MILESTONE FUNDS, 485APOS, 1997-03-17

MILESTONE FUNDS
485APOS, 1997-03-17

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<PAGE>
As filed with the Securities and Exchange Commission on March 17, 1997

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

SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

FORM N-1A

REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
Post-Effective Amendment No. 6

and

REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT OF 1940
Amendment No. 9

THE MILESTONE FUNDS
(Formerly LEARNING ASSETS(TM))
(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, Levin, Naftalis, & Frankel
919 Third Avenue
New York, New York 10019

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

It is proposed that this filing will become effective:

[ ] immediately upon filing pursuant Rule 485, paragraph (b)
[ ] on [ ] pursuant to Rule 485, paragraph (b)
[x] 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, 1996 was filed with
the Commission on or before January 28, 1997.

<PAGE>
CROSS REFERENCE SHEET
(as required by Rule 404 (c))

PART A

Form N-1A Location in Prospectus
Item No. (Caption)
- --------- ----------------------
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

<PAGE>
CROSS REFERENCE SHEET
(as required by Rule 404 (c))

PART B

Location in Statement
Form N-1A of Additional Information
Item No. (Caption)
- --------- -------------------------
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 Value;
of Securities Being Offered 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

<PAGE>

The Milestone Funds
Treasury Obligations Portfolio

ADVISER
Milestone Capital Management, L.P.

PROSPECTUS

MARCH 31, 1997

INSTITUTIONAL CLASS

<PAGE>

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 March 31,1997, 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 OF CONTENTS

Page
----
Prospectus Summary............................................... 2
Expenses of Investing in the Portfolio........................... 3
Financial Highlights............................................. 4
Investment Objective and Policies................................ 5
Risk Considerations.............................................. 6
Additional Investment Policies and Practices..................... 7
Management of the Trust.......................................... 8
How to Invest in the Portfolio................................... 11
How to Redeem Shares of the Portfolio............................ 13
Dividends and Tax Matters........................................ 14
Other Information................................................ 15

PROSPECTUS SUMMARY

PORTFOLIO HIGHLIGHTS

Institutional Shares. This prospectus offers Institutional Shares of the
Treasury Obligations Portfolio. 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
Investor Shares, Service Shares, Financial Shares and Premium Shares by separate
prospectuses. Investor Shares, Service Shares, Financial Shares and Premium
Shares are subject to different expenses that affect their performance. For
information about Investor Shares, Service Shares, Financial Shares or Premium
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. Midwest Group Financial
Services, Inc., P. O. Box 5354, Cincinnati, Ohio 45201-5354, serves as statutory
underwriter of the Trust's shares. See "Management of the Trust".

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Portfolio most effectively, investors are encouraged to execute as many trades
as possible before 2:30 p.m. If MGF Service Corp. (the "Transfer Agent")
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 Transfer Agent 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 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 Transfer
Agent 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 Of 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:

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

Annual Portfolio Operating Expenses (as a percentage of average annual net
assets):

Advisory Fees................................................. 0.10%
12b-1 Fees.................................................... None

Shareholder Servicing Fees.................................... 0.05%*
Other Expenses................................................ 0.05%
-----
Total Operating Expenses...................................... 0.20%

* Under the Shareholder Servicing Plan, the Institutional Shares may
incur expenses up to .10% of the average daily net assets attributable
to such shares. For the current fiscal year, the Adviser has agreed to
waive up to 100% of the shareholder servicing fee in order to limit the
total expenses of the Institutional Shares to .20%. This voluntary
limitation may be terminated at any time subject to shareholders
receiving 30 days notice of such change.

For a further description of the various expenses incurred in the operation of
the Portfolio, see "Management of the Trust".

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Example

You would pay the following expenses on
a $1,000 investment in Institutional
Shares of the Portfolio, assuming a 5%
annual return and redemption at the end 1 Year 3 Years 5 Years 10 Years
of each period: ........................ $2 $6 $11 $26

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.

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FINANCIAL HIGHLIGHTS

The following financial highlights of the Portfolio's Institutional Shares 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.

For the period
For the year June 20, 1995*
ended through
November 30, 1996 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 0.052 0.026

Dividends from net investment income (0.052) (0.026)
------- -------

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

Total return 5.37% 5.76%(a)

Ratios/supplemental data
Ratios to average net assets:
Expenses (b) 0.20% 0.20%(a)
Net investment income 5.21% 5.69%(a)

Net assets at the end of period (000's omitted) $897,173 $229,159

</TABLE>

(a) Annualized

(b) Net of advisory, shareholder servicing, and administration fees waived and
expenses reimbursed of 0.02% and 0.17%, respectively.
* Commencement of operations

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.

