BRIAR FUNDS TRUST, 497, 1996-01-08

BRIAR FUNDS TRUST
497, 1996-01-08

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STALWART FUNDS

Supplement dated December 26, 1995 to the Prospectus dated January 20, 1995

Effective January 1, 1996, Sunstone Financial Group, Inc. ("Sunstone") will
serve as the new transfer agent and dividend-disbursing agent of the Stalwart
Funds (the "Funds"). The Funds' shares will not be offered to the public
generally. Shares may be purchased, redeemed and exchanged only through
representatives of Sachem Trust, the successor to the Trust Department of
Layfayette American Bank & Trust Company or by clients of the Adviser. All
correspondence and inquiries, including inquiries regarding account balances,
should be directed to the shareholder's trust officer or investment specialist
at Sachem Trust at 23 Boston Street, Guilford, CT 06437 or at 1-800-580-3656.

Also effective January 1, 1996, the Kemper Cash Account Trust Money Market
Portfolio, the Kemper Cash Account Trust Tax-Exempt Portfolio and the Flagship
Connecticut Double Tax-Exempt Fund will no longer be available as part of the
Funds' expanded exchange privilege. Shareholders should consult their trust
officer or investment specialist at Sachem Trust to discuss other cash
investment alternatives. Shareholders may continue to authorize Sachem Trust to
execute exchanges among the five Stalwart Funds.

In its capacity as transfer agent and dividend-disbursing agent, Sunstone will
be responsible for providing those services that are now provided by DST
Systems, Inc. (successor to Supervised Service Company, Inc. ("SSC")) as
described in the Prospectus.

This information supplements and, to the extent applicable, supersedes the
information contained on pages 3, 25-28 and 32 of the Prospectus and elsewhere
therein.

The shareholders of the Core Equity Fund approved and the Core Equity Fund
entered into a new sub-advisory agreement between Briar Capital Management
L.L.C., as adviser, and Harris Associates L.P. on December 20, 1995. The new
sub-advisory agreement is identical (except for the term of the agreement) to
the sub-advisory agreement previously in effect.

Questions regarding the purchase and sale of shares of the Funds should be
directed at 1-800-580-3656.

This Supplement should be retained with your Prospectus for future
reference.

BRIAR FUNDS TRUST

Supplement dated July 20, 1995 to the Prospectus dated January 20, 1995

The following Financial Highlights are to be inserted prior to the section
titled "The Stalwart Funds" on page 6. The Financial Highlights have been
derived from the Financial Statements located in Part B, the Statement of
Additional Information.

<TABLE>
FINANCIAL HIGHLIGHTS

For the Period from January 27, 1995<F1> through May 31, 1995 (Unaudited)
<CAPTION>
U.S. Government Core Aggressive International
Securities Income Equity Equity Equity
Fund Fund Fund Fund Fund
---- ---- ---- ---- ----

1/27/95<F1> 1/27/95<F1> 1/27/95<F1> 1/27/95<F1> 1/27/95<F1>
through through through through through
5/31/95 5/31/95 5/31/95 5/31/95 5/31/95
------- ------- ------- ------- -------

<S> <C> <C> <C> <C> <C>
Net Asset Value, beginning of period $10.00 $10.00 $10.00 $10.00 $10.00

Income from investment operations:
Net investment income 0.20 0.19 0.05 0.01 0.05
Net realized and unrealized
gains on securities 0.69 0.73 1.06 0.35 0.89
--------- --------- --------- --------- ---------

Total from investment operations 0.89 0.92 1.11 0.36 0.94

Less distributions from:
Net investment income (0.20) (0.19) - - -
--------- --------- --------- --------- ---------

Total distributions (0.20) (0.19) - - -
--------- --------- --------- --------- ---------

Net Asset Value, end of period $10.69 $10.73 $11.11 $10.36 $10.94
========= ========= ========= ========= =========
Total return<F2> 8.98% 9.22% 11.10% 3.60% 9.40%

Supplemental data and ratios:
Net assets, end of period $8,733,934 $6,884,030 $8,540,251 $6,823,554 $4,623,916
Ratio of net expenses to average
net assets <F3><F4> 1.11% 1.31% 1.53% 1.60% 1.91%
Ratio of net income to average
net assets <F3><F4> 6.15% 5.63% 1.67% 0.43% 1.54%
Portfolio turnover rate <F2> 16.00% 16.43% 7.46% 26.74% 5.44%

<FN>
<F1>Commencement of operations.

<F2>Not annualized for the period from January 27, 1995 through May 31, 1995.

<F3>Annualized for the period from January 27, 1995 through May 31, 1995.

<F4>Without fees waived, the ratio of expenses to average net assets would have been 2.33% for the U.S. Government Securities Fund;
2.60% for the Income Fund; 2.69% for the Core Equity Fund; 2.76% for the Aggressive Equity Fund; and 4.17% for the International
Equity Fund.

Without fees waived, the ratio of net investment income to average net assets would have been 4.93% for the U.S. Government
Securities Fund; 4.34% for the Income Fund; 0.51% for the Core Equity Fund; (0.73)% for the Aggressive Equity Fund; and (0.72)% for
the International Equity Fund.

This Supplement should be retained with your Prospectus for future reference.
</TABLE>

STALWART FUNDS
PROSPECTUS
JANUARY 20, 1995

Core Equity Fund
Aggressive Equity Fund
International Equity Fund
U.S. Government Securities Fund
Income Fund

TABLE OF CONTENTS
Highlights 2
Expense Summary 4
The Stalwart Funds 6
Investment Objectives and Policies 6
Core Equity Fund 6
Aggressive Equity Fund 7
International Equity Fund 8
U.S. Government Securities Fund 9
Income Fund 10
Additional Investment Information and Risks 11
Investment Restrictions 19
Management of the Stalwart Funds 20
Purchase and Redemption of Shares 25
Determination of Net Asset Value 28
Dividends and Distributions 29
Tax Information 29
Fund Performance 30
Other Information 31
Shareholder Inquiries 32

No person has been authorized to give any information or to make any
representations other than those contained in this Prospectus and the Statement
of Additional Information dated January 20, 1995 and, if given or made, such
information or representations may not be relied upon as having been authorized
by the Trust or its distributor. This Prospectus does not constitute an offer to
sell securities in any state or jurisdiction in which such offering may not
lawfully be made.

BRIAR FUNDS TRUST/THE STALWART FUNDS

Core Equity Fund
Aggressive Equity Fund
International Equity Fund
U. S. Government Securities Fund
Income Fund

Briar Funds Trust (the "Trust") is an open-end management investment company.
The Trust currently consists of five different investment portfolios, the Briar
Funds Trust/the Stalwart Funds (the "Stalwart Funds"), better known as mutual
funds (which funds are singularly referred to as a "Fund" and collectively
referred to as the "Funds"). The Funds offer a variety of investment
objectives designed to offer investors a range of investment opportunities. The
Funds currently consist of the following portfolios:

The Core Equity Fund seeks long-term capital appreciation through a diversified
portfolio of investments primarily in common stocks and securities convertible
into common stocks. Under normal market conditions the Core Equity Fund will
invest at least 65% of its total assets in common stocks of companies comprising
the S&P 500. Although income is considered in the selection of securities, the
Core Equity Fund is not designed for investors whose primary investment
objective is income.

The Aggressive Equity Fund seeks long-term growth of capital through investments
in small-and mid-cap common stocks of companies believed by the Fund's sub-
adviser to possess superior growth potential. Income is a secondary objective to
be sought only when consistent with the primary objective.

The International Equity Fund seeks long-term capital appreciation primarily
through a diversified portfolio of investments in equity securities of companies
based outside the United States.

The U.S. Government Securities Fund seeks a high level of total return from
investments principally in a diversified portfolio of securities issued or
guaranteed as to principal and interest by the U.S. government and its agencies
or instrumentalities.

The Income Fund seeks a high level of current income primarily from a
diversified portfolio of fixed income securities and dividend-paying common
stocks.

This Prospectus sets forth concisely the information you should know before
investing in the Funds. It should be read and retained for future reference.
Additional information about the Stalwart Funds is contained in the Statement of
Additional Information for the Stalwart Funds, which has been filed with the
Securities and Exchange Commission, bears the same date as this Prospectus and
is incorporated by reference in its entirety into the Prospectus and which is
available at no charge by writing Lafayette American Bank & Trust Company,
Attention: Trust Department at 1087 East Broad Street, Bridgeport, Connecticut
06604 or calling (203) 336-6137 or (800) 262-7642.

SHARES OF THE FUNDS ARE NOT BANK DEPOSITS, AND ARE NEITHER ENDORSED BY, INSURED
BY, GUARANTEED BY, OBLIGATIONS OF, NOR OTHERWISE SUPPORTED BY THE U.S.
GOVERNMENT, THE FDIC, THE FEDERAL RESERVE BOARD, LAFAYETTE AMERICAN BANK & TRUST
COMPANY, ITS AFFILIATES OR ANY OTHER BANK, OR OTHER GOVERNMENTAL AGENCY. AN
INVESTMENT IN THE STALWART FUNDS INVOLVES INVESTMENT RISKS INCLUDING POSSIBLE
LOSS OF PRINCIPAL.

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

HIGHLIGHTS

Investment Objectives

The Stalwart Core Equity Fund, Stalwart Aggressive Equity Fund, Stalwart
International Equity Fund, Stalwart U.S. Government Securities Fund and Stalwart
Income Fund are separate series of the Briar Funds Trust, an open-end management
investment company. Each "Fund" is a "no-load" fund. There are no sales or
redemption charges, but there are 12b-1 fees. The investment objectives of the
Funds are described below. There can be no guarantee that the Funds will
achieve their investment objectives. See "Investment Objectives and
Policies."

The International Equity Fund seeks long-term capital appreciation primarily
through a diversified portfolio of investments in equity securities of companies
based outside the United States.

The Income Fund seeks a high level of current income primarily from a
diversified portfolio of fixed income securities and dividend-paying common
stocks.

Additional Risks

Investing in the Funds involves the risks common to any investment in
securities. Each Fund seeks to achieve its investment objective by investing in
a variety of securities consistent with the Fund's

investment objective. The market value of fixed income securities, which
constitutes a major part of the investments of several of the Funds, will
generally vary inversely with changes in prevailing interest rates. The
Aggressive Equity Fund is a non-diversified fund which means its portfolio can
be dependent upon the performance of a smaller number of securities than is the
case with the other Funds which are diversified funds. In addition, the equity
securities in which the Aggressive Equity Fund will invest will primarily be of
companies with small or medium capitalizations, which often involve higher
risks. Each of the Funds may invest in foreign securities, which investments
involve special risks and costs which are in addition to the normal risks
inherent in domestic investments. The International Equity Fund may invest up
to 100% of its assets in foreign securities and may also invest in securities of
issuers domiciled or doing substantial business in emerging markets or countries
with limited or developing capital markets. To the extent consistent with their
investment objectives, each Fund may also purchase and sell put and call
options, purchase and sell futures contracts and options on futures contracts,
invest in illiquid securities, mortgage and other asset-backed securities, and
purchase securities issued on a forward commitment basis or when-issued basis.
Each Fund may also invest to a limited degree in non-investment grade debt
securities. Certain of the policies of the Funds present additional risks which
are described under "Additional Investment Information and Risks."

Additional Investment Information

Each Fund's investment objective may be changed by its Board of Trustees without
shareholder approval. Shareholders will, however, be notified in advance of any
proposed change. In addition to the foregoing, the Funds have adopted certain
fundamental investment restrictions that may be changed only with the approval
by the lesser of (i) a majority of the Fund's outstanding shares or (ii) 67% of
the Fund's shares present or represented at a meeting at which the holders of
more than 50% of such shares are present or represented. See "Investment
Restrictions."

