the Institutional Shares such that the
Trust may obtain the services of the Adviser and other qualified financial
institutions to act as shareholder servicing agents for their customers. Under
this plan, the Trust has authorized the Adviser to enter into agreements
pursuant to which the shareholder servicing agent performs certain shareholder
services. For these services, the Adviser pays the shareholder servicing agent a
fee based upon the average daily net assets of the Institutional Shares owned by
investors for which the shareholder servicing agent maintains a servicing
relationship.

Among the services provided by shareholder servicing agents are: answering
customer inquiries regarding account matters; assisting shareholders in
designating and changing various account options; aggregating and processing
purchase and redemption orders and transmitting and receiving funds for
shareholder orders; transmitting, on behalf of the Trust, proxy statements,
prospectuses and shareholder reports to shareholders and tabulating proxies;
processing dividend payments and providing subaccounting services for Fund
shares held beneficially; and providing such other services as the Trust or a
shareholder may request.

from its own resources, pays Bear Stearns a fee. The Adviser may enter into
similar client service agreements with other persons who provide certain
shareholder services. These fees do not increase the amount of any advisory or
shareholder services fees paid to the Adviser.

TRANSFER AGENT

Fund/Plan Services, Inc., a registered transfer agent, acts as the Trust's
transfer agent and dividend disbursing agent. Fund/Plan Services, Inc. maintains
an account for each shareholder of the Portfolio (unless such accounts are
maintained by sub-transfer agents or processing agents) and performs other
transfer agency and related functions.

Fund/Plan Services, Inc. is authorized to subcontract any or all of its
functions to one or more qualified sub-transfer agents, shareholder servicing
agents, or processing agents, who may be affiliates of Fund/Plan Services, Inc.,
and who agree to comply with the terms of Fund/Plan Services, Inc.'s agreement
with the Trust. Among the services provided by such agents are answering
customer inquiries regarding account matters; assisting shareholders in
designating and changing various account options; aggregating and processing
purchase and redemption orders and transmitting and receiving funds for
shareholder orders; transmitting, on behalf of the Trust, proxy statements,
prospectuses and shareholder reports to shareholders and tabulating proxies;
processing dividend payments and providing subaccounting services for Portfolio
shares held beneficially; and providing such other services as the Trust or a
shareholder may request.

9
<PAGE>

Fund/Plan Services, Inc. may pay these agents for their services, but no such
payment will increase Fund/Plan Services, Inc.'s compensation from the Trust.

HOW TO INVEST IN THE PORTFOLIO

Shares of the Portfolio may be purchased by wire only. Shares are sold at the
net asset value next determined after receipt of a purchase order in the manner
described below. Purchase orders are accepted on any day on which the New York
Stock Exchange and the Federal Reserve Bank of New York are open ('Fund Business
Day') between the hours of 9:00 a.m. and 6:00 p.m. (Eastern Time). The Trust
does not determine net asset value, and purchase orders are not accepted, on the
days those institutions observe the following holidays: New Year's Day, Martin
Luther King, Jr. Day, Presidents' Day, Good Friday, Memorial Day, Independence
Day, Labor Day, Columbus Day, Veterans' Day, Thanksgiving and Christmas.

To purchase shares of the Portfolio by Federal Reserve wire, call Fund/Plan
Services, Inc. at (800) 363-7660 or call your sales representative. If the Fund

receives a firm indication of the approximate size of the intended investment
before 2:30 p.m. (Eastern Time), and if Fund/Plan Services, Inc. receives the
purchase order before 4:15 p.m. (Eastern Time) and the Custodian receives
Federal Funds the same day, purchases of shares of the Portfolio begin to earn
dividends that day. Completed orders received after 4:15 p.m. begin to earn
dividends the next Fund Business Day upon receipt of Federal Funds.

To allow the Adviser to manage the Portfolio most effectively, investors are
encouraged to execute as many trades as possible before 2:30 p.m. To protect the
Portfolio's performance and shareholders, the Adviser discourages frequent
trading in response to short-term market fluctuations. The Portfolio reserves
the right to refuse any investment that, in its sole discretion, would disrupt
the Portfolio's management.

If the Public Securities Association recommends that the government securities
markets close early, the Trust may advance the time at which Fund/Plan Services,
Inc. must receive notification of orders for purposes of determining eligibility
for dividends on that day. Investors who notify Fund/Plan Services, Inc. after
the advanced time become entitled to dividends on the following Fund Business
Day. If Fund/Plan Services, Inc. receives notification of a redemption request
after the advanced time, it ordinarily will wire redemption proceeds on the next
Fund Business Day.

If an investor does not remit Federal Funds, such payment must be converted into
Federal Funds. This usually occurs within one Fund Business Day of receipt of a
bank wire. Prior to receipt of Federal Funds, the investor's monies will not be
invested.

The following procedure will help assure prompt receipt of your Federal Funds
wire:

A. Telephone Fund/Plan Services, Inc. toll free at (800) 363-7660 and
provide the following information:

Your name
Address
Telephone number
Taxpayer ID number
The amount being wired
The identity of the bank wiring funds.

You will then be provided with a Portfolio account number. (Investors with
existing accounts must also notify the Trust before wiring funds.)

10
<PAGE>
B. Instruct your bank to wire the specified amount to the Trust as follows:

The Bank of New York, ABA # 021000018
A/C # 8900276541
FBO Milestone Funds Treasury Obligations
Portfolio Operating Account
Ref: Shareholder Name and Account Number

An investor may open an account when placing an initial order by telephone,
provided the investor thereafter submits an Account Registration Form by mail.
An Account Registration Form is included with this Prospectus.

The Trust and Fund/Plan Services, Inc. each reserves the right to reject any
purchase order for any reason.

SHARE CERTIFICATES. Fund/Plan Services, Inc. maintains a share account for each
shareholder. The Trust does not issue share certificates.

ACCOUNT STATEMENTS. Monthly account statements are sent to investors to report
transactions such as purchases and redemptions as well as dividends paid during
the month.

MINIMUM INVESTMENT REQUIRED. The minimum initial investment in the Portfolio is
$10,000,000. There is no minimum subsequent investment. The Trust reserves the
right to waive the minimum investment requirement.

HOW TO REDEEM SHARES OF THE PORTFOLIO

Holders of shares of the Portfolio may redeem their shares without charge at the
net asset value next determined after the Portfolio receives the redemption
request. Redemption requests must be received in proper form and can be made by
telephone request or written request on any Fund Business Day between the hours
of 9:00 a.m. and 6:00 p.m. (Eastern Time).

BY TELEPHONE. Redemption requests may be made by telephoning Fund/Plan Services,
Inc. at (800) 363-7660. Shareholders must provide Fund/Plan Services, Inc. with
the shareholder's account number, the exact name in which the shares are
registered and some additional form of identification such as a password. A
redemption by telephone may be made only if the telephone redemption
authorization has been completed on the Account Registration Form included with
this Prospectus. In an effort to prevent unauthorized or fraudulent redemption
requests by telephone, Fund/Plan Services, Inc. will follow reasonable
procedures to confirm that such instructions are genuine. If such procedures are
followed, neither Fund/Plan Services, Inc. nor the Trust will be liable for any

losses due to unauthorized or fraudulent redemption requests.

In times of drastic economic or market changes, it may be difficult to make
redemptions by telephone. If a shareholder cannot reach Fund/Plan Services, Inc.
by telephone, redemption requests may be mailed or hand-delivered to Fund/Plan
Services, Inc.

WRITTEN REQUESTS. Redemption requests may be made by writing to The Milestone
Funds, c/o Fund/Plan Services, Inc., P. O. Box 874, #2 Elm Street, Conshohocken,
Pennsylvania 19428. Written requests must be in proper form. The shareholder
will need to provide the exact name in which the shares are registered, the
Portfolio name, account number, and the share or dollar amount requested.

11
<PAGE>

A signature guarantee is required for any written redemption request and for any
instruction to change the shareholder's record name or address, a designated
bank account, the dividend election, or the telephone redemption or other option
elected on an account. Signature guarantees may be provided by any eligible
institution acceptable to Fund/Plan Services, Inc., including a bank, a broker,
a dealer, national securities exchange, a credit union, or a savings association
which is authorized to guarantee signatures. Other procedures may be implemented
from time to time.

Fund/Plan Services, Inc. may request additional documentation to establish that
a redemption request has been authorized properly. A redemption request will not
be considered to have been received in proper form until such additional
documentation has been submitted to Fund/Plan Services, Inc.

<TABLE>
<CAPTION>
FIRM INDICATION OF REDEMPTION REQUEST COMPLETED REDEMPTION ORDER REDEMPTION
AND APPROXIMATE SIZE OF REDEMPTION RECEIVED BY PROCEEDS
RECEIVED BY THE TRUST FUND/PLAN SERVICES ORDINARILY DIVIDENDS
<S> <C> <C> <C>
- --------------------------------------------------------------------------------------------------------------
By 2:30 p.m. Eastern Time By 4:00 p.m. Wired same Not earned on the
Eastern Time Business Day day request received
After 2:30 p.m. Eastern Time After 4:00 p.m. Eastern Time Wired next Earned on day request
Business Day received
</TABLE>

Due to the cost to the Trust of maintaining smaller accounts, the Trust reserves
the right to redeem, upon 60 days written notice, all shares in an account with
an aggregate net asset value of less than $1,000,000 unless an investment is
made to restore the minimum value. The Trust will not redeem accounts that fall
below this amount solely as a result of a reduction in the net asset value of
the Portfolio's shares.

DIVIDENDS AND TAX MATTERS

DIVIDENDS AND DISTRIBUTIONS

DIVIDENDS. Dividends are declared daily and paid monthly, following the close of
the last Fund Business Day of the month. Shares purchased by wire before 4:15
p.m. (Eastern Time) begin earning dividends that day. Dividends are
automatically reinvested on payment dates in additional shares of the Portfolio
unless cash payments are requested by contacting the Trust. The election to
reinvest dividends and distributions or receive them in cash may be changed at
any time upon written notice to Fund/Plan Services, Inc. All dividends and other
distributions are treated in the same manner for Federal income tax purposes
whether received in cash or reinvested in shares of the Portfolio. If no
election is made, all dividends and distributions will be reinvested.

CAPITAL GAINS DISTRIBUTIONS. Net realized short-term capital gains, if any, will
be distributed whenever the Trustees determine that such distributions would be
in the best interest of the shareholders, which would be at least once per year.
The Trust does not anticipate that the Portfolio would realize any long-term
capital gains, but should they occur, they also will be distributed at least
once every 12 months.

TAX MATTERS

TAX STATUS OF THE PORTFOLIO. The Portfolio intends to qualify and continue to
qualify to be taxed as a 'regulated investment company' under the Internal
Revenue Code of 1986, as amended (the 'Code'). Accordingly, the Portfolio will
not be liable for Federal income taxes on the net investment income and capital
gains distributed to its shareholders. Because the Portfolio intends to
distribute all of its net investment

12
<PAGE>
income and net capital gains each year in accordance with the timing
requirements of the Code, the Portfolio should also avoid Federal excise taxes.

subject to Federal income tax when they are paid, whether received in cash or
reinvested in shares of the Portfolio. Distributions declared in December and
paid in January, however, are taxable as if paid on December 31st.

The Portfolio is required by Federal law to withhold 31% of reportable payments
(which may include dividends and capital gain distributions) paid to a
non-corporate shareholder unless that shareholder certifies in writing that the
social security or other tax identification number provided is correct and that
the shareholder is not subject to backup withholding for prior underreporting to
the Internal Revenue Service.

Some states and localities do not tax dividends paid on shares of the Portfolio
that are attributable to interest from U.S. Treasury obligations (but not
necessarily interest earned on repurchase agreements).

Reports containing appropriate information with respect to the Federal income
tax status of dividends, distributions and redemptions, including the
proportions attributable to capital gains and interest on U.S. Treasury
obligations, paid during the year by the Portfolio will be mailed to
shareholders shortly after the close of each calendar year.

The foregoing is only a summary of some of the tax considerations generally
affecting the Portfolio and its shareholders. The Statement of Additional
Information contains a further discussion. Because other Federal, state or local
tax considerations may apply, investors are urged to consult their tax advisors.

OTHER INFORMATION

PORTFOLIO PERFORMANCE. The Portfolio may advertise its yield, which is based on
historical results and is not intended to indicate future performance. Yield
shows the rate of income the Portfolio has earned on its investments as a
percentage of the Portfolio's share price. To calculate yield, the Portfolio
takes the interest income it earned from its portfolio of investments for a
seven-day period (net of expenses), divides it by the average number of shares
entitled to receive dividends, and expresses the result as an annualized
percentage rate based on the Portfolio's share price at the end of the seven-day
period. The Portfolio's compounded annualized yield assumes the reinvestment of
dividends paid by the Portfolio, and therefore will be somewhat higher than the
annualized yield for the same period.

The Portfolio's advertisements may refer to ratings and rankings among similar
funds by independent evaluators such as Morningstar, Lipper Analytical Services,
Inc. or IBC/Donoghue, Inc. In addition, the performance of the Portfolio may be
compared to recognized indices of market performance. The comparative material
found in the Portfolio's advertisements, sales literature, or reports to
shareholders may contain performance ratings. This material is not to be
considered representative or indicative of future performance.

DETERMINATION OF NET ASSET VALUE. The net asset value per share of the Portfolio
is determined at 4:15 p.m. (Eastern Time) on each Fund Business Day. The net
asset value is determined by subtracting total liabilities from total assets and
dividing the remainder by the number of shares outstanding. The Portfolio's
securities are valued at their amortized cost which does not take into account
unrealized gains or losses on securities. This method involves initially valuing

an instrument at its cost and thereafter assuming a constant

13
<PAGE>
amortization to maturity of any premium paid or accreting discount received. The
amortized cost method minimizes changes in the market value of the securities
held by the Portfolio and helps it maintain a stable price of $1.00 per share.

CUSTODIAN AND ACCOUNTING AGENT. The Bank of New York, New York, New York, is
custodian for the securities and cash of the Trust. The Bank of New York is also
the accounting agent for the Portfolio, with responsibility for calculating the
net asset value of the Institutional Class and for maintaining its books and
records.

LEGAL COUNSEL. Legal counsel to the Trust is provided by Kramer, Levin,
Naftalis, Nessen, Kamin & Frankel, New York, New York.

INDEPENDENT PUBLIC ACCOUNTANT. The independent public accountant for the Trust
is McGladrey & Pullen, LLP, New York, New York.

THE TRUST, ITS SHARES AND CLASSES. The Trust is registered with the SEC as an
open-end management investment company and was organized as a business trust
under the laws of the State of Delaware on July 14, 1994. The Board has the
authority to issue an unlimited number of shares of beneficial interest of
separate series with no par value per share and to create classes of shares
within each series. If shares of separate series are issued, each share of each
series would be entitled to participate equally in dividends and other
distributions and the proceeds of any liquidation of that series. Voting rights
would not be cumulative and the shares of each series of the Trust would be
voted separately except when an aggregate vote is required by law.

In addition to Institutional Shares, the Portfolio offers an Investor Class
('Investor Shares') by separate prospectus. Each class of shares has a different
distribution arrangement. Also, to the extent one class bears expenses different
from the other class, the amount of dividends and other distributions it
receives, and its performance, will differ. Shareholders of one class have the
same voting rights as shareholders of the other class, except that separate
votes are taken by each class of the Portfolio if the interests of one class
differ from the interests of the other. For information about Investor Shares,
please call (800) 941-MILE, or ask your sales representative whether this class
would be a suitable investment.

Delaware law does not require a registered investment company to hold annual
meetings of shareholders, and it is anticipated that shareholder meetings will
be held only when specifically required by Federal or state law. Shareholders
have available procedures for requiring the Trustees to call a meeting and for
removing Trustees. Shares issued by the Trust have no conversion, subscription
or preemptive rights. See 'OTHER INFORMATION--The Trust and its Shareholders' in
the Statement of Additional Information.

As of November 30, 1995, the Trustees and officers of the Portfolio in the

aggregate owned less than one percent of the outstanding shares of the
Portfolio.

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

<PAGE>

THE
MILESTONE
FUNDS

Adviser
------------------------------------------------------------
Milestone Capital Management, L.P.
One Odell Plaza
Yonkers, NY 10701

Administrator / Custodian
------------------------------------------------------------
The Bank of New York
90 Washington Street
New York, NY 10286

Underwriter / Transfer Agent
------------------------------------------------------------
Fund/Plan Broker Services, Inc. / Fund/Plan Services, Inc.
P. O. Box 874, #2 Elm Street
Conshohocken, PA 19428

Primary Dealer
------------------------------------------------------------
Bear, Stearns & Co. Inc.
245 Park Avenue

New York, NY 10167

Legal Counsel
------------------------------------------------------------
Kramer, Levin, Naftalis, Nessen, Kamin & Frankel
919 Third Avenue
New York, NY 10022

Independent Public Accountant
------------------------------------------------------------
McGladrey & Pullen, LLP
555 Fifth Avenue
New York, NY 10017

The Milestone Funds
800-941-MILE

<PAGE>

THE
MILESTONE
FUNDS

THE MILESTONE FUNDS
TREASURY OBLIGATIONS PORTFOLIO

ADVISER
Milestone Capital Management, L.P.

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

PROSPECTUS
FEBRUARY 23, 1996
INVESTOR CLASS

<PAGE>

THE
MILESTONE
FUNDS

THE MILESTONE FUNDS

TREASURY OBLIGATIONS PORTFOLIO
INVESTOR SHARES

One Odell Plaza Yonkers, New York 10701
(800) 941-MILE

This Prospectus offers Investor Shares of the Treasury Obligations Portfolio
(the 'Portfolio'), a diversified, no-load money market portfolio of The
Milestone Funds (the 'Trust'), an open-end investment management company. The
Portfolio seeks to provide its shareholders with the maximum current income that
is consistent with the preservation of capital and the maintenance of liquidity.
Milestone Capital Management, L.P. serves as the Portfolio's investment adviser.

TREASURY OBLIGATIONS PORTFOLIO invests only in short-term obligations of
the U.S. Treasury and repurchase agreements fully collateralized by
obligations of the U.S. Treasury.

INVESTORS SHOULD READ AND RETAIN THIS PROSPECTUS FOR FUTURE REFERENCE.

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

<PAGE>

<CAPTION>
TABLE OF CONTENTS
PAGE PAGE
---- ----
<S> <C> <C> <C>
Prospectus Summary............. 2 Management of the Trust........ 7
Expenses of Investing in the How to Invest in the
Portfolio.................... 3 Portfolio...................... 10
Financial Highlights........... 4 How to Redeem Shares of the
Portfolio...................... 11
Investment Objective and Dividends and Tax Matters...... 12
Policies..................... 4
Risk Considerations............ 6 Other Information.............. 13
Additional Investment Policies
and Practices................ 6
</TABLE>

PROSPECTUS SUMMARY

PORTFOLIO HIGHLIGHTS

INVESTOR SHARES. This prospectus offers shares of the Investor Class of the
Treasury Obligations Portfolio ('Investor Shares'). The Treasury Obligations
Portfolio (the 'Portfolio') is a money market fund that invests only in U.S.
Treasury obligations and repurchase agreements fully collateralized by U.S.
Treasury obligations. Investor Shares are designed for certain institutional and
high net worth investors as a convenient investment vehicle for short-term
funds. The Portfolio also offers an Institutional Class of shares
('Institutional Shares') by separate prospectus. The Institutional Class is
subject to different expenses that affect its performance. For information about
Institutional Shares, speak to your sales representative or call (800) 941-MILE.
See 'Other Information'.

MANAGEMENT. The Portfolio's investment adviser is Milestone Capital Management,
L.P. (the 'Adviser'), One Odell Plaza, Yonkers, New York 10701. See 'Management
of the Trust'.

Inc., P. O. Box 874, #2 Elm Street, Conshohocken, Pennsylvania 19428, serves as
statutory underwriter of the Trust's shares. See 'Management of the Trust'.

2
<PAGE>

of a redemption by 2:30 p.m. (Eastern Time), and the completed redemption order
by 4:00 p.m., redemption proceeds will ordinarily be wired that day, and the
investor will not receive that day's dividends. The minimum initial investment
is $1,000,000. The Trust and Fund/Plan Services, Inc. each reserves the right to
waive this minimum initial investment limitation. There is no minimum subsequent
investment. See 'How To Invest In The Portfolio' and 'How To Redeem Shares In
The Portfolio'.

EXPENSES OF INVESTING IN THE PORTFOLIO

The purpose of the following table is to assist an investor in understanding the
various costs and expenses that a shareholder of the Trust will bear, either
directly or indirectly.

SHAREHOLDER TRANSACTION EXPENSES:

<TABLE>
<S> <C>
Maximum Sales Load Imposed on Purchases........... None
Maximum Sales Load Imposed on Reinvested
Dividends......................................... None
Deferred Sales Load............................... None
Redemption Fees................................... None
Exchange Fees..................................... None
</TABLE>

ANNUAL PORTFOLIO OPERATING EXPENSES (as a percentage of annual net assets):

<TABLE>
<S> <C>
Advisory Fees..................................... 0.10%
12b-1 Fees........................................ None
Shareholder Servicing Fees........................ 0.25%
Other Expenses.................................... 0.10%
----
Total Operating Expenses.......................... 0.45%
</TABLE>

The Adviser has voluntarily agreed to waive up to 100% of the shareholder
servicing fee for the Investor Class and may waive up to 100% of the advisory
fee of the Portfolio. This voluntary limitation may be terminated at any time.
For a further description of the various expenses incurred in the operation of
the Portfolio, see 'Management of the Trust'.

EXAMPLE

<TABLE>
<S> <C> <C> <C> <C>
You would pay the following expenses on a $1,000 1 3 5 10
investment in Investor Shares of the Portfolio, Year Years Years Years
assuming a 5% annual return and redemption at the ---- ----- ----- -----
end of each period:............................... $5 $14 $25 $57
</TABLE>

3
<PAGE>
FINANCIAL HIGHLIGHTS

The following financial highlights of the Investor Class have been audited by
McGladrey & Pullen, LLP, independent certified public accountants. The financial
statements and independent accountant's report thereon of the Portfolio are
incorporated by reference into the Statement of Additional Information.

<TABLE>
<CAPTION>
DECEMBER 30, 1994
(COMMENCEMENT OF

OPERATIONS) TO
NOVEMBER 30, 1995
--------------------
<S> <C>
Per share operating performance for a share
outstanding throughout the period

Beginning net asset value per share...................... $ 1.00
----------
Net investment income.................................... 0.05
Dividends from net investment income..................... (0.05)
----------
Ending net asset value per share......................... $ 1.00
----------
----------
Total return (a)......................................... 5.71%

Ratios/supplemental data

Ratios to average net assets (a):
Expenses (b)........................................... 0.38%
Net investment income.................................. 5.63%
Net assets at the end of period (000's omitted).......... $ 82,273
</TABLE>

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

(a) Annualized.

(b) Net of advisory, shareholder servicing, and administration fees waived and
expenses reimbursed of 0.14%.

INVESTMENT OBJECTIVE AND POLICIES

INVESTMENT OBJECTIVE

INVESTMENT POLICIES

<PAGE>
The following permissible investments and investment restrictions are
fundamental investment policies of the Portfolio that may not be changed without
shareholder approval:

PERMISSIBLE INVESTMENTS.

The Portfolio seeks to achieve its investment objective by investing ONLY in:

Repurchase agreements fully collateralized by U.S. Treasury obligations.
Repurchase agreements are transactions in which the Portfolio purchases a
security and simultaneously commits to resell that security to the seller
at an agreed-upon price on an agreed-upon future date, normally
one-to-seven days later. The resale price reflects a market rate of
interest that is not related to the coupon rate or maturity of the
purchased security. The Portfolio enters into repurchase agreements ONLY
WITH PRIMARY DEALERS designated by the Federal Reserve Bank of New York
and the Trust's custodian bank which the Adviser believes present minimal
credit risks in accordance with guidelines established by the Board of
Trustees of the Trust (the 'Board'). The Adviser monitors the
credit-worthiness of sellers under the Board's general supervision. If a
seller defaults on its repurchase obligation, however, the Portfolio might
suffer a loss.

INVESTMENT RESTRICTIONS.

The Portfolio WILL NOT:

1. Invest in structured notes or instruments commonly known as
derivatives;

2. Invest in variable, adjustable or floating rate instruments of any
kind;

3. Enter into reverse repurchase agreements;

5. Invest in zero coupon bonds.

5
<PAGE>
RISK CONSIDERATIONS

ADDITIONAL INVESTMENT POLICIES AND PRACTICES

BORROWING. As a fundamental investment policy, the Portfolio may only borrow

money for temporary or emergency purposes, including the meeting of redemption
requests, in amounts up to 33 1/3% of the Portfolio's total assets. Interest
costs on borrowings may fluctuate with changing market rates of interest and may
partially offset or exceed the return earned on borrowed funds (or on the assets
that were retained rather than sold to meet the needs for which funds were
borrowed). Under adverse market conditions, the Portfolio might have to sell
portfolio securities to meet interest or principal payments at a time when
investment considerations would not favor such sales. As a nonfundamental
investment policy, the Portfolio may not purchase securities for investment
while any borrowing equaling 5% or more of the Portfolio's total assets is
outstanding.

WHEN-ISSUED AND DELAYED DELIVERY TRANSACTIONS. The Portfolio may purchase new
issues of U.S. Treasury Obligations on a 'when-issued' basis or existing issues
of U.S. Treasury obligations on a 'delayed delivery' basis. The Portfolio would
enter into these forward commitments to obtain securities at prices that might
not be available in the future. The price is fixed when the commitment is made,
but the securities are delivered on a future date beyond the customary
settlement time and paid for upon delivery. The Portfolio assumes the risk that
the value of the securities on the delivery date may be more or less than the
purchase price. Failure by the other party to deliver a security purchased by
the Portfolio may result in a loss or a missed opportunity to make an
alternative investment. Commitments for when-issued or delayed delivery
transactions will be entered into only when the Portfolio intends to acquire the
securities. Although there is no limit on the amount of these commitments that
the Portfolio may make, under normal circumstances it will not commit more than
30% of its total assets to such purchases.

6
<PAGE>
are invested in illiquid securities, the Adviser will take reasonable steps to
reduce the Portfolio's holdings of illiquid securities to 10% or less of its net
assets.

TEMPORARY DEFENSIVE POSITIONS. Under abnormal market or economic conditions, the
Portfolio temporarily may hold up to 100% of its investable assets in cash.

MANAGEMENT OF THE TRUST

BOARD OF TRUSTEES

THE ADVISER

compensate certain persons who provide

7
<PAGE>

ADMINISTRATOR

The Bank of New York, 90 Washington Street, New York, New York 10286 serves as
the administrator of the Trust, pursuant to an Administration Agreement with the
Trust.

UNDERWRITER

Under the Underwriting Agreement, Fund/Plan Broker Services, Inc. serves as
statutory underwriter of the Portfolio's shares, and as the agent of the Trust
in connection with the offering of shares of the Portfolio. Fund/Plan Broker
Services, Inc. receives no compensation for its services under the Underwriting
Agreement. Fund/Plan Broker Services, Inc. may enter into arrangements with
banks, broker-dealers or other financial institutions ('Selected Dealers')
through which investors may purchase or redeem shares. Fund/Plan Broker
Services, Inc. may, at its own expense and from its own resources, compensate
certain persons who provide services in connection with the sale or expected
sale of shares of the Portfolio. Investors purchasing shares of the Portfolio
through another financial institution should read any materials and information
provided by the financial institution to acquaint themselves with its procedures
and any fees that it may charge.

PRIMARY DEALER

8
<PAGE>

SHAREHOLDER SERVICES

The Trust has adopted a shareholder service plan under which it pays the Adviser
.25% of the average daily net assets of the Investor Shares such that the Trust
may obtain the services of the Adviser and other qualified financial
institutions to act as shareholder servicing agents for their customers. Under
this Plan, the Trust has authorized the Adviser to enter into agreements
pursuant to which the shareholder servicing agent performs certain shareholder
services. For these services, the Adviser pays the shareholder servicing agent a
fee based upon the average daily net assets of the Investor Shares owned by
investors for which the shareholder servicing agent maintains a servicing
relationship.

Among the services provided by shareholder servicing agents are: answering
customer inquiries regarding account matters; assisting shareholders in

designating and changing various account options; aggregating and processing
purchase and redemption orders and transmitting and receiving funds for
shareholder orders; transmitting, on behalf of the Trust, proxy statements,
prospectuses and shareholder reports to shareholders and tabulating proxies;
processing dividend payments and providing subaccounting services for Fund
shares held beneficially; and providing such other services as the Trust or a
shareholder may request.

The Adviser has entered into a separate Client Services Agreement with Bear
Stearns under which it provides distribution assistance and various services to
those shareholders of the Trust who purchase shares of the Portfolio through
Bear Stearns (the 'Bear Stearns Accounts'). Under the Client Services Agreement,
Bear Stearns furnishes such facilities and personnel as are necessary to provide
the Trust and the Bear Stearns Accounts with any information either may need
about the other and to facilitate the processing of orders for the purchase or
redemption of shares. For these services, the Adviser, at its own expense and
from its own resources, pays Bear Stearns a fee. The Adviser may enter into
similar client service agreements with other persons who provide certain
shareholder services. These fees do not increase the amount of any advisory or
shareholder services fees paid to the Adviser.

TRANSFER AGENT

9
<PAGE>

Fund/Plan Services, Inc. may pay these agents for their services, but no such

payment will increase Fund/Plan Services, Inc.'s compensation from the Trust.

HOW TO INVEST IN THE PORTFOLIO

To purchase shares of the Portfolio by Federal Reserve wire, call Fund/Plan
Services, Inc. at (800) 363-7660 or call your sales representative. If the Fund
receives a firm indication of the approximate size of the intended investment
before 2:30 p.m. (Eastern Time), and if Fund/Plan Services, Inc. receives the
purchase order before 4:15 p.m. (Eastern Time) and the Custodian receives
Federal Funds the same day, purchases of shares of the Portfolio begin to earn
dividends that day. Completed orders received after 4:15 p.m. begin to earn
dividends the next Fund Business Day upon receipt of Federal Funds.

The following procedure will help assure prompt receipt of your Federal Funds
wire:

A. Telephone Fund/Plan Services, Inc. toll free at (800) 363-7660 and

provide the following information:

Your name
Address
Telephone number
Taxpayer ID number
The amount being wired
The identity of the bank wiring funds.

You will then be provided with a Portfolio account number. (Investors with
existing accounts must also notify the Trust before wiring funds.)

10
<PAGE>

B. Instruct your bank to wire the specified amount to the Trust as follows:

The Bank of New York, ABA # 021000018
A/C # 8900276541
FBO Milestone Funds Treasury Obligations
Portfolio Operating Account
Ref: Shareholder Name and Account Number

The Trust and Fund/Plan Services, Inc. each reserves the right to reject any
purchase order for any reason.

SHARE CERTIFICATES. Fund/Plan Services, Inc. maintains a share account for each
shareholder. The Trust does not issue share certificates.

ACCOUNT STATEMENTS. Monthly account statements are sent to investors to report
transactions such as purchases and redemptions as well as dividends paid during
the month.

MINIMUM INVESTMENT REQUIRED. The minimum initial investment in the Portfolio is
$1,000,000. There is no minimum subsequent investment. The Trust reserves the
right to waive the minimum investment requirement.

HOW TO REDEEM SHARES OF THE PORTFOLIO

11
<PAGE>

Fund/Plan Services, Inc. may request additional documentation to establish that
a redemption request has been authorized properly. A redemption request will not

be considered to have been received in proper form until such additional
documentation has been submitted to Fund/Plan Services, Inc.

<TABLE>
<CAPTION>
FIRM INDICATION OF
REDEMPTION REQUEST
AND APPROXIMATE SIZE OF COMPLETED REDEMPTION
REDEMPTION ORDER RECEIVED BY REDEMPTION PROCEEDS
RECEIVED BY THE TRUST FUND/PLAN SERVICES ORDINARILY DIVIDENDS
<S> <C> <C> <C>
- -----------------------------------------------------------------------------------------------------
By 2:30 p.m. Eastern By 4:00 p.m. Wired same Not earned on the
Time Eastern Time Business Day day request received

After 2:30 p.m. Eastern After 4:00 p.m. Wired next Earned on day
Time Eastern Time Business Day request received
</TABLE>

Due to the cost to the Trust of maintaining smaller accounts, the Trust reserves
the right to redeem, upon 60 days written notice, all shares in an account with
an aggregate net asset value of less than $100,000 unless an investment is made
to restore the minimum value. The Trust will not redeem accounts that fall below
this amount solely as a result of a reduction in the net asset value of the
Portfolio's shares.

DIVIDENDS AND TAX MATTERS

DIVIDENDS AND DISTRIBUTIONS

TAX MATTERS

12
<PAGE>
income and net capital gains each year in accordance with the timing
requirements of the Code, the Portfolio should also avoid Federal excise taxes.

DISTRIBUTIONS. Dividends paid by the Portfolio out of its net investment income
(including realized net short-term capital gains) are taxable to the
shareholders of the Portfolio as ordinary income. Distributions of net long-term
capital gains, if any, realized by the Portfolio are taxable to the shareholders
as long-term capital gains, regardless of the length of time the shareholder may
have held shares in the Portfolio at the time of distribution. Distributions are
subject to Federal income tax when they are paid, whether received in cash or
reinvested in shares of the Portfolio. Distributions declared in December and
paid in January, however, are taxable as if paid on December 31st.

OTHER INFORMATION

percentage of the Portfolio's share price. To calculate yield, the Portfolio
takes the interest income it earned from its portfolio of investments for a
seven-day period (net of expenses), divides it by the average number of shares
entitled to receive dividends, and expresses the result as an annualized
percentage rate based on the Portfolio's share price at the end of the seven-day
period. The Portfolio's compounded annualized yield assumes the reinvestment of
dividends paid by the Portfolio, and therefore will be somewhat higher than the
annualized yield for the same period.

13
<PAGE>
securities. This method involves initially valuing an instrument at its cost and
thereafter assuming a constant amortization to maturity of any premium paid or
accreting discount received. The amortized cost method minimizes changes in the
market value of the securities held by the Portfolio and helps it maintain a
stable price of $1.00 per share.

CUSTODIAN AND ACCOUNTING AGENT. The Bank of New York, New York, New York, is
custodian for the securities and cash of the Trust. The Bank of New York is also
the accounting agent for the Portfolio, with responsibility for calculating the
net asset value of the Investor Class and for maintaining its books and records.

LEGAL COUNSEL. Legal counsel to the Trust is provided by Kramer, Levin,
Naftalis, Nessen, Kamin & Frankel, New York, New York.

INDEPENDENT PUBLIC ACCOUNTANT. The independent public accountant for the Trust
is McGladrey & Pullen, LLP, New York, New York.

distributions and the proceeds of any liquidation of that series. Voting rights
would not be cumulative and the shares of each series of the Trust would be
voted separately except when an aggregate vote is required by law.

In addition to Investor Shares, the Portfolio offers an Institutional Class
('Institutional Shares') by separate prospectus. Each class of shares has a
different distribution arrangement. Also, to the extent one class bears expenses
different from the other class, the amount of dividends and other distributions
it receives, and its performance, will differ. Shareholders of one class have
the same voting rights as shareholders of the other class, except that separate
votes are taken by each class of the Portfolio if the interests of one class
differ from the interests of the other. For information about Institutional
Shares, please call (800) 941-MILE, or ask your sales representative whether
this class would be a suitable investment.

As of November 30, 1995, the Trustees and officers of the Portfolio in the
aggregate owned less than one percent of the outstanding shares of the
Portfolio.

<PAGE>
THE
MILESTONE
FUNDS

Adviser
-------------------------------------------------------------
Milestone Capital Management, L.P.
One Odell Plaza
Yonkers, NY 10701

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

Administrator / Custodian
-------------------------------------------------------------
The Bank of New York
90 Washington Street
New York, NY 10286

Underwriter / Transfer Agent
-------------------------------------------------------------
Fund/Plan Broker Services, Inc. / Fund/Plan Services, Inc.
P. O. Box 874, #2 Elm Street
Conshohocken, PA 19428

Primary Dealer
-------------------------------------------------------------
Bear, Stearns & Co. Inc.
245 Park Avenue
New York, NY 10167

Legal Counsel

-------------------------------------------------------------
Kramer, Levin, Naftalis, Nessen, Kamin & Frankel
919 Third Avenue
New York, NY 10022

Independent Public Accountant
-------------------------------------------------------------
McGladrey & Pullen, LLP
555 Fifth Avenue
New York, NY 10017

The Milestone Funds
800-941-MILE

THE MILESTONE FUNDS

Treasury Obligations Portfolio

One Odell Plaza
Yonkers, New York 10701
Tel. (800) 941-MILE

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

STATEMENT OF ADDITIONAL INFORMATION

February 14, 1996

The Milestone Funds (the "Trust") is an open-end investment management company.
This Statement of Additional Information supplements the Prospectus offering
shares of each class of Treasury Obligations Portfolio (the "Portfolio"), a
diversified, no-load money market portfolio of the Trust, and should be read
only in conjunction with the Prospectus, a copy of which may be obtained
without charge by writing to The Milestone Funds, One Odell Plaza, Yonkers, New
York 10701, or by calling (800) 941-MILE (941-6453).

TABLE OF CONTENTS

Page
----

1. Investment Policies................. 2
2. Investment Limitations.............. 3
3. Advertising......................... 5
4. Management.......................... 7
5. Determination of Net Asset Value.... 14
6. Portfolio Transactions.............. 14
7. Additional Purchase and
Redemption Information............ 15
8. Taxation............................ 16
9. Other Information................... 21

This Statement of Additional Information is not a prospectus and is authorized
for distribution to prospective investors only if preceded or accompanied by a
current prospectus.

1. INVESTMENT POLICIES

The following discussion is intended to supplement the disclosure in the
Prospectus concerning the Portfolio's investments and investment techniques and
the risks associated therewith.

DEFINITIONS

As used in this Statement of Additional Information, the following terms shall
have the meanings listed:

"Board" shall mean the Board of Trustees of the Trust.

"U.S. Treasury obligations" shall mean securities issued by the United
States Treasury, such as Treasury bills, notes and bonds, that are
fully guaranteed as to payment of principal and interest by the United
States.

"1940 Act" shall mean the Investment Company Act of 1940, as amended.

Repurchase Agreements. The Portfolio may purchase repurchase agreements fully
collateralized by U.S. Treasury obligations. In a repurchase agreement, the
Portfolio purchases a security and simultaneously commits to resell that
security to the seller at an agreed-upon price on an agreed-upon future date,
normally one-to-seven days later. The repurchase price reflects a market rate
of interest unrelated to the coupon rate or maturity of the purchased security.
The obligation of the seller to pay the repurchase price is in effect secured
by the value of the underlying security (as determined daily by the Adviser).
This value must be equal to, or greater than, the repurchase price plus the
transaction costs (including loss of interest) that the Portfolio could expect
to incur upon liquidation of the collateral if the counterparty defaults. If a
counterparty defaults on its repurchase obligation, the Portfolio might suffer
a loss to the extent that the proceeds from the sale of the collateral were
less than the repurchase price. In the event of a counterparty's bankruptcy,
the Portfolio might be delayed in, or prevented from, selling the collateral
for the Portfolio's benefit.

When-Issued and Delayed Delivery Transactions. In order to assure itself of
being able to obtain securities at prices which the Adviser believes might not
be available at a future time, the Portfolio may purchase securities on a
when-issued or delayed delivery basis (forward commitments). When these
transactions are negotiated, the price (generally expressed in terms of yield)
and the interest rate payable on the securities are fixed on the transaction
date. Delivery and payment may take place a month or more after the date of the
transaction is fixed, however. When the Portfolio makes the forward commitment,
it will record the transactions as a purchase and thereafter reflect the value
each day of such securities in determining its net asset value. During the
period between a commitment and settlement, no payment is made for the
securities purchased and no interest on the security accrues to the purchaser.
At the time the Portfolio makes a commitment to purchase securities in this

manner, the Portfolio immediately assumes the risk of ownership, including
price fluctuation. Accordingly, the value of the securities on the delivery
date may be more or less than the purchase price. Although the Portfolio will
only enter

into a forward commitment if it intends to actually acquire the securities, if
the Portfolio later chooses to dispose of the right to acquire a when-issued
security prior to its acquisition, it could, as with the disposition of any
other portfolio obligation, incur a gain or loss due to market fluctuation.
When the Portfolio agrees to purchase a security on a when-issued or delayed
delivery basis, the Trust's custodian will set aside and maintain a segregated
account of sufficient liquid assets (such as cash or U.S. Treasury obligations)
which will be available to make payment for the securities purchased. Failure
by the other party to deliver a security purchased by the Portfolio may result
in a loss or a missed opportunity to make an alternative investment. Although
there is no limit on the amount of these commitments that the Portfolio may
make, under normal circumstances it will not commit more than 30% of its total
assets to such purchases.

Illiquid Securities. The Portfolio may invest up to 10% of its net assets in
illiquid securities. The term "illiquid securities" for this purpose means
repurchase agreements having a maturity of more than seven days and not
entitling the holder to payment of principal within seven days. Certain
repurchase agreements which provide for settlement in more than seven days can
be liquidated before the nominal fixed term on seven days or less notice. Such
repurchase agreements will be regarded as liquid instruments. The Board has
ultimate responsibility for determining whether specific securities are liquid
or illiquid. The Adviser monitors the liquidity of securities held by the
Portfolio and reports periodically to the Board.

Cash Position. Although the Portfolio intends to be invested fully in U.S.
Treasury obligations or repurchase agreements, it may hold a de minimus amount
of cash for a short period prior to investment or payment of the proceeds of
redemption. The amount of this cash should not exceed 5% of the Portfolio's
assets, and in most cases will be significantly less.

2. INVESTMENT LIMITATIONS

The Portfolio has adopted the following fundamental investment limitations that
cannot be changed without the affirmative vote of the lesser of (i) more than
50% of the outstanding shares of the Portfolio or (ii) 67% of the shares of the
Portfolio present or represented at a shareholders meeting at which the holders
of more than 50% of the outstanding shares of the Portfolio are present or
represented. The Portfolio may not:

(1) Invest in variable, adjustable or floating rate instruments
of any kind;

(2) Invest in securities issued by agencies or instrumentalities
of the United States Government, such as the Federal National Mortgage
Association ("FNMA"), Government National Mortgage Association ("GNMA"),

Federal Home Loan Mortgage Corp. ("Freddie Mac"), or the Small Business
Administration ("SBA"); or,

(3) Invest in zero coupon bonds.

(4) Invest in structured notes or instruments commonly known as
derivatives.

(5) Enter into reverse repurchase agreements.

(6) With respect to 100% of its assets, purchase a security other
than a U.S. Treasury obligation if, as a result, more than 5% of the Fund's
total assets would be invested in the securities of a single issuer.

(7) Purchase securities if, immediately after the purchase, 25% or
more of the value of the Portfolio's total assets would be invested in the
securities of issuers having their principal business activities in the same
industry; except that there is no limit on investments in U.S. Treasury
obligations and repurchase agreements fully collateralized by U.S. Treasury
obligations.

(8) Purchase restricted securities, or underwrite securities of
other issuers, except to the extent that the Portfolio may be considered to be
acting as an underwriter in connection with the disposition of portfolio
securities.

(9) Purchase or sell real estate or any other interest therein, or
real estate limited partnerships or invest in securities issued by companies
that invest in real estate or interests therein.

(10) Purchase or sell physical commodities or contracts relating to
physical commodities, provided that currencies and currency-related contracts
will not be deemed to be physical commodities.

