MILESTONE FUNDS, 485APOS, 1998-04-15

MILESTONE FUNDS
485APOS, 1998-04-15

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As filed with the Securities and Exchange Commission on April 15, 1998

File No. 33-81574
File No. 811-8620
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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

FORM N-1A

REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
Post-Effective Amendment No. 8

and

REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT OF 1940
Amendment No. 11

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

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

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

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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

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It is proposed that this filing will become effective:

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

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

PART A

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

Item 2. Synopsis Expenses of Investing in the Portfolio

Item 3. Condensed Financial Information Financial Highlights

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 Fund Performance Not Applicable

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

Item 7. Purchase of Securities Being Offered How to Invest in the Portfolio; 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

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

PART B

Form N-1A Location in Statement
of Additional Information
Item No. (Caption)
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<S> <C> <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 Holders of Management; Other Information
Securities

Item 16. Investment Advisory and Other Services Management

Item 17. Brokerage Allocation and Other Practices Portfolio Transactions

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

Item 19. Purchase, Redemption and Pricing of Securities Determination of Net Asset Value;
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 Not applicable

</TABLE>

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The Milestone Funds
Prime Obligations Portfolio

ADVISER
Milestone Capital Management, L.P.

PROSPECTUS
JUNE 29, 1998

INSTITUTIONAL SHARES

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The Milestone Funds
Prime Obligations Portfolio
Institutional Shares
One Executive Boulevard, Yonkers, New York 10701
(800) 941-MILE

This Prospectus offers Institutional Shares of the Prime 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.

Prime Obligations Portfolio invests in high grade money market
instruments, including, but not limited to, U.S. Government
obligations, bank obligations, commercial instruments, and
repurchase agreements.

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 June 29, 1998, has been filed with the
Securities and Exchange Commission ("SEC") and is available free of charge by
contacting The Milestone Funds, One Executive Boulevard, 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.

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TABLE OF CONTENTS

Page
Prospectus Summary....................................................... 2
Expenses of Investing in the Portfolio................................... 3
Investment Objective and Policies........................................ 4
Risk Considerations...................................................... 6
Additional Investment Policies and Practices............................. 6
Management of the Trust.................................................. 7
How to Invest in the Portfolio........................................... 10
How to Redeem Shares of the Portfolio.................................... 12
Dividends and Tax Matters................................................ 13
Other Information........................................................ 14

PROSPECTUS SUMMARY

PORTFOLIO HIGHLIGHTS

Institutional Shares. This prospectus offers Institutional Shares of the Prime
Obligations Portfolio. The Prime Obligations Portfolio (the "Portfolio") is a
money market fund that invests in high grade money market instruments,
including, but not limited to, U.S. Government obligations, bank obligations,
commercial instruments, and repurchase agreements. Institutional Shares are
designed for institutional investors as a convenient investment vehicle for
short-term funds. The Portfolio also offers Service Shares by separate
prospectus which are subject to different expenses that affect their
performance. For further information about Service Shares call (800) 941-MILE.
See "Other Information".

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

Administration and Underwriting. The administrator of the Trust is The Bank of
New York, 90 Washington Street, New York, New York 10286. CW Fund Distributors,
Inc., P. O. Box 5354, Cincinnati, Ohio 45201-5354, 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 8:30 a.m. and 7:00 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
Countrywide Fund Services, Inc. (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 4:30 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

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redemption order by 4:30 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 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".

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 annual average 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 0.10% of the average daily net assets attributable to such
shares. For the current fiscal year, the Adviser has agreed to limit the
total expenses of the Institutional Shares to .20%. Absent such
limitation, estimated annual Operating Expenses would be 0.25%. 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
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<S> <C> <C> <C> <C>
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: . . . . $2 $6 N/A N/A
</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.

INVESTMENT OBJECTIVE AND POLICIES

INVESTMENT OBJECTIVE

The Portfolio seeks to provide investors with maximum current income that is
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 in a broad range of money market instruments, including
but not limited to, U.S. government obligations, bank obligations,
commercial instruments and repurchase agreements. Obligations held by the
Portfolio will have final maturities of 397 days (13 months) or less (with
certain exceptions), subject to the diversification and other requirements of
Rule 2a-7 under the Investment Company Act of 1940 ("Rule 2a-7") which regulates
money market mutual funds. The dollar-weighted average maturity of the Portfolio
will be 90 days or less.

Permissible Investments. The Portfolio will invest only in high quality money
market instruments, including but not limited to commercial paper, master notes,
and other short-term corporate instruments that are either rated in the highest
short-term rating category by one or more nationally-recognized statistical
rating organizations ("NRSROS") or are of comparable quality to securities
having such ratings. Additionally, the Portfolio may purchase securities issued
or guaranteed as to principal or interest by the U.S. Government or any of its
agencies or instrumentalities. U.S. Government securities may include
zero-coupon bonds. The Portfolio may also invest in separately-traded principal
and interest components of securities guaranteed or issued by the U.S. Treasury
if such components are traded independently under the Separate Trading of
Registered Interest and Principal of Securities Program ("STRIPS"). Certain
government securities held by the Portfolio may have remaining maturities
exceeding thirteen months if such securities

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provide for adjustments in their interest rates not less frequently than every

thirteen months. All securities purchased by the Portfolio must be denominated
in U.S. dollars.

The Portfolio may invest in U.S. bank obligations such as certificates of
deposit, time deposits, bankers acceptances issued or supported by U.S. banks or
savings institutions having total assets at the time of purchase of $1 billion
or more.

The Portfolio may invest in asset-backed securities which represent a
participation in, or are secured by and payable from, a stream of payments
generated by particular assets, most often a pool of assets such as motor
vehicle receivables, credit card receivables, mortgages, or other assets.

