MILESTONE FUNDS, 485APOS, 1999-02-01

MILESTONE FUNDS
485APOS, 1999-02-01

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<PAGE>

As filed with the Securities and Exchange Commission on February 1, 1999

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

SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

FORM N-1A

REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
Post-Effective Amendment No. 9

and

REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT OF 1940
Amendment No. 12

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

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

Laura S. Melman
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 LLP
919 Third Avenue
New York, New York 10019

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

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)
X 60 days after filing pursuant to Rule 485, paragraph (a)(i)
___ on [ date ] pursuant to Rule 485, paragraph (a)(i)
___ 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

<PAGE>

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

PART A

<TABLE>
<CAPTION>
Form N-1A Location in Prospectus
Item No. (Caption)
- ----------------------- -------------------------------------------

<S> <C> <C>
Item 1. Front and Back Cover Pages Front Cover Page; Back Cover Page

Item 2. Risk/Return Summary: Investments, Risks and Risk/Return Summary - Investment
Performance Objective; Investment Strategies;
Principal Risks; Bar Chart and
Performance Table

Item 3. Risk/Return Summary: Fee Table Risk/Return Summary - Fee Table

Item 4. Investment Objectives, Principal Investment Investment Objective, Principal
Strategies, and Related Risks Strategies and Related Risks

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

Item 6. Management, Operation and Capital Structure Management of the Portfolio

Item 7. Shareholder Information Other Information - Determination of Net
Asset Value; How to Invest in the
Portfolio; How to Redeem Shares of the
Portfolio; Dividends, Distributions and
Tax Matters

Item 8. Distribution Arrangements Other Information - Distribution Plan;
Shareholder Services

Item 9. Financial Highlights Information Financial Highlights
</TABLE>

<PAGE>

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

PART B

<TABLE>
<CAPTION>
Form N-1A Location in Statement
of Additional Information
Item No. (Caption)
- ----------------------- -------------------------------------------

<S> <C> <C>
Item 10. Cover Page and Table of Contents Cover Page

Item 11. Fund History General Information; Other Information -
the Trust and its Shareholders

Item 12. Description of the Fund and its Investments and Investment Policies; Investment
Risks Limitations

Item 13. Management of the Fund Management of the Portfolio

Item 14. Control Persons and Principal Holders of Management of the Portfolio; Other
Securities Information - Ownership of Shares of the
Portfolio

Item 15. Investment Advisory and Other Services Management of the Portfolio

Item 16. Brokerage Allocation and Other Practices Portfolio Transactions

Item 17. Capital Stock and Other Securities Determination of Net Asset Value

Item 18. Purchase, Redemption and Pricing of Shares Determination of Net Asset Value;
Additional Purchase and Redemption
Information

Item 19. Taxation of the Fund Taxation

Item 20. Underwriters Management of the Portfolio

Item 21. Calculation of Performance Data Advertising

Item 22. Financial Statements Other Information
</TABLE>

<PAGE>

The Milestone Funds
Treasury Obligations Portfolio
PREMIUM SHARES

INVESTMENT ADVISER
Milestone Capital Management, L.P.

PROSPECTUS
MARCH 30, 1999

This Prospectus offers Premium Shares of the Treasury Obligations Portfolio, a
diversified, no-load money market portfolio of The Milestone Funds. 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.

The Portfolio also offers Institutional Shares, Investor Shares, Financial
Shares and Service Shares by separate prospectus which are subject to different
expenses that affect their performance. For further information about these
shares call (800) 941-MILE.

This Prospectus provides you with information about the Portfolio that you
should know before investing. Please read it carefully and keep it for future
reference.

THE SECURITIES AND EXCHANGE COMMISSION HAS NOT APPROVED THE
ABOVE LISTED FUND. THE SECURITIES AND EXCHANGE COMMISSION
ALSO HAS NOT DETERMINED WHETHER THIS PROSPECTUS IS ACCURATE OR
COMPLETE. ANY PERSON WHO TELLS YOU THAT THE SECURITIES AND
EXCHANGE COMMISSION HAS MADE SUCH AN APPROVAL OR
DETERMINATION IS COMMITTING A CRIME.
<PAGE>

TABLE OF CONTENTS

Page
----
Risk/Return Summary....................................................... 3
Investment Objective, Principal Strategies and Related Risks.............. 6
Management of the Portfolio............................................... 8
How to Invest in the Portfolio............................................ 9
How to Redeem Shares of the Portfolio..................................... 11
Dividends, Distributions and Tax Matters.................................. 12
Other Information......................................................... 14
Financial Highlights...................................................... 15

2
<PAGE>

RISK/RETURN SUMMARY

Investment Objective
The Treasury Obligations Portfolio is a money market fund that seeks to provide
its shareholders with the maximum current income that is consistent with the
preservation of capital and the maintenance of liquidity.

Investment Strategies
The Portfolio invests only in the following money market instruments:

o short-term obligations of the U.S. Treasury; and
o repurchase agreements fully collateralized by obligations of
the U.S. Treasury.

Principal Risks
All money market instruments, including U.S. Treasury Obligations, may change in
value in response to changes in interest rates. A significant increase in
interest rates could cause the value of your investment to decline.

An investment in the Portfolio is not insured or guaranteed by the Federal
Deposit Insurance Corporation or any other government agency. Although the
Portfolio seeks to preserve the value of your investment at $1.00 per share, it
is possible to lose money by investing in the Portfolio.

Bar Chart and Performance Table
The following chart demonstrates the risks of investing in the Portfolio by
showing changes in the Portfolio's performance from December 31, 1997 through
December 31, 1998. Past performance is not an indication of future performance.

The annual return of the Premium Shares of the Portfolio for 1998 was 5.03%

During this period, the best performance for a quarter was 1.26% (for the
quarter ended September 30, 1998). The worst performance was 1.12% (for the
quarter ended December 31, 1998).

3
<PAGE>

Fee Table

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

Shareholder Fees (fees paid directly from your investment):

Maximum Sales Charge (Load) Imposed on Purchases
(as a percentage of offering price)............................ None
Maximum Deferred Sales Charge (Load)............................. None
Maximum Sales Charge (Load) Imposed on Reinvested Dividends...... None
Redemption Fee................................................... None
Exchange Fee..................................................... None
Maximum Account Fee.............................................. None

Annual Portfolio Operating Expenses (expenses that are deducted from Portfolio
assets):

Advisory Fees.................................................. 0.10%
Rule 12b-1 Fees................................................ 0.35%*
Shareholder Servicing Fees..................................... 0.25%
Other Expenses................................................. 0.05%
----
Total Annual Fund Operating Expenses 0.75%*
====
Expenses Reimbursed to Fund 0.15%*
Net Annual Fund Operating Expenses 0.60%
(expenses actually incurred by the Fund)

*Under the Rule 12b-1 Plan, the Premium Shares may incur distribution
expenses of up to 0.35% of the average daily net assets attributable to
such shares. For the current fiscal year, the Adviser has contractually
agreed to waive up to 100% of the 12b-1 fees in order to limit the
total annual expenses of the Premium Shares to 0.65%.

Example

This example is to help you compare the cost of investing in Premium Shares of
the Portfolio with the cost of investing in other mutual funds.

The Example assumes that:
o you invest $10,000 in the Portfolio for the time periods indicated;
o your investment has a 5% return each year; and
o the Portfolio's operating expenses remain the same.

4
<PAGE>

Although your actual costs may be higher or lower, under these assumptions, your
costs would be:

1 Year* 3 Years* 5 Years* 10 Years*
$61 $225 $402 $916

* Your costs of investing in the Portfolio for one year reflect the
amount you would pay after the Adviser reimburses the Portfolio for some or all
of the Portfolio's total expenses. Your costs of investing in the Portfolio for
three, five and 10 years reflect the amount you would pay if the Adviser did not
reimburse the Portfolio for some or all of the Portfolio's total expenses. If
the Adviser continues to limit the Portfolio's total expenses for three, five or
10 years as we are doing for the first year, your actual costs would be lower
than the amounts shown. The Adviser is currently under no obligation to limit
total expenses for any period beyond the current fiscal year.

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.

5
<PAGE>

INVESTMENT OBJECTIVE, PRINCIPAL STRATEGIES AND RELATED RISKS

Investment Objective

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

Principal Investment Strategies

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

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

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

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

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.

The Portfolio will maintain an average maturity, computed on a dollar-weighted
basis, of 90 days or less.

6
<PAGE>

Additional Investment Strategies

The Portfolio may purchase U.S. Treasury obligations on a when-issued or forward
commitment basis. The Portfolio may also invest in illiquid securities and other
investment companies. For temporary or emergency purposes, the Portfolio may
borrow up to 33 1/3% of its total assets. Each of these investment techniques
and their related risks are described in detail in the Statement of Additional
Information.

Temporary Defensive Positions

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

Risk Considerations

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

7
<PAGE>

MANAGEMENT OF THE PORTFOLIO

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 Trust's executive officers, may be found in the Statement of Additional
Information under the heading "Management of the Portfolio - Trustees and
Officers".

The Adviser

Milestone Capital Management, L.P. (the "Adviser") serves as investment adviser
to the Portfolio pursuant to an investment advisory agreement with the Trust.
Subject to the general control of the Board, the Adviser continually manages the
Portfolio, including the purchase, retention and disposition of its securities
and other assets. The Adviser is a limited partnership organized under the laws
of the State of New York on August 1, 1994, and is a registered investment
adviser under the Investment Advisers Act of 1940. The General Partner of the
Adviser is Milestone Capital Management Corp., a New York corporation.

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

Marc H. Pfeffer is Chief Investment Officer of the Adviser. He is primarily
responsible for the day-to-day management of the Treasury Obligations Portfolio
and heads the Adviser's portfolio management and research team. Before joining
the Adviser, Mr. Pfeffer was with Goldman, Sachs & Co. for eight years. 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.

8
<PAGE>

For its services, the Adviser may receive 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. Should the expenses of the Portfolio (including the fees of the Adviser
but excluding interest, taxes, brokerage commissions, litigation and
indemnification expenses and other extraordinary expenses) for any fiscal year
exceed the limits prescribed by any state in which the Portfolio's shares are
qualified for sale, the Adviser will reduce its fee or reimburse expenses by the
amount of such excess.

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.

HOW TO INVEST IN THE PORTFOLIO

Purchasing Shares. You may purchase shares of the Portfolio 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, Unified Fund Services, Inc., at (800) 363-7660. 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

9
<PAGE>

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.

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, Unified 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.)

10
<PAGE>

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

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

You may open an account when placing an initial order by telephone, provided you
thereafter submit 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.

Minimum Investment Required. The minimum initial investment in Premium Shares of
the Portfolio is $100,000. 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. You may redeem your 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. You may redeem your shares by telephoning the Transfer Agent,
Unified Fund Services, Inc., at (800) 363-7660. You must provide the Transfer
Agent with the your 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.

11
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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 Unified Fund Services, Inc., 431 North Pennsylvania Street,
Indianapolis, Indiana 46204-1806. Written requests must be in proper form. You
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.

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

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

Due to the cost to the Trust of maintaining smaller accounts, the Trust reserves
the right to redeem, upon 60 days written notice, all shares in an account with
an aggregate net asset value of less than $10,000 unless an investment is made
to restore the minimum value.

DIVIDENDS, DISTRIBUTIONS AND TAX MATTERS

12
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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 will be at least once per year.
The Trust does not anticipate that the Portfolio will realize any long-term
capital gains, but should they occur, they also will be distributed at least
once every 12 months.

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

The Portfolio is required by federal law to withhold 31% of reportable payments
(which may include dividends and capital gain distributions) paid to a
non-corporate shareholder unless that shareholder certifies in writing that the
social security or other taxpayer 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 more detailed discussion. Because other federal, state or
local tax considerations may apply, investors are urged to consult their tax
advisors.

13
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OTHER INFORMATION

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.

Distribution Plan

The Trust has adopted a distribution plan for Premium Shares of the Portfolio.
Pursuant to this Plan, the Portfolio may incur distribution expenses related to
the sale of Premium Shares of up to 0.35% per year of the average daily net
assets of the Premium Shares.