(11) Borrow money, except for temporary or emergency purposes
(including the meeting of redemption requests), provided that borrowings do not
exceed 33 1/3% of the value of the Portfolio's total assets.

(12) Issue senior securities except as appropriate to evidence
indebtedness that the Portfolio is permitted to incur, and provided that the
Portfolio may issue shares of additional series or classes that the Trustees
may establish.

(13) Make loans (except through the use of repurchase agreements,
and through the purchase of debt securities that are otherwise permitted
investments).

(14) Purchase securities on margin, or make short sales of
securities, except for the use of short-term credit necessary for the clearance
of purchases and sales of portfolio securities.

(15) Write options or acquire instruments with put or demand
features, except that the Portfolio may enter into repurchase agreements
terminable upon demand.

(16) Invest in oil, gas or other mineral exploration or development
programs.

The Portfolio has adopted the following nonfundamental investment limitations
that may be changed by the Board without shareholder approval. The Portfolio
may not:

(a) Purchase securities for investment while any borrowing equaling 5%
or more of the Portfolio's total assets is outstanding; and if at any time the
Portfolio's borrowings exceed the Portfolio's investment limitations due to a
decline in net assets, such borrowings will be promptly (within three days)
reduced to the extent necessary to comply with the limitations.

(b) Invest in or hold securities of any issuer other than the Portfolio
if those Trustees and officers of the Trust or the Portfolio's investment
adviser, individually owning beneficially more than 1/2 of 1% of the securities
of the issuer, in the aggregate own more than 5% of the issuer's securities.

(c) Acquire securities or invest in repurchase agreements with respect
to any securities if, as a result, more than 10% of the Portfolio's net assets
(taken at current value) would be invested in repurchase agreements having a
maturity of more than seven days and not entitling the holder to payment of
principal 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.

Except as required by the 1940 Act, if a percentage restriction on investment
or utilization of assets is adhered to at the time an investment is made a
later change in percentage resulting from a change in the market values of the
Portfolio's assets, the change in status of a security or purchases and
redemptions of shares will not be considered a violation of the limitation.

3. ADVERTISING

Performance Data

The Portfolio may provide current annualized and effective annualized yield
quotations for each class based on its daily dividends. These quotations may
from time to time be used in advertisements, shareholder reports or other
communications to shareholders. All performance information supplied by the
Portfolio is historical and is not intended to indicate future returns.

In performance advertising the Portfolio may compare any of its performance
information with data published by independent evaluators including
Morningstar, Lipper Analytical Services, Inc., IBC/Donoghue, Inc.,
CDA/Wiesenberger and other companies that track the investment performance of

investment companies ("Fund Tracking Companies"). The Portfolio may also
compare any of its performance information with the performance of recognized
stock, bond and other indices. The Portfolio may also refer in such materials
to mutual fund performance rankings and other data published by Fund Tracking
Companies. Performance advertising may also refer to discussions of the
Portfolio and comparative mutual fund data and ratings reported in independent
periodicals, such as newspapers and financial magazines.

Any current yield quotation of a class of the Portfolio which is used in such a
manner as to be subject to the provisions of Rule 482(d) under the Securities
Act of 1933, as amended, shall consist of an annualized historical yield,
carried at least to the nearest hundredth of one percent, based on a specific
seven-calendar-day period and shall be calculated by dividing the net change
during the seven-day period in the value of an account having a balance of one
share at the

beginning of the period by the value of the account at the beginning of the
period, and multiplying the quotient by 365/7. For this purpose, the net change
in account value would reflect the value of additional shares purchased with
dividends declared on the original share and dividends declared on both the
original share and any such additional shares, but would not reflect any
realized gains or losses from the sale of securities or any unrealized
appreciation or depreciation on portfolio securities. In addition, any
effective annualized yield quotation used by the Portfolio shall be calculated
by compounding the current yield quotation for such period by adding 1 to the
product, raising the sum to a power equal to 365/7, and subtracting 1 from the
result.

The current and effective seven day yields at November 30, 1995 were 5.76% and
5.93% for the Institutional Class and 5.56% and 5.72% for the Investor Class,
respectively.

Although published yield information is useful to investors in reviewing a
class's performance, investors should be aware that the Portfolio's yield
fluctuates from day to day and that its yield for any given period is not an
indication or representation by the Portfolio of future yields or rates of
return on its shares. The yields of a class are neither fixed nor guaranteed,
and an investment in the Portfolio is not insured or guaranteed. Accordingly,
yield information may not necessarily be used to compare shares of the
Portfolio with investment alternatives which, like money market instruments or
bank accounts, may provide a fixed rate of interest. Also, it may not be
appropriate to compare directly the Portfolio's yield information to similar
information of investment alternatives which are insured or guaranteed.

Income calculated for the purpose of determining the yield of a class differs
from income as determined for other accounting purposes. Because of the
different accounting methods used, and because of the compounding assumed in
yield calculations, the yield quoted for a class may differ from the rate of
distribution the class paid over the same period or the rate of income reported
in the Portfolio's financial statements.

The Funds may advertise other forms of performance. For example, the Funds may
quote unaveraged or cumulative total returns reflecting the change in the value
of an investment over a stated period. Average annual and cumulative total
returns may be quoted as a percentage or as a dollar amount, and may be
calculated for a single investment, a series of investments, and/or a series of
redemptions over any time period. Total returns may be broken down into their
components of income and capital (including capital gains and changes in share
price) in order to illustrate the relationship of these factors and their
contributions to total return. Any performance information may be presented
numerically or in a table, graph or similar illustration.

Other Information

The Funds may include other information in their advertisements including, but
not limited to (i) portfolio holdings and portfolio allocation as of certain
dates, such as portfolio diversification by instrument type, by instrument, by
location of issuer or by maturity; (ii) statements or illustrations relating to
the appropriateness of types of securities and/or mutual funds that may be
employed by an investor to meet specific financial goals; (iii) descriptions of
the Funds' portfolio managers and the portfolio management staff of the Adviser
or summaries of the views of the portfolio

managers with respect to the financial markets; (iv) information regarding the
background, experience or areas of expertise of the Funds' trustees; (v)
ratings assigned the Fund by ratings organizations such as Standard & Poor's
Ratings Group, Moody's Investors Service, or Fitch Investors Service, Inc.;
(vi) the results of a hypothetical investment in a Fund over a given number of
years, including the amount that the investment would be at the end of the
period; and, (ix) the net asset value, net assets or number of shareholders of
a Fund as of one or more dates. The Fund may also compare the Fund's operations
to the operations of other funds or similar investment products. Such
comparisons may refer to such aspects of operations as the nature and scope of
regulation of the products and the products' weighted average maturity,
liquidity, investment policies, and the manner of calculating and reporting
performance.

In connection with its advertisements each Fund may provide "shareholders'
letters" to provide shareholders or investors an introduction to the Fund's,
the Trust's or any of the Trust's service provider's policies or business
practices. The Fund may also include in sales materials information regarding
the Adviser including the nature of its management techniques and its status as
an entity wholly owned by women.

4. MANAGEMENT

Trustees and Officers

The Trustees and Officers of the Trust and their principal occupations during
the past five years are set forth below. Trustee deemed to be "interested
person" of the Trust as defined in the 1940 Act are marked with an asterisk.

*Janet Tiebout Hanson, Chairman and President.

President and Chief Executive Officer of Milestone Capital Management,
L.P., the Adviser to the Portfolio and President and Chief Executive
Officer of Milestone Capital Management Corp., the general partner of
the Adviser. Ms. Hanson was Managing Director of the Hanson Consulting
Group, Inc., a management consulting firm, from September 1993 to May
1994. From October 1991 to August 1993, she was Vice-President of the
Asset Management Division of Goldman, Sachs & Co., an investment
banking firm. Ms. Hanson was also with Goldman, Sachs & Co. from 1977
to 1987. During that period, she became Vice-President of Fixed Income
Sales and served as co-manager of money market sales in New York. Her
address is 38 Forest Lane, Bronxville, New York 10708.

*Dort A. Cameron III, Trustee.

Chairman of the Board of Milestone Capital Management Corp. Since 1984,
he has been the General Partner of BMA L.P., which is the General
Partner of Investment Limited Partnership, an investment partnership.
Since 1988, Mr. Cameron has been a General Partner of EBD L.P., which
is the General Partner of The Airlie Group, L.P., an investment
partnership. He has been Chairman of Entex Information Services, a
computer

resale and service corporation, since August 1993. Mr. Cameron
is a Trustee and Chairman of the Finance Committee of Middlebury
College. His address is Airlie Farm, Old Post Road, Bedford, New York
10506.

*John D. Gilliam, Trustee.

Chief Financial Officer, Robert Wood Johnson Foundation, Princeton,
New Jersey. Former Limited Partner, Goldman, Sachs & Co. from 1987 to
1991. From 1991 to 1994, Mr. Gilliam was Deputy Comptroller,
Bureau of Asset Management, in the Office of the Comptroller for
the City of New York. He was a Partner at Goldman, Sachs & Co. from
1973 to 1987. His address is 700 Park Avenue, New York, New York
10021. Mr. Gilliam is currently a Limited Partner at Goldman, Sachs &
Co.

Karen S. Cook, Trustee.

Director of Client Services, Steinhardt Management Co., an investment
partnership. Trustee and Chair of the Investment Committee of Wheaton
College. Ms. Cook is also Vice-President of the Board of Trustees and
Chair of the Development Committee of the Episcopal School in New York
City. From 1989 until 1992, she was Managing Director of Alterna-Track,
a professional placement and consulting firm specializing in the
financial services industry. From 1975 until 1987, Ms. Cook was with
the Equity Division of Goldman, Sachs & Co., where she became a

Vice-President and senior block trader. Her address is 125 East 72nd
Street, New York, New York 10021.

Anne Brown Farrell, Trustee.

Former Vice-President, Fixed Income Division, Goldman, Sachs & Co. From
1973 through November 1994, Ms. Farrell was associated with Goldman
Sachs in various capacities including Money Market Sales and Trading,
and Fixed Income Administration. Her address is 34 Midwood Road,
Greenwich, Connecticut 06830.

Magna L. Dodge, Trustee.

Financial Consultant, Magna Dodge & Company, Inc. Ms. Dodge is
also Vice Chairman of the Board of Trustees of Middlebury College,
and Vice Chairman of the Budget and Finance Committee. She is also
a member of the Board of Directors of Planned Parenthood of
Westchester and Rockland, Inc. From June 1975 until June 1994, she
was with Chemical Bank and Manufacturers Hanover Trust Company, New
York, prior to its merger with Chemical. Ms. Dodge was a Managing
Director in charge of the Media and Entertainment Group. Her
address is 20 Wood End Lane, Bronxville, New York 10708.

*Michael Minikes, Trustee.

Senior Managing Director and Treasurer of The Bear Stearns Companies,
Inc. Mr. Minikes is also a member of the Board of Directors of the
Depository Trust Company,

past chairman of the Securities Industry Association Capital
Committee, a former member of the NASD District 12 Business Conduct
Committee, and a former director of the Securities Industry Automation
Corp.

Mr. Minikes joined Bear Stearns in 1978. Mr. Minikes became a
general partner and then a senior managing director when Bear
Stearns incorporated and went public in 1986. He is a member of the
Firm's Board of Directors, and Operations Committee. His address is
245 Park Avenue, New York, New York, 10167.

Philip F. Strassler, Treasurer.

Chief Financial Officer of Milestone Capital Management, L.P.,

and Partner of Marcum & Kliegmay LLP. Mr. Strassler was formally
President of Philip F. Strassler CPA, P.C., an accounting firm.
Before that, Mr. Strassler was a Limited Partner of EBD L.P., an
investment partnership that is the General Partner of The Airlie
Group, L.P., an investment partnership. His address is 485 Underhill
Boulevard, Syosset, New York 11791.

Jeffrey R. Hanson, Secretary.

Chief Operating Officer, Milestone Capital Management, L.P.,
and Managing Director of the Hanson Consulting Group, Inc. Mr.
Hanson's address is 38 Forest Lane, Bronxville, New York 10708.

Janet Tiebout Hanson, Dort A. Cameron III, John D. Gilliam and Michael
Minikes are interested persons of the Trust as that term is defined in the
1940 Act. Janet Tiebout Hanson and Jeffrey R. Hanson are married.

The following table sets forth the fees paid to each Trustee of the Company for
the period from November 30, 1994 to November 30, 1995.

Name of Person, Position Aggregate Pension or Estimated Annual Total
Compensation Retirement Benefits Upon Compensation
From Company Benefits Accrued Retirement From Company
As Part of Fund And Fund
Expenses Complex Paid To
Directors
<S> <C> <C> <C> <C>
Janet T. Hanson $0 $0 $0 $0

Dort A. Cameron III $0 $0 $0 $0

John D. Gilliam $1,000 $0 $0 $1,000

Karen S. Cook $1,000 $0 $0 $1,000

Anne Brown Farrell $1,000 $0 $0 $1,000

Magna L. Dodge $1,000 $0 $0 $1,000

Michael Minikes $0 $0 $0 $0

</TABLE>

Investment Adviser

The Portfolio's investment adviser, Milestone Capital Management, L.P. (the
"Adviser") furnishes at its own expense all services, facilities and personnel
necessary in connection with managing the Portfolio's investments and effecting
portfolio transactions for the Portfolio. The Investment Advisory Agreement
between the Trust and the Adviser will remain in effect with respect to the
Portfolio for a period of 24 months and will continue in effect thereafter only
if its continuance is specifically approved at least annually by the Board or
by vote of the shareholders, and in either case, by a majority of the Trustees
who are not parties to the Investment Advisory Agreement or interested persons
of any such party at a meeting called for the purpose of voting on the
Investment Advisory Agreement.

The Investment Advisory Agreement is terminable without penalty by the Trust
with respect to the Portfolio on 60 days' written notice when authorized either
by vote of the Portfolio's shareholders or by a vote of a majority of the
Board, or by the Adviser on 60 days' written notice, and will automatically
terminate in the event of its assignment. The Investment Advisory Agreement
also provides that, with respect to the Portfolio, the Adviser shall not be
liable for any error of judgment or mistake of law or for any act or omission
in the performance of its duties to the Portfolio, except for willful
misfeasance, bad faith or gross negligence in the performance of the Adviser's
duties or by reason of reckless disregard of the Adviser's obligations and
duties under the Investment Advisory Agreement.

For the services provided by the Adviser, the Trust pays the Adviser, with
respect to the Portfolio, an annual fee of 0.10% of the total average daily net
assets of the Portfolio. This fee is accrued by the Trust daily. The Adviser has
voluntarily agreed to waive up to 100% of the advisory fee of the Portfolio. In
addition, the Adviser may waive up to 100% of the shareholder servicing fee of
each class. At any time, however, the Adviser may rescind a voluntary fee
waiver.

Under the Investment Advisory Agreement, the Adviser has agreed to reimburse
the Trust for certain of the Portfolio's operating expenses (exclusive of
interest, taxes, brokerage fees, distribution fees and organization and
extraordinary expenses, all to the extent such exclusions are permitted by
applicable state law) which in any year exceed the limits prescribed by any
state in which the Portfolio's shares are qualified for sale. The Adviser
believes that currently the most restrictive expense limitation imposed by any
state is 2-1/2% of the first $30 million of the Portfolio's average net assets,
2% of the next $70 million of its average net assets and 1-1/2% of its average
net assets in excess of $100 million. For the purpose of this obligation to
reimburse expenses, the Portfolio's annual expenses are estimated and accrued
daily, and any appropriate estimated payments will be made by the Adviser

monthly.

For the period December 30, 1994 (commencement of operations) to November 30,
1995, the Adviser received advisory fees of $100,353, reflecting waivers of
$231,894.

Subject to the obligations of the Adviser to reimburse the Trust for its excess
expenses, the Trust has confirmed its obligation to pay all of its expenses,
including: interest charges, taxes, brokerage fees and commissions; expenses of
issue, repurchase and redemption of shares; premiums of insurance for the
Trust, its Trustees and officers and fidelity bond premiums; applicable fees,
interest charges and expenses of third parties, including the Trust's manager,
investment adviser, investment subadviser, custodian, transfer agent and fund
accountant; fees of pricing, interest, dividend, credit and other reporting
services; costs of membership in trade associations; telecommunications
expenses; funds transmission expenses, auditing, legal and compliance expenses;
cost of forming the Trust and maintaining its existence; costs of preparing and
printing the Trust's prospectuses, statements of additional information and
shareholder reports and delivering them to existing shareholders; expenses of
meetings of shareholders and proxy solicitations therefor; costs of maintaining
books and accounts and preparing tax returns; costs of reproduction, stationery
and supplies; fees and expenses of the Trustees; compensation of the Trust's
officers and employees who are not employees of the Adviser, and costs of other
personnel (who may be employees of the Adviser) performing services for the
Trust; costs of Trustee meetings; Securities and Exchange Commission
registration fees and related expenses; and state or foreign securities laws
registration fees and related expenses.

The Adviser may carry out any of its obligations under the Investment Advisory
Agreement by employing, subject to the Board's supervision, one or more persons
who are registered as investment advisers or who are exempt from registration.
The Investment Advisory Agreement provides that the Adviser shall not be liable
for any act or omission of any subadviser except with respect to matters as to
which the Adviser specifically assumes responsibility in writing.

Administrator

The Bank of New York acts as administrator to the Trust pursuant to an
Administration Agreement with the Trust. As administrator, The Bank of New York
provides management and administrative services necessary to the operation of
the Trust (which include, among other responsibilities, negotiation of
contracts and fees with, and monitoring of performance and billing of, the
transfer agent and custodian and arranging for maintenance of books and records
of the Trust), and provides the Trust with general office facilities. The

Administration Agreement will remain in effect for a period of eighteen months
with respect to the Portfolio and thereafter is automatically renewed each year
for an additional term of one year.

The Administration Agreement terminates automatically if it is assigned and may
be terminated without penalty with respect to the Portfolio by vote of the
Portfolio's shareholders or by either party on not more than 60 days' written
notice. The Administration Agreement also provides that The Bank of New York
shall not be liable for any error of judgment or mistake of law or for any act
or omission in the administration or management of the Trust, except for
willful misfeasance, bad faith or gross negligence in the performance of The
Bank of New York's duties or by reason of reckless disregard of its obligations
and duties under the Administration Agreement.

Underwriter

Fund/Plan Broker Services, Inc. serves as the Trust's statutory underwriter and
acts as the agent of the Trust in connection with the offering of shares of the
Portfolio pursuant to a Underwriting Agreement. The Underwriting Agreement will
continue in effect for eighteen months and will continue in effect thereafter
only if its continuance is specifically approved at least annually by the Board
or by vote of the shareholders entitled to vote thereon, and in either case, by
a majority of the Trustees who (i) are not parties to the Underwriting
Agreement, (ii) are not interested persons of any such party or of the Trust
and (iii) with respect to any class for which the Trust has adopted an
underwriting plan, have no direct or indirect financial interest in the
operation of that underwriting plan or in the Underwriting Agreement, at a
meeting called for the purpose of voting on the Underwriting Agreement. All
subscriptions for shares obtained by Fund/Plan Broker Services, Inc. are
directed to the Trust for acceptance and are not binding on the Trust until
accepted by it. Fund/Plan Broker Services, Inc. receives no compensation or
reimbursement of expenses for the underwriting services provided pursuant to
the Underwriting Agreement and is under no obligation to sell any specific
amount of Portfolio shares. Fund/Plan Broker Services, Inc. is a wholly-owned
subsidiary of Fund/Plan Services, Inc., the Trust's transfer agent. See
"Transfer Agent".

The Underwriting Agreement provides that Fund/Plan Broker Services, Inc. shall
not be liable for any error of judgment or mistake of law or in any event
whatsoever, except for willful misfeasance, bad faith or gross negligence in
the performance of their duties or by reason of reckless disregard of its
obligations and duties under the Underwriting Agreement.

The Underwriting Agreement is terminable with respect to the Portfolio without

penalty by the Trust on 60 days' written notice when authorized either by vote
of the Portfolio's shareholders or

by a vote of a majority of the Board, or by Fund/Plan Broker Services, Inc. on
60 days' written notice. The Underwriting Agreement will automatically
terminate in the event of its assignment.

Fund/Plan Broker Services, Inc. may enter into agreements with selected
broker-dealers, banks, or other financial institutions for distribution of
shares of the Portfolio. These financial institutions may charge a fee for
their services and may receive shareholders service fees even though shares of
the Portfolio are sold without sales charges or underwriting fees. These
financial institutions may otherwise act as processing agents, and will be
responsible for promptly transmitting purchase, redemption and other requests
to the Portfolio.

Investors who purchase shares in this manner will be subject to the procedures
of the institution through whom they purchase shares, which may include
charges, investment minimums, cutoff times and other restrictions in addition
to, or different from, those listed herein. Information concerning any charges
or services will be provided to customers by the financial institution.
Investors purchasing shares of the Portfolio in this manner should acquaint
themselves with their institution's procedures and should read this Prospectus
in conjunction with any materials and information provided by their
institution. The financial institution and not its customers will be the
shareholder of record, although customers may have the right to vote shares
depending upon their arrangement with the institution.

Transfer Agent

Fund/Plan Services, Inc. acts as transfer agent and dividend disbursing agent
for the Trust pursuant to a Transfer Agency Agreement. The Transfer Agency
Agreement will remain in effect for a period of eighteen months with respect to
the Portfolio and thereafter is automatically renewed each year for an
additional term of one year.

Among the responsibilities of Fund/Plan Services, Inc. as transfer agent for
the Trust are, with respect to shareholders of record: (1) answering
shareholder inquiries regarding account status and history, the manner in which
purchases and redemptions of shares of the Portfolio may be effected and
certain other matters pertaining to the Portfolio; (2) assisting shareholders
in initiating and changing account designations and addresses; (3) providing
necessary personnel and facilities to establish and maintain shareholder

accounts and records, assisting in processing purchase and redemption
transactions and receiving wired funds; (4) transmitting and receiving funds in
connection with customer orders to purchase or redeem shares; (5) verifying
shareholder signatures in connection with changes in the registration of
shareholder accounts; (6) furnishing periodic statements and confirmations of
purchases and redemptions; (7) arranging for the transmission of proxy
statements, annual reports, prospectuses and other communications from the
Trust to its shareholders; (8) arranging for the receipt, tabulation and
transmission to the Trust of proxies executed by shareholders with respect to
meetings of shareholders of the Trust; and (9) providing such other related
services as the Trust or a shareholder may reasonably request.

Fund/Plan Services, Inc. or any sub-transfer agent or processing agent may also
act and receive compensation for acting as custodian, investment manager,
nominee, agent or fiduciary for its customers or clients who are shareholders
of the Portfolio with respect to assets invested in the

Portfolio. Fund/Plan Services, Inc. or any sub-transfer agent or other
processing agent may elect to credit against the fees payable to it by its
clients or customers all or a portion of any fee received from the Trust or
from Fund/Plan Services, Inc. with respect to assets of those customers or
clients invested in the Portfolio. The sub-transfer agents or processing agents
retained by Fund/Plan Services, Inc. may be affiliated persons of Fund/Plan
Services, Inc.

5. DETERMINATION OF NET ASSET VALUE

Pursuant to the rules of the Securities and Exchange Commission, the Board has
established procedures to stabilize the Portfolio's net asset value at $1.00
per share. These procedures include a review of the extent of any deviation of
net asset value per share as a result of fluctuating interest rates, based on
available market rates, from the Portfolio's $1.00 amortized cost price per
share. Should that deviation exceed 1/2 of 1%, the Board will consider whether
any action should be initiated to eliminate or reduce material dilution or
other unfair results to shareholders. Such action may include redemption of
shares in kind, selling Portfolio securities prior to maturity, reducing or
withholding dividends and utilizing a net asset value per share as determined
by using available market quotations. The Trust has also established procedures
to ensure that portfolio securities meet the Portfolio's quality criteria.

In determining the approximate market value of Portfolio investments, the
Portfolio may employ outside organizations which may use a matrix or formula
method that takes into consideration market indices, matrices, yield curves and

other specific adjustments. This may result in the securities being valued at a
price different from the price that would have been determined had the matrix
or formula method not been used. All cash, receivables and current payables are
carried at their face value.

6. PORTFOLIO TRANSACTIONS

Purchases and sales of portfolio securities for the Portfolio usually are
principal transactions. Portfolio securities are normally purchased directly
from the issuer or from an underwriter or market maker for the securities.
Purchases from underwriters of portfolio securities include a commission or
concession paid by the issuer to the underwriter, and purchases from dealers
serving as market makers include the spread between the bid and asked price.
There usually are no brokerage commissions paid for any purchases. While the
Trust does not anticipate that the Portfolio will pay any amounts of
commission, in the event the Portfolio pays brokerage commissions or other
transaction-related compensation, the payments may be made to broker-dealers
who pay expenses of the Portfolio that it would otherwise be obligated to pay
itself. Any transaction for which the Portfolio pays commissions or
transaction-related compensation will be effected at the best price and
execution available, taking into account the value of any research services
provided, or the amount of any payments for other services made on behalf of
the Portfolio, by the broker-dealer effecting the transaction.

Allocations of transactions to dealers and the frequency of transactions are
determined for the Portfolio by the Adviser in its best judgment and in a
manner deemed to be in the best interest of shareholders of the Portfolio
rather than by any formula. The primary consideration is prompt

execution of orders in an effective manner and at the most favorable price
available to the Portfolio.

Investment decisions for the Portfolio will be made independently from those
for any other portfolio, account or investment company that is or may in the
future become managed by the Adviser or its affiliates. If, however, the
Portfolio and other portfolios, accounts, or investment companies managed by
the Adviser are contemporaneously engaged in the purchase or sale of the same
security, the transactions may be averaged as to price and allocated equitably
to each entity. In some cases, this policy might adversely affect the price
paid or received by the Portfolio or the size of the position obtainable for
the Portfolio. In addition, when purchases or sales of the same security for
the Portfolio and for other investment companies managed by the Adviser occur
contemporaneously, the purchase or sale orders may be aggregated in order to
obtain any price advantages available to large denomination purchases or sales.

7. ADDITIONAL PURCHASE AND REDEMPTION INFORMATION

Shares of the Portfolio are sold on a continuous basis by the underwriter
without any sales charge. Shareholders may effect purchases or redemptions or
request any shareholder privilege in person at Fund/Plan Services, Inc.'s

offices located at P. O. Box 874, #2 Elm Street, Conshohocken, Pennsylvania
19428.

The Trust accepts orders for the purchase or redemption of shares on any day
that the New York Stock Exchange and the Federal Reserve Bank of New York are
open ("Fund Business Day") between the hours of 9:00 a.m. and 6:00 p.m.
(Eastern Time). The Trust does not determine net asset value, and does not
accept orders, on the days those institutions observe the following holidays:
New Year's Day, Martin Luther King, Jr. Day, Presidents' Day, Good Friday,
Memorial Day, Independence Day, Labor Day, Columbus Day, Veterans' Day,
Thanksgiving and Christmas.

If the Public Securities Association recommends that the government securities
markets close early, the Trust reserves the right to advance the time at which
purchase and redemption offers must be received. In this event, a purchase or
redemption order will be executed at the net asset value next determined after
receipt. Investors who place purchase orders after the advanced time become
entitled to dividends on the following Fund Business Day. If a redemption
request is received after the advanced time, Fund/Plan Services, Inc.
ordinarily will wire redemption proceeds on the next Fund Business Day. In
addition, the Trust reserves the right to advance the time by which purchase
and redemption orders must be received for same day credit as otherwise
permitted by the Securities and Exchange Commission.

Additional Redemption Matters

The Trust may redeem shares involuntarily to reimburse the Portfolio for any
loss sustained by reason of the failure of a shareholder to make full payment
for shares purchased by the shareholder or to collect any charge relating to
transactions effected for the benefit of a

shareholder which is applicable to the Portfolio's shares as provided in the
Prospectus from time to time.

Redemptions may be made wholly or partially in portfolio securities if the
Board determines that payment in cash would be detrimental to the best
interests of the Portfolio. The Trust has filed an election with the Securities
and Exchange Commission pursuant to which the Portfolio will only consider
effecting a redemption in portfolio securities if the particular shareholder is
redeeming more than $250,000 or 1% of the Portfolio's net asset value,
whichever is less, during any 90-day period.

8. TAXATION

The following is only a summary of certain additional tax considerations
generally affecting the Portfolio and its shareholders that are not described
in the Prospectus. No attempt is made to present a detailed explanation of the
tax treatment of the Portfolio or its shareholders, and the discussions here

and in the Prospectus are not intended as substitutes for careful tax planning.

Qualification as a Regulated Investment Company

The Portfolio has elected to be taxed as a regulated investment company under
Subchapter M of the Internal Revenue Code of 1986, as amended (the "Code"). As
a regulated investment company, the Portfolio is not subject to federal income
tax on the portion of its net investment income (i.e., taxable interest,
dividends and other taxable ordinary income, net of expenses) and capital gain
net income (i.e., the excess of capital gains over capital losses) that it
distributes to shareholders, provided that it distributes at least 90% of its
investment company taxable income (i.e., net investment income and the excess
of net short-term capital gain over net long-term capital loss) for the taxable
year (the "Distribution Requirement"), and satisfies certain other requirements
of the Code that are described below. Distributions by the Portfolio made
during the taxable year or, under specified circumstances, within twelve months
after the close of the taxable year, will be considered distributions of income
and gains of the taxable year and can therefore satisfy the Distribution
Requirement.

In addition to satisfying the Distribution Requirement, a regulated investment
company must: (1) derive at least 90% of its gross income from dividends,
interest, certain payments with respect to securities loans, gains from the
sale or other disposition of stock or securities or foreign currencies (to the
extent such currency gains are directly related to the regulated investment
company's principal business of investing in stock or securities) and other
income (including but not limited to gains from options, futures or forward
contracts) derived with respect to its business of investing in such stock,
securities or currencies (the "Income Requirement"); and (2) derive less that
30% of its gross income (exclusive of certain gains on designated hedging
transactions that are offset by realized or unrealized losses on offsetting
positions) from the sale or other disposition of stock, securities or foreign
currencies (or options, futures or forward contracts thereon) held for less
than three months (the "Short-Short Gain Test"). However, foreign currency
gains, including those derived from options, futures and forwards, will not in
any event be characterized as Short-Short Gain if they are directly related to
the regulated investment

company's investments in stock or securities (or options or futures thereon).
Because of the Short-Short Gain Test, the Portfolio may have to limit the sale
of appreciated securities that it has held for less than three months. However,
the Short-Short Gain Test will not prevent the Portfolio from disposing of
investments at a loss, since the recognition of a loss before the expiration of
the three-month holding period is disregarded for this purpose. Interest
(including original issue discount) received by the Portfolio at maturity or
upon the disposition of a security held for less than three months will not be
treated as gross income derived from the sale or other disposition of such
security within the meaning of the Short-Short Gain Test. However, income that
is attributable to realized market appreciation will be treated as gross income
from the sale or other disposition of securities for this purpose.

In general, gain or loss recognized by the Portfolio on the disposition of an

asset will be a capital gain or loss. However, gain recognized on the
disposition of a debt obligation purchased by the Portfolio at a market
discount (generally, at a price less than its principal amount) will be treated
as ordinary income to the extent of the portion of the market discount which
accrued during the period of time the Portfolio held the debt obligation.

Treasury Regulations permit a regulated investment company, in determining its
investment company taxable income and net capital gain (i.e., the excess of net
long-term capital gain over net short-term capital loss) for any taxable year,
to elect (unless it has made a taxable year election for excise tax purposes as
discussed below) to treat all or any part of any net capital loss, any net
long-term capital loss or any net foreign currency loss incurred after October
31 as if it had been incurred in the succeeding year.

In addition to satisfying the requirements described above, the Portfolio must
satisfy an asset diversification test in order to qualify as a regulated
investment company. Under this test, at the close of each quarter of the
Portfolio's taxable year, at least 50% of the value of the Portfolio's assets
must consist of cash and cash items, U.S. Government securities, securities of
other regulated investment companies, and securities of other issuers (as to
which the Portfolio has not invested more than 5% of the value of the
Portfolio's total assets in securities of such issuer and as to which the
Portfolio does not hold more than 10% of the outstanding voting securities of
such issuer), and no more than 25% of the value of its total assets may be
invested in the securities of any one issuer (other than U.S. Government
securities and securities of other regulated investment companies), or in two
or more issuers which the Portfolio controls and which are engaged in the same
or similar trades or businesses.

If for any taxable year the Portfolio does not qualify as a regulated
investment company, all of its taxable income (including its net capital gain)
will be subject to tax at regular corporate rates without any deduction for
distributions to shareholders, and such distributions will be taxable to the
shareholders as ordinary dividends to the extent of the Portfolio's current and
accumulated earnings and profits. Such distributions generally will be eligible
for the dividends-received deduction in the case of corporate shareholders.

Excise Tax on Regulated Investment Companies

A 4% non-deductible excise tax is imposed on a regulated investment company
that fails to distribute in each calendar year an amount equal to 98% of
ordinary taxable income for the calendar year and 98% of capital gain net
income for the one-year period ended on October 31 of such calendar year (or,
at the election of a regulated investment company having a taxable year ending
November 30 or December 31, for its taxable year (a "taxable year election")).
The balance of such income must be distributed during the next calendar year.
For the foregoing purposes, a regulated investment company is treated as having
distributed any amount on which it is subject to income tax for any taxable
year ending in such calendar year.

For purposes of the excise tax, a regulated investment company shall: (1)
reduce its capital gain net income (but not below its net capital gain) by the
amount of any net ordinary loss for the calendar year; and (2) exclude foreign
currency gains and losses incurred after October 31 of any year (or after the
end of its taxable year if it has made a taxable year election) in determining
the amount of ordinary taxable income for the current calendar year (and,
instead, include such gains and losses in determining ordinary taxable income
for the succeeding calendar year).

The Portfolio intends to make sufficient distributions or deemed distributions
of its ordinary taxable income and capital gain net income prior to the end of
each calendar year to avoid liability for the excise tax. However, investors
should note that the Portfolio may in certain circumstances be required to
liquidate portfolio investments to make sufficient distributions to avoid
excise tax liability.

Portfolio Distributions

The Portfolio anticipates distributing substantially all of its investment
company taxable income for each taxable year. Such distributions will be
taxable to shareholders as ordinary income and treated as dividends for federal
income tax purposes, but they will not qualify for the 70% dividends-received
deduction for corporate shareholders.

The Portfolio may either retain or distribute to shareholders its net capital
gain for each taxable year. The Portfolio currently intends to distribute any
such amounts. If net capital gain is distributed and designated as a capital
gain dividend, it will be taxable to shareholders as long-term capital gain,
regardless of the length of time the shareholder has held his shares or whether
such gain was recognized by the Portfolio prior to the date on which the
shareholder acquired his shares.

Conversely, if the Portfolio elects to retain its net capital gain, the
Portfolio will be taxed thereon (except to the extent of any available capital
loss carryovers) at the 35% corporate tax rate. If the Portfolio elects to
retain its net capital gain, it is expected that the Portfolio also will elect
to have shareholders of record on the last day of its taxable year treated as
if each received a distribution of his pro rata share of such gain, with the
result that each shareholder will be required to report his pro rata share of
such gain on his tax return as long-term capital gain, will receive a
refundable

tax credit for his pro rata share of tax paid by the Portfolio on the gain, and
will increase the tax basis for his shares by an amount equal to the deemed
distribution less the tax credit.

Distributions by the Portfolio that do not constitute ordinary income dividends
or capital gain dividends will be treated as a return of capital to the extent
of (and in reduction of) the shareholder's tax basis in his shares; any excess
will be treated as gain from the sale of his shares, as discussed below.

Distributions by the Portfolio will be treated in the manner described above

regardless of whether such distributions are paid in cash or reinvested in
additional shares of the Portfolio (or of another fund). Shareholders receiving
a distribution in the form of additional shares will be treated as receiving a
distribution in an amount equal to the fair market value of the shares
received, determined as of the reinvestment date. In addition, if the net asset
value at the time a shareholder purchases shares of the Portfolio reflects
undistributed net investment income or recognized capital gain net income, or
unrealized appreciation in the value of the assets of the Portfolio,
distributions of such amounts will be taxable to the shareholder in the manner
described above, although such distributions economically constitute a return
of capital to the shareholder.

Ordinarily, shareholders are required to take distributions by the Portfolio
into account in the year in which the distributions are made. However,
dividends declared in October, November or December of any year and payable to
shareholders of record on a specified date in such a month will be deemed to
have been received by the shareholders (and made by the Portfolio) on December
31 of such calendar year if such dividends are actually paid in January of the
following year. Shareholders will be advised annually as to the U.S. federal
income tax consequences of distributions made (or deemed made) during the year.

The Portfolio will be required in certain cases to withhold and remit to the
U.S. Treasury 31% of ordinary income dividends and capital gain dividends, and
the proceeds of redemption of shares, paid to any shareholder (1) who has
provided either an incorrect tax identification number or no number at all, (2)
who is subject to backup withholding by the IRS for failure to report the
receipt of interest or dividend income properly, or (3) who has failed to
certify to the Portfolio that it is not subject to backup withholding or that
it is a corporation or other "exempt recipient".

Sale or Redemption of Shares

The Portfolio seeks to maintain a stable net asset value of $1.00 per share;
however, there can be no assurance that the Portfolio will do this. In such a
case, a shareholder will recognize gain or loss on the sale or redemption of
shares of the Portfolio in an amount equal to the difference between the
proceeds of the sale or redemption and the shareholder's adjusted tax basis in
the shares. All or a portion of any loss so recognized may be disallowed if the
shareholder purchases other shares of the Portfolio within 30 days before or
after the sale or redemption. In general, any gain or loss arising from (or
treated as arising from) the sale or redemption of shares of the Portfolio will
be considered capital gain or loss and will be long-term capital gain or loss
if the shares were held for longer than one year. However, any capital loss
arising from the sale or redemption of shares held for six months or less will
be treated as a long-term capital loss to the

extent of the amount of capital gain dividends received on such shares. For
this purpose, the special holding period rules of Code Section 246(c)(3) and
(4) generally will apply in determining the holding period of shares. Long-term
capital gains of noncorporate taxpayers are currently taxed at a maximum rate
11.6% lower than the maximum rate applicable to ordinary income. Capital losses
in any year are deductible only to the extent of capital gains plus, in the

case of a noncorporate taxpayer, $3,000 of ordinary income.

Foreign Shareholders

Taxation of a shareholder who, as to the United States, is a nonresident alien
individual, foreign trust or estate, foreign corporation, or foreign
partnership ("foreign shareholder"), depends on whether the income from the
Portfolio is "effectively connected" with a U.S. trade or business carried on
by such shareholder.

If the income from the Portfolio is not effectively connected with a U.S. trade
or business carried on by a foreign shareholder, ordinary income dividends paid
to a foreign shareholder will be subject to U.S. withholding tax at the rate of
30% (or lower treaty rate) upon the gross amount of the dividend. Such a
foreign shareholder would generally be exempt from U.S. federal income tax on
gains realized on the sale of shares of the Portfolio, capital gain dividends
and amounts retained by the Portfolio that are designated as undistributed
capital gains.

If the income from the Portfolio is effectively connected with a U.S. trade or
business carried on by a foreign shareholder, then ordinary income dividends,
capital gain dividends, and any gains realized upon the sale of shares of the
Portfolio will be subject to U.S. federal income tax at the rates applicable to
U.S. citizens or domestic corporations.

In the case of foreign noncorporate shareholders, the Portfolio may be required
to withhold U.S. federal income tax at a rate of 31% on distributions that are
otherwise exempt from withholding tax (or taxable at a reduced treaty rate)
unless such shareholders furnish the Portfolio with proper notification of its
foreign status.

The tax consequences to a foreign shareholder entitled to claim the benefits of
an applicable tax treaty may be different from those described herein. Foreign
shareholders are urged to consult their own tax advisers with respect to the
particular tax consequences to them of an investment in the Portfolio,
including the applicability of foreign taxes.

Effect of Future Legislation; Local Tax Considerations

The foregoing general discussion of U.S. Federal income tax consequences is
based on the Code and the Treasury Regulations issued thereunder as in effect
on the date of this Statement of Additional Information. Future legislative or
administrative changes or court decisions may significantly change the
conclusions expressed herein, and any such changes or decisions may have a
retroactive effect with respect to the transactions contemplated herein.

Rules of state and local taxation of ordinary income dividends and capital gain
dividends from regulated investment companies often differ from the rules for
U.S. Federal income taxation described above. Shareholders are urged to consult
their tax advisers as to the consequences of these and other state and local

tax rules affecting investment in the Portfolio.

9. OTHER INFORMATION

Custodian and Accounting Agent

Pursuant to a Custodian Contract with the Trust, The Bank of New York, New
York, New York, acts as the custodian of the Portfolio's assets. The
custodian's responsibilities include safeguarding and controlling the
Portfolio's cash and securities and determining income payable on and
collecting interest on Portfolio investments.

The Bank of New York also serves as the accounting agent for the Trust. As the
accounting agent, The Bank of New York is responsible for calculating the net
asset value of each class of shares of the Portfolio and for maintaining the
Trust's books and records.

Auditors

McGladrey & Pullen, LLP, New York, New York, independent auditors, acts as
auditors for the Trust.

The Trust and its Shareholders

The Trust was originally organized as a Delaware business trust on July 14,
1994, under the name Learning Assets(TradeMark). By Certificate of Amendment
filed with the Secretary of State in Delaware on December 1, 1994, and amendment
to its Trust Instrument and Bylaws, the Trust changed its name to The Milestone
Funds.

Delaware law provides that shareholders shall be entitled to the same
limitations of personal liability extended to stockholders of private
corporations for profit. The securities regulators of some states, however,
have indicated that they and the courts in their state may decline to apply
Delaware law on this point. The Trust Instrument contains an express disclaimer
of shareholder liability for the debts, liabilities, obligations, and expenses
of the Trust and requires that a disclaimer be given in each contract entered
into or executed by the Trust or the Trustees. The Trust Instrument provides
for indemnification out of each series' property of any shareholder or former
shareholder held personally liable for the obligations of the series. The Trust
Instrument also provides that each series shall, upon request, assume the
defense of any claim made against any shareholder for any act or obligation of
the series and satisfy any judgment thereon. Thus, the risk of a shareholder
incurring financial loss on account of shareholder liability is limited to
circumstances in which Delaware law does not apply, no contractual limitation
of liability was in effect and the portfolio is unable to meet its obligations.

The Trust Instrument further provides that the Trustees shall not be liable to
any person other than the Trust or its shareholders; moreover, the Trustees
shall not be liable for any conduct whatsoever, provided that a Trustee is not
protected 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.

Portfolio capital consists of shares of beneficial interest. Shares are fully
paid and nonassessable, except as set forth above with respect to Trustee and
shareholder liability. Shareholders representing 10% or more of the Trust or a
series may, as set forth in the Trust Instrument, call meetings of the Trust or
series for any purpose related to the Trust or series, 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 series may be terminated
upon the sale of its assets to, or merger with, another open-end management
investment company or series thereof, or upon liquidation and distribution of
its assets. Generally such terminations must be approved by the vote of the
holders of a majority of the outstanding shares of the Trust or the series;
however, the Trustees may, without prior shareholder approval, change the form
of organization of the Trust by merger, consolidation or incorporation. If not
so terminated or reorganized, the Trust and its series will continue
indefinitely. Under the Trust Instrument, the Trustees may, without shareholder
vote, cause the Trust to merge or consolidate into one or more trusts,
partnerships or corporations or cause the Trust to be incorporated under
Delaware law, so long as the surviving entity is an open-end management
investment company that will succeed to or assume the Trust's registration
statement.