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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.

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.

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 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 minimis 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.

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<PAGE>

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.

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.

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Borrowing. As a fundamental investment policy, the Portfolio may only borrow
money for temporary or emergency purposes (not for leveraging or investment),
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.

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. In addition, the Portfolio
will not invest in repurchase agreements having a maturity in excess of one
year. 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 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.

8
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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

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investment advisory agreement. The Adviser 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 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

Midwest Group Financial Services, Inc. (the "Underwriter") serves as statutory
underwriter of the Portfolio's shares pursuant to an Underwriting Agreement with
the Trust, and as the agent of the Trust in connection with the offering of
shares of the Portfolio. The Underwriter is an affiliate of the Trust's transfer
agent. See "Transfer Agent".

The Underwriter is reimbursed for all costs and expenses incurred in this
capacity but receives no further compensation for its services under the
Underwriting Agreement. The Underwriter may enter into arrangements with banks,
broker-dealers or other financial institutions ("Selected Dealers") through
which investors may purchase or redeem shares. The Underwriter may 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

10
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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.

Under its Primary Dealer Agreement with the Underwriter, 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
the Underwriter 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
.10% 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.

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.

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<PAGE>

TRANSFER AGENT

MGF Service Corp., a registered transfer agent, acts as the Trust's transfer
agent and dividend disbursing agent. The Transfer Agent 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.

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. The Transfer
Agent may pay these agents for their services, but no such payment will increase
the Transfer Agent'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 the Transfer
Agent, MGF Service Corp., at (800) 363-7660 or call your sales representative.
If the Transfer Agent receives a firm indication of the approximate size of the
intended investment before 2:30 p.m. (Eastern Time) and the completed 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 the 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.

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If the Public Securities Association recommends that the government securities
markets close early, the Trust may advance the time at which the Transfer Agent
must receive notification of orders for purposes of determining eligibility for
dividends on that day. Investors who notify the Transfer Agent after the
advanced time become entitled to dividends on the following Fund Business Day.
If the Transfer Agent 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 the Transfer Agent, MGF Service Corp., 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.)

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 the Transfer Agent each reserves the right to reject any purchase
order for any reason.

Share Certificates. The Transfer Agent 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.

13
<PAGE>

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 wire 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 the Transfer Agent,
MGF Service Corp., at (800) 363-7660. Shareholders must provide the Transfer
Agent 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, the Transfer Agent will follow reasonable procedures to
confirm that such instructions are genuine. If such procedures are followed,
neither the Transfer Agent 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 the Transfer Agent by
telephone, redemption requests may be mailed or hand-delivered to the Transfer
Agent.

Written Requests. Redemption requests may be made by writing to The Milestone
Funds, c/o MGF Service Corp., P. O. Box 5354, Cincinnati, Ohio 45201-5354.
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.

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 the Transfer Agent, 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.

The Transfer Agent 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 the Transfer Agent.

14
<PAGE>

<TABLE>
<CAPTION>
Firm Indication of Redemption Request and Completed Redemption Redemption Proceeds
Approximate Size of Redemption Received Order Received Ordinarily Dividends
- ------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
By 2:30 p.m. Eastern Time By 4:00 p.m. Eastern Wired same Business Not earned on the
Time Day day request received

After 2:30 p.m. Eastern Time After 4:00 p.m. Wired next Business Earned on day
Eastern Time 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 $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 the Transfer Agent. 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 income and net capital gains each year in
accordance with the timing requirements of the Code, the Portfolio should also
avoid Federal excise taxes.

15
<PAGE>

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.

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.

16
<PAGE>

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 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
& Frankel, New York, New York.

Independent Public Accountant. The independent public accountant for the Trust
is Deloitte & Touche, 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 Investor Shares,
Financial Shares, Service Shares and Premium Shares (individually, a "Class") by
separate prospectuses. Each Class of shares has a different distribution
arrangement. Also, to the extent one Class bears expenses different from the
other Classes, 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 Classes, except that separate votes are
taken by each Class of the Portfolio if the interests of one Class differ from
the interests of the others. For information about Investor Shares, Financial
Shares, Service Shares or Premium Shares, please call (800) 941-MILE, or ask
your sales representative which Class would be a suitable investment.