Shareholder Services

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

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.

14
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FINANCIAL HIGHLIGHTS

The financial highlights table is intended to help you understand the
Portfolio's financial performance since the commencement of its operations on
May 20, 1997. The total returns in the table represent the rate that an investor
would have earned (or lost) on an investment in the Portfolio (assuming
reinvestment of all dividends and distributions). This information has been
audited by Deloitte & Touche, LLP, independent certified public accountants,
whose report, along with the Portfolio's financial statements, are included in
the Statement of Additional Information, which is available upon request.

<TABLE>
<CAPTION>
For the period
For the Year May 20, 1997*
ended through
November 30, 1998 November 30, 1997
----------------- -----------------
<S> <C> <C>
Beginning net asset value per share $ 1.00 $ 1.00
-------- --------
Net investment income 0.049 0.027
Dividends from net investment income (0.049) (0.027)
-------- --------
Ending net asset value per share $ 1.00 $ 1.00
======== ========
Total return 5.03% 5.06%(a)

Net assets at the end of period (000's omitted) $85,937 $84,239
Ratios to average net assets:
Expenses 0.60% 0.60%(a)
Net investment income 4.92% 5.01%(a)
</TABLE>

(a) Annualized
* Commencement of operations

15
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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
Unified Management Corp. / Unified Fund Services, Inc.
431 North Pennsylvania Street
Indianapolis, Indiana 46204-1806

Legal Counsel
Kramer Levin Naftalis & Frankel LLP
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

[back cover page]
Statement of Additional Information. The Statement of Additional Information
provides a more complete discussion about the Portfolio and is incorporated by
reference into this prospectus, which means that it considered a part of this
prospectus.

16
<PAGE>

Annual and Semi-Annual Reports. The annual and semi-annual reports to
shareholders contain additional information about the Portfolio's investments.

To Review or Obtain this Information: The Statement of Additional Information
and annual and semi-annual reports are available without charge upon your
request by writing The Milestone Funds, One Executive Boulevard, Yonkers, New
York 10701, or by calling (800) 941-MILE (6453). This information may be
reviewed at the Public Reference Room of the Securities and Exchange Commission
or by visiting the SEC's World Wide Website at http://www.sec.gov. In addition,
this information may be obtained for a fee by writing or calling the Public
Reference Room of the Securities and Exchange Commission, Washington, D.C.
20549-6009, telephone (800) SEC-0330.

Investment Company Act file no. 811-8620

<PAGE>

The Milestone Funds
Treasury Obligations Portfolio
INSTITUTIONAL SHARES

INVESTMENT ADVISER
Milestone Capital Management, L.P.

PROSPECTUS
MARCH 30, 1999

This Prospectus offers Institutional Shares of the Treasury Obligations
Portfolio, a diversified, no-load money market portfolio of The Milestone Funds.
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.

The Portfolio also offers Premium Shares, Investor Shares, Financial Shares and
Service Shares by separate prospectus which are subject to different expenses
that affect their performance. For further information about these other classes
of shares call (800) 941-MILE.

This Prospectus provides you with information about the Portfolio that you
should know before investing. Please read it carefully and keep it for future
reference.

THE SECURITIES AND EXCHANGE COMMISSION HAS NOT APPROVED
THE ABOVE LISTED FUND. THE SECURITIES AND EXCHANGE COMMISSION
ALSO HAS NOT DETERMINED WHETHER THIS PROSPECTUS IS ACCURATE OR
COMPLETE. ANY PERSON WHO TELLS YOU THAT THE SECURITIES AND
EXCHANGE COMMISSION HAS MADE SUCH AN APPROVAL OR
DETERMINATION IS COMMITTING A CRIME.

<PAGE>

TABLE OF CONTENTS

Page
----
Risk/Return Summary....................................................... 3
Investment Objective, Principal Strategies and Related Risks.............. 6
Management of the Portfolio............................................... 8
How to Invest in the Portfolio............................................ 9
How to Redeem Shares of the Portfolio..................................... 11
Dividends, Distributions and Tax Matters.................................. 12
Other Information......................................................... 13
Financial Highlights...................................................... 14

<PAGE>

RISK/RETURN SUMMARY

Investment Strategies
The Portfolio invests only in the following money market instruments:

o short-term obligations of the U.S. Treasury; and
o repurchase agreements fully collateralized by obligations of
the U.S. Treasury.

Bar Chart and Performance Table
The following chart demonstrates the risks of investing the Portfolio by showing
changes in the Portfolio's performance from December 31, 1996 through December
31, 1998. Past performance is not an indication of future performance.

The annual returns of the Institutional Shares of the Portfolio for 1996, 1997
and 1998 were 5.37%, 5.46% and 5.45%, respectively.

During this period, the best performance for a quarter was 1.36% (for the
quarter ended September 30, 1998). The worst performance was 1.23% (for the
quarter ended December 31, 1998).

<PAGE>

Fee Table

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

Shareholder Fees (fees paid directly from your investment):

<TABLE>
<S> <C>
Maximum Sales Charge (Load) Imposed on Purchases
(as a percentage of offering price).......................................... None
Maximum Deferred Sales Charge (Load)........................................... None
Maximum Sales Charge (Load) Imposed on Reinvested Dividends.................... None
Redemption Fee................................................................. None
Exchange Fee................................................................... None
Maximum Account Fee............................................................ None
</TABLE>

Annual Portfolio Operating Expenses (expenses that are deducted from Portfolio
assets):

<TABLE>
<S> <C>
Advisory Fees.................................................................. 0.10%
Rule 12b-1 Fees................................................................ None
Shareholder Servicing Fees..................................................... 0.10%*
Other Expenses................................................................. 0.05%
----
Total Annual Fund Operating Expenses 0.25%*
====
Expenses Reimbursed to Fund 0.05%*
Net Annual Fund Operating Expenses 0.20%
(expenses actually incurred by the Fund)
</TABLE>

* Under the Shareholder Servicing Plan, the Institutional Shares may
incur expenses of up to .10% of the average daily net assets
attributable to such shares. For the current fiscal year, the Adviser
has contractually agreed to waive up to 100% of the shareholder
servicing fees in order to limit the total annual expenses of the
Institutional Shares to 0.20%.

Example

This example is to help you compare the cost of investing in Institutional
Shares of the Portfolio with the cost of investing in other mutual funds.

The Example assumes that:
o you invest $10,000 in the Portfolio for the time periods indicated;
o your investment has a 5% return each year; and o the Portfolio's
operating expenses remain the same.

<PAGE>

Although your actual costs may be higher or lower, under these assumptions, your
costs would be:

1 Year* 3 Years* 5 Years* 10 Years*
$20 $75 $136 $313

* Your costs of investing in the Portfolio for one year reflect the
amount you would pay after the Adviser reimburses the Portfolio for some or all
of the Portfolio's total expenses. Your costs of investing in the Portfolio for
three, five and 10 years reflect the amount you would pay if the Adviser did not
reimburse the Portfolio for some or all of the Portfolio's total expenses. If
the Adviser continues to limit the Portfolio's total expenses for three, five or
10 years as we are doing for the first year, your actual costs for those periods
would be lower than the amounts shown. The Adviser is currently under no
obligation to limit total expenses for any period beyond the current fiscal
year.

5
<PAGE>

INVESTMENT OBJECTIVE, PRINCIPAL STRATEGIES AND RELATED RISKS

Investment Objective

Principal Investment Strategies

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

The Portfolio will maintain an average maturity, computed on a dollar-weighted
basis, of 90 days or less.

<PAGE>

Additional Investment Strategies

Temporary Defensive Positions

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

Risk Considerations

The Portfolio is also subject to the risk that the Portfolio or its service
providers could be disrupted by problems in their computer systems related to
the Year 2000.

<PAGE>

MANAGEMENT OF THE PORTFOLIO

Board Of Trustees

The business of The Milestone Funds (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 Trust's executive officers, may be found in the
Statement of Additional Information under the heading "Management of the
Portfolio - Trustees and Officers".

The Adviser

<PAGE>

HOW TO INVEST IN THE PORTFOLIO

<PAGE>

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

A. Telephone the Transfer Agent, Unified 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 # 8900276541
FBO Milestone Funds Treasury Obligations Portfolio
Operating Account
Ref: Shareholder Name and Account Number

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

<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 Institutional
Shares of 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

<PAGE>

<TABLE>
<CAPTION>
Firm Indication of Redemption Completed Redemption
Request and Approximate Size of Redemption ProceedS
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.

DIVIDENDS, DISTRIBUTIONS AND TAX MATTERS

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.

12
<PAGE>

OTHER INFORMATION

13
<PAGE>

Shareholder Services

The Trust has adopted a shareholder service plan under which it pays the Adviser
0.10% of the average daily net assets of the Institutional Shares such that the
Trust may obtain the services of the Adviser and other qualified financial
institutions to act as shareholder servicing agents for their customers. Under
this Plan, the Trust has authorized the Adviser to enter into agreements
pursuant to which the shareholder servicing agent performs certain shareholder
services. For these services, the Adviser pays the shareholder servicing agent a
fee based upon the average daily net assets of the Institutional Shares owned by
investors for which the shareholder servicing agent maintains a servicing
relationship.

FINANCIAL HIGHLIGHTS

The financial highlights table is intended to help you understand the
Portfolio's financial performance since the commencement of its operations on
June 20, 1995. The total returns in the table represent the rate that an
investor would have earned (or lost) on an investment in the Portfolio (assuming
reinvestment of all dividends and distributions). This information has been
audited by Deloitte & Touche, LLP, independent certified public accountants, for
the years ended November 30, 1997 and November 30, 1998 and by other independent
auditors for the year ended November 30, 1996 and for the period June 20, 1995
through November 30, 1995. The financial statements and independent accountant's
report thereon of the Portfolio's financial statements, are included in the
Statement of Additional Information, which is available upon request.

14
<PAGE>

<TABLE>
<CAPTION>
For the period
For the year For the year For the year June 20, 1995*
ended ended ended through
November 30, 1998 November 30, 1997 November 30, 1996 November 30, 1995
----------------- ----------------- ----------------- -----------------

<S> <C> <C> <C> <C>
Beginning net asset value per share $ 1.00 $ 1.00 $ 1.00 $ 1.00
------- ------ ------ -------

Net investment income 0.053 0.053 0.052 0.026

Dividends from net investment income (0.053) (0.053) (0.052) (0.026)
------- ------- ------- -------

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

Total return 5.45% 5.46% 5.37% 5.76%(a)

Ratios/supplemental data

Net assets at the end of
period (000's omitted) $1,686,835 1,183,905 $897,173 $229,159

Ratios to average net assets:
Expenses (b) 0.20% 0.20% 0.20% 0.20%(a)
Net investment income 5.30% 5.32% 5.21% 5.69%(a)
</TABLE>

(a) Annualized
(b) Net of advisory, shareholder servicing, and administration fees waived
and expenses reimbursed of less than 0.01%, 0.01%, 0.02% and 0.17% for
each of the respective periods presented.
* Commencement of operations

15
<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
Unified Management Corp. / Unified Fund Services, Inc.
431 North Pennsylvania Street
Indianapolis, Indiana 46204-1806

Legal Counsel
Kramer Levin Naftalis & Frankel LLP
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

[back cover page]
Statement of Additional Information. The Statement of Additional
Information provides a more complete discussion about the Portfolio and
is incorporated by reference into this prospectus, which means that it
considered a part of this prospectus.

Annual and Semi-Annual Reports. The annual and semi-annual reports to
shareholders contain additional information about the Portfolio's investments.

To Review or Obtain this Information: The Statement of Additional
Information and annual and semi-annual reports are available without
charge upon your request by writing The Milestone Funds, One Executive
Boulevard, Yonkers, New York 10701, or by calling (800) 941-MILE
(6453). This information may be reviewed at the Public Reference Room
of the Securities and Exchange Commission or by visiting the SEC's
World Wide Website at http://www.sec.gov. In addition, this information
may be obtained for a fee by writing or calling the Public Reference
Room of the Securities and Exchange Commission, Washington, D.C.
20549-6009, telephone (800) SEC-0330.