Ownership Of Shares Of The Portfolio

As of December 1, 1995, the Trustees and officers of the Portfolio in the
aggregate owned less than one percent of the outstanding shares of the
Portfolio. Also, as of that date, the shareholders listed below owned of record
more than five percent of the Portfolio:

Shares of % of
Shareholder Portfolio Owned Portfolio Owned
----------- --------------- ---------------
<S> <C> <C>
WEBAT & Co. 24,530,400 7.25%
Attn: Lynn LaRusso
P.O. Box 5177
Westport, CT 06881

Illinois Public Treasurers Investment Pool 22,301,603 6.59%
300 W. Jefferson Level 2

Springfield, IL 62702

Bear, Stearns & Co. 22,287,103 6.59%
One Metrotech Center North
Brooklyn, NY 11201-3859
</TABLE>

<S> <C> <C>
Riverside County Treasurer 20,000,000 5.91%
P.O. Box 12005
Riverside, CA 92502-2205

Bear Stearns & Co. 19,455,691 5.75%
One Metrotech Center North
Brooklyn, NY 11201-3859

</TABLE>

Financial Statements

The audited financial statement of the Trust for the fiscal year ended
November 30, 1995 follows.

<PAGE>

[LOGO]

The Milestone Funds
Treasury Obligations Portfolio

ADVISER
Milestone Capital Management, L.P.

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

DISTRIBUTOR

Forum Financial Services, Inc.

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

PRIMARY DEALER

Bear, Stearns & Co. Inc.

ANNUAL REPORT

NOVEMBER 30, 1995

<PAGE>

[LOGO]

TABLE OF CONTENTS

Letter to Our Shareholders ....................................................3

Statement of Investments ......................................................4

Statement of Assets and Liabilities ...........................................5

Statement of Operations .......................................................6

Statement of Changes in Net Assets ............................................7

Financial Highlights ..........................................................8

Notes to Financial Statements ..............................................9-10

Independent Auditor's Report .................................................11

<PAGE>

[LOGO]

TREASURY OBLIGATIONS PORTFOLIO

Letter to Our Shareholders

NOVEMBER 30, 1995

Dear Shareholder:

The Milestone Funds are pleased to present you with the 1995 annual report for
the Treasury Obligations Portfolio. It has been a privilege to have you as a
client during this, our first full year of operation, and we look forward to
continuing to work in partnership with you to help meet your cash management and
liquidity needs during the coming year.

1995 was truly a year of significant "milestones" for the Fund. Beginning with
an initial investment of $25 million from Bear Stearns, our primary dealer, the
Fund's total assets grew to over $300 million as of November 30, 1995. The Fund
is one of the few money market mutual funds to be rated AAA by Standard &
Poor's, Fitch Investors Service, and Moody's Investors Service. Along with our
strong emphasis on investment safety, other important aspects of the service we
offer to institutional investors include enhanced daily liquidity and
transaction ease. In response to the needs which many of our shareholders have
for later day liquidity, as of June we extended our hours for same-day
settlement of purchases until 4:00 p.m. EST (with notification by 2:30) and
redemptions until 2:30 p.m. Plans are presently underway to further expand the
services and value we provide to shareholders (an overview of these new
initiatives will be sent to you shortly).

1995 was a transitional year for the financial markets. After consistently
raising rates for over a year, soft economic data and emerging signs of more
moderate inflation prompted the Federal Reserve to begin lowering short-term
interest rates. The Treasury Obligations Portfolio was structured and managed to
reflect these shifts, and as a result the Fund achieved very competitive
performance for our investors throughout the year. The average maturity of the
portfolio was extended in the second quarter as it became evident that
short-term rates were not likely to increase further. A more neutral position
was taken in the third quarter as some renewed signs of economic strength
appeared, enabling the Fund to purchase longer dated treasuries as yields moved
higher. While we believe that the Federal Reserve will remain vigilant in
identifying and responding to inflationary signals, we expect the Federal
Reserve to maintain its present policy of easing if the U.S. economy displays
further indications of weakness and if a credible budget package is received
from Washington. We encourage you to call our Portfolio Management & Research
Team for current information on the Fund's structure and performance, market
updates, investment strategies and opportunities, and any specialized analysis
which you require.

We are looking forward to a challenging and successful 1996. We are strongly

committed to putting the needs of our clients first in order to provide the
highest value and standard of service available to institutional fund investors.

Sincerely,

Janet Tiebout Hanson Marc H. Pfeffer
Chairman of the Board of Trustees Chief Investment Officer
The Milestone Funds Milestone Capital Management, L.P.

<PAGE>

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TREASURY OBLIGATIONS PORTFOLIO

Statement Of Investments
NOVEMBER 30, 1995
($ in Thousands)

<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------------------
Principal Amount Interest Rate Maturity Date Value
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
U.S. Treasury Obligations: 13.8%
United States Treasury Bills
$5,000 5.385% 5/2/96 $4,886
2,500 5.390% 5/2/96 2,443
5,000 5.380% 5/30/96 4,865
2,500 5.500% 5/30/96 2,431
5,000 5.575% 5/30/96 4,860
2,000 5.350% 7/25/96 1,929
2,500 5.425% 7/25/96 2,411
2,500 5.470% 7/25/96 2,410
2,500 5.500% 7/25/96 2,409
2,500 5.505% 7/25/96 2,409
2,500 5.535% 7/25/96 2,409
2,500 5.185% 8/22/96 2,404
2,500 5.220% 8/22/96 2,404
5,000 5.335% 8/22/96 4,804
- ------------------------------------------------------------------------------------------------------------------------------------
Total U.S. Treasury Obligations (cost $43,074) 43,074
- ------------------------------------------------------------------------------------------------------------------------------------

Repurchase Agreements: 86.2%
Aubrey G. Lanston, dated 11/30/95, repurchase price $15,002 (U.S. Treasury Bills: $5,200, 5.440%, 1/11/96; $1,000, 5.520%, 2/8/96;
$8,615, 5.460%, 5/9/96; $2, 5.450%, 5/16/96; $66, 5.440%, 5/30/96; $95, 5.400%, 7/25/96; $610, 5.360%, 11/14/96)
$15,000 5.900% 12/1/95 15,000
BZW Securities LTD, dated 11/30/95, repurchase price $15,002 (U.S. Treasury Notes: $8,731, 5.500%, 7/31/97; $6,233, 7.500%, 1/31/96)
$15,000 5.850% 12/1/95 15,000
Citicorp Securities Inc., dated 11/30/95, repurchase price $15,002 (U.S. Treasury Note: $14,220, 7.875%, 1/15/98)
$15,000 5.900% 12/1/95 15,000
Donaldson, Lufkin & Jenrette Securities Corporation, dated 11/30/95, repurchase price $9,777 (U.S. Treasury Note: $9,875,
5.750%, 10/31/00)
$9,775 5.900% 12/1/95 9,775
First Boston Corporation, dated 11/30/95, repurchase price $15,002 (U.S. Treasury Bills: $13,680, 5.450%, 3/14/96; $1,860,
5.490%, 2/29/96)
$15,000 5.870% 12/1/95 15,000
HSBC Securities, dated 11/30/95, repurchase price $70,012, (U.S. Treasury Notes: $9,790, 6.250%, 8/31/00; $430, 6.125%, 9/30/00;
$1,559, 5.750%, 10/31/00; $596, 8.500%, 11/15/00; $58,385, 5.625%, 11/30/00)

$70,000 5.930% 12/1/95 70,000
Merrill Lynch & Co., Inc., dated 11/30/95, repurchase price $15,002 (U.S. Treasury Note: $15,365, 4.250%, 5/15/96)
$15,000 5.860% 12/1/95 15,000
Nomura Securities International, dated 11/30/95, repurchase price $15,002 (U.S. Treasury Note: $14,544, 6.375%, 1/15/00)
$15,000 5.900% 12/1/95 15,000
SBC Capital Markets, dated 11/30/95, repurchase price $15,002 (U.S. Treasury Note: $14,960, 6.000%, 10/15/99;
U.S. Treasury Bill: $25, 5.380%, 10/17/96)
$15,000 5.900% 12/1/95 15,000
Smith Barney, dated 11/30/95, repurchase price $15,002 (U.S. Treasury Note: $2,581, 6.375%, 8/15/02; U.S. Treasury Bill: $12,754,
5.490%, 2/29/96)
$15,000 5.890% 12/1/95 15,000
UBS Securities, Inc., dated 11/30/95, repurchase price $70,011 (U.S. Treasury Notes: $3,805, 6.250%, 1/31/97; $17,780, 7.500%,
1/31/97; $15,720, 4.750%, 2/15/97; $45, 6.750%, 2/28/97; $4,780, 6.875%, 2/28/97; $7,785, 6.625%, 3/31/97; $5,000, 6.875%,
3/31/97; $2,810, 8.500%, 4/15/97; $3,650, 6.500%, 4/30/97; $3,550, 6.875%, 4/30/97; $4,550, 6.500%, 5/15/97)
$70,000 5.910% 12/1/95 70,000
- ------------------------------------------------------------------------------------------------------------------------------------
Total Repurchase Agreements (cost $269,775) 269,775
- ------------------------------------------------------------------------------------------------------------------------------------
Total Investments: 100% (cost $312,849) $312,849
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>

See notes to financial statements.

<PAGE>
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TREASURY OBLIGATIONS PORTFOLIO

Statement Of Assets And Liabilities

NOVEMBER 30, 1995

<TABLE>
<S> <C>
ASSETS:
Investments, at value and cost (note 1) $312,848,969
Cash 2,565
Interest receivable 44,237
Due from Adviser 42,630
Organization costs, net of amortization 127,314
------------
Total assets 313,065,715
------------

LIABILITIES:
Dividends payable 1,520,641
Accrued expenses 113,294
------------
Total liabilities 1,633,935
------------
NET ASSETS $311,431,780
============

NET ASSETS BY CLASS OF SHARES:
Investor shares $ 82,273,203
Institutional shares 229,158,577
------------
NET ASSETS $311,431,780
============

SHARES OUTSTANDING
Investor shares 82,273,194
============
Institutional shares 229,158,586
============

NET ASSET VALUE PER SHARE
Investor shares $1.00
============
Institutional shares $1.00
============
</TABLE>
See notes to financial statements.

<PAGE>

[LOGO]

TREASURY OBLIGATIONS PORTFOLIO

Statement Of Operations

PERIOD FROM DECEMBER 30, 1994 (COMMENCEMENT OF OPERATIONS) TO NOVEMBER 30, 1995

<TABLE>

<S> <C>
INVESTMENT INCOME:
Interest income $12,816,916
------------

EXPENSES (note 2):
Investment advisory 332,247
Administration 110,515
Shareholder services
Investor class 78,635
Institutional class 59,029
Transfer agency 25,285
Custody 27,821
Accounting 38,621
Professional 36,097
Auditing 21,055
Compliance 102,942
Trustees 7,107
Rating services 37,660
Amortization of organization costs 28,581
Other 28,977
------------
Total expenses 934,572
Fees waived and expenses reimbursed (note 3) (329,538)
------------
Net expenses 605,034
------------
NET INVESTMENT INCOME 12,211,882
NET REALIZED GAIN ON INVESTMENTS 3,391
------------
NET INCREASE IN NET ASSETS FROM OPERATIONS $12,215,273
============

</TABLE>
See notes to financial statements.

<PAGE>

[LOGO]

TREASURY OBLIGATIONS PORTFOLIO

Statement Of Changes In Net Assets

PERIOD FROM DECEMBER 30, 1994 (COMMENCEMENT OF OPERATIONS) TO NOVEMBER 30, 1995

<TABLE>
<S> <C>
OPERATIONS:
Net investment income $ 12,211,882
Net realized gain on investments 3,391
----------------
12,215,273
----------------

DISTRIBUTIONS TO SHAREHOLDERS:
Net investment income-Investor shares (5,492,911)
Net investment income-Institutional shares (6,718,971)
Net realized gain on investments-Investor shares (677)
Net realized gain on investments-Institutional shares (2,714)
----------------
(12,215,273)
----------------

TRANSACTIONS IN SHARES OF BENEFICIAL INTEREST*:
Sale of shares-Investor shares 1,191,429,951
Sale of shares-Institutional shares 1,520,992,027
Reinvested dividends-Investor shares 4,238,692
Reinvested dividends-Institutional shares 4,032,896
Cost of shares repurchased-Investor shares (1,113,495,449)
Cost of shares repurchased-Institutional shares (1,295,866,337)
----------------
311,331,780
----------------

NET ASSETS:
Beginning of period 100,000
----------------
End of period $311,431,780
================

</TABLE>

*Share transactions at net asset value of $1.00 per share.

See notes to financial statements.

<PAGE>

[LOGO]

TREASURY OBLIGATIONS PORTFOLIO

Financial Highlights

<TABLE>
<CAPTION>
Institutional Investor
Class Class
------------- ---------
June 20, 1995 December 30, 1994
(commencement of offering of shares) (commencement of operations)
to November 30, 1995 to November 30, 1995
------------------------------------ ----------------------------

<S> <C> <C>
Per share operating performance for a share
outstanding throughout the period
Beginning net asset value per share $1.00 $1.00
----- -----

Net investment income 0.03 0.05

Dividends from net investment income (0.03) (0.05)
----- -----

Ending net asset value per share $1.00 $1.00
===== =====

Total return (a) 5.76% 5.71%

Ratios/supplemental data
Ratios to average net assets (a):
Expenses(b) 0.20% 0.38%
Net investment income 5.69% 5.63%

Net assets at the end of period (000's omitted) $229,159 $82,273
</TABLE>

(a) Annualized

(b) Net of advisory, shareholder servicing, and administration fees waived and
expenses reimbursed of 0.17% and 0.14% for the Institutional and Investor
class, respectively.

See notes to financial statements.

<PAGE>

[LOGO]

TREASURY OBLIGATIONS PORTFOLIO

Notes To Financial Statements

NOVEMBER 30, 1995

NOTE 1. SUMMARY OF ORGANIZATION AND
SIGNIFICANT ACCOUNTING POLICIES

The Milestone Funds (the "Trust") was formed as a Delaware business trust on
July 14, 1994. The Trust is registered as an open-end, management investment
company under the Investment Company Act of 1940. It currently has one
diversified investment portfolio, the Treasury Obligations Portfolio (the
"Portfolio") which is authorized under the Trust Instrument to issue an
unlimited number of shares of beneficial interest without par value. The
Portfolio is currently authorized to issue two classes of shares, Institutional
shares and Investor shares. The Trust commenced the offering of Investor shares
of the Portfolio on December 30, 1994 and the offering of Institutional shares
on June 20, 1995. The Trust's financial statements are prepared in accordance
with generally accepted accounting principles.

Valuation of Securities - Securities in which the Portfolio invests are valued
at amortized cost. Under the amortized cost method, a portfolio instrument is
valued at cost and any premium or discount is amortized on a constant basis to
maturity. Amortization of premium and accretion of market discount is charged to
income.

Repurchase Agreements - The Portfolio may purchase securities from financial
institutions subject to the seller's agreement to repurchase and the Portfolio's
agreement to resell the securities at par. The investment adviser only enters
into repurchase agreements with financial institutions that are primary dealers
and deemed to be creditworthy by the investment adviser in accordance with
procedures adopted by the Board of Trustees. Securities purchased subject to
repurchase agreements are maintained with a custodian of the Portfolio and must
have, at all times, an aggregate market value greater than or equal to the
repurchase price plus accrued interest. If the value of the underlying
securities falls below 102% of the value of the repurchase price plus accrued
interest, the Portfolio will require the seller to deposit additional collateral
by the next Portfolio business day. In the event that the seller under the
agreement defaults on its repurchase obligation or fails to deposit sufficient
collateral, the Portfolio has the contractual right, subject to the requirements
of applicable bankruptcy and insolvency laws, to sell the underlying securities
and may claim any resulting loss from the seller.

Security Transactions - Security transactions are recorded on the trade date.
Realized gains and losses are recorded on the identified cost basis. The cost of
investments for federal income tax purposes at November 30, 1995 is the same as

that shown on the accompanying statement of investments.

Class Specific Expenses - Each share of both classes represents an undivided,
proportionate interest in the Portfolio. The Portfolio's class specific expenses
include shareholder service fees, transfer agent fees and certain other expenses
in accordance with procedures adopted by the Board of Trustees regarding the
offering of multiple classes of shares by open-end, management investment
companies. In addition, there are differences between the classes of shares with
respect to the minimum investment required and voting rights affecting each
class.

Income Taxes - It is the Portfolio's policy to comply with the requirements of
the Internal Revenue Code applicable to regulated investment companies and to
distribute all of its investment company taxable income and net realized gains,
if applicable, to its shareholders. Therefore, no provision has been made for
federal income taxes.

<PAGE>

[LOGO]

TREASURY OBLIGATIONS PORTFOLIO

Notes To Financial Statements (Cont'd)

NOVEMBER 30, 1995

Interest Income and Dividends to Shareholders - Interest income is accrued as
earned. Dividends to shareholders from each class of the Portfolio's net
investment income are declared daily and distributed monthly. Net realized
capital gains, unless offset by any available capital loss carryforwards, are
distributed at least annually.

Organization Costs - Organization costs are being amortized on a straight line
basis over five years.

NOTE 2. INVESTMENT ADVISORY AND OTHER SERVICES

Milestone Capital Management, L.P. (the "Adviser") serves as investment adviser
to the Portfolio pursuant to an investment advisory agreement with the Trust.
For its services, the Adviser receives a fee at an annual rate equal to 0.10% of
the average daily net assets of the Portfolio. Prior to June 20, 1995, the fee
payable to the Adviser under the investment advisory agreement was equal to
0.30% of the average daily net assets of the Portfolio.

As administrator of the Trust, Forum Financial Services, Inc. ("Forum") receives
a fee at an annual rate of 0.05% of the average daily net assets of the
Portfolio subject to an annual minimum of $50,000. Forum acts as the Trust's
distributor pursuant to a separate distribution agreement with the Trust under
which it receives no compensation.

The Trust has adopted a shareholder service plan providing that the Trust may
obtain the services of the Adviser and other qualified financial institutions to
act as shareholder servicing agents for their customers. Under this plan, the
Trust has authorized Forum to enter into agreements pursuant to which the
shareholder servicing agents perform certain shareholder services. For these
services, Forum receives from the Trust a fee of 0.05% and 0.20% of the average
daily net assets of the Institutional shares and Investor shares, respectively.
Forum pays the shareholder servicing agents up to these amounts with respect to
shares owned by investors for which the shareholder servicing agents maintain a
servicing relationship pursuant to the shareholder servicing agreement.

Forum Financial Corp. ("FFC") serves as the Trust's transfer agent, dividend
disbursing agent and fund accountant. FFC is paid a transfer agent fee of
$12,000 per year attributable to each class of the Portfolio plus certain
account charges. For its fund accounting services, FFC is paid $36,000 per year
for the Investor share class of the Portfolio and an additional $12,000 per year
for the Institutional share class of the Portfolio, subject to adjustments for
the size of the Portfolio and the number and type of Portfolio transactions.

NOTE 3. WAIVER OF FEES AND REIMBURSEMENT
OF EXPENSES

For the eleven months ended November 30, 1995, the Adviser waived $231,894 of
its advisory fee and $59,029 of its shareholder services fee. For the same
period, Forum waived $22,465 of its administration fee and voluntarily
reimbursed Portfolio expenses amounting to $16,150.

<PAGE>

[LOGO]

TREASURY OBLIGATIONS PORTFOLIO

Independent Auditor's Report

NOVEMBER 30, 1995

The Board of Trustees and Shareholders
Treasury Obligations Portfolio of The Milestone Funds

We have audited the accompanying statement of assets and liabilities, including
the statement of investments, of the Treasury Obligations Portfolio of The
Milestone Funds as of November 30, 1995, and the related statement of
operations, the statement of changes in net assets, and the financial highlights
for the period from December 30, 1994 (commencement of operations) to November
30, 1995. These financial statements and financial highlights are the
responsibility of the Fund's management. Our responsibility is to express an
opinion on these financial statements and financial highlights based on our
audit.

We conducted our audit in accordance with generally accepted auditing standards.
Those standards require that we plan and perform the audit to obtain reasonable
assurance about whether the financial statements and financial highlights are
free of material misstatement. An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in the financial statements. Our
procedures included confirmation of securities owned as of November 30, 1995, by
correspondence with the custodian. An audit also includes assessing the
accounting principles used and significant estimates made by management, as well
as evaluating the overall financial statement presentation. We believe that our
audit provides a reasonable basis for our opinion.

In our opinion, the financial statements and financial highlights referred to
above present fairly, in all material respects, the financial position of the
Treasury Obligations Portfolio of The Milestone Funds, as of November 30, 1995,
the results of its operations, the changes in its net assets and the financial
highlights for the period indicated, in conformity with generally accepted
accounting principles.

McGladrey & Pullen, LLP

New York, New York
December 22, 1995

<PAGE>

[LOGO]

Adviser
------------------------------------------------------------
Milestone Capital Management, L.P.
One Odell Plaza
Yonkers, NY 10701

Administrator / Distributor / Transfer Agent
------------------------------------------------------------
Forum Financial Group
Two Portland Square, Portland, ME 04101
800-363-7660

Primary Dealer
------------------------------------------------------------
Bear, Stearns & Co. Inc.
245 Park Avenue
New York, NY 10167

Custodian
------------------------------------------------------------
UMB Bank, N.A.
928 Grand Avenue
Kansas City, MO 64141

Legal Counsel
------------------------------------------------------------
Kramer, Levin, Naftalis, Nessen, Kamin & Frankel
919 Third Avenue
New York, NY 10022

This report is authorized for distribution
only to current shareholders and to others
who have received a copy of The Milestone Funds prospectus.

The Milestone Funds
One Odell Plaza, Yonkers, New York 10701
800-941-MILE

<PAGE>

PART C
OTHER INFORMATION

Item 24. Financial Statements and Exhibits.

(a) Financial Statements

Included in the Prospectus (Part A):

Audited Per Share Data

Included in the Statement of Additional Information (Part B):

Audited Statement of Investments; Statement of Changes
in Net Assets; Statement of Assets and Liabilities; and Statement of
Operations for the period ended November 30, 1995; Notes to Financial
Statements; Report of Independent Auditors

(b) Exhibits:

(1) Copy of Trust Instrument dated July 14, 1994,
as amended and restated December 1, 1994
(filed as Exhibit 1 to Pre-effective Amendment
No. 3 dated December 5, 1994 ("Pre-effective
3"), to Registrant's Registration Statement on
Form N-1A filed on July 14, 1994 (File No.
33-81574) ("Registration Statement") and
incorporated herein by reference).*

(2) Copy of Bylaws dated July 14, 1994, as amended
and restated December 1, 1994 (filed as
Exhibit 2 to Pre-effective 3 and incorporated
herein by reference).*

(3) Inapplicable.

(4) Inapplicable.

(5) Form of Investment Advisory Agreement to be
between Registrant and Milestone Capital
Management L.P.*

(6) (a) Revised Form of Distribution
Agreement to be between Registrant
and Forum Financial Services, Inc.
(filed as Exhibit 6(a) to
Pre-effective Amendment No. 1, dated
September 16, 1994 ("Pre-effective
1"), to Registration Statement and
incorporated herein by reference).*

<PAGE>

(b) Form of Co-distribution Agreement to be
between Registrant and Bear, Stearns & Co.
Inc. (filed as Exhibit 6(b) to Pre-effective
Amendment No. 2 to Registration Statement
("Pre-effective 2") and incorporated herein by
reference).*

(d) Form of Underwriting Agreement to be between
Registrant and Fund/Plan Broker Services, Inc.
(filed herewith).

(7) Inapplicable.

(8) (a) Form of Custodian Agreement (filed as Exhibit
8 to Pre-effective 2 and incorporated herein
by reference).

(b) Form of Custodian Agreement to be between
Registrant and The Bank of New York (filed
herewith).

(9) (a) Revised Form of Administration Agreement to be
between Registrant and Forum Financial
Services, Inc. (filed as Exhibit 9(a) to
Pre-effective 1 and incorporated herein by
reference).*

(b) Revised Form of Transfer Agency Agreement to
be between Registrant and Forum Financial
Corp. (filed as Exhibit 9(b) to Pre-effective
1 and incorporated herein by reference).*

(c) Revised Form of Fund Accounting Agreement with
Forum Financial Corp. (filed as Exhibit 9(c)
to Pre-effective 1 and incorporated herein by
reference).*

(d) Form of Client Services Agreement to be
between Milestone Capital Management, L.P. and
Bear, Stearns & Co. Inc. (filed as Exhibit
9(d) to Pre-effective 2 and incorporated
herein by reference).*

(e) Form of Administration Agreement to be between
Registrant and The Bank of New York (filed
herewith).

(f) Form of Transfer Agency Agreement to be between
Registrant and Fund/Plan Services, Inc. (filed herewith).

(g) Form of Accounting Agreement to be between
Registrant and The Bank of New York (filed
herewith).

<PAGE>

(h) Form of Cash Management Agreement to be
between Registrant and The Bank of New York
(filed herewith).

(10) Opinion of Counsel, Kramer, Levin, Naftalis,
Nessen, Kamin & Frankel (filed as Exhibit 10
to Pre-effective 3 and incorporated herein by
reference).*

(11) Consent of Independent Auditors, McGladrey &

Pullen (filed herewith).
(12) Inapplicable.

(13) Investment Representation letter (filed as
Exhibit 13 to Pre-effective 3 and incorporated
herein by reference).*

(14) Inapplicable.

(15) Inapplicable.

(16) Inapplicable.

(17) Inapplicable.

(18) Multiclass Plan adopted June 14, 1995 pursuant
to Rule 18f-3 under the 1940 Act.*

Other Exhibits:

(A) Power of Attorney, Janet Tiebout Hanson,
Chairman and President (filed as Exhibit A to
Pre-effective 2 and incorporated herein by
reference).*

(B) Power of Attorney, Dort A. Cameron III,
Trustee (filed as Exhibit B to Pre-effective 2
and incorporated herein by reference). *

(C) Power of Attorney, Phylis M. Esposito, Trustee
(filed as Exhibit C to Pre-effective 2 and
incorporated herein by reference).*

(D) Power of Attorney, Karen S. Cook, Trustee
(filed as Exhibit D to Pre-effective 3 and
incorporated herein by reference).*

(E) Power of Attorney, Anne Brown Farrell, Trustee
(filed as Exhibit E to Pre-effective 3 and
incorporated herein by reference).*

(F) Power of Attorney, John D. Gilliam, Trustee
(filed as Exhibit F to Pre-effective 3 and
incorporated herein by reference).*

(G) Power of Attorney, Magna L. Dodge, Trustee.*

<PAGE>

* Previously filed.

Item 25. Persons Controlled by or Under Common Control
with Registrant.

None.

Item 26. Number of Holders of Securities as of February
13, 1996.

Title of Class of Shares
of Beneficial Interest Number of Holders

The Milestone Funds
Treasury Obligations Portfolio 180

Item 27. Indemnification.

Section 10.01 of the Registrant's Trust Instrument provides that a Trustee,
when acting in such capacity, will not be personally liable to any person other
than the Trust or Shareholders for any act, omission or obligation of the Trust
or any Trustee. Section 10.01 also provides that a Trustee, when acting in such
capacity, will not be liable to the Trust or to Shareholder except for acts or
omissions constituting willful misfeasance, bad faith, gross negligence or
reckless disregard of the Trustee's duties under the Trust Instrument.

The general effect of Section 10.02 of the Registrant's Trust Instrument is
to indemnify existing or former trustees and officers of the Trust to the
fullest extent permitted by law against liability and expenses. There is no
indemnification if, among other things, any such person is adjudicated liable to
the Registrant or its shareholders by reason of willful misfeasance, bad faith,
gross negligence or reckless disregard of the duties involved in the conduct of
his office, Section 10.02 also provides that the Trust may obtain insurance
coverage for the indemnification rights provided for Section 10.02.

The foregoing description of the limitation of liability, indemnification

and insurance provisions of the Trust Instrument is modified in its entirety by
the provisions of Article X of the Trust Instrument contained in this
Registration Statement as Exhibit 1 and incorporated herein by reference.

Insofar as indemnification for liability arising under the Securities Act
of 1933 (the "1933 Act") may be permitted to trustees, officers and controlling
persons of the Registrant pursuant to the foregoing provisions, or otherwise,
the Registrant has been advised that in the opinion of the Securities and
Exchange Commission such indemnification is against public policy as expressed
in the 1933 Act and is, therefore, unenforceable. In the event that a claim for
indemnification against such liabilities (other than the payment by the
Registrant of expenses incurred or paid by a trustee, officer or controlling
person of the Registrant in the successful defense of any action, suit or
proceeding) is asserted by such trustee, officer or controlling person in
connection with the

<PAGE>

securities being registered, the Registrant will, unless in the opinion of its
counsel the matter has been settled by controlling precedent, submit to a court
of appropriate jurisdiction the question whether such indemnification by it is
against public policy as expressed in the 1933 Act and will be governed by the
final adjudication of such issue.

Item 28. Business and Other Connections of Investment Advisers.

The description of Milestone Capital Management L.P. under the caption
"Management of the Trust - The Adviser" and "Management - Investment Adviser" in
the Prospectus and Statement of Additional Information, constituting certain of
Parts A and B, respectively, of this Registration Statement, are incorporated by
reference herein.

The address of Milestone Capital Management L.P. is One Odell Plaza,
Yonkers, New York 10701. The General Partner of Milestone Capital Management
L.P. is Milestone Capital Management Corp. The principal shareholder of
Milestone Capital Management Corp. is Janet Tiebout Hanson. The following are
the partners and executive officers of Milestone Capital Management L.P.,
including any business connections of a substantial nature which they have had
in the past two years.

Janet Tiebout Hanson, President, Chief Executive Officer, and Chief
Investment Officer

President and Chief Executive Officer of Milestone Capital Management
Corp., One Odell Plaza, Yonkers, New York 10701. From September 1993 to May
1994, Ms. Hanson was Managing Director of the Hanson Consulting Group,
Ltd., 38 Forest Lane, Bronxville, New York 10708. From October 1991 to
August 1993, she was Vice President of Goldman Sachs & Co., 85 Broad
Street, New York, New York 10004.

Dort A. Cameron III, Limited Partner

Chairman of the Board of Milestone Capital Management Corp.; General
Partner of BMA L.P., 201 Main Street, Fort Worth, Texas 76102; General
Partner of EBD L.P., 201 Main Street, Fort Worth, Texas 76102; Chairman of
Entex Information Services, 6 International Drive, Rye Brook, New York
10573.

Mary Dillon Reynolds, Limited Partner

Member, Trustees' Advisory Council, Fairfield College, Fairfield,
Connecticut. Since leaving Prudential Capital Management Group in 1991, Ms.
Reynolds has not been actively employed, but has pursued personal
interests.

Jeffrey R. Hanson, Chief Operating Officer

Managing Director of the Hanson Consulting Group, 38 Forest Lane,
Bronxville, New York 10708.

<PAGE>

Michael Minikes, Trustee

Senior Managing Director and Treasurer of The Bear Stearns Companies, Inc.,
245 Park Avenue, New York, New York, 10167.

Philip F. Strassler, Chief Financial Officer

President of Philip F. Strassler CPA, P.C., an accounting firm, located at
305 Northern Blvd., Suite 202, Great Neck, New York, 11021.

Marc H. Pfeffer, Chief Investment Officer

Senior Portfolio Manager, Milestone Capital Management, L.P. From 1993 to
December 1994, Mr. Pfeffer was a vice-president in the Asset Management
Division of Goldman Sachs & Co., 85 Broad Street, New York, New York 10004.

Item 29. Principal Underwriters.

(a) Fund/Plan Broker Services, Inc., the
Registrant's underwriter, serves as
underwriter to the Registrant.

(b) Not applicable.

Item 30 Location of Books and Records.

The majority of the accounts, books and other documents required to be
maintained by Section 31(a) of the Investment Company Act of 1940 (the "1940
Act") and the Rules thereunder are maintained at the offices of The Bank of New
York, 90 Washington Street, New York, New York 10286. The records required to be
maintained under Rule 31a-1(b)(1) with respect to journals of receipts and
deliveries of securities and receipts and disbursements of cash are maintained
at the offices of the Registrant's custodian, as listed under "Other Information
- -- Custodian" in Part B to this Registration Statement.

Item 31. Management Services.

Inapplicable.

<PAGE>
Item 32. Undertakings.

Registrant undertakes to:

(i) contain in its Trust Instrument or Bylaws provisions for assisting
shareholder communications and for the removal of trustees substantially similar
to those provided for in Section 16(c) of the 1940 Act, except to the extent
such provisions are mandatory or prohibited under applicable Delaware law;

(ii) furnish each person to whom a prospectus is delivered with a copy of
Registrant's latest annual report to shareholders relating to the portfolio or
class thereof to which the prospectus relates upon request and without charge.

<PAGE>

SIGNATURES

Pursuant to the requirements of the Securities Act of 1933 and the
Investment Company Act of 1940, the Registrant certifies that it meets all of
the requirements for effectiveness of this Registration Statement pursuant to
Rule 485(b) under the Securities Act of 1933 and has duly caused this amendment
to its Registration Statement to be signed on its behalf by the undersigned,
thereto duly authorized, in the City of New York, and State of New York on the
23rd day of February, 1996.

THE MILESTONE FUNDS

By: ____________________________

Janet Tiebout Hanson, President

Pursuant to the requirements of the Securities Act of 1933, this amendment

to the Registrant's Registration Statement has been signed below by the
following persons on the 23rd day of February, 1996.

Name Title

<S> <C>
(Philip F. Strassler) Treasurer

(Dort A. Cameron III) Trustee

(Michael Minikes) Trustee

(Karen S. Cook) Trustee

(Anne Brown Farrell) Trustee

(John D. Gilliam) Trustee

(Magna L. Dodge) Trustee

(Jeffrey R. Hanson) Secretary

</TABLE>

<PAGE>

Index to Exhibits

<TABLE>
<CAPTION>
Sequential
Exhibit Page Number

<S> <C>
6(d) Form of Underwriting Agreement to be between
Registrant and Fund/Plan Broker Services, Inc.

8(b) Form of Custodian Agreement to be between
Registrant and The Bank of New York.

9(e) Form of Administration Agreement to be between
Registrant and The Bank of New York.

9(f) Form of Transfer Agency Agreement to be
between Registrant and Fund/Plan Services,
Inc.

9(g) Form of Accounting Agreement to be between
Registrant and The Bank of New York.

9(h) Form of Cash Management Agreement to be
between Registrant and The Bank of New York.

(11) Consent of Independent Auditors, McGladrey &
Pullen.

(16) Schedule for computation of performance.

</TABLE>

6(d) Form of Underwriting Agreement to be between
Registrant and Fund/Plan Broker Services, Inc.

UNDERWRITING AGREEMENT
This Agreement, dated as of the 1st day of February , 1996, made
by and between The Milestone Funds, a business trust (the "Trust")
operating as a registered investment company under the Investment Company
Act of 1940, as amended (the "Act"), duly organized and existing under the
laws of the State of Delaware; Milestone Capital Management, L.P. (the
"Adviser"), a registered investment adviser existing as a limited
partnership duly organized and existing under the laws of the State of New
York; and Fund/Plan Broker Services, Inc. ("Fund/Plan"), a corporation duly
organized and existing under the laws of the State of Delaware
(collectively, the "Parties").
WITNESSETH THAT:
WHEREAS, the Trust is authorized by its Trust Instrument to issue
separate series of shares representing interests in separate investment
portfolios (the "Series"), which Series may in turn offer multiple Classes
of Shares ("Classes") which Series and Classes are identified on Schedule
"C" attached hereto, and which Schedule "C" may be amended from time to
time by mutual agreement among the Parties; and
WHEREAS, the Adviser has been appointed investment adviser to the
Trust; and
WHEREAS, Fund/Plan is a broker-dealer registered with the U.S.
Securities and Exchange Commission and a member in good standing of the
National Association of Securities Dealers, Inc. (the "NASD"); and
WHEREAS, the Parties are desirous of entering into an agreement
providing that, among other things Fund/Plan serves as statutory
Underwriter of shares of the Series and Classes of the Trust (the
"Shares"), and that Fund/Plan be compensated by the Adviser for providing
such services.
NOW, THEREFORE, in consideration of the promises and agreements of
the Parties contained herein, the Parties agree as follows:

1. Appointment.
The Trust hereby appoints Fund/Plan as statutory Underwriter of the
Shares, and Fund/Plan hereby accepts such appointment under the
terms of this Agreement. The Trust agrees that it will not sell
any shares to any person except to fill orders for the shares
received through Fund/Plan; provided, however, that the foregoing
exclusive right shall not apply: (a) to shares issued or sold in
connection with the merger or

================================================================================
Underwriting Agreement between The Milestone Funds, Milestone Capital
Management, L.P. and Fund/Plan Broker Services, Inc.

Page 1 of 9 pages.

consolidation of any other investment company with the Trust or the
acquisition by purchase or otherwise of all or substantially all of
the assets of any investment company or substantially all of the
outstanding shares of any such company by the Trust; (b) to shares
which may be offered by the Trust to its stockholders for
reinvestment of cash distributed from capital gains or net

investment income of the Trust; or (c) to shares which may be
issued to shareholders of other funds who exercise any exchange
privilege set forth in the Trust's Prospectus. Notwithstanding any
other provision hereof, the Trust may terminate, suspend, or
withdraw the offering of the Shares whenever in its sole discretion,
it deems such action to be desirable.
2. Sale and Repurchase of Shares.
(a) Fund/Plan is hereby granted the right as agent for the
Trust, to sell Shares to the public against orders therefor
at the public offering price (as defined in sub-paragraph
2.(c) hereof).
(b) Fund/Plan will also have the right to take, as agent
for the Trust, all actions which, in Fund/Plan's
judgment, are necessary to carry into effect the
Underwriting of the Shares.
(c) The public offering price shall be the net asset
value of the Shares then in effect.
(d) The net asset value of the Shares shall be
determined in the manner provided in the then
current prospectus, and statement of additional
information relating to the Shares and when
determined shall be applicable to all transactions
as provided in the prospectus. The net asset value
of the Shares shall be calculated by the Trust or by
another entity on behalf of the Trust. Fund/Plan
shall have no duty to inquire into or liability for
the accuracy of the net asset value per Share as
calculated.
(e) On every sale, the Trust shall receive the
applicable net asset value of the Shares promptly.
(f) Upon receipt of purchase instructions, Fund/Plan
will transmit such instructions to the Trust or its
transfer agent for registration of the Shares
purchased.

Page 2 of 9 pages.

(g) Nothing in this Agreement shall prevent Fund/Plan or
any affiliated person (as defined in the Act) of
Fund/Plan from acting as underwriter for any other
person, firm or corporation (including other
investment companies) or in any way limit or
restrict Fund/Plan or such affiliated person from
buying, selling or trading any securities for its or
their own account or for the accounts of others for
whom it or they may be acting; provided, however,
that Fund/Plan expressly agrees that it will not for
its own account purchase any shares of the Trust
except for investment purposes and that it will not
for its own account sell any such shares except by

redemption of such shares by the Trust, and that it
will not undertake in any activities which, in its
judgment, will adversely affect the performance of
its obligations to the Trust under this Agreement.
(h) Fund/Plan may repurchase Shares at such prices and
upon such terms and conditions as shall be specified
in the Prospectus.
3. Rules of Sale of Shares.
Fund/Plan does not agree to sell any specific number of
Shares. Fund/Plan, as Underwriter for the Trust, undertakes to
sell Shares on a best efforts basis and only against orders
received therefor.
The Trust reserves the right to terminate, suspend or
withdraw the sale of its Shares for any reason deemed adequate by
it and the Trust reserves the right to refuse at any time or times
to sell any of its Shares to any person for any reason deemed
adequate by it.
4. Rules of NASD.
(a) Fund/Plan will conform to the Rules of Fair Practice
of the NASD and the securities laws of any
jurisdiction in which it directly or indirectly
sells any Shares.
(b) Fund/Plan will require each dealer with whom
Fund/Plan has a selling agreement to conform to the
applicable provisions of the Prospectus, with
respect to the public offering price of the Shares,
and Fund/Plan shall not cause the Trust to withhold
the placing of purchase orders so as to make a
profit thereby.

Page 3 of 9 pages.

(c) The Trust agrees to furnish to Fund/Plan sufficient
copies of any agreements, plans, communications with
the public or other materials it intends to use in
connection with any sales of Shares in adequate time
for Fund/Plan to file and clear (unless Fund/Plan
and the Trust agree that any such material may be
filed subsequent to its use) such materials with the
proper authorities before they are put in use unless
Fund/Plan and the Trust agree that any such material
may be filed subsequent to its use. In addition,
the Trust agrees not to use any such materials until
so filed and cleared for use by appropriate
authorities and Fund/Plan.
(d) Fund/Plan, at its own expense, will qualify as a
dealer or broker, or otherwise, under all applicable
state or federal laws required in order that the
Shares may be sold in such states as may be mutually
agreed upon by the Parties.

(e) Fund/Plan shall remain registered with the U.S.
Securities and Exchange Commission and a member of
the National Association of Securities Dealers for
the term of this Agreement.
(f) Fund/Plan shall not, in connection with any sale or
solicitation of a sale of the Shares, make or
authorize any representative, Service Organization,
broker or dealer to make, any representations
concerning the Shares except those contained in the
Prospectus covering the Shares and in communications
with the public or sales materials approved by
Fund/Plan and the Trust as information supplemental
to such Prospectus. Copies of the Prospectus will
be supplied by the Trust to Fund/Plan in reasonable
quantities upon request.
5. Records to be Supplied by the Trust.
The Trust shall furnish to Fund/Plan copies of all
information, financial statements and other papers which Fund/Plan
may reasonably request for use in connection with the Underwriting
of the Shares including, but not be limited to, one certified copy
of all financial statements prepared for the Trust by its
independent public accountants.
6. Expenses.

Page 4 of 9 pages.