Management of the Stalwart Funds

Briar Capital Management L.L.C. is the investment adviser of the Funds (the
"Adviser"), and as such, manages the business and affairs of the Funds. The
Adviser has, however, retained a separate sub-adviser to provide investment
advisory services for each of the Funds. Details about the Adviser and the sub-
advisers are described under "Management of the Stalwart Funds."

S.F. Investments, Inc., an affiliate of the Adviser, acts as the distributor of
the Funds. The Funds have adopted a plan of distribution pursuant to Rule 12b-1
pursuant to which the Funds may bear expenses to finance activities intended to
result in the sale of their shares.

Sunstone Financial Group, Inc. acts as administrator and fund accountant for the
Funds, Supervised Service Company, Inc. acts as transfer agent, and United
Missouri Bank, n.a. acts as custodian.

Purchases and Redemption of Shares

The Funds' shares will not be offered to the public generally and may be
purchased by Lafayette American Bank & Trust Company and its affiliates, either
for their own account or for the account of their clients. Shares of each Fund
are sold without an initial sales charge at the net asset value next determined
after the receipt of a purchase order in proper form. The minimum initial
purchase for each Fund is $500. There is a $100 minimum purchase amount
required for subsequent purchases. Shares may be purchased in a variety of ways
as described under "Purchase and Redemption of Shares."

Shares of the Funds may be redeemed at the net asset value as next determined
after receipt of a redemption request in proper form. Redemptions may be made
in a variety of ways which are described under "Purchase and Redemption of
Shares."

Dividends and Distributions

Dividends of net investment income are declared and paid monthly for the U.S.
Government Securities and Income Funds, and annually for the Core Equity Fund,
Aggressive Equity Fund and International Equity Fund. Net capital gains for the
Funds are intended to be distributed on an annual basis.

Shareholder Services

Questions regarding the Funds and inquiries regarding a shareholder's account
may be directed to Lafayette American Bank & Trust Company, Attention: Trust
Department at 1087 East Broad Street, Bridgeport, Connecticut 06604 or calling
(203) 336-6137 or (800) 262-7642.

<TABLE>
EXPENSE SUMMARY

The following table is designed to assist you in understanding the expenses you will bear directly or indirectly as a shareholder of
the Stalwart Funds. The percentages shown below are the annualized operating expenses the Funds expect to pay during the current
fiscal year. An example based on the summary is also shown.

<CAPTION>
Core Aggressive International U.S. Gov't.
Equity Equity Equity Securities Income
Fund Fund Fund Fund Fund
---- ---- ---- ---- ----

<S> <C> <C> <C> <C> <C>
Shareholder Transaction Expenses
Maximum Sales Load Imposed on Purchases None None None None None
Maximum Sales Load Imposed on Reinvested
Dividends None None None None None
Deferred Sales Load Imposed on Redemptions None None None None None
Redemption Fees<F5> None None None None None
Exchange Fees $5.00 $5.00 $5.00 $5.00 $5.00

Annual Operating Expenses
(as a percentage of average net assets)
Management Fees 0.75%<F6> 0.65% 0.85% 0.45% 0.45%
12b-1 Fees<F7> 0.15% 0.15% 0.15% 0.15% 0.15%
Other Expenses (net of reimbursement)<F8> 0.63% 0.80% 0.91% 0.51% 0.71%
Total Operating Expenses (net of
reimbursements) 1.53% 1.60% 1.91% 1.11% 1.31%

Example
Based on the foregoing table, you would pay
the following expenses on a $1,000 investment,
assuming (i) a 5% annual return and
(ii) redemption at the end of each time period:

One Year $16 $16 $20 $11 $13
Three Years $48 $51 $61 $36 $42

<FN>
<F5>United Missouri Bank, n.a., charges a $9.00 fee for each wire redemption.

<F6>The Core Equity Fund pays a management fee that varies based on its performance.

<F7>Each Fund has adopted a distribution plan pursuant to Rule 12b-1 under which it will pay to its Distributor a fee of 0.15% per
annum of the average daily net assets of the Fund. The effect of a Rule 12b-1 Plan is that a long-term shareholder in a Fund may
pay more than the economic equivalent of the maximum front-end sales charge permitted by the rules of the National Association of
Securities Dealers, Inc.

<F8>For the current year, Briar Capital Management L.L.C. (the "Adviser") has voluntarily agreed to reimburse other expenses to
the extent necessary to ensure that total fund operating expenses do not exceed 1.53%, 1.60%, 1.91%, 1.11% and 1.31% of the
average daily net assets of the Core Equity, Aggressive Equity, International Equity, U.S. Government Securities and Income Funds,
respectively, for the fiscal year. Absent these reimbursements, the estimated other expenses for the Core Equity, Aggressive
Equity, International Equity, U.S. Government Securities and Income Funds are expected to be 0.66%, 0.80%, 1.01%, 0.65% and 0.71%,
respectively, and the estimated total operating expenses are expected to be 1.56%, 1.60%, 2.01%, 1.25% and 1.31%, respectively.
For future years, the Adviser has voluntarily agreed to reimburse other expenses to the extent necessary to ensure that total
operating expenses do not exceed industry averages (as provided by Lipper Analytical Services, Inc.) for similar funds (other than
the Aggressive Equity Fund which may exceed such industry average by no more than 10%, the Core Equity Fund which may exceed such
industry average by no more than 11.5% and the International Equity Fund which may exceed such industry average by no more than
20%).

The examples shown above should not be considered representations of past or future expenses or rates of return. The Stalwart Funds
are new and actual operating expenses and investment return may be more or less than those shown. Information about the actual
performance of the Funds will be contained in the Funds' future annual reports to shareholders, which may be obtained without charge
when they become available.
</TABLE>

THE STALWART FUNDS
The Stalwart Funds are a family of five mutual funds offering a variety of
investment objectives designed to offer investors a range of investment
opportunities. The Stalwart Funds are investment portfolios of Briar Funds Trust
(the "Trust"), a Delaware business trust. A mutual fund allows you to pool
your money with that of other investors in order to obtain professional
management of your investments. While every investment involves some degree of
risk, a mutual fund allows you to spread your investment over a larger group of
securities and thus minimize your risk of loss from any individual security.
While the Funds attempt to minimize this risk, they are subject to general
market movements as well as movements of the individual securities which they
own. Accordingly, the investment objectives described below may or may not be
accomplished.

INVESTMENT OBJECTIVES AND POLICIES
The investment objectives and policies of each Fund are described below.
Additional information regarding the securities, investment techniques and
restrictions of each Fund are described under "Additional Investment
Information and Risks" and "Investment Restrictions."

THE CORE EQUITY FUND
The Core Equity Fund seeks long-term capital appreciation. The Fund will seek to
achieve its objective through a diversified portfolio of investments primarily
in common stocks and securities convertible into common stocks deemed
significantly undervalued by the Fund's sub-adviser. Under normal market
conditions the Core Equity Fund will invest at least 65% of its total assets in
common stocks of companies comprising the S&P 500. Although income is
considered in the selection of securities, the Fund is not designed for
investors whose primary investment objective is income.

The primary criteria used in security selection is the size of the discount of
market price relative to the economic value of the security as determined by the
Fund's sub-adviser. The Fund's investment philosophy is predicated on the belief
that over time market price and value converge and that the investment in
securities priced significantly below long-term value presents the best
opportunity to achieve the Fund's objective of long-term capital appreciation.

The Fund's sub-adviser uses several qualitative and quantitative methods in
analyzing economic value, but considers the primary determinant of value to be
the enterprise's long-run ability to generate cash for its owners. Once it is
determined that a security is undervalued, the sub-adviser will consider it for
purchase by the Fund. In making investment decisions, a key additional factor is
the quality of management and, for equity securities, particular emphasis is
placed on significant management stock ownership. The Fund's sub-adviser
believes that the risks of equity investing are often reduced if management's
interests are strongly aligned with the interests of its shareholders.

Under normal market conditions, the Fund will invest at least 65% of its total
assets in common stock and securities convertible into common stock. The Fund
may also invest in other securities that are suited to the Fund's investment
objective, including preferred stocks and investment grade debt securities. See
"Additional Investment Information and Risks - Investment Grade and Non-
Investment Grade Debt Securities."

Although the Fund invests principally in securities of U.S. issuers, it may
invest up to 15% of its total assets (valued at the time of investment) in
foreign securities, including foreign government obligations and foreign equity
and debt securities. Foreign securities in the Fund will be limited to American
Depository Receipts ("ADRs") traded on a U.S. exchange or in the over-the-
counter market. See "Additional Investment Information and Risks - Foreign
Securities."

In seeking to achieve its investment objective, the Fund ordinarily invests on a
long-term basis, but on occasion may also invest on a short-term basis (for
example, where short-term perceptions have created a significant gap between
price and value). Occasionally, securities purchased on a long-term basis may be
sold within 12 months after purchase in light of a change in the circumstances
of a particular company or industry, or to reflect general market or economic
conditions.

Under normal market conditions, the Fund expects to be substantially fully
invested in the types of securities described in the preceding paragraphs.
Within the limitations described in this Prospectus, the percentages of Fund
assets invested in various types of securities will vary in accordance with the
judgment of the Fund's sub-adviser. When the sub-adviser considers a temporary
defensive posture advisable, the Fund may invest without limitation in
investment grade corporate debt obligations or U.S. government obligations, or
may hold cash or money market instruments. Investments in such securities have
risks different from that of common stocks. See "Additional Investment
Information and Risks - Money Market Instruments - and Investment Grade and
Non-Investment Grade Debt Securities."

THE AGGRESSIVE EQUITY FUND
The Aggressive Equity Fund seeks long-term growth of capital through investments
in small-and mid-cap common stocks of companies believed by the Fund's sub-
adviser to possess the potential for growth. Income is a secondary objective to
be sought only when consistent with the primary objective.

The Fund will normally invest at least 65% of its total assets in common stocks
of companies which are believed by its sub-adviser to present the prospect for
long-term capital appreciation based on historical and projected rates of
earnings growth or on development of new products and services. Equity
securities in which the Fund invests will primarily be of companies with small
or medium capitalizations (total market capitalizations, as measured by the
market value of each company's respective outstanding common stock, ranging from
$100 million to $3 billion with an anticipated average capitalization of $1
billion or less under normal market conditions). While such companies generally
have potential for rapid growth, they often involve higher risks because they
lack the management experience, financial resources, product diversification and
competitive strengths of larger corporations. In addition, in many instances,
the frequency and volume of their trading is substantially less than is typical
of larger companies. Therefore, the securities of smaller companies may be
subject to wider price fluctuations. The spreads between the bid and asked
prices of the securities of these companies are typically larger than the
spreads for more actively traded securities. As a result, the Fund could incur
a loss if it determined to sell such a security shortly after its acquisition.
When making large sales, the Fund may have to sell portfolio holdings at
discount from quoted prices or may have to make a series of small sales over an
extended period of time due to the trading volume of smaller company securities.

The Fund may also invest in investment grade convertible securities and up to
10% of its total assets in foreign securities. See "Additional Investment
Information and Risks - Foreign Securities and - Investment Grade and Non-
Investment Grade Debt Securities." At times, when economic conditions or
general levels of common stock prices are such that its sub-adviser deems it
prudent to adopt a temporary defensive position by reducing or curtailing
investments in common stocks, a larger proportion than usual of the Fund's
assets may be invested in government securities, or may hold cash or money
market instruments. See "Additional Investment Information and Risks - Money
Market Instruments."

Unlike the other Funds, this Fund is a non-diversified investment company. This
means that the Fund is not restricted by the provisions of the Investment
Company Act of 1940 (the "1940 Act") with respect to the diversification of
its investments. Because the Fund's "non-diversified status" permits the
investment of a greater portion of the Fund's assets in the securities of
individual companies than would be permissible under a "diversified status,"
the Fund's "non-diversified status" is considered to subject the Fund to a
greater degree of risk. See "Investment Restrictions." The Fund will however
meet certain diversification requirements in order to qualify for treatment as a
regulated investment company under the Internal Revenue Code of 1986, as amended
(the "Code"). See "Tax Information."