Investment Company Act file no. 811-8620

<PAGE>

The Milestone Funds
Treasury Obligations Portfolio
FINANCIAL SHARES

INVESTMENT ADVISER
Milestone Capital Management, L.P.

PROSPECTUS
MARCH 30, 1999

This Prospectus offers Financial Shares of the Treasury Obligations Portfolio, a
diversified, no-load money market portfolio of The Milestone Funds. 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.

The Portfolio also offers Premium Shares, Institutional Shares, Investor Shares
and Service Shares by separate prospectus which are subject to different
expenses that affect their performance. For further information about these
other classes of shares call (800) 941-MILE.

This Prospectus provides you with information about the Portfolio that you
should know before investing. Please read it carefully and keep it for future
reference.

<PAGE>

TABLE OF CONTENTS

Page
----
Risk/Return Summary........................................................ 3
Investment Objective, Principal Strategies and Related Risks............... 5
Management of the Portfolio................................................ 7
How to Invest in the Portfolio............................................. 8
How to Redeem Shares of the Portfolio...................................... 10
Dividends, Distributions and Tax Matters................................... 11
Other Information.......................................................... 13
Financial Highlights....................................................... 14

<PAGE>

RISK/RETURN SUMMARY

Investment Strategies
The Portfolio invests only in the following money market instruments:

o short-term obligations of the U.S. Treasury; and
o repurchase agreements fully collateralized by
obligations of the U.S. Treasury.

Bar Chart and Performance Table
The following chart demonstrates the risks of investing the Portfolio by showing
changes in the Portfolio's performance from December 31, 1997 through December
31, 1998. Past performance is not an indication of future performance.

The annual return of the Financial Shares of the Portfolio for 1998 was 5.50%

During this period, the best performance for a quarter was 1.38% (for the
quarter ended September 30, 1998). The worst performance was 1.24% (for the
quarter ended December 31, 1998).

<PAGE>

Fee Table

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

Shareholder Fees (fees paid directly from your investment):

Maximum Sales Charge (Load) Imposed on Purchases................ None
(as a percentage of offering price)........................... None
Maximum Deferred Sales Charge (Load)............................ None
Maximum Sales Charge (Load) Imposed on Reinvested Dividends..... None
Redemption Fee.................................................. None
Exchange Fee.................................................... None

Annual Portfolio Operating Expenses (expenses that are deducted from Portfolio
assets):

Advisory Fees................................................... 0.10%
Rule 12b-1 Fees................................................. None
Shareholder Servicing Fees...................................... None
Other Expenses.................................................. 0.05%
----
Total Annual Fund Operating Expenses 0.15%
====

Example

This example is to help you compare the cost of investing in Financial Shares of
the Portfolio with the cost of investing in other mutual funds.

The Example assumes that:
o you invest $10,000 in the Portfolio for the time periods indicated;
o your investment has a 5% return each year; and
o the Portfolio's operating expenses remain the same.

Although your actual costs may be higher or lower, under these assumptions, your
costs would be:

1 Year 3 Years 5 Years 10 Years
$15 $48 $85 $192

<PAGE>

INVESTMENT OBJECTIVE, PRINCIPAL STRATEGIES AND RELATED RISKS

Investment Objective

Principal Investment Strategies

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

The Portfolio will maintain an average maturity, computed on a dollar-weighted
basis, of 90 days or less.

<PAGE>

Additional Investment Strategies

Temporary Defensive Positions

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

Risk Considerations

The Portfolio is also subject to the risk that the Portfolio or its service
providers could be disrupted by problems in their computer systems related to
the Year 2000.

<PAGE>

MANAGEMENT OF THE PORTFOLIO

Board Of Trustees

The Adviser

<PAGE>

HOW TO INVEST IN THE PORTFOLIO

<PAGE>

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

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

A. Telephone the Transfer Agent, Unified 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 # 8900276541 FBO
Milestone Funds Treasury Obligations Portfolio
Operating Account
Ref: Shareholder Name and Account Number

<PAGE>

You may open an account when placing an initial order by telephone, provided you
thereafter submit 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.

Minimum Investment Required. The minimum initial investment in Financial Shares
of the Portfolio is $20,000,000. There is no minimum subsequent investment. The
Trust reserves the right to waive the minimum investment requirement.

HOW TO REDEEM SHARES OF THE PORTFOLIO

Written Requests. Redemption requests may be made by writing to The Milestone
Funds, c/o Unified Fund Services, Inc., 431 North Pennsylvania Street,
Indianapolis, Indiana 46204-1806.

<PAGE>

Written requests must be in proper form. You 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.

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

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

Due to the cost to the Trust of maintaining smaller accounts, the Trust reserves
the right to redeem, upon 60 days written notice, all shares in an account with
an aggregate net asset value of less than $2,000,000 unless an investment is
made to restore the minimum value.

DIVIDENDS, DISTRIBUTIONS AND TAX MATTERS

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

<PAGE>

shareholders, which will be at least once per year. The Trust does not
anticipate that the Portfolio will realize any long-term capital gains, but
should they occur, they also will be distributed at least once every 12 months.

<PAGE>

OTHER INFORMATION

<PAGE>

FINANCIAL HIGHLIGHTS

The financial highlights table is intended to help you understand the
Portfolio's financial performance since the commencement of its operations on
March 13, 1997. The total returns in the table represent the rate that an
investor would have earned (or lost) on an investment in the Portfolio (assuming
reinvestment of all dividends and distributions). This information has been
audited by Deloitte & Touche, LLP, independent certified public accountants,
whose report, along with the Portfolio's financial statements, are included in
the Statement of Additional Information, which is available upon request.

<TABLE>
<CAPTION>
For the period
For the Year March 13, 1997*
Ended through
November 30, 1998 November 30 1997
----------------- ----------------
<S> <C> <C>
Beginning net asset value per share $ 1.00 $ 1.00
-------- -------
Net investment income 0.054 0.038
Dividends from net investment income (0.054) (0.038)
-------- -------
Ending net asset value per share $ 1.00 $ 1.00
======== =======
Total return 5.50% 5.52%(a)
Net assets at the end of period (000's omitted) $314,556 $90,465
Ratios to average net assets:
Expenses 0.15% 0.14%(a)
Net investment income 5.28% 5.45%(a)
</TABLE>

(a) Annualized
* Commencement of operations

<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
Unified Management Corp. / Unified Fund Services, Inc.
431 North Pennsylvania Street
Indianapolis, Indiana 46204-1806

Legal Counsel
Kramer Levin Naftalis & Frankel LLP
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

Annual and Semi-Annual Reports. The annual and semi-annual reports to
shareholders contain additional information about the Portfolio's investments.

<PAGE>

Investment Company Act file no. 811-8620

<PAGE>

The Milestone Funds
Treasury Obligations Portfolio
INVESTOR SHARES

INVESTMENT ADVISER
Milestone Capital Management, L.P.

PROSPECTUS
MARCH 30, 1999

This Prospectus offers Investor Shares of the Treasury Obligations Portfolio, a
diversified, no-load money market portfolio of The Milestone Funds. 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.

The Portfolio also offers Premium Shares, Institutional Shares, Financial Shares
and Service Shares by separate prospectus which are subject to different
expenses that affect their performance. For further information about these
other classes of shares call (800) 941-MILE.

This Prospectus provides you with information about the Portfolio that you
should know before investing. Please read it carefully and keep it for future
reference.

<PAGE>

TABLE OF CONTENTS

Page
----
Risk/Return Summary...................................................... 3
Investment Objective, Principal Strategies and Related Risks............. 5
Management of the Portfolio.............................................. 7
How to Invest in the Portfolio........................................... 8
How to Redeem Shares of the Portfolio.................................... 10
Dividends, Distributions and Tax Matters................................. 11
Other Information........................................................ 12
Financial Highlights..................................................... 13

2
<PAGE>

RISK/RETURN SUMMARY

Investment Strategies
The Portfolio invests only in the following money market instruments:

o short-term obligations of the U.S. Treasury; and
o repurchase agreements fully collateralized by obligations of
the U.S. Treasury.

The annual returns of the Investor Shares of the Portfolio for 1996, 1997 and
1998 were 5.11%, 5.23% and 5.23%, respectively.

During this period, the best performance for a quarter was 1.31% (for the
quarter ended September 30, 1998). The worst performance was 1.18% (for the
quarter ended December 31, 1998).

3
<PAGE>

Fee Table

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

Shareholder Fees (fees paid directly from your investment):

Annual Portfolio Operating Expenses (expenses that are deducted from Portfolio
assets):

<TABLE>
<S> <C>
Advisory Fees.................................................................. 0.10%
Rule 12b-1 Fees................................................................ None
Shareholder Servicing Fees..................................................... 0.25%
Other Expenses................................................................. 0.05%
-----
Total Annual Fund Operating Expenses 0.40%
=====
</TABLE>

Example

This example is to help you compare the cost of investing in Investor Shares of
the Portfolio with the cost of investing in other mutual funds.

The Example assumes that:
o you invest $10,000 in the Portfolio for the time periods indicated;
o your investment has a 5% return each year; and o the Portfolio's
operating expenses remain the same.

Although your actual costs may be higher or lower, under these assumptions, your
costs would be:

1 Year 3 Years 5 Years 10 Years
$41 $128 $224 $505

4
<PAGE>

INVESTMENT OBJECTIVE, PRINCIPAL STRATEGIES AND RELATED RISKS

Investment Objective

Principal Investment Strategies

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

The Portfolio will maintain an average maturity, computed on a dollar-weighted
basis, of 90 days or less.

5
<PAGE>

Additional Investment Strategies

Temporary Defensive Positions

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

Risk Considerations

The Portfolio is also subject to the risk that the Portfolio or its service
providers could be disrupted by problems in their computer systems related to
the Year 2000.

6
<PAGE>

MANAGEMENT OF THE PORTFOLIO

Board Of Trustees

The Adviser

7
<PAGE>

HOW TO INVEST IN THE PORTFOLIO

8
<PAGE>

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

A. Telephone the Transfer Agent, Unified 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 unds.

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

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

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

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

9
<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 Investor Shares
of the Portfolio is $1,000,000. There is no minimum subsequent investment. The
Trust reserves the right to waive the minimum investment requirement.

HOW TO REDEEM SHARES OF THE PORTFOLIO

10
<PAGE>

<TABLE>
<CAPTION>
Firm Indication of Redemption Completed Redemption
Request and Approximate Size of Redemption Proceeds
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 $100,000 unless an investment is made
to restore the minimum value.

DIVIDENDS, DISTRIBUTIONS AND TAX MATTERS

11
<PAGE>

OTHER INFORMATION

12
<PAGE>

Shareholder Services

The Trust has adopted a shareholder service plan under which it pays the Adviser
0.25% of the average daily net assets of the Investor Shares such that the Trust
may obtain the services of the Adviser and other qualified financial
institutions to act as shareholder servicing agents for their customers. Under
this Plan, the Trust has authorized the Adviser to enter into agreements
pursuant to which the shareholder servicing agent performs certain shareholder
services. For these services, the Adviser pays the shareholder servicing agent a
fee based upon the average daily net assets of the Investor Shares owned by
investors for which the shareholder servicing agent maintains a servicing
relationship.

FINANCIAL HIGHLIGHTS

The financial highlights table is intended to help you understand the
Portfolio's financial performance since the commencement of its operations on
December 30, 1994. The total returns in the table represent the rate that an
investor would have earned (or lost) on an investment in the Portfolio (assuming
reinvestment of all dividends and distributions). This information has been
audited by Deloitte & Touche, LLP, independent certified public accountants, for
the years ended November 30, 1997 and November 30, 1998 and by other independent
auditors for the year ended November 30, 1996 and for the period December 30,
1994 through November 30, 1995. The financial statements and independent
accountant's report thereon of the Portfolio's financial statements, are
included in the Statement of Additional Information, which is available upon
request.