The Portfolio may invest, in variable rate demand notes, among other variable
or floating rate instruments, that ultimately mature in more than 397 days,
provided that the Portfolio acquires a right to sell the securities that meets
certain requirements set forth in Rule 2a-7.

The Portfolio may invest in repurchase agreements with banks and broker-dealers.
Repurchase agreements are arrangements in which banks and broker-dealers sell
securities to the Portfolio and agree at the time of sale to repurchase them at
a mutually agreed upon time and price. These transactions must be fully
collateralized at all times. To the extent that the seller does not repurchase
the securities from the Portfolio, the Portfolio could receive less than the
repurchase price on any sale of such securities.

The Portfolio may, when deemed appropriate, invest in high-quality, short-term
municipal obligations that carry yields that are competitive with those of other
types of money-market instruments in which they may invest.

The Portfolio may also invest in securities that are not registered ("restricted
securities") under the Securities Act of 1933 ("1933 Act"), but can be offered
and sold to "qualified institutional buyers" under Rule 144A under the 1933 Act
or to other investors under other private placement exemptions under such Act.
Restricted securities (including commercial paper issued pursuant to Section
4(2) of the Act) determined to be liquid by the Board of Trustees will not be
deemed to be illiquid investments. The Board of Trustees may adopt guidelines
and delegate to the Adviser the daily function of monitoring the liquidity of
restricted securities. The Board, however, will retain sufficient oversight and
be ultimately responsible for the determinations.

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.

Investment Limitations. The two limitations summarized below are fundamental and
may not be changed without shareholder approval.

The Portfolio may not:

1. purchase any securities which would cause 25% or more of the value

of its total assets at the time of purchase to be invested in the
securities of issuers conducting their principal business
activities in the same industry, provided that there is no

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limitation with respect to investments in obligations issued or
guaranteed by the U.S. government, its agencies or
instrumentalities, securities of state or municipal governments
and their political subdivisions, and bank instruments such as
CD's, bankers' acceptances, time deposits and bank repurchase
agreements; or

2. purchase securities of any one issuer, other than the obligations
of the U.S. government, its agencies or instrumentalities, if
immediately after such purchase more than 5% of the value of its
total assets would be invested in such issuer, except as permitted
under Rule 2a-7 under the Investment Company Act of 1940, as such
rule may be amended from time to time; and except that the
Portfolio may purchase securities of other investment companies to
the extent permitted by applicable laws or exemptive order.

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 money market instruments, 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 can change in value
in response to changes in interest rates, and a major change in rates could
cause the share price to change. 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

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.

When-Issued and Delayed Delivery Transactions. The Portfolio may purchase new
issues of securities on a "when-issued" basis or existing issues of securities
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

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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.

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,
which she founded in 1994. 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. Ms. Hanson

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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 heads the
Adviser's portfolio management and research team which is responsible for the
day-to-day operations of the Prime Obligations Portfolio. Before joining the
Adviser, Mr. Pfeffer was with Goldman, Sachs & Co. for eight years. As a
vice-president and portfolio manager of Goldman Sachs' Asset Management, 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 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.

The Adviser may enter into separate agreements with third parties that provide
various services to those shareholders of the Trust who purchase shares of the
Portfolio. For these services, the Adviser, at its own expense and from its own
resources, may pay a fee which would not increase the amount of any advisory
fees paid to the Adviser by the Portfolio.

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.

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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

CW Fund Distributors, 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 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.

SHAREHOLDER SERVICES

The Trust has adopted a shareholder service plan under which it pays the Adviser
0.10% of the average daily net assets attributable to 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 shares
held beneficially; and providing such other services as the Trust or a
shareholder may request.

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TRANSFER AGENT

Countrywide Fund Services, Inc., 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.

The Transfer Agent 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 the Transfer Agent, and who agree to
comply with the terms of the Transfer Agent'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 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

Purchasing Shares. 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 8:30 a.m. and 7:00 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, Countrywide Fund Services, Inc., 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 4:30 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 4:30 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.

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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, Countrywide Fund 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.)

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

The Bank of New York, ABA # 021000018
A/C # ________________
FBO Milestone Funds Prime 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.

11
<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

Redeeming Shares. 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 8:30 a.m. and 7:00 p.m. (Eastern Time).

By Telephone. Redemption requests may be made by telephoning the Transfer Agent,
Countrywide Fund Services, Inc., 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 Countrywide Fund Services, Inc., 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.

12
<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 4:30 p.m. Eastern Wired same Business Not earned on the
Time Day day request received

After 2:30 p.m. Eastern Time After 4:30 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 4:30
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 or
mid-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.

13
<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
and mid-term capital gains, if any, realized by the Portfolio are taxable to the
shareholders as long-term and mid-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.

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 Financial Data, Inc. In

14
<PAGE>

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 4:30 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 Investor Shares 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 Auditors. The independent auditors for the Trust are 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 Service 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 Service Shares, please call (800)
941-MILE.

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

15
<PAGE>

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 March 30, 1998, 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 Executive Boulevard
Yonkers, NY 10701

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

Underwriter / Transfer Agent
CW Fund Distributors, Inc. / Countrywide Fund Services, Inc.
P. O. Box 5354
Cincinnati, OH 45201-5354

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

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

The Milestone Funds
800-941-MILE

<PAGE>

The Milestone Funds
Prime Obligations Portfolio

ADVISER
Milestone Capital Management, L.P.

PROSPECTUS
JUNE 29, 1998

SERVICE SHARES

<PAGE>

The Milestone Funds
Prime Obligations Portfolio
Service Shares
One Executive Boulevard, Yonkers, New York 10701
(800) 941-MILE

This Prospectus offers Service Shares of the Prime 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.