THE INTERNATIONAL EQUITY FUND
The International Equity Fund seeks long-term capital appreciation primarily
through investments in equity securities of companies based outside the United
States. Under normal market conditions, the Fund will invest at least 65% of
its total assets in common stocks, securities convertible into such common
stocks (including ADRs and European Depository Receipts ("EDRs")), rights and
warrants issued by companies that are based outside the United States and
securities of investment companies with similar investment objectives as the
Fund (subject to Securities and Exchange Commission (the "Commission") limits
on such investments). The Fund may also invest in forward foreign currency
exchange contracts, options, futures and options on futures, and in normal
market conditions up to 35% of its assets in money market instruments and in
debt securities which are rated investment grade. The Fund may invest up to 10%
of its net assets in convertible securities and debt securities which are rated
below investment grade, and in unrated securities judged to be of equivalent
quality as determined by its sub-adviser. See "Additional Investment
Information and Risks - Investment Grade and Non-Investment Grade Debt
Securities."

Subject to the foregoing, the Fund will invest broadly in the available universe
of securities of companies primarily domiciled in at least three of the four
following categories: (1) Europe, including Austria, Belgium, Denmark, Finland,
France, Germany, Ireland, Italy, Luxembourg, the Netherlands, Norway, Spain,
Sweden, Switzerland and the United Kingdom; (2) the Pacific Rim, including
Australia, Hong Kong, Japan, Malaysia, New Zealand and Singapore; (3) Canada;
and (4) countries with "emerging markets" as defined by Morgan Stanley Capital
International ("MSCI"). At least 65% of these securities will be denominated
in at least three currencies other than the U.S. dollar.

The investment approach of the Fund's sub-adviser is "bottom up;" this
approach seeks to identify companies with excellent long-term business
prospects, and selects those whose stocks appear to offer attractive absolute
returns. Investment criteria includes both growth and value considerations.
The sub-adviser seeks companies that it believes have strong balance sheets,
sustainable internal growth, superior financial returns and defensible business
franchises. Typically, the sub-adviser will only invest in companies that the
sub-adviser has analyzed for a number of years for the International Equity Fund
or other comparable funds. Country allocation and sector weightings reflect the
results of stock selection, which itself is strongly influenced by the sub-
adviser's cyclical and secular outlook for various industries, sectors and
national economies. Explicit country or sector allocation decisions are taken
only when necessary to ensure that the Fund is well-diversified. The sub-
adviser hedges foreign currency exposure infrequently, on those occasions when
it has a strong view on the prospects for a particular currency. Currency
hedging is done through the use of forward contracts or options.

The Fund will invest in various types of equity securities, including growth
stocks, value stocks, rights and warrants. The expense ratio of the Fund can be
expected to be higher than that of funds investing primarily in domestic
securities. The costs attributable to investing abroad are usually higher for
several reasons: higher costs of investment research and custody of foreign
securities; higher commissions paid on comparable transactions on foreign
markets; and additional costs arising from delays in settlements of transactions
involving foreign securities.

For purposes of its investment policies, the Fund defines an emerging market as
any country, the economy and market of which is generally considered to be
emerging or developing by MSCI or, in the absence of an MSCI classification, by
the World Bank. The Fund considers emerging markets to include all markets
except Australia, Austria, Belgium, Canada, Denmark, Finland, France, Germany,
Hong Kong, Ireland, Italy, Japan, Luxembourg, Malaysia, the Netherlands, New
Zealand, Norway, Singapore, Spain, Sweden, Switzerland, the United Kingdom and
the United States. The Fund may invest up to 35% of its net assets in
securities issued by companies in emerging markets.

THE U.S. GOVERNMENT SECURITIES FUND
The U.S. Government Securities Fund seeks a high level of total return from
investments principally in a diversified portfolio of securities issued or
guaranteed as to principal and interest by the U.S. government and its agencies
or instrumentalities. The U.S. government securities in which the Fund may
invest are described under "Additional Investment Information and Risks - U.S.
Government Obligations." The Fund does not have any portfolio maturity
restrictions except it is not anticipated that under normal market conditions
the average maturity for the Fund as determined by the sub-adviser will be in
excess of twelve years. Under normal market conditions, the Fund will invest at
least 65% of its total assets in U.S. government securities.

In seeking to achieve the investment objectives of the Fund, the Fund's sub-
adviser will actively manage the Fund's portfolio, adjusting the average
portfolio maturity according to the sub-adviser's interest rate outlook.
Through this active management approach, the sub-adviser seeks to reduce any
negative changes in the Fund's net asset value per share. During periods of
rising interest rates and falling prices, a shorter average maturity may be
adopted to help cushion the effect of price declines on the Fund's net asset
value. When interest rates are falling and prices are rising, the sub-adviser
may seek a longer average maturity for the Fund's portfolio, in order to, among
other reasons, seek total return possibilities consistent with the Fund's
investment objective. The Fund's maturity will also vary depending upon market
conditions. While the sub-adviser seeks to manage the Fund's maturity in light
of its interest rate outlook and market conditions, interest rate changes and
market conditions may result in decreases in the Fund's net asset value, which
is anticipated to fluctuate.

Even though interest-bearing securities are investments which often offer a
stable stream of income, the prices of fixed income securities are affected by
changes in the prevailing level of interest rates. The value of fixed income
securities varies inversely with changes in market interest rates. When
interest rates rise, the value of a Fund's portfolio securities, and therefore
its net asset value per share, generally will decline. Generally, the longer
the maturity of a fixed income security, the higher its yield and the greater
its price volatility. Conversely, the shorter the maturity, the lower the yield
but the greater the price stability. The sub-adviser to this Fund may adjust
the average maturity of the Fund's portfolio from time to time, depending on its
assessment of the relative yields available on securities of different
maturities and its assessment of future interest rate patterns and the
investment policy of the Fund relative to maturities. As a general matter,
instruments having a longer remaining maturity tend to fluctuate more in market
value than instruments having a shorter maturity for a given change in yield.
Consequently, the Fund's net asset value will tend to fluctuate more at times
when the average maturity of its portfolio is longer.

THE INCOME FUND
The Income Fund seeks a high level of current income primarily from a
diversified portfolio of fixed income securities and dividend-paying common
stocks. The Fund is designed for investors who seek a high level of income and
are willing to accept greater principal fluctuation in order to achieve that
objective. The Fund does not have any portfolio maturity restrictions except it
is not anticipated that under normal market conditions the average maturity for
the Fund as determined by the sub-adviser will be in excess of twelve years.
Under normal market conditions, the Fund will invest at least 65% of its total
assets in fixed income securities and dividend-paying common stocks.

In seeking to achieve its investment objective, the Fund may invest in a variety
of investment grade fixed income securities including U.S. government securities
in which the U.S. Government Securities Fund may invest; corporate debt
securities, including bonds, debentures, and notes; bank obligations; commercial
paper (including variable amount master demand notes); repurchase agreements;
convertible securities; preferred stocks (securities that represent an ownership
interest in a corporation and that give the owner a prior claim over common
stock on the company's earnings or assets); mortgage-backed securities and
collateralized mortgage obligations; and dividend-paying common stocks.

Even though interest-bearing securities are investments which often offer a
stable stream of income, the prices of fixed income securities are affected by
changes in the prevailing level of interest rates. The value of fixed income
securities varies inversely with changes in market interest rates. When
interest rates rise, the value of the Fund's portfolio securities, and therefore
its net asset value per share, generally will decline. Generally, the longer
the maturity of a fixed income security, the higher its yield and the greater
its price volatility. Conversely, the shorter the maturity, the lower the yield
but the greater the price stability. The sub-adviser to this Fund may adjust
the average maturity of the Fund's portfolio from time to time, depending on its
assessment of the relative yields available on securities of different
maturities and its assessment of future interest rate patterns and the
investment policy of the Fund relative to maturities. As a general matter,
instruments having a longer remaining maturity tend to fluctuate more in market
value than instruments having a shorter maturity for a given change in yield.
Consequently, the Fund's net asset value will tend to fluctuate more at times
when the average maturity of its portfolio is longer.

The values of fixed income securities also may be affected by changes in the
credit rating or financial condition of the issuing entities. Fixed income
securities in which the Fund will invest will be investment grade at the time of
purchase. See "Additional Investment Information and Risks - Investment Grade
and Non-Investment Grade Debt Securities."

ADDITIONAL INVESTMENT INFORMATION AND RISKS

Money Market Instruments

Each of the Funds may hold the following investments in such proportions as, in
the opinion of the Adviser and the Fund's sub-adviser, existing circumstances
may warrant: short-term U.S. government obligations, repurchase agreements,
bank obligations, commercial paper, variable amount master demand notes,
corporate bonds with remaining maturities of thirteen months or less, securities
issued by other investment companies which invest in high quality, short-term
debt securities (subject to limitations imposed by the 1940 Act) and cash and
other cash equivalents for temporary defensive purposes, pending investment, or
to meet anticipated redemption requests. In addition to the advisory fees and
other expenses a Fund bears directly in connection with its own operations, as a
shareholder of another investment company, a Fund would bear its pro rata
portion of the other investment company's advisory fees and other expenses, and
such fees and other expenses will be borne indirectly by the Fund's
shareholders.

Repurchase Agreements

In a repurchase agreement, a Fund buys a security at one price and, at the time
of the sale, the seller agrees to repurchase the obligation at a mutually agreed
upon time and price (usually within seven days). The repurchase agreement
thereby determines the yield during the purchaser's holding period, while the
seller's obligation to repurchase is secured by the value of the underlying
security. The Adviser and the Fund's sub-adviser will monitor, on an ongoing
basis, the value of the underlying securities to assure that the value always
equals or exceeds the repurchase price plus accrued interest. Repurchase
agreements could involve certain risks in the event of a default or insolvency
of the other party to the agreement, including possible delays or restrictions
upon a Fund's ability to dispose of the underlying securities. Although no
definitive creditworthiness criteria are used, the Adviser and the Fund's sub-
adviser review the creditworthiness of the banks and non-bank dealers with which
a Fund enters into repurchase agreements to evaluate those risks.

U.S. Government Obligations

To the extent consistent with their respective objectives, the Funds may invest
in a variety of U.S. Treasury obligations consisting of bills, notes and bonds,
which principally differ only in their interest rates, maturities and time of
issuance. The Funds may also invest in other securities issued or guaranteed by
the U. S. government, its agencies and instrumentalities. Obligations of
certain agencies and instrumentalities, such as the Government National Mortgage
Association ("GNMA"), are supported by the full faith and credit of the U.S.
Treasury; others, such as those of the Export-Import Bank of the United States,
are supported by the right of the issuer to borrow from the Treasury; others,
such as those of the Federal National Mortgage Association ("FNMA"), are
supported by the discretionary authority of the U.S. government to purchase the
agency's obligations; still others, such as those of the Student Loan Marketing
Association, are supported only by the credit of the instrumentalities. No
assurance can be given that the U.S. government will provide financial support
to its agencies or instrumentalities if it is not obligated to do so by law.
There is no assurance that these commitments will be undertaken or complied with
in the future.

Obligations of the U.S. Treasury include "stripped" U.S. Treasury obligations
such as Treasury Receipts, representing either future interest or principal
payments. Stripped securities are issued at a discount to their "face value"
and may exhibit greater price volatility than ordinary debt securities because
of the manner in which their principal and interest are returned to investors.
Stripped U.S. Treasury obligations may include coupons that have been stripped
from U.S. Treasury bonds, which may be held through the Federal Reserve Bank's
book-entry system called "Separate Trading of Registered Interest and Principal
of Securities" ("STRIPS") or through a program entitled "Coupon Under Book-
Entry Safekeeping" ("CUBES").