<PAGE>

<TABLE>
<CAPTION>
For the year For the year For the year For the period December 30,
ended ended ended 1994* through
November 30, 1998 November 30, 1997 November 30, 1996 November 30, 1995
----------------- ----------------- ----------------- -----------------

<S> <C> <C> <C> <C>
Beginning net asset value
per share $ 1.00 $ 1.00 $ 1.00 $ 1.00
------- ------- ------- -------

Net Investment Income 0.051 0.051 0.050 0.051

Dividends from net
investment income (0.051) (0.051) (0.050) (0.051)
------- ------- ------- -------

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

Total return 5.23% 5.23% 5.11% 5.71%(a)

Ratios/supplemental data

Net assets at the end of
period (000's omitted) $421,088 $385,229 $82,915 $82,273

Ratio to average net assets:
Expenses(b) 0.40% 0.41% 0.45% 0.38%(a)
Net investment income 5.08% 5.13% 4.99% 5.63%(a)
</TABLE>

(a) Annualized
(b) Net of advisory, shareholder servicing, and administration fees waived
and expenses reimbursed of 0.00%, 0.00%, 0.01% and 0.14% for each of
the respective periods presented.
* Commencement of operations

14
<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
Unified Management Corp. / Unified Fund Services, Inc.
431 North Pennsylvania Street
Indianapolis, Indiana 46204-1806

Legal Counsel
Kramer Levin Naftalis & Frankel LLP
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

Annual and Semi-Annual Reports. The annual and semi-annual reports to
shareholders contain additional information about the Portfolio's investments.

<PAGE>

Investment Company Act file no. 811-8620

<PAGE>

The Milestone Funds
Treasury Obligations Portfolio
SERVICE SHARES

INVESTMENT ADVISER
Milestone Capital Management, L.P.

PROSPECTUS
MARCH 30, 1999

This Prospectus offers Service Shares of the Treasury Obligations Portfolio, a
diversified, no-load money market portfolio of The Milestone Funds. 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.

The Portfolio also offers Premium Shares, Institutional Shares, Financial Shares
and Investor Shares by separate prospectus which are subject to different
expenses that affect their performance. For further information about these
other classes of shares call (800) 941-MILE.

This Prospectus provides you with information about the Portfolio that you
should know before investing. Please read it carefully and keep it for future
reference.

THE SECURITIES AND EXCHANGE COMMISSION HAS NOT APPROVED THE
ABOVE LISTED FUND. THE SECURITIES AND EXCHANGE COMMISSION ALSO HAS
NOT DETERMINED WHETHER THIS PROSPECTUS IS ACCURATE OR COMPLETE.
ANY PERSON WHO TELLS YOU THAT THE SECURITIES AND EXCHANGE
COMMISSION HAS MADE SUCH AN APPROVAL OR DETERMINATION
IS COMMITTING A CRIME.

<PAGE>

TABLE OF CONTENTS

Page
----
Risk/Return Summary ....................................................... 3
Investment Objective, Principal Strategies and Related Risks .............. 6
Management of the Portfolio ............................................... 8
How to Invest in the Portfolio ............................................ 9
How to Redeem Shares of the Portfolio ..................................... 11
Dividends, Distributions and Tax Matters .................................. 12
Other Information ......................................................... 13
Financial Highlights ...................................................... 14

<PAGE>

RISK/RETURN SUMMARY

Investment Strategies
The Portfolio invests only in the following money market instruments:

o short-term obligations of the U.S. Treasury; and
o repurchase agreements fully collateralized by obligations of
the U.S. Treasury.

The annual return of the Service Shares of the Portfolio for 1998 was 5.19%.

During this period, the best performance for a quarter was 1.30% (for the
quarter ended September 30, 1998). The worst performance was 1.16% (for the
quarter ended December 31, 1998).

<PAGE>

Fee Table

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

<TABLE>
<S> <C>
Shareholder Fees (fees paid directly from your investment):

Maximum Sales Charge (Load) Imposed on Purchases
(as a percentage of offering price).......................................... None
Maximum Deferred Sales Charge (Load)........................................... None
Maximum Sales Charge (Load) Imposed on Reinvested Dividends.................... None
Redemption Fee................................................................. None
Exchange Fee................................................................... None
</TABLE>

Annual Portfolio Operating Expenses (expenses that are deducted from Portfolio
assets):

<TABLE>
<S> <C>
Advisory Fees.................................................................. 0.10%
Rule 12b-1 Fees................................................................ 0.25%*
Shareholder Servicing Fees..................................................... 0.25%
Other Expenses................................................................. 0.05%
----
Total Annual Portfolio Operating Expenses 0.65%
====
Expenses Reimbursed to Portfolio 0.20%*
Net Annual Portfolio Operating Expenses
(expenses actually incurred by the Portfolio) 0.45%*
</TABLE>

* Under the Portfolio's Rule 12b-1 Plan, the Service Shares may incur
distribution expenses of up to 0.25% of the average daily net assets of
the Service Shares. For the current fiscal year, the Adviser has
contractually agreed to waive up to 100% of the Rule 12b-1 fees in
order to limit the total expenses of the Service Shares to 0.45%.

Example

This example is to help you compare the cost of investing in Service Shares of
the Portfolio with the cost of investing in other mutual funds.

The Example assumes that:
o you invest $10,000 in the Portfolio for the time periods indicated;
o your investment has a 5% return each year; and
o the Portfolio's operating expenses remain the same.

<PAGE>

Although your actual costs may be higher or lower, under these assumptions, your
costs would be:

1 Year* 3 Years* 5 Years* 10 Years*
$46 $188 $342 $791

<PAGE>

INVESTMENT OBJECTIVE, PRINCIPAL STRATEGIES AND RELATED RISKS

Investment Objective

Principal Investment Strategies

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

The Portfolio will maintain an average maturity, computed on a dollar-weighted
basis, of 90 days or less.

<PAGE>

Additional Investment Strategies

Temporary Defensive Positions

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

Risk Considerations

The Portfolio is also subject to the risk that the Portfolio or its service
providers could be disrupted by problems in their computer systems related to
the Year 2000.

<PAGE>

MANAGEMENT OF THE PORTFOLIO

Board Of Trustees

The Adviser

<PAGE>

HOW TO INVEST IN THE PORTFOLIO

<PAGE>

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

A. Telephone the Transfer Agent, Unified 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 # 8900276541
FBO Milestone Funds Treasury Obligations Portfolio
Operating Account
Ref: Shareholder Name and Account Number

<PAGE>

You may open an account when placing an initial order by telephone, provided you
thereafter submit 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.

Minimum Investment Required. The minimum initial investment in Service Shares of
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

<PAGE>

shares are registered, the Portfolio name, account number, and the share or
dollar amount requested.

<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 $50,000 unless an investment is made
to restore the minimum value.

DIVIDENDS, DISTRIBUTIONS AND TAX MATTERS

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

<PAGE>

OTHER INFORMATION

<PAGE>

market value of the securities held by the Portfolio and helps it maintain a
stable price of $1.00 per share.

Distribution Plan

The Trust has adopted a Distribution Plan for Service Shares of the Portfolio.
Pursuant to this Plan, the Portfolio may incur distribution expenses related to
the sale of Service Shares of up to 0.25% per a year of the average daily net
assets of the Service Shares.

Shareholder Services

The Trust has adopted a shareholder service plan under which it pays the Adviser
0.25% of the average daily net assets of 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.

FINANCIAL HIGHLIGHTS

The financial highlights table is intended to help you understand the
Portfolio's financial performance since the commencement of its operations on
May 2, 1997. The total returns in the table represent the rate that an investor
would have earned (or lost) on an investment in the Portfolio (assuming
reinvestment of all dividends and distributions). This information has been
audited by Deloitte & Touche, LLP, independent certified public accountants,
whose report, along with the Portfolio's financial statements, are included in
the Statement of Additional Information, which is available upon request.

<PAGE>

For the period
For the year May 2, 1997*
ended through
November 30, 1998 November 30, 1997
----------------- -----------------
<S> <C> <C>
Beginning net asset value per share $1.00 $1.00
------ ------
Net investment income 0.051 0.030
Dividends from net investment income (0.051) (0.030)
------ ------
Ending net asset value per share $1.00 $1.00
====== ======
Total return 5.19% 5.21%(a)

Net assets at the end of period (000's
omitted) $109,993 $242,068

Ratios to average net assets:
Expenses 0.45% 0.45%(a)
Net investment income 5.07% 5.15%(a)
</TABLE>

(a) Annualized
* Commencement of operations

<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
Unified Management Corp. / Unified Fund Services, Inc.
431 North Pennsylvania Street
Indianapolis, Indiana 46204-1806

Legal Counsel
Kramer Levin Naftalis & Frankel LLP
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

Annual and Semi-Annual Reports. The annual and semi-annual reports to
shareholders contain additional information about the Portfolio's investments.

<PAGE>

Investment Company Act file no. 811-8620

<PAGE>

The Milestone Funds
Prime Obligations Portfolio
INSTITUTIONAL SHARES

INVESTMENT ADVISER
Milestone Capital Management, L.P.

PROSPECTUS
MARCH 30, 1999

This Prospectus offers Institutional Shares of the Prime Obligations Portfolio,
a diversified, no-load money market portfolio of The Milestone Funds. 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.

The Portfolio also offers Service Shares by separate prospectus which are
subject to different expenses that affect their performance. For further
information about this other class of shares call (800) 941-MILE.

This Prospectus provides you with information about the Portfolio that you
should know before investing. Please read it carefully and keep it for future
reference.

THE SECURITIES AND EXCHANGE COMMISSION HAS NOT APPROVED
THE ABOVE LISTED FUND. THE SECURITIES AND EXCHANGE COMMISSION
ALSO HAS NOT DETERMINED WHETHER THIS PROSPECTUS IS ACCURATE OR
COMPLETE. ANY PERSON WHO TELLS YOU THAT THE SECURITIES AND
EXCHANGE COMMISSION HAS MADE SUCH AN APPROVAL OR
DETERMINATION IS COMMITTING A CRIME.

<PAGE>

TABLE OF CONTENTS

Page
----
Risk/Return Summary...................................................... 3
Investment Objective, Principal Strategies and Related Risks............. 6
Management of the Portfolio.............................................. 8
How to Invest in the Portfolio........................................... 9
How to Redeem Shares of the Portfolio.................................... 11
Dividends, Distributions and Tax Matters................................. 12
Other Information........................................................ 14

<PAGE>

RISK/RETURN SUMMARY

Investment Objective
The Prime Obligations Portfolio is a money market fund that seeks to provide its
shareholders with the maximum current income that is consistent with the
preservation of capital and the maintenance of liquidity.

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

Principal Risks
All money market instruments may change in value in response to changes in
interest rates. A significant increase in interest rates could cause the value
of your investment to decline.

Fee Table

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

Shareholder Fees (fees paid directly from your investment):

Annual Portfolio Operating Expenses (expenses that are deducted from Portfolio
assets):

3
<PAGE>

Expenses Reimbursed to Fund 0.05%*
Net Annual Fund Operating Expenses 0.20%*
(expenses actually incurred by the Fund)
</TABLE>

*Under the Shareholder Servicing Plan, the Institutional Shares may
incur expenses of up to 0.10% of the average daily net assets
attributable to such shares. For the current fiscal year, the Adviser
has contractually agreed to waive up to 100% of the shareholder
servicing fees in order to limit the total annual expenses of the
Institutional Shares to 0.20%.

Example

This example is to help you compare the cost of investing in Institutional
Shares of the Portfolio with the cost of investing in other mutual funds.

The Example assumes that:
o you invest $10,000 in the Portfolio for the time periods indicated;
o your investment has a 5% return each year; and
o the Portfolio's operating expenses remain the same.

4
<PAGE>

Although your actual costs may be higher or lower, under these assumptions, your
costs would be:

1 Year* 3 Years* 5 Years* 10 Years*
$20 $75 $136 $313

* Your costs of investing in the Portfolio for one year reflect
the amount you would pay after the Adviser reimburses the Portfolio for some or
all of the Portfolio's total expenses. Your costs of investing in the Portfolio
for three, five and 10 years reflect the amount you would pay if the Adviser did
not reimburse the Portfolio for some or all of the Portfolio's total expenses.
If the Adviser continues to limit the Portfolio's total expenses for three, five
or 10 years as we are doing for the first year, your actual costs would be lower
than the amounts shown. The Adviser is currently under no obligation to limit
total expenses for any period beyond the current fiscal year.