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
Investment Objective and Policies..................................... 4
Risk Considerations................................................... 6
Additional Investment Policies and Practices.......................... 6
Management of the Trust............................................... 7
How to Invest in the Portfolio........................................ 10
How to Redeem Shares of the Portfolio................................. 12
Dividends and Tax Matters............................................. 13
Other Information..................................................... 14

PROSPECTUS SUMMARY

PORTFOLIO HIGHLIGHTS

Service Shares. This prospectus offers Service Shares of the Prime Obligations
Portfolio. The Prime Obligations Portfolio (the "Portfolio") is a money market
fund that invests in high grade money market instruments, including, but not
limited to, U.S. Government obligations, bank obligations, commercial
instruments, and repurchase agreements. Service Shares are designed primarily
for use by banks and other financial institutions acting for themselves or in an
advisory, agency, custodial, fiduciary or other similar capacity. The Portfolio
also offers Institutional Shares by separate prospectus which are subject to
different expenses that affect their performance. For further information about
Institutional Shares call (800) 941-MILE. See "Other Information".

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

2
<PAGE>

redemption order by 4:30 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 $500,000. 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:

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 annual average net
assets):

Advisory Fees.................................................. 0.10%
12b-1 Fees..................................................... 0.05%*
Shareholder Servicing Fees..................................... 0.25%
Other Expenses................................................. 0.05%
-----
Total Operating Expenses....................................... 0.45%
=====

* Under the Rule 12b-1 Plan of the Portfolio's Service Shares, the Service
Shares may incur distribution expenses of up to 0.25% of the average daily
net assets attributable to such shares. For the current fiscal year, the
Adviser has agreed to limit the total expenses of the Service Shares to
0.45%. Absent such limitation, estimate annual Total Operating Expenses
would be 0.65%. 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

<TABLE>
<S> <C> <C> <C> <C>
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: . . . . $5 $14 N/A N/A
</TABLE>

INVESTMENT OBJECTIVE AND POLICIES

INVESTMENT OBJECTIVE

INVESTMENT POLICIES

The Portfolio invests in a broad range of money market instruments, including
but not limited to, U.S. government obligations, bank obligations, commercial
instruments, and repurchase agreements. Obligations held by the Portfolio will
have final maturities of 397 days (13 months) or less (with certain exceptions),
subject to the diversification and other requirements of Rule 2a-7 under the
Investment Company Act of 1940 ("Rule 2a-7") which regulates money market mutual
funds. The dollar-weighted average maturity of the Portfolio will be 90 days or
less.

4
<PAGE>

provide for adjustments in their interest rates not less frequently than every
thirteen months. All securities purchased by the Portfolio must be denominated

in U.S. dollars.

The Portfolio may invest in variable rate demand notes, among other variable or
floating rate instruments, that ultimately mature in more than 397 days,
provided that the Portfolio acquires a right to sell the securities that meets
certain requirements set forth in Rule 2a-7.

The Portfolio may also invest in securities that are not registered ("restricted
securities") under the Securities Act of 1933 ("1933 Act"). Such restricted
securities may be offered and sold to "qualified institutional buyers" under
Rule 144A under the 1933 Act or to other investors under other private placement
exemptions under such Act. Restricted securities (including commercial paper
issued pursuant to Section 4(2) of the Act) determined to be liquid by the Board
of Trustees will not be deemed to be illiquid investments. The Board of Trustees
may adopt guidelines and delegate to the Adviser the daily function of
monitoring the liquidity of restricted securities. The Board, however, will
retain sufficient oversight and be ultimately responsible for the
determinations.

Investment Limitations. The two limitations summarized below are fundamental and
may not be changed without shareholder approval.

The Portfolio may not:

1. purchase any securities which would cause 25% or more of the value

of its total assets at the time of purchase to be invested in the
securities of issuers conducting their principal business
activities in the same industry, provided that there is no

5
<PAGE>

limitation with respect to investments in obligations issued or
guaranteed by the U.S. government, its agencies or
instrumentalities, securities of state or municipal goverment and
their political subdivisions, and bank instruments such as CD's,
bankers' acceptances, time deposits and bank repurchase
agreements; or

RISK CONSIDERATIONS

ADDITIONAL INVESTMENT POLICIES AND PRACTICES

of the Portfolio's total assets is outstanding.

6
<PAGE>

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.

MANAGEMENT OF THE TRUST

BOARD OF TRUSTEES

THE ADVISER

7
<PAGE>

Marc H. Pfeffer is Chief Investment Officer of the Adviser. He heads the
Adviser's portfolio management and research team which is responsible for the
day-to-day operations of the Prime Obligations Portfolio. Before joining
the Adviser, Mr. Pfeffer was with Goldman, Sachs & Co. for eight years. As a
vice-president and portfolio manager of Goldman Sachs' Asset Management, 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.

Trust.

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.

8
<PAGE>

UNDERWRITER

DISTRIBUTION PLAN

The Trust has adopted a distribution plan for Investor Shares. Pursuant to this
Plan, the Portfolio may incur distribution expenses related to the sale of
Investor Shares of up to 0.25% per annum of the Portfolio's average daily net
assets attributable to such Shares. The Plan provides that the Portfolio may

finance activities which are primarily intended to result in the sale of Service
Shares, including, but not limited to, advertising, printing of prospectuses and
reports for other than existing shareholders, preparation and distribution of
advertising material and sales literature and payments to dealers who enter into
agreements with the Trust or Underwriter. The Plan will only make payments for
expenses actually incurred on a first-in, first-out basis. The Plan may carry
forward for an unlimited number of years any unreimbursed expenses. Such amounts
payable will be disclosed in the financial statements of the annual report to
the Portfolio. If the Plan is terminated in accordance with its terms, the
obligations of the Portfolio to make payments pursuant to the Plan will cease
and the Portfolio will not be required to make any payments past the date the
Plan terminates.