Privately-Issued Stripped Securities

To the extent consistent with their respective investment objectives, each Fund
may also purchase U.S. Treasury securities that are stripped by investment banks
and sold under proprietary names. Such investments may include participations
in trusts that hold U.S. Treasury and agency securities (such as Treasury Income
Growth Receipts ("TIGRs") and Certificates of Accrual on Treasury Securities
("CATS"). These stripped securities are issued at a discount to their "face
value," and may exhibit greater price volatility than ordinary debt securities
because of the manner in which their principal and interest are returned to
investors. Securities stripped by investment banks are not as liquid as STRIPS
and CUBES and are not viewed by the staff of the Commission as U.S. government
securities for purposes of the 1940 Act.

Foreign Securities

Each Fund (other than the U.S. Government Securities Fund) may invest in foreign
securities. Such Funds' investments in the obligations of foreign issuers may
include both obligations of foreign corporations and banks, as well as
obligations of foreign governments and their political subdivisions. The
International Equity Fund may invest up to 100% of its assets in foreign
securities, whereas the Core Equity, Aggressive Equity, and Income Funds may
invest up to 15%, 10%, and 10%, respectively, in foreign securities. Foreign
securities include equity or derivative securities denominated in currencies
other than the U.S. dollar, including any single currency or multi-currency
units, plus sponsored and unsponsored ADRs and EDRs. ADRs typically are issued
by a U.S. bank or trust company and evidence ownership of underlying securities
issued by a foreign corporation. EDRs are receipts issued in Europe, typically
by foreign banks and trust companies, that evidence ownership of either foreign
or domestic underlying securities. Unsponsored ADRs and EDRs differ from
sponsored ADRs and EDRs in that the establishment of unsponsored ADRs and EDRs
are not approved by the issuer of the underlying securities. As a result,
available information concerning the issuer may not be as current or reliable as
information for sponsored ADRs and EDRs, and the price of unsponsored ADRs and
EDRs may be more volatile.

Investments in foreign securities and securities denominated in non-U.S.
currencies involve special risks and costs which are in addition to the normal
risks inherent in domestic investments. Political, economic or social
instability of the issuer or the country of issue, difficulty of predicting
international trade patterns, the possibility of expropriation or confiscatory
taxation, limitations on the removal of assets or diplomatic developments, and
the possibility of adverse changes in investment or exchange control regulations
are among the inherent risks. In addition, foreign stock markets are generally
not as developed or efficient as those in the U.S. Fixed commissions on foreign
stock exchanges are generally higher than the negotiated commissions on U.S.
exchanges, and there is generally less government supervision and regulation of
foreign stock exchanges, brokers and companies than in the U.S. In addition,
differences in clearance and settlement procedures on foreign markets may cause
delays in settlements of a Fund's trades effected in such markets. Inability to
dispose of portfolio securities due to settlement delays could result in losses
to the Fund due to subsequent declines in value of such security purchases due
to settlement problems or could result in a failure of a Fund to make
potentially advantageous investments.

Foreign companies are not subject to the regulatory requirements of U.S.
companies and, as such, there may be less publicly available information about
such companies. Moreover, foreign companies are not subject to uniform
accounting, auditing and financial reporting standards and requirements
comparable to those applicable to U.S. companies. In addition, a Fund could
encounter difficulties in obtaining or enforcing a judgment against an issuer in
certain foreign countries.

Fluctuations in the relative rates of exchange between the currencies of
different nations will affect the value of a Fund's investments. Changes in
foreign currency exchange rates relative to the U.S. dollar will affect the U.S.
dollar value of a Fund's assets denominated in that currency and thereby impact
upon the Fund's total return on such assets. Foreign currency exchange rates
are determined by forces of supply and demand on the foreign exchange markets.
These forces are themselves affected by the international balance of payments
and other economic and financial conditions, government intervention,
speculation and other factors. Moreover, foreign currency exchange rates may be
affected by the regulatory control of the exchanges on which the currencies
trade. To the extent that a Fund's total assets, adjusted to reflect the Fund's
net position after giving effect to currency transactions, are denominated in
the currencies of foreign countries, the Fund will be more susceptible to the
risk of adverse economic and political developments within those countries. In
addition, the respective net currency position of the Funds may expose them to
risks independent of their securities positions. To the extent that the
International Equity Fund is fully invested in foreign securities while also
maintaining currency positions, it may be exposed to greater risk than it would
have if it did not maintain the currency positions. The Funds are also subject
to the possible imposition of exchange control regulations or freezes on
convertibility of currency. Dividends and interest payable on a Fund's foreign
portfolio securities may be subject to foreign withholding taxes. To the extent
such taxes are not offset by credits or deductions allowed to investors under
U.S. federal income tax law, such taxes may reduce the net return to the
shareholders. See "Taxes" in the Statement of Additional Information.

Because of these and other factors, securities of foreign companies acquired by
the Funds may be subject to greater fluctuation in price than securities of
domestic companies.

Forward Currency Exchange Contracts

Each Fund (other than the U.S. Government Securities Fund) may enter into
forward contracts to "lock in" the U.S. dollar price of a security denominated
in a foreign currency when it enters into a contract to purchase or sell the
security, or to hedge against an anticipated decline in the currency of a
particular foreign country in which some of the Fund's portfolio securities are
denominated. These Funds may also enter into forward contracts to attempt to
hedge interest or dividend payments payable in a foreign currency. The
International Equity Fund may also conduct currency transactions on a spot
(cash) basis.

A forward currency exchange contract is an obligation to purchase or sell a
specific currency at a future date, which may be any fixed number of days from
the date of the contract agreed upon by the parties, at a price set at the time
of contract. Although the contracts may be used to minimize the risk of loss
due to a decline in the value of the hedged currency, at the same time they tend
to limit any potential gain that might be realized should the value of such
currency increase. In addition, the use of forward contracts does not eliminate
fluctuations in the underlying prices of the securities, but it does establish a
rate of exchange that can be achieved in the future. In connection with its
forward currency exchange contracts, a Fund will create a segregated account of
liquid assets, such as cash, U.S. government securities or other liquid high
quality debt obligations, or will otherwise cover its position in accordance
with applicable requirements of the Commission.

Emerging Market Securities

The risks of investing in foreign securities may be intensified in the case of
investments in issuers domiciled or doing substantial business in emerging
markets or countries with limited or developing capital markets. Security
prices in emerging markets can be significantly more volatile than in the more
developed nations of the world, reflecting the greater uncertainties of
investing in less established markets or economies. In particular, countries
with emerging markets may have relatively unstable governments, present the risk
of sudden adverse government action and even nationalization of businesses,
restrictions on foreign ownership, or prohibitions of repatriation of assets,
and may have less protection of property rights than more developed countries.
The economies of countries with emerging markets may be predominantly based on
only a few industries, may be highly vulnerable to changes in local or global
trade conditions, and may suffer from extreme and volatile debt burdens or
inflation rates. Local securities markets may trade a small number of
securities and may be unable to respond effectively to increases in trading
volume, potentially making prompt liquidation of substantial holdings difficult
or impossible at times. Transaction settlement and dividend collection
procedures may be less reliable in emerging markets than in developed markets.
Securities of issuers located in countries with emerging markets may have
limited marketability and may be subject to more abrupt or erratic price
movements.

Options and Futures Contracts

To the extent consistent with its investment objective, each Fund may purchase
and sell put and call options for the purpose of hedging or earning additional
income. These options may relate to particular securities, financial
instruments, foreign currencies, stock or bond indices, and may or may not be
listed on a securities exchange and may or may not be issued by the Options
Clearing Corporation. A Fund will not purchase put and call options where the
aggregate premiums on outstanding options exceed 5% of its total assets at the
time of purchase, and will not write put options if the aggregate value of
securities underlying the put options would exceed 25% of the Fund's net assets
(measured at the time the put option is written). Options trading is a highly
specialized activity that entails greater than ordinary investment risks. In
addition, unlisted options are not subject to the protections afforded
purchasers of listed options issued by the Options Clearing Corporation, which
performs the obligations of its members if they default.

To the extent consistent with its investment objective, each Fund may also
purchase and sell futures contracts and options on futures contracts for hedging
purposes or to maintain liquidity by using the futures contract or option as a
substitute for holding the designated securities underlying the futures
contract. A futures contract is an agreement to purchase or sell a specified
amount of designated securities for a set price at a specified future time. At
the time it enters into a futures contract or writing an option on a futures
contract, a Fund is required to make a performance deposit ("initial margin")
of cash or liquid securities. Subsequent payments of "variation margin" are
then made on a daily basis, depending on the value of the futures or options
position which is continually marked to market.

If a Fund enters into a short position in a futures contract as a hedge against
anticipated adverse market movements and the market then rises, the increase in
the value of the hedged securities will be offset, in whole or in part, by a
loss on the futures contract. If instead a Fund purchases a futures contract as
a substitute for investing in the designated underlying securities, the Fund
will experience gains or losses that correspond generally to gains or losses in
the underlying securities. The latter type of futures contract transactions
permits a Fund to experience the results of being fully invested in a particular
asset class, while maintaining the liquidity needed to manage cash flows into or
out of the Fund. To the extent that a Fund enters into futures contracts,
options on futures contracts or options on foreign currencies that are traded on
an exchange regulated by the Commodity Futures Trading Commission ("CFTC"), in
each case that are not for bona fide hedging purposes (as defined by the CFTC),
the Fund's aggregate initial margin and premiums required to establish those
positions may not exceed 5% of the liquidation value of the Fund's portfolio,
after taking into account unrealized profits and unrealized losses on any such
positions it has entered into. To the extent a Fund purchases or sells futures,
options on futures contracts or foreign currencies traded on a CFTC regulated
exchange, its sub-adviser intends to comply with the regulations of the CFTC
exempting the Fund from registration as a "commodity pool operator."

When required, a Fund will segregate cash, U.S. government securities or other
high-quality debt securities in an amount sufficient to meet its obligations
under the transactions. The primary risks associated with the use of futures
contracts and options are: (a) the imperfect correlation between the change in
market value of the instruments hedged by a Fund and the price of the futures
contract or option; (b) possible lack of a liquid secondary market for a futures
contract or option and the resulting inability to close a futures contract or
option when desired; (c) losses caused by unanticipated market movements, which
are potentially unlimited; and (d) the sub-adviser's ability to correctly
predict the direction of securities prices, interest rates, currency exchange
rates and other economic factors. A further discussion is included in the
Statement of Additional Information.

Illiquid Securities

Each Fund will not knowingly invest more than 15% of the value of its respective
net assets in securities that are illiquid. For purposes of this restriction,
illiquid securities include repurchase agreements and time deposits that do not
provide for payment to a Fund within seven days, over-the-counter options, and
securities that are not registered under the Securities Act of 1933 (unless the
Board of Trustees or the Adviser or a Fund's sub-adviser, pursuant to guidelines
adopted by the Board of Trustees, determines that a liquid trading market
exists). Risks associated with restricted securities include the potential
obligation to pay all or part of the registration expenses in order to sell
certain restricted securities. A considerable period of time may elapse between
the time of the decision to sell a security and the time a Fund may be permitted
to sell under an effective registration statement. If, during such a period,
adverse conditions were to develop, a Fund might obtain a less favorable price
than prevailing when it decided to sell.