5
<PAGE>

INVESTMENT OBJECTIVE, PRINCIPAL STRATEGIES AND RELATED RISKS

Investment Objective

Principal Investment Strategies

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.

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 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 and 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.

6
<PAGE>

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 will maintain an average maturity, computed on a dollar-weighted
basis, of 90 days or less.

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.

Additional Investment Strategies

The Portfolio may purchase new issues of securities on a when-issued or forward
commitment basis. The Portfolio may also invest in illiquid or restricted
securities and other investment companies. For temporary or emergency purposes,
the Portfolio may borrow up to 33 1/3% of its total assets. Each of these
investment techniques and their related risks are described in detail in the
Statement of Additional Information.

Temporary Defensive Positions

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

Risk Considerations

Although the Portfolio invests only in money market investments, 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

7
<PAGE>

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. 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.

MANAGEMENT OF THE PORTFOLIO

Board Of Trustees

The Adviser

8
<PAGE>

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.

HOW TO INVEST IN THE PORTFOLIO

To purchase shares of the Portfolio by Federal Reserve wire, call the Transfer
Agent, Unified Fund Services, Inc., at (800) 363-7660. If the Transfer Agent
receives a firm indication of the

9
<PAGE>

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.

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

A. Telephone the Transfer Agent, Unified 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.)

10
<PAGE>

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

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

You may open an account when placing an initial order by telephone, provided you
thereafter submit 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.

HOW TO REDEEM SHARES OF THE PORTFOLIO

11
<PAGE>

<TABLE>
<CAPTION>
Firm Indication of Redemption Completed Redemption
Request and Approximate Size of Redemption Proceeds
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.

DIVIDENDS, DISTRIBUTIONS AND TAX MATTERS

12
<PAGE>

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 will be at least once per year.
The Trust does not anticipate that the Portfolio will realize any long-term
capital gains, but should they occur, they also will be distributed at least
once every 12 months.

13
<PAGE>

OTHER INFORMATION

Shareholder Services

<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
Unified Management Corp. / Unified Fund Services, Inc.
431 North Pennsylvania Street
Indianapolis, Indiana 46204-1806

Legal Counsel
Kramer Levin Naftalis & Frankel LLP
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

15
<PAGE>

Annual and Semi-Annual Reports. The annual and semi-annual reports to
shareholders contain additional information about the Portfolio's investments.

Investment Company Act file no. 811-8620

<PAGE>

The Milestone Funds
Prime Obligations Portfolio
SERVICE SHARES

INVESTMENT ADVISER
Milestone Capital Management, L.P.

PROSPECTUS
MARCH 30, 1999

This Prospectus offers Service Shares of the Prime Obligations Portfolio, a
diversified, no-load money market portfolio of The Milestone Funds. 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.

The Portfolio also offers Institutional Shares by separate prospectus which are
subject to different expenses that affect their performance. For further
information about this other class of shares call (800) 941-MILE.

This Prospectus provides you with information about the Portfolio that you
should know before investing. Please read it carefully and keep it for future
reference.

<PAGE>

TABLE OF CONTENTS

Page
----
Risk/Return Summary........................................................ 3
Investment Objective, Principal Strategies and Related Risks............... 6
Management of the Portfolio................................................ 8
How to Invest in the Portfolio............................................. 9
How to Redeem Shares of the Portfolio...................................... 11
Dividends, Distributions and Tax Matters................................... 12
Other Information.......................................................... 14

<PAGE>

RISK/RETURN SUMMARY

Fee Table

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

Shareholder Fees (fees paid directly from your investment):

Maximum Sales Charge (Load) Imposed on Purchases
(as a percentage of offering price).......................... None
Maximum Deferred Sales Charge (Load)........................... None
Maximum Sales Charge (Load) Imposed on Reinvested Dividends.... None
Redemption Fee................................................. None
Exchange Fee................................................... None
Maximum Account Fee............................................ None

Annual Portfolio Operating Expenses (expenses that are deducted from Portfolio
assets):

Advisory Fees.................................................. 0.10%
Rule 12b-1 Fees................................................ 0.25%*
Shareholder Servicing Fees..................................... 0.25%
Other Expenses................................................. 0.05%
----
Total Annual Fund Operating Expenses 0.65%*
====
3

<PAGE>

Expenses Reimbursed to Fund 0.20%*
Net Annual Fund Operating Expenses 0.45%*
(expenses actually incurred by the Fund)

*Under the Rule 12b-1 Plan, 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 contractually
agreed to waive up to 100% of the 12b-1 fees in order to limit the
total annual expenses of the Service Shares to 0.45%.

Example

This example is to help you compare the cost of investing in Service Shares of
the Portfolio with the cost of investing in other mutual funds.

The Example assumes that:
o you invest $10,000 in the Portfolio for the time periods
indicated;
o your investment has a 5% return each year; and
o the Portfolio's operating expenses remain the same.

<PAGE>

Although your actual costs may be higher or lower, under these assumptions, your
costs would be:

1 Year* 3 Years* 5 Years* 10 Years*
$46 $188 $342 $791

* Your costs of investing in the Portfolio for one year reflect
the amount you would pay after the Adviser reimburses the Portfolio for some or
all of the Portfolio's total expenses. Your costs of investing in the Portfolio
for three, five and 10 years reflect the amount you would pay if the Adviser did
not reimburse the Portfolio for some or all of the Portfolio's total expenses.
If the Adviser continues to limit the Portfolio's total expenses for three, five
or 10 years as we are doing for the first year, your actual costs would be lower
than the amounts shown. The Adviser is currently under no obligation to limit
total expenses for any period beyond the current fiscal year.

<PAGE>

INVESTMENT OBJECTIVE, PRINCIPAL STRATEGIES AND RELATED RISKS

Investment Objective

Principal Investment Strategies

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 maturies
exceeding thirteen months if such securities 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.

<PAGE>

The Portfolio will maintain an average maturity, computed on a dollar-weighted
basis, of 90 days or less.

Additional Investment Strategies

Temporary Defensive Positions

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

Risk Considerations

<PAGE>

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

MANAGEMENT OF THE PORTFOLIO

Board Of Trustees

The Adviser

<PAGE>

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.

HOW TO INVEST IN THE PORTFOLIO

To purchase shares of the Portfolio by Federal Reserve wire, call the Transfer
Agent, Unified Fund Services, Inc., at (800) 363-7660. If the Transfer Agent
receives a firm indication of the

<PAGE>

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

A. Telephone the Transfer Agent, Unified 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.)

<PAGE>

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

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

You may open an account when placing an initial order by telephone, provided you
thereafter submit 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.

HOW TO REDEEM SHARES OF THE PORTFOLIO

<PAGE>

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

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

Due to the cost to the Trust of maintaining smaller accounts, the Trust reserves
the right to redeem, upon 60 days written notice, all shares in an account with
an aggregate net asset value of less than $50,000 unless an investment is made
to restore the minimum value.

DIVIDENDS, DISTRIBUTIONS AND TAX MATTERS

<PAGE>

OTHER INFORMATION

Distribution Plan

The Trust has adopted a distribution plan for Service Shares of the Portfolio.
Pursuant to this Plan, the Portfolio may incur distribution expenses related to
the sale of Service Shares of up to 0.25% per year of the average daily net
assets of the Service Shares.

Shareholder Services

<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
Unified Management Corp. / Unified Fund Services, Inc.
431 North Pennsylvania Street
Indianapolis, Indiana 46204-1806

Legal Counsel
Kramer Levin Naftalis & Frankel LLP
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>

Annual and Semi-Annual Reports. The annual and semi-annual reports to
shareholders contain additional information about the Portfolio's investments.

Investment Company Act file no. 811-8620

<PAGE>

THE MILESTONE FUNDS

Treasury Obligations Portfolio-Institutional Shares and Investor Shares

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

STATEMENT OF ADDITIONAL INFORMATION
March 30, 1999

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 Investor Class of the Treasury
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
----
General Information ..................................... 2
Investment Policies ..................................... 2
Investment Limitations .................................. 4
Advertising ............................................. 6
Management of the Portfolio ............................. 8
Determination of Net Asset Value ........................ 14
Portfolio Transactions .................................. 14
Additional Purchase and Redemption Information .......... 15
Taxation ................................................ 16
Other Information ....................................... 20

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>

GENERAL INFORMATION

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.

The Portfolio offers Premium Shares, Institutional Shares, Investor Shares,
Financial Shares and Service Shares. 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 each 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.

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.

INVESTMENT POLICIES

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

The Portfolio's investment objective is to provide shareholders with the maximum
current income that is consistent with the presentation of capital and the
maintenance of liquidity. 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 fundamental and nonfundamental
investment policies are described below.

Definitions

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

"Adviser" shall mean Milestone Capital Management, L.P.

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

<PAGE>

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

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

"Fully Collateralized" shall mean that the value of the underlying
securities used to collateralize a repurchase agreement is at least
102% of the maturity value.

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.

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

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

<PAGE>

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

Illiquid Securities. The Portfolio may invest up to 10% of its net assets in
illiquid securities. The term "illiquid securities" for this purpose means
repurchase agreements having a maturity of more than seven days and not
entitling the holder to payment of principal within seven days. In addition, the
Portfolio will not invest in repurchase agreements having a maturity in excess
of one year. 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.

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

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

INVESTMENT LIMITATIONS

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

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

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

4
<PAGE>

(3) Invest in zero coupon bonds.

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

(5) Enter into reverse repurchase agreements.

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

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

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

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

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

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

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

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

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

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

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

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

<PAGE>

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

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

(c) Acquire securities or invest in repurchase agreements with respect
to any securities if, as a result, more than 10% of the Portfolio's net assets
(taken at current value) would be invested in repurchase agreements having a
maturity of more than seven days and not entitling the holder to payment of
principal within seven days and in securities that are illiquid by virtue of
legal or contractual restrictions on resale or the absence of a readily
available market.

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

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.

<PAGE>

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

The current and effective seven-day yields at November 30, 1998 were 4.79% and
4.90% for the Institutional Class and 4.60% and 4.70% for the Investor Class,
respectively.

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

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

The 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.

<PAGE>

MANAGEMENT OF THE PORTFOLIO

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 a 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.

*John D. Gilliam, Trustee.

Chief Financial Officer, Robert Wood Johnson Foundation, Princeton, New
Jersey. Former Limited Partner, Goldman, Sachs & Co. from 1987 to the
present. 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

<PAGE>

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.

*Christopher J. Williams, Trustee.

President and Chief Executive Officer of The Williams Capital Group,
L.P., one of the three largest minority-owned investment banking firms
in the United States. Former Senior Vice President, Lehman Brothers
Inc. from 1984 to 1992. Mr. Williams is a member of the board of
directors of the New York City Partnership and Chamber of Commerce as
well as a member of The Economic Club of New York. Additionally, he
sits on the board of directors of the WNYC Foundation. His address is
1185 Park Avenue, New York, NY 10128.

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 Christopher J.
Williams are interested persons of the Trust as that term is defined in the 1940
Act. Janet Tiebout Hanson and Jeffrey R. Hanson are married.

<PAGE>

The following table sets forth the fees paid to each Trustee of the Company for
the fiscal year ended November 30, 1998.

<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 $3,000 $0 $0 $3,000

Karen S. Cook $2,000 $0 $0 $2,000

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

Allen Lee Sessoms $3,000 $0 $0 $3,000

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

As of March __, 1999, the Trustees and officers of the Portfolio in the
aggregate owned less than 1% of the outstanding shares of the Portfolio.

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.

<PAGE>

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.

For the fiscal years ended November 30, 1998, November 30, 1997, November 30,
1996 and the period December 30, 1994 (commencement of operations) to November
30, 1995, the Adviser received advisory fees of $2,203,792, $1,624,259, $812,214
and $100,353, reflecting waivers of $0, $0, $0 and $231,894, respectively.