SHAREHOLDER SERVICES

The Trust has adopted a shareholder service plan under which it pays the Adviser
0.25% of the average daily net assets attributable to the Service 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 Service
Shares owned by investors for which the shareholder servicing agent maintains a
servicing relationship.

9
<PAGE>

TRANSFER AGENT

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 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

10
<PAGE>

day. Completed orders received after 4:30 p.m. begin to earn dividends the next
Fund Business Day upon receipt of Federal Funds.

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, Countrywide Fund 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.)

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

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

11
<PAGE>

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.

Minimum Investment Required. The minimum initial investment in the Portfolio is
$500,000. There is no minimum subsequent investment. The Trust reserves the
right to waive the minimum investment requirement.

HOW TO REDEEM SHARES OF THE PORTFOLIO

Redeeming Shares. 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 8:30 a.m. and 7:00 p.m. (Eastern Time).

12
<PAGE>

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.

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 4:30 p.m. Eastern Wired same Business Not earned on the
Time Day day request received

After 2:30 p.m. Eastern Time After 4:30 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 $50,000 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 4:30
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
or mid-term capital gains, but should they occur, they also will be distributed
at least once every 12 months.

13
<PAGE>

TAX MATTERS

shareholders as long-term and mid-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 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

14
<PAGE>

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 Financial Data, 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.

Legal Counsel. Legal counsel to the Trust is provided by Kramer, Levin, Naftalis
& Frankel, New York, New York.

Independent Auditors. The independent auditors for the Trust are Deloitte &
Touche, LLP, New York, New York.

In addition to Service Shares, the Portfolio offers Institutional Shares by
separate prospectus. Each class of shares has a different distribution
arrangement. Also, to the extent one class bears expenses

15
<PAGE>

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.

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 March 30, 1998, 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 Executive Boulevard
Yonkers, NY 10701

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

Underwriter / Transfer Agent
CW Fund Distributors, Inc. / Countrywide Fund Services, Inc.
P. O. Box 5354
Cincinnati, OH 45201-5354

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

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

The Milestone Funds
800-941-MILE

<PAGE>

THE MILESTONE FUNDS

Prime Obligations Portfolio - Institutional Shares and Service Shares

One Executive Boulevard
Yonkers, New York 10701
Tel. (800) 941-MILE
- --------------------------------------------------------------------------------

STATEMENT OF ADDITIONAL INFORMATION
June 29, 1998

The Milestone Funds (the "Trust") is an open-end investment management company.
This Statement of Additional Information supplements the Prospectuses which
offer shares of the Institutional Class and Service Class of the Prime
Obligations Portfolio (the "Portfolio"), a diversified, no-load money market
portfolio of the Trust, and should be read only in conjunction with those
Prospectuses, copies of which may be obtained without charge by writing to The
Milestone Funds, One Executive Boulevard, Yonkers, New York 10701, or by calling
(800) 941-MILE (941-6453).

TABLE OF CONTENTS

Page

1. Investment Policies.................................... 2
2. Investment Limitations................................. 4
3. Advertising............................................ 5
4. Management............................................. 7
5. Determination of Net Asset Value....................... 13
6. Portfolio Transactions................................. 13
7. Additional Purchase and Redemption Information......... 14
8. Taxation............................................... 15
9. Distribution Plan...................................... 19
10. Shareholder Service Plan............................... 20
11. 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.

<PAGE>

1. INVESTMENT POLICIES

The following discussion is intended to supplement the disclosure in the
Prospectuses of the Institutional and Service Classes of shares concerning the
Portfolio's investments and investment techniques and the risks associated
therewith.

Commercial Paper. The Portfolio may invest in commercial paper, including master
notes. Master notes are obligations that provide for a periodic adjustment in
the interest rate paid and permit daily changes in the amount borrowed. Since
these obligations typically provide that the interest rate is tied to the
Treasury bill auction rate, the rate on master notes is subject to change.
Although there is no secondary market for master notes, such obligations are
considered to be liquid because they are payable immediately upon demand. The
Portfolio may also invest in commercial paper issued in reliance on the
so-called private placement exemption from registration afforded by Section 4(2)
of the Securities Act of 1933. Section 4(2) paper is restricted as to
disposition under the Federal securities laws and generally is sold to
institutional investors who are purchasing the paper for investment and not with
a view to public distribution. Any resale by the purchaser must be in an exempt
transaction. Section 4(2) paper will not be subject to the 10% limitation on
illiquid securities where the Board of Trustees (pursuant to guidelines adopted
by the Board) determines that a liquid trading market exists.

United States Government Obligations. The Portfolio may invest in obligations
issued or guaranteed by the United States Government or by its agencies or
instrumentalities. Obligations issued or guaranteed by federal agencies or
instrumentalities may or may not be backed by the "full faith and credit" of the
United States. Securities that are backed by the full faith and credit of the
United States include Treasury bills, Treasury notes, Treasury bonds and
obligations of the Government National Mortgage Association, the Farmers Home
Administration, and the Export-Import Bank. Securities in which the Portfolio
may invest that are not backed by the full faith and credit of the United States
include, the Federal National Mortgage Association, obligations of the Federal
Farm Credit System and the Federal Home Loan Banks.

Bank Obligations. The Portfolio may invest in negotiable certificates of
deposit, time deposits and bankers' acceptances of banks, and savings
institutions that have total assets of $1 billion or more and are organized
under the laws of the United States.