(a) The Trust will bear the following expenses:
(i) preparation, setting in type, and printing of
sufficient copies of the prospectuses and
statements of additional information for
distribution to shareholders, and the distribution
of same to the shareholders;
(ii) preparation, printing and distribution of reports
and other communications to shareholders;
(iii) registration of the Shares under the federal
securities laws;
(iv) qualification of the Shares for sale in the
jurisdictions mutually agreed upon by the Trust and
Fund/Plan;
(v) maintaining facilities for the issue and transfer
of the Shares;
(vi) supplying information, prices and other data to be
furnished by the Trust under this Agreement; and
(vii) any original issue taxes or transfer taxes
applicable to the sale or delivery of the Shares or
certificates therefor.
(b) the Advisor will pay all other expenses incident to the sale
and distribution of the Shares sold hereunder.
7. Term and Compensation.
(a) This Agreement shall commence on the date herein stated

above ("Effective Date").
(b) This Agreement shall remain in effect for eighteen (18)
months from the Effective Date and shall continue thereafter
for periods not exceeding one (1) year if approved at least
annually (i) by a vote of a majority of the outstanding
voting securities of each Series, or (ii) by a vote of a
majority of the Trustees of the Trust including the majority
of the Trustees who are not interested persons or parties to
this Agreement (other than as Trustees of the Trust), cast
in person at a meeting called for the purpose of voting on
such approval.
(c) Fees payable to Fund/Plan shall by paid by the Adviser and
are set forth in Schedule "B" attached. Such fees shall be
fixed for eighteen (18) months commencing on the Effective
Date of this Agreement. Thereafter, the fee schedule will
be subject to review and adjustment.
(d) This Agreement (i) may at any time be terminated without the
payment of any

Page 5 of 9 pages.

penalty, either by a vote of the Trustees of the Trust or by a
vote of a majority of the outstanding voting securities of each
Series with respect to such Series, on sixty (60) days' written
notice to Fund/Plan; and (ii) may be terminated by Fund/Plan on
sixty (60) days' written notice to the Trust with respect to
any Series.
(e) This Agreement shall automatically terminate in the event of
its assignment.
8. Indemnification of Fund/Plan by Adviser and Trust.
(a) The Adviser will indemnify and hold Fund/Plan harmless for
the actions of its employees and any persons affiliated with
the Advisor, as that term is defined in the Act, who are
also registered with the NASD as registered Representatives
of Fund/Plan. Further the Adviser undertakes to maintain
compliance with all rules and regulations concerning any and
all sales presentations made by such employees and
affiliated persons.
(b) The Trust and the Adviser warrant that the Shares shall only
be offered in those jurisdictions in which the Shares are
registered for such offering (or which Shares qualify for an
exemption from registration) by personnel duly licensed to
make such an offering. In the event such warranty is
violated, the Trust and the Adviser, jointly and severally,
shall fully indemnify and hold Fund/Plan harmless against
any and all matters and for any and all expenses arising
there from.
9. Liability of Fund/Plan.
(a) Fund/Plan, its directors, officers, employees, shareholders
and agents shall not be liable for any error of judgment or

mistake of law or for any loss suffered by the Trust in
connection with the performance of this Agreement, except a
loss resulting from a breach of Fund/Plan's obligation
pursuant to Section 4 of this Agreement, a breach of
fiduciary duty with respect to the receipt of compensation
for services or a loss resulting from willful misfeasance,
bad faith or gross negligence on the part of Fund/Plan in
the performance of its obligations and duties or by reason
of its reckless disregard of its obligations and duties
under this Agreement.
(b) The Trust agrees to indemnify and hold harmless Fund/Plan
against any and all

Page 6 of 9 pages.

liability, loss, damages, costs or expenses (including
reasonable counsel fees) which Fund/Plan may incur or be
required to pay hereafter, in connection with any action, suit
or other proceeding, whether civil or criminal, before any
court or administrative or legislative body, in which Fund/Plan
may be involved as a party or otherwise or with which Fund/Plan
may be threatened, by reason of the offer or sale of the Trust
shares by persons other that Fund/Plan, prior to the execution
of this Agreement.
(c) Any person, even though also a director, officer, employee,
shareholder or agent of Fund/Plan, who may be or become an
officer, director, trustee, employee or agent of the Trust,
shall be deemed, when rendering services to the Trust or
acting on any business of the Trust (other than services or
business in connection with Fund/Plan's duties hereunder),
to be rendering such services to or acting solely for the
Trust and not as a director, officer, employee, shareholder
or agent, or one under the control or direction of Fund/Plan
even though receiving a salary from Fund/Plan.
(d) The Trust agrees to indemnify and hold harmless Fund/Plan,
and each person, who controls Fund/Plan within the meaning
of Section 15 of the Securities Act of 1933, as amended (the
"Securities Act"), or Section 20 of the Securities Exchange
Act of 1934, as amended (the "Exchange Act"), against any
and all losses, claims, damages and liabilities, joint or
several (including any reasonable investigative, legal and
other expenses incurred in connection therewith) to which
they, or any of them, may become subject under the Act, the
Securities Act, the Exchange Act or other federal or state
law or regulation, at common law or otherwise insofar as
such losses, claims, damages or liabilities (or actions,
suits or proceedings in respect thereof) arise out of or are
based upon any untrue statement or alleged untrue statement
of a material fact contained in a prospectus, statement of
additional information, supplement thereto, sales literature

or other written information prepared by the Trust and
furnished by the Trust to Fund/Plan for Fund/Plan's use
hereunder, disseminated by the Trust or arise out of or are
based upon any omission or alleged omission to state therein
a material fact required to be stated therein or

Page 7 of 9 pages.

necessary to make the statements therein not misleading. Such
indemnity shall not, however, inure to the benefit of Fund/Plan
(or any person controlling Fund/Plan) on account of any losses,
claims, damages or liabilities (or actions, suits or
proceedings in respect thereof) arising from the sale of the
shares of the Trust to any person by Fund/Plan
(i) if such untrue statement or omission or alleged untrue
statement or omission was made in the prospectus, statement
of additional information, or supplement, sales or other
literature, in reliance upon and in conformity with
information furnished in writing to the Trust by Fund/Plan
specifically for use therein or (ii) if such losses, claims,
damages or liabilities arise out of or are based upon an
untrue statement or omission or alleged untrue statement or
omission found in any prospectus, statement of additional
information, supplement, sales or other literature,
subsequently corrected, but, negligently distributed by
Fund/Plan and a copy of the corrected prospectus was not
delivered to such person at or before the confirmation of
the sale to such person.
10. Amendments.
No provision of this Agreement may be amended or modified,
in any manner whatsoever except by a written agreement properly
authorized and executed by the Parties.
11. Section Headings.
Section and Paragraph headings are for convenience only and
shall not be construed as part of this Agreement.
12. Reports.
Fund/Plan shall prepare reports for the Board of Trustees of
the Trust on a quarterly basis showing such information as from
time to time shall be reasonably requested by such Board.
13. Severability.
If any part, term or provision of this Agreement is held by
any court to be illegal, in conflict with any law or otherwise
invalid, the remaining portion or portions shall be considered
severable and not affected, and the rights and obligations of the
parties shall be construed and enforced as if the Agreement did not
contain the

Page 8 of 9 pages.

particular part, term or provision held to be illegal or invalid
provided that the basic agreement is not thereby substantially
impaired.
14. Governing Law.
This Agreement shall be governed by the laws of the Commonwealth of
Pennsylvania and the venue of any action arising under this
Agreement shall be Montgomery County, Commonwealth of Pennsylvania
if the suit is instituted by the Trust or the Adviser. If a suit
is instituted by Fund/Plan, the venue of such action arising under
this Agreement shall be Yonkers, New York.

IN WITNESS WHEREOF, the parties hereto have caused this Agreement
consisting of nine typewritten pages, together with Schedules "A", "B" and
"C", to be signed by their duly authorized officers, as of the day and year
first above written.

Milestone Capital Management, L.P. Fund/Plan Broker Services, Inc.

____________________________________ ____________________________________
By: Janet Tiebout Hanson, President By: Kenneth J. Kempf, President

The Milestone Funds

______________________________________
By: Jeffrey R. Hanson, Chief Operating
Officer

Page 9 of 9 pages.

Schedule "A"

Underwriter Services
for
The Milestone Funds

I. Underwriter Services

A) Act as statutory Underwriter to the Trust.

B) Literature review, recommendations and submission to the NASD

C) Maintain all NASD required files and bookkeeping

D) Initial NASD Licensing and Transfers of Registered
Representatives

This includes: U-4 Form and Fingerprint Submission to NASD
Supplying Series 6 and 63 written study material
Registration for Exam Preparation classes
Renewals and Terminations of Representatives

E) Written supervisory procedures and manuals for Registered
Representatives

F) Ongoing compliance and updates for Representatives regarding
sales practices, written correspondence and other
communications with the public.

Schedule "A"

Schedule "B"

Underwriter and Distribution Fee Schedule
for
The Milestone Funds

This Fee Schedule is fixed for a period of eighteen (18) months from the
Effective Date as that term is defined in the Agreement.

I. FPBS will maintain annual NASD and state license renewals and the
monitoring required of representative activities as follows:

Up to 2 States - $1,500 per Representative per Year
3 to 30 States - $2,500 per Representative per Year
31 to 50 States - $3,500 per Representative per Year

II. Out-of-Pocket Expenses

The Adviser will reimburse Fund/Plan Services monthly for all
out-of-pocket expenses, including postage, telecommunications
(telephone and fax), special reports, record retention, special
transportation costs as incurred.
================================================================================
Underwriting Agreement between The Milestone Funds, Milestone Capital
Management, L.P. and Fund/Plan Broker Services, Inc.

Schedule "B"

Schedule "C"

Identification of Series

Below are listed the "Series" to which services under this Agreement are to
be performed as of the execution date of the Agreement:

"The Milestone Funds"

Treasury Obligations Portfolio - Institutional Class
Treasury Obligations Portfolio - Investor Class

This Schedule "C" may be amended from time to time by agreement of the
Parties.

Schedule "C"

(8)(b) Form of Custodian Agreement to be between Registrant
and The Bank of New York

CUSTODY AGREEMENT

Agreement made as of this 30th day of January, 1996,
between THE MILESTONE FUNDS - TREASURY OBLIGATIONS PORTFOLIO,
a Delaware business trust organized and existing under the laws
of the State of Delaware, having its principal office and place
of business at

(hereinafter called the "Fund"), and THE BANK OF NEW YORK, a
New York corporation authorized to do a banking business, hav-
ing its principal office and place of business at 48 Wall
Street, New York, New York 10286 (hereinafter called the
"Custodian").

W I T N E S S E T H :

that for and in consideration of the mutual promises
hereinafter set forth, the Fund and the Custodian agree as
follows:

ARTICLE I

DEFINITIONS

Whenever used in this Agreement, the following words and
phrases, unless the context otherwise requires, shall have the
following meanings:

1. "Book-Entry System" shall mean the Federal
Reserve/Treasury book-entry system for United States and
federal agency securities, its successor or successors and its
nominee or nominees.

2. "Call Option" shall mean an exchange traded option
with respect to Securities other than Stock Index Options,
Futures Contracts, and Futures Contract Options entitling the
holder, upon timely exercise and payment of the exercise price,
as specified therein, to purchase from the writer thereof the
specified underlying Securities.

3. "Certificate" shall mean any notice, instruction, or
other instrument in writing, authorized or required by this
Agreement to be given to the Custodian which is actually
received by the Custodian and signed on behalf of the Fund by
any two Officers, and the term Certificate shall also include
instructions by the Fund to the Custodian communicated by a
Terminal Link.

4. "Clearing Member" shall mean a registered
broker-dealer which is a clearing member under the rules of
O.C.C. and a member of a national securities exchange

qualified to act as a custodian for an investment company, or
any broker-dealer reasonably believed by the Custodian to be
such a clearing member.

5. "Collateral Account" shall mean a segregated account
so denominated which is specifically allocated to a Series and
pledged to the Custodian as security for, and in consideration
of, the Custodian's issuance of (a) any Put Option guarantee
letter or similar document described in paragraph 8 of Article
V herein, or (b) any receipt described in Article V or VIII
herein.

6. "Covered Call Option" shall mean an exchange traded
option entitling the holder, upon timely exercise and payment
of the exercise price, as specified therein, to purchase from
the writer thereof the specified underlying Securities
(excluding Futures Contracts) which are owned by the writer
thereof and subject to appropriate restrictions.

7. "Depository" shall mean The Depository Trust Company
("DTC"), a clearing agency registered with the Securities and
Exchange Commission, its successor or successors and its
nominee or nominees. The term "Depository" shall further mean
and include any other person authorized to act as a depository
under the Investment Company Act of 1940, its successor or
successors and its nominee or nominees, specifically identified
in a certified copy of a resolution of the Fund's Board of
Trustees specifically approving deposits therein by the
Custodian.

8. "Financial Futures Contract" shall mean the firm
commitment to buy or sell fixed income securities including,
without limitation, U.S. Treasury Bills, U.S. Treasury Notes,
U.S. Treasury Bonds, domestic bank certificates of deposit, and
Eurodollar certificates of deposit, during a specified month at
an agreed upon price.

9. "Futures Contract" shall mean a Financial Futures
Contract and/or Stock Index Futures Contracts.

10. "Futures Contract Option" shall mean an option with
respect to a Futures Contract.

11. "Margin Account" shall mean a segregated account in
the name of a broker, dealer, futures commission merchant, or
a Clearing Member, or in the name of the Fund for the benefit
of a broker, dealer, futures commission merchant, or Clearing
Member, or otherwise, in accordance with an agreement between
the Fund, the Custodian and a broker, dealer, futures commis-
sion merchant or a Clearing Member (a "Margin Account Agree-
ment"), separate and distinct from the custody account, in
which certain Securities and/or money of the Fund shall be
deposited and withdrawn from time to time in connection with
such transactions as the Fund may from time to time determine.

Securities held in the Book-Entry System or the

-2-

Depository shall be deemed to have been deposited in, or
withdrawn from, a Margin Account upon the Custodian's
effecting an appropriate entry in its books and records.

12. "Money Market Security" shall be deemed to include,
without limitation, certain Reverse Repurchase Agreements, debt
obligations issued or guaranteed as to interest and principal
by the government of the United States or agencies or
instrumentalities thereof, any tax, bond or revenue
anticipation note issued by any state or municipal government
or public authority, commercial paper, certificates of deposit
and bankers' acceptances, repurchase agreements with respect to
the same and bank time deposits, where the purchase and sale of
such securities normally requires settlement in federal funds
on the same day as such purchase or sale.

13. "O.C.C." shall mean the Options Clearing Corporation,
a clearing agency registered under Section 17A of the
Securities Exchange Act of 1934, its successor or successors,
and its nominee or nominees.

14. "Officers" shall be deemed to include the President,
any Vice President, the Secretary, the Clerk, the Treasurer,
the Controller, any Assistant Secretary, any Assistant Clerk,
any Assistant Treasurer, and any other person or persons,
whether or not any such other person is an officer of the Fund,
duly authorized by the Board of Trustees of the Fund to execute
any Certificate, instruction, notice or other instrument on
behalf of the Fund and listed in the Certificate annexed hereto
as Appendix A or such other Certificate as may be received by
the Custodian from time to time.

15. "Option" shall mean a Call Option, Covered Call Op-
tion, Stock Index Option and/or a Put Option.

16. "Oral Instructions" shall mean verbal instructions
actually received by the Custodian from an Officer or from a
person reasonably believed by the Custodian to be an Officer.

17. "Put Option" shall mean an exchange traded option
with respect to Securities other than Stock Index Options,
Futures Contracts, and Futures Contract Options entitling the
holder, upon timely exercise and tender of the specified
underlying Securities, to sell such Securities to the writer
thereof for the exercise price.

18. "Reverse Repurchase Agreement" shall mean an agree-
ment pursuant to which the Fund sells Securities and agrees to
repurchase such Securities at a described or specified date and
price.

19. "Security" shall be deemed to include, without
limitation, Money Market Securities, Call Options, Put Options,
Stock Index Options, Stock Index Futures Contracts, Stock
Index Futures Contract Options, Financial Futures

-3-

Contracts, Financial Futures Contract Options, Reverse
Repurchase Agreements, common stocks and other securities
having characteristics similar to common stocks, preferred
stocks, debt obligations issued by state or municipal
governments and by public authorities, (including, without
limitation, general obligation bonds, revenue bonds,
industrial bonds and industrial development bonds), bonds,
debentures, notes, mortgages or other obligations, and any
certificates, receipts, warrants or other instruments
representing rights to receive, purchase, sell or subscribe
for the same, or evidencing or representing any other rights
or interest therein, or any property or assets.

20. "Senior Security Account" shall mean an account
maintained and specifically allocated to a Series under the
terms of this Agreement as a segregated account, by recordation
or otherwise, within the custody account in which certain
Securities and/or other assets of the Fund specifically al-
located to such Series shall be deposited and withdrawn from
time to time in accordance with Certificates received by the
Custodian in connection with such transactions as the Fund may
from time to time determine.

21. "Series" shall mean the various portfolios, if any,
of the Fund as described from time to time in the current and
effective prospectus for the Fund and listed on Appendix B
hereto as amended from time to time.

22. "Shares" shall mean the shares of beneficial interest
of the Fund, each of which is, in the case of a Fund having
Series, allocated to a particular Series.

23. "Stock Index Futures Contract" shall mean a bilateral
agreement pursuant to which the parties agree to take or make
delivery of an amount of cash equal to a specified dollar
amount times the difference between the value of a particular
stock index at the close of the last business day of the
contract and the price at which the futures contract is
originally struck.

24. "Stock Index Option" shall mean an exchange traded
option entitling the holder, upon timely exercise, to receive
an amount of cash determined by reference to the difference
between the exercise price and the value of the index on the
date of exercise.

25. "Terminal Link" shall mean an electronic data
transmission link between the Fund and the Custodian requiring
in connection with each use of the Terminal Link by or on
behalf of the Fund use of an authorization code provided by the
Custodian and at least two access codes established by the
Fund.

-4-

ARTICLE II

APPOINTMENT OF CUSTODIAN

1. The Fund hereby constitutes and appoints the
Custodian as custodian of the Securities and moneys at any time
owned by the Fund during the period of this Agreement.

2. The Custodian hereby accepts appointment as such
custodian and agrees to perform the duties thereof as
hereinafter set forth.

ARTICLE III

CUSTODY OF CASH AND SECURITIES

1. Except as otherwise provided in paragraph 7 of this
Article and in Article VIII, the Fund will deliver or cause to
be delivered to the Custodian all Securities and all moneys
owned by it, at any time during the period of this Agreement,
and shall specify with respect to such Securities and money the
Series to which the same are specifically allocated. The
Custodian shall segregate, keep and maintain the assets of the
Series separate and apart. The Custodian will not be
responsible for any Securities and moneys not actually received
by it. The Custodian will be entitled to reverse any credits
made on the Fund's behalf where such credits have been
previously made and moneys are not finally collected. The Fund
shall deliver to the Custodian a certified resolution of the
Board of Trustees of the Fund, substantially in the form of
Exhibit A hereto, approving, authorizing and instructing the
Custodian on a continuous and on-going basis to deposit in the
Book-Entry System all Securities eligible for deposit therein,
regardless of the Series to which the same are specifically
allocated and to utilize the Book-Entry System to the extent
possible in connection with its performance hereunder,
including, without limitation, in connection with settlements
of purchases and sales of Securities, loans of Securities and
deliveries and returns of Securities collateral. Prior to a
deposit of Securities specifically allocated to a Series in the
Depository, the Fund shall deliver to the Custodian a certified
resolution of the Board of Trustees of the Fund, substantially
in the form of Exhibit B hereto, approving, authorizing and
instructing the Custodian on a continuous and ongoing basis
until instructed to the contrary by a Certificate actually
received by the Custodian to deposit in the Depository all
Securities specifically allocated to such Series eligible for
deposit therein, and to utilize the Depository to the extent
possible with respect to such Securities in connection with its
performance hereunder, including, without limitation, in
connection with settlements of purchases and sales of
Securities, loans of Securities, and deliveries and returns of

Securities collateral. Securities and moneys deposited in
either the Book-Entry System or the

-5-

Depository will be represented in accounts which include only
assets held by the Custodian for customers, including, but not
limited to, accounts in which the Custodian acts in a
fiduciary or representative capacity and will be specifically
allocated on the Custodian's books to the separate account for
the applicable Series. Prior to the Custodian's accepting,
utilizing and acting with respect to Clearing Member confirma-
tions for Options and transactions in Options for a Series as
provided in this Agreement, the Custodian shall have received
a certified resolution of the Fund's Board of Trustees,
substantially in the form of Exhibit C hereto, approving,
authorizing and instructing the Custodian on a continuous and
ongoing basis, until instructed to the contrary by a
Certificate actually received by the Custodian, to accept,
utilize and act in accordance with such confirmations as
provided in this Agreement with respect to such Series.

2. The Custodian shall establish and maintain separate
accounts, in the name of each Series, and shall credit to the
separate account for each Series all moneys received by it for
the account of the Fund with respect to such Series. Money
credited to a separate account for a Series shall be disbursed
by the Custodian only:

(a) As hereinafter provided;

(b) Pursuant to Certificates setting forth the name
and address of the person to whom the payment is to be made,
the Series account from which payment is to be made and the
purpose for which payment is to be made; or

(c) In payment of the fees and in reimbursement of
the expenses and liabilities of the Custodian attributable to
such Series.

3. Promptly after the close of business on each day, the
Custodian shall furnish the Fund with confirmations and a
summary, on a per Series basis, of all transfers to or from the
account of the Fund for a Series, either hereunder or with any
co-custodian or sub-custodian appointed in accordance with this
Agreement during said day. Where Securities are transferred to
the account of the Fund for a Series, the Custodian shall also
by book-entry or otherwise identify as belonging to such Series
a quantity of Securities in a fungible bulk of Securities
registered in the name of the Custodian (or its nominee) or
shown on the Custodian's account on the books of the Book-Entry
System or the Depository. At least monthly and from time to
time, the Custodian shall furnish the Fund with a detailed
statement, on a per Series basis, of the Securities and moneys

held by the Custodian for the Fund.

4. Except as otherwise provided in paragraph 7 of this
Article and in Article VIII, all Securities held by the
Custodian hereunder, which are issued or issuable only in

-6-

bearer form, except such Securities as are held in the
Book-Entry System, shall be held by the Custodian in that form;
all other Securities held hereunder may be registered in the
name of the Fund, in the name of any duly appointed registered
nominee of the Custodian as the Custodian may from time to time
determine, or in the name of the Book-Entry System or the
Depository or their successor or successors, or their nominee
or nominees. The Fund agrees to furnish to the Custodian
appropriate instruments to enable the Custodian to hold or
deliver in proper form for transfer, or to register in the name
of its registered nominee or in the name of the Book-Entry
System or the Depository any Securities which it may hold
hereunder and which may from time to time be registered in the
name of the Fund. The Custodian shall hold all such Securities
specifically allocated to a Series which are not held in the
Book-Entry System or in the Depository in a separate account in
the name of such Series physically segregated at all times from
those of any other person or persons.

5. Except as otherwise provided in this Agreement and
unless otherwise instructed to the contrary by a Certificate,
the Custodian by itself, or through the use of the Book-Entry
System or the Depository with respect to Securities held
hereunder and therein deposited, shall with respect to all
Securities held for the Fund hereunder in accordance with
preceding paragraph 4:

(a) Collect all income due or payable;

(b) Present for payment and collect the amount pay-
able upon such Securities which are called, but only if either
(i) the Custodian receives a written notice of such call, or
(ii) notice of such call appears in one or more of the
publications listed in Appendix C annexed hereto, which may be
amended at any time by the Custodian without the prior
notification or consent of the Fund;

(d) Surrender Securities in temporary form for
definitive Securities;

(e) Execute, as custodian, any necessary declara-
tions or certificates of ownership under the Federal Income Tax
Laws or the laws or regulations of any other taxing authority

now or hereafter in effect; and

(f) Hold directly, or through the Book-Entry System
or the Depository with respect to Securities therein deposited,
for the account of a Series, all rights and similar securities
issued with respect to any Securities held by the Custodian for
such Series hereunder.

-7-

6. Upon receipt of a Certificate and not otherwise, the
Custodian, directly or through the use of the Book-Entry System
or the Depository, shall:

(a) Execute and deliver to such persons as may be
designated in such Certificate proxies, consents, authoriza-
tions, and any other instruments whereby the authority of the
Fund as owner of any Securities held by the Custodian hereunder
for the Series specified in such Certificate may be exercised;

(b) Deliver any Securities held by the Custodian
hereunder for the Series specified in such Certificate in
exchange for other Securities or cash issued or paid in con-
nection with the liquidation, reorganization, refinancing,
merger, consolidation or recapitalization of any corporation,
or the exercise of any conversion privilege and receive and
hold hereunder specifically allocated to such Series any cash
or other Securities received in exchange;

(c) Deliver any Securities held by the Custodian
hereunder for the Series specified in such Certificate to any
protective committee, reorganization committee or other person
in connection with the reorganization, refinancing, merger,
consolidation, recapitalization or sale of assets of any
corporation, and receive and hold hereunder specifically al-
located to such Series such certificates of deposit, interim
receipts or other instruments or documents as may be issued to
it to evidence such delivery;

(d) Make such transfers or exchanges of the assets
of the Series specified in such Certificate, and take such
other steps as shall be stated in such Certificate to be for
the purpose of effectuating any duly authorized plan of
liquidation, reorganization, merger, consolidation or
recapitalization of the Fund; and

(e) Present for payment and collect the amount pay-
able upon Securities not described in preceding paragraph 5(b)
of this Article which may be called as specified in the
Certificate.

7. Notwithstanding any provision elsewhere contained
herein, the Custodian shall not be required to obtain posses-
sion of any instrument or certificate representing any Futures

Contract, any Option, or any Futures Contract Option until
after it shall have determined, or shall have received a
Certificate from the Fund stating, that any such instruments or
certificates are available. The Fund shall deliver to the
Custodian such a Certificate no later than the business day
preceding the availability of any such instrument or
certificate. Prior to such availability, the Custodian shall
comply with Section 17(f) of the Investment Company Act of
1940, as amended, in connection with the purchase, sale,

-8-

settlement, closing out or writing of Futures Contracts, Op-
tions, or Futures Contract Options by making payments or
deliveries specified in Certificates received by the Custodian
in connection with any such purchase, sale, writing, settlement
or closing out upon its receipt from a broker, dealer, or
futures commission merchant of a statement or confirmation
reasonably believed by the Custodian to be in the form
customarily used by brokers, dealers, or future commission
merchants with respect to such Futures Contracts, Options, or
Futures Contract Options, as the case may be, confirming that
such Security is held by such broker, dealer or futures com-
mission merchant, in book-entry form or otherwise, in the name
of the Custodian (or any nominee of the Custodian) as custodian
for the Fund, provided, however, that notwithstanding the
foregoing, payments to or deliveries from the Margin Account
and payments with respect to Securities to which a Margin
Account relates, shall be made in accordance with the terms and
conditions of the Margin Account Agreement. Whenever any such
instruments or certificates are available, the Custodian shall,
notwithstanding any provision in this Agreement to the
contrary, make payment for any Futures Contract, Option, or
Futures Contract Option for which such instruments or such
certificates are available only against the delivery to the
Custodian of such instrument or such certificate, and deliver
any Futures Contract, Option or Futures Contract Option for
which such instruments or such certificates are available only
against receipt by the Custodian of payment therefor. Any such
instrument or certificate delivered to the Custodian shall be
held by the Custodian hereunder in accordance with, and subject
to, the provisions of this Agreement.

ARTICLE IV

PURCHASE AND SALE OF INVESTMENTS OF THE FUND
OTHER THAN OPTIONS, FUTURES CONTRACTS AND
FUTURES CONTRACT OPTIONS

1. Promptly after each purchase of Securities by the
Fund, other than a purchase of an Option, a Futures Contract,
or a Futures Contract Option, the Fund shall deliver to the
Custodian (i) with respect to each purchase of Securities which

are not Money Market Securities, a Certificate, and (ii) with
respect to each purchase of Money Market Securities, a
Certificate or Oral Instructions, specifying with respect to
each such purchase: (a) the Series to which such Securities are
to be specifically allocated; (b) the name of the issuer and
the title of the Securities; (c) the number of shares or the
principal amount purchased and accrued interest, if any; (d)
the date of purchase and settlement; (e) the purchase price per
unit; (f) the total amount payable upon such purchase; (g) the
name of the person from whom or the broker through whom the
purchase was made, and the name of the clearing broker, if any;
and (h) the name of the broker to

-9-

whom payment is to be made. The Custodian shall, upon receipt
of Securities purchased by or for the Fund, pay to the broker
specified in the Certificate out of the moneys held for the
account of such Series the total amount payable upon such
purchase, provided that the same conforms to the total amount
payable as set forth in such Certificate or Oral Instructions.

2. Promptly after each sale of Securities by the Fund,
other than a sale of any Option, Futures Contract, Futures
Contract Option, or any Reverse Repurchase Agreement, the Fund
shall deliver to the Custodian (i) with respect to each sale of
Securities which are not Money Market Securities, a
Certificate, and (ii) with respect to each sale of Money Market
Securities, a Certificate or Oral Instructions, specifying with
respect to each such sale: (a) the Series to which such
Securities were specifically allocated; (b) the name of the
issuer and the title of the Security; (c) the number of shares
or principal amount sold, and accrued interest, if any; (d) the
date of sale; (e) the sale price per unit; (f) the total amount
payable to the Fund upon such sale; (g) the name of the broker
through whom or the person to whom the sale was made, and the
name of the clearing broker, if any; and (h) the name of the
broker to whom the Securities are to be delivered. The
Custodian shall deliver the Securities specifically allocated
to such Series to the broker specified in the Certificate
against payment upon receipt of the total amount payable to the
Fund upon such sale, provided that the same conforms to the
total amount payable as set forth in such Certificate or Oral
Instructions.

ARTICLE V

OPTIONS

1. Promptly after the purchase of any Option by the
Fund, the Fund shall deliver to the Custodian a Certificate
specifying with respect to each Option purchased: (a) the
Series to which such Option is specifically allocated; (b) the

type of Option (put or call); (c) the name of the issuer and
the title and number of shares subject to such Option or, in
the case of a Stock Index Option, the stock index to which such
Option relates and the number of Stock Index Options purchased;
(d) the expiration date; (e) the exercise price; (f) the dates
of purchase and settlement; (g) the total amount payable by the
Fund in connection with such purchase; (h) the name of the
Clearing Member through whom such Option was purchased; and (i)
the name of the broker to whom payment is to be made. The
Custodian shall pay, upon receipt of a Clearing Member's
statement confirming the purchase of such Option held by such
Clearing Member for the account of the Custodian (or any duly
appointed and registered nominee of the Custodian) as custodian
for the Fund, out of moneys held for the account of the Series
to which such Option is to be specifically allocated, the total
amount payable upon such

-10-

purchase to the Clearing Member through whom the purchase was
made, provided that the same conforms to the total amount
payable as set forth in such Certificate.

2. Promptly after the sale of any Option purchased by
the Fund pursuant to paragraph 1 hereof, the Fund shall deliver
to the Custodian a Certificate specifying with respect to each
such sale: (a) the Series to which such Option was specifically
allocated; (b) the type of Option (put or call); (c) the name
of the issuer and the title and number of shares subject to
such Option or, in the case of a Stock Index Option, the stock
index to which such Option relates and the number of Stock
Index Options sold; (d) the date of sale; (e) the sale price;
(f) the date of settlement; (g) the total amount payable to the
Fund upon such sale; and (h) the name of the Clearing Member
through whom the sale was made. The Custodian shall consent to
the delivery of the Option sold by the Clearing Member which
previously supplied the confirmation described in preceding
paragraph 1 of this Article with respect to such Option against
payment to the Custodian of the total amount payable to the
Fund, provided that the same conforms to the total amount
payable as set forth in such Certificate.

3. Promptly after the exercise by the Fund of any Call
Option purchased by the Fund pursuant to paragraph 1 hereof,
the Fund shall deliver to the Custodian a Certificate specify-
ing with respect to such Call Option: (a) the Series to which
such Call Option was specifically allocated; (b) the name of
the issuer and the title and number of shares subject to the
Call Option; (c) the expiration date; (d) the date of exercise
and settlement; (e) the exercise price per share; (f) the total
amount to be paid by the Fund upon such exercise; and (g) the
name of the Clearing Member through whom such Call Option was
exercised. The Custodian shall, upon receipt of the Securities
underlying the Call Option which was exercised, pay out of the

moneys held for the account of the Series to which such Call
Option was specifically allocated the total amount payable to
the Clearing Member through whom the Call Option was exercised,
provided that the same conforms to the total amount payable as
set forth in such Certificate.

4. Promptly after the exercise by the Fund of any Put
Option purchased by the Fund pursuant to paragraph 1 hereof,
the Fund shall deliver to the Custodian a Certificate specify-
ing with respect to such Put Option: (a) the Series to which
such Put Option was specifically allocated; (b) the name of the
issuer and the title and number of shares subject to the Put
Option; (c) the expiration date; (d) the date of exercise and
settlement; (e) the exercise price per share; (f) the total
amount to be paid to the Fund upon such exercise; and (g) the
name of the Clearing Member through whom such Put Option was
exercised. The Custodian shall, upon receipt of the amount
payable upon the exercise of the Put Option, deliver or direct
the Depository to deliver the Securities specifically

-11-

allocated to such Series, provided the same conforms to the
amount payable to the Fund as set forth in such Certificate.

5. Promptly after the exercise by the Fund of any Stock
Index Option purchased by the Fund pursuant to paragraph 1
hereof, the Fund shall deliver to the Custodian a Certificate
specifying with respect to such Stock Index Option: (a) the
Series to which such Stock Index Option was specifically al-
located; (b) the type of Stock Index Option (put or call); (c)
the number of Options being exercised; (d) the stock index to
which such Option relates; (e) the expiration date; (f) the
exercise price; (g) the total amount to be received by the Fund
in connection with such exercise; and (h) the Clearing Member
from whom such payment is to be received.

6. Whenever the Fund writes a Covered Call Option, the
Fund shall promptly deliver to the Custodian a Certificate
specifying with respect to such Covered Call Option: (a) the
Series for which such Covered Call Option was written; (b) the
name of the issuer and the title and number of shares for which
the Covered Call Option was written and which underlie the
same; (c) the expiration date; (d) the exercise price; (e) the
premium to be received by the Fund; (f) the date such Covered
Call Option was written; and (g) the name of the Clearing
Member through whom the premium is to be received. The
Custodian shall deliver or cause to be delivered, in exchange
for receipt of the premium specified in the Certificate with
respect to such Covered Call Option, such receipts as are
required in accordance with the customs prevailing among
Clearing Members dealing in Covered Call Options and shall
impose, or direct the Depository to impose, upon the underlying
Securities specified in the Certificate specifically allocated

to such Series such restrictions as may be required by such
receipts. Notwithstanding the foregoing, the Custodian has the
right, upon prior written notification to the Fund, at any time
to refuse to issue any receipts for Securities in the
possession of the Custodian and not deposited with the
Depository underlying a Covered Call Option.

7. Whenever a Covered Call Option written by the Fund
and described in the preceding paragraph of this Article is
exercised, the Fund shall promptly deliver to the Custodian a
Certificate instructing the Custodian to deliver, or to direct
the Depository to deliver, the Securities subject to such
Covered Call Option and specifying: (a) the Series for which
such Covered Call Option was written; (b) the name of the is-
suer and the title and number of shares subject to the Covered
Call Option; (c) the Clearing Member to whom the underlying
Securities are to be delivered; and (d) the total amount pay-
able to the Fund upon such delivery. Upon the return and/or
cancellation of any receipts delivered pursuant to paragraph 6
of this Article, the Custodian shall deliver, or direct the
Depository to deliver, the underlying Securities as specified

-12-

in the Certificate against payment of the amount to be received
as set forth in such Certificate.

8. Whenever the Fund writes a Put Option, the Fund shall
promptly deliver to the Custodian a Certificate specifying with
respect to such Put Option: (a) the Series for which such Put
Option was written; (b) the name of the issuer and the title
and number of shares for which the Put Option is written and
which underlie the same; (c) the expiration date; (d) the
exercise price; (e) the premium to be received by the Fund; (f)
the date such Put Option is written; (g) the name of the
Clearing Member through whom the premium is to be received and
to whom a Put Option guarantee letter is to be delivered; (h)
the amount of cash, and/or the amount and kind of Securities,
if any, specifically allocated to such Series to be deposited
in the Senior Security Account for such Series; and (i) the
amount of cash and/or the amount and kind of Securities
specifically allocated to such Series to be deposited into the
Collateral Account for such Series. The Custodian shall, after
making the deposits into the Collateral Account specified in
the Certificate, issue a Put Option guarantee letter
substantially in the form utilized by the Custodian on the date
hereof, and deliver the same to the Clearing Member specified
in the Certificate against receipt of the premium specified in
said Certificate. Notwithstanding the foregoing, the Custodian
shall be under no obligation to issue any Put Option guarantee
letter or similar document if it is unable to make any of the
representations contained therein.

9. Whenever a Put Option written by the Fund and

described in the preceding paragraph is exercised, the Fund
shall promptly deliver to the Custodian a Certificate specify-
ing: (a) the Series to which such Put Option was written; (b)
the name of the issuer and title and number of shares subject
to the Put Option; (c) the Clearing Member from whom the
underlying Securities are to be received; (d) the total amount
payable by the Fund upon such delivery; (e) the amount of cash
and/or the amount and kind of Securities specifically allocated
to such Series to be withdrawn from the Collateral Account for
such Series and (f) the amount of cash and/or the amount and
kind of Securities, specifically allocated to such Series, if
any, to be withdrawn from the Senior Security Account. Upon
the return and/or cancellation of any Put Option guarantee
letter or similar document issued by the Custodian in
connection with such Put Option, the Custodian shall pay out of
the moneys held for the account of the Series to which such Put
Option was specifically allocated the total amount payable to
the Clearing Member specified in the Certificate as set forth
in such Certificate against delivery of such Securities, and
shall make the withdrawals specified in such Certificate.

10. Whenever the Fund writes a Stock Index Option, the
Fund shall promptly deliver to the Custodian a Certificate
specifying with respect to such Stock Index Option: (a) the

-13-

Series for which such Stock Index Option was written; (b)
whether such Stock Index Option is a put or a call; (c) the
number of options written; (d) the stock index to which such
Option relates; (e) the expiration date; (f) the exercise
price; (g) the Clearing Member through whom such Option was
written; (h) the premium to be received by the Fund; (i) the
amount of cash and/or the amount and kind of Securities, if
any, specifically allocated to such Series to be deposited in
the Senior Security Account for such Series; (j) the amount of
cash and/or the amount and kind of Securities, if any,
specifically allocated to such Series to be deposited in the
Collateral Account for such Series; and (k) the amount of cash
and/or the amount and kind of Securities, if any, specifically
allocated to such Series to be deposited in a Margin Account,
and the name in which such account is to be or has been
established. The Custodian shall, upon receipt of the premium
specified in the Certificate, make the deposits, if any, into
the Senior Security Account specified in the Certificate, and
either (1) deliver such receipts, if any, which the Custodian
has specifically agreed to issue, which are in accordance with
the customs prevailing among Clearing Members in Stock Index
Options and make the deposits into the Collateral Account
specified in the Certificate, or (2) make the deposits into the
Margin Account specified in the Certificate.

11. Whenever a Stock Index Option written by the Fund and
described in the preceding paragraph of this Article is

exercised, the Fund shall promptly deliver to the Custodian a
Certificate specifying with respect to such Stock Index Option:
(a) the Series for which such Stock Index Option was written;
(b) such information as may be necessary to identify the Stock
Index Option being exercised; (c) the Clearing Member through
whom such Stock Index Option is being exercised; (d) the total
amount payable upon such exercise, and whether such amount is
to be paid by or to the Fund; (e) the amount of cash and/or
amount and kind of Securities, if any, to be withdrawn from the
Margin Account; and (f) the amount of cash and/or amount and
kind of Securities, if any, to be withdrawn from the Senior
Security Account for such Series; and the amount of cash and/or
the amount and kind of Securities, if any, to be withdrawn from
the Collateral Account for such Series. Upon the return and/or
cancellation of the receipt, if any, delivered pursuant to the
preceding paragraph of this Article, the Custodian shall pay
out of the moneys held for the account of the Series to which
such Stock Index Option was specifically allocated to the
Clearing Member specified in the Certificate the total amount
payable, if any, as specified therein.

12. Whenever the Fund purchases any Option identical to
a previously written Option described in paragraphs, 6, 8 or 10
of this Article in a transaction expressly designated as a
"Closing Purchase Transaction" in order to liquidate its posi-
tion as a writer of an Option, the Fund shall promptly deliver
to the Custodian a Certificate specifying with respect to the

-14-

Option being purchased: (a) that the transaction is a Closing
Purchase Transaction; (b) the Series for which the Option was
written; (c) the name of the issuer and the title and number of
shares subject to the Option, or, in the case of a Stock Index
Option, the stock index to which such Option relates and the
number of Options held; (d) the exercise price; (e) the premium
to be paid by the Fund; (f) the expiration date; (g) the type
of Option (put or call); (h) the date of such purchase; (i) the
name of the Clearing Member to whom the premium is to be paid;
and (j) the amount of cash and/or the amount and kind of
Securities, if any, to be withdrawn from the Collateral
Account, a specified Margin Account, or the Senior Security
Account for such Series. Upon the Custodian's payment of the
premium and the return and/or cancellation of any receipt
issued pursuant to paragraphs 6, 8 or 10 of this Article with
respect to the Option being liquidated through the Closing
Purchase Transaction, the Custodian shall remove, or direct the
Depository to remove, the previously imposed restrictions on
the Securities underlying the Call Option.

13. Upon the expiration, exercise or consummation of a
Closing Purchase Transaction with respect to any Option
purchased or written by the Fund and described in this Article,
the Custodian shall delete such Option from the statements

delivered to the Fund pursuant to paragraph 3 Article III
herein, and upon the return and/or cancellation of any receipts
issued by the Custodian, shall make such withdrawals from the
Collateral Account, and the Margin Account and/or the Senior
Security Account as may be specified in a Certificate received
in connection with such expiration, exercise, or consummation.

ARTICLE VI

FUTURES CONTRACTS

1. Whenever the Fund shall enter into a Futures
Contract, the Fund shall deliver to the Custodian a Certificate
specifying with respect to such Futures Contract, (or with
respect to any number of identical Futures Contract(s)): (a)
the Series for which the Futures Contract is being entered; (b)
the category of Futures Contract (the name of the underlying
stock index or financial instrument); (c) the number of
identical Futures Contracts entered into; (d) the delivery or
settlement date of the Futures Contract(s); (e) the date the
Futures Contract(s) was (were) entered into and the maturity
date; (f) whether the Fund is buying (going long) or selling
(going short) on such Futures Contract(s); (g) the amount of
cash and/or the amount and kind of Securities, if any, to be
deposited in the Senior Security Account for such Series; (h)
the name of the broker, dealer, or futures commission merchant
through whom the Futures Contract was entered into; and (i) the
amount of fee or commission, if any, to be paid and the name of
the broker, dealer, or futures

-15-

commission merchant to whom such amount is to be paid. The
Custodian shall make the deposits, if any, to the Margin
Account in accordance with the terms and conditions of the
Margin Account Agreement. The Custodian shall make payment
out of the moneys specifically allocated to such Series of the
fee or commission, if any, specified in the Certificate and
deposit in the Senior Security Account for such Series the
amount of cash and/or the amount and kind of Securities
specified in said Certificate.

2. (a) Any variation margin payment or similar payment
required to be made by the Fund to a broker, dealer, or futures
commission merchant with respect to an outstanding Futures
Contract, shall be made by the Custodian in accordance with the
terms and conditions of the Margin Account Agreement.

(b) Any variation margin payment or similar payment
from a broker, dealer, or futures commission merchant to the
Fund with respect to an outstanding Futures Contract, shall be
received and dealt with by the Custodian in accordance with the
terms and conditions of the Margin Account Agreement.

3. Whenever a Futures Contract held by the Custodian
hereunder is retained by the Fund until delivery or settlement
is made on such Futures Contract, the Fund shall deliver to the
Custodian a Certificate specifying: (a) the Futures Contract
and the Series to which the same relates; (b) with respect to
a Stock Index Futures Contract, the total cash settlement
amount to be paid or received, and with respect to a Financial
Futures Contract, the Securities and/or amount of cash to be
delivered or received; (c) the broker, dealer, or futures
commission merchant to or from whom payment or delivery is to
be made or received; and (d) the amount of cash and/or
Securities to be withdrawn from the Senior Security Account for
such Series. The Custodian shall make the payment or delivery
specified in the Certificate, and delete such Futures Contract
from the statements delivered to the Fund pursuant to paragraph
3 of Article III herein.

4. Whenever the Fund shall enter into a Futures Contract
to offset a Futures Contract held by the Custodian hereunder,
the Fund shall deliver to the Custodian a Certificate
specifying: (a) the items of information required in a
Certificate described in paragraph 1 of this Article, and (b)
the Futures Contract being offset. The Custodian shall make
payment out of the money specifically allocated to such Series
of the fee or commission, if any, specified in the Certificate
and delete the Futures Contract being offset from the
statements delivered to the Fund pursuant to paragraph 3 of
Article III herein, and make such withdrawals from the Senior
Security Account for such Series as may be specified in such
Certificate. The withdrawals, if any, to be made from

-16-

the Margin Account shall be made by the Custodian in
accordance with the terms and conditions of the Margin Account
Agreement.