Mortgage and Other Asset-Backed Securities

The Funds may purchase securities that are secured or backed by mortgages or
other mortgage-related assets. Such securities may be issued by such entities
as GNMA, FNMA, the Federal Home Loan Mortgage Corporation ("FHLMC"),
commercial banks, savings and loan associations, mortgage banks or by issuers
that are affiliates of or sponsored by such entities. Such securities are
ownership interests in the underlying mortgage loans and provide for monthly
payments that are a "pass-through" of the monthly interest and principal
payments (including any prepayments) made by the individual borrowers on the
pooled mortgage loans, net of any fees paid to the guarantor of such securities
and the servicer of the underlying mortgage loans.

Mortgage-backed securities also include collateralized mortgage obligations
("CMOs"). CMOs are securities collateralized by mortgages or mortgage-backed
securities. CMOs are issued with a variety of classes or series, which have
different maturities, and are often retired in sequence. CMOs may be issued by
governmental or non-governmental entities such as banks and other mortgage
lenders. Securities issued by entities other than governmental entities may
offer a higher yield but also may be subject to greater price fluctuations than
securities issued by governmental entities. None of the Funds intend to invest
in derivative mortgage-backed securities, such as certain classes of CMOs and
other types of mortgage pass-through securities, which are designed to be highly
sensitive to changes in prepayment and interest rates and can subject the
shareholder to extreme reductions of yield and possibly loss of principal.

The Funds (other than the U.S. Government Securities Fund) may also purchase
securities that are secured or backed by assets other than mortgage-related
assets, such as automobile and credit card receivables, and that are sponsored
by such institutions as finance companies, finance subsidiaries of industrial
companies and investment banks. These securities may not have the benefit of
any security interest in the underlying assets and recoveries on repossessed
collateral may not, in some cases, be available to support payments on these
securities. A Fund will only purchase asset-backed securities that its sub-
adviser determines to be liquid.

The yield characteristics of mortgage-backed and other asset-backed securities
differ from traditional debt securities. A major difference is that the
principal amount of the obligation generally may be prepaid at any time because
the underlying assets (i.e., loans) generally may be prepaid at any time. As a
result, if an asset-backed security is purchased at a premium, a prepayment rate
that is faster than expected will reduce yield to maturity, while a prepayment
rate that is slower than expected will have the opposite effect of increasing
yield to maturity. Conversely, if an asset-backed security is purchased at a
discount, faster than expected prepayments will increase, while slower than
expected prepayments will decrease, yield to maturity.

Forward Commitments and When-Issued Securities

Each Fund may purchase securities on a firm commitment basis, including when-
issued securities. Securities purchased or sold on a firm commitment basis are
purchased or sold for delivery beyond the normal settlement date at a stated
price and yield. Purchases are recorded as an asset and are subject to changes
in the general level of interest rates. The Funds will only make commitments to
purchase securities on a firm commitment basis or purchase or sell securities on
a forward commitment basis with the intention of actually acquiring the
securities but may sell them before the settlement date if it is deemed
advisable.

When a Fund purchases securities on a when-issued or forward commitment basis,
the Fund's custodian will maintain in a segregated account cash and liquid high-
grade debt securities having a value (determined daily) at least equal to the
amount of the Fund's purchase commitments. In the case of a forward commitment
to sell portfolio securities, the custodian will hold the portfolio securities
themselves in a segregated account while the commitment is outstanding. These
procedures are designed to ensure that the Fund will maintain sufficient assets
at all times to cover its obligations under when-issued purchases and forward
commitments.

Convertible Securities

Each Fund (other than the U.S. Government Securities Fund) may invest in
convertible securities. A convertible security may be converted either at a
stated price or rate within a specified period of time into a specified number
of shares of common stock. By investing in convertible securities, a Fund seeks
the opportunity, through the conversion feature, to participate in a portion of
the capital appreciation of the common stock into which the securities are
convertible, while earning higher current income than is available from the
common stock. Convertible debt securities and convertible preferred stocks,
until converted, have general characteristics similar to both debt and equity
securities. Although to a lesser extent than with debt securities generally,
the market value of convertible securities tends to decline as interest rates
increase and, conversely, tends to increase as interest rates decline. In
addition, because of the conversion or exchange feature, the market value of
convertible securities typically changes as the market value of the underlying
common stock changes, and, therefore, also tends to follow movements in the
general market for equity securities. A unique feature of convertible
securities is that as the market price of the underlying common stock declines,
convertible securities tend to trade increasingly on a yield basis, and so may
not experience market value declines to the same extent as the underlying common
stock. When the market price of the underlying common stock increases, the
prices of the convertible securities tend to rise as a reflection of the value
of the underlying common stock, although typically not as much as the underlying
common stock. Convertible securities generally offer lower yields than non-
convertible securities of similar quality because of their conversion or
exchange features. The lowest grade of convertible security in which any Fund
may invest is B as rated by Moody's Investor Service, Inc. ("Moody's") and
Standard & Poor's Corporation ("S&P").

Investment Grade and Non-Investment Grade Debt Securities

Each Fund (other than the Core Equity and International Equity Funds) intends to
limit its investments in debt securities to those which are "investment
grade." Investment grade obligations are obligations rated within the four
highest rating categories by Moody's (Baa or higher), S&P (BBB or higher) or
other nationally recognized rating agencies, or obligations unrated but deemed
by the Fund's sub-adviser to be comparable in quality to instruments that are so
rated. Obligations rated in the lowest of the top four ratings, though
considered investment grade, are considered to have speculative characteristics,
and changes in economic conditions or other circumstances are more likely to
lead to a weakened capacity to make principal and interest payments than is the
case with higher rated securities. Subsequent to its purchase by a Fund, a
rated security may cease to be rated or its rating may be reduced below the
minimum rating required for purchase by such Fund. The Fund's sub-adviser will
consider such an event in determining whether a Fund should continue to hold the
security. Such Fund's sub-adviser expects to sell promptly any securities that
are non-investment grade as a result of these events that exceed 5% of the
Fund's net assets. However, nothing herein shall require the Fund's sub-adviser
to sell any securities at a loss to the respective Fund. See the Statement of
Additional Information for a description of applicable debt ratings.

The Core Equity and International Equity Funds may invest up to 10% of their
respective net assets in convertible securities and debt securities rated lower
than Baa by Moody's or BBB by S&P, or of equivalent quality as determined by
their respective sub-advisers (commonly referred to as "junk bonds"). The
lower the ratings of such debt securities, the greater their risks make such
securities like or similar to equity securities. The lowest grade of debt
security in which any Fund may invest is B as rated by Moody's and S&P.

Low-rated securities generally offer a higher yield than that available from
higher rated securities. However, low-rated securities involve higher risks, in
that they are especially subject to adverse changes in general economic
conditions and in the industries in which the issuers are engaged, to changes in
the financial condition of the issuers and to price fluctuation in response to
changes in interest rates. During periods of economic downturn or rising
interest rates, highly leveraged issuers may experience financial stress which
could adversely affect their ability to make payments of principal and interest
and increase the possibility of default. In addition, the market for low-rated
securities has expanded rapidly in recent years.

The market for low-rated securities is generally thinner and less active than
that for higher quality securities, which would limit the Fund's ability to sell
such securities at fair value in response to changes in the economy or the
financial markets. While such securities may have some quality and protective
characteristics, these are outweighed by large uncertainties or major risk
exposure to adverse conditions. The sub-advisers to the Core Equity and
International Equity Funds will seek to reduce the risks associated with
investing in such securities by limiting the Funds' holdings in such securities
and by the depth of their own credit analyses. For additional information about
the risks of investing in low-rated securities and for additional information on
securities ratings, see the Statement of Additional Information.

Subsequent to its purchase by a Fund, a rated security may cease to be rated or
its rating may be reduced below the minimum rating required for purchase by the
Fund. Each Fund's sub-adviser will consider such an event in determining
whether the Fund should continue to hold the security. The Funds expect,
however, to sell promptly any securities that fall below their respective
minimums as a result of these events that exceed 5% of each Fund's net assets.
However, nothing herein shall require a Fund's sub-adviser to sell any
securities at a loss.

Securities Lending

The Funds do not presently intend to lend portfolio securities.

Portfolio Turnover

In order to achieve its investment objective, the sub-advisers of the Funds will
generally purchase and sell securities without regard to the length of time the
security has been held and, accordingly, it can be expected that the rate of
portfolio turnover may be substantial. The sub-advisers intend to purchase a
given security whenever they believe it will contribute to the stated objective
of a Fund, even if the same security has only recently been sold. In selling a
given security, the sub-advisers will keep in mind that (i) profits from sales
of securities held less than three months must be limited in order to meet the
requirements of Subchapter M of the Code; and (ii) profits from sales of
securities are taxable to certain shareholders. Subject to those
considerations, the Funds may sell a given security, no matter for how long or
for how short a period it has been held in the portfolio, and no matter whether
the sale is at a gain or at a loss, if the portfolio managers believe that it is
not fulfilling its purpose. Since investment decisions are based on the
anticipated contribution of the security in question to the applicable Fund's
objectives, the rate of portfolio turnover is irrelevant when the sub-advisers
believe a change is in order to achieve those objectives, and each of the Funds'
annual portfolio turnover rate may vary from year to year.

It is anticipated that the annual portfolio turnover rate of the Core Equity
Fund will be approximately 40%, the portfolio turnover rate of the Aggressive
Equity Fund will be approximately 100%, the portfolio turnover rate of the
International Equity Fund will be approximately 50%, the portfolio turnover rate
of the U.S. Government Securities Fund will be approximately 30%, and the
portfolio turnover rate of the Income Fund will be approximately 40%.

High portfolio turnover (i.e., over 100%) may involve correspondingly greater
brokerage commissions and other transaction costs, which are borne directly by
the Funds. In addition, high portfolio turnover may result in increased short-
term capital gains which, when distributed to shareholders, are treated as
ordinary income for federal income tax purposes.

INVESTMENT RESTRICTIONS
A Fund's investment objective may be changed by its Board of Trustees without
shareholder approval. Shareholders will, however, be notified at least 30 days
in advance of any changes. Any such change may result in a Fund having an
investment objective different from the objective which the shareholder
considered appropriate at the time of investment in the Fund. No assurance can
be provided that a Fund will achieve its investment objective.

Each Fund has also adopted certain fundamental investment restrictions that may
be changed only with the approval by a majority of a Fund's outstanding shares.
The following description summarizes several of the Fund's fundamental
restrictions, which are set forth in full in the Statement of Additional
Information.

No Fund may:
1. purchase the securities of any issuer if the purchase would cause more than
5% of the value of a Fund's total assets to be invested in securities of any one
issuer (except securities of the U.S. government or any agency or
instrumentality thereof), or purchase more than 10% of the outstanding voting
securities of any one issuer, except that up to 25% of a Fund's total assets may
be invested without regard to these limitations;

2. invest 25% or more of its total assets at the time of purchase in
securities of issuers whose principal business activities are in the same
industry; and

3. borrow money except for temporary purposes in amounts up to 33 1/3% of the
value of its total assets at the time of borrowing.

Although restriction 1 does not apply to the Aggressive Equity Fund, in order to
meet certain tax requirements, the Aggressive Equity Fund will not hold any
securities (except U.S. government securities and repurchase agreements
collateralized by such securities) that would cause, at the end of any quarter
of such Fund's taxable year, more than 5% of its total assets to be invested in
the securities of any one issuer, except that up to 50% of the Fund's total
assets may be invested without regard to this limitation so long as no more than
25% of the Fund's total assets are invested in any one issuer (except the U.S.
government, its agencies and instrumentalities).