Asset-Backed Securities. The Portfolio may invest in asset-backed securities.
Asset-backed securities represent a participation interest in, or are secured by
and payable from, a stream of payments generated by particular assets such as
motor vehicle or credit card receivables. Payments of principal and interest may
be guaranteed up to certain amounts and for a certain time period by a letter of
credit issued by a financial institution unaffiliated with the entities issuing
the securities. The asset-backed securities in which the Portfolio may invest
are subject to the Portfolio's overall credit requirements.

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<PAGE>

Variable rate demand notes. The Portfolio may invest in variable rate demand
notes which are obligations that provide for a periodic adjustment in the
interest rate paid on the notes. They permit the holder to demand payment of the
notes, or to demand purchase of the notes at a purchase price equal to the
unpaid principal balance plus accrued interest. The terms of the instruments
will provide that interest rates are adjustable at intervals ranging from daily
to six months, and the adjustments are usually based upon the prime rate of a
bank or another appropriate interest rate index specified in the respective
notes. Variable rate instruments maturing in 397 days or less are deemed to have
maturities equal to the period remaining until the next readjustment of the
rate. The Portfolio may invest in variable rate securities ultimately maturing
in more than 397 days, if the Portfolio acquires a right to sell the securities
that meet certain requirements set forth in Rule 2a-7.

Repurchase Agreements. The Portfolio may enter into repurchase agreements with
brokers, dealers or banks that meet the credit guidelines approved by the Board
of Trustees. In a repurchase agreement, the Portfolio buys a security from a
seller that has agreed to repurchase the same security at a mutually agreed upon
date and price. The resale price is normally in excess of the purchase price,
reflecting an agreed upon interest rate. A repurchase agreement may also be
viewed as a fully collateralized loan of money by the Portfolio to the seller.
The length of maturity will usually be short, from overnight to one week, and at
no time will the Portfolio invest in repurchase agreements maturing in more than
one year. The Portfolio will always receive securities as collateral whose
market value is, and during the entire term of the agreement remains, at least
equal to 102% of the dollar amount invested by the Portfolio in each agreement
plus accrued interest, and the Portfolio will make payment for such securities
only upon physical delivery or upon evidence of book entry transfer to the
account of the Portfolio's custodian. If the seller defaults, the Portfolio may
incur a loss if the value of the collateral securing the repurchase agreement
declines and might incur disposition costs in connection with liquidating the
collateral. In the event of a seller'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 it 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

3
<PAGE>

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.

Illiquid Securities. The Portfolio may invest up to 10% of its net assets in
illiquid securities or securities that are not readily marketable, including
repurchase agreements and time deposits of more than seven days' duration.
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. The Portfolio may also
invest in securities that are not registered ("restricted securities") under the
Securities Act of 1933 ("1933 Act"), but can be offered and sold to "qualified
institutional buyers" under Rule 144A under the 1933 Act. Restricted securities
(including commercial paper issued pursuant to Section 4(2) of the 1933 Act)
determined to be liquid by the Board of Trustees will not be deemed to be
illiquid investments for purposes of this restriction. The Board of Trustees may
adopt guidelines and delegate to the Adviser the daily function of monitoring
the liquidity of restricted securities. The Board, however, will retain
sufficient oversight and be ultimately responsible for the determinations.

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. issue "senior securities" as defined in the Investment Company Act
of 1940, as amended and the rules, regulations and orders
thereunder, except as permitted under such Act and the rules,
regulations and orders thereunder;

2. borrow money, except that (a) the Portfolio may borrow from banks

for temporary or emergency (not leveraging) purposes, including the
meeting of redemption requests which might otherwise require the
untimely disposition of securities, and (b) the Portfolio may
engage in investment strategies to the extent permitted by the
Investment Company Act of 1940, as amended and to the extent
consistent with its investment objectives and policies. To the
extent that the Portfolio engages in transactions described in (a)
and (b), the Portfolio will be limited so that no more than 33 1/3%
of the value of its total assets (including the amount borrowed),
valued at the lesser of cost of market, less liabilities (not
including the amount borrowed) valued at the time the borrowing is
made, is derived from such transactions;

3. make loans. This restriction does not apply to (a) the purchase of
debt obligations in which the Portfolio may invest consistent with
its investment objectives and policies, (b) repurchase agreements,
and (c) loans of its portfolio securities, to the fullest extent
permitted under the Investment Company Act of 1940, as amended;

4. engage in the business of underwriting securities issued by other
persons, except to the extent that the Portfolio may technically be
deemed to be an underwriter under the Securities Act of 1933, as
amended, in disposing of portfolio securities;

5. purchase or sell real estate, commodities or commodity contracts,
but this restriction shall not prevent the Portfolio from (a)
investing in securities of issuers engaged in the real estate
business or the business of investing in real estate and securities
which are secured by real estate or interests therein, (b) holding
or selling real estate received in connection with securities it
holds or held, or (c) trading in futures contracts and options on
futures contracts (including options on currencies to the extent
consistent with the Portfolio's investment objective and policies);

6. purchase any securities which would cause 25% or more of the value
of its total assets at the time of purchase to be invested in the
securities of issuers conducting their principal business
activities in the same industry, provided that there is no
limitation with respect to investments in obligations issued or
guaranteed by the U.S. government, its agencies or
instrumentalities, securities of state or municipal governments,
and their political subdivisions, and bank instruments such as
CD's, bankers' acceptances, time deposits and bank repurchase
agreements; or

7. purchase securities of any one issuer, other than the obligations
of the U.S. government, its agencies or instrumentalities, if
immediately after such purchase more than 5% of the value of its
total assets would be invested in such issuer,

4
<PAGE>

except as permitted under Rule 2a-7 under the Investment Company
Act of 1940, as such rule may be amended from time to time; and
except that the Portfolio may purchase securities of other
investment companies to the extent permitted by applicable law or
exemptive order.