ARTICLE VII

FUTURES CONTRACT OPTIONS

1. Promptly after the purchase of any Futures Contract
Option by the Fund, the Fund shall promptly deliver to the
Custodian a Certificate specifying with respect to such Futures
Contract Option: (a) the Series to which such Option is
specifically allocated; (b) the type of Futures Contract Option
(put or call); (c) the type of Futures Contract and such other
information as may be necessary to identify the Futures
Contract underlying the Futures Contract Option purchased; (d)
the expiration date; (e) the exercise price; (f) the dates of
purchase and settlement; (g) the amount of premium to be paid
by the Fund upon such purchase; (h) the name of the broker or

futures commission merchant through whom such option was
purchased; and (i) the name of the broker, or futures
commission merchant, to whom payment is to be made. The
Custodian shall pay out of the moneys specifically allocated to
such Series, the total amount to be paid upon such purchase to
the broker or futures commissions merchant through whom the
purchase was made, provided that the same conforms to the
amount set forth in such Certificate.

2. Promptly after the sale of any Futures Contract Op-
tion purchased by the Fund pursuant to paragraph 1 hereof, the
Fund shall promptly deliver to the Custodian a Certificate
specifying with respect to each such sale: (a) Series to which
such Futures Contract Option was specifically allocated; (b)
the type of Future Contract Option (put or call); (c) the type
of Futures Contract and such other information as may be
necessary to identify the Futures Contract underlying the
Futures Contract Option; (d) the date of sale; (e) the sale
price; (f) the date of settlement; (g) the total amount payable
to the Fund upon such sale; and (h) the name of the broker of
futures commission merchant through whom the sale was made.
The Custodian shall consent to the cancellation of the Futures
Contract Option being closed against payment to the Custodian
of the total amount payable to the Fund, provided the same
conforms to the total amount payable as set forth in such
Certificate.

3. Whenever a Futures Contract Option purchased by the
Fund pursuant to paragraph 1 is exercised by the Fund, the Fund
shall promptly deliver to the Custodian a Certificate
specifying: (a) the Series to which such Futures Contract Op-
tion was specifically allocated; (b) the particular Futures
Contract Option (put or call) being exercised; (c) the type of
Futures Contract underlying the Futures Contract Option; (d)
the date of exercise; (e) the name of the broker or futures

-18-

commission merchant through whom the Futures Contract Option
is exercised; (f) the net total amount, if any, payable by the
Fund; (g) the amount, if any, to be received by the Fund; and
(h) the amount of cash and/or the amount and kind of
Securities to be deposited in the Senior Security Account for
such Series. The Custodian shall make, out of the moneys and
Securities specifically allocated to such Series, the
payments, if any, and the deposits, if any, into the Senior
Security Account as specified in the Certificate. The
deposits, if any, to be made to the Margin Account shall be
made by the Custodian in accordance with the terms and
conditions of the Margin Account Agreement.

4. Whenever the Fund writes a Futures Contract Option,
the Fund shall promptly deliver to the Custodian a Certificate
specifying with respect to such Futures Contract Option: (a)

the Series for which such Futures Contract Option was written;
(b) the type of Futures Contract Option (put or call); (c) the
type of Futures Contract and such other information as may be
necessary to identify the Futures Contract underlying the
Futures Contract Option; (d) the expiration date; (e) the
exercise price; (f) the premium to be received by the Fund; (g)
the name of the broker or futures commission merchant through
whom the premium is to be received; and (h) the amount of cash
and/or the amount and kind of Securities, if any, to be
deposited in the Senior Security Account for such Series. The
Custodian shall, upon receipt of the premium specified in the
Certificate, make out of the moneys and Securities specifically
allocated to such Series the deposits into the Senior Security
Account, if any, as specified in the Certificate. The
deposits, if any, to be made to the Margin Account shall be
made by the Custodian in accordance with the terms and
conditions of the Margin Account Agreement.

5. Whenever a Futures Contract Option written by the
Fund which is a call is exercised, the Fund shall promptly
deliver to the Custodian a Certificate specifying: (a) the
Series to which such Futures Contract Option was specifically
allocated; (b) the particular Futures Contract Option
exercised; (c) the type of Futures Contract underlying the
Futures Contract Option; (d) the name of the broker or futures
commission merchant through whom such Futures Contract Option
was exercised; (e) the net total amount, if any, payable to the
Fund upon such exercise; (f) the net total amount, if any,
payable by the Fund upon such exercise; and (g) the amount of
cash and/or the amount and kind of Securities to be deposited
in the Senior Security Account for such Series. The Custodian
shall, upon its receipt of the net total amount payable to the
Fund, if any, specified in such Certificate make the payments,
if any, and the deposits, if any, into the Senior Security
Account as specified in the Certificate. The deposits, if any,
to be made to the Margin Account shall be made by the Custodian
in accordance with the terms and conditions of the Margin
Account Agreement.

-18-

6. Whenever a Futures Contract Option which is written
by the Fund and which is a put is exercised, the Fund shall
promptly deliver to the Custodian a Certificate specifying: (a)
the Series to which such Option was specifically allocated; (b)
the particular Futures Contract Option exercised; (c) the type
of Futures Contract underlying such Futures Contract Option;
(d) the name of the broker or futures commission merchant
through whom such Futures Contract Option is exercised; (e) the
net total amount, if any, payable to the Fund upon such
exercise; (f) the net total amount, if any, payable by the Fund
upon such exercise; and (g) the amount and kind of Securities
and/or cash to be withdrawn from or deposited in, the Senior
Security Account for such Series, if any. The Custodian shall,

upon its receipt of the net total amount payable to the Fund,
if any, specified in the Certificate, make out of the moneys
and Securities specifically allocated to such Series, the
payments, if any, and the deposits, if any, into the Senior
Security Account as specified in the Certificate. The deposits
to and/or withdrawals from the Margin Account, if any, shall be
made by the Custodian in accordance with the terms and
conditions of the Margin Account Agreement.

7. Whenever the Fund purchases any Futures Contract
Option identical to a previously written Futures Contract Op-
tion described in this Article in order to liquidate its posi-
tion as a writer of such Futures Contract Option, the Fund
shall promptly deliver to the Custodian a Certificate specify-
ing with respect to the Futures Contract Option being
purchased: (a) the Series to which such Option is specifically
allocated; (b) that the transaction is a closing transaction;
(c) the type of Future Contract and such other information as
may be necessary to identify the Futures Contract underlying
the Futures Option Contract; (d) the exercise price; (e) the
premium to be paid by the Fund; (f) the expiration date; (g)
the name of the broker or futures commission merchant to whom
the premium is to be paid; and (h) the amount of cash and/or
the amount and kind of Securities, if any, to be withdrawn from
the Senior Security Account for such Series. The Custodian
shall effect the withdrawals from the Senior Security Account
specified in the Certificate. The withdrawals, if any, to be
made from the Margin Account shall be made by the Custodian in
accordance with the terms and conditions of the Margin Account
Agreement.

8. Upon the expiration, exercise, or consummation of a
closing transaction with respect to, any Futures Contract Op-
tion written or purchased by the Fund and described in this
Article, the Custodian shall (a) delete such Futures Contract
Option from the statements delivered to the Fund pursuant to
paragraph 3 of Article III herein and, (b) make such withdraw-
als from and/or in the case of an exercise such deposits into
the Senior Security Account as may be specified in a
Certificate. The deposits to and/or withdrawals from the

-19-

Margin Account, if any, shall be made by the Custodian in ac-
cordance with the terms and conditions of the Margin Account
Agreement.

9. Futures Contracts acquired by the Fund through the
exercise of a Futures Contract Option described in this Article
shall be subject to Article VI hereof.

ARTICLE VIII

SHORT SALES

1. Promptly after any short sales by any Series of the
Fund, the Fund shall promptly deliver to the Custodian a
Certificate specifying: (a) the Series for which such short
sale was made; (b) the name of the issuer and the title of the
Security; (c) the number of shares or principal amount sold,
and accrued interest or dividends, if any; (d) the dates of the
sale and settlement; (e) the sale price per unit; (f) the total
amount credited to the Fund upon such sale, if any, (g) the
amount of cash and/or the amount and kind of Securities, if
any, which are to be deposited in a Margin Account and the name
in which such Margin Account has been or is to be established;
(h) the amount of cash and/or the amount and kind of
Securities, if any, to be deposited in a Senior Security
Account, and (i) the name of the broker through whom such short
sale was made. The Custodian shall upon its receipt of a
statement from such broker confirming such sale and that the
total amount credited to the Fund upon such sale, if any, as
specified in the Certificate is held by such broker for the
account of the Custodian (or any nominee of the Custodian) as
custodian of the Fund, issue a receipt or make the deposits
into the Margin Account and the Senior Security Account
specified in the Certificate.

2. In connection with the closing-out of any short sale,
the Fund shall promptly deliver to the Custodian a Certificate
specifying with respect to each such closing out: (a) the
Series for which such transaction is being made; (b) the name
of the issuer and the title of the Security; (c) the number of
shares or the principal amount, and accrued interest or
dividends, if any, required to effect such closing-out to be
delivered to the broker; (d) the dates of closing-out and
settlement; (e) the purchase price per unit; (f) the net total
amount payable to the Fund upon such closing-out; (g) the net
total amount payable to the broker upon such closing-out; (h)
the amount of cash and the amount and kind of Securities to be
withdrawn, if any, from the Margin Account; (i) the amount of
cash and/or the amount and kind of Securities, if any, to be
withdrawn from the Senior Security Account; and (j) the name of
the broker through whom the Fund is effecting such
closing-out. The Custodian shall, upon receipt of the net
total amount payable to the Fund upon such closing-out, and the
return and/or cancellation of the receipts, if any, issued

-20-

by the Custodian with respect to the short sale being
closed-out, pay out of the moneys held for the account of the
Fund to the broker the net total amount payable to the broker,
and make the withdrawals from the Margin Account and the
Senior Security Account, as the same are specified in the
Certificate.

ARTICLE IX

REVERSE REPURCHASE AGREEMENTS

1. Promptly after the Fund enters a Reverse Repurchase
Agreement with respect to Securities and money held by the
Custodian hereunder, the Fund shall deliver to the Custodian a
Certificate, or in the event such Reverse Repurchase Agreement
is a Money Market Security, a Certificate or Oral Instructions
specifying: (a) the Series for which the Reverse Repurchase
Agreement is entered; (b) the total amount payable to the Fund
in connection with such Reverse Repurchase Agreement and
specifically allocated to such Series; (c) the broker or dealer
through or with whom the Reverse Repurchase Agreement is
entered; (d) the amount and kind of Securities to be delivered
by the Fund to such broker or dealer; (e) the date of such
Reverse Repurchase Agreement; and (f) the amount of cash and/or
the amount and kind of Securities, if any, specifically
allocated to such Series to be deposited in a Senior Security
Account for such Series in connection with such Reverse
Repurchase Agreement. The Custodian shall, upon receipt of the
total amount payable to the Fund specified in the Certificate
or Oral Instructions make the delivery to the broker or dealer,
and the deposits, if any, to the Senior Security Account,
specified in such Certificate or Oral Instructions.

2. Upon the termination of a Reverse Repurchase Agree-
ment described in preceding paragraph 1 of this Article, the
Fund shall promptly deliver a Certificate or, in the event such
Reverse Repurchase Agreement is a Money Market Security, a
Certificate or Oral Instructions to the Custodian specifying:
(a) the Reverse Repurchase Agreement being terminated and the
Series for which same was entered; (b) the total amount payable
by the Fund in connection with such termination; (c) the amount
and kind of Securities to be received by the Fund and
specifically allocated to such Series in connection with such
termination; (d) the date of termination; (e) the name of the
broker or dealer with or through whom the Reverse Repurchase
Agreement is to be terminated; and (f) the amount of cash
and/or the amount and kind of Securities to be withdrawn from
the Senior Securities Account for such Series. The Custodian
shall, upon receipt of the amount and kind of Securities to be
received by the Fund specified in the Certificate or Oral
Instructions, make the payment to the broker or dealer, and the
withdrawals, if any, from the Senior

-21-

Security Account, specified in such Certificate or Oral
Instructions.

ARTICLE X

LOAN OF PORTFOLIO SECURITIES OF THE FUND

1. Promptly after each loan of portfolio Securities
specifically allocated to a Series held by the Custodian
hereunder, the Fund shall deliver or cause to be delivered to
the Custodian a Certificate specifying with respect to each
such loan: (a) the Series to which the loaned Securities are
specifically allocated; (b) the name of the issuer and the
title of the Securities, (c) the number of shares or the
principal amount loaned, (d) the date of loan and delivery, (e)
the total amount to be delivered to the Custodian against the
loan of the Securities, including the amount of cash collateral
and the premium, if any, separately identified, and (f) the
name of the broker, dealer, or financial institution to which
the loan was made. The Custodian shall deliver the Securities
thus designated to the broker, dealer or financial institution
to which the loan was made upon receipt of the total amount
designated as to be delivered against the loan of Securities.
The Custodian may accept payment in connection with a delivery
otherwise than through the Book-Entry System or Depository only
in the form of a certified or bank cashier's check payable to
the order of the Fund or the Custodian drawn on New York
Clearing House funds and may deliver Securities in accordance
with the customs prevailing among dealers in securities.

2. Promptly after each termination of the loan of
Securities by the Fund, the Fund shall deliver or cause to be
delivered to the Custodian a Certificate specifying with
respect to each such loan termination and return of Securities:
(a) the Series to which the loaned Securities are specifically
allocated; (b) the name of the issuer and the title of the
Securities to be returned, (c) the number of shares or the
principal amount to be returned, (d) the date of termination,
(e) the total amount to be delivered by the Custodian
(including the cash collateral for such Securities minus any
offsetting credits as described in said Certificate), and (f)
the name of the broker, dealer, or financial institution from
which the Securities will be returned. The Custodian shall
receive all Securities returned from the broker, dealer, or
financial institution to which such Securities were loaned and
upon receipt thereof shall pay, out of the moneys held for the
account of the Fund, the total amount payable upon such return
of Securities as set forth in the Certificate.

-22-

ARTICLE XI

CONCERNING MARGIN ACCOUNTS, SENIOR SECURITY
ACCOUNTS, AND COLLATERAL ACCOUNTS

1. The Custodian shall, from time to time, make such
deposits to, or withdrawals from, a Senior Security Account as

specified in a Certificate received by the Custodian. Such
Certificate shall specify the Series for which such deposit or
withdrawal is to be made and the amount of cash and/or the
amount and kind of Securities specifically allocated to such
Series to be deposited in, or withdrawn from, such Senior
Security Account for such Series. In the event that the Fund
fails to specify in a Certificate the Series, the name of the
issuer, the title and the number of shares or the principal
amount of any particular Securities to be deposited by the
Custodian into, or withdrawn from, a Senior Securities Account,
the Custodian shall be under no obligation to make any such
deposit or withdrawal and shall so notify the Fund.

2. The Custodian shall make deliveries or payments from
a Margin Account to the broker, dealer, futures commission
merchant or Clearing Member in whose name, or for whose
benefit, the account was established as specified in the Margin
Account Agreement.

3. Amounts received by the Custodian as payments or
distributions with respect to Securities deposited in any
Margin Account shall be dealt with in accordance with the terms
and conditions of the Margin Account Agreement.

4. The Custodian shall have a continuing lien and
security interest in and to any property at any time held by
the Custodian in any Collateral Account described herein. In
accordance with applicable law the Custodian may enforce its
lien and realize on any such property whenever the Custodian
has made payment or delivery pursuant to any Put Option
guarantee letter or similar document or any receipt issued
hereunder by the Custodian. In the event the Custodian should
realize on any such property net proceeds which are less than
the Custodian's obligations under any Put Option guarantee
letter or similar document or any receipt, such deficiency
shall be a debt owed the Custodian by the Fund within the scope
of Article XIV herein.

5. On each business day the Custodian shall furnish the
Fund with a statement with respect to each Margin Account in
which money or Securities are held specifying as of the close
of business on the previous business day: (a) the name of the
Margin Account; (b) the amount and kind of Securities held
therein; and (c) the amount of money held therein. The
Custodian shall make available upon request to any broker,
dealer, or futures commission merchant specified in the name of
a Margin Account a copy of the statement furnished the Fund
with respect to such Margin Account.

-23-

6. Promptly after the close of business on each business
day in which cash and/or Securities are maintained in a
Collateral Account for any Series, the Custodian shall furnish

the Fund with a statement with respect to such Collateral Ac-
count specifying the amount of cash and/or the amount and kind
of Securities held therein. No later than the close of busi-
ness next succeeding the delivery to the Fund of such state-
ment, the Fund shall furnish to the Custodian a Certificate
specifying the then market value of the Securities described in
such statement. In the event such then market value is
indicated to be less than the Custodian's obligation with
respect to any outstanding Put Option guarantee letter or
similar document, the Fund shall promptly specify in a
Certificate the additional cash and/or Securities to be
deposited in such Collateral Account to eliminate such
deficiency.

ARTICLE XII

PAYMENT OF DIVIDENDS OR DISTRIBUTIONS

1. The Fund shall furnish to the Custodian a copy of the
resolution of the Board of Trustees of the Fund, certified by
the Secretary, the Clerk, any Assistant Secretary or any
Assistant Clerk, either (i) setting forth with respect to the
Series specified therein the date of the declaration of a
dividend or distribution, the date of payment thereof, the
record date as of which shareholders entitled to payment shall
be determined, the amount payable per Share of such Series to
the shareholders of record as of that date and the total amount
payable to the Dividend Agent and any sub-dividend agent or
co-dividend agent of the Fund on the payment date, or (ii)
authorizing with respect to the Series specified therein the
declaration of dividends and distributions on a daily basis and
authorizing the Custodian to rely on Oral Instructions or a
Certificate setting forth the date of the declaration of such
dividend or distribution, the date of payment thereof, the
record date as of which shareholders entitled to payment shall
be determined, the amount payable per Share of such Series to
the shareholders of record as of that date and the total amount
payable to the Dividend Agent on the payment date.

2. Upon the payment date specified in such resolution,
Oral Instructions or Certificate, as the case may be, the
Custodian shall pay out of the moneys held for the account of
each Series the total amount payable to the Dividend Agent and
any sub-dividend agent or co-dividend agent of the Fund with
respect to such Series.

-24-

ARTICLE XIII

SALE AND REDEMPTION OF SHARES

1. Whenever the Fund shall sell any Shares, it shall

deliver to the Custodian a Certificate duly specifying:

(a) The Series, the number of Shares sold, trade
date, and price; and

(b) The amount of money to be received by the
Custodian for the sale of such Shares and specifically al-
located to the separate account in the name of such Series.

2. Upon receipt of such money from the Transfer Agent,
the Custodian shall credit such money to the separate account
in the name of the Series for which such money was received.

3. Upon issuance of any Shares of any Series described
in the foregoing provisions of this Article, the Custodian
shall pay, out of the money held for the account of such
Series, all original issue or other taxes required to be paid
by the Fund in connection with such issuance upon the receipt
of a Certificate specifying the amount to be paid.

4. Except as provided hereinafter, whenever the Fund
desires the Custodian to make payment out of the money held by
the Custodian hereunder in connection with a redemption of any
Shares, it shall furnish to the Custodian a Certificate
specifying:

(a) The number and Series of Shares redeemed; and

(b) The amount to be paid for such Shares.

5. Upon receipt from the Transfer Agent of an advice
setting forth the Series and number of Shares received by the
Transfer Agent for redemption and that such Shares are in good
form for redemption, the Custodian shall make payment to the
Transfer Agent out of the moneys held in the separate account
in the name of the Series the total amount specified in the
Certificate issued pursuant to the foregoing paragraph 4 of
this Article.

6. Notwithstanding the above provisions regarding the
redemption of any Shares, whenever any Shares are redeemed
pursuant to any check redemption privilege which may from time
to time be offered by the Fund, the Custodian, unless otherwise
instructed by a Certificate, shall, upon receipt of an advice
from the Fund or its agent setting forth that the redemption is
in good form for redemption in accordance with the check
redemption procedure, honor the check presented as part of such
check redemption privilege out of the moneys held

-25-

in the separate account of the Series of the Shares being
redeemed.

ARTICLE XIV

OVERDRAFTS OR INDEBTEDNESS

1. If the Custodian, should in its sole discretion advance
funds on behalf of any Series which results in an overdraft
because the moneys held by the Custodian in the separate
account for such Series shall be insufficient to pay the total
amount payable upon a purchase of Securities specifically
allocated to such Series, as set forth in a Certificate or Oral
Instructions, or which results in an overdraft in the separate
account of such Series for some other reason, or if the Fund is
for any other reason indebted to the Custodian with respect to
a Series, including any indebtedness to The Bank of New York
under the Fund's Cash Management and Related Services
Agreement, (except a borrowing for investment or for temporary
or emergency purposes using Securities as collateral pursuant
to a separate agreement and subject to the provisions of
paragraph 2 of this Article), such overdraft or indebtedness
shall be deemed to be a loan made by the Custodian to the Fund
for such Series payable on demand and shall bear interest from
the date incurred at a rate per annum (based on a 360-day year
for the actual number of days involved) equal to 1/2% over
Custodian's prime commercial lending rate in effect from time
to time, such rate to be adjusted on the effective date of any
change in such prime commercial lending rate but in no event to
be less than 6% per annum. In addition, the Fund hereby agrees
that the Custodian shall have a continuing lien and security
interest in and to any property specifically allocated to such
Series at any time held by it for the benefit of such Series or
in which the Fund may have an interest which is then in the
Custodian's possession or control or in possession or control
of any third party acting in the Custodian's behalf. The Fund
authorizes the Custodian, in its sole discretion, at any time
to charge any such overdraft or indebtedness together with
interest due thereon against any balance of account standing to
such Series' credit on the Custodian's books. In addition, the
Fund hereby covenants that on each Business Day on which either
it intends to enter a Reverse Repurchase Agreement and/or
otherwise borrow from a third party, or which next succeeds a
Business Day on which at the close of business the Fund had
outstanding a Reverse Repurchase Agreement or such a borrowing,
it shall prior to 9 a.m., New York City time, advise the
Custodian, in writing, of each such borrowing, shall specify
the Series to which the same relates, and shall not incur any
indebtedness not so specified other than from the Custodian.

2. The Fund will cause to be delivered to the Custodian
by any bank (including, if the borrowing is pursuant to a

-26-

separate agreement, the Custodian) from which it borrows money
for investment or for temporary or emergency purposes using
Securities held by the Custodian hereunder as collateral for
such borrowings, a notice or undertaking in the form currently
employed by any such bank setting forth the amount which such
bank will loan to the Fund against delivery of a stated amount
of collateral. The Fund shall promptly deliver to the
Custodian a Certificate specifying with respect to each such
borrowing: (a) the Series to which such borrowing relates; (b)
the name of the bank, (c) the amount and terms of the borrow-
ing, which may be set forth by incorporating by reference an
attached promissory note, duly endorsed by the Fund, or other
loan agreement, (d) the time and date, if known, on which the
loan is to be entered into, (e) the date on which the loan
becomes due and payable, (f) the total amount payable to the
Fund on the borrowing date, (g) the market value of Securities
to be delivered as collateral for such loan, including the name
of the issuer, the title and the number of shares or the
principal amount of any particular Securities, and (h) a
statement specifying whether such loan is for investment
purposes or for temporary or emergency purposes and that such
loan is in conformance with the Investment Company Act of 1940
and the Fund's prospectus. The Custodian shall deliver on the
borrowing date specified in a Certificate the specified col-
lateral and the executed promissory note, if any, against
delivery by the lending bank of the total amount of the loan
payable, provided that the same conforms to the total amount
payable as set forth in the Certificate. The Custodian may, at
the option of the lending bank, keep such collateral in its
possession, but such collateral shall be subject to all rights
therein given the lending bank by virtue of any promissory note
or loan agreement. The Custodian shall deliver such Securities
as additional collateral as may be specified in a Certificate
to collateralize further any transaction described in this
paragraph. The Fund shall cause all Securities released from
collateral status to be returned directly to the Custodian, and
the Custodian shall receive from time to time such return of
collateral as may be tendered to it. In the event that the
Fund fails to specify in a Certificate the Series, the name of
the issuer, the title and number of shares or the principal
amount of any particular Securities to be delivered as
collateral by the Custodian, the Custodian shall not be under
any obligation to deliver any Securities.

ARTICLE XV

TERMINAL LINK

1. At no time and under no circumstances shall the Fund
be obligated to have or utilize the Terminal Link, and the
provisions of this Article shall apply if, but only if, the
Fund in its sole and absolute discretion elects to utilize the
Terminal Link to transmit Certificates to the Custodian.

-27-

2. The Terminal Link shall be utilized by the Fund only
for the purpose of the Fund providing Certificates to the
Custodian with respect to transactions involving Securities or
for the transfer of money to be applied to the payment of
dividends, distributions or redemptions of Fund Shares, and
shall be utilized by the Custodian only for the purpose of
providing notices to the Fund. Such use shall commence only
after the Fund shall have delivered to the Custodian a
Certificate substantially in the form of Exhibit D and shall
have established access codes. Each use of the Terminal Link
by the Fund shall constitute a representation and warranty that
the Terminal Link is being used only for the purposes permitted
hereby, that at least two Officers have each utilized an access
code, that such safekeeping procedures have been established by
the Fund, and that such use does not contravene the Investment
Company Act of 1940, as amended, or the rules or regulations
thereunder.

3. The Fund shall obtain and maintain at its own cost
and expense all equipment and services, including, but not
limited to communications services, necessary for it to utilize
the Terminal Link, and the Custodian shall not be responsible
for the reliability or availability of any such equipment or
services.

4. The Fund acknowledges that any data bases made
available as part of, or through the Terminal Link and any
proprietary data, software, processes, information and docu-
mentation (other than any such which are or become part of the
public domain or are legally required to be made available to
the public) (collectively, the "Information"), are the
exclusive and confidential property of the Custodian. The Fund
shall, and shall cause others to which it discloses the
Information, to keep the Information confidential by using the
same care and discretion it uses with respect to its own
confidential property and trade secrets, and shall neither make
nor permit any disclosure without the express prior written
consent of the Custodian.

5. Upon termination of this Agreement for any reason,
the Fund shall return to the Custodian any and all copies of
the Information which are in the Fund's possession or under
its control, or which the Fund distributed to third parties.
The provisions of this Article shall not affect the copyright
status of any of the Information which may be copyrighted and
shall apply to all Information whether or not copyrighted.

6. The Custodian reserves the right to modify the Ter-
minal Link from time to time without notice to the Fund except
that the Custodian shall give the Fund notice not less than 75
days in advance of any modification which would materially

adversely affect the Fund's operation, and the Fund agrees that
the Fund shall not modify or attempt to modify the Terminal
Link without the Custodian's prior written consent. The Fund
acknowledges that any software or procedures provided

-28-

the Fund as part of the Terminal Link are the property of the
Custodian and, accordingly, the Fund agrees that any
modifications to the Terminal Link, whether by the Fund, or by
the Custodian and whether with or without the Custodian's
consent, shall become the property of the Custodian.

7. Neither the Custodian nor any manufacturers and
suppliers it utilizes or the Fund utilizes in connection with
the Terminal Link makes any warranties or representations,
express or implied, in fact or in law, including but not
limited to warranties of merchantability and fitness for a
particular purpose.

8. The Fund will cause its Officers and employees to
treat the authorization codes and the access codes applicable
to Terminal Link with extreme care, and irrevocably authorizes
the Custodian to act in accordance with and rely on
Certificates received by it through the Terminal Link. The
Fund acknowledges that it is its responsibility to assure that
only its Officers use the Terminal Link on its behalf, and that
a Custodian shall not be responsible nor liable for use of the
Terminal Link on the Fund's behalf by persons other than such
persons or Officers, or by only a single Officer, nor for any
alteration, omission, or failure to promptly forward.

9(a). Except as otherwise specifically provided in
Section 9(b) of this Article, the Custodian shall have no
liability for any losses, damages, injuries, claims, costs or
expenses arising out of or in connection with any failure,
malfunction or other problem relating to the Terminal Link
except for money damages suffered as the direct result of the
negligence of the Custodian in an amount not exceeding for any
incident $25,000 provided, however, that the Custodian shall
have no liability under this Section 9 if the Fund fails to
comply with the provisions of Section 11.

9(b). The Custodian's liability for its negligence in
executing or failing to execute in accordance with a
Certificate received through Terminal Link shall be only with
respect to a transfer of funds which is not made in accordance
with such Certificate after such Certificate shall have been
duly acknowledged by the Custodian, and shall be contingent
upon the Fund complying with the provisions of Section 12 of
this Article, and shall be limited to (i) restoration of the
principal amount mistransferred, if and to the extent that the
Custodian would be required to make such restoration under
applicable law, and (ii) the lesser of (A) a Fund's actual

pecuniary loss incurred by reason of its loss of use of the
mistransferred funds or the funds which were not transferred,
as the case may be, or (B) compensation for the loss of the use
of the mistransferred funds or the funds which were not
transferred, as the case may be, at a rate per annum equal to
the average federal funds rate as computed from the Federal
Reserve Bank of New York's daily determination of the

-29-

effective rate for federal funds, for the period during which
a Fund has lost use of such funds. In no event shall the
Custodian have any liability for failing to execute in
accordance with a Certificate a transfer of funds where the
Certificate is received by the Custodian through Terminal Link
other than through the applicable transfer module for the
particular instructions contained in such Certificate.

10. Without limiting the generality of the foregoing, in
no event shall the Custodian or any manufacturer or supplier of
its computer equipment, software or services relating to the
Terminal Link be responsible for any special, indirect,
incidental or consequential damages which the Fund may incur or
experience by reason of its use of the Terminal Link even if
the Custodian or any manufacturer or supplier has been advised
of the possibility of such damages, nor with respect to the use
of the Terminal Link shall the Custodian or any such
manufacturer or supplier be liable for acts of God, or with
respect to the following to the extent beyond such person's
reasonable control: machine or computer breakdown or
malfunction, interruption or malfunction of communication
facilities, labor difficulties or any other similar or
dissimilar cause.

11. The Fund shall notify the Custodian of any errors,
omissions or interruptions in, or delay or unavailability of,
the Terminal Link as promptly as practicable, and in any event
within 24 hours after the earliest of (i) discovery thereof,
(ii) the Business Day on which discovery should have occurred
through the exercise of reasonable care and (iii) in the case
of any error, the date of actual receipt of the earliest notice
which reflects such error, it being agreed that discovery and
receipt of notice may only occur on a business day. The
Custodian shall promptly advise the Fund whenever the Custodian
learns of any errors, omissions or interruption in, or delay
or unavailability of, the Terminal Link.

12. The Custodian shall verify to the Fund, by use of the
Terminal Link, receipt of each Certificate the Custodian
receives through the Terminal Link, and in the absence of such
verification the Custodian shall not be liable for any failure
to act in accordance with such Certificate and the Fund may not
claim that such Certificate was received by the Custodian.
Such verification, which may occur after the Custodian has

acted upon such Certificate, shall be accomplished on the same
day on which such Certificate is received.

ARTICLE XVI

DUTIES OF THE CUSTODIAN WITH RESPECT TO PROPERTY
OF ANY SERIES HELD OUTSIDE OF THE UNITED STATES

1. The Custodian is authorized and instructed to employ,
as sub-custodian for each Series' Foreign Securities

(as such term is defined in paragraph (c)(1) of Rule 17f-5
under the Investment Company Act of 1940, as amended) and
other assets, the foreign banking institutions and foreign
securities depositories and clearing agencies designated on
Schedule I hereto ("Foreign Sub-Custodians") to carry out
their respective responsibilities in accordance with the terms
of the sub- custodian agreement between each such Foreign
Sub-Custodian and the Custodian, copies of which have been
previously delivered to the Fund and receipt of which is
hereby acknowledged (each such agreement, a "Foreign
Sub-Custodian Agreement"). Upon receipt of a Certificate,
together with a certified resolution substantially in the form
attached as Exhibit E of the Fund's Board of Trustees, the
Fund may designate any additional foreign sub-custodian with
which the Custodian has an agreement for such entity to act as
the Custodian's agent, as its sub- custodian and any such
additional foreign sub-custodian shall be deemed added to
Schedule I. Upon receipt of a Certificate from the Fund, the
Custodian shall cease the employment of any one or more
Foreign Sub-Custodians for maintaining custody of the Fund's
assets and such Foreign Sub-Custodian shall be deemed deleted
from Schedule I.

2. Each Foreign Sub-Custodian Agreement shall be
substantially in the form previously delivered to the Fund and
will not be amended in a way that materially adversely affects
the Fund without the Fund's prior written consent.

3. The Custodian shall identify on its books as
belonging to each Series of the Fund the Foreign Securities of
such Series held by each Foreign Sub-Custodian. At the election
of the Fund, it shall be entitled to be subrogated to the
rights of the Custodian with respect to any claims by the Fund
or any Series against a Foreign Sub-Custodian as a consequence
of any loss, damage, cost, expense, liability or claim
sustained or incurred by the Fund or any Series if and to the
extent that the Fund or such Series has not been made whole for
any such loss, damage, cost, expense, liability or claim.

4. Upon request of the Fund, the Custodian will,
consistent with the terms of the applicable Foreign Sub-
Custodian Agreement, use reasonable efforts to arrange for the

independent accountants of the Fund to be afforded access to
the books and records of any Foreign Sub-Custodian insofar as
such books and records relate to the performance of such
Foreign Sub-Custodian under its agreement with the Custodian on
behalf of the Fund.

5. The Custodian will supply to the Fund from time to
time, as mutually agreed upon, statements in respect of the
securities and other assets of each Series held by Foreign Sub-
Custodians, including but not limited to, an identification of
entities having possession of each Series' Foreign Securities
and other assets, and advices or

-31-

notifications of any transfers of Foreign Securities to or
from each custodial account maintained by a Foreign
Sub-Custodian for the Custodian on behalf of the Series.

6. The Custodian shall furnish annually to the Fund, as
mutually agreed upon, information concerning the Foreign Sub-
Custodians employed by the Custodian. Such information shall
be similar in kind and scope to that furnished to the Fund in
connection with the Fund's initial approval of such Foreign
Sub-Custodians and, in any event, shall include information
pertaining to (i) the Foreign Custodians' financial strength,
general reputation and standing in the countries in which they
are located and their ability to provide the custodial services
required, and (ii) whether the Foreign Sub-Custodians would
provide a level of safeguards for safekeeping and custody of
securities not materially different form those prevailing in
the United States. The Custodian shall monitor the general
operating performance of each Foreign Sub-Custodian. The
Custodian agrees that it will use reasonable care in monitoring
compliance by each Foreign Sub-Custodian with the terms of the
relevant Foreign Sub-Custodian Agreement and that if it learns
of any breach of such Foreign Sub-Custodian Agreement believed
by the Custodian to have a material adverse effect on the Fund
or any Series it will promptly notify the Fund of such breach.
The Custodian also agrees to use reasonable and diligent
efforts to enforce its rights under the relevant Foreign Sub-
Custodian Agreement.

7. The Custodian shall transmit promptly to the Fund all
notices, reports or other written information received
pertaining to the Fund's Foreign Securities, including without
limitation, notices of corporate action, proxies and proxy
solicitation materials.

8. Notwithstanding any provision of this Agreement to
the contrary, settlement and payment for securities received
for the account of any Series and delivery of securities
maintained for the account of such Series may be effected in
accordance with the customary or established securities trading

or securities processing practices and procedures in the
jurisdiction or market in which the transaction occurs,
including, without limitation, delivery of securities to the
purchaser thereof or to a dealer therefor (or an agent for such
purchaser or dealer) against a receipt with the expectation of
receiving later payment for such securities from such purchaser
or dealer.

9. Notwithstanding any other provision in this Agreement
to the contrary, with respect to any losses or damages arising
out of or relating to any actions or omissions of any Foreign
Sub-Custodian the sole responsibility and liability of the
Custodian shall be to take appropriate action at the Fund's
expense to recover such loss or damage from the Foreign Sub-
Custodian. It is expressly understood and agreed that the
Custodian's sole responsibility and liability shall

-32-

be limited to amounts so recovered from the Foreign
Sub-Custodian.

ARTICLE XVII

CONCERNING THE CUSTODIAN

1. Except as hereinafter provided, or as provided in
Article XVI neither the Custodian nor its nominee shall be
liable for any loss or damage, including counsel fees,
resulting from its action or omission to act or otherwise,
either hereunder or under any Margin Account Agreement, except
for any such loss or damage arising out of its own negligence
or willful misconduct. In no event shall the Custodian be
liable to the Fund or any third party for special, indirect or
consequential damages or lost profits or loss of business,
arising under or in connection with this Agreement, even if
previously informed of the possibility of such damages and
regardless of the form of action. The Custodian may, with
respect to questions of law arising hereunder or under any
Margin Account Agreement, apply for and obtain the advice and
opinion of counsel to the Fund or of its own counsel, at the
expense of the Fund, and shall be fully protected with respect
to anything done or omitted by it in good faith in conformity
with such advice or opinion. The Custodian shall be liable to
the Fund for any loss or damage resulting from the use of the
Book-Entry System or any Depository arising by reason of any
negligence or willful misconduct on the part of the Custodian
or any of its employees or agents.

2. Without limiting the generality of the foregoing, the
Custodian shall be under no obligation to inquire into, and
shall not be liable for:

(a) The validity of the issue of any Securities
purchased, sold, or written by or for the Fund, the legality of
the purchase, sale or writing thereof, or the propriety of the
amount paid or received therefor;

(b) The legality of the sale or redemption of any
Shares, or the propriety of the amount to be received or paid
therefor;

(d) The legality of any borrowing by the Fund using
Securities as collateral;

(e) The legality of any loan of portfolio Securi-
ties, nor shall the Custodian be under any duty or obligation
to see to it that any cash collateral delivered to it by a
broker, dealer, or financial institution or held by it at any
time as a result of such loan of portfolio Securities of the

-33-

Fund is adequate collateral for the Fund against any loss it
might sustain as a result of such loan. The Custodian
specifically, but not by way of limitation, shall not be under
any duty or obligation periodically to check or notify the Fund
that the amount of such cash collateral held by it for the Fund
is sufficient collateral for the Fund, but such duty or
obligation shall be the sole responsibility of the Fund. In
addition, the Custodian shall be under no duty or obligation to
see that any broker, dealer or financial institution to which
portfolio Securities of the Fund are lent pursuant to Article
XIV of this Agreement makes payment to it of any dividends or
interest which are payable to or for the account of the Fund
during the period of such loan or at the termination of such
loan, provided, however, that the Custodian shall promptly
notify the Fund in the event that such dividends or interest
are not paid and received when due; or

(f) The sufficiency or value of any amounts of money
and/or Securities held in any Margin Account, Senior Security
Account or Collateral Account in connection with transactions
by the Fund. In addition, the Custodian shall be under no duty
or obligation to see that any broker, dealer, futures
commission merchant or Clearing Member makes payment to the
Fund of any variation margin payment or similar payment which
the Fund may be entitled to receive from such broker, dealer,
futures commission merchant or Clearing Member, to see that any
payment received by the Custodian from any broker, dealer,
futures commission merchant or Clearing Member is the amount
the Fund is entitled to receive, or to notify the Fund of the
Custodian's receipt or non-receipt of any such payment.

3. The Custodian shall not be liable for, or considered
to be the Custodian of, any money, whether or not represented
by any check, draft, or other instrument for the payment of
money, received by it on behalf of the Fund until the Custodian
actually receives and collects such money directly or by the
final crediting of the account representing the Fund's interest
at the Book-Entry System or the Depository.

4. The Custodian shall have no responsibility and shall
not be liable for ascertaining or acting upon any calls,
conversions, exchange offers, tenders, interest rate changes or
similar matters relating to Securities held in the Depository,
unless the Custodian shall have actually received timely notice
from the Depository. In no event shall the Custodian have any
responsibility or liability for the failure of the Depository
to collect, or for the late collection or late crediting by the
Depository of any amount payable upon Securities deposited in
the Depository which may mature or be redeemed, retired, called
or otherwise become payable. However, upon receipt of a
Certificate from the Fund of an overdue amount on Securities
held in the Depository the Custodian shall make a claim against
the Depository on behalf of the Fund, except that the Custodian
shall not be under any

-34-

obligation to appear in, prosecute or defend any action suit
or proceeding in respect to any Securities held by the
Depository which in its opinion may involve it in expense or
liability, unless indemnity satisfactory to it against all
expense and liability be furnished as often as may be
required.

5. The Custodian shall not be under any duty or obliga-
tion to take action to effect collection of any amount due to
the Fund from the Transfer Agent of the Fund nor to take any
action to effect payment or distribution by the Transfer Agent
of the Fund of any amount paid by the Custodian to the Transfer
Agent of the Fund in accordance with this Agreement.

6. The Custodian shall not be under any duty or obliga-
tion to take action to effect collection of any amount if the
Securities upon which such amount is payable are in default, or
if payment is refused after due demand or presentation, unless
and until (i) it shall be directed to take such action by a
Certificate and (ii) it shall be assured to its satisfaction of
reimbursement of its costs and expenses in connection with any
such action.

7. The Custodian may in addition to the employment of
Foreign Sub-Custodians pursuant to Article XVI appoint one or
more banking institutions as Depository or Depositories, as
Sub-Custodian or Sub-Custodians, or as Co-Custodian or
Co-Custodians including, but not limited to, banking

institutions located in foreign countries, of Securities and
moneys at any time owned by the Fund, upon such terms and
conditions as may be approved in a Certificate or contained in
an agreement executed by the Custodian, the Fund and the
appointed institution.

8. The Custodian shall not be under any duty or obliga-
tion (a) to ascertain whether any Securities at any time
delivered to, or held by it or by any Foreign Sub-Custodian,
for the account of the Fund and specifically allocated to a
Series are such as properly may be held by the Fund or such
Series under the provisions of its then current prospectus, or
(b) to ascertain whether any transactions by the Fund, whether
or not involving the Custodian, are such transactions as may
properly be engaged in by the Fund.

9. The Custodian shall be entitled to receive and the
Fund agrees to pay to the Custodian all out-of-pocket expenses
and such compensation as may be agreed upon from time to time
between the Custodian and the Fund. The Custodian may charge
such compensation and any expenses with respect to a Series
incurred by the Custodian in the performance of its duties
pursuant to such agreement against any money specifically al-
located to such Series. Unless and until the Fund instructs
the Custodian by a Certificate to apportion any loss, damage,
liability or expense among the Series in a specified manner,
the Custodian shall also be entitled to charge against any

-35-

money held by it for the account of a Series such Series' pro
rata share (based on such Series net asset value at the time of
the charge to the aggregate net asset value of all Series at
that time) of the amount of any loss, damage, liability or
expense, including counsel fees, for which it shall be entitled
to reimbursement under the provisions of this Agreement. The
expenses for which the Custodian shall be entitled to
reimbursement hereunder shall include, but are not limited to,
the expenses of sub-custodians and foreign branches of the
Custodian incurred in settling outside of New York City
transactions involving the purchase and sale of Securities of
the Fund.