MANAGEMENT OF THE STALWART FUNDS
As a Delaware business trust, the business and affairs of the Trust are managed
by its Board of Trustees. The Trust has entered into a Management and Advisory
Agreement dated January 15, 1995 (the "Advisory Agreement") with Briar Capital
Management L.L.C. (the "Adviser"), 311 South Wacker Drive, Suite 4990,
Chicago, Illinois 60606-6604, pursuant to which the Adviser provides consulting,
investment and administrative services to the Funds. The Advisory Agreement
permits the Adviser to retain one or more sub-advisers to provide investment
advisory services to the Funds. Pursuant to this authority, the Adviser has
entered into sub-advisory agreements with four sub-advisers each dated January
15, 1995 (the "Sub-Advisory Agreement(s)") to provide investment advisory
services for the Core Equity, Aggressive Equity, International Equity, U.S.
Government Securities and Income Funds. Subject to the management and direction
of the Board of Trustees, the Adviser selects and monitors the various sub-
advisers.

Investment Adviser

The Adviser was organized on September 29, 1994 as an Illinois limited liability
company to become the investment adviser to the Funds. The Adviser presently
has no other clients and no prior experience managing a registered open-end
investment company. The Adviser is affiliated with Pekin, Singer & Shapiro
Asset Management, Inc. ("PSSAM"), Prairie Asset Management, Glencoe Investment
Corporation and S.F. Investments, Inc. PSSAM, a registered investment adviser,
is owned by substantially the same individuals as the Adviser. The
professionals that provide investment advisory services for PSSAM are
substantially the same individuals that will comprise the investment committee
that will make investment decisions for the Adviser. Several of these
individuals have been in the investment advisory business for over 25 years.
PSSAM was founded in 1990 and along with its affiliated companies currently has
assets under management of approximately $300 million.

Pursuant to the Advisory Agreement, the Adviser (i) provides or oversees the
provision of all general management and administration, investment advisory and
portfolio management for the Funds; (ii) provides the Funds with office space,
equipment and personnel necessary to operate and administer the Funds' business,
and to supervise the provision of services by third parties such as the sub-
advisers and custodian; and (iii) develops the investment programs, selects sub-
advisers, and monitors the sub-advisers' investment programs and results. The
Adviser bears the expenses it incurs in providing these services as well as the
costs of preparing and distributing explanatory materials concerning the Funds.
The Adviser also provides asset management consulting services, including the
objective-setting and asset-allocation strategies, and sub-advisers review and
evaluation assistance.

The Adviser receives an annual management fee from each Fund. The Adviser is
responsible for the payment of all fees to the sub-advisers. The annual
management fees, payable monthly on a pro rata basis, are the following
percentages of the average daily net assets of the Funds: 0.75% for the Core
Equity Fund, 0.65% for the Aggressive Equity Fund, 0.85% for the International
Equity Fund and 0.45% for each of the U.S. Government Securities Fund and the
Income Fund. The basic advisory fee paid by the Core Equity Fund of 0.75% may
be increased or decreased by applying an adjustment formula based on the
investment performance of the Fund relative to the performance of the S&P 500.
The Fund calculates investment performance in the same manner as the S&P 500.
The adjustment is 0.02% for each full 1.00% by which the total rate of return of
the Fund differs from the total rate of return on the S&P 500 during each Fund
year. The maximum annualized performance adjustment is +/- 0.10% (i.e., 10
basis points). The Adviser and the Fund's sub-adviser will receive the maximum
performance adjustment in the event that the total rate of return of the Fund
exceeds the total rate of return of the S&P 500 by 5.00% (i.e., 500 basis
points). For example, if the S&P 500 has an average annual performance of 10%,
the Fund's average annual performance would have to be equal to or greater than
15% for the Adviser and the Fund's sub-adviser to receive an annual performance
fee of 0.10% (i.e., the difference in performance between the Fund and the S&P
500 must be equal to or greater than 5% for the Adviser and the Fund's sub-
adviser to receive the maximum performance fee). In April 1972, the SEC issued
release No. 7113 under the Investment Company Act (the "Release") to call the
attention of directors and investment advisers to certain factors which must be
considered in connection with investment company incentive fee arrangements.
One of these factors is to "avoid basing significant fee adjustments upon
random or insignificant differences" between the investment performance of a
fund and that of the particular index with which it is being compared. The
Release provides that "preliminary studies (of the SEC staff) indicate that as
a 'rule of thumb' the performance difference should be at least +/- 10
percentage points" annually before the maximum performance adjustment may be
made. However, the Release also states that "because of the preliminary nature
of these studies, the Commission is not recommending at this time, that any
particular performance difference exists before the maximum fee adjustment may
be made." The Release concludes that the directors of a fund "should satisfy
themselves that the maximum performance adjustment will be made only for
performance differences that can reasonably be considered significant." The
Board of Trustees of the Fund has fully considered the Release and believes that
the performance adjustments are entirely appropriate although not within the
+/- 10 percentage points per year range suggested by the Release.

The Adviser retains 0.25% of the advisory fees and the remaining amounts are
remitted to the respective sub-advisers. While the investment advisory fee paid
by the Core Equity Fund and the International Equity Fund is higher than that
paid by most investment companies, the Board of Trustees believes it is
appropriate for these Funds in light of their investment objectives and
policies.

Sub-Advisers

All sub-advisers are employed by the Adviser, subject to approval by the Board
of Trustees and the shareholders of the applicable Fund. The Adviser recommends
sub-advisers to the Fund's Board of Trustees based upon its continuing
quantitative and qualitative evaluation of the sub-adviser's skill in managing
assets using specific investment styles and strategies. Each sub-adviser has
discretion to purchase and sell securities for the assets of its respective Fund
in accordance with that Fund's objectives, policies and restrictions and the
more specific strategies provided by the Adviser. Although the sub-advisers are
subject to general supervision by the Funds' Board, officers and Adviser, these
parties do not evaluate the investment merits of specific securities
transactions.

Sub-advisers are selected for the Funds based primarily upon the research and
recommendations of the Adviser, which evaluates quantitatively and qualitatively
the sub-adviser's skills and results in managing assets for specific asset
classes, investment styles and strategies. The Adviser evaluates the risks and
returns of the sub-advisers' investment style over an entire market cycle.
Short-term investment performance by itself is not a controlling factor in
selecting or terminating a sub-adviser.

Each of the sub-advisers has entered into a Sub-Advisory Agreement and each is
principally engaged in managing investment advisory accounts or providing
investment supervisory services. Details regarding the sub-advisers are
described below under "Portfolio Management of the Funds."

Portfolio Management of the Funds

Information regarding the portfolio management of each Fund, including
background information about the sub-advisers and portfolio managers for each
Fund and the fees to be paid for advisory services by the Fund, is set forth
below:

Core Equity Fund

Harris Associates L.P. ("Harris"), Two North LaSalle Street, Chicago, Illinois
60602-3790, acts as sub-adviser for the Core Equity Fund. Harris was founded in
1976 and presently has assets under management in excess of $5.5 billion.
Harris has thirteen active partners, none of whom own more than 15%.
Domestically, the firm manages both balanced and equity portfolios for
individual and institutional clients. Harris also offers international equity
separate account management for institutions and provides investment advisory
services to partnerships and two registered investment companies. Harris
currently acts as investment adviser to the Oakmark Fund and the Oakmark
International Fund.

Robert H. Harper, C.F.A., a principal of Harris, acts as portfolio manager for
the Fund and is the person primarily responsible for the day-to-day management
of the Fund. Mr. Harper has been a principal with Harris since 1978 and
presently is a director of the firm and a Vice President of its general partner.
He has 25 years of investment management experience.

For its services to the Fund, the Adviser pays Harris a fee, computed daily and
payable monthly, equal to 0.50% of the average daily net assets of the Fund.
This basic advisory fee may be increased or decreased by applying an adjustment
formula based on the investment performance of the Fund relative to the
performance of the S&P 500. The Fund calculates investment performance in the
same manner as the S&P 500. The adjustment is 0.02% for each full 1.00% by
which the total rate of return of the Fund differs from the total rate of return
on the S&P 500 during each Fund year. The maximum annualized performance
adjustment is +/- 0.10% (i.e., 10 basis points). Harris will receive the
maximum performance adjustment in the event that the total rate of return of the
Fund exceeds the total rate of return of the S&P 500 by 5.00% (i.e., 500 basis
points).

Aggressive Equity Fund

Wasatch Advisors, Inc. ("Wasatch"), 68 South Main Street, Salt Lake City, Utah
84101, acts as sub-adviser to the Aggressive Equity Fund. Wasatch has been in
the investment advisory business since 1975 and currently has assets under
management of approximately $300 million including the assets of four mutual
funds for which the firm acts as investment adviser. Dr. Samuel S. Stewart, Jr.
is Chairman of the Board and President of Wasatch. Dr. Stewart is the only
owner of Wasatch who owns more than 25% of Wasatch and is thus deemed to control
Wasatch. The Fund is managed by a committee of four persons, including Dr.
Stewart who is chairman and who has served as President of Wasatch since 1975
when he founded the firm. The balance of the committee is comprised of Jeff
Cardon, Karolyn Worton and Robert Gardiner, all of whom are Chartered Financial
Analysts. No single individual is primarily responsible for making
recommendations to the committee. Mr. Cardon joined Wasatch in 1980 and serves
as senior research analyst. Ms. Worton and Mr. Gardiner have served as research
analysts for Wasatch since 1989 and 1990, respectively.

For its services to the Fund, the Adviser pays Wasatch a fee, computed daily and
payable monthly, equal to 0.40% of the average daily net assets of the Fund.

International Equity Fund

Harding, Loevner Management, L.P. ("HLM"), 50 Division Street, Somerville, New
Jersey 08876, acts as sub-adviser to the International Equity Fund. HLM,
established in 1989 and controlled by Daniel D. Harding and David R. Loevner, is
a registered investment adviser that specializes in global investment management
for private investors, foundations and endowments. HLM presently provides
investment supervisory services to a registered investment company and has $350
million under management.

Daniel D. Harding, Chief Investment Officer of HLM, Simon Hallett, Senior
Portfolio Manager and Principal of HLM and David R. Loevner, Chief Executive
Officer of HLM, comprise the investment committee that is primarily responsible
for the day-to-day management of the Fund. No single individual is primarily
responsible for making investment recommendations to that committee.

Prior to founding the firm, Mr. Harding served for ten years as a senior
investment manager with Rockefeller & Company, the private investment firm that
advises the Rockefeller family and related charities. At Rockefeller, he set
equity and fixed income investment strategy and spearheaded the international
diversification of the firm's investments. Mr. Harding graduated with honors
from Colgate University and is a Chartered Financial Analyst.

Prior to joining the firm in 1991, Mr. Hallett served seven years with Jardine
Fleming Investment Management where he was director in charge of a team of six
portfolio managers investing in the markets of Southeast and North Asia. Mr.
Hallett graduated with honors from Oxford University.

Mr. Loevner's prior experience includes nine years with the Rockefeller family
office where he managed equity portfolios and developed new financial planning
and asset allocation techniques. In 1987, he relocated to Hong Kong to open
Rockefeller's first Asian office and manage a regional investment program
comprising both quoted and private venture investments. Before joining
Rockefeller, Mr. Loevner was an economist with the World Bank. He graduated
summa cum laude from Princeton University and, as a Sachs scholar, received
graduate degrees from Oxford University.

For its services to the Fund, the Adviser pays HLM a fee, computed daily and
payable monthly, equal to 0.60% of the average daily net assets of the Fund.

U.S. Government Securities Fund and Income Fund

PSSAM manages the assets of the U.S. Government Securities Fund and the Income
Fund. PSSAM is owned and operated by substantially the same individuals as the
Adviser. All investment decisions made by PSSAM for these Funds are made by an
investment committee and no single individual is primarily responsible for
making investment recommendations to that committee. The committee presently
consists of David S. Evans, Thomas A. Hickey, Joanne Pekin, Sheldon M. Pekin and
Richard A. Singer, certain of whom are principals of the Adviser, PSSAM, Prairie
Asset Management, Glencoe Investment Corporation and/or S.F. Investments, Inc.