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 Financial Data, 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.

5
<PAGE>

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 Portfolio may advertise other forms of performance. For example, the
Portfolio 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 Portfolio may include other information in its 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 portfolio manager and the portfolio management staff of the Adviser or
summaries of the views of the portfolio manager with respect to the financial
markets; (iv) information regarding the background, experience or areas of
expertise of the Portfolio's trustees; (v) ratings assigned the Portfolio 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 the Portfolio over a given number of years, including the amount
that the investment would be at the end of the period; and, (vii) the net asset
value, net assets or number of shareholders of the Portfolio as of one or more
dates. The Portfolio may also compare the Portfolio'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.

6
<PAGE>

In connection with its advertisements the Portfolio may provide "shareholders'
letters" to provide shareholders or investors an introduction to the
Portfolio's, the Trust's or any of the Trust's service provider's policies or
business practices. The Portfolio 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. Trustees deemed to be "interested
persons" 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 founded the Adviser in July of 1994. 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
16 Argyle Place, 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.

7
<PAGE>

*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.

General Partner of 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.

Partner of Sage Capital Management, an investment partnership. 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.

Allen Lee Sessoms, Trustee.

President of Queens College, The City University of New York. Former
Executive Vice President, University of Massachusetts Systems from
1993-1995. From 1980 to 1993 Dr. Sessoms was associated with the U.S.
Department of State in various capacities including Deputy Chief of
Mission, U.S. Embassy, Mexico, Minister-Counselor for Political
Affairs, U.S. Embassy, Mexico and Counselor for Scientific and
Technological Affairs, U.S. Embassy, Paris, France. From 1974-1981 Dr.
Sessoms was an Assistant Professor of Physics at Harvard University.
From 1973-1975 Dr. Sessoms was a Scientific Associate at the European
Organization of Nuclear Research. He was a post-doctoral Research
Associate at Brookhaven National Laboratory from 1972-1973. His address
is 65-30 Kissena Boulevard, Flushing, New York 11367-1597.

*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

8
<PAGE>

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.

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 16 Argyle Place, 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 fiscal year ended November 30, 1997.
<TABLE>
<CAPTION>

Total
Pension or Compensation
Retirement From Company
Aggregate Benefits Accrued Estimated Annual And Fund
Compensation As Part of Fund Benefits Upon Complex Paid To
Name of Person, Position From Company Expenses Retirement 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 $3,000 $0 $0 $3,000

Anne Brown Farrell $2,000 $0 $0 $2,000

Allen Lee Sessoms $2,000 $0 $0 $2,000

Michael Minikes $0 $0 $0 $0
</TABLE>

9
<PAGE>

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 may
waive up to 100% of the advisory fee of the Portfolio. At any time, however, the
Adviser may rescind a voluntary fee waiver.

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.

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<PAGE>

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

CW Fund Distributors, Inc. (the "Underwriter") 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 an Underwriting Agreement. The
Underwriting Agreement will continue in effect for two years 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 the Underwriter are directed to the Trust
for acceptance and are not binding on the Trust until accepted by it. The
Underwriter is reimbursed for all costs and expenses incurred in this capacity
but receives no further compensation under the Underwriting Agreement and is
under no obligation to sell any specific amount of Portfolio shares. The
Underwriter is an affiliate of Countrywide Fund Services, Inc., the Trust's
transfer agent. See "Transfer Agent".

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<PAGE>

The Underwriting Agreement provides that the Underwriter 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
the Underwriter on 60 days' written notice. The Underwriting Agreement will
automatically terminate in the event of its assignment.

The Underwriter 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

Countrywide Fund Services, Inc. (the "Transfer Agent") 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 the Transfer Agent 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

12
<PAGE>

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.

The Transfer Agent 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. The Transfer Agent
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 the Transfer Agent with respect to assets of
those customers or clients invested in the Portfolio. The sub-transfer agents or
processing agents retained by the Transfer Agent may be affiliated persons of
the Transfer Agent.

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

13
<PAGE>

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 Countrywide Fund Services, Inc.'s
offices located at P. O. Box 5354, 312 Walnut Street, Cincinnati, Ohio 45202.

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 8:30 a.m. and 7:00 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, the Transfer Agent 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

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<PAGE>

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 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,

15
<PAGE>

futures or forward contracts) derived with respect to its business of investing
in such stock, securities or currencies (the "Income Requirement").

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

16
<PAGE>

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 or mid-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.

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<PAGE>

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.

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<PAGE>

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. DISTRIBUTION PLAN

The Trust has adopted a distribution plan for the Service Shares. The Plan
provides that the Portfolio may incur distribution expenses related to the sale
of Service Shares of up to 0.25% per annum of the Portfolio's average daily net
assets attributable to such Shares. The Plan provides that the Portfolio may
finance activities which are primarily intended to result in the sale of Service
Shares, including, but not limited to, advertising, printing of prospectuses and
reports for other than existing shareholders, preparation and distribution of
advertising material and sales literature and payments to dealers and
shareholder servicing agents who enter into agreements with the Trust or its
distributor.