10. The Custodian shall be entitled to rely upon any
Certificate, notice or other instrument in writing received by
the Custodian and reasonably believed by the Custodian to be a
Certificate. The Custodian shall be entitled to rely upon any
Oral Instructions actually received by the Custodian
hereinabove provided for. The Fund agrees to forward to the
Custodian a Certificate or facsimile thereof confirming such
Oral Instructions in such manner so that such Certificate or
facsimile thereof is received by the Custodian, whether by hand
delivery, telecopier or other similar device, or otherwise, by
the close of business of the same day that such Oral Instruc-

tions are given to the Custodian. The Fund agrees that the
fact that such confirming instructions are not received, or
that contrary instructions are received, by the Custodian shall
in no way affect the validity of the transactions or
enforceability of the transactions hereby authorized by the
Fund. The Fund agrees that the Custodian shall incur no
liability to the Fund in acting upon Oral Instructions given to
the Custodian hereunder concerning such transactions provided
such instructions reasonably appear to have been received from
an Officer.

11. The Custodian shall be entitled to rely upon any
instrument, instruction or notice received by the Custodian
and reasonably believed by the Custodian to be given in ac-
cordance with the terms and conditions of any Margin Account
Agreement. Without limiting the generality of the foregoing,
the Custodian shall be under no duty to inquire into, and shall
not be liable for, the accuracy of any statements or
representations contained in any such instrument or other
notice including, without limitation, any specification of any
amount to be paid to a broker, dealer, futures commission
merchant or Clearing Member.

12. The books and records pertaining to the Fund which
are in the possession of the Custodian shall be the property of
the Fund. Such books and records shall be prepared and
maintained as required by the Investment Company Act of 1940,
as amended, and other applicable securities laws and rules and
regulations. The Fund, or the Fund's authorized representa-
tives, shall have access to such books and records during the
Custodian's normal business hours. Upon the reasonable

-36-

request of the Fund, copies of any such books and records shall
be provided by the Custodian to the Fund or the Fund's
authorized representative, and the Fund shall reimburse the
Custodian its expenses of providing such copies. Upon reason-
able request of the Fund, the Custodian shall provide in hard
copy or on micro-film, whichever the Custodian elects, any
records included in any such delivery which are maintained by
the Custodian on a computer disc, or are similarly maintained,
and the Fund shall reimburse the Custodian for its expenses of
providing such hard copy or micro-film.

13. The Custodian shall provide the Fund with any report
obtained by the Custodian on the system of internal accounting
control of the Book-Entry System, the Depository or O.C.C., and
with such reports on its own systems of internal accounting
control as the Fund may reasonably request from time to time.

14. The Fund agrees to indemnify the Custodian against
and save the Custodian harmless from all liability, claims,
losses and demands whatsoever, including attorney's fees,

howsoever arising or incurred because of or in connection with
this Agreement, including the Custodian's payment or
non-payment of checks pursuant to paragraph 6 of Article XIII
as part of any check redemption privilege program of the Fund,
except for any such liability, claim, loss and demand arising
out of the Custodian's own negligence or willful misconduct.

15. Subject to the foregoing provisions of this Agree-
ment, including, without limitation, those contained in Article
XVI the Custodian may deliver and receive Securities, and
receipts with respect to such Securities, and arrange for pay-
ments to be made and received by the Custodian in accordance
with the customs prevailing from time to time among brokers or
dealers in such Securities. When the Custodian is instructed
to deliver Securities against payment, delivery of such
Securities and receipt of payment therefor may not be completed
simultaneously. The Fund assumes all responsibility and
liability for all credit risks involved in connection with the
Custodian's delivery of Securities pursuant to instructions of
the Fund, which responsibility and liability shall continue
until final payment in full has been received by the Custodian.

16. The Custodian shall have no duties or
responsibilities whatsoever except such duties and
responsibilities as are specifically set forth in this Agree-
ment, and no covenant or obligation shall be implied in this
Agreement against the Custodian.

-37-

ARTICLE XVIII

TERMINATION

1. Either of the parties hereto may terminate this
Agreement by giving to the other party a notice in writing
specifying the date of such termination, which shall be not
less than ninety (90) days after the date of giving of such
notice. In the event such notice is given by the Fund, it
shall be accompanied by a copy of a resolution of the Board of
Trustees of the Fund, certified by the Secretary, the Clerk,
any Assistant Secretary or any Assistant Clerk, electing to
terminate this Agreement and designating a successor custodian
or custodians, each of which shall be a bank or trust company
having not less than $2,000,000 aggregate capital, surplus and
undivided profits. In the event such notice is given by the
Custodian, the Fund shall, on or before the termination date,
deliver to the Custodian a copy of a resolution of the Board of
Trustees of the Fund, certified by the Secretary, the Clerk,
any Assistant Secretary or any Assistant Clerk, designating a
successor custodian or custodians. In the absence of such
designation by the Fund, the Custodian may designate a
successor custodian which shall be a bank or trust company

having not less than $2,000,000 aggregate capital, surplus and
undivided profits. Upon the date set forth in such notice this
Agreement shall terminate, and the Custodian shall upon receipt
of a notice of acceptance by the successor custodian on that
date deliver directly to the successor custodian all Securities
and moneys then owned by the Fund and held by it as Custodian,
after deducting all fees, expenses and other amounts for the
payment or reimbursement of which it shall then be entitled.

2. If a successor custodian is not designated by the
Fund or the Custodian in accordance with the preceding
paragraph, the Fund shall upon the date specified in the notice
of termination of this Agreement and upon the delivery by the
Custodian of all Securities (other than Securities held in the
Book-Entry System which cannot be delivered to the Fund) and
moneys then owned by the Fund be deemed to be its own custodian
and the Custodian shall thereby be relieved of all duties and
responsibilities pursuant to this Agreement, other than the
duty with respect to Securities held in the Book Entry System
which cannot be delivered to the Fund to hold such Securities
hereunder in accordance with this Agreement.

ARTICLE XIX

MISCELLANEOUS

1. Annexed hereto as Appendix A is a Certificate signed
by two of the present Officers of the Fund under its seal,
setting forth the names and the signatures of the present

-38-

Officers. The Fund agrees to furnish to the Custodian a new
Certificate in similar form in the event that any such present
Officer ceases to be an Officer or in the event that other or
additional Officers are elected or appointed. Until such new
Certificate shall be received, the Custodian shall be fully
protected in acting under the provisions of this Agreement upon
Oral Instructions or signatures of the present Officers as set
forth in the last delivered Certificate.

2. Any notice or other instrument in writing, authorized
or required by this Agreement to be given to the Custodian,
shall be sufficiently given if addressed to the Custodian and
mailed or delivered to it at its offices at 90 Washington
Street, New York, New York 10286, or at such other place as the
Custodian may from time to time designate in writing.

3. Any notice or other instrument in writing, authorized
or required by this Agreement to be given to the Fund shall be
sufficiently given if addressed to the Fund and mailed or
delivered to it at its office at the address for the Fund first
above written, or at such other place as the Fund may from time

to time designate in writing.

4. This Agreement may not be amended or modified in any
manner except by a written agreement executed by both parties
with the same formality as this Agreement and approved by a
resolution of the Board of Trustees of the Fund.

5. This Agreement shall extend to and shall be binding
upon the parties hereto, and their respective successors and
assigns; provided, however, that this Agreement shall not be
assignable by the Fund without the written consent of the
Custodian, or by the Custodian without the written consent of
the Fund, authorized or approved by a resolution of the Fund's
Board of Trustees.

6. This Agreement shall be construed in accordance with
the laws of the State of New York without giving effect to
conflict of laws principles thereof. Each party hereby
consents to the jurisdiction of a state or federal court
situated in New York City, New York in connection with any
dispute arising hereunder and hereby waives its right to trial
by jury.

7. This Agreement may be executed in any number of
counterparts, each of which shall be deemed to be an original,
but such counterparts shall, together, constitute only one
instrument.

-39-

IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be executed by their respective Officers,
thereunto duly authorized and their respective seals to be
hereunto affixed, as of the day and year first above written.

THE MILESTONE FUNDS -
TREASURY OBLIGATIONS
PORTFOLIO

[SEAL] By: /s/ Janet T. Hanson
------------------------
/s/ Jeffrey R. Hanson
- ---------------------------

Attest:

/s/
- ---------------------------

THE BANK OF NEW YORK

[SEAL] By: /s/ Stephen E. Grunston
-------------------------
Name: Stephen E. Grunston
Title: Vice President

Attest:

/s/ Vincent M. Blazewicz
- ---------------------------

-40-

APPENDIX A

I, Janet Tiebout Hanson, President and I, Jeffrey R.
Hanson, Secretary of THE MILESTONE FUNDS - TREASURY
OBLIGATIONS PORTFOLIO, a Delaware business trust (the "Fund"),
do hereby certify that:

The following individuals serve in the following positions
with the Fund and each has been duly elected or appointed by
the Board of Trustees of the Fund to each such position and
qualified therefor in conformity with the Fund's Declaration of
Trust and By-Laws, and the signatures set forth opposite their
respective names are their true and correct signatures:

Name Position Signature

____________________ ___________________ _________________
Marc Pfeffer Chief Investment Officer /s/ Marc Pfeffer
Barbara Gentile Trading Assistant /s/ Barbara Gentile
Janet T. Hanson Pres./CEO /s/ Janet T. Hanson
Jeffrey R. Hanson COO /s/ Jeffrey R. Hanson

APPENDIX C

I, Vincent M. Blazewicz, a Vice President with THE BANK
OF NEW YORK do hereby designate the following publications:

The Bond Buyer
Depository Trust Company Notices
Financial Daily Card Service
JJ Kenney Municipal Bond Service
London Financial Times
New York Times
Standard & Poor's Called Bond Record
Wall Street Journal

EXHIBIT A

CERTIFICATION

The undersigned, Jeffrey R. Hanson, hereby certifies that
he or she is the duly elected and acting Secretary of THE
MILESTONE FUNDS - TREASURY OBLIGATIONS PORTFOLIO, a Delaware
business trust (the "Fund"), and further certifies that the
following resolution was adopted by the Board of Trustees of
the Fund at a meeting duly held on , 1995,
at which a quorum was at all times present and that such
resolution has not been modified or rescinded and is in full
force and effect as of the date hereof.

RESOLVED, that The Bank of New York, as Custodian
pursuant to a Custody Agreement between The Bank of New
York and the Fund dated as of , 1995, (the
"Custody Agreement") is authorized and instructed on a
continuous and ongoing basis to deposit in the Book-Entry
System, as defined in the Custody Agreement, all securi-
ties eligible for deposit therein, regardless of the
Series to which the same are specifically allocated, and
to utilize the Book-Entry System to the extent possible in
connection with its performance thereunder, including,
without limitation, in connection with settlements of
purchases and sales of securities, loans of securities,
and deliveries and returns of securities collateral.

IN WITNESS WHEREOF, I have hereunto set my hand and the
seal of THE MILESTONE FUNDS - TREASURY OBLIGATIONS PORTFOLIO,
as of the 30th day of January, 1996.

/s/ Jeffrey Hanson
---------------------

[SEAL]

EXHIBIT D

The undersigned, Jeffrey R. Hanson, hereby certifies that
he or she is the duly elected and acting Secretary of THE
MILESTONE FUNDS - TREASURY OBLIGATIONS PORTFOLIO, a Delaware
business trust (the "Fund"), further certifies that the
following resolutions were adopted by the Board of Trustees of
the Fund at a meeting duly held on
, 1995, at which a quorum was at all times
present and that such resolutions have not been modified or
rescinded and are in full force and effect as of the date
hereof.

RESOLVED, that The Bank of New York, as Custodian pursuant
to the Custody Agreement between The Bank of New York and the
Fund dated as of , 1995 (the "Custody Agreement")
is authorized and instructed on a continuous and ongoing basis
to act in accordance with, and to rely on Certificates (as
defined in the Custody Agreement) given by the Fund to the
Custodian by a Terminal Link (as defined in the Custody
Agreement).

RESOLVED, that the Fund shall establish access codes and
grant us of such access codes only to Officers of the fund as
defined in the Custody Agreement, shall establish internal
safekeeping procedures to safeguard and protect the
confidentiality and availability of such access codes, shall
limit its use of the Terminal Link to those purposes permitted
by the Custody Agreement, shall require at least two such
Officers to utilize their respective access codes in connection
with each such Certificate, and shall use the Terminal Link
only in a manner that does not contravene the Investment
Company Act of 1940, as amended, or the rules and regulations
thereunder.

RESOLVED, that Officers of the Fund shall, following the
establishment of such access codes and such internal
safekeeping procedures, advise the Custodian that the same have
been established by delivering a Certificate, as defined in the
Custody Agreement, and the Custodian shall be entitled to rely
upon such advice.

IN WITNESS WHEREOF, I have hereunto set my hand and the
seal of THE MILESTONE FUNDS - TREASURY OBLIGATIONS PORTFOLIO,
as of the 30th day of January, 1995.

/s/ Jeffrey R. Hanson
----------------------

[SEAL]

9(e) Form of Administration Agreement to be between
Registrant and The Bank of New York.

ADMINISTRATION AGREEMENT

AGREEMENT made as of 1/30/96, by and between each entity listed
on Exhibit A hereto (each, a "Fund"; collectively, the "Funds"), and
The Bank of New York, a New York trust company (the "Administrator").

W I T N E S S E T H :

WHEREAS, each Fund is an investment company registered under
the Investment Company Act of 1940, as amended (the "1940 Act");
and

WHEREAS, each Fund desires to retain the Administrator to
provide administration services for the portfolios identified on
Exhibit A hereto (each, a "Series") and the Administrator is
willing to provide such services, all as more fully set forth
below;

NOW THEREFORE, in consideration of the mutual promises and
agreements contained herein, the parties hereby agree as follows:

1. Appointment.

Each Fund hereby appoints the Administrator as its agent for
the term of this Agreement to perform the services described
herein. The Administrator hereby accepts such appointment and
agrees to perform the duties hereinafter set forth.

2. Representations and Warranties.

Each Fund hereby represents and warrants to the
Administrator, which representations and warranties shall be
deemed to be continuing, that:

(a) It is duly organized and existing under the laws of
the jurisdiction of its organization, with full power to carry
on its business as now conducted, to enter into this Agreement
and to perform its obligations hereunder;

(b) This Agreement has been duly authorized, executed and
delivered by the Fund in accordance with all requisite action
and constitutes a valid and legally binding obligation of the
Fund, enforceable in accordance with its terms; and

-2-

statute, regulation, rule, order or judgment binding on it and

no provision of its charter or by-laws, nor of any mortgage,
indenture, credit agreement or other contract binding on it or
affecting its property which would prohibit its execution or
performance of this Agreement.

3. Delivery of Documents.

(a) Each Fund will promptly deliver to the Administrator
true and correct copies of each of the following documents as
currently in effect and will promptly deliver to it all future
amendments and supplements thereto, if any:

(i) The Fund's articles of incorporation or other organizational
document and all amendments thereto (the "Charter");

(ii) The Fund's bylaws (the "Bylaws");

(iii) Resolutions of the Fund's board of directors or other
governing body (the "Board") authorizing the execution,
delivery and performance of this Agreement by the Fund;

(iv) The Fund's registration statement most recently filed
with the Securities and Exchange Commission (the "SEC")
relating to the shares of the Fund (the "Registration
Statement");

(v) The Fund's Notification of Registration under the 1940
Act on Form N-8A filed with the SEC; and

(vi) The Fund's Prospectus and Statement of Additional
Information pertaining to the Series (collectively, the
"Prospectus").

(b) Each copy of the Charter shall be certified by the
Secretary of State (or other appropriate official) of the state
of organization, and if the Charter is required by law also to be
filed with a county or other officer or official body, a
certificate of such filing shall be filed with a certified copy
submitted to the Administrator. Each copy of the Bylaws,
Resistration Statement and Prospectus, and all amendments
thereto, and copies of Board resolutions, shall be certified by
the Secretary or an Assistant Secretary of the appropriate Fund.

(c) It shall be the sole responsibility of each Fund to
deliver to the Administrator its currently effective Prospectus
and the Administrator shall not be deemed to have notice of any
information contained in such Prospectus until it is actually
received by the Administrator.

-3-

4. Duties and Obligations of the Administrator.

(a) Subject to the direction and control of each Fund's Board and the
provisions of this Agreement, the Administrator shall provide to each Fund the
administrative services set forth on Schedule I attached hereto.

(b) In performing hereunder, the Administrator sha11 provide, at its
expense, office space, facilities, equipment and personnel.

(c) The Administrator shall not provide any services relating to the
management, investment advisory or sub-advisory functions of any Fund,
distribution of shares of any Fund, maintenance of any Fund's financial records
or other services norma11y performed by the Funds' respective counsel or
indecendent auditors.

(d) Upon receipt of a Fund's prior written consent (which shail not be
unreasonably withheld), the Administrator may delegate any of its duties and
obligations hereunder to any delegee or agent whenever and on such terms and
conditions as it deems necessary or appropriate. Notwithstanding the foregoing,
no Fund consent shall be required for any such delegation to any other
subsidiary of The Bank of New York Company, Inc. The Administrator shall not be
liable to any Fund for any loss or damage arising out of, or in connection with,
the actions or omissions to act of any delegee or agent utilized hereunder so
long as the Administrator acts in good faith and without negligence or wilful
misconduct in the selection of such delegee or agent.

(e) Each Fund shall cause its officers, advisors, sponsor, distributor, legal
counsel, independent accountants, current administrator (if any) and transfer
agent to cooperate with the Administrator and to provide the Administrator, upon
request, with such information, documents and advice relating to such Fund as is
within the possession or knowledge of such persons, in order to enable the
Administrator to perform its duties hereunder. In connection with its duties
hereunder, the Administor shall be entitled to rely, and shall be held harmless
by each Fund when acting in reliance, upon the instructions, advice or any
documents relating to such Fund provided to the Administrator by any of the
aforementioned persons. The Administrator shall not be liable for any loss,
damage or expense resulting from or arising out of the failure cf the Fund to
cause any information, documents or advice to be provided to the Administrator
as provided herein. All fees or costs charged by such persons shall be borne by
the appropriate Fund.

(f) Nothing in this Agreement shall limit or restrict the Administrator, any
affiliate of the Administrator or any officer

-4-

or employee thereof from acting as administrator for or with any third parties.

(g) The Administrator may apply to an officer of any Fund for written
instructions with respect to any matter arising in connection with the
Administrator's performance hereunder for such Fund, and the Administrator shall
not be liable for any action taken or omitted to be taken by it in good faith in
accordance with such instructions. Such application for instructions may, at
the option of the Administrator, set forth in writing any action proposed to be

taken or omitted to be taken by the Administrator with respect to its duties or
obligations under this Agreement and the date on and/or after which such action
shall be taken, and the Administrator shall not be liable for any action taken
or omitted to be taken in accordance with a proposal included in any such
application on or after the date specified therein unless, prior to taking or
omitting to take any such action, the Administrator has received written
instructions in response to such application specifying the action to be taken
or omitted. The Administrator may consult with counsel to the appropriate Fund
or its own counsel, at such Fund's expense, and shall be fully protected with
respect to anything done or omitted by it in good faith in accordance with the
advice or opinion of such counsel.

(h) The Administrator shall have no duties or responsibilities whatsoever
except such duties and responsibilities as are specifically set forth in this
Agreement and Schedule I hereto, and no covenant or obligation shall be implied
against the Administrator in connection with this Agreement.

5. Allocation of Expenses.

Except as otherwise provided herein, all costs and expenses arising or
incurred in connection with the performance of this Agreement shall be paid by
the appropriate Fund, including but not limited to, organizational costs and
costs of maintaining corporate existence, taxes, interest, brokerace fees and
commissions, insurance premiums, compensation and expenses of such Fund's
trustees, directors, officers or employees, legal accounting and audit expenses,
management, advisory sub-advisory, administration and shareholder servicing
fees, charges of custodians, transfer and dividend disbursing agents, expenses
(including clerical expenses) incident to the issuance, redemption or repurchase
of Fund shares, fees and expenses incident to the registration or qualification
under federal or state securities laws of the Fund or its shares, costs
(inclucding printing and mailing costs) of preparing and distributing
Prospectuses, reports, notices and proxy material to such Fund's shareholders,
all expenses incidental to holding meetings of such Fund's trustees, directors
and shareholders, and extraordinary expenses as may arise, including litigation
affecting such Fund

-5-

and legal obligations relating thereto for which the Fund may
have to indemnify its trustees, directors and officers.

6. Standard of Care; Indemnification.

(a) Except as otherwise provided herein, the Administrator
shall not be liable for any costs, expenses, damages, liabilities
or claims (including attorneys' and accountants' fees) incurred
by a Fund, except those costs, expenses, damages, liabilities or
claims arising out of the Administrator's own bad faith, gross
negligence or wilful misconduct. In no event shall the
Administrator be liable to any Fund or any third party for

special, indirect or consequential damages, or lost profits or
loss of business, arising under or in connection with this
Agreement, even if previously informed of the possibility of such
damages and regardless of the form of action.

(b) Each Fund shall indemnify and hold harmless the
Administrator from and against any and all costs, expenses,
damages, liabilities and claims (including claims asserted by a
Fund), and reasonable attorneys' and accountants' fees relating
thereto, which are sustained or incurred or which may be asserted
against the Administrator, by reason of or as a result of any
action taken or omitted to be taken by the Administrator in good
faith hereunder or in reliance upon (i) any law, act, regulation
or interpretation of the same even though the same may thereafter
have been altered, changed, amended or repealed, (ii) such Fund's
Registration Statement or Prospectus, (iii) any instructions of
an officer of such Fund, or (iv) any opinion of legal counsel for
such Fund or the Administrator, or arising out of transactions or
other activities of such Fund which occurred prior to the
commencement of this Agreement; provided, that no Fund shall
indemnify the Administrator for costs, expenses, damages,
liabilities or claims arising out of the Administrator's own
gross negligence, bad faith or wilful misconduct. This indemnity
shall be a continuing obligation of each Fund, its successors and
assigns, notwithstanding the termination of this Agreement.

(c) Actions taken or omitted in reliance on oral or written
instructions, or upon any information, order, indenture, stock
certificate, power of attorney, assignment, affidavit or other
instrument believed by the Administrator to be genuine or bearing
the signature of a person or persons believed to be authorized to
sign, countersign or execute the same, or upon the opinion of
legal counsel for a Fund or its own counsel, shall be
conclusively presumed to have been taken or omitted in good
faith.

7. Compensation.

For the services provided hereunder, each Fund agrees to pay
the Administrator such compensation as is mutually agreed from
time to time and such out-of-pocket expenses (e.g.,
telecommunication charges, postage and delivery charges, record

-6-

retention costs, reproduction charges and transportation and
lodging costs) as are incurred by the Administrator in performing
its duties hereunder. Except as hereinafter set forth,
compensation shall be calculated and accrued daily and paid
monthly. Each Fund authorizes the Administrator to debit such
Fund's custody account for all amounts due and payable hereunder.
The Administrator shall deliver to each Fund invoices for
services rendered after debiting such Fund's custody account with

an indication that payment has been made. Upon termination of
this Agreement before the end of any month, the compensation for
such part of a month shall be prorated according to the
proportion which such period bears to the full monthly period and
shall be payable upon the effective date of termination of this
Agreement. For the purpose of determining compensation payable
to the Administrator, each Fund's net asset value shall be
computed at the times and in the manner specified in the Fund's
Prospectus.

8. Term of Agreement.

(a) This Agreement shall continue until terminated by
either the Administrator giving to a Fund, or a Fund giving to
the Administrator, a notice in writing specifying the date of
such termination, which date shall be not less than 90 days after
the date of the giving of such notice. Upon termination hereof,
the affected Fund(s) shall pay to the Administrator such
compensation as may be due as of the date of such termination,
and shall reimburse the Administrator for any disbursements and
expenses made or incurred by the Administrator and payable or
reimbursable hereunder.

(b) Notwithstanding the foregoing, the Administrator may
terminate this Agreement upon 30 days prior written notice to a
Fund if such Fund shall terminate either its custody agreement or
fund accounting agreement with The Bank of New York, or fail to
perform its obligations hereunder in a material respect.

9. Amendment.

This Agreement may not be amended or modified in any manner
except by a written agreement executed by the Administrator and
the Fund to be bound thereby, and authorized or approved by such
Fund's Board.

1O. Assignment.

This Agreement shall extend to and shall be binding upon
the parties hereto, and their respective successors and assigns;
provided, however, that this Agreement shall not be assignable
by any Fund without the written consent of the Administrator, or
by the Administrator without the written consent of the affected
Fund accompanied by the authorization or approval of such Fund's
Board.

-7-

11. Governinq Law; Consent to Jurisdiction.

This Agreement shall be construed in accordance with the
laws of the State of New York, without regard to conflict of
laws principles thereof. Each Fund hereby consents to the

jurisdiction of a state or federal court situated in New York
City, New York, in connection with any dispute arising hereunder.
To the extent that in any jurisdiction any Fund may now or
hereafter be entitled to claim, for itself or its assets,
immunity from suit, execution, attachment (before or after
judgment) or other legal process, such Fund irrevocably agrees
not to claim, and it hereby waives, such immunity.

12. Severability.

In case any provision in or obligation under this Agreement
shall be invalid, illegal or unenforceable in any jurisdict on,
the validity, legality and enforceability of the remaining
provisions or obligations shall not in any way be affected or
impaired thereby, and if any provision is inapplicable to any
person or circumstances, it shall nevertheless remain applicable
to all other persons and circumstances.

13. No Waiver.

Each and every right granted to the Administrator hereunder
or under any other document delivered hereunder or in connection
herewith, or allowed it by law or equity, shall be cumulative
and may be exercised from time to time. No failure on the part
of the Administrator to exercise, and no delay in exercising,
any right will operate as a waiver thereof, nor will any single
or partial exercise by the Administrator of any right preclude
any other or future exercise thereof or the exercise of any
other right.

14. Notices.

All notices, reouests, consents and other communications
pursuant to this Agreement in writing shall be sent as follows:

if to a Fund, at

Milestone Capital Management LP
1 Odell Plaza
Yonkers, NY 10701 Attn Jeffery R. Hanson

if to the Administrator, at

The Bank of New York
90 Washington Street
New York, New York 10286
Attn: Timothy Overzat
Vice President

-8-

or at such other place as may from time to time be designated in
writing. Notices hereunder shall be effective upon receipt.

15. Counterparts.

This Agreement may be executed in any number of
counterparts, each of which shall be deemed to be an original;
but such counterparts together shall constitute only one
instrument.

16. Several Obligations.

The parties acknowledge that the obligations of the Funds
hereunder are several and not joint, that no Fund shall be liable
for any amount owing by another Fund and that the Funds have
executed one instrument for convenience only.

IN WITNESS WHEREOF, the parties hereto have caused the
foregoing instrument to be executed by their duly authorized
officers and their seals to be hereunto affixed, all as of the
day and year first above written.

By: /s/ Janet T. Hanson
-------------------------
on behalf of each Fund
identified on Exhibit A
attached hereto

THE BANK OF NEW YORK

By: /s/ Stephen E. Grunston
-------------------------
Title: Vice President

EXHIBIT A

Name of Fund
THE MILESTONE FUNDS - TREASURY OBLIGATIONS PORTFOLIO

SCHEDULE I

Administrative Services

1. Maintain each Fund's minute book and its general
corporate records (other than accounting books and
records).

2. Monitor and document compliance by each Fund with its
policies and restrictions as delineated in its
Prospectus.

3. Participate in the periodic updating of each Fund's
Registration Statement and Prospectus and, subject to
approval by such Fund's Treasurer and legal counsel,
coordinate the preparation, filing, printing and
dissemination of periodic reports and other information
to the SEC and the Fund's shareholders, including
annual and semi-annual reports to shareholders, annual
and semi-annual Form N-SAR, notices pursuant to Rule
24(f)-2 and proxy materials.

4. Prepare federal, state and local income tax returns for
each Fund and Series and file such returns upon the
approval of the Funds' respective independent
accountants; monitor and report on Sub-Chapter M
qualifications; prepare and file all Form l099s with
respect to each Fund's directors or trustees; monitor
compliance with Section 4982 of the Internal Revenue
Code; calculate and maintain records pertaining to
Original Issue Discount and premium amortization as
required; perform ongoing wash sales review (i.e.,
purchases and sales of Fund investments within 30 days
of each other).

5. Prepare and, subject to approval of each Fund's
Treasurer, disseminate to such Fund's Board quarterly
unaudited financial statements and schedules of such
Fund's investments and make presentations to the Board,
as appropriate.

6. Subject to approval of each Fund's Board, assist such
Fund in obtaining fidelity bond and E&O/D&O insurance
coverage.

7. Prepare statistical reports for outside information
services (e.g., IBC/Donoghue, ICI and Lipper
Ana1ytical).

8. Attend shareholder and Board meetings as requested from
time to time.

9. Maintain expense files and coordinate the payment of
invoices.

(9)(f) Form of Transfer Agent Agreement to be between Registrant and
Fund/Plan Services, Inc.

TRANSFER AGENT SERVICES AGREEMENT
This Agreement, dated as of the day of February , 1996,
made by and between The Milestone Funds, a business trust (the "Trust")
duly organized and existing under the laws of the State of Delaware and
operating as a registered investment company under the Investment Company
Act of 1940, as amended (the "Act"), and Fund/Plan Services, Inc.
("Fund/Plan"), a corporation duly organized and existing under the laws of
the State of Delaware (collectively, the "Parties").
WITNESSETH THAT:
WHEREAS, the Trust is authorized by its Trust Instrument to issue
separate series of shares representing interests in separate investment
portfolios (the "Series"), which Series may, in turn offer multiple classes
of shares ("Classes"), which Series and Classes are identified on Schedule
"C" attached hereto and which Schedule "C" may be amended from time to time
by mutual agreement of the Trust and Fund/Plan; and
WHEREAS, the Trust desires to retain Fund/Plan to perform share
transfer agency, redemption and dividend disbursing services as set forth
in this Agreement and in Schedule "A" attached hereto, and to perform
certain other functions in connection with these duties; and
WHEREAS, Fund/Plan is registered with the Securities and Exchange
Commission as a Transfer Agent as required under Section 17(A)(c) of the
Securities Exchange Act of 1934, as amended; and
WHEREAS, Fund/Plan is willing to serve in such capacity and perform
such functions upon the terms and conditions set forth below.
NOW, THEREFORE, in consideration of the premises and mutual
covenants contained herein and for good and valuable consideration, the
receipt and sufficiency is hereby acknowledged, the Parties hereto,
intending to be legally bound, do hereby agree as follows:
Section 1. The terms as defined in this Section wherever used in
this Agreement, or in any amendment or supplement hereto, shall have the
meanings herein specified unless the context otherwise requires.
Share Certificates shall mean the certificates representing shares
of stock of each Series.
Shareholders shall mean the registered owners of the Shares of the
Series in accordance

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Transfer Agent Services Agreement between The Milestone Funds and
Fund/Plan Services, Inc.
Page 1 of 11 pages.

with the share registry records maintained by Fund/Plan for the
Trust.
Shares shall mean the issued and outstanding shares of the Series.
Signature Guarantee shall mean the guarantee of signatures by an
"eligible guarantor institution" as defined in rule 17Ad-15 under the
Securities Exchange Act of 1934, as amended. Eligible guarantor
institutions include banks, brokers, dealers, credit unions, national
securities exchanges, registered securities associations, clearing
agencies and savings associations. Broker-dealers guaranteeing
signatures must be members of a clearing corporation or maintain net
capital of at least $100,000. Signature guarantees will be accepted from
any eligible guarantor institution which participates in a signature
guarantee program.
Oral Instruction shall mean an authorization, instruction,
approval, item or set of data, or information of any kind transmitted to
Fund/Plan in person or by telephone, telegram, telecopy or other mechanical
or documentary means lacking an original signature, by a person or persons
reasonably identified to Fund/Plan to be a person or persons so authorized
by a resolution of the Board of Trustees of the Trust.
Written Instruction shall mean an authorization, instruction,
approval, item or set of data or information of any kind transmitted to
Fund/Plan in an original writing containing an original signature or a copy
of such document transmitted by telecopy including transmission of such
signature reasonably identified to Fund/Plan to be the signature of a
person or persons so authorized by a resolution of the Board of Trustees of
the Trust to give Written Instructions to Fund/Plan.
TRANSFER AGENCY SERVICES
Section 2. Fund/Plan as Transfer Agent shall make original issues
of Shares in accordance with Section 10 and 11 below and with each Series'
Prospectus and Statement of Additional Information then in effect, upon the
written request of the Trust, and upon being furnished with (i) a certified
copy of a resolution or resolutions of the Board of Trustees of the Trust
authorizing such issue; (ii) an opinion of counsel as to the validity of
such Shares; and (iii) necessary funds for the payment of any original
issue tax applicable to such additional Shares.
Section 3. Transfers of Shares shall be registered and new Shares
issued by Fund/Plan upon redemption of outstanding Shares, (i) in the form
deemed by Fund/Plan to be properly endorsed for transfer, (ii) with all
necessary endorser's signatures guaranteed pursuant to Rule

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17Ad-15 under the Securities Exchange Act of 1934, as amended, accompanied by,
(iii) such assurances as Fund/Plan shall deem necessary or appropriate to
evidence the genuineness and effectiveness of each necessary endorsement, and
(iv) satisfactory evidence of compliance with all applicable laws relating to
the payment or collection of taxes.
Section 4. In registering transfers, Fund/Plan as Transfer Agent
may rely upon the applicable commercial code or any other applicable law
which, in the written opinion (a copy of which shall previously have been
furnished to the Trust) of counsel, protect Fund/Plan and the Trust in not

requiring complete documentation, in registering transfer without inquiry
into adverse claims, in delaying registration for purposes of such inquiry,
or in refusing registration where in its judgment an adverse claim requires
such refusal.
Section 5. The Trust agrees not to issue Shares through the use of
confirm trades.
Section 6. Fund/Plan will maintain stock registry records in the
usual form in which it will note the issuance, transfer and redemption of
Shares. Fund/Plan is responsible to provide reports of Share purchases,
redemptions, and total Shares outstanding on the next business day after
each net asset valuation. Fund/Plan is authorized to keep records, which
will be part of the stock transfer records, in which it will note the names
and registered address of Shareholders and the number of Shares and
fractions thereof owned by them.
Section 7. Under this Agreement, Fund/Plan shall, in addition to
the duties and functions above-mentioned, perform the usual duties and
functions of a stock transfer agent for an investment company as listed in
Schedule "A" attached hereto. Fund/Plan may rely conclusively and act
without further investigation upon any list, instruction, certification,
authorization or other instrument or paper believed by it in good faith to
be genuine and unaltered, and to have been signed, countersigned, or
executed by duly authorized person or persons, or upon the instructions of
any officer of the Trust, or upon the advice of counsel for the Trust or
for Fund/Plan. Fund/Plan may record any transfer of Shares which is
reasonably believed by it to have been duly authorized or may refuse to
record any transfer of Shares if in good faith Fund/Plan in its capacity as
Transfer Agent deems such refusal necessary in order to avoid any liability
either of the Trust or Fund/Plan. The Trust agrees to indemnify and hold
harmless Fund/Plan from and against any and all losses, costs, claims, and
liability which it may suffer or incur by reason of so relying or acting or
refusing to act. Fund/Plan shall maintain and reconcile all operating bank
accounts necessary to facilitate all transfer agency

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Page 3 of 11 pages.

processes; including, but not limited to, distribution disbursements,
redemptions and payment clearance accounts.
Section 8. In case of any request or demand for the inspection of
the Share records of the Series, Fund/Plan as Transfer Agent shall endeavor
to notify the Trust and to secure instructions as to permitting or refusing
such inspection. Fund/Plan may, however, exhibit such records to any
person in any case where it is advised by its counsel that it may be held
liable for failure to do so.
Section 9. Fund/Plan acknowledges that all records that it
maintains on behalf of the Trust are the property of the Trust and will be
surrendered promptly to the Trust upon written request. Fund/Plan will
preserve, for the periods prescribed under Rule 31a-2 under the Act, all
such records required to be maintained under Rule 31a-1 of the Act.
ISSUANCE OF SHARES
Section 10. Prior to the daily determination of net asset value in
accordance with the Trust's Prospectus and Statement of Additional

Information, Fund/Plan shall process all purchase orders received since the
last determination of the Series' net asset value.
Fund/Plan shall calculate on a daily basis the amount available for
investment in Shares at the net asset value determined by the Series'
pricing agent as of the close of regular trading on the New York Stock
Exchange, the number of Shares and fractional Shares to be purchased and
the net asset value to be deposited with the custodian of the assets of the
Trust (the "Custodian"). Fund/Plan shall place a purchase order daily with
the appropriate Series for the proper number of Shares and fractional
Shares to be purchased and confirm such number to the Trust, in writing.
Section 11. Fund/Plan having made the calculations provided for in
Section 9, shall thereupon pay over the net asset value of Shares purchased
to the Custodian. The proper number of Shares and fractional Shares shall
then be issued daily and credited by Fund/Plan to the Shareholder
Registration Records. The Shares and fractional Shares purchased for each
Shareholder will be credited by Fund/Plan to that Shareholder's separate
account. Fund/Plan shall mail to each Shareholder a confirmation of each
purchase with, if requested, copies to the Trust. Such confirmations will
show the prior Share balance, the new Share balance, the amount invested
and the price paid for the newly purchased Shares.

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REDEMPTIONS
Section 12. Prior to the daily determination of net asset value in
accordance with the Trust's Prospectus and Statement of Additional
Information then in effect, Fund/Plan shall process all requests from
Shareholders to redeem Shares and determine the number of Shares required
to be redeemed to make monthly payments, automatic payments or the like.
Thereupon, Fund/Plan shall advise the Trust of the total number of Shares
available for redemption and the number of Shares and fractional Shares
requested to be redeemed. The Trust's pricing agent shall then determine
the applicable net asset value. Thereafter Fund/Plan shall furnish the
Trust with an appropriate confirmation of the redemption and process the
redemption by filing with the Custodian an appropriate statement and make
the proper distribution and application of the redemption proceeds in
accordance with the Trust's Prospectus and Statement of Additional
Information then in effect. The stock registry books recording outstanding
Shares, the Shareholder Registration Records and the individual account of
the Shareholder shall be properly debited.
Section 13. The proceeds of redemption shall be remitted by
Fund/Plan in accordance with the Trust's Prospectus and Statement of
Additional Information then in effect, by check mailed to the Shareholder
at the Shareholder's registered address or wired to an authorized bank
account.
For the purposes of redemption of Shares which have been purchased
within 15 days of a redemption request, the Trust shall provide Fund/Plan,
from time to time, with Written Instructions concerning the time within
which such requests may be honored.
DIVIDENDS

Section 14. The Trust shall notify Fund/Plan of the date of each
dividend declaration or capital gains distribution. In addition, the Trust
shall provide to Fund/Plan five business days' prior written notice of the
record date for determining the Shareholders entitled to payment. The per-share
payment amount of any dividend or capital gain shall be determined by the Trust
after receipt of necessary information from and consultation with the Trust's
accounting agent and auditors.
Section 15. On or before each payment date, the Trust will notify
Fund/Plan of the total amount of the dividend or distribution currently
payable. Fund/Plan will, on the designated payment date, automatically
reinvest all dividends in additional Shares except in

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Page 5 of 11 pages.

cases where Shareholders have elected to receive distribution in cash, in which
case Fund/Plan will mail distribution checks to the Shareholders for the proper
amounts payable to them from monies transferred by the Custodian to Fund/Plan
for that purpose.
FEES
Section 16. The Trust agrees to pay Fund/Plan compensation for its
services and to reimburse it for expenses, at the rates and amounts as set
forth in Schedule "B" attached hereto, and as shall be set forth in any
amendments to such Schedule "B" approved by the Trust and Fund/Plan. The
Trust agrees and understands that Fund/Plan's compensation will be
comprised of two components, payable on a monthly basis, as follows:
(i) Subject to a minimum fee for each Series
issuing one class of Shares and a minimum fee for each additional Class
issued by any Series, the Trust agrees to pay Fund/Plan an annual account
maintenance fee. This fee shall be calculated by multiplying the sum of
the average monthly number of accounts within each Series issuing one class
of Shares together with the monthly average number of accounts within each
additional Class of Shares of a Series by one twelfth (1/12th) the annual
account maintenance fee as set forth in Schedule "B", which fee will be
billed to the Trust within the first ten calendar days of the month
following the month in which the fee was incurred; and
(ii) reimbursement of any reasonable out-of-pocket
expenses paid by Fund/Plan on behalf of the Trust, which out-of-pocket
expenses will be billed to the Trust within the first ten calendar days of
the month following the month in which such out-of-pocket expenses were
incurred. The Trust agrees to reimburse Fund/Plan for such expenses within
ten calendar days of receipt of such bill.
For the purpose of determining fees payable to Fund/Plan, the value
of the Trust's net assets shall be computed at the times and in the manner
specified in the Trust's Prospectus and Statement of Additional Information
then in effect.
During the term of this Agreement, should the Trust seek services
or functions in addition to those outlined above or in Schedule "A"
attached, a written amendment to this Agreement specifying the additional
services and corresponding compensation shall be executed by both Fund/Plan
and the Trust.