17
<PAGE>

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, 1996, 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
Midwest Group Financial Services, Inc. / MGF Service Corp.
P. O. Box 5354
Cincinnati, OH 45201-5354

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

Legal Counsel

Kramer, Levin, Naftalis & Frankel

919 Third Avenue
New York, NY 10022

Independent Public Accountant

Deloitte & Touche, LLP
Two World Financial Center
New York, NY 10281-1434

The Milestone Funds
800-941-MILE

<PAGE>

The Milestone Funds
Treasury Obligations Portfolio

ADVISER
Milestone Capital Management, L.P.

----------

PROSPECTUS

MARCH 31, 1997

INVESTOR CLASS

<PAGE>

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.

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 March 31, 1997, 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.

<PAGE>

TABLE OF CONTENTS

Page
----
Prospectus Summary........................................... 2
Expenses of Investing in the Portfolio....................... 3

Financial Highlights......................................... 5
Investment Objective and Policies............................ 6
Risk Considerations.......................................... 7

Additional Investment Policies and Practices................. 7

Management of the Trust...................................... 9
How to Invest in the Portfolio............................... 12
How to Redeem Shares of the Portfolio........................ 14
Dividends and Tax Matters.................................... 15
Other Information............................................ 16

PROSPECTUS SUMMARY

PORTFOLIO HIGHLIGHTS

Investor Shares. This prospectus offers Investor Shares of the Treasury
Obligations Portfolio. 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
Institutional Shares, Service Shares, Financial Shares and Premium Shares by
separate prospectuses. Institutional Shares, Service Shares, Financial Shares
and Premium Shares are subject to different expenses that affect their
performance. For information about Institutional Shares, Service Shares,
Financial Shares or Premium 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".

open ("Fund Business Day") between

2
<PAGE>

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 MGF Service Corp. (the "Transfer
Agent") 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 Transfer Agent 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 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 the
Transfer Agent 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 Of 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:

Annual Portfolio Operating Expenses (as a percentage of average annual net
assets):

Advisory Fees................................................. 0.10%
12b-1 Fees.................................................... None
Shareholder Servicing Fees.................................... 0.25%

Other Expenses................................................ 0.05%

-----

Total Operating Expenses...................................... 0.40%
=====

For the current fiscal year, the Adviser has agreed to waive up to 100% of the

shareholder servicing fee in order to limit the total expenses of the Investor
Shares to 0.45%. This voluntary limitation may be terminated at any time subject
to shareholders receiving 30 days notice of such change.

For a further description of the various expenses incurred in the operation of
the Portfolio, see "Management of the Trust".

3
<PAGE>

Example

You would pay the following expenses on
a $1,000 investment in Investor
Shares of the Portfolio, assuming a 5%
annual return and redemption at the end 1 Year 3 Years 5 Years 10 Years

of each period: ........................ $4 $13 $23 $51

4
<PAGE>

FINANCIAL HIGHLIGHTS

The following financial highlights of the Portfolio's Investor Shares 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>
For the period
For the year December 30, 1994*
ended through
November 30, 1996 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 0.050 0.051
Dividends from net investment income (0.050) (0.051)
------- -------

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

Total return 5.11% 5.71%(a)

Ratios/supplemental data
Ratios to average net assets:
Expenses (b) 0.45% 0.38%(a)
Net investment income 4.99% 5.63%(a)

Net assets at the end of period (000's omitted) $82,915 $82,273
</TABLE>

(a) Annualized

(b) Net of advisory, shareholder servicing, and administration fees waived and
expenses reimbursed of 0.01% and 0.14%, respectively.
* Commencement of operations

INVESTMENT OBJECTIVE AND POLICIES

INVESTMENT OBJECTIVE

5
<PAGE>

INVESTMENT POLICIES

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.

6
<PAGE>

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.

RISK CONSIDERATIONS

ADDITIONAL INVESTMENT POLICIES AND PRACTICES

7
<PAGE>

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.

Temporary Defensive Positions. Under abnormal market or economic conditions, the
Portfolio temporarily may hold up to 100% of its investable assets in cash.

8
<PAGE>

MANAGEMENT OF THE TRUST

BOARD OF TRUSTEES

THE ADVISER

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.

9
<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

10
<PAGE>

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

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.

11
<PAGE>

TRANSFER AGENT

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. The Transfer
Agent may pay these agents for their services, but no such payment will increase
the Transfer Agent's compensation from the Trust.

HOW TO INVEST IN THE PORTFOLIO

To purchase shares of the Portfolio by Federal Reserve wire, call the Transfer
Agent, MGF Service Corp., at (800) 363-7660 or call your sales representative.
If the Transfer Agent receives a firm indication of the approximate size of the
intended investment before 2:30 p.m. (Eastern Time) and the completed 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.