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

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

Administrator

The Bank of New York acts as administrator to the Trust pursuant to an
Administration Agreement with the Trust. As administrator, The Bank of New York
provides management and administrative services necessary to the operation of
the Trust (which include, among other responsibilities, negotiation of contracts
and fees with, and monitoring of performance and billing of, the transfer agent
and custodian and arranging for maintenance of books and records of the Trust),
and provides the Trust with general office facilities. The Administration
Agreement will remain in effect for a period of eighteen months with respect to
the Portfolio and thereafter is automatically renewed each year for an
additional term of one year.

The Administration Agreement terminates automatically if it is assigned and may
be terminated without penalty with respect to the Portfolio by vote of the
Portfolio's shareholders or by either party on not

<PAGE>

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.

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

Unified Management Corp. (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 Unified Fund Services, Inc., the Trust's transfer
agent. See "Transfer Agent".

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.

<PAGE>

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

Unified 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 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.

<PAGE>

Shareholder Services

The Trust has adopted a Shareholder Service Plan under which it pays the Adviser
0.10% and 0.25% of the average daily net assets of the Institutional Shares and
Investor Shares, respectively, so 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.

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 Portfolio
shares held beneficially; and providing such other services as the Trust or a
shareholder may request.

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.

PORTFOLIO TRANSACTIONS

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

<PAGE>

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.

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 Unified Fund Services, Inc.'s
offices located at 431 North Pennsylvania Street, Indianapolis, Indiana
46204-1806.

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.

<PAGE>

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 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.

TAXATION

The following is only a summary of certain additional federal income 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.

<PAGE>

loans, gains from the sale or other disposition of stock or securities or
foreign currencies (to the extent such currency gains are directly related to
the regulated investment company's principal business of investing in stock or
securities) and other income (including but not limited to gains from options,
futures or forward contracts) derived with respect to its business of investing
in such stock, securities or currencies (the "Income Requirement").

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

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

<PAGE>

taxable income for the current calendar year (and, instead, include such gains
and losses in determining ordinary taxable income for the succeeding calendar
year).

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

Portfolio Distributions

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

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

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

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

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

<PAGE>

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 who (1) has failed
to provide a correct taxpayer identification number, (2) is subject to backup
withholding for failure to report the receipt of interest or dividend income
properly, or (3) 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. If the net
asset value varies from $1.00 per share, 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. 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 applicable treaty rate) upon the gross amount of the dividend.
Such a foreign shareholder would generally be exempt from U.S. federal income
tax on gains realized on the sale of shares of the Portfolio, capital gain
dividends, and amounts retained by the Portfolio that are designated as
undistributed capital gains.

<PAGE>

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 subject to withholding 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; State and 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.

Rules of state and local taxation of ordinary income dividends and capital gain
dividends from regulated investment companies may 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.

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.

Independent Auditor

Deloitte & Touche, LLP, New York, New York, acts as independent auditor for the
Trust.

Legal Counsel

<PAGE>

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

The Trust and its Shareholders

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

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

The Trust Instrument further provides that the Trustees shall not be liable to
any person other than the Trust or its shareholders; moreover, the Trustees
shall not be liable for any conduct whatsoever, provided that a Trustee is not
protected against any liability to which he would otherwise be subject by reason
of willful misfeasance, bad faith, gross negligence or reckless disregard of the
duties involved in the conduct of his office.

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

<PAGE>

Ownership Of Shares Of The Portfolio

As of March 6, 1998, the Trustees and officers of the Portfolio in the aggregate
owned less than one percent of the outstanding shares of the Portfolio. Also, as
of that date, the shareholders listed below owned of record more than five
percent of the Portfolio:

INSTITUTIONAL SHARES:

<TABLE>
<CAPTION>
Shares of % of
Shareholder Portfolio Owned Class Owned
----------- --------------- -----------
<S> <C> <C>
Bear Stearns Securities Corp. 203,385,935 12.93
FBO 7502313716-318
One Metrotech Center North
Brooklyn, NY 11201-3859

Clark County 123,662,986 7.86
500 Grand Central Parkway
Las Vegas, NV 89155-1220

Hare & Co. 98,310,649 6.25
c/o The Bank of New York
Attn.: P. Madden
STIF - Master Note Department
One Wall Street, Second Floor
New York, NY 10286

Bear Stearns Securities Corp. 97,479,992 6.20
FBO 1020712426
One Metrotech Center North
Brooklyn, NY 11201-3859

Texas State Treasury 96,000,000 6.10
P. O. Box 12608
Austin, TX 78711-2608
</TABLE>

<PAGE>

INVESTOR SHARES:

<TABLE>
<CAPTION>
Shares of % of
Shareholder Portfolio Owned Class Owned
----------- --------------- -----------
<S> <C> <C>
Hare & Co. 77,724,052 34.40
c/o Bank of New York
Attn.: P. Madden
STIF-Master Note Department
One Wall Street, Second Floor
New York, NY 10286

Amalgamated Bank of Chicago 38,672,423 17.12
One West Monroe Street
Chicago, IL 60603

Bear Stearns Securities Corp. 15,726,155 6.96
A/C 2208072815-R28
One Metrotech Center North
Brooklyn, NY 11201-3859
</TABLE>

FINANCIAL SHARES:

<TABLE>
<CAPTION>
Shares of % of
Shareholder Portfolio Owned Class Owned
----------- --------------- -----------
<S> <C> <C>
Obie & Co. 90,000,000 99.94
Chase Bank of Texas
STIF Unit
P. O. Box 2558
Houston, TX 77252-2558
</TABLE>

<PAGE>

SERVICE SHARES:

<TABLE>
<CAPTION>
Shares of % of
Shareholder Portfolio Owned Class Owned
----------- --------------- -----------
<S> <C> <C>
US Bank NA 58,954,560 47.53
Attn.: Linda Fritz
First Trust Center
180 East Fifth Street
St. Paul, MN 55101

Obie & Co. 40,897,723 32.97
Chase Bank of Texas
STIF Unit
P. O. Box 2558
Houston, TX 77252-2558

Hare & Co. 21,785,766 17.57
c/o Bank of New York
Attn.: P. Madden
STIF-Master Note Department
One Wall Street, Second Floor
New York, NY 10286
</TABLE>

PREMIUM SHARES:

<TABLE>
<CAPTION>
Shares of % of
Shareholder Portfolio Owned Class Owned
----------- --------------- -----------
<S> <C> <C>
US Bank NA 82,253,878 100
Attn.: Linda Fritz
First Trust Center
180 East Fifth Street
St. Paul, MN 55101
</TABLE>

Financial Statements

The audited financial statements and the reports thereon of the Trust for the
fiscal year ended November 30, 1998 are incorporated herein.

<PAGE>

THE MILESTONE FUNDS

Treasury Obligations Portfolio-Financial Shares, Service Shares and
Premium Shares

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

STATEMENT OF ADDITIONAL INFORMATION
March 30, 1999

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 Financial Class, Service Class and Premium Class of the
Treasury 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
----

General Information...................................... 2
Investment Policies...................................... 2
Investment Limitations................................... 4
Advertising.............................................. 6
Management of the Portfolio.............................. 8
Determination of Net Asset Value......................... 15
Portfolio Transactions................................... 15
Additional Purchase and Redemption Information........... 16
Taxation................................................. 17
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>

GENERAL INFORMATION

INVESTMENT POLICIES

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

Definitions

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

"Adviser" shall mean Milestone Capital Management, L.P.

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

2
<PAGE>

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

"Fully Collateralized" shall mean that the value of the underlying
securities used to collateralize a repurchase agreement is at least
102% of the maturity value.

3
<PAGE>

INVESTMENT LIMITATIONS

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

4
<PAGE>

(3) Invest in zero coupon bonds.

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

(5) Enter into reverse repurchase agreements.

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

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

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

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

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

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

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

5
<PAGE>

ADVERTISING

Performance Data

6
<PAGE>

The current and effective seven-day yields at November 30, 1998 were 4.85% and
4.97% for the Financial Class, 4.54% and 4.64% for the Service Class, and 4.39%
and 4.49% for the Premium Class, respectively.

7
<PAGE>

MANAGEMENT OF THE PORTFOLIO

Trustees and Officers

*Janet Tiebout Hanson, Chairman and President.

*Dort A. Cameron III, Trustee.

*John D. Gilliam, Trustee.

Karen S. Cook, Trustee.

8
<PAGE>

Anne Brown Farrell, Trustee.

Allen Lee Sessoms, Trustee.

*Christopher J. Williams, Trustee.

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.

9
<PAGE>

The following table sets forth the fees paid to each Trustee of the Company for
the fiscal year ended November 30, 1998.

<S> <C> <C> <C> <C>
Janet T. Hanson $0 $0 $0 $0

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

John D. Gilliam $3,000 $0 $0 $3,000

Karen S. Cook $2,000 $0 $0 $2,000

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

Allen Lee Sessoms $3,000 $0 $0 $3,000

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

As of March __, 1999, the Trustees and officers of the Portfolio in the
aggregate owned less than 1% of the outstanding shares of the Portfolio.

Investment Adviser

10
<PAGE>

Administrator

11
<PAGE>

Underwriter

12
<PAGE>

Transfer Agent

13
<PAGE>

Shareholder Services

The Trust has adopted a Shareholder Service Plan under which it pays the Adviser
0.25% of the average daily net assets of the Premium Shares or Service Shares so
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.

Distribution Plans

The Trust has adopted Distribution Plans for the Premium Shares and Service
Shares. The Plan, with respect to the Premium Shares, provides that the
Portfolio may incur distribution expenses related to the sale of Premium Shares
of up to 0.35% per annum of the Portfolio's average daily net assets
attributable to such Shares. The Plan, with respect to the Service Shares,
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. Each Plan provides that the Portfolio may
finance activities which are primarily intended to result in the sale of Premium
Shares and Service Shares, respectively, 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.

In approving each 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 each Plan will benefit the applicable
Shares of the Portfolio and its shareholders. Each 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 a 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.
A 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 a Plan
is in effect, the selection and nomination of the Qualified Trustees shall be
made by those Qualified Trustees then in office.

14
<PAGE>

Payments under the 12b-1 Plans 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 a Trust may bear such expenses only pursuant to a plan
adopted in accordance with Rule 12b-1. In accordance with Rule 12b-1, each 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.

For the fiscal year ended November 30, 1998, the Service Shares and Premium
Shares paid $59,148 and $174,782, respectively, for services related to their
respective 12b-1 Plans, all of which was compensation to dealers.

DETERMINATION OF NET ASSET VALUE

PORTFOLIO TRANSACTIONS

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

15
<PAGE>

ADDITIONAL PURCHASE AND REDEMPTION INFORMATION

Additional Redemption Matters

16
<PAGE>

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.

TAXATION

Qualification as a Regulated Investment Company

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

17
<PAGE>

Excise Tax on Regulated Investment Companies

Portfolio Distributions

18
<PAGE>

dividends for federal income tax purposes, but they will not qualify for the 70%
dividends-received deduction for corporate shareholders.

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.

19
<PAGE>

Sale or Redemption of Shares

Foreign Shareholders

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.

20
<PAGE>

Effect of Future Legislation; State and Local Tax Considerations

OTHER INFORMATION

Custodian and Accounting Agent

Independent Auditor

Deloitte & Touche, LLP, New York, New York, acts as independent auditor for the
Trust.

Legal Counsel

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

The Trust and its Shareholders

21
<PAGE>

liabilities, obligations, and expenses of the Trust and requires that a
disclaimer be given in each contract entered into or executed by the Trust or
the Trustees. The Trust Instrument provides for indemnification out of each
series' property of any shareholder or former shareholder held personally liable
for the obligations of the series. The Trust Instrument also provides that each
series shall, upon request, assume the defense of any claim made against any
shareholder for any act or obligation of the series and satisfy any judgment
thereon. Thus, the risk of a shareholder incurring financial loss on account of
shareholder liability is limited to circumstances in which Delaware law does not
apply, no contractual limitation of liability was in effect and the portfolio is
unable to meet its obligations.