For its services for the U.S. Government Securities Fund and the Income Fund,
the Adviser receives from each Fund a fee, computed daily and payable monthly,
equal to 0.45% of the average net assets of the respective Fund. Of this fee,
the Adviser pays to the sub-adviser a fee equal to 0.20% of the average net
assets of the respective Fund.

Administrator

Pursuant to an Administration and Fund Accounting Agreement (the
"Administration Agreement"), Sunstone Financial Group, Inc. (the
"Administrator" or "Sunstone"), 207 East Buffalo Street, Suite 400,
Milwaukee, Wisconsin 53202, acts as administrator for the Funds. The
Administrator, at its own expense and without reimbursement from the Funds,
furnishes office space and all necessary office facilities, equipment, supplies
and clerical and executive personnel for performing the services required to be
performed by it under the Administration Agreement. For its administrative
services (which include clerical, compliance, regulatory, fund accounting and
other services), the Administrator receives from the Trust a fee, computed daily
and payable monthly, based on the Funds' aggregate average net assets at the
annual rate of 0.200 of 1.0% on the first $100,000,000 of average net assets,
0.125 of 1.0% on the next $150,000,000 of average net assets and 0.075 of 1.0%
on average net assets in excess of $250,000,000, subject to an annual minimum of
$255,000, plus out-of-pocket expenses. In addition, the Administrator received
from the Funds $60,000 for organizational services provided by the
Administrator.

Distributor

S. F. Investments, Inc. (the "Distributor"), 311 South Wacker Drive, Suite
4990, Chicago, Illinois 60606-6604, is the distributor of the Fund. The
Distributor is an affiliate of the Adviser and is controlled by Nathan Shapiro,
a principal of PSSAM. The Trust has adopted a plan of distribution pursuant to
Rule 12b-1 of the 1940 Act. Under this plan, the Trust may bear expenses to
finance activities intended to result in the sale of its shares provided the
expenses are reviewed and approved by the Board of Trustees. Such activities
may include compensating brokers, preparing and distributing marketing
materials, and preparing and placing advertisements. Payments may also be made
to organizations, including affiliates of the Adviser, which provide support and
distribution services to their customers which are beneficial owners of Fund
shares. These services may include assisting investors in processing purchase,
exchange and redemption requests; processing dividend and distribution payments
from the Funds; providing information periodically to customers showing their
positions in Fund shares; and providing subaccounting with respect to Fund
shares beneficially owned by customers or the information necessary for
subaccounting. The Trust pays the Distributor an annual 12b-1 fee of 0.15% of
the average daily net assets of the Funds. If payments made by the Distributor
for such activities or expenses exceed in any year the maximum under the plan of
distribution, the Trust will not be liable for any such difference.

Expenses

The Trust will pay all of its own expenses, including, but not limited to,
investment advisory, transfer agent, distribution, custodial, audit, legal,
printing and postage, accounting, registration and insurance expenses. The
Adviser has voluntarily agreed to waive its advisory fee and reimburse other
expenses to the extent necessary to ensure that the total operating expenses do
not exceed 1.53%, 1.60%, 1.91%, 1.11% and 1.31% of the average daily net assets
of the Core Equity Fund, Aggressive Equity Fund, International Equity Fund,
U.S. Government Securities Fund and Income Fund, respectively, for the fiscal
year. For future years, the Adviser has voluntarily agreed to reimburse other
expenses to the extent necessary to ensure that total operating expenses do not
exceed industry averages (as provided by Lipper Analytical Services, Inc.) for
similar funds (other than the Aggressive Equity and International Equity Funds
which may exceed such industry average by no more than 10%, the Core Equity Fund
which may exceed such industry average by no more than 11.5% and the
International Equity Fund which may exceed such industry average by no more than
20%). This waiver and reimbursement may be terminated upon 60 days prior
written notice to the shareholders.

Allocation of Brokerage Commissions

The Adviser and the sub-advisers, where appropriate, reserve the right to
allocate brokerage transactions to other broker/dealers in a manner which takes
into account the sale of the Trust's shares and may allocate brokerage to
broker/dealers and others who may be affiliated with a sub-adviser or the
Adviser only if done in compliance with the 1940 Act and with procedures
established by the Board of Trustees. Any allocation of brokerage transactions
will be governed by the ability to obtain the most favorable price and execution
of the transaction. The Board of Trustees will review the allocation of
brokerage transactions on a quarterly basis.

PURCHASE AND REDEMPTION OF SHARES

Who May Purchase Fund Shares

The Funds' shares will not be offered to the public generally and may be
purchased only by Lafayette American Bank & Trust Company and its affiliates,
either for their own account or for the account of their clients, or by clients
of the Adviser.

How to Buy Shares

Shares of each Fund are sold without an initial sales charge at the net asset
value next determined after the receipt of a purchase order in proper form as
described below. The minimum initial purchase of shares is $500 per Fund.
There is a $100 minimum amount required for subsequent purchases. Each Fund
reserves the right to reject any order for the purchase of its shares or to
limit or suspend, without prior notice, the offering of its shares.

By Wire: Initial Purchases: Lafayette American Bank & Trust Company and its
affiliates may purchase shares by transmitting immediately available funds
(federal funds) by wire to:

United Missouri Bank
ABA #101000 695
For credit to Stalwart Funds, Account #98-7060-774-3
Name and account number of Shareholder's Account

Before making an initial investment by wire, Lafayette American Bank & Trust
Company and its affiliates must notify the Funds' Transfer Agent to advise of
the action and to be assigned an account number. If this notification is not
made, it may not be possible to process the order promptly. In addition, an
Account Application, which is available through the Distributor, should be
promptly forwarded to the Transfer Agent, at the following address:

Stalwart Funds, Inc.
P.O. Box 419740
Kansas City, MO 64141-6740

Subsequent Purchases: Additional investments may be made at any time through
the wire procedure described above.

By Mail: Initial Purchases: The Account Application available through the
Distributor should be completed by Lafayette American Bank & Trust Company and
its affiliates, signed and mailed with a check, Federal Reserve draft, or other
negotiable bank draft, drawn on a U.S. bank and payable in U.S. dollars, to the
order of the Fund whose shares are being purchased, as the case may be, and
mailed to the Transfer Agent at the above address.

Subsequent Purchases: Additional purchases may be made at any time by Lafayette
American Bank & Trust Company by check, Federal Reserve draft, or other
negotiable bank draft, drawn on a U.S. bank and payable in U.S. dollars, to the
order of the relevant Fund at the above address. The Lafayette American Bank &
Trust Company sub-account, if any, to which the subsequent purchase is to be
credited should be identified together with the sub-account number and, unless
otherwise agreed, the name of the sub-account.

Automatic Investment Plan

The Funds offer an Automatic Investment Plan whereby a shareholder may
automatically make purchases of shares of a Fund in an existing account on a
regular, monthly basis on the 5th day of each month ($50.00 minimum per
transaction). If the fifth day of a month occurs on a Saturday, Sunday or legal
holiday, the purchase shall be made on the prior business day. Under the
Automatic Investment Plan, a shareholder's designated bank or other financial
institution debits a preauthorized amount on the shareholder's account each
month and applies the amount to the purchase of Fund shares. The Automatic
Investment Plan must be implemented with a financial institution that is a
member of the Automated Clearing House. No service fee is currently charged by
a Fund for participation in the Automatic Investment Plan. A $12.50 fee will be
imposed by the Transfer Agent if sufficient funds are not available in the
shareholder's account or the shareholder's account has been closed at the time
of the automatic transaction. To establish the Automatic Investment Plan
contact the Lafayette American Bank & Trust Company, Attention: Trust Department
at 1087 East Broad Street, Bridgeport, Connecticut 06604 or call (203) 336-6137
or (800) 262-7642.

How Shareholder Accounts are Maintained

Upon the initial purchase of a Fund's shares, an account will be opened for the
account or sub-account of Lafayette American Bank & Trust Company or its
affiliates. Subsequent investments may be made through Lafayette American Bank
& Trust Company or its affiliates at any time by mail to the Transfer Agent or
by wire as noted above. The shareholder accounts relating to investments made
by customers of the Adviser shall be maintained as specified by the Adviser.
Distributions paid in additional shares are credited to Fund accounts when paid.
Confirmation statements indicating total shares of each Fund owned in the
account or each sub-account will be mailed to shareholders at least quarterly,
and at the time of each purchase or redemption. The issuance of shares will be
recorded on the books of the relevant Fund. The Trust does not issue share
certificates.

How to Exchange Shares

Shares of any Fund may be exchanged for shares of another Fund at any time.
This exchange offer is available only in states where shares of such other Fund
may be legally sold. Each exchange is subject to a minimum initial investment
of $500 in each Fund except for certain Retirement Plans (as defined herein).

The value to be exchanged and the price of the shares being purchased will be
the net asset value next determined after receipt of instructions for the
exchange. An exchange from one Fund to another is treated the same as an
ordinary sale and purchase for federal income tax purposes and such an
exchanging shareholder will generally realize a capital gain or loss. This is
not a tax-free exchange. A fee of $5.00 is charged for each exchange, but such
exchange fee may be waived in certain instances. Exchange requests should be
directed to the Transfer Agent. The Trust reserves the right to modify or
terminate the exchange privilege upon 60 days' written notice to each
shareholder prior to the modification or termination taking effect.

Shareholders may withdraw all or a portion of their investment in the Stalwart
Funds and reinvest the proceeds in the Kemper Cash Account Trust Money Market
Portfolio, the Kemper Cash Account Trust Tax-Exempt Portfolio or the Flagship
Connecticut Double Tax Exempt Fund (collectively, the "expanded exchange
funds"). These exchange privileges are subject to the minimum initial and
subsequent investment requirements of the Stalwart Funds. Only collected shares
will be exchanged. Shareholders must obtain a copy of the prospectus for the
expanded exchange funds from the Trust, and are advised to read it carefully
before authorizing any investment in shares of the expanded exchange funds.

No charge to shareholders is imposed in connection with the expanded exchange
privilege. An exchange from the Funds to any of the expanded exchange funds is
treated as an ordinary sale and purchase for federal income tax purposes and
such an exchanging shareholder will generally realize a capital gain or loss.
This is not a tax-free exchange. The Trust reserves the right to modify or
terminate the expanded exchange privilege upon 60 days' written notice to each
shareholder prior to the modification or termination taking effect.

Additional documentation may be required for exchange requests if shares are
registered in the name of a corporation, partnership or fiduciary. Any exchange
request may be rejected by a Fund or the Distributor at its discretion. The
exchange privilege may be changed or discontinued without penalty at any time.
Contact the Lafayette American Bank & Trust Company for additional information
concerning the exchange privilege.

How to Redeem Shares

Shares of a Fund will be redeemed at the net asset value next determined after
receipt of a redemption request in proper form as described below. Proceeds
will be mailed within seven days of such receipt. However, at various times a
Fund may be requested to redeem shares for which it has not yet received good
payment. If the shares to be redeemed represent an investment made by check,
each Fund may delay payment of redemption proceeds until the check has been
collected which, depending upon the location of the issuing bank, could take up
to 15 days. For federal and state income tax purposes, a redemption of shares
is a taxable transaction and may result in recognition of a gain or loss.

Lafayette American Bank & Trust Company may redeem all or any number of shares
at any time by mail by delivering the request to the Transfer Agent. Stock
powers would be required when redeeming $25,000 or more, or when redemption
proceeds are going to an address other than an address of record, or when
redemption proceeds are going to a different person other than the Shareholder
of record. Written redemption requests or stock powers must be endorsed by the
record owner(s) exactly as the shares are registered. When required,
signature(s) must be guaranteed by a member of either the Securities Transfer
Association's STAMP program or the New York Stock Exchange's Medallion Signature
Program, or certain banks, savings and loan institutions, credit unions,
securities dealers, securities exchanges, clearing agencies and registered
securities associations as required by regulation of the Commission and
acceptable to the Transfer Agent. A notary public is not an acceptable
guarantor.