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Transfer Agent Services Agreement between The Milestone Funds and
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GENERAL PROVISIONS
Section 17. Fund/Plan shall maintain records (which may be part of
the stock transfer records) in connection with the issuance and redemption
of Shares, and the disbursement of dividends and dividend reinvestments, in
which will be noted the transactions effected for each Shareholder and the
number of Shares and fractional Shares owned by each Shareholder.
Fund/Plan agrees to make available upon request and to preserve for the
periods prescribed in Rule 31a-2 under the Investment Company Act of 1940,
as amended, any records relating to services provided under this Agreement
which are required to be maintained by Rule 31a-1 under the Act.
Section 18. In addition to the services as Transfer Agent and
dividend disbursing agent set forth above, Fund/Plan will perform other
services for the Trust as agreed upon from time to time, including but not
limited to, preparation of and mailing Federal Tax Information Forms and
mailing semi-annual reports to shareholders of the Trust.
Section 19. Nothing contained in this Agreement is intended to or
shall require Fund/Plan in any capacity hereunder, to perform any functions
or duties on any holiday, day of special observance or any other day on
which the Custodian or the New York Stock Exchange are closed. Functions
or duties normally scheduled to be performed on such days shall be
performed on, and as of, the next business day on which both the New York
Stock Exchange and the Custodian are open.
Section 20.
(a) Fund/Plan, its directors, officers, employees,
shareholders and agents shall only be liable for any error of judgment or
mistake of law or for any loss suffered by the Trust, in connection with
the performance of this Agreement that result from willful misfeasance, bad
faith, gross negligence or reckless disregard on the part of Fund/Plan in
the performance of its obligations and duties under this Agreement.
(b) Any person, even though also a director, officer,
employee, shareholder or agent of Fund/Plan, who may be or become an
officer, trustee, employee, or agent of the Trust, shall be deemed, when
rendering services to such entity or acting on any business of the Trust,
(other than services or business in connection with Fund/Plan's duties
hereunder), to be rendering such services to or acting solely for the Trust
and not as a director, officer, employee, shareholder or agent of, or one
under the control or direction of Fund/Plan even

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Page 7 of 11 pages.

though that person is being paid salary by Fund/Plan.
(c) Notwithstanding any other provision of this Agreement,
the Trust shall indemnify and hold harmless Fund/Plan, its directors,
officers, employees, shareholders and agents from and against any and all
claims, demands, expenses and liabilities (whether with or without basis in

fact or law) of any and every nature which Fund/Plan may sustain or incur
or which may be asserted against Fund/Plan by any person by reason of, or
as a result of (i) any action taken or omitted to be taken by Fund/Plan in
good faith hereunder; (ii) any action taken or omitted to be taken by
Fund/Plan in good faith in reliance upon any certificate, instrument,
order, or stock certificate or other document reasonably believed by it to
be genuine and to be signed, countersigned or executed by any duly
authorized person, upon the Oral Instructions or Written Instructions of an
authorized person of the Trust or upon the opinion of legal counsel to the
Trust, or its own counsel; or (iii) any action taken or omitted to be taken
by Fund/Plan in connection with its appointment under this agreement, which
action or omission was taken in good faith in reliance upon any law, act,
regulation or interpretation of the same even though the same may
thereafter have been altered, changed, amended, or repealed.
Indemnification under this subparagraph, however, shall not apply to
actions or omissions of Fund/Plan or its directors, officers, employees,
shareholders, or agents in cases of its or their willful misfeasance, bad
faith, gross negligence or reckless disregard of its or their duties
hereunder.
(d) Fund/Plan shall give written notice to the Trust within
thirty (30) business days of receipt by Fund/Plan of a written assertion or
claim of any threatened or pending legal proceeding which may be subject to
this indemnification. The failure to notify the Trust of such written
assertion or claim shall not, however, operate in any manner whatsoever to
relieve the Trust of any liability arising under this Section or otherwise,
except to the extent that failure to give notice prejudices the Trust.
(e) For any legal proceeding giving rise to this
indemnification, the Trust shall be entitled to defend or prosecute any
claim in the name of Fund/Plan at its own expense and through counsel of
its own choosing if it gives written notice to Fund/Plan within thirty (30)
business days of receiving notice of such claim. Notwithstanding the
foregoing, Fund/Plan may participate in the litigation at its own expense
through counsel of its own choosing. In the event the Trust chooses to
defend or prosecute such claim, the parties shall cooperate in the

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Page 8 of 11 pages.

defense or prosecution thereof and shall furnish such records and other
information as are reasonably necessary.
(f) The Trust shall not settle any claim under Section 19(d)
and 19(e) without Fund/Plan's express written consent, which consent shall
not be unreasonably withheld. Fund/Plan shall not settle any such claim
without the Trust's express written consent, which likewise shall not be
unreasonably withheld.
Section 21. Fund/Plan is authorized, upon receipt of Written
Instructions from the Trust, to make payment upon redemption of Shares
without a signature guarantee. The Trust hereby agrees to indemnify and
hold Fund/Plan, its successors and assigns, harmless of and from any and
all expenses, damages, claims, suits, liabilities, actions, demands, losses
whatsoever arising out of or in connection with a payment by Fund/Plan upon
redemption of Shares pursuant to Written Instructions and without a

signature guarantee; upon the request of Fund/Plan, the Trust shall assume
the entire defense of any action, suit or claim subject to the foregoing
indemnity. Fund/Plan shall notify the Trust of any such action, suit or
claim within thirty (30) days after receipt by Fund/Plan of notice thereof.
Section 22.
(a) The term of this Agreement shall commence on the date herein
stated above ("Effective Date").
(b) This Agreement shall remain in effect for eighteen (18)
months from the Effective Date and shall continue thereafter on a year to
year term subject to termination by either Party set forth in (c) below.
(c) After the initial term of this Agreement, the Trust or
Fund/Plan may give written notice to the other of the termination of this
Agreement, such termination to take effect at the time specified in the
notice, which date shall not be less than sixty (60) days after the date of
receipt of such notice. Upon the effective termination date, the Trust
shall pay to Fund/Plan such compensation as may be due as of the date of
termination and shall likewise reimburse Fund/Plan for any out-of-pocket
expenses and disbursements reasonably incurred by Fund/Plan to such date.
(d) If a successor to any of Fund/Plan's duties or
responsibilities under this Agreement is designated by the Trust by written
notice to Fund/Plan in connection with the termination of this Agreement,
Fund/Plan shall promptly upon such termination and at the

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Page 9 of 11 pages.

expense of the Trust, transfer all required records and shall cooperate in the
transfer of such duties and responsibilities.
Section 23. The Trust shall file with Fund/Plan a certified copy
of each resolution of its Board of Trustees authorizing the execution of
Written Instructions or the transmittal of Oral Instructions, as provided
in Section 1 of this Agreement.
Section 24. This Agreement may be amended from time to time by a
supplemental agreement executed by the Trust and Fund/Plan.
Section 25. Except as otherwise provided in this Agreement, any
notice or other communication required by or permitted to be given in
connection with this Agreement shall be in writing, and shall be delivered
in person or sent by first class mail, postage prepaid, to the respective
parties as follows:

If to Milestone: If to Fund/Plan:
---------------- ----------------
The Milestone Funds Fund/Plan Services, Inc.
One Odell Plaza 2 West Elm Street
Yonkers, New York 10701 Conshohocken, PA 19428
Attention: Jeffrey Hanson Attention: Kenneth J. Kempf,
Chief Operating Officer President

Section 26. The Trust represents and warrants to Fund/Plan that
the execution and delivery of this Agreement by the undersigned officers of
the Trust has been duly and validly authorized by resolution of the Board

of Trustees of the Trust.
Section 27. This Agreement may be executed in two or more
counterparts, each of which when so executed shall be deemed to be an
original, but such counterparts shall together constitute but one and the
same instrument.
Section 28. This Agreement shall extend to and shall be binding
upon the Parties and their respective successors and assigns; provided,
however, that this Agreement shall not be assignable by the Trust without
the written consent of Fund/Plan or by Fund/Plan without the written
consent of the Trust, authorized or approved by a resolution of their
respective Boards of Trustees.
Section 29. This Agreement shall be governed by the laws of the
Commonwealth of Pennsylvania and the venue of any action arising under this
Agreement shall be Montgomery

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Page 10 of 11 pages.

County, Commonwealth of Pennsylvania if the suit is instituted by the Trust or
the Adviser. If a suit is instituted by Fund/Plan, the venue of such action
arising under this Agreement shall be Yonkers, New York.
Section 30. No provision of this Agreement may be amended or
modified, in any manner except in writing, properly authorized and executed
by Fund/Plan and the Trust.
Section 31. If any part, term or provision of this Agreement is
held by any court to be illegal, in conflict with any law or otherwise
invalid, the remaining portion or portions shall be considered severable
and not be affected, and the rights and obligations of the parties shall be
construed and enforced as if the Agreement did not contain the particular
part, term or provision held to be illegal or invalid, provided that the
basic agreement is not thereby substantially impaired.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement
consisting
in its entirety, of eleven typewritten pages, together with Schedules "A,"
"B" and "C," to be signed by their duly authorized officers as of the day
and year first above written.

The Milestone Funds Fund/Plan Services, Inc.

____________________________________ ____________________________________
By: Jeffrey Hanson, Chief Operating By: Kenneth J. Kempf, President
Officer

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Transfer Agent Services Agreement between The Milestone Funds and

Fund/Plan Services, Inc.
Page 11 of 11 pages.

Schedule "A"

Transfer Agent/Shareholder Services
for
The Milestone Funds

Subject to the "Milestone Funds Servicing Procedures," "Milestone Fund
Processing Procedures Using BoNY Cash Management" and "Milestone Fund
Processing Procedures" included in this Schedule "A," the following
Transfer Agency Services shall be provided under this Agreement:

I - Shareholder File

1. Establish new accounts and enter demographic data into shareholder
base. Includes review and file maintenance all NSCC originated
registrations and data changes for FundServ, Networking and ACATS
accounts for compliance with Investar customer file requirements.

2. Create Customer Information File (CIF) to link accounts within the
Fund and across funds within the Fund Group. Facilitates account
maintenance, lead tracking, quality control, household mailings and
combined statements.

3. 100% quality control of new account information, including
verification of initial investment.

* 4. Systematic linkage of shareholder accounts with exact matches on
SSN and address for the purpose of consolidated account history
reporting. Periodic production of laser printed combined
statements.

* 5. Production of household mailing labels which enable the Fund to
do special mailings to each address in the Fund Group rather than
each account.

6. Maintain account and customer file records based on shareholder
request and routine quality review.

7. Maintain tax ID certification and NRA records for each account,
including backup withholding.

8. Provide written confirmation of address changes.

9. Produce shareholder statements for daily activity, dividends,
on-request, third party, and periodic mailings.

* 10. Produce shareholder lists, labels and ad hoc reports to Fund
management as requested.

11. Automated processing of dividends and capital gains with daily,
monthly, quarterly or annual distributions. Payment options
include reinvestment, directed payment to another fund, cash via
mail, Fed wire or ACH.

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Transfer Agent Services Agreement between The Milestone Funds and
Fund/Plan Services, Inc.
Schedule "A", Page 1

II - Shareholder Services

1. Provide quality service through a staff of highly trained NASD
licensed customer service personnel, including phone, research and
correspondence representatives.

2. Answer shareholder calls: provide routine account information,
transaction details including direct and wire purchases,
redemptions, exchanges, systematic withdrawals, pre-authorized
drafts, Fund SERV and wire order trades, problem solving and process
telephone transactions.

* 3. Customized recording of fund prices daily after regular business
hours for shareholder access.

4. Silent monitoring of shareholder calls by the phone supervisor to
ensure exceptional customer service.

5. Record and maintain tape recordings of all shareholder calls for a
six month period.

6. Phone Supervisor produces daily management reports of shareholder
calls which track volumes, length of calls, average wait time and
abandoned call rates to ensure quality service.

7. Phone representatives are thoroughly trained through in house
training programs on the techniques of providing Exceptional
Customer Service.

8. Customer inquiries received by letter or telephone are thoroughly
researched by a correspondence team member. These inquires include
such items as, account/customer file information, complete
historical account information, stop payments on checks, transaction
details, and lost certificates.

III - Investment Processing

1. Initial investment (checks or Fed wires).

2. Subsequent investments (checks or Fed wires) processed through lock
box.

3. Pre-authorized investments (PAD) through ACH system.

4. Government allotments through ACH system.

5. Prepare and process daily bank deposit of shareholder investments.

* 6. NSCC - FundSERV trades.

IV - Redemption Processing

1. Process letter redemption requests.

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Transfer Agent Services Agreement between The Milestone Funds and
Fund/Plan Services, Inc.
Schedule "A", Page 2

2. Process telephone redemption transactions.

3. Establish Systematic Withdrawal File and process automated
transactions on monthly basis.

4. Issue checkbooks and process checkbook redemptions through agent
bank.

5. Redemption proceeds distributed to shareholder by check, Fed wire or
ACH processing.

* 6. Provide NSCC - FundSERV trade processing.

V - Exchange & Transfer Processing

1. Process legal transfers.

2. Issue and cancel certificates.

3. Replace certificates through surety bonds (separate charge to
shareholder).

4. Process exchange transactions (letter and telephone request).

5. Process ACATS transfers.

VI - Retirement Plans

1. Fund sponsored IRAs offered using Semper Trust Company as custodian.
Services include:
a. Contribution processing
b. Distribution processing
c. Apply rollover transactions
d. Process Transfer of Assets
e. Letters of Acceptance to prior custodians
f. Notify IRA holders of 70 requirements
g. Calculate Required Minimum Distributions
h. Maintain beneficiary information file
i. Solicit birth date information

2. Fund sponsored SEP-IRA plans offered using Semper Trust Company as

custodian. Services include those listed under IRAs and:
a. Identification of employer contributions

3. Fund sponsored Qualified plans offered:
a. Plan document available
b. Omnibus/master account processing only
c. Produce annual statements
d. Process contributions
e. Process distributions
f. Process rollover and Transfer of Assets transactions

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Transfer Agent Services Agreement between The Milestone Funds and
Fund/Plan Services, Inc.
Schedule "A", Page 3

VII - Settlement & Control

1. Daily review of processed shareholder transactions to assure input
was processed correctly. Accurate trade activity figures passed to
Fund's Accounting Agent by 10:00am EST.

2. Preparation of daily cash movement information to be passed to the
Fund's Accounting Agent and Custodian Bank by 10:00am EST for use in
determining Fund's daily cash availability.

3. Prepare a daily share reconcilement which balances the shares on the
Transfer Agent system to those on the books of the Fund.

4. Resolve any outstanding share or cash issues that are not cleared by
trade date
+ 2.

5. Process shareholder adjustments to include the proper notification
of any booking entries needed, as well as any necessary cash
movement.

6. Settlement and review of Fund's declared dividends and capital gains
to include the following:
a. Review record date report for accuracy of shares.
b. Preparation of dividend settlement report after dividend is
posted. Verify the posting date shares, the rate used and the
NAV price of reinvest date to ensure dividend was posted
properly.
c. Distribute copies to the Fund's Accounting Agent.
d. Preparation of the checks prior to being mailed.
e. Sending of any dividends via wires if requested.
f. Preparation of cash movement information for the cash portion of
the dividend payout on payable date.

7. Placement of stop payments on dividend and liquidation checks as
well as the issuance of their replacements.

8. Maintain inventory control for stock certificates and dividend check

form.

9. Aggregate tax filings for all Fund/Plan clients. Monthly deposits to
the IRS of all taxes withheld from shareholder disbursements,
distributions and foreign account distributions. Correspond with
the IRS concerning any of the above issues.

10. Timely settlement and cash movement for all NSCC/FundSERV
activity.

VIII - Year End Processing

1. Maintain shareholder records in accordance with IRS notices for
under-reporting and invalid Tax Ids. This includes initiating 31%
backup withholding and notifying shareholder of their tax status and
the corrective action which is needed.

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Transfer Agent Services Agreement between The Milestone Funds and
Fund/Plan Services, Inc.
Schedule "A", Page 4

2. Conduct annual W-9 solicitation of all uncertified accounts. Update
account tax status to reflect backup withholding or certified status
depending upon responses.

3. Conduct periodic W-8 solicitation of all non-resident alien
shareholder accounts. Update account tax status with updated
shareholder information and treaty rates for NRA tax.

4. Review IRS Revenue Procedures for changes in transaction and
distribution reporting and specifications for the production of
forms to ensure compliance.

5. Coordinate year end activity with client. Activities include
producing year end statements, scheduling record dates for year
dividends and capital gains, production of combined statements,
printing of inserts to be mailed with tax forms.

6. Distribute Dividend Letter to funds for them to sign off on all
distributions paid year to date. Dates and rates must be
authorized so that they can be used for reporting to the IRS.

7. Coordinate the ordering of form stock and envelopes from vendor in
preparation of tax reporting. Review against IRS requirements to
ensure accuracy.

8. Prepare form flashes for the microfiche vendor. Test and oversee the
production of fiche for year end statements and tax forms.

9. Match and settle tax reporting totals to fund records and on-line
date from Investar.

10. Produce forms 1099R, 1099B, 1099Div, 5498, 1042S and year end

valuations. Quality assure forms before mailing to shareholders.

11. Monitor IRS deadlines and special events such as cross over
dividends and prior year IRA contributions.

12. Prepare IRS magnetic tapes and appropriate forms for the filing of
all reportable activity to the Internal Revenue Service.

IX - Client Services

1. An Account Manager is assigned to each relationship. The Account
Manager acts as the liaison between the Fund and the Transfer Agency
staff. Responsibilities include scheduling of events, system
enhancement implementation, special promotion/event implementation
and follow-up, and constant fund interaction on daily operational
issues.

Specifically:
a. Scheduling of dividends, proxies, report mailing and special
mailings.
b. Coordinate with the Fund the shipment of materials for scheduled
mailings.
c. Liaison between the Fund and support services for preparation of
proofs and eventual printing of statement forms, certificates,
proxy cards, envelopes.
d. Handle all notification regarding proxy tabulation through the
meeting. Coordinate
================================================================================
Transfer Agent Services Agreement between The Milestone Funds and
Fund/Plan Services, Inc.
Schedule "A", Page 5

scheduling of materials, including voted cards, tabulation letters,
and shareholder list, to be available for the meeting.
e. Order special reports, tapes, discs for special systems requests
received.
f. Implement new operational procedures, e.g., check writing
feature, load discounts, minimum waivers, sweeps, telephone
options, PAD promotions.
g. Coordinate with systems, services and operations on special
events, e.g., mergers, new fund start ups, small account
liquidations, combined statements, household mailings, additional
mail files.
h. Prepare standard operating procedures and review prospectus for
new funds and our current client base. Coordinate implementation
of suggested changes with the Fund.
i. Liaison between the Fund and the transfer agency staff regarding
all service and operational issues.

2. Proxy Processing (Currently one free per year)
a. Coordinate printing of cards with vendor.
b. Coordinate mailing of cards with Account Manager and mailroom.
c. Provide daily report totals to Account Manager for client
notification.

d. Preparation of affidavit of mailing documents.
e. Provide one shareholder list.
f. Prepare final tabulation letter.

3. Blue Sky Processing
a. Maintain file with additions, deletions, changes and updates at
the Fund's direction.
b. Provide daily and monthly reports to enable the Fund to do
necessary state filings.

* Separate fees will apply for these services.

================================================================================
Transfer Agent Services Agreement between The Milestone Funds and
Fund/Plan Services, Inc.
Schedule "A", Page 6

DAILY REPORTS

REPORT NUMBER REPORT DESCRIPTION
------------- ------------------

Daily Activity Register
024 Tax Reporting Proof
051 Cash Receipts and Disbursement Proof
053 Daily Share Proof
091 Daily Gain/Loss Report
104 Maintenance Register
044 Transfer/Certificate Register
056 Blue Sky Warning Report

MONTHLY REPORTS
---------------

Report Description
------------------

Blue Sky
Certificate Listing
State Sales and Redemption
Monthly Statistical Report
Account Demographic Analysis
MTD Sales - Demographics by Account Group
Account Analysis by Type
================================================================================
Transfer Agent Services Agreement between The Milestone Funds and
Fund/Plan Services, Inc.
Schedule "A", Page 7

Fund/Plan Services, Inc.
Institutional Services Department
MILESTONE FUNDS SERVICING PROCEDURES
Revised February 2, 1996

Chris Miller - Institutional Services Supervisor
Peter Haas - Institutional Services Representative
______________________________________________________________________________

1. Purchase Processing (excluding Bear Stearns trades):

For each purchase trade, the following steps will be taken by the
Institutional Services Representative:

a. Representative will receive the notification of a purchase via a
telephone call, record the relevant account number, purchase amount and
shareholder information and confirm the information back to the caller.

b. The purchase will be input on a wire expect trade form.
c. If the trade is larger than five million dollars, the representative
will notify Marc Pfeffer at Milestone Capital Management of the trade.
d. The wire expect will be processed on Imaging by the Institutional
Services Department and routed to Operations to await receipt of the
wire.
e. Representative will notify Marc Pfeffer of any late day trade
indications.
f. Each trade will take approximately 15 minutes to process.

2. Redemption Processing (excluding Bear Stearns trades):

For each redemption trade, the following steps will be taken by the
Institutional Services
Representative:

a. Representative will receive the notification of a redemption via a
telephone call, record the relevant account number, redemption amount,
remittance instructions and shareholder information and confirm the
information back to the caller.
b. The redemption will be input on a telephone redemption form.
c. If the trade is larger than five million dollars, the representative
will notify Marc Pfeffer at Milestone Capital Management of the trade.
d. The telephone redemption will be processed on Investar, completed and
added on Imaging to create a TAC notification task, and continue onto
the Institutional Services Department for quality control.
e. The Institutional Services Department must notify TAC with any trades
taken at the 2:30 PM EST cutoff. Notification is required so TAC can
check Imaging for the trade and include it in the availability faxed to
Marc Pfeffer. Trade work-flow will progress as stated above.
f. For accounts which receive immediate wiring of redemption proceeds, the
Institutional Services Department will notate immediate wiring in
comment section of the electronic form. TAC will proceed with the
immediate remittance of monies through Bank of New York.

================================================================================
Transfer Agent Services Agreement between The Milestone Funds and
Fund/Plan Services, Inc.
Schedule "A", Page 8

g. Representative will notify Marc Pfeffer of any late day trade
indications.
h. Each trade will take approximately 20 minutes to process.

3. Processing of Bear Stearns trades:

a. Bear Stearns will transmit all their purchases and redemptions via fax
to the Institutional Services Department on a daily basis.
b. Since the trade sheet will only contain Bear Stearns account numbers,
the representative will need to cross-reference each Bear Stearns
account number with the number we use on our system.
c. Trades will be scanned two times into imaging workflow for processing.
Once as a liquidation to the Institutional Services Department, and
once as a purchase to the Operations Department.
d. All redemptions will be processed on Investar, completed and added on
Imaging to create a TAC notification task, and continue onto the
Institutional Services Department for quality control.
e. The Institutional Services Department must notify TAC with any trades
taken at the 2:30 PM EST cutoff. Notification is required so TAC can
check Imaging for the trade and include it in the availability faxed to
Marc Pfeffer. Trade work-flow will progress as stated above.
f. The entire process from the initial receipt of the fax from Bear
Stearns to the final processing of all trades will take approximately
forty five minutes.

4. Daily Faxing of Reports:
a. The Institutional Services Department will receive several reports
every morning which must be faxed to different locations.
b. The reports must be copied onto 8 1/2" by 11" paper before they can be
faxed.
- A daily share and accrual balance report for the 2 State of
Illinois accounts must be reviewed for accuracy and then faxed to
two people every day. This will take approximately 10 minutes per
fax to complete.
- A daily share and accrual balance report for the ten CTC
accounts must be reviewed for accuracy and then faxed to one person
every day. This will take approximately 10 minutes to complete.

5. Total Time Spent on Servicing Functions:

DAILY ACTIVITY:
a. Purchases (5 per day @ 15 minutes per trade) 1 hour 15 minutes
b. Redemptions (5 per day @ 20 minutes per trade) 1 hour 40 minutes
c. Bear Stearns daily trade fax 45 minutes
d. Daily Faxing (3 faxes @ 10 minutes per fax) 30 minutes

Total Daily Time 4 hours 10 minutes
------------------

Note: All italicized items in Sections 1-6 denote special servicing
procedures normally not done by the Institutional Services Department.

================================================================================
Transfer Agent Services Agreement between The Milestone Funds and
Fund/Plan Services, Inc.
Schedule "A", Page 9

Fund/Plan Services, Inc.
Institutional Services Department
MILESTONE FUNDS SERVICING PROCEDURES
ANALYSIS OF TIME SPENT ON SERVICING FUNCTIONS

Chris Miller - Institutional Services Supervisor
Peter Haas - Institutional Services Representative

______________________________________________________________________________

Function Routine Processing Time Special Processing Time

Purchase Processing 50 minutes 1 hour 15 minutes
(5 trades @ 10 min per) (5 trades @ 15 min per)

Redemption Processing 50 minutes 1 hour 40 minutes
(5 trades @ 10 min per) (5 trades @ 20 min per)

Dealer Trades 45 minutes 45 minutes
(Bear Stearns)

Daily Faxing 0 minutes 30 minutes

TOTAL DAILY TIME 2 hours 25 minutes 4 hours 10 minutes

DIFFERENCE DUE TO SPECIAL HANDLING 1 hours 45 minutes

================================================================================
Transfer Agent Services Agreement between The Milestone Funds and
Fund/Plan Services, Inc.
Schedule "A", Page 10

Fund/Plan Services, Inc.
Transfer Agent Control (TAC)
MILESTONE FUND PROCESSING PROCEDURES
USING BoNY CASH MANAGEMENT

Glenn Brynan - Manager
Maryellen Dudziak - Supervisor
Revised 2/02/96
================================================================================

1. Fund Settlement: (Purchases)

For each purchase trade, the following steps will be taken by the
settlement clerk.

a. Receive printed placement confirmation of the trade from Institutional
Rep.
b. Place the confirmation sheet into the "pending" file.
c. Review BoNY DDA Account for received wires at 11:50am, 2:20 pm and
4:20 pm.

Upon receipt of the wire:

d. Update Cash Movement Sheet to reflect additional wire received.
e. Update Capstock Sheet to reflect additional trade processed.
f. Update Cash Availability to reflect additional wire received.
g. Pass wire notification sheet to Operations for Investar processing of
payment.
h. Review Investar System processing soon afterward to verify accuracy of
input.

**Process to take roughly 5 minutes per trade.

2. Fund Settlement: (Redemptions)

For each redemption trade, the following steps will be taken by the
settlement clerk.

a. Receive printed placement confirmation of the trade from Institutional
clerk.
b. Update Cash Availability to reflect additional trade received.
c. Update Cash Movement Sheet to reflect additional trade received.
d. Update Capstock Sheet to reflect additional trade received.
e. Review Investar System processing soon afterward to verify accuracy of
input.
f. For "Rush" wires, access BoNY DDA System and transmit wire to S/H.

**Process to take roughly 5 minutes per trade.

3. Fund Settlement: (Daily Distribution)

Each day the following steps will be taken by the settlement clerk.

a. Receive a Daily Distribution Report from the Investar System.
b. Verify beginning accrual balance to ensure it matches yesterday's
ending balance.
c. Verify that the daily rate matches what was reported from BoNY
Accounting Dept.

================================================================================
Transfer Agent Services Agreement between The Milestone Funds and
Fund/Plan Services, Inc.
Schedule "A", Page 11

d. Verify that the shares multiplied by the rate matches the current daily
accrual total.
e. Account for any early payouts or accrual adjustments due to as/of's.
f. Verify that the new ending accrual total is correct.
g. Prepare a Daily Distribution Confirmation to be faxed to BoNY
Accounting Dept.
h. Verify that BoNY confirms our totals and faxes confirmation back each
day.

**Process to take roughly 15 minutes each day (Per Fund or Class of
Shares).

4. Fund Settlement: (Share Reconcilement)

Each day the following steps will be taken by the settlement clerk.

a. Receive daily System reports including Share Proof, DAR, Transaction
Journal.
b. Verify that the trades posted match what was listed on previous day's
Capstock.
c. Review Aged Suspense Report to ensure there are no trades not
processed.
d. Prepare Share Rec showing both the T/A and Accounting balances and any
differences.
e. Work with appropriate personnel to ensure differences are corrected on
T+1.

**Process to take roughly 15 minutes each day (Per Fund or Class of
Shares).

5. Fund Settlement: (Cash Availability Reporting)

Each day the following steps will be taken by the settlement clerk.

a. At 12:00 noon EST, a preliminary availability will be sent to Milestone
via fax.
b. At 2:30pm EST, an updated availability is sent to Milestone and BoNY
Accounting via Fax.
c. At 4:30pm EST, a FINAL availability is sent to Milestone and BoNY
Accounting via Fax.

**Process to take roughly 10 minutes each cutoff time. It involves
printing the Cash Availability, faxing it to BoNY and Milestone, and

verifying that the fax transmitted properly.

6. Fund Settlement: (Cash Movement to/from BoNY)

Each day the following steps will be taken by the settlement clerk.

a. At 2:30pm EST the "NET" figure thus far is determined and reported to
BoNY Custody.
b. A wire is initiated from the DDA Account to the Custody Account for
wires received.
c. A wire is initiated from the Custody Acct to the DDA Acct for
Redemptions received.
d. Non "Rush" wires will be initiated by TAC at this time by accessing the
BoNY System.
e. Review outgoing wire notifications each half hour to verify that wires
were sent.

End of day processing will consist of.

e. Shortly after 4:30pm EST, additional s/h activity is reported to BoNY
Custody.
f. A wire is initiated from the DDA Account to the Custody Account for
late wires received.
g. A wire is initiated from the Custody Acct to the DDA Acct for late
Redemptions received.

================================================================================
Transfer Agent Services Agreement between The Milestone Funds and
Fund/Plan Services, Inc.
Schedule "A", Page 12

h. Late Redemption requests (after 2:30pm) will be processed as they are
received.

**Process to take roughly 45 minutes each cutoff time. It involves
printing the Cash Movement Sheet, faxing it to BoNY and Milestone,
initiating fund and s/h wires and verifying that the fax and ALL wires
transmitted properly.

7. Total Time Spent on Settlement Functions:

Total Time spent on the Milestone Fund:

a. Purchases. . . . . . . . . . . . . . . .50 minutes (@ 10 trades)
b. Redemptions. . . . . . . . . . . . . . .50 minutes (@ 10 trades)
c. Daily Distribution . . . . . . . . . . .30 minutes
d. Share Reconcilement. . . . . . . . . . .30 minutes
e. Cash Availability Reporting. . . . . . .30 minutes
f. Cash Movement to/from BoNY . . . . . . .90 minutes
----------
4 hrs 40 minutes Total Time
===========================

Total Time spent on a typical Money Market Fund:

a. Purchases. . . . . . . . . . . . . . . . 1 hour
b. Redemptions. . . . . . . . . . . . . . . 30 minutes
c. Daily Distribution . . . . . . . . . . . 20 minutes
d. Share Reconcilement. . . . . . . . . . . 20 minutes
e. Cash Availability Reporting. . . . . . . 20 minutes
f. Cash Movement to/from BoNY . . . . . . . 30 minutes
----------
3 hrs Total Time
================

LEGEND: Bold italicized items reflect processes above and beyond standard
processes.

================================================================================
Transfer Agent Services Agreement between The Milestone Funds and
Fund/Plan Services, Inc.
Schedule "A", Page 13

Fund/Plan Services, Inc.
Transfer Agent Operations Department
MILESTONE FUND PROCESSING PROCEDURES
Revised February 2, 1996

Barbara Mack - Operations Manager
Andrew Krane - Operations Supervisor
Pamela Toombs - Operations Representative
_______________________________________________________________________________

1. Work Flow and Record Retention:

a. Documents received in Institutional Services Department, sent to
Imaging for entry into Operations work flow.
b. Special status assigned to Milestone, documents processed with highest
priority.
c. Documents sorted by date and filed weekly in client specific storage
boxes.
d. Work flow and document management takes approximately 1 minute per
item.

2. Operations Staffing

a. Documents processed by Transfer Agent Operations Department based upon
status (ie: Broker, Direct, Institutional).
b. Milestone assigned one primary representative and one back-up
representative responsible for all operational processing.

3. Customer and Account File Set-up and Maintenance:

a. Documents reviewed to insure that all processing requirements are met.
b. Accounts established on Investar system, customer file created and
linked with all accounts owned by same shareholder.
c. Account set-up and maintenance processed by Operations Representative.

d. 100% quality control review performed by Institutional Representative.
e. 100% quality assurance review performed by Operations Supervisor.
e. New Account Set-up and Customer file creation takes approximately 10
minutes per item. File Maintenance takes approximately 5 minute
per item.

4. Purchase Processing:

a. Wire Expect Electronic Form entered into Imaging by Institutional
Representative.
b. Transaction input into Investar Batch program by Operations
Representative.
c. Purchases posted immediately to shareholder account as pending items
(MFTPNDL) and included in Fund totals (MFTCFFI).
d. Purchase detail forwarded to TAC as "Complete and Add" for entry to
fund availability totals.
e. Transaction updated upon receipt of wire notification from TAC
Department.
f. Items not matched to wires are suspended at end of day, awaiting
receipt of money.
g. 100% quality control review done by other Operations staff member.
h. Purchase processing takes approximately 5 minutes per item.

================================================================================
Transfer Agent Services Agreement between The Milestone Funds and
Fund/Plan Services, Inc.
Schedule "A", Page 14

5. Non-Monetary Share Transaction Processing:

a. Documents reviewed to insure that all processing requirements are met.
b. Transaction processed to Investar system.
c. 100% quality control review done by Institutional Representative.
d. 100% quality assurance review done by Operations Supervisor.
e. Processing takes approximately 10 minutes per item.

6. Total Time Spent on Operations Processing Functions:

a. Work Flow set-up (15 items per day) 15 minutes
b. Customer/Account File (2 items per day) 15 minutes
c. Purchase transactions (5 items per day) 25 minutes
d. Non-Monetary transactions (1 item per day) 10 minutes

Total Daily Time: 1 hour, 5 minutes

7. Analysis of Time Spent on Milestone Processing Versus Standard
Processing:

FUNCTION STANDARD MILESTONE
-------- -------- ---------
a. Work Flow set-up 15 minutes 15 minutes
b. Customer/Account File 10 minutes 15 minutes
c. Purchase transactions 15 minutes 25 minutes
d. Non-Monetary transactions 5 minutes 10 minutes

Total Standard vrs Milestone: 1 hour 1 hour, 5 minutes
Difference Due to Special Handling: 5 minutes

NOTE: All italicized items in Sections 1-6 denote special servicing
procedures normally not done by the Transfer Agent Operations Department.

================================================================================
Transfer Agent Services Agreement between The Milestone Funds and
Fund/Plan Services, Inc.
Schedule "A", Page 15

Schedule "B"

Shareholder Services and Transfer Agent Fee Schedule
for
The Milestone Funds

This Fee Schedule is fixed for a period of eighteen (18) months from the
Effective Date as that term is defined in the Agreement.

I. A) Annual Account Maintenance Fee:

$20.00 per account, payable monthly, subject to a minimum monthly
fee of $3,266.67 for up to 1,200 accounts per separate series
issuing one class of shares and $2,983.33 for up to 1,050 accounts
of each additional class of any separate series.

B) IRA's, 403(b) Plans, Defined Contribution/Benefit Plans:

$12.00 per Account Annual Maintenance Fee (charged directly to
shareholder)

II. NSCC Services

A) Fund/SERV

Initialization and Set-Up: {$5,000.00} [waived]
Monthly Maintenance Fee: $ 50.00 Per separate Series
of shares

B) Networking

Initialization and Set-Up: {$5,000.00} [waived]
Monthly Maintenance Fee: $ 75.00 Per separate Series
of shares

III. Out-of-Pocket Expenses:

The Trust will reimburse Fund/Plan Services monthly for all
reasonable out-of-pocket expenses, including postage, stationery
(statements), telecommunications (telephone, fax, dedicated 800
line, on-line access), special reports, transmissions, records
retention, tapes, couriers and any pre-approved travel expenses.

IV. Additional Services

Activities of a non-recurring nature including but not limited to fund
consolidations, mergers, acquisitions, reorganizations, the addition
or deletion of a series, and shareholder meetings/proxies are not
included herein, and will be quoted separately. To the extent the
Trust should decide to issue multiple/separate classes of shares,
additional fees will apply. Any enhanced services, programming
requests or reports will be quoted upon request.

================================================================================

Transfer Agent Services Agreement between The Milestone Funds and
Fund/Plan Services, Inc.
Schedule "B"

Schedule "C"

Identification of Series

Below are listed the "Series" to which services under this Agreement are to
be performed as of the execution date of the Agreement:

"The Milestone Funds"

Treasury Obligations Portfolio - Institutional Class
Treasury Obligations Portfolio - Investor Class

This Schedule "C" may be amended from time to time by agreement of the Parties.

================================================================================
Transfer Agent Services Agreement between The Milestone Funds and
Fund/Plan Services, Inc.
Schedule "C"

9(g) Form of Accounting Agreement to be between
Registrant and The Bank of New York.

FUND ACCOUNTING AGREEMENT

AGREEMENT made as of this 30 day of January, 1996, by
and between THE MILESTONE FUNDS - TREASURY OBLIGATIONS
PORTFOLIO, a Delaware business trust having its principal place
of business at
(hereinafter called the "Fund") and The Bank of New York, a New
York corporation authorized to do a banking business, having
its principal place of business at 48 Wall Street, New York,
New York 10286 (hereinafter called the "Bank").

W I T N E S S E T H:

In consideration of the mutual agreements herein
contained, the Fund and the Bank hereby agree as follows:

1. The Fund hereby appoints the Bank to perform the
duties hereinafter set forth.

2. The Bank hereby accepts appointment and agrees to
perform the duties hereinafter set forth.

3. Subject to the provisions of paragraphs 5 and 6
below, the Bank shall compute the net asset value per share of
the Fund and shall value the securities held by the Fund (the
"Securities") at such times and dates and in the manner specified
in the then currently effective Prospectus of the Fund. In the
event Schedule 1 hereto, as amended from time to time upon the
agreement of the Fund and the Bank, specifies series of a Fund
and/or classes of shares of the Fund or of a series, all
computations described with respect to the Fund or shares of the
Fund shall be made with respect to each series so specified and
the shares of each such series or such class.

4. Subject to the provisions of paragraphs 5 and 6
below, the Bank shall also compute the net income of the Fund for
dividend purposes and the net income per share at such times and
dates and in the manner specified in the then currently effective
Prospectus of the Fund.

5. To the extent valuation of Securities or computation
of a net asset value, net income for dividend purposes, or net
income per share as specified in the Fund's then currently
effective Prospectus is at any time inconsistent with any
applicable laws or regulations, the Fund shall immediately so
notify the Bank in writing and thereafter shall either furnish
the Bank at all appropriate times with the values of such
Securities, net asset value, net income for dividend purposes or
net income per share, as the case may be, or subject to the prior
approval of the Bank, instruct the Bank in writing to value
Securities and compute net asset value, net income for dividend
purposes, and net income per share in a manner which the Fund
then represents in writing to be consistent with all applicable
laws and regulations. The Fund may also from time to time,
subject to the prior approval of the Bank, instruct the Bank in
writing to compute the value of the Securities, the Fund's net
asset value, net income for dividend purposes, or net income per
share in a manner other than as specified in paragraphs 3 and 4
of this Agreement. The Fund shall have sole responsibility for
determining the method of valuation of Securities and the method
of computing net asset value, net income for dividend purposes
and net income per share.

6. The Fund shall furnish the Bank with any and all
instructions, explanations, information, specifications and
documentation deemed necessary by the Bank in the performance of
its duties hereunder, including, without limitation, the amounts
or written formula for calculating the amounts and times of
accrual of Fund liabilities and expenses. The Fund shall also
furnish the Bank with bid, offer, or market values of Securities
if the Bank notifies the Fund that same are not available to the

-2-

Bank from a security pricing or similar service utilized, or
subscribed to, by the Bank which the Bank in its judgment deems
reliable at the time such information is required for
calculations hereunder. At any time and from time to time, the
Fund also may furnish the Bank with bid, offer, or market values
of Securities and instruct the Bank to use such information in
its calculations hereunder. The Bank shall at no time be
required or obligated to commence or maintain any utilization of,
or subscriptions to, any securities pricing or similar service.

7. The Bank shall advise the Fund and the Fund's
transfer agent of the net asset value, net income for dividend
purposes, and net income per share upon completion of the

computations required to be made by the Bank pursuant to this
Agreement.

8. The Bank shall, as agent for the Fund, maintain and
keep current the books, accounts and other documents (the
"Records") the Fund is required to maintain and preserve by the
Investment Company Act of 1940, as amended, and the rules and
regulations thereunder (the "Rules") with respect to the
computations by the Bank under this Agreement. Such Records
shall be preserved in accordance with the Rules and shall be made
available upon reasonable request for inspection by officers,
employees and auditors of the Fund during the Bank's normal
business hours.

9. Records maintained and preserved by the Bank pursuant
to this Agreement shall be and remain the property of the Fund
and shall be surrendered to the Fund promptly upon request in the
form in which such Records have been maintained and preserved.
Upon reasonable request of the Fund, the Bank shall provide in
hard copy or on micro-film, whichever the Bank shall elect, any
Records included in any such delivery which are maintained by the
Bank on a computer disc, or are similarly

-3-

maintained, and the Fund shall reimburse the Bank for its
expenses of providing such hard copy or micro-film.

10. The Bank, in performing the services required of it
under the terms of this Agreement, shall be entitled to rely
fully on the accuracy and validity of any and all instructions,
explanations, information, specifications and documentation
furnished to it by the Fund and shall have no duty or obligation
to review the accuracy, validity or propriety of such
instructions, explanations, information, specifications or
documentation, including, without limitation, evaluations of
Securities; the amounts or formula for calculating the amounts
and times of accrual of liabilities and expenses; the amounts
receivable and the amounts payable on the sale or purchase of
Securities; and amounts receivable or amounts payable for the
sale or redemption of Fund shares effected by or on behalf of the
Fund. In the event the Bank's computations hereunder rely, in
whole or in part, upon information, including, without
limitation, bid, offer or market values of Securities or other
assets, or accruals of interest or earnings thereon, from a
pricing or similar service utilized, or subscribed to, by the
Bank which the Bank in its judgment deems reliable, the Bank
shall not be responsible for, under any duty to inquire into, or
deemed to make any assurances with respect to, the accuracy or
completeness of such information.

11. The Bank shall not be required to inquire into any
valuation of Securities or other assets by the Fund or any third
party described in preceding paragraph 10 hereof, even though the

Bank in performing services similar to the services provided
pursuant to this Agreement for others may receive different
valuations of the same or different securities of the same
issuers.

12. The Bank, in performing the services required of it
under the terms of this Agreement, shall not be responsible for
determining whether any interest accruable to the Fund is or

-4-

will be actually paid, but will accrue such interest until
otherwise instructed by the Fund.

13. The Bank shall not be responsible for delays or
errors which occur by reason of circumstances beyond its control
in the performance of its duties under this Agreement, including,
without limitation, labor difficulties within or without the
Bank, mechanical breakdowns, flood or catastrophe, acts of God,
failures of transportation, communication or power supply, or
other similar circumstances. Nor shall the Bank be responsible
for delays or failures to supply the information or services
specified in this Agreement where such delays or failures are
caused by the failure of any person(s) other than the Bank to
supply any instructions, explanations, information,
specifications or documentation deemed necessary by the Bank in
the performance of its duties under this Agreement.

14. No provision of this Agreement shall prevent the Bank
from offering services similar or identical to those covered by
this Agreement to any other corporations, associations or
entities of any kind. Any and all operational procedures,
techniques and devices developed by the Bank in connection with
the performance of its duties and obligations under this
Agreement, including those developed in conjunction with the
Fund, shall be and remain the property of the Bank, and the Bank
shall be free to employ such procedures, techniques and devices
in connection with the performance of any other contract with any
other person whether or not such contract is similar or identical
to this Agreement.

15. The Bank may, with respect to questions of law, apply
to and obtain the advice and opinion of counsel to the Fund or
its own counsel and shall be entitled to rely on the advice or
opinion of such counsel. The costs of any such advice or opinion
shall be borne by the Fund.

-5-

16. The Bank shall be entitled to rely upon any oral
instructions received by the Bank and reasonably believed by the
Bank to be given by or on behalf of the Fund, even if the Bank
subsequently receives written instructions contradicting such
oral instructions. The books and records of the Bank with

respect to the content of any oral instruction shall be binding
and conclusive.

17. The Bank shall not be liable for any loss, damage or
expense, including counsel fees and other costs and expenses of
a defense against any claim or liability, resulting from, arising
out of, or in connection with its performance hereunder,
including its actions or omissions, the incompleteness or
inaccuracy of any specifications or other information furnished
by the Fund, or for delays caused by circumstances beyond the
Bank's control, unless such loss, damage or expense arises out of
the bad faith, negligence, or willful misconduct of the Bank. In
no event shall the Bank be liable to the Fund or any third party
for special, indirect, or consequential damages, or for lost
profits or loss of business, arising under or in connection with
this Agreement, even if previously informed of the possibility of
such damages and regardless of the form of action.

18. Without limiting the generality of the foregoing, the
Fund shall indemnify the Bank against and save the Bank harmless
from any loss, damage or expense, including counsel fees and
other costs and expenses of a defense against any claim or
liability, arising from any one or more of the following:

(a) Errors in records or instructions, explanations,
information, specifications or documentation of any kind, as the
case may be, supplied to the Bank by any third party described in
preceding paragraph 10 hereof or by or on behalf of the Fund;

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(b) Action or inaction taken or omitted to be taken
by the Bank pursuant to written or oral instructions of the Fund
or otherwise without bad faith, negligence or willful misconduct;

(c) Any action taken or omitted to be taken by the
Bank in good faith in accordance with the advice or opinion of
counsel for the Fund or its own counsel;

(d) Any improper use by the Fund or its agents,
distributor or investment advisor of any valuations or
computations supplied by the Bank pursuant to this Agreement;

(e) The method of valuation of the Securities and
the method of computing net asset value, net income for dividend
purposes, and net income per share; or

(f) Any bid, offer, market value or other valuations
of Securities, net asset value, net income for dividend purposes,
or net income per share provided by the Fund.