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<PAGE>

In approving the Plan in accordance with the requirements of Rule 12b-1 under
the 1940 Act, the Trustees (including the Qualified Trustees, being Trustees who
are not "interested persons", as defined by the 1940 Act, of the Trust and have
no direct or indirect financial interest in the operation of the Plan or in any
agreements related to the Plan) considered various factors and determined that
there is a reasonable likelihood that the Plan will benefit the Service Shares
of the Portfolio and its shareholders. The Plan will continue in effect from
year-to-year if specifically approved annually (a) by the majority of such
Portfolio's applicable outstanding voting Shares or by the Board of Trustees and
(b) by the vote of a majority of the Qualified Trustees. While the Plan remains
in effect, the Trust's Principal Financial Officer shall prepare and furnish to
the Board of Trustees a written report setting forth the amounts spent by the
Portfolio under the Plan and the purposes for which such expenditures were made.
The Plan may not be amended to increase materially the amount to be spent for
distribution without shareholder approval and all material amendments to the
Plan must be approved by the Board of Trustees and by the Qualified Trustees
cast in person at a meeting called specifically for that purpose. While the Plan
is in effect, the selection and nomination of the Qualified Trustees shall be
made by those Qualified Trustees then in office.

Payments under the 12b-1 Plan are subject to the conditions imposed by Rule
12b-1 and Rule 18f-3 under the 1940 Act and the Rule 18f-3 Multiple Class Plan

which has been adopted by the Trustees for the benefit of the Trust. Rule 12b-1
defines distribution expenses to include the cost of "any activity which is
primarily intended to result in the sales of shares". Rule 12b-1 provides, among
other things, that the Trust may bear such expenses only pursuant to a plan
adopted in accordance with Rule 12b-1. In accordance with Rule 12b-1, the 12b-1
Plan provides that a report of the amounts expensed, and the purposes for which
such expenditures were incurred, will be made to the Trustees for their review
at least quarterly. The 12b-1 Plan provides that it may not be amended to
increase materially the costs which the related class of shares may bear for
distribution pursuant to the 12b-1 Plan without shareholder approval, and the
12b-1 Plan provides that any other type of material amendment must be approved
by a majority of the Trustees, and by a majority of the Trustees who are neither
"interested persons" (as defined in the 1940 Act) of the Trust nor have any
direct or indirect financial interest in the operation of the 12b-1 Plan being
amended or in any related agreements, by vote cast in person at a meeting called
for the purpose of considering such amendments. In addition, as long as the
12b-1 Plan is in effect, the nomination of the Trustees who are not interested
persons of the Trust (as defined in the 1940) must be committed to the
non-interested Trustees.

10. SHAREHOLDER SERVICES PLAN

The Trust has adopted a shareholder service plan under which it pays the Adviser
.10% of the average daily net assets attributable to the Institutional Shares
and 0.25% of the average daily net assets attributable to the Service 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

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<PAGE>

agent a fee based upon the average daily net assets of the Institutional Shares
and Service 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.

11. 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

Deloitte & Touche, 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(TM). 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

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<PAGE>

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.

<PAGE>

PART C
OTHER INFORMATION

Item 24. Financial Statements and Exhibits.

(a) Financial Statements.

Included in the Prospectus (Part A):

None

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

None

(b) Exhibits:

EX-99.B1. 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).*

EX-99.B2. 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).*

EX-99.B3. Inapplicable.

EX-99.B4. Inapplicable.

EX-99.B5. Revised Appendix A (filed
herewith) to Form of Investment
Advisory Agreement to be
between Registrant and
Milestone Capital Management
L.P.*

EX-99.B6. (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
Registrant's 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 Registrant's 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 as Exhibit 6(d) to
Post-Effective Amendment No. 3
dated February 23, 1996
("Post-Effective 3"), to
Registrant's Registration
Statement and incorporated
herein by reference).*

(e) Form of Underwriting Agreement
to be between Registrant and CW
Fund Distributors, Inc.
formerly known as Midwest Group
Financial Services, Inc. (filed
as Exhibit 6(e) to
Post-Effective Amendment No. 4
dated April 30, 1996,
("Post-Effective 4"), to
Registrant's Registration
Statement and incorporated by
reference).*

(f) Form of Selected Dealer
Agreement to be between CW Fund
Distributors, Inc. formerly

known as Midwest Group
Financial Services, Inc. and
selected dealers (filed as
Exhibit 6(f) to Post-Effective
4 and incorporated herein by
reference).*

EX-99.B7. Inapplicable.

EX-99.B8. (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 as
Exhibit 8(b) to Post-Effective
3 and incorporated herein by
reference).*

<PAGE>

EX-99.B9. (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) Revised Exhibit A (filed
herewith) to Form of
Administration Agreement to be
between Registrant and The Bank
of New York (filed as Exhibit
9(e) to Post-Effective 3 and
incorporated herein by
reference).*

(f) Form of Transfer Agency
Agreement to be between
Registrant and Fund/Plan
Services, Inc. (filed as
Exhibit 9(f) to Post-Effective
3 and incorporated herein by
reference).*

(g) Revised Schedule 1 (filed
herewith) to Form of Accounting
Agreement to be between
Registrant and The Bank of New
York (filed as Exhibit 9(g) to
Post-Effective 3 and
incorporated herein by
reference).*

(h) Revised Exhibit A (filed
herewith) to Form of Cash
Management Agreement to be
between Registrant and The Bank
of New York (filed as Exhibit
9(h) to Post-Effective 3 and
incorporated herein by
reference).*

(i) Revised Schedule A (filed
herewith) to Form of Transfer,
Dividend Disbursing,
Shareholder Service and Plan
Agency Agreement to be between
the Registrant and Countrywide
Fund Services, Inc. formerly
known as MGF Service Corp.
(filed as Exhibit 9(i) to
Post-Effective 4 and
incorporated herein by
reference).