Ownership Of Shares Of The Portfolio

INSTITUTIONAL SHARES:

<TABLE>
<CAPTION>
Shares of % of
Shareholder Portfolio Owned Class Owned
----------- --------------- -----------

<S> <C> <C>
Bear Stearns Securities Corp. 203,385,935 12.93
FBO 7502313716-318
One Metrotech Center North
Brooklyn, NY 11201-3859
</TABLE>

22
<PAGE>

<TABLE>
<S> <C> <C>
Clark County 123,662,986 7.86
500 Grand Central Parkway
Las Vegas, NV 89155-1220

Hare & Co. 98,310,649 6.25
c/o The Bank of New York
Attn.: P. Madden
STIF - Master Note Department
One Wall Street, Second Floor
New York, NY 10286

Bear Stearns Securities Corp. 97,479,992 6.20
FBO 1020712426
One Metrotech Center North
Brooklyn, NY 11201-3859

Texas State Treasury 96,000,000 6.10
P. O. Box 12608
Austin, TX 78711-2608
</TABLE>

23
<PAGE>

INVESTOR SHARES:

<TABLE>
<CAPTION>
Shares of % of
Shareholder Portfolio Owned Class Owned
----------- --------------- -----------

<S> <C> <C>
Hare & Co. 77,724,052 34.40
c/o Bank of New York
Attn.: P. Madden
STIF-Master Note Department
One Wall Street, Second Floor
New York, NY 10286

Amalgamated Bank of Chicago 38,672,423 17.12
One West Monroe Street
Chicago, IL 60603

Bear Stearns Securities Corp. 15,726,155 6.96
A/C 2208072815-R28
One Metrotech Center North
Brooklyn, NY 11201-3859
</TABLE>

FINANCIAL SHARES:

<TABLE>
<CAPTION>
Shares of % of
Shareholder Portfolio Owned Class Owned
----------- --------------- -----------

<S> <C> <C>
Obie & Co. 90,000,000 99.94
Chase Bank of Texas
STIF Unit
P. O. Box 2558
Houston, TX 77252-2558
</TABLE>

24
<PAGE>

SERVICE SHARES:

<TABLE>
<CAPTION>
Shares of % of
Shareholder Portfolio Owned Class Owned
----------- --------------- -----------

<S> <C> <C>
US Bank NA 58,954,560 47.53
Attn.: Linda Fritz
First Trust Center
180 East Fifth Street
St. Paul, MN 55101

Obie & Co. 40,897,723 32.97
Chase Bank of Texas
STIF Unit
P. O. Box 2558
Houston, TX 77252-2558

Hare & Co. 21,785,766 17.57
c/o Bank of New York
Attn.: P. Madden
STIF-Master Note Department
One Wall Street, Second Floor
New York, NY 10286
</TABLE>

PREMIUM SHARES:

<TABLE>
<CAPTION>
Shares of % of
Shareholder Portfolio Owned Class Owned
----------- --------------- -----------

<S> <C> <C>
US Bank NA 82,253,878 100
Attn.: Linda Fritz
First Trust Center
180 East Fifth Street
St. Paul, MN 55101
</TABLE>

Financial Statements

The audited financial statements and the reports thereon of the Trust for the
fiscal year ended November 30, 1998 are incorporated herein.

25
<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
March 30, 1999

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 Treasury
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
----

General Information............................................... 2
Investment Policies............................................... 2
Investment Limitations............................................ 5
Advertising....................................................... 7
Management of the Portfolio....................................... 9
Determination of Net Asset Value.................................. 16
Portfolio Transactions............................................ 16
Additional Purchase and Redemption Information.................... 17
Taxation.......................................................... 18
Other Information................................................. 22

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>

GENERAL INFORMATION

The Portfolio offers Institutional Shares and Service Shares. 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 each 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.

INVESTMENT POLICIES

Definitions

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

"Adviser" shall mean Milestone Capital Management, L.P.

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

<PAGE>

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

"Fully Collateralized" shall mean that the value of the underlying
securities used to collateralize a repurchase agreement is at least 102% of the
maturity value.

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.

<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.

<PAGE>

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

INVESTMENT LIMITATIONS

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;

<PAGE>

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; and

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, 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.

<PAGE>

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 Act of 1940.

ADVERTISING

Performance Data

Any current yield quotation of a class of the Portfolio which is used in such a
manner as to be subject to the provisions of Rule 482(d) under the Securities
Act of 1933, as amended, shall consist of an annualized historical yield,
carried at least to the nearest hundredth of one percent, based on a specific
seven-calendar-day period and shall be calculated by dividing the net change
during the seven-day period in the value of an account having a balance of one
share at the beginning of the period by the value of the account at the
beginning of the period, and multiplying the quotient by 365/7. For this
purpose, the net change in account value would reflect the value of additional
shares purchased with dividends declared on the original share and dividends
declared on both the original share and any such additional shares, but would
not reflect any realized gains or losses from the sale of securities or any
unrealized appreciation or depreciation on portfolio securities. In addition,
any effective annualized yield quotation used by the Portfolio shall be
calculated by compounding the current yield quotation for such period by adding
1 to the product, raising the sum to a power equal to 365/7, and subtracting 1
from the result.

The current and effective seven-day yields at November 30, 1998 were 4.79% and
4.90% for the Institutional Class and 4.60% and 4.70% for the Investor Class,
respectively.

<PAGE>

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.

<PAGE>

MANAGEMENT OF THE PORTFOLIO

Trustees and Officers

*Janet Tiebout Hanson, Chairman and President.

*Dort A. Cameron III, Trustee.

*John D. Gilliam, Trustee.

Karen S. Cook, Trustee.

<PAGE>

Anne Brown Farrell, Trustee.

Allen Lee Sessoms, Trustee.

*Christopher J. Williams, Trustee.

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.

<PAGE>

The following table sets forth the fees paid to each Trustee of the Company for
the fiscal year ended November 30, 1998.

<S> <C> <C> <C> <C>
Janet T. Hanson $0 $0 $0 $0

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

John D. Gilliam $3,000 $0 $0 $3,000

Karen S. Cook $2,000 $0 $0 $2,000

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

Allen Lee Sessoms $3,000 $0 $0 $3,000

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

As of March __, 1999, the Trustees and officers of the Portfolio in the
aggregate owned less than 1% of the outstanding shares of the Portfolio.

Investment Adviser

<PAGE>

Administrator

<PAGE>

Underwriter

<PAGE>

Transfer Agent

<PAGE>

Shareholder Services

The Trust has adopted a Shareholder Service Plan under which it pays the Adviser
0.25% and 0.10% of the average daily net assets of the Service Shares and
Institutional Shares, respectively, so 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.

Distribution Plans

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.

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 holders of the
Service Shares of the Portfolio. The Plan will continue in effect from
year-to-year if specifically approved annually (a) by the majority of the
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.

<PAGE>

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.

DETERMINATION OF NET ASSET VALUE

PORTFOLIO TRANSACTIONS

<PAGE>

ADDITIONAL PURCHASE AND REDEMPTION INFORMATION

Additional Redemption Matters

<PAGE>

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.

TAXATION

Qualification as a Regulated Investment Company

<PAGE>

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.

Excise Tax on Regulated Investment Companies

Portfolio Distributions

<PAGE>

Sale or Redemption of Shares

<PAGE>

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. 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

Effect of Future Legislation; State and Local Tax Considerations

<PAGE>

OTHER INFORMATION

Custodian and Accounting Agent

Independent Auditor

Deloitte & Touche, LLP, New York, New York, acts as independent auditor for the
Trust.

Legal Counsel

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

The Trust and its Shareholders

<PAGE>

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.

<PAGE>

PART C
OTHER INFORMATION

Item 23. Exhibits.

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

EX-99.B5. (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).*

(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).*

(c) Form of Primary Dealer
Agreement to be between Forum
Financial Services, Inc. and
Bear, Stearns & Co. Inc.
(filed as Exhibit 6(c) to
Pre-effective Amendment No. 7
to Registrant's Registration
Statement 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

<PAGE>

Registration Statement and
incorporated herein by
reference).*

(e) Form of Underwriting Agreement
to be between Registrant and
Unified Management Corp.,
formerly known as CW Fund
Distributors, Inc., prior
thereto 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 Unified
Management Corp., formerly
known as CW Fund Distributors,
Inc., prior thereto 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.B6. Inapplicable.

EX-99.B7. (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).*

EX-99.B8. (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).*

2
<PAGE>

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

EX-99.B9. Opinion of Counsel, Kramer
Levin Naftalis & Frankel LLP
(filed as Exhibit 10 to
Pre-effective 3 and
incorporated herein by
reference).*

EX-99.B10. (a) Consent of Independent
Auditors, Deloitte & Touche
(filed herewith).

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

EX-99.B11. Inapplicable.

EX-99.B12. Investment Representation
letter (filed as Exhibit 13 to
Pre-effective 3 and
incorporated herein by
reference).*

EX-99.B13. (a) Rule 12b-1 Plan for the Service
Shares of the Treasury
Obligations Portfolio of the
Registrant (filed as Exhibit
15(a) to Post-Effective 6 and
incorporated herein by

3
<PAGE>
reference).*

(b) Rule 12b-1 Plan for the Premium
Shares of the Treasury
Obligations Portfolio of the
Registrant (filed as Exhibit
15(b) to Post-Effective 6 and
incorporated herein by
reference).*

(c) Rule 12b-1 Plan for the Service
Shares of the Prime Obligations
Portfolio of the Registrant
(filed as Exhibit 15 to
Post-Effective 8 and
incorporated herein by
reference)*

EX-99.B14. Form of Shareholder Service
Plan for the Institutional and
Service Shares of the Prime
Obligations Portfolio of the
Registrant (filed as Exhibit 16
to Post-Effective 8 and
incorporated herein by
reference).*

EX-99.B15. (a) Financial Data Schedule -
Treasury Obligations Portfolio
- Institutional Shares (filed
herewith).

(b) Financial Data Schedule -
Treasury Obligations Portfolio
- Investor Shares (filed
herewith).

(d) Financial Data Schedule -
Treasury Obligations Portfolio
- Service Shares (filed
herewith).

(e) Financial Data Schedule -
Treasury Obligations Portfolio
- Premium Shares (filed
herewith).

EX-99.B16. Rule 2a-7 (filed as Exhibit 17
to Post-Effective 8 and
incorporated herein by
reference).*

EX-99.B17. Multiclass Plan adopted June
14, 1995 pursuant to Rule 18f-3
under the 1940 Act (filed as
Exhibit 18 to Post-Effective 8
and incorporated herein by
reference).*

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).*

4
<PAGE>

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).*

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 24. Persons Controlled by or Under Common Control with Registrant.

None.

Item 25. 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

5
<PAGE>

X of the Trust Instrument contained in this Registration Statement
as Exhibit 1 and incorporated herein by reference.

Insofar as indemnification for liability arising under the
Securities Act of 1933 (the "1933 Act") may be permitted to
trustees, officers and controlling persons of the Registrant
pursuant to the foregoing provisions, or otherwise, the Registrant
has been advised that in the opinion of the Securities and
Exchange Commission such indemnification is against public policy
as expressed in the 1933 Act and is, therefore, unenforceable. In
the event that a claim for indemnification against such
liabilities (other than the payment by the Registrant of expenses
incurred or paid by a trustee, officer or controlling person of
the Registrant in the successful defense of any action, suit or
proceeding) is asserted by such trustee, officer or controlling
person in connection with the 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 26. 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

6
<PAGE>

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 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.

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 27. Principal Underwriters.

7
<PAGE>

(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.

Item 28. 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 29. Management Services.

Inapplicable.

Item 30. 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.

8
<PAGE>

SIGNATURES

Pursuant to the requirements of the Securities Act of 1933 and
the Investment Company Act of 1940, the Registrant has duly caused this
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 29th day of January, 1999.

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 29th day of January, 1999.