19. In consideration for all of the services to be
performed by the Bank as set forth herein the Bank shall be
entitled to receive reimbursement for all out-of-pocket expenses

and such compensation as may be agreed upon in writing from time
to time between the Bank and the Fund.

20. Attached hereto as Appendix A is a list of persons
duly authorized by the Board of Trustees of the Fund to execute
this Agreement and give any written or oral instructions, or
written or oral specifications, by or on behalf of the Fund.
From time to time the Fund may deliver a new Appendix A to add or
delete any person and the Bank shall be entitled to rely on the
last Appendix A actually received by the Bank.

21. The Fund represents and warrants to the Bank that it
has all requisite power to execute and deliver this Agreement,

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to give any written or oral instructions contemplated hereby, and
to perform the actions or obligations contemplated to be
performed by it hereunder, and has taken all necessary action to
authorize such execution, delivery, and performance. By giving
any instruction described in this Agreement to the Bank, the Fund
shall be deemed to have represented that such instruction is
consistent with all applicable laws and regulations and the then
currently effective Prospectus of the Fund.

22. This Agreement shall not be assignable by the Fund
without the prior written consent of the Bank, or by the Bank
without the prior written consent of the Fund.

23. Either of the parties hereto may terminate this
Agreement by giving the other party a notice in writing
specifying the date of such termination, which shall not be less
than ninety (90) days after the date of giving of such notice.
Upon the date set forth in such notice, the Bank shall deliver to
the Fund all Records then the property of the Fund and, upon such
delivery, the Bank shall be relieved of all duties and
responsibilities under this Agreement.

24. This Agreement may not be amended or modified in any
manner except by written agreement executed on behalf of both
parties hereto.

25. This Agreement is executed in the State of New York
and all laws and rules of construction of the State of New York
(other than those relating to choice of laws) shall govern the
rights, duties and obligations of the parties hereto.

26. The performance and provisions of this Agreement are
intended to benefit only the Bank and the Fund, and no rights
shall be granted to any other person by virtue of this Agreement.

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IN WITNESS WHEREOF, the parties hereto have executed this

Agreement as of the day and year first written above.

By: /s/
-----------------------

Attest:
/s/
- ------------------------

THE BANK OF NEW YORK

By: /s/ Stephen E. Grunston
------------------------
STEPHEN E. GRUNSTON
Attest: Vice President
/s/
- ------------------------

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SCHEDULE 1
Series and Classes

APPENDIX A

I, Jeffrey R. Hanson, Secretary, of THE MILESTONE FUNDS -
TREASURY OBLIGATIONS PORTFOLIO, a Delaware business trust (the
"Fund"), do hereby certify that:

The following individuals serve in the following positions
with the Fund, and each has been duly elected or appointed by the
Board of Trustees of the Fund to each such position and qualified
therefor in conformity with the Fund's Declaration of Trust and
By-Laws, and the signatures set forth opposite their respective
names are their true and correct signatures. Each such person is
authorized to give written or oral instructions or written or
oral specifications by or on behalf of the Fund to the Bank.

Name Position Signature

_________________ ________________ _________________
Janet T. Yanson Pres/CEO /s/ Janet T. Yanson
Marc Pfeffer CIO /s/ Marc Pfeffer
Barbara Gentile Trading Asst. /s/ Barbara Gentile
Jeffrey R. Hanson COO /s/ Jeffrey R. Hanson

(9)(h) Form of Cash Management Agreement to be Between Registrant and
The Bank of New York

CASH MANAGEMENT AND RELATED SERVICES AGREEMENT, dated as of February 1,
1996 between each mutual fund and/or portfolio series of each mutual fund listed
on Schedule A hereto (each a "Fund", collectively the "Funds"), and The Bank of
New York (the "Bank").

W I T N E S S E T H:

That in consideration of the mutual agreements and covenants herein
contained, the Bank and each Fund hereby agree as follows:

ARTICLE I
DEFINITIONS

Whenever used in this Agreement, unless the context otherwise requires, the
following words shall have the meanings set forth below:

1. "Account Available Balance" shall mean with respect to an Account for
any given day during a calendar month a positive or negative dollar amount equal
to (A) if such day is a Business Day, the Account Available Balance as of the
close of the last preceding Business Day plus a positive or negative dollar
amount equal to the difference, if any, between the Chargeable Credits with
respect to such day and such Account and the Chargeable Debits with respect to
such day and such Account, and (B) if such day is not a Business Day, the
Account Available Balance as of close of the last preceding Business Day, except
that both (A) and (B) shall be reduced by the United States Federal Reserve
reserve requirements then applicable to the Bank with respect to such Account.
The Account Available Balance of an Account shall be zero on the date
immediately preceding the first date on which an entry, consisting of either a
Chargeable Credit or Chargeable Debit, is first made to such Account hereunder.

2. "ACCESS" shall mean any on-line communication system provided by the
Bank hereunder whereby either the receiver of such communication is able to
verify by codes or otherwise with a reasonable degree of certainty the identiy
of the sender of such communication, or the sender is required to provide a
password or other identification code.

3. "Authorized Person" shall mean either (A) any person duly authorized by
corporate resolutions of the board of directors or board of trustees of a Fund,
as appropriate, to give Oral and/or Written Instructions on behalf of such Fund,
such persons to be designated in a certificate, substantially in the form of
Exhibit A, which contains a specimen signature of such person, or (B) any person
sending or transmitting any instruction or direction through ACCESS.

4. "Business Day" shall mean any day on which the Federal Reserve Bank of
New York is open for business, except for any such day on which the Bank is
required by law or regulation to be closed, or elects to be closed.

5. "Calendar Month Earnings Credit" shall mean with respect to an Account
for any calendar month the dollar amount, whether positive or negative, equal to
the sum of the Gross Calendar Month Earnings Credit with respect to such Account
for such calendar month and the Monthly Overdraft Charges with respect to such
Account for such calendar month.

6. "Chargeable Credits" shall mean with respect to an Account for any given

day during a calendar month a positive amount of dollars equal to the sum, if
any, of (A) the aggregate dollar amount of Federal Funds credited to such
Account by the Bank of accordance with the then applicable availability schedule
of the Federal Reserve Bank of New York, and (B) the aggregate dollar amount of
Bank internal transfers of Federal Funds to such Account.

7. "Chargeable Debits" shall mean with respect to an Account for any given
day during a calendar month a negative dollar amount equal to the sum, if any,
of (A) the aggregate dollar amount of Federal Funds relating to such Account
charged against the Bank by the Federal Reserve Bank of New York on or as of
such day, and (B) the aggregate dollar amount of drafts drawn on such Account
which are deposited in the Bank by customers of the Bank on such day, or Bank
internal transfers from, or charges to, such Account.

8. "Daily Earnings" shall mean with respect to an Account for any day
during a calendar month a positive dollar amount equal to the product of (A) the
positive Account Available Balance, if any, of such Account for such day,
multiplied by (B) the Daily Earnings Rate for such day. The Daily Earnings with
respect to an Account for any day during a calendar month on which the Account
Available Balance of such Account is negative shall be zero.

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9. "Daily Earnings Rate" shall mean for any day during a calendar month one
three hundred and sixty-fifth of the 91 day U.S. Treasury Bill discount rate of
the Monday auction first preceding such day (whether or not such day is a
Monday, and whether or not such Monday auction was in the immediately prior
month), as such Monday auction 91 day U.S. Treasury Bill discount rate is
reported in The Wall Street Journal.

10. "Daily Overdraft Charges" shall mean with respect to an Account for any
day during any calendar month a negative dollar amount equal to the product, if
any, of (A) the negative Account Available Balances, if any, with respect to
such Account for such day during such calendar month, multiplied by (B) the
Overdraft Rate.

11. "Federal Funds" shall mean immediately available same day funds.

12. "Gross Calendar Month Earnings Credit" shall mean with respect to an
Account for any calendar month a positive dollar amount equal to the aggregate
sum of the Daily Earnings of such Account for such calendar month.

13. "Monthly Overdraft Charges" shall mean with respect to an Account for
any calendar month a negative dollar amount equal to the aggregate sum of the
Daily Overdraft Charges with respect to such Account for such calendar month
which have not been previously paid to the Bank by the Fund to which such
Account relates.

14. "Oral Instructions" shall mean verbal instructions actually received by
the Bank from an Authorized Person or from a person reasonably believed by the
Bank to be an Authroized Person.

15. "Overdraft Rate" shall mean with respect to an Account for any calendar
day during any calendar month a rate equal to one three hundred and sixtieth of

the sum of (A) one-half percent, and (B) the greater of (i) the prime commercial
lending rate of The Bank of New York, as publicly announced to be in effect from
time to time, in effect on such calendar day, and (ii) 6%.

16. "Shareholder" shall mean any record holder of any Shares, as identified
to the Bank from time to time pursuant to this Agreement.

17. "Shares" shall mean all or any part of each class of the shares of
capital stock, beneficial interest, or limited partnership interest of a Fund,
as the case may be, which are authorized and/or issued from time to time.

18. "Written Instructions" shall mean written instructions actually
received by the Bank from an Authorized Person or from a person reasonably
believed by the Bank to be an Authorized Person by letter, memorandum, telegram,
cable, telex, telecopy facsimilie or through ACCESS.

ARTICLE II
APPOINTMENT OF BANK; REPRESENTATIONS AND WARRANTIES

1. Appointment; Establishment of Accounts. Each Fund hereby appoints the
Bank as its agent for the term of this Agreement to perform the cash management
services set forth herein and in Schedules I and II attached hereto and made a
part hereof (as such Schedules may be amended or supplemented from time to time
by mutual agreement). The Bank hereby accepts appointment as such agent for
each appointing Fund and agrees to establish and maintain one or more separate
accounts with respect to each Fund (each, an "Account"; collectively, the
"Accounts") in order to receive and disburse money for the purposes set forth in
this Agreement.

2. Representations and Warranties. Each Fund hereby represents and
warrants only as to itself, and not jointly, to the Bank, which representations
and warranties shall be deemed to be continuing and to be reaffirmed upon
delivery to the Bank of any Oral or Written Instructions, that:

(a) It is duly organized and existing under the laws of the jurisdiction of
its organization, with full power to carry on its business as now conducted, to
enter into this Agreement and to perform its obligations hereunder;

(b) This Agreement has been duly authorized, executed and delivered by the
Fund in accordance with all requisite corporate action and constitutes a valid
and legally binding obligation of the Fund enforceable in accordance with its
terms, except to the extent such enforcement may be limited by general equity
principles or bankruptcy principles; and

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(c) It is conducting its business in compliance with all applicable laws
and regulations, both state and federal, and has obtained all regulatory
licenses, approvals and consents necessary to carry on its business as now
conducted; there is no statute, regulation, rule, order or judgment binding on
it and no provision of its charter or by-laws, nor of any mortgage, indenture,
credit agreement or other contract binding on it or affecting its property which
would prohibit its execution or performance of this Agreement.

3. Board Resolutions. Each Fund shall provide the Bank with a certified
copy of a resolution of the board of directors or board of trustees of such
Fund, as appropriate, appointing the Bank as its agent to act hereunder and
providing for the creation of such Fund's Account(s) and the execution by such
Fund of this Agreement, it being understood that receipt of the same by the Bank
shall be a condition precedent to the Bank's establishing an Account for such
Fund.

ARTICLE III
CASH MANAGEMENT SERVICES

1. Receipt of Money. The Bank shall receive money for credit to an Account
only:

(i) by personal presentment of drafts by a Fund, but not by a Shareholder
of such Fund, at the branch or branches in Manhattan identified from time to
time by the Bank to such Fund, provided such presentment is in accordance with
the time frames specified by the Bank to such Fund;

(ii) by mailing of drafts to a post office box designated by the Bank for
such purpose, provided such drafts are accompanied by a properly completed
investment stub;

(iii) by wire transfer to an account maintained at the Federal Reserve Bank
of New York as identified in writing by the Bank to a Fund;

(iv) by transfer to an account identified in writing by the Bank to a Fund
through the New York Automated Clearing House;

(v) by transfer from another Account maintained by such Fund with the Bank
under this Agreement;

(vi) by transfer from another account maintained by such Fund with the
Bank, including such Fund's custodian account under its Custody Agreement with
the Bank as Custodian; and

(vii) by transfer from any other account maintained with the Bank.

All money received by the Bank shall be credited upon receipt, but subject to
final payment and receipt by the Bank of immediately available funds, and
receipt by the Bank of such forms, documents and information as are required by
the Bank from time to time and received in the appropriate time frames. The
Bank shall be entitled to reverse any credits previouly made to a Fund's Account
where money is not finally collected or where a credit to such Fund's Account
was in error.

2. Disbursement of Money. The Bank shall disburse money credited to an
Account only:

(i) pursuant to Written Instructions of such Fund transmitted through
ACCESS (except as otherwise provided in Article V, Section 7 hereof), to
transfer funds as directed by such Fund (including transfers through the
Federal Reserve Bank of New York transfer wire and the New York Automated
Clearing House);

(ii) in payment of drafts drawn by an Authorized Person or Shareholder (as
appropriate for the particular Account), subject to the terms hereof; and

(iii) in payment of charges to such Account representing amounts payable to
the Bank, and chargeable against such Account, as provided in this Agreement.

The Bank shall be required to disburse money in accordance with the foregoing
only insofar as such money is immediately available and on deposit with the
Bank. All instructions directing the disbursement of money credited to an
Account under this Agreement (whether through ACCESS or by Oral Instructions
pursuant to Article V hereof) must identify an account to which such money shall
be transferred, and include all other information reasonably required by the
Bank from time to time. It is understood and agreed that with respect to any
such instructions, when instructed to credit or pay a party by both name and a

-4-

unique numeric or alpha-numeric identifer (e.g., ABA number or account number),
the Bank and any other financial institution participating in the funds transfer
may rely solely on the unique identifier, even if it identifies a party
different than the party named. Such reliance on a unique identifier shall
apply to beneficiaries named in such instructions as well as any financial
institution which is designated in such instruction to act as an intermediary in
a funds transfer.

3. Redemption Drafts; Shareholder Information. (a) Each Fund shall be
entitled to supply its Shareholders with redemption drafts, but only in a form
and substance agreed to by the Bank. The Bank agrees to give each Fund sixty
(60) days prior notice of any changes to the form of substance of redemption
drafts required by the Bank, provided that if such change is required by
applicable rules or procedures of the Federal Reserve or any clearinghouse
through which such drafts may be presented, the Bank may as promptly as
practicable give such notice which may less than sixty (60) days.

(b) Each Fund will promptly furnish to the Bank (i) the name, mailing
address and telephone number of each Shareholder of such Fund, and (ii) specimen
signatures for all individuals authorized to draw redemption drafts (whether on
their own behalf or on behalf of third parties). Each Fund will promptly
advise the Bank of individuals no longer authorized to draw redemption drafts,
and those individuals newly authorized. Such information shall be provided to
the Bank in a mutually agreed upon format.

4. Redemption Draft Returns. A Fund may give the Bank Oral or Written
Instructions from time to time to return unpaid redemption drafts of the Fund to
the presenting financial institution for any reason, and the Bank shall use
reasonable efforts to comply with such Oral or Written Instructions provided
that any such compliance would not prejudice or impair any rights or privileges
of the Bank under prevailing draft return procedures and would not be contrary
to prevailing industry rules, procedures, customs or practices. Notwithstanding
the foregoing, or any other provision in this Agreement or the Schedules hereto,
the Bank (i) may return redemption drafts with unauthorized or missing
signatures to the presenting financial institution in accordance with prevailing
banking industry draft return procedures, and (ii) shall have no obligation to

request Oral or Written Instructions from a Fund with respect to any redemption
drafts.

ARTICLE IV
OVERDRAFTS OR INDEBTEDNESS

If the Bank in its sole discretion advnaces funds, or if there shall arise
for whatever reason an overdraft or other indebtedness in connection with any
Account, such advancement of funds or overdraft with respect to such Account
shall be deemed a loan made by the Bank to the Fund to which the Account relates
payable on demand, and bearing interest from the date incurred at the Overdraft
Rate, such Overdraft Rate to be adjusted on the effective date of any change in
the prime commercial lending rate constituting a part thereof. Upon any advance
or overdraft in connection with an omnibus Account maintained for the benefit of
more than one Fund, the Bank shall be furnished promptly with Written
Instructions identifying each Fund to which such advance or overdraft relates,
and the amount allocable thereto. Each Fund hereby agrees with respect to its
Account(s) and any advancement of funds or overdraft that the Bank shall have a
continuing lien and security interest in and to any property at any time held by
it for the benefit of the Fund either hereunder or under such Fund's Custody
Agreement with the Bank, or in which the Fund may have an interest which is then
in the Bank's possession or control or in possession or control of any third
party acting in the Bank's behalf, including in its behalf as Custodian under
the Fund's Custody Agreement with the Bank. Each Fund authorizes the Bank, in
its sole discretion, at any time to charge any such overdraft or indebtedness
together with interest due thereon at the Overdraft Rate against any balance of
accounts standing to the Fund's credit on the books of the Bank, including those
books maintained by the Bank in its capacity as Custodian for the Fund under its
Custody Agreement with the Fund. In addition, each Fund hereby convenants that
on each Business Day on which either it intends to enter a reverse repurchase
agreement and/or otherwise borrow from a third party, or which next succeeds a
Business Day on which at the close of business the Fund had outstanding a
reverse repurchase agreement on such a borrowing, it shall prior to 9:00 a.m.
(New York City time) advise the Bank, in writing, of each such borrowing, shall
specify the portfolio or series to which the same relates, and shall not incur
any indebtedness not so specified other than from the Bank.

ARTICLE V
ACCESS: CALL-BACK SECURITY PROCEDURE

1. Services Generally. Each Fund shall be permitted to utilize ACCESS to
obtain direct on-line access to its Accounts. ACCESS shall permit each Fund at
the times mutually agreed upon by the Bank and such Fund to receive reports,
make inquiries, instruct the Bank to disburse money in accordance with Article
III, and perform such other functions as are more fully set forth in Schedule I
hereto.

-5-

2. Permitted Use; Proprietary Information. (a) Each Fund shall use ACCESS
and the services available thereby only for its own internal and proper business
purposes and shall not sell, lease or otherwise provide, directly or indirectly,
ACCESS or any of such services or any portion thereof to any other person or
entity. Each Fund shall obtain and maintain at its own cost and expense all

equipment and services, including but not limited to communications services,
necessary for it to utilize ACCESS and receive the services thereby, and the
Bank shall not be responsible for the reliability or availability of any such
equipment or any services used in connection with ACCESS.

(b) Each Fund acknowledges that all data bases made available as part of,
or through ACCESS, and any proprietary data, processes, information and
documentation (other than any such which are or become part of the public domain
or are legally required to be made available to the public) (collectively, the
"Information"), are the exclusive and confidential property of the Bank. Each
Fund shall keep the Information condifential by using the same care and
discretion that each Fund uses with respect to its own confidential property and
trade secrets, and shall neither make nor permit any disclosure without the
express prior written consent of the Bank.

(c) Upon termination of this Agreement for any reason, each Fund shall
return to the Bank any and all copies of the Information which are in such
Fund's possession or under its control, or distributed to third parties. The
provisions of this Article shall not affect the copyright status of any of the
Information which may be copyrighted and shall apply to all Information whether
or not copyrighted.

3. Modifications. The Bank reserves the right to modify ACCESS from time
to time without notice to any Fund. Each Fund agrees not to modify or attempt
to modify ACCESS without the Bank's prior written consent. Each Fund
acknowledges that ACCESS is the property of the Bank and, accordingly, each Fund
agrees that any modifications to ACCESS, whether by such Fund or the Bank and
whether with or without the Bank's consent, shall become the property of the
Bank.

4. No Representations or Warranties. Neither the Bank nor any
manufacturers or suppliers it utilizes or any Fund utilizes in obtaining ACCESS
makes any warranties or representations, express or implied, in fact or in law,
including but not limited to warranties of merchantability and fitness for a
particular purposes.

5. Security; Reliance; Unauthorized Use. Each Fund will, and will cause
all persons utilizing ACCESS to, treat the user and authorization codes,
passwords and authentication keys applicable to ACCESS with extreme care. The
Bank is hereby irrevocably authorized to act in accordance with and rely on
Written Instructions received by it through ACCESS. Each Fund acknowledges that
it is its sole responsibility to assure that only authorized persons use ACCESS
and that the Bank shall not be responsible nor liable for any unauthorized use
thereof.

6. Limitations of Liability. (a) Except as otherwise specifically provided
in Section 6(b) below, the Bank shall have no liability for any losses, damages,
injuries, claims, costs or expenses of a Fund arising out of or in connection
with any failure, malfunction or other problem relating to any Fund's use of
ACCESS, except for money damages suffered as the direct result of the negligence
of the Bank in an amount not exceeding, in the aggregate for all such losses,
damages, injuries, claims, costs and expenses of a Fund arising during any
month, the total charges paid by such Fund to the Bank for ACCESS and services
hereunder which caused such loss, damage, injury, claim, cost or expense during

the 12 months preceding the month in question, or such lesser number of months
as a Fund has used ACCESS if such Fund has not received 12 months use of ACCESS;
provided however, that the Bank shall have no liability under this Section 6(a)
if a Fund fails to comply with the provisions of Section 6(d).

(b) The Bank's liability for its negligence in executing or failing to
execute a Fund's Written Instructions received through ACCESS shall be only with
respect to a transfer, or failure to transfer, funds not in accordance with such
Written Instructions after such instructions have been duly acknowledged by the
Bank, and shall be contingent upon the Fund complying with the provisions of
Section 6(d) below, and shall be limited to (i) restoration of the principal
amount mistransferred, if and to the extent that the Bank would be required to
make such restoration under applicable law, and (ii) the lesser of (A) a Fund's
actual pecuniary loss incurred by reason of its loss of use of the
mistransferred funds or the funds which were not transferred, as the case may
be, or (B) compensation for the loss of the use of the mistransferred funds or
the funds which were not transferred, as the case may be, at a rate per annum
equal to the average federal funds rate as computed from the Federal Reserve
Bank of New York's daily determination of the effective rate for federal funds,
for the period during which a Fund has lost use of such funds. In no event
shall the Bank have any liability for failing to execute Written Instructions
for the transfer of funds which are received by it through ACCESS other than
through the applicable transfer module for the particular instructions.

(c) Withoug limiting the generality of the foregoing, it is hereby agreed
that in no event shall the Bank or any manufacturer or supplier of its computer
equipment, software or services be responsible for any special, indirect,
incidental or

-6-

consequential damages which a Fund may incur arising out of or in connection
with ACCESS or the services provided thereby, even if the Bank or such
manufacturer or supplier has been advised of the possibility of such damages
and regardless of the form of action.

(d) Each Fund shall notify the Bank of any errors, omissions or
interruptions in, or delay or unavailability of, ACCESS as promptly as
practicable, and in any event within one Business Day after the earliest of (i)
discovery thereof, (ii) the date discovery should have occurred through the
exercise of reasonable care, and (iii) in the case of any error, the date of the
earliest notice to such Fund which reflects such error.

7. Funds Transfer Back-Up Procedure. (a) In the event ACCESS is
inoperable and a Fund is unable to utilize ACCESS for the transmission of
Written Instructions to the Bank to tranfer funds, the Fund may give Oral
Instructions regarding funds transfers, it being expressly understood and agreed
that the Bank's acting pursuant to such Oral Instructions shall be contingent
upon the Bank's verification of the authenticity thereof pursuant to the
Call-Back Security Procedure set forth on Schedule III hereto (the
"Procedure"). In this regard, each Fund shall deliver to the Bank a Funds
Transfer Telephone Instruction Authorization in the form of Schedule III-A
hereto, identifying the individuals authorized to deliver and/or confirm all
such Oral Instructions. Each Fund understands and agrees that the Procedure is

intended to determine whether Oral Instructions received pursuant to this
Section are authorized but is not intended to detect any errors contained in
such instructions. Each fund hereby accepts the Procedure and confirms its
belief that the Procedure is commercially reasonable.

(b) The Bank shall have no liability whatsoever for any funds transfer
executed in accordance with Oral Instructions delivered and confirmed pursuant
to this Section 7 and Schedule III hereto. The Bank's liability for its
negligence in executing or failing to execute any such Oral Instructions shall
be determined by reference to Section 6(b) of this Article.

(c) The Bank reserves the right to suspend acceptance of Oral Instructions
pursuant to this Section 7 if conditions exist which the Bank, in its sole
discretion, believes have created an unacceptable security risk.

ARTICLE VI
CONCERNING THE BANK

1. Standard of Care; Presentment of Claims. Except as otherwise provided
herein, the Bank shall not be liable for any costs, expenses, damages,
liabilities or claims (including attorney's fees) incurred by a Fund, except
those costs, expenses, damages, liabilities or claims arising out of the Bank's
own negligence, bad faith or willful misconduct. Notwithstanding the foregoing
or anything contained in the Sechedules hereto, the Bank shall not be liable for
any loss or damage, including attorney's fees, resulting from the Bank paying
any redemption draft containing a forged drawer signature, unless such loss or
damage arises out of the Bank's gross negligence, bad faith or willful
misconduct. All claims against the Bank hereunder shall be made by the
respective Fund as promptly as practicable, and in any event within 6 months
from the date of the action or inaction on which such claim is based, and shall
include documentation evidencing such claim and loss.

2. No Liability. The Bank shall nave no obligation hereunder for costs,
expenses, damages, liabilities or claims, including attorney's fees, which are
sustained or incurred by reason of any action or inaction by the Federal
Reserve wire transfer system or the New York Automated Clearing House.
Notwithstanding any other provision elsewhere contained in this Agreement, in no
event shall the Bank be liable to any Fund or any third party for special,
indirect or consequential damages, or lost profits or loss of business, arising
under or in connection with this Agreement, even if previously informed of the
possibility of such damages and regardless of the form of action.

3. Indemnification. Each Fund shall indemnify and exonerate, save and hold
harmless the Bank from and against any and all costs, expenses, damages,
liabilities or claims, including reasonable attorney's fees and expenses, which
the Bank may sustain or incur or which may be asserted against the Bank by
reason of or as a result of any action taken or omitted by the Bank in
connection with its performance under this Agreement, except those costs,
expenses, damages, liabilities or claims arising out fo the Bank's own
negligence, bad faith or wilful misconduct. This indemnity shall be a
continuing obligation of each Fund notwithstanding the termination of this
Agreement, or any Account, with respect to a Fund.

4. No Obligation to Inquire. Without limiting the generality of the

foregoing, the Bank shall in no event be under any obligation to inquire into,
and shall not be liable for:

(a) the due authority of any Authorized Person acting on behalf of a Fund
in connection with this Agreement;

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(b) the genuineness of any drawer signature on any draft deposited in any
Account, or whether such signature is a forgery, other than the signature of
the drawer of any draft drawn on the Bank;

(c) the existence or genuineness of any endorsement or any marking
purporting to be an endorsement on any draft deposited in any Account, or
whether such endorsement or marking is a forgery, it being expressly understood
that all risks associated with the acceptance by the Bank of any draft payable
to a payee other than a Fund for deposit in any Account pursuant to Oral or
Written Instructiosn by the Fund shall be borne by such Fund.

(d) any discrepancy between the pre-printed investment stub (other than a
substitute stub created by the Bank) and the payee either named on a draft or
written on the face thereof, provided the Bank has acted in accordance with the
investment stub;

(e) any discrepancy between the written amount for which any draft is drawn
and the Magnetic Incription Character Recognition ("MICR") code enscribed
thereon by any bank other than the Bank on any draft presented, provided the
Bank has acted in accordance with the MICR code;

(f) any disbursement directed by any Fund, regardless of the purpose
therefor;

(g) any determination of the Share balance of any Shareholder whose name is
signed on any redemption draft;

(h) any determination of length of time any Shares have been owned by any
Shareholder or the method of payment utilized to purchase such Shares by such
Shareholder;

(i) any claims, liens, attachments, stays or stop orders with respect to
any Shares, proceeds, or money, other than a stop payment placed by a Fund on a
draft drawn by such Fund on its Account;

(j) the propriety and/or legality of any transaction in any Account;

(k) the lack of authority of any person signing as a drawer of a draft,
provided such person and his specimen signature is specified in the certificate
of authorized signatures last received by the Bank; or

(l) whether any redemption draft equals or exceeds any minimum amount.

5. Reliance Upon Instructions. The Bank shall be entitled to rely upon any
Written or Oral Instructions received by the Bank. Each Fund agrees to forward
to the Bank Written Instructions confirming Oral Instructions in such manner so

that such Written Instructions are received by the Bank by the close of business
of the same day that such Oral Instructions are given to the Bank. Each Fund
agrees that the fact that such confirming Written Instructions are not timely
received or that contrary Written Instructions are received by the Bank shall in
no way affect the validity or enforceability of the transactions previsouly
authorized.

6. Force Majeure. The Bank shall not be responsible or liable for any
failure or delay in the performance of its obligations under this Agreement
arising out of or caused, directly or indirectly, by circumstances beyond its
control, including acts of God; earthquakes; fires; floods; wars; civil or
military distrubances; sabotage; epidemics; riots; interruptions, loss or
malfunctions of utilities, computers (hardware or software), transportation, or
communications service; mechanical breakdowns; interruption or loss of ACCESS
(except as otherwise provided in Section 7 of Article V); accidents; acts of
civil or military authority; governmental actions; labor disputes; or inability
to obtain labor, material, equipment or transportation.

7. No Implied Duties; Performance According To Applicable Law. The Bank
shall have no duties or responsibilities except such duties and responsibilities
as are specifically set forth in this Agreement and Schedule I and II hereto,
and no convenant or obligation shall be implied in this Agreement against the
Bank. The Bank's duties and responsibilities hereunder shall be performed in
accordance with applicable laws, regulations and rules, including but not
limited to Federal Reserve Regulations CC and the Operating Rules of the New
York Automated Clearing House, and the Bank shall have no obligation to take
actions which in the reasonable opinion of the Bank are either inconsistent
with, or prejudice or impair the Bank's rights under, any such laws, regulations
and rules.

8. Requests for Instructions. At any time the Bank may apply to an officer
of a Fund for Oral or Written Instructions with respect to any matter arising in
connection with the Bank's duties and obligations with respect to an Account of
such Fund, and the Bank shall not be liable for any action taken or permitted by
it in good faith in accordance with such Oral or

-8-

Written Instructions. Such application for Oral or Written Instructions
may, at the option of the Bank, set forth in writing any action proposed
to be taken or omitted by the Bank with respect to its duties or
obligations under this Agreement and the date on and/or after which such
action shall be taken, and the Bank shall not be liable for any action
taken or omitted in accordance with a proposal included in any such
application on or after the date specified therein (which shall be at
least 5 days after the date of such Fund's receipt of such application)
unless, prior to taking or omitting any such action, the Bank has
received Oral or Written Instructions in response to such application
specifying the action to be taken or omitted. The Bank may apply for and
obtain the advice and opinion of counsel to each Fund or of its own
counsel, at the expense of a Fund, and shall be fully protected with
respect to anything done or omitted by it in good faith in conformity
with such advice or opinion.

9. Delegation of Duties. The Bank may delegate any of its duties
and obligations hereunder to any delegee and may employ agents or
attorneys-in-fact; provided however, that no such delegation or
employment by the Bank shall discharge the Bank from its obligations
hereunder. The Bank shall have no liability or responsibility whatsoever
if any delegee, agent or attorney-in-fact shall have been selected or
approved by a Fund. Notwithstanding the foregoing, nothing contained in
this paragraph shall obligate the Bank to effect any delegation or to
employ any agent or attorney-in-fact.

10. Fees; Invoices. (a) For its services hereunder, each Fund
agrees to pay the Bank (i) its out-of-pocket expenses, (ii) the monthly
fees and compensation set forth on Schedules I and II attached hereto,
and (iii) any negative Calendar Month Earnings Credits, and such other
amounts as may be mutually agreed upon from time to time. The Bank shall
provide each Fund with a monthly activity analysis detailing service
volumes, and including average Account Available Balances and average
ledger balances, and all fees owing for such month.

(b) The Bank shall submit periodic invoices specifying the amount
of all out-of-pocket expenses, fees, compensation and negative Calendar
Month Earnings Credits then due hereunder. The Bank may, and is hereby
authorized by each Fund, to charge such amounts to the appropriate
Fund's Account(s), but only if such amounts remain unpaid for fifteen
(15) days after the end of the period to which such amounts relate.

11. Application of Calendar Month Earnings Credits. (a) Any
positive Calendar Month Earnings Credit for a calendar month shall be
applied only as follows and only in the specified order:

(i) First, applied against such compensation, fees, but not
out-of-pocket expenses, payable by such Fund to the Bank under this
Agreement for such month; and

(ii) Second, applied against such compensation, fees, and negative
Calendar Month Earnings Credits, but not out-of-pocket expenses,
payable by such Fund to the Bank under this Agreement for any
subsequent month in the same calendar year.

(b) Except as provided above, in no event may any Calendar Month
Earnings Credit be applied to any month other than the month in which it
was earned. Calendar Month Earnings Credits may not be transferred to,
or utilized by, any other Fund, person or entity. The portion, if any,
of any Calendar Month Earnings Credit not used by a Fund may be carried,
but only forward; provided, however, that in no event may any Calendar
Month Earnings Credit, including those earned during the fourth calendar
quarter, be carried beyond the end of the calendar year in which earned.

ARTICLE VII
TERMINATION

1. Prior Notice. This Agreement may be terminated by either the

Bank giving to any Fund, or any Fund giving to the Bank, a notice in
writing specifying the date of such termination, which date shall be not
less than 90 days after the date of the giving of such notice.
Notwithstanding the foregoing, the Bank reserves the right to terminate
this Agreement at any time upon 30 days prior written notice if any of
the conditions precedent set forth in Article II, paragraph 3 are
unfulfilled.

2. Obligations Upon Termination. Upon any termination, the Bank's
sole obligations, which shall arise only after, and not before, each
Fund which is the subject of such termination has paid to the Bank all
out-of-pocket expenses, fees, compensation, negative Calendar Month
Earnings Credits and other amounts owed by such Fund to the Bank, shall
be (i) to deliver to such Fund such records, if any, as may be owned by
such Fund, in the form and manner kept by the Bank on such date of
termination, and (ii) to pay any funds held hereunder for such Fund to
such Fund.

-9-

ARTICLE VIII
MISCELLANEOUS

1. Certificates of Authorized Persons. Each Fund agrees to furnish
to the Bank a new certificate of Authorized Persons in the event that
any present Authorized Person of such Fund ceases to be an Authorized
Person or in the event that any other Authorized Persons are appointed
and authorized. Until such new certificate is received, the Bank shall
be fully protected in acting under the provisions of this Agreement upon
Oral or Written Instructions or signatures of the present Authorized
Persons as set forth in the last delivered certificate.

2. Notices. (a) Any notice or other instrument in writing,
authorized or required by this Agreement to be given to the Bank, shall
be sufficiently given if addressed to the Bank and received by it at its
offices at 90 Washington Street, 22nd Floor, New York, New York 10286,
Attention: Division Manager - Mutual Funds, or at such other place as
the Bank may from time to time designate in writing.

(b) Any notice or other instrument in writing, authorized or
required by this Agreement to be given to a Fund shall be sufficiently
given if addressed to a Fund and received by it it at
_____________________________________________________________________,
or at such other place as such Fund may from time to time designate in
writing.

3. Cumulative Rights and No Waiver. Each and every right granted to
the Bank hereunder or under any other document delivered hereunder or in
connection herewith, or allowed it by law or equity, shall be cumulative
and may be exercised from time to time. No failure on the part of the
Bank to exercise, and no delay in exercising, any right will operate as
a waiver therof, nor will any single or partial exercise by the Bank of
any right preclude any other or future exercise thereof or the exercise

of any other right.

4. Severability. In case any provision in or obligation under this
Agreement shall be invalid, illegal or unenforceable in any
jurisdiction, the validity, legality and enforceability of the remaining
provisions or obligations shall not in any way be affected or impaired
thereby, and if any provision is inapplicable to any person or
circumstances, it shall nevertheless remain applicable to all other
persons and circumstances.

5. Amendments. This Agreement may not be amended or modified in any
manner except by a written agreement executed by the Bank and each Fund
to be bound thereby, and, except in the case of an amendment to
Schedules I and II hereto, authorized or approved by a resolution of
each Fund's board of directors or board of trustees, as appropriate.

6. Headings. The headings in this Agreement are inserted for
convenience and identification only and are in no way intended to
describe, interpret, define or limit the scope, extent or intent of this
Agreement or any provisions hereof.

7. Applicable Law Consent to Jurisdiction: Jury Trial Waiver. This
Agreement shall be construed in accordance with the laws of the State of
New York without giving effect to conflict of laws principles thereof.
Each party hereby consents to the jurisdiction of a state or federal
court situated in New York City, New York, in connection with any dispute
arising hereunder and hereby waives its right to trial by jury.

8. No Third Party Beneficiaries. The provisions of this Agreement
are intended to benefit only the Bank and each Fund and their respective
permitted successors and assigns, and no right shall be granted to any
other person by virtue of this Agreement.

9. Successors and Assigns. This Agreement shall extend to and shall
be binding upon the parties hereto, and their respective successors and
assigns; provided, however, that this Agreement shall not be assignable
by any Fund without the written consent of the Bank and authorized or
approved by a resolution of such Fund's board of directors, or board of
trustees, as appropriate.

10. Counterparts. This Agreement may be executed in any
number of counterparts, each of which shall be deemed to be an
original, but such counterparts shall, together, constitute
only one instrument.

11. Several Obligations. The parties acknowledge that the
obligations of the Funds are several and not joint, that no Fund shall
be liable for any amount owing by another Fund and that the Funds have
executed one instrument for convenience only.

-10-

IN WITNESS WHEREOF, the parties hereto have caused this Agreement

to be executed by this respective corporate officers, thereunto duly
authorized, as of the day and year first above written.

By: /s/ Jeffrey R. Hanson, Secretary
------------------------

on behalf of each Fund identified
on Schedule A attached hereto

THE BANK OF NEW YORK

By: /s/ TK
------------------------
Title: Vice President

SCHEDULE A

Name of Fund

THE MILESTONE FUNDS - TREASURY OBLIGATIONS PORTFOLIO

EXHIBIT A

I, Jeffrey R. Hanson of the Milestone Fund Treasury Obligation
Portfolio (the "Fund"), a Delaware Trust to hereby certify that:

The following individuals have been duly authorized by the Board of
Directors of the Fund in conformity with the Fund's Articles of
Incorporation and By-Laws to give Oral Instructions and Written
Instructions on behalf of the Fund, for purposes of the Fund's Cash
Management and Related Services Agreement, and the signatures set forth
opposite their respective names are their true and correct signatures.

Name Signature

Marc Pfeffer /s/ Marc Pfeffer
- ----------------------------- -----------------------------
Janet Hagan /s/ Janet Hagan
- ----------------------------- -----------------------------
Jeffrey Hagan /s/ Jeffrey Hagan
- ----------------------------- -----------------------------
Barbara Gentile /s/ Barbara Gentile
- ----------------------------- -----------------------------

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

/s/ Jeffrey Hagan
-----------------------------
[Title of Officer]
Secretary

(11) Consent of Independent Auditors, McGladrey & Pullen

[LETTERHEAD OF MCGLADREY & PULLEN, LLP]
Certified Public Accountants and Consultants

CONSENT OF INDEPENDENT AUDITORS

We hereby consent to the use of our report dated December 22, 1995, on
the financial statements referred to therein, in Post-Effective Amendment No. 3
to the Registration Statement on Form N-lA of The Milestone Funds as filed with
the Securities and Exchange Commission.

We also consent to the reference to our Firm in the Statement of
Additional Information under the caption "Auditors" and in each Prospectus under
the captions "Financial Highlights" and "Independent Public Accountant".

/s/ MCGLADREY & PULLEN, LLP
---------------------------
MCGLADREY & PULLEN, LLP

New York, New York
February 16, 1996

(16) Schedule for computation of performance

INSTITUTIONAL CLASS

Calculation of Performance

Seven Day Current Yield

(Cumulative dividend for seven days) X 365/7 = Yield

(.0011047) X 365/7 = 5.76%

Effective Yield
365/7
(Cumulative dividend for seven days + 1) - 1 = Effective Yield

365/7
(.0011047 + 1) - 1 = 5.93%

INVESTOR CLASS

Calculation of Performance

Seven Day Current Yield

(Cumulative dividend for seven days) X 365/7 = Yield

(.0010665) X 365/7 = 5.56%

Effective Yield
365/7
(Cumulative dividend for seven days + 1) - 1 = Effective Yield

365/7
(.0010665 + 1) - 1 = 5.72%

<ARTICLE> 6
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION
EXTRACTED FROM STATEMENT OF INVESTMENTS DATED 11/30/95
AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH REPORT.
</LEGEND>
<SERIES>
<NUMBER> 2
<NAME> MILESTONE TREASURY OBLIGATIONS-INSTITUTIONAL

<S> <C>
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<FISCAL-YEAR-END> NOV-30-1995
<PERIOD-END> NOV-30-1995
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<NET-CHANGE-FROM-OPS> 6721685
<EQUALIZATION> 0
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<SHARES-REINVESTED> 4032896
<NET-CHANGE-IN-ASSETS> 229158577
<ACCUMULATED-NII-PRIOR> 0
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<OVERDISTRIB-NII-PRIOR> 0
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<GROSS-ADVISORY-FEES> 332247
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 934572
<AVERAGE-NET-ASSETS> 271359090
<PER-SHARE-NAV-BEGIN> 1.00
<PER-SHARE-NII> .03
<PER-SHARE-GAIN-APPREC> 0
<PER-SHARE-DIVIDEND> .03
<PER-SHARE-DISTRIBUTIONS> 0
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 1.00
<EXPENSE-RATIO> .20
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0

</TABLE>

<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> NOV-30-1995
<PERIOD-END> NOV-30-1995
<INVESTMENTS-AT-COST> 312848969
<INVESTMENTS-AT-VALUE> 312848969
<RECEIVABLES> 86867
<ASSETS-OTHER> 127314
<OTHER-ITEMS-ASSETS> 2565
<TOTAL-ASSETS> 313065715
<PAYABLE-FOR-SECURITIES> 0
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<OTHER-ITEMS-LIABILITIES> 1633935
<TOTAL-LIABILITIES> 1633935
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 82273194
<SHARES-COMMON-STOCK> 82273194
<SHARES-COMMON-PRIOR> 0
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 0
<OVERDISTRIBUTION-GAINS> 9
<ACCUM-APPREC-OR-DEPREC> 0
<NET-ASSETS> 82273203
<DIVIDEND-INCOME> 0
<INTEREST-INCOME> 5861849
<OTHER-INCOME> 0
<EXPENSES-NET> 368938
<NET-INVESTMENT-INCOME> 5492911
<REALIZED-GAINS-CURRENT> 677
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<NET-CHANGE-FROM-OPS> 5493588
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<DISTRIBUTIONS-OF-INCOME> 5492911
<DISTRIBUTIONS-OF-GAINS> 668
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<NUMBER-OF-SHARES-SOLD> 1191429951
<NUMBER-OF-SHARES-REDEEMED> 1113495449
<SHARES-REINVESTED> 4238692
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<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 0
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0

<GROSS-ADVISORY-FEES> 332247
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 934572
<AVERAGE-NET-ASSETS> 97424145
<PER-SHARE-NAV-BEGIN> 1.00
<PER-SHARE-NII> .05
<PER-SHARE-GAIN-APPREC> 0
<PER-SHARE-DIVIDEND> .05
<PER-SHARE-DISTRIBUTIONS> 0
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 1.00
<EXPENSE-RATIO> .38
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0

</TABLE>