<PAGE>

EX-99.B10. Opinion of Counsel, Kramer,
Levin, Naftalis & Frankel

(filed as Exhibit 10 to
Pre-effective 3 and
incorporated herein by
reference).*

EX-99.B11. (a) Inapplicable.

(b) Consent of Legal Counsel,
Kramer Levin Naftalis & Frankel
(filed herewith).

EX-99.B12. Inapplicable.

EX-99.B13. Investment Representation
letter (filed as Exhibit 13 to
Pre-effective 3 and
incorporated herein by
reference).*

EX-99.B14. Inapplicable.

EX-99.B15. Rule 12b-1 Plan for the Service
Shares of the Registrant (filed
herewith).

EX-99.B16. Form of Shareholder Service
Plan for the Institutional and
Service Shares of the
Registrant (filed herewith).

EX-99.B17. Rule 2a-7 (filed herewith).

EX-99.B18. Multiclass Plan pursuant to
Rule 18f-3 under the 1940 Act
(filed herewith).

Other Exhibits:

EX-99.B(A) Power of Attorney, Janet
Tiebout Hanson, Chairman and
President (filed as Exhibit A
to Pre-effective 2 and
incorporated herein by
reference).*

EX-99.B(B) Power of Attorney, Dort A.
Cameron III, Trustee (filed as
Exhibit B to Pre-effective 2
and incorporated herein by
reference).*

EX-99.B(C) Inapplicable.

EX-99.B(D) Power of Attorney, Karen S.
Cook, Trustee (filed as Exhibit
D to Pre-effective 3 and
incorporated herein by
reference).*

<PAGE>

EX-99.B(E) Power of Attorney, Anne Brown
Farrell, Trustee (filed as
Exhibit E to Pre-effective 3
and incorporated herein by
reference).*

EX-99.B(F) Power of Attorney, John D.
Gilliam, Trustee (filed as
Exhibit F to Pre-effective 3
and incorporated herein by
reference).*

* Previously filed.

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

None.

Item 26. 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,

<PAGE>

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
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 27. 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 Executive
Boulevard, 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 Executive Boulevard,
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.

Elizabeth C. Cameron, Limited Partner

Laboratory Assistant, New York Medical Hospital Medical
Genetics Laboratory. From May 1968 to June 1970, Ms.
Cameron was a banker with State Street Bank & Trust.

Sarah Brooke Cameron, Limited Partner

Film Maker, Brilliant Mistakes Production, 42 Bond St.,
6th Floor, New York, New York 10012. From November 1993
to July 1995, Ms. Cameron was a film maker for 2637
Cinema LLC, 7 East 85th Street, New York, New York
10028. From May 1993 to November 1993, Ms. Cameron was
a film

<PAGE>

maker for Waynes World, 555 Melrose Avenue, Hollywood,
California 90038. From September 1992 to March 1993,
Ms. Cameron was a film maker for CIC Video UK, London,
England.

Eliza Lindsay Cameron, Limited Partner

Student, Rippowam Cisqua School, Bedford, New York
10506.

Jeffrey R. Hanson, Chief Operating Officer

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

Michael Minikes, Trustee

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

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 28. Principal Underwriters.

(a) CW Fund Distributors, Inc. formerly known as Midwest
Group Financial Services, Inc., the Registrant's
underwriter, serves as underwriter to the Registrant.

(b) Not applicable.

<PAGE>

Item 29. 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 30. Management Services.

Inapplicable.

Item 31. 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.

(iii) The Registrant hereby also undertakes to file a
post-effective amendment, using financial statements which
need not be certified, within four to six months from the
effective date of registrant's 1993 Act registration
statement.

<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(a)(2) under the Securities Act of 1933 and has duly caused this
amendment to its Registration Statement on Form N-1A 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 15th day of April, 1998.

THE MILESTONE FUNDS

By: /s/ Janet Tiebout Hanson
------------------------
Janet Tiebout Hanson, President

Pursuant to the requirements of the Securities Act of 1933, this
Post-Effective Amendment to the Registrant's Registration Statement has been
signed below by the following persons on the 15th day of April, 1998.

Name Title Date
---- ----- ----

/s/ Dort A. Cameron III Trustee 4/15/98
- ------------------------------
(Dort A. Cameron III)

/s/ Michael Minikes Trustee 4/15/98
- ------------------------------
(Michael Minikes)

/s/ Karen S. Cook Trustee 4/15/98
- ------------------------------
(Karen S. Cook)

/s/ Anne Brown Farrell Trustee 4/15/98
- ------------------------------
(Anne Brown Farrell)

/s/ John D. Gilliam Trustee 4/15/98
- ------------------------------
(John D. Gilliam)

/s/ Allen Lee Sessoms Trustee 4/15/98
- ------------------------------
(Allen Lee Sessoms)

/s/ Jeffrey R. Hanson Secretary 4/15/98
- ------------------------------

(Jeffrey R. Hanson)

<PAGE>

Index to Exhibits

Exhibit

EX-99.B5. Revised Schedule A to Investment Advisory Agreement

EX-99.B9(e) Revised Exhibit A to Administration Agreement

EX-99.B9(g) Revised Schedule 1 to Accounting Agreement

EX-99.B9(h) Revised Exhibit A to Cash Management Agreement

EX-99.B9(i) Revised Schedule A to Transfer, Dividend Disbursing,
Shareholder Service and Plan Agency Agreement

EX-99.B11(b) Consent of Legal Counsel, Kramer, Levin, Naftalis & Frankel.

EX-99.B15 Distribution Plan - Service Shares.

EX-99.B16 Form of Shareholder Service Plans.

EX-99.B17 Rule 2a-7.

EX-99.B18 Multiclass Plan pursuant to Rule 18f-3 under the 1940 Act.

<PAGE>

APPENDIX A