The right to redeem shares of a Fund and to receive payment therefore may be
suspended at times when (a) the securities markets are closed, other than
customary weekend and holiday closings; (b) trading is restricted for any
reason; (c) an emergency exists as a result of which disposal by the Fund of
securities owned by it is not reasonably practicable or it is not reasonably
practicable for the Fund fairly to determine the value of its net assets; or (d)
the Commission by order permits a suspension of the right of redemption or a
postponement of the date of payment or redemption.

Although the Funds normally intend to redeem shares in cash, each Fund, subject
to compliance with applicable regulations, reserves the right to deliver the
proceeds of redemptions in the form of portfolio securities if deemed advisable
by the Trustees. The value of any such portfolio securities distributed will be
determined in the manner as described under "Determination of Net Asset Value"
and may be more or less than a shareholder's cost depending upon the market
value of portfolio securities at the time the redemption is made. If the amount
of a Fund's shares to be redeemed for a Participating Trust Department sub-
account within a 90-day period exceeds the lesser of $250,000 or 1% of the
aggregate net asset value of the Fund at the beginning of such period, such Fund
reserves the right to deliver all or any part of such excess in the form of
portfolio securities. If portfolio securities were distributed in lieu of cash,
the shareholder would normally incur transaction costs upon the disposition of
any such securities.

Due to the relatively high cost of maintaining small accounts, each Fund
reserves the right to redeem fully at net asset value any Fund account which at
any time, due to redemption or transfer, amounts to less than $500 for that
Fund; any shareholder who makes a partial redemption which reduces his or her
account in a Fund to less than $500 would be subject to the Fund's right to
redeem such account. However, no such redemption would be required by the Fund
if the cause of the low account balance was a reduction in the net asset value
of Fund shares. Prior to the execution of any such redemption, notice will be
sent and the shareholder will be allowed 60 days from the date of notice to make
an additional investment to meet the required minimum of $500 per Fund.

Systematic Withdrawal Plan

The Funds offer shareholders a Systematic Withdrawal Plan, which allows a
shareholder to designate that a fixed sum ($250.00 minimum per transaction
limited to those shareholders with a balance of $5,000 or greater) be
distributed to the shareholder or as otherwise directed at regular intervals.
The redemption takes place on the 30th of the month, but if the 30th of the
month falls on a Saturday, Sunday or legal holiday, the distribution shall be
made on the prior business day. An application for this service together with
information on any applicable service fees may be obtained by calling Lafayette
American Bank & Trust Company, Trust Department at (203) 336-6137 or
(800) 262-7642.

Retirement Plans

The Trust has instituted a program under which an investor may establish an
Individual Retirement Account with the Lafayette American Bank & Trust Company
and purchase shares through such account. The minimum initial investment in
each Fund for such an account is $500 ($250 for a spousal IRA) and no minimum
for additional investments. Additional information regarding the establishment
of such an account may be obtained by calling Lafayette American Bank & Trust
Company, Trust Department at (203) 336-6137 or (800) 262-7642.

Lafayette American Bank & Trust Company also offers defined contribution plans,
including simplified employee (including SAR-SEPs), 401(k), profit-sharing and
money purchase pension plans ("Retirement Plans"). There is no minimum
investment required for Retirement Plans.

DETERMINATION OF NET ASSET VALUE
The price investors pay when buying Fund shares, and the price investors
receive when redeeming Fund shares, is the net asset value of the shares. No
sales charge or commission of any kind is added by the Fund upon a purchase and
no charge is deducted upon a redemption.

The net asset value for each Fund is determined by dividing the total value of
its net assets (meaning its assets less its liabilities excluding capital and
surplus) by the total number of its shares outstanding at that time. The net
asset value is determined as of the close of regular trading (currently 4:00
p.m. Eastern time) on the New York Stock Exchange (the "Exchange") on each day
the Exchange is open for trading. This determination is applicable to all
transactions in shares of each Fund prior to that time and after the previous
time as of which net asset value was determined. Accordingly, purchase orders
accepted or shares tendered for redemption prior to the close of regular trading
on a day the Exchange is open for trading will be valued as of the close of
trading, and purchase orders accepted or shares tendered for redemption after
that time will be valued as of the close of the next trading day.

Each security traded on a national securities exchange or quoted on Nasdaq will
ordinarily be valued on the basis of its last sale price on the date of
valuation or, if there are no sales that day, at the closing bid quotation. All
other securities for which reliable bid quotations are available are valued at
the latest bid quotation. Short-term securities are valued at either original
cost or amortized cost, both of which the Board of Trustees has determined to
approximate current market value. Other assets and securities (for which no
current price is available) are valued in good faith by the Board of Trustees.

DIVIDENDS AND DISTRIBUTIONS
It is the policy of the Trust to pay dividends from the net investment income of
the U.S. Government Securities and Income Funds monthly, and to pay dividends
from the net investment income of the Core Equity Fund, Aggressive Equity Fund
and International Equity Fund annually. The Trust intends to distribute
substantially all of its net investment income in order to comply with certain
requirements of the Code. Net capital gains (the excess of net long-term
capital gains over short-term capital losses), if any, are intended to be
distributed on an annual basis. Any dividends or distributions will be
automatically reinvested at net asset value unless a shareholder otherwise
instructs the Transfer Agent in writing.

TAX INFORMATION
Each Fund intends to qualify for treatment as a regulated investment company
under the Code. In each taxable year that a Fund so qualifies, such Fund (but
not its shareholders) will be relieved of federal income tax on that part of its
investment company taxable income (consisting generally of net investment
income, net gains from certain foreign currency transactions, and net short-term
capital gain), and net capital gain that is distributed to shareholders.

Dividends from a Fund's investment company taxable income (whether paid in cash
or reinvested in additional shares) are taxable to its shareholders as ordinary
income to the extent of the Fund's earnings and profits. Distributions of a
Fund's net capital gain, when designated as such, are taxable to its
shareholders as long-term capital gain, regardless of how long they have held
their Fund shares and whether such distributions are paid in cash or reinvested
in additional Fund shares.

Each Fund provides federal tax information to its shareholders annually,
including information about dividends and other distributions paid during the
preceding year and, under certain circumstances, with respect to the
International Equity Fund, each shareholder's respective shares of any foreign
taxes paid by the Funds, in which event each shareholder would be required to
include in his or her gross income his or her pro rata share of those taxes but
might be entitled to claim a credit or deduction for them.

Each Fund must withhold 31% from dividends, capital gain distributions, and
redemption proceeds payable to any individuals and certain other noncorporate
shareholders who (i) have not furnished to the Fund a correct taxpayer
identification number or a properly completed claim for exemption on Form W-8 or
W-9 or (ii) otherwise are subject to backup withholding. A shareholder should
contact the Transfer Agent if the shareholder is uncertain whether a proper
taxpayer identification number is on file with the Fund.

A redemption of shares of a Fund may result in taxable gain or loss to the
redeeming shareholder, depending upon whether the redemption proceeds are more
or less than the shareholder's adjusted basis for the redeemed shares. An
exchange of shares of a Fund for shares of another Fund generally will have
similar tax consequences. In addition, if shares of a Fund are purchased within
30 days before or after redeeming shares of that Fund at a loss, the loss will
not be deductible and instead will increase the basis of the newly purchased
shares.

The foregoing is only a summary of some of the important federal tax
considerations generally affecting each Fund and its shareholders. See
"Taxes" in the Statement of Additional Information for a further discussion.
There may be other federal, state, local or foreign tax considerations
applicable to a particular investor. Prospective investors therefore are urged
to consult their tax advisers.

FUND PERFORMANCE
From time to time, total return and yield data for a Fund may be quoted in
advertisements or in communications to shareholders. A Fund's total return will
be calculated on an average annual (compound) total return basis, and may also
be calculated on an aggregate total return basis, for various periods from the
date it commences operations. Average annual total return reflects the average
annual percentage change in value of an investment in a Fund over the measuring
period. Aggregate total return reflects the total percentage change in value
over the measuring period. Both methods of calculating total return assume that
dividends and capital gain distributions made by a Fund during the period are
reinvested in Fund shares.

Yield is computed based on the net income of a Fund during a 30-day (or one-
month) period, which will be identified in connection with the particular yield
quotation. More specifically, the yield is computed by dividing a Fund's net
income per share during a 30-day (or one-month) period by the net asset value
per share on the last day of the period and annualizing the result on a semi-
annual basis.

The total return and yield of a Fund may be compared to those of other mutual
funds with similar investment objectives and to stock, bond and other relevant
indices or to rankings prepared by independent services or other financial or
industry publications that monitor the performance of mutual funds. For
example, the total return and yield of a Fund's shares may be compared to data
prepared by Lipper Analytical Services, Inc. Total return and yield data as
reported in national financial publications such as Money Magazine, Forbes,
Barron's, Morningstar Mutual Funds, The Wall Street Journal and The New York
Times, or in publications of a local or regional nature, may also be used in
comparing the performance of a Fund.

Performance quotations of a Fund represent the Fund's past performance and
should not be considered as representative of future results. The investment
return and principal value of an investment in a Fund will fluctuate so that an
investor's shares, when redeemed, may be worth more or less than their original
cost. The methods used to compute a Fund's total return and yield are described
in more detail in the Statement of Additional Information.

OTHER INFORMATION
The Trust is a business trust established under Delaware law and is a no-load,
open-end management investment company. The Trust was established under a
Certificate of Trust dated October 7, 1994. The Trust's shares of beneficial
interest have no par value. Shares of the Trust may be issued in two or more
series or "Funds." The Trust currently has five Funds. Each Fund's shares
may be issued in an unlimited number by the Trustees of the Trust. Each share
of a Fund represents an equal proportionate beneficial interest in that Fund
and, when issued and outstanding, the shares are fully paid and non-assessable
by the relevant Fund. Shareholders are entitled to one vote for each full share
held and proportionate fractional votes for fractional shares held. Each series
entitled to vote on a matter will vote in the aggregate and not by series,
except as required by applicable law or when the matter to be voted on affects
only the interests of shareholders of a particular series. Voting rights are
not cumulative and, accordingly, the holders of more than 50% of the aggregate
shares of the Funds may elect all of the Trustees.

The Trust does not presently intend to hold annual meetings of shareholders
except as required by the 1940 Act or other applicable law. Pursuant to the
Declaration of Trust, the Trustees will promptly call a meeting of shareholders
to vote upon the removal of any Trustee when so requested in writing by the
record holders of 10% or more of the outstanding shares. To the extent required
by law, the Trust will assist in shareholder communications in connection with
the meeting. The Declaration of Trust expressly provides that separate boards
of trustees may be authorized for each series of the Trust. Presently, only one
Board of Trustees has been established which oversees the Trust and the Stalwart
Funds. It is contemplated that if additional series are created, separate
boards may be created.

As of the date of this Prospectus, Briar Capital Management, L.L.C., owned all
of the outstanding shares of each Fund. It is contemplated that the public
offering of the shares of the Funds will reduce Briar Capital Management,
L.L.C.'s holdings to less than 5% of the total shares outstanding.

The Prospectuses of the Funds are combined in this Prospectus. Each Fund offers
only its own shares; yet it is possible that a Fund might become liable for a
misstatement in the Prospectus of another Fund. The Trustees have considered
this in approving the use of a combined Prospectus.

SHAREHOLDER INQUIRIES
Shareholders desiring information on their account with the Trust or those
desiring to submit applications, redemption requests, inquiries or
notifications, should contact Lafayette American Bank & Trust Company,
Attention: Trust Department at 1087 East Broad Street, Bridgeport, Connecticut
06604 or call (203) 336-6137 or (800) 262-7642.