BRIAR FUNDS TRUST, 485BPOS, 1996-04-22

BRIAR FUNDS TRUST
485BPOS, 1996-04-22

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<PAGE> 1
As filed with the Securities and Exchange Commission on April 22, 1996.
Securities Act Registration No. 33-85082
Investment Company Act Registration No. 811-8812
- --------------------------------------------------------------------------------

SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

_______________________

FORM N-1A

REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933

Pre-Effective Amendment No. __

Post-Effective Amendment No. 2

and/or

REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT OF 1940

Amendment No. 4
(Check appropriate box or boxes)

BRIAR FUNDS TRUST
(Exact Name of Registrant as Specified in Charter)

311 SOUTH WACKER DRIVE
SUITE 4990
CHICAGO, ILLINOIS 60606-6604
(Address of Principal Executive Office) (Zip Code)

Registrant's Telephone Number, including Area Code: (312) 554-7525

DAVID EVANS
311 SOUTH WACKER DRIVE
SUITE 4990
CHICAGO, ILLINOIS 60606-6604
(Name and Address of Agent for Service)

Copy to:

James Snyder, Esq.
Holleb & Coff
55 East Monroe Street
Suite 4100
Chicago, Illinois 60603

It is proposed that this filing will become effective upon review by the
Securities and Exchange Commission pursuant to Rule 485.

Registrant has filed a declaration pursuant to Rule 24f-2 under the Investment
Company Act of 1940, as amended.

<PAGE> 2

BRIAR FUNDS TRUST

CROSS REFERENCE SHEET

(Pursuant to Rule 481, the following indicates the location in the Prospectus
and the Statement of Additional Information of the responses to the Items of
Parts A and B of Form N-1A).

Item No. on Form N-1A Caption or Subheading in Prospectus
or Statement of Additional Information
--------------------- --------------------------------------

PART A - INFORMATION REQUIRED IN PROSPECTUS

1. Cover Page Cover Page

2. Synopsis Highlights

3. Condensed Financial Information Financial Highlights

4. General Description of Registrant Termination of Funds; The Stalwart
Funds; Investment Objectives and
Policies; Additional Investment
Information and Risks; Investment
Restrictions; Fund Performance

5. Management of the Fund Management of the Stalwart Funds

6. Capital Stock and Other Securities Dividends and Distributions; Tax
Information; Other Information

7. Purchase of Securities Being Offered Purchase and Redemption of Shares

8. Redemption or Repurchase Purchase and Redemption of Shares

9. Legal Proceedings *

PART B - INFORMATION REQUIRED IN STATEMENT OF ADDITIONAL INFORMATION

10. Cover Page Cover Page

11. Table of Contents Table of Contents

12. General Information and History **

13. Investment Objectives and Policies Additional Investment Information;
Investment Restrictions;
Determination of Net Asset Value;
Appendix B

14. Management of the Fund Additional Trust Information

15. Control Persons and Principal Additional Trust Information;
Holders of Securities Distribution of Shares

16. Investment Advisory and Other Additional Trust Information
Services

<PAGE> 3

17. Brokerage Allocation and Other Portfolio Transactions and Brokerage
Policies

18. Capital Stock and Other Securities **

19. Purchase, Redemption and Determination of Net Asset Value;
Pricing of Securities Being Offered Description of Shares; Additional
Trust Information; Distribution of
Shares

20. Tax Status Taxes

21. Underwriters Distribution of Shares

22. Calculations of Performance Data Performance Information

23. Financial Statements Financial Statements

- ------------------
* Answer negative or inapplicable
** Complete answer to Item is contained in the Prospectus

<PAGE> 4
PROSPECTUS APRIL 22, 1996
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BRIAR FUNDS TRUST/THE STALWART FUNDS

U. S. GOVERNMENT SECURITIES FUND
INCOME FUND
CORE EQUITY FUND
AGGRESSIVE EQUITY FUND
INTERNATIONAL EQUITY 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 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.

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.

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, is
incorporated by reference in its entirety into the Prospectus and which is
available at no charge by writing or calling an Authorized Institution.

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 OR ANY OTHER GOVERNMENTAL
AGENCY OR ANY BANK. 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.
<PAGE> 5

TABLE OF CONTENTS

Page
----
HIGHLIGHTS ....................................................... 1

FINANCIAL HIGHLIGHTS ............................................. 4

EXPENSE SUMMARY .................................................. 5

TERMINATION OF FUNDS ............................................. 7

THE STALWART FUNDS ............................................... 7

INVESTMENT OBJECTIVES AND POLICIES ............................... 7
THE U.S. GOVERNMENT SECURITIES FUND ...................... 7
THE INCOME FUND .......................................... 8
THE CORE EQUITY FUND ..................................... 9
THE AGGRESSIVE EQUITY FUND ............................... 10
THE INTERNATIONAL EQUITY FUND ............................ 11

ADDITIONAL INVESTMENT INFORMATION AND RISKS ...................... 12

INVESTMENT RESTRICTIONS .......................................... 19

MANAGEMENT OF THE STALWART FUNDS ................................. 20
U.S. GOVERNMENT SECURITIES FUND AND INCOME FUND .......... 22
CORE EQUITY FUND ......................................... 23
AGGRESSIVE EQUITY FUND ................................... 23
INTERNATIONAL EQUITY FUND ................................ 23

PURCHASE AND REDEMPTION OF SHARES ................................ 26

DETERMINATION OF NET ASSET VALUE ................................. 30

DIVIDENDS AND DISTRIBUTIONS ...................................... 30

TAX INFORMATION .................................................. 30

FUND PERFORMANCE ................................................. 31

OTHER INFORMATION ................................................ 32

AUTHORIZED INSTITUTION INFORMATION - SHAREHOLDER INQUIRIES ....... 33

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 APRIL 19, 1996 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.