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

/s/ Dort A. Cameron III Trustee January 29, 1999
- ------------------------------------------
(Dort A. Cameron III)

/s/ Christopher J. Williams Trustee January 29, 1999
- ------------------------------------------
(Christopher J. Williams)

/s/ Karen S. Cook Trustee January 29, 1999
- ------------------------------------------
(Karen S. Cook)

/s/ Anne Brown Farrell Trustee January 29, 1999
- ------------------------------------------
(Anne Brown Farrell)

/s/ John D. Gilliam Trustee January 29, 1999
- ------------------------------------------
(John D. Gilliam)

/s/ Allen Lee Sessoms Trustee January 29, 1999
- ------------------------------------------
(Allen Lee Sessoms)

/s/ Jeffrey R. Hanson Secretary January 29, 1999
- ------------------------------------------
(Jeffrey R. Hanson)

9
<PAGE>

Index to Exhibits

<TABLE>
<CAPTION>
Exhibit
- -------

<S> <C>
EX-27(a) Financial Data Schedule - Treasury Obligations Portfolio - Institutional Shares.

EX-27(b) Financial Data Schedule - Treasury Obligations Portfolio - Investor Shares.

EX-27(c) Financial Data Schedule - Treasury Obligations Portfolio - Financial Shares.

EX-27(d) Financial Data Schedule - Treasury Obligations Portfolio - Service Shares.

EX-27(e) Financial Data Schedule - Treasury Obligations Portfolio - Premium Shares.

EX-99.B10(a) Consent of Independent Auditors, Deloitte & Touche.

EX-99.B10(b) Consent of Legal Counsel, Kramer Levin Naftalis & Frankel LLP.
</TABLE>

<ARTICLE> 6
<SERIES>
<NUMBER> 012
<NAME> INSTITUTIONAL SHARES

<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> NOV-30-1998
<PERIOD-END> NOV-30-1998
<INVESTMENTS-AT-COST> 2,615,737,945
<INVESTMENTS-AT-VALUE> 2,615,737,945
<RECEIVABLES> 7,007,857
<ASSETS-OTHER> 72,999
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 2,622,818,801
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 4,409,643
<TOTAL-LIABILITIES> 4,409,643
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 2,618,409,158
<SHARES-COMMON-STOCK> 1,686,835,141
<SHARES-COMMON-PRIOR> 1,183,905,306
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 0
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 0
<NET-ASSETS> 1,686,835,141
<DIVIDEND-INCOME> 0
<INTEREST-INCOME> 121,014,428
<OTHER-INCOME> 0
<EXPENSES-NET> 5,538,070
<NET-INVESTMENT-INCOME> 115,476,358
<REALIZED-GAINS-CURRENT> 13,517
<APPREC-INCREASE-CURRENT> 0
<NET-CHANGE-FROM-OPS> 115,489,875
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> (76,898,628)
<DISTRIBUTIONS-OF-GAINS> (7,083)
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 11,020,380,539
<NUMBER-OF-SHARES-REDEEMED> (10,572,428,163)
<SHARES-REINVESTED> 54,977,458
<NET-CHANGE-IN-ASSETS> 632,502,741
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 0
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 2,203,792
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 5,551,394
<AVERAGE-NET-ASSETS> 1,450,710,562
<PER-SHARE-NAV-BEGIN> 1.00
<PER-SHARE-NII> 0.053
<PER-SHARE-GAIN-APPREC> 0
<PER-SHARE-DIVIDEND> (0.053)
<PER-SHARE-DISTRIBUTIONS> 0
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 1.00
<EXPENSE-RATIO> 0.20
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0

</TABLE>

<ARTICLE> 6
<SERIES>
<NUMBER> 011
<NAME> INVESTOR SHARES

<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> NOV-30-1998
<PERIOD-END> NOV-30-1998
<INVESTMENTS-AT-COST> 2,615,737,945
<INVESTMENTS-AT-VALUE> 2,615,737,945
<RECEIVABLES> 7,007,857
<ASSETS-OTHER> 72,999
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 2,622,818,801
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 4,409,643
<TOTAL-LIABILITIES> 4,409,643
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 2,618,409,158
<SHARES-COMMON-STOCK> 421,087,842
<SHARES-COMMON-PRIOR> 385,229,200
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 0
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 0
<NET-ASSETS> 421,087,842
<DIVIDEND-INCOME> 0
<INTEREST-INCOME> 121,014,428
<OTHER-INCOME> 0
<EXPENSES-NET> 5,538,070
<NET-INVESTMENT-INCOME> 115,476,358
<REALIZED-GAINS-CURRENT> 13,517
<APPREC-INCREASE-CURRENT> 0
<NET-CHANGE-FROM-OPS> 115,489,875
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> (15,266,103)
<DISTRIBUTIONS-OF-GAINS> (2,431)
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 1,943,037,601
<NUMBER-OF-SHARES-REDEEMED> (1,912,845,866)
<SHARES-REINVESTED> 5,666,907
<NET-CHANGE-IN-ASSETS> 632,502,741
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 0
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 2,203,792
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 5,551,394
<AVERAGE-NET-ASSETS> 300,463,145
<PER-SHARE-NAV-BEGIN> 1.00
<PER-SHARE-NII> 0.051
<PER-SHARE-GAIN-APPREC> 0
<PER-SHARE-DIVIDEND> (0.051)
<PER-SHARE-DISTRIBUTIONS> 0
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 1.00
<EXPENSE-RATIO> 0.40
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0

</TABLE>

<ARTICLE> 6
<SERIES>
<NUMBER> 013
<NAME> FINANCIAL SHARES

<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> NOV-30-1998
<PERIOD-END> NOV-30-1998
<INVESTMENTS-AT-COST> 2,615,737,945
<INVESTMENTS-AT-VALUE> 2,615,737,945
<RECEIVABLES> 7,007,857
<ASSETS-OTHER> 72,999
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 2,622,818,801
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 4,409,643
<TOTAL-LIABILITIES> 4,409,643
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 2,618,409,158
<SHARES-COMMON-STOCK> 314,556,028
<SHARES-COMMON-PRIOR> 90,465,489
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 0
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 0
<NET-ASSETS> 314,556,028
<DIVIDEND-INCOME> 0
<INTEREST-INCOME> 121,014,428
<OTHER-INCOME> 0
<EXPENSES-NET> 5,538,070
<NET-INVESTMENT-INCOME> 115,476,358
<REALIZED-GAINS-CURRENT> 13,517
<APPREC-INCREASE-CURRENT> 0
<NET-CHANGE-FROM-OPS> 115,489,875
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> (12,891,937)
<DISTRIBUTIONS-OF-GAINS> (1,428)
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 1,099,712,000
<NUMBER-OF-SHARES-REDEEMED> (880,647,883)
<SHARES-REINVESTED> 5,026,423
<NET-CHANGE-IN-ASSETS> 632,502,741
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 0
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 2,203,792
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 5,551,394
<AVERAGE-NET-ASSETS> 244,287,840
<PER-SHARE-NAV-BEGIN> 1.00
<PER-SHARE-NII> 0.054
<PER-SHARE-GAIN-APPREC> 0
<PER-SHARE-DIVIDEND> (0.054)
<PER-SHARE-DISTRIBUTIONS> 0
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 1.00
<EXPENSE-RATIO> 0.15
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0

</TABLE>

<ARTICLE> 6
<SERIES>
<NUMBER> 014
<NAME> SERVICE SHARES

<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> NOV-30-1998
<PERIOD-END> NOV-30-1998
<INVESTMENTS-AT-COST> 2,615,737,945
<INVESTMENTS-AT-VALUE> 2,615,737,945
<RECEIVABLES> 7,007,857
<ASSETS-OTHER> 72,999
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 2,622,818,801
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 4,409,643
<TOTAL-LIABILITIES> 4,409,643
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 2,618,409,158
<SHARES-COMMON-STOCK> 109,992,667
<SHARES-COMMON-PRIOR> 242,067,781
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 0
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 0
<NET-ASSETS> 109,992,667
<DIVIDEND-INCOME> 0
<INTEREST-INCOME> 121,014,428
<OTHER-INCOME> 0
<EXPENSES-NET> 5,538,070
<NET-INVESTMENT-INCOME> 115,476,358
<REALIZED-GAINS-CURRENT> 13,517
<APPREC-INCREASE-CURRENT> 0
<NET-CHANGE-FROM-OPS> 115,489,875
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> (6,109,949)
<DISTRIBUTIONS-OF-GAINS> (1,850)
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 288,570,874
<NUMBER-OF-SHARES-REDEEMED> (420,683,543)
<SHARES-REINVESTED> 37,555
<NET-CHANGE-IN-ASSETS> 632,502,741
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 0
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 2,203,792
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 5,551,394
<AVERAGE-NET-ASSETS> 120,453,217
<PER-SHARE-NAV-BEGIN> 1.00
<PER-SHARE-NII> 0.051
<PER-SHARE-GAIN-APPREC> 0
<PER-SHARE-DIVIDEND> (0.051)
<PER-SHARE-DISTRIBUTIONS> 0
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 1.00
<EXPENSE-RATIO> 0.45
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0

</TABLE>

<ARTICLE> 6
<SERIES>
<NUMBER> 015
<NAME> PREMIUM SHARES

<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> NOV-30-1998
<PERIOD-END> NOV-30-1998
<INVESTMENTS-AT-COST> 2,615,737,945
<INVESTMENTS-AT-VALUE> 2,615,737,945
<RECEIVABLES> 7,007,857
<ASSETS-OTHER> 72,999
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 2,622,818,801
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 4,409,643
<TOTAL-LIABILITIES> 4,409,643
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 2,618,409,158
<SHARES-COMMON-STOCK> 85,937,480
<SHARES-COMMON-PRIOR> 84,238,641
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 0
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 0
<NET-ASSETS> 85,937,480
<DIVIDEND-INCOME> 0
<INTEREST-INCOME> 121,014,428
<OTHER-INCOME> 0
<EXPENSES-NET> 5,538,070
<NET-INVESTMENT-INCOME> 115,476,358
<REALIZED-GAINS-CURRENT> 13,517
<APPREC-INCREASE-CURRENT> 0
<NET-CHANGE-FROM-OPS> 115,489,875
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> (4,309,741)
<DISTRIBUTIONS-OF-GAINS> (725)
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 191,389,622
<NUMBER-OF-SHARES-REDEEMED> (189,690,783)
<SHARES-REINVESTED> 0
<NET-CHANGE-IN-ASSETS> 632,502,741
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 0
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 2,203,792
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 5,551,394
<AVERAGE-NET-ASSETS> 87,622,180
<PER-SHARE-NAV-BEGIN> 1.00
<PER-SHARE-NII> 0.049
<PER-SHARE-GAIN-APPREC> 0
<PER-SHARE-DIVIDEND> (0.049)
<PER-SHARE-DISTRIBUTIONS> 0
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 1.00
<EXPENSE-RATIO> 0.60
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0

</TABLE>

<PAGE>

CONSENT OF INDEPENDENT AUDITORS

The Milestone Funds Treasury Obligations Portfolio:

We consent to the use in Post-Effective Amendment No. 9 to Registration
Statement No. 33-81574 of our report dated December 30, 1998, appearing in the
Statement of Additional Information which is included in such Registration
Statement, and to the references to us under the captions "Financial Highlights"
in the Prospectus and "Independent Auditors" in the Statement of Additional
Information, which are also included in such Registration Statement.

DELOITTE & TOUCHE LLP
New York, New York
January 26, 1999

<PAGE>

KRAMER LEVIN NAFTALIS & FRANKEL LLP
9 1 9 T H I R D A V E N U E
NEW YORK, N.Y. 10022 - 3852
(212) 715 - 9100

FAX

(212) 715-8000
-----

WRITER'S DIRECT
NUMBER

(212) 715-9100

January 28, 1999

The Milestone Funds
One Executive Boulevard
Yonkers, New York 10701

Re: The Milestone Funds
File Nos. 33-81574; 811-8620

Dear Ladies and Gentlemen:

We hereby consent to the reference of our firm as Counsel in
this Registration Statement on Form N-1A.

Very truly yours,

KRAMER LEVIN NAFTALIS & FRANKEL LLP