-i-
<PAGE> 6
HIGHLIGHTS

Termination of Funds

The Board of Trustees of the Briar Funds Trust/The Stalwart Funds unanimously
voted on Friday, January 26, 1996 to terminate its Advisory contract with Briar
Capital Management L.L.C. (the "Adviser"), all of its Sub-Advisory Agreements
with Pekin, Singer, Shapiro Asset Management, Inc., Harris Associates L.P.,
Wasatch Advisors, Inc. and Harding, Loevner Management, L.P., its Distribution
Agreement with S.F. Investments, Inc., its Custodian Agreement with United
Missouri Bank and its Transfer Agency and Administrative Agreements with
Sunstone Financial Group, Inc. (collectively, the "Service Provider
Agreements"). The Service Provider Agreements have been terminated as of March
31, 1996. The Funds will terminate operations in the near future and
distribute all remaining net assets to shareholders.

The Board also adopted a resolution that the Funds cease accepting additional
purchases of shares. Shareholders may continue to redeem their shares at the
next determined net asset value of their shares. See "Purchase and Redemption
of Shares." All portfolio investments of the Funds have been liquidated and
the proceeds are currently held in short-term debt obligations. Accordingly,
this entire prospectus should be read in connection with the fact that each of
the Funds are terminating operations.

Investment Objectives

The Stalwart U.S. Government Securities Fund, Stalwart Income Fund, Stalwart
Core Equity Fund, Stalwart Aggressive Equity Fund and Stalwart International
Equity 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 on the previous page. There can be no
guarantee that the Funds will achieve their investment objectives. See
"Investment Objectives and Policies."

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, its agencies
or instrumentalities.

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

CORE EQUITY FUND seeks long-term capital appreciation 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.

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.

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.

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

<PAGE> 7

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 (other
than the U.S. Government Securities Fund) may invest in foreign securities,
which involve special risks and costs 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 also may 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 (1) a majority of the Fund's outstanding
shares or (2) 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 under 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, fund accountant and
transfer agent for the Funds (the "Transfer Agent"); and United Missouri Bank,
N.A. acts as custodian.

Purchases and Redemption of Shares

The Funds' shares will not generally be offered to the public and may be
purchased by an Authorized Institution and their affiliates. 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,
Aggressive Equity, and International Equity Funds. Net capital gains for the
Funds are intended to be distributed on an annual basis.

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<PAGE> 8

Shareholder Services

Questions regarding the Funds and inquiries regarding a shareholder's account
may be directed to an Authorized Institution.

-3-
<PAGE> 9
FINANCIAL HIGHLIGHTS

THE FOLLOWING FINANCIAL HIGHLIGHTS HAVE BEEN DERIVED FROM THE FINANCIAL
STATEMENTS LOCATED IN PART B, THE STATEMENT OF ADDITIONAL INFORMATION, AND MAY
BE OBTAINED BY SHAREHOLDERS.

For the Period from January 27, 1995(1) through November 30, 1995

<TABLE>
<CAPTION>
U.S.
Government Core Aggressive
Securities Income Equity Equity International
Fund Fund Fund Fund Equity Fund
- ----------------------------------------------------------------------------------------------------------------------------
1/27/95(1) 1/27/95(1) 1/27/95(1) 1/27/95(1) 1/27/95(1)
through through through through through
11/30/95 11/30/95 11/30/95 11/30/95 11/30/95
- ----------------------------------------------------------------------------------------------------------------------------
<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 0.52 0.48 0.12 (0.01) 0.09
Net realized and unrealized gains
on securities 0.96 1.17 2.48 2.32 0.92
- ----------------------------------------------------------------------------------------------------------------------------

Total from investment operations 1.48 1.65 2.60 2.31 1.01

Less distributions from:
Net investment income (0.52) (0.46) (0.12) ___ (0.04)
- ----------------------------------------------------------------------------------------------------------------------------

Total distributions (0.52) (0.46) (0.12) ___ (0.04)
- ----------------------------------------------------------------------------------------------------------------------------

Net Asset Value, end of period $10.96 $11.19 $12.48 $12.31 $10.97
============================================================================================================================
Total return(2) 15.13% 16.81% 25.97% 23.10% 10.09%

Supplemental data and ratios:
Net assets, end of period (in 000s) $7,195 $6,108 $8,172 $6,311 $3,692
Ratio of net expenses to average
net assets(3) (4) 1.11% 1.31% 1.53% 1.60% 1.91%
Ratio of net income to average net
assets(3) (4) 5.94% 5.35% 1.19% (0.10)% 0.89%
Portfolio turnover rate(2) 55.29% 63.76% 34.71% 140.94% 38.09%
</TABLE>

(1) Commencement of operations.
(2) Not annualized for the period from January 27, 1995 through November 30,
1995.
(3) Annualized for the period from January 27, 1995 through November 30,
1995.
(4) Without fees waived, the ratio of expenses to average net assets would
have been 2.33% for the U.S. Government Securities Fund; 2.57% for the
Income Fund; 2.54% for the Core Equity Fund; 2.71% for the Aggressive
Equity Fund; and 4.08% for the International Equity Fund.

Without fees waived, the ratio of net investment income to average net
assets would have been 4.72% for the U.S. Government Securities Fund; 4.09%
for the Income Fund; 0.18% for the Core Equity Fund; (1.22)% for the
Aggressive Equity Fund; and (1.28)% for the International Equity Fund.

-4-
<PAGE> 10
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.

<TABLE>
<S> <C> <C> <C> <C> <C>
U.S. Government Core Equity Aggressive International
Securities Fund Income Fund Fund Equity Fund Equity Fund
SHAREHOLDER TRANSACTION EXPENSES
Maximum Sales Load Imposed on Purchases None None None None
Maximum Sales Load Imposed on
Reinvested Dividends None None None None
Deferred Sales Loan Imposed on
Redemptions None None None None
Redemption Fees(1) None None None None
Exchange Fees $5.00 $5.00 $5.00 $5.00
ANNUAL OPERATING EXPENSES (AS A
PERCENTAGE OF AVERAGE NET ASSETS)
Management Fees 0.45% 0.45% 0.75%(2) 0.65% 0.85%
12b-1 Fees(3) 0.15% 0.15% 0.15% 0.15% 0.15%
Other Expenses (net of reimbursement)(4) 0.34% 0.50% 0.74% 0.81% 0.87%
Total Operating Expenses (net of
reimbursement) 0.94% 1.10% 1.64% 1.61% 1.87%

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 ............................ $10 $11 $17 $16 $19
Three Years ......................... $30 $35 $53 $51 $60
Five Years .......................... $52 $61 $91 $89 $103
Ten Years ........................... $116 $135 $197 $193 $223
</TABLE>

(1) United Missouri Bank, N.A., charges a $9.00 fee for each wire redemption.
(2) The Core Equity Fund pays a management fee that varies based on its
performance.
(3) 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.
(4) 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 0.94%, 1.10%,
1.64%, 1.61%, and 1.87% of the average daily net assets of the U.S.
Government Securities, Income, Core Equity, Aggressive Equity and
International Equity Funds, respectively, for the fiscal year. Absent
these reimbursements, the estimated other expenses for the U.S. Government
Securities, Income, Core Equity, Aggressive Equity, and International
Equity Funds are expected to be 1.71%, 1.86%, 1.66%, 2.06% and 3.18%,
respectively, and the estimated total operating expenses are expected to
be 2.31%, 2.46%, 2.56%, 2.86% and 4.18%, 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 Core Equity Fund which may exceed such
industry average
-5-

<PAGE> 11
by no more than 11.5%, the Aggressive Equity Fund which may exceed such
industry average by no more than 10% and the International Equity Fund
which may exceed such industry average by no more than 20%).

-6-

<PAGE> 12
TERMINATION OF FUNDS

THE STALWART FUNDS

The Stalwart Funds are investment portfolios of Briar Funds Trust (the
"Trust"), a Delaware business trust. The five no-load mutual funds that
comprise the Stalwart Funds family offer you a wide range of investment choices
to help meet your financial goals. A mutual fund allows you to pool your money
with that of other investors in order to obtain professional management of your
investments. A mutual fund allows you to spread your investment over a broader
group of securities and help minimize your risk of loss from any individual
security, although the Funds remain subject to general market movements as well
as movements of the individual securities which they own. Therefore, you
should be cautioned that 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 below under "Additional Investment
Information and Risks" and "Investment Restrictions."

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 12 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 Fund's investment objectives, the Fund's sub-adviser
will actively manage the portfolio, adjusting the average portfolio maturity
according to the sub-adviser's interest rate outlook.

-7-
<PAGE> 13

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, among
other reasons, to seek total return possibilities consistent with the Fund's
investment objective. The Fund's maturity also will 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. 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 12 years.
Under normal market conditions, the Fund will invest at least 65% of its total
assets in fixed income securities and dividend paying common and preferred
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.

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

-8-
<PAGE> 14

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 these Funds may
adjust the average maturity of a Fund's portfolio from time to time, depending
on its assessment of: the relative yields available on securities of different
maturities; 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. Consequently, a 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 Investments Information and Risks -- Investment
Grade and Non-Investment Grade Debt Securities."

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 primarily in entities with total
market capitalization equal to or in excess of $2 billion. 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 market price discount
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-term 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.

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."

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<PAGE> 15

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 also may 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 prospects 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 below $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 a 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 also may 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, -- Investment Grade and also
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

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<PAGE> 16

of the Fund's assets may be invested in government securities, or the
Fund may hold cash or money market instruments. See "Additional Investment
Information and Risks -- Money Market Instruments."

Unlike other Funds in the family, 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, preferred 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 investment
objectives similar to the Fund's (subject to Securities and Exchange Commission
(the "Commission") limits on such investments). The Fund also may 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 rated investment grade. The Fund may
invest up to 10% of its net assets in convertible securities and debt
securities 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 one of 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. 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 made 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.

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<PAGE> 17

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,
Ireland, Italy, Japan, 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.

ADDITIONAL INVESTMENT INFORMATION AND RISKS

MONEY MARKET INSTRUMENTS

Each of the Funds may hold 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, a
Fund, as a shareholder of another investment company, would bear its pro rata
portion of the other investment company's advisory fees and other expenses.
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-advisers will monitor, on
an ongoing basis, the value of the underlying securities to assure that the
value 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-advisers 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 also may invest in other securities issued or guaranteed

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<PAGE> 18

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
also may 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 Fund's 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 Income, Core Equity and Aggressive Equity Funds may
invest up to 10%, 15% 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 foreign corporations. 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.

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<PAGE> 19

Investments in foreign securities and securities denominated in non-U.S.
currencies involve special risks and costs 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
affect 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, after giving effect to any
foreign currency exchange contracts, 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 positions 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 also may

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<PAGE> 20

enter into forward contracts to attempt to hedge interest or dividend
payments payable in a foreign currency. The International Equity Fund also may
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; may have restrictions on foreign ownership, or prohibitions on
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 also may
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

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<PAGE> 21

securities for a set price at a specified future time. At the time it
enters into a futures contract or writes 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 cases 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 into which it has entered. 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: (1) 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; (2) 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; (3) losses caused by unanticipated market
movements, which are potentially unlimited; and (4) the sub-adviser's ability
to predict correctly 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

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<PAGE> 22

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 possible loss of principal.

The Funds (other than the U.S. Government Securities Fund) also may purchase
securities that are secured or backed by assets other than mortgage-related
assets, such as automobile and credit card receivables, and 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 yield
to maturity, while slower than expected prepayments will decrease such yield.

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. However, they 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

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<PAGE> 23

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. 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 and 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 Investor Service, Inc. ("Moody's") (Baa or
higher), Standard & Poor's Corporation ("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 that exceed 5% of the
Fund's net assets as a result of these events. However, nothing herein shall
require the Funds' 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.

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<PAGE> 24

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.

Although the market for low-rated securities has expanded in recent years, the
market for low-rated securities is generally thinner and less active than that
for higher quality securities, thus, a Fund's ability to sell such securities
at fair value in response to changes in the economy or the financial markets
could be limited. While such securities may have some quality and protective
characteristics, these are outweighed by great 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 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 exceed 5% of each Fund's net
assets that fall below their respective minimums as a result of these events.
However, nothing herein shall require a Fund's sub-adviser to sell any
securities at a loss.

SECURITIES LENDING. Although the Funds are authorized to lend portfolio
securities, they do not presently intend to do so.

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 (1) 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 (2) 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. Each of the Funds' annual portfolio turnover rate may vary
from year to year.

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 thirty
days in advance of any changes. Any such change may result in a Fund having an
investment objective different from the objective the shareholder

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<PAGE> 25

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 also has adopted certain fundamental investment restrictions that may
be changed only with the approval by a majority of the Fund's outstanding
shares. The following 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, all of the
Funds including the Aggressive Equity Fund will 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" and "Taxes" in Statement of Additional Information.

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 U.S. Government Securities, Income, Core Equity, Aggressive
Equity and International Equity 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 many of the same individuals that comprise the investment committee that
make

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<PAGE> 26

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 (1) provides or oversees the
provision of all general management and administration, investment advisory and
portfolio management for the Funds; (2) 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 (3) 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 objective-setting and asset-allocation strategies, and
sub-adviser 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: 0.45% for each of
the U.S. Government Securities Fund and the Income Fund, 0.75% for the Core
Equity Fund, 0.65% for the Aggressive Equity Fund and 0.85% for the
International Equity 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
positive 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 this 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 exist
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

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<PAGE> 27

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 each 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 individual portfolio managers
for each Fund and the fees to be paid for advisory services by the Fund, is set
forth below.

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, 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 to 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.

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<PAGE> 28
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 $8.0 billion.
Harris is a wholly-owned subsidiary of New England Investment Companies, L.P.
Domestically, Harris 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.

Robert H. Harper, C.F.A., a senior investment professional 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 professional with
Harris since 1978. He has twenty-five years of investment management
experience.

For its services to the Fund, Harris is paid a fee by the Adviser, 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 fiscal year. The maximum annualized
performance adjustment is +/- 0.10% (i.e. 10 basis points). Harris will
receive the maximum positive 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
Jeffrey 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, Wasatch is paid a fee by the Adviser, 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

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<PAGE> 29

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, HLM is paid a fee by the Adviser, computed daily
and payable monthly, equal to 0.60% of the average daily net assets of the
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.

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<PAGE> 30

Such activities may include compensating brokers, preparing and
distributing marketing materials, and preparing and placing advertisements.
Payments also may be made to organizations, including affiliates of the Adviser,
which provide support and distribution services to their customers who 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 allowable under the plan of distribution, the Trust will not be
liable for any such difference.

SERVICE ORGANIZATIONS

The Funds may enter into agreements with Service Organizations such as banks,
corporations, brokers, dealers and other financial institutions, including
Authorized Financial Institutions, concerning the provision of administrative
support services to their customers who own Fund shares. These services, which
are described more fully in the Statement of Additional Information, may
include support services such as assisting investors in processing
administrative purchase, exchange and redemption requests; processing dividend
and distribution payments from the Funds; providing information to customers
showing their positions in the Funds; and providing subaccounting with respect
to Fund shares beneficially owned by customers or the information necessary for
subaccounting. In addition, Service Organizations may provide assistance, such
as the forwarding of sales literature and advertising to their customers, in
connection with the distribution of Fund shares. For their services, Service
Organizations may receive fees from a Fund at annual rates of up to .25% of the
average daily net asset value of the shares covered by their agreements.

Service Organizations may charge their customers fees for providing
administrative services in connection with investments in a Fund. Under the
terms of their agreements with the Funds, Service Organizations are required to
provide a schedule of these fees to their customers. In addition, investors
should contact their Service Organization with respect to the availability of
shareholder services and the particular Service Organization's procedures for
purchasing and redeeming shares. It is the responsibility of Service
Organizations to transmit purchase and redemption orders and record those
orders on a timely basis in accordance with their agreements with their
customers.

Conflict-of-interest restrictions may apply to the receipt of compensation
paid by the Funds in connection with the investment of fiduciary funds in Fund
shares. Institutions, including banks regulated by the Comptroller of the
Currency, Federal Reserve Board and state banking commissions, and investment
advisers and other money managers subject to the jurisdiction of the Securities
and Exchange Commission, the Department of Labor or state securities
commissions, are urged to consult their legal counsel before entering into
agreements with the Funds.

The Glass-Steagall Act and other applicable laws, among other things,
prohibit banks from engaging in the business of underwriting securities.
Accordingly, banks will be engaged under agreements with the Funds only to
perform the administrative and investor servicing functions described above,
and will represent that the services provided by them under the agreements will
not be primarily intended to result in the sale of Fund shares.

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<PAGE> 31

Payments to Service Organizations, including Authorized Financial
Institutions, under the Plan are not tied directly to their own out-of-pocket
expenses and therefore may be used as they elect (for example, to defray their
overhead expenses), and may exceed their direct and indirect costs.

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 0.94%, 1.10%, 1.64%, 1.61% and 1.87% of the average daily net assets
of the U.S. Government Securities Fund, Income Fund, Core Equity Fund,
Aggressive Equity Fund and International Equity 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 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%). 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. They may allocate brokerage
transactions 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 through selected community based financial institutions and
their affiliates authorized by the Distributor ("Authorized Institutions"),
either for their own account or for the account of their clients, or by clients
of the Adviser. Certain of these Authorized Institutions may be Service
Organizations that charge certain fees as described below in "Management of the
Stalwart Funds -- Service Organizations."

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.

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<PAGE> 32

INITIAL PURCHASES BY MAIL: Initial purchases may be made by wire by
transmitting immediately available funds (federal funds) by wire to:

United Missouri Bank
ABA #101000695
for credit to Stalwart Funds, Account #98-7060-774-3
Name and account number of Authorized Institution and Shareholder's Account

Before making an initial investment by wire, the Funds' Transfer Agent must be
notified. The Funds' Transfer Agent will, in turn, assign an account number.
If proper 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.
207 E. Buffalo Street
Milwaukee, WI 53202

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

Initial Purchases by Mail: The Account Application available through the
Distributor should be completed by an Authorized Institution, 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 by Wire: Additional purchases may be made at any time by
an Authorized Institution 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. An Authorized Institution sub-account,
if any, to which the subsequent purchase is to be credited should be identified
together with the investor 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 fifth 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 an Authorized Institution.

HOW SHAREHOLDER ACCOUNTS ARE MAINTAINED

Upon initial purchase of a Fund's shares, an account will be opened for the
account or sub-account of an Authorized Institution or its affiliates.
Subsequent investments may be made through an Authorized Institution or its
affiliates at any time by mail to the Transfer Agent or by wire as noted above.
The

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<PAGE> 33

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.

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
you 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 an Authorized Institution 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.

An Authorized Institution 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

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<PAGE> 34

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 (1) the securities markets are closed, other than
customary weekend and holiday closings; (2) trading is restricted for any
reason; (3) 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
(4) 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 particular 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 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 an Authorized Institution.

RETIREMENT PLANS

The Trust has instituted a program under which an investor may establish an
Individual Retirement Account with an Authorized Institution 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 an Authorized Institution.

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<PAGE> 35

Contact an Authorized Institution regarding 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. 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 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.

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<PAGE> 36

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 (1) 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 (2) 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 PERFORMANCEE

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 also
may 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

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<PAGE> 37

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, also may 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 presently does not 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., owns
shares of each Fund consisting of less than 5% of the total shares outstanding.

The Funds are using this combined Prospectus rather than having a separate
Prospectus for each Fund. Each Fund offers only its own shares; yet it is
possible that a Fund might become liable for a misstatement in the Prospectus
relating to another Fund. The Trustees have considered this in approving the
use of a combined Prospectus.

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<PAGE> 38
AUTHORIZED INSTITUTION INFORMATION - SHAREHOLDER INQUIRIES

Shareholders desiring information on their account with the Trust or those
desiring to submit applications, redemption requests, inquiries or
notifications, should contact an Authorized Institution.

Sachem Trust is an Authorized Institution and can be contacted as provided
below:

Sachem Trust
23 Boston Street
Guilford, CO 06437

Tel: (203) 458-2323 or (800) 580-3656

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<PAGE> 39

BRIAR FUNDS TRUST/THE STALWART FUNDS

STATEMENT OF ADDITIONAL INFORMATION

for the

Core Equity Fund

Aggressive Equity Fund

International Equity Fund

U.S. Government Securities Fund

Income Fund

This Statement of Additional Information dated April 22, 1996, is meant
to be read in conjunction with the Stalwart Funds' Prospectus dated April
22, 1996, for the Core Equity Fund, Aggressive Equity Fund, International
Equity Fund, U.S. Government Securities Fund, and Income Fund
(collectively referred to as the "Funds") and is incorporated by reference
in its entirety into the Prospectus. Because this Statement of Additional
Information is not itself a prospectus, no investment in shares of these
Funds should be made solely upon the information contained herein. Copies
of the Prospectus for the Funds may be obtained 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. Capitalized terms used but not defined herein have the
same meanings as in the Prospectus.

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 FUNDS INVOLVES INVESTMENT RISKS
INCLUDING POSSIBLE LOSS OF PRINCIPAL.
<PAGE> 40
TABLE OF CONTENTS

TERMINATION OF FUNDS ....................................................... 1
ADDITIONAL INVESTMENT INFORMATION .......................................... 1
INVESTMENT RESTRICTIONS .................................................... 13
ADDITIONAL TRUST INFORMATION ............................................... 16
Trustees and Officers ................................................. 16
Investment Adviser .................................................... 17
Sub-Advisers .......................................................... 18
Administrator ......................................................... 19
Legal Counsel ......................................................... 20
Independent Auditors .................................................. 20
In-Kind Purchases ..................................................... 20
DISTRIBUTION OF SHARES ..................................................... 21
PORTFOLIO TRANSACTIONS AND BROKERAGE ....................................... 22
TAXES ...................................................................... 23
DESCRIPTION OF SHARES ...................................................... 26
OTHER INFORMATION .......................................................... 29
PERFORMANCE INFORMATION .................................................... 29
DETERMINATION OF NET ASSET VALUE ........................................... 32
FINANCIAL STATEMENTS ....................................................... 32

________________

NO PERSON HAS BEEN AUTHORIZED TO GIVE ANY INFORMATION OR TO MAKE ANY
REPRESENTATIONS NOT CONTAINED IN THIS STATEMENT OF ADDITIONAL INFORMATION OR IN
THE PROSPECTUS IN CONNECTION WITH THE OFFERING MADE BY THE PROSPECTUS AND, IF
GIVEN OR MADE, SUCH INFORMATION OR REPRESENTATIONS MUST NOT BE RELIED UPON AS
HAVING BEEN AUTHORIZED BY THE FUNDS OR ITS DISTRIBUTOR. THE PROSPECTUS DOES
NOT CONSTITUTE AN OFFERING BY THE FUNDS OR BY THE DISTRIBUTOR IN ANY
JURISDICTION IN WHICH SUCH OFFERING MAY NOT LAWFULLY BE MADE.

<PAGE> 41
TERMINATION OF FUNDS

The Board also adopted a resolution that the Funds cease accepting additional
purchases of shares. Shareholders may continue to redeem their shares at the
next determined net asset value of their shares. See "Purchase and Redemption
of Shares." All portfolio investments of the Funds have been liquidated and
the proceeds are currently held in short-term debt obligations. Accordingly,
this entire Statement of Additional Information should be read in connection
with the fact that each of the Funds are terminating operations.

ADDITIONAL INVESTMENT INFORMATION

INVESTMENT OBJECTIVES AND POLICIES

THE CORE EQUITY FUND seeks long-term capital appreciation through a diversified
portfolio of 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 though 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 primarily 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 and total return primarily
from a diversified portfolio of fixed-income securities and dividend-paying
common stocks.

The following supplements the investment policies of the Funds as set
forth in the Prospectus.

<PAGE> 42

MONEY MARKET INSTRUMENTS. Each Fund may invest in a variety of money
market instruments for temporary defensive purposes, pending investment, or to
meet anticipated redemption requests. Commercial paper represents short-term
unsecured promissory notes issued in bearer form by banks or bank holding
companies, corporations and finance companies. Certificates of deposit are
generally negotiable certificates issued against funds deposited in a
commercial bank for a definite period of time and earning a specified return.
Bankers' acceptances are negotiable drafts or bills of exchange, normally drawn
by an importer or exporter to pay for specific merchandise, which are
"accepted" by a bank, meaning, in effect, that the bank unconditionally agrees
to pay the face value of the instrument on maturity. Fixed time deposits are
bank obligations payable at a stated maturity date and bearing interest at a
fixed rate. Fixed time deposits may be withdrawn on demand by the investor,
but may be subject to early withdrawal penalties that vary depending upon
market conditions and the remaining maturity of the obligation. There are no
contractual restrictions on the right to transfer a beneficial interest in a
fixed time deposit to a third party, although there is no market for such
deposits. Bank notes and bankers' acceptances rank junior to deposit
liabilities of the bank and pari passu with other senior, unsecured obligations
of the bank. Bank notes are classified as "other borrowings" on a bank's
balance sheet, while deposit notes and certificates of deposit are classified
as deposits. Bank notes are not insured by the Federal Deposit Insurance
Corporation or any other insurer. Deposit notes are insured by the Federal
Deposit Insurance Corporation only to the extent of $100,000 per depositor per
bank.

Each Fund (other than the U.S. Government Securities Fund) may invest in
the obligations of foreign banks and foreign branches of domestic banks. Such
obligations include Eurodollar Certificates of Deposit ("ECDs") which are U.S.
dollar-denominated certificates of deposit issued by offices of foreign and
domestic banks located outside the United States; Eurodollar Time Deposits
("ETRs") which are U.S. dollar-denominated deposits in a foreign branch of a
U.S. bank or a foreign bank; Canadian Time Deposits ("CTDs") which are
essentially the same as ETDs except they are issued by Canadian offices of
major Canadian banks; Schedule Bs, which are obligations issued by Canadian
branches of foreign or domestic banks; Yankee Certificates of Deposit ("Yankee
CDs") which are U.S. dollar-denominated certificates of deposit issued by a
U.S. branch of a foreign bank and held in the United States; and Yankee
Bankers' Acceptances ("Yankee BAs") which are U.S. dollar-denominated bankers'
acceptances issued by a U.S. branch of a foreign bank and held in the United
States.

REPURCHASE AGREEMENTS. Each Fund may agree to purchase portfolio
securities from financial institutions subject to the seller's agreement to
repurchase them at a mutually agreed upon date and price ("repurchase
agreements"). Although the securities subject to a repurchase agreement may
bear maturities exceeding one year, settlement for the repurchase agreement
will never be more than one year after a Fund's acquisition of the securities
and normally will be within a shorter period of time. Securities subject to
repurchase agreements are held either by the Briar Funds Trust's (the "Trust")
custodian or subcustodian (if any), or in the Federal Reserve/Treasury
Book-Entry System. The seller under a repurchase agreement will be required to
maintain the value of the securities subject to the agreement in an amount
exceeding the repurchase price (including accrued interest). Repurchase
agreements may be considered loans to the seller, collateralized by the
underlying securities. The risk to a Fund is limited to the ability of the
seller to pay the agreed upon sum on the repurchase date; in the event of
default, the repurchase agreement provides that a Fund is entitled to sell the
underlying collateral. If the value of the collateral declines after the
agreement is entered into, however, and if the seller defaults under a
repurchase agreement when the value of the underlying collateral is less than
the repurchase price, a Fund could incur a loss of both principal and interest.
A Fund's adviser and sub-adviser monitor the value of the collateral at the
time the action is entered into and at all times during the term of the
repurchase agreement. This is done in an effort to determine that the value of
the

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<PAGE> 43

collateral always equals or exceeds the agreed upon repurchase price to be
paid to a Fund. If the seller were to be subject to a federal bankruptcy
proceeding, the ability of a Fund to liquidate the collateral could be delayed
or impaired because of certain provisions of the bankruptcy laws.

VARIABLE AND FLOATING RATE INSTRUMENTS. With respect to the variable and
floating rate instruments that may be acquired by the Funds, a Fund's adviser
and sub-adviser will consider the earning power, cash flows and other liquidity
ratios of the issuers and guarantors of such instruments and, if the
instruments are subject to demand features, will monitor their financial status
to meet payment on demand. Variable rate U.S. government obligations held by
the Funds, however, will be deemed to have maturities equal to the period
remaining until the next interest rate adjustment. In determining a Fund's
weighted average portfolio maturity, an instrument will usually be deemed to
have a maturity equal to the longer of the period remaining until the next
interest rate adjustment or the time a Fund can recover payment of principal as
specified in the instrument. Where necessary to ensure that a variable or
floating rate instrument is of the minimum required credit quality for a Fund,
the issuer's obligation to pay the principal of the instrument will be backed
by an unconditional bank letter or line of credit, guarantee or commitment to
lend.

FORWARD COMMITMENTS, WHEN-ISSUED SECURITIES AND DELAYED-DELIVERY
TRANSACTIONS. Each Fund may purchase securities on a when-issued basis or
purchase or sell securities on a forward commitment (sometimes called delayed
delivery) basis. These transactions involve a commitment by the Fund to
purchase or sell securities at a future date. The price of the underlying
securities (usually expressed in terms of yield) and the date when the
securities will be delivered and paid for (the settlement date) are fixed at
the time the transaction is negotiated. When-issued purchases and forward
commitment transactions are normally negotiated directly with the other party.

A Fund will purchase securities on a when-issued basis or purchase or sell
securities on a forward commitment basis only with the intention of completing
the transaction and actually purchasing or selling the securities. If deemed
advisable as a matter of investment strategy, however, a Fund may dispose of or
negotiate a commitment after entering into it. A Fund also may sell securities
it has committed to purchase before those securities are delivered to the Fund
on the settlement date.

When a Fund purchases securities on a when-issued, delayed-delivery or
forward commitment basis, the Fund's custodian or subcustodian will maintain in
a segregated account cash, U.S. government securities or other high-grade debt
obligations having a value (determined daily) at least equal to the amount of
the Fund's purchase commitments.

UNITED STATES GOVERNMENT OBLIGATIONS. Examples of the types of U.S.
government obligations that may be acquired by the Funds include U.S. Treasury
Bills, Treasury Notes and Treasury Bonds and the obligations of Federal Home
Loan Banks, Federal Farm Credit Banks, Federal Land Banks, the Federal Housing
Administration, Farmers Home Administration, Export-Import Bank of the United
States, Small Business Administration, Federal National Mortgage Association
("FNMA"), Government National Mortgage Association ("GNMA"), General Services
Administration, Student Loan Marketing Association, Central Bank for
Cooperatives, Federal Home Loan Mortgage Corporation ("FHLMC"), Federal
Intermediate Credit Banks and Maritime Administration.

ASSET-BACKED SECURITIES. The Funds may purchase asset-backed securities,
which are securities backed by mortgages, installment contracts, credit card
receivables or other assets. Asset-backed securities represent interests in
"pools" of assets in which payments of both interest and principal on the

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<PAGE> 44

securities are made monthly, thus in effect "passing through" monthly payments
made by the individual borrowers on the assets that underlie the securities,
net of any fees paid to the issuer or guarantor of the securities. The average
life of asset-backed securities varies with the maturities of the underlying
instruments, and the average life of a mortgage-backed instrument, in
particular, is likely to be substantially less than the original maturity of
the mortgage pools underlying the securities as a result of mortgage payments.
For this and other reasons, an asset-backed security's stated maturity may be
shortened, and the security's total return may be difficult to predict
precisely. Asset-backed securities acquired by the Funds may include
collateralized mortgage obligations ("CMOs") issued by private companies.

The Funds may acquire several types of mortgage-backed securities,
including guaranteed mortgage pass-through certificates, which provide the
holder with a pro rata interest in the underlying mortgages, and CMOs, which
provide the holder with a specified interest in the cash flow of a pool of
underlying mortgages or other mortgage-backed securities. Issuers of CMOs
ordinarily elect to be taxed as pass-through entities known as real estate
mortgage investment conduits ("REMICs"). CMOs are issued in multiple classes,
each with a specified fixed or floating interest rate and a final distribution
date. The relative payment rights of the various CMO classes may be structured
in a variety of ways. The Funds will not purchase "residual" CMO interests,
which normally exhibit greater price volatility.

There are a number of important differences among the agencies and
instrumentalities of the U.S. government that issue mortgage-related securities
and among the securities that they issue. Mortgage-related securities
guarantees by the GNMA include GNMA Mortgage Pass-Through Certificates (also
known as "Ginnie Maes") which are guaranteed as to the timely payment of
principal and interest by GNMA and backed by the full faith and credit of the
United States. GNMA is a wholly-owned U.S. government corporation with the
Department of Housing and Urban Development. GNMA certificates also are
supported by the authority of GNMA to borrow funds from the U.S. Treasury to
make payments under its guarantee. Mortgage-backed securities issued by the
FNMA include FNMA Guaranteed Mortgage Pass-Through Certificates (also known as
"Fannie Maes") which are solely the obligations of the FNMA and are not backed
by or entitled to the full faith and credit of the United States, but are
supported by the right of the issuer to borrow from the Treasury. FNMA is a
government-sponsored organization owned entirely by private stockholders.
Fannie Maes are guaranteed as to timely payment of the principal and interest
by FNMA. Mortgage-related securities issued by the FHLMC include FHLMC
Mortgage Participation Certificates (also known as "Freddie Macs" or "PCs").
FHLMC is a corporate instrumentality of the United States, created pursuant to
an Act of Congress, which is owned entirely by Federal Home Loan Banks.
Freddie Macs are not guaranteed and do not constitute a debt or obligation of
the United States or of any Federal Home Loan Bank. Freddie Macs entitle the
holder to timely payment of interest, which is guaranteed by FHLMC. FHLMC
guarantees either ultimate collection or timely payment of all principal
payments on the underlying mortgage loans. When FHLMC does not guarantee
timely payment of principal, FHLMC may remit the amount due on account of its
guarantee of ultimate payment of principal at any time after default on an
underlying mortgage, but in no event later than one year after it becomes
payable.

Non-mortgage asset-backed securities involve certain risks that are not
presented by mortgage-backed securities. Primarily, these securities do not
have the benefit of the same security interest in the underlying collateral.
Credit card receivables are generally unsecured and the debtors are entitled to
the protection of a number of state and federal consumer credit laws, many of
which have given debtors the right to set off certain amounts owed on the
credit cards, thereby reducing the balance due. Most issuers of automobile
receivables permit the servicers to retain possession of the underlying
obligations. If the

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<PAGE> 45

servicer were to sell these obligations to another party, there is a
risk that the purchaser would acquire an interest superior to that of the
holders of the related automobile receivables. In addition, because of the
large number of vehicles involved in a typical issuance and technical
requirements under state laws, the trustee for the holders of the automobile
receivables may not have an effective security interest in all of the
obligations backing such receivables. Therefore, there is a possibility that
recoveries on repossessed collateral may not, in some cases, be able to support
payments on these securities.

The yield characteristics of asset-backed securities differ from
traditional debt securities. A major difference is that the principal amount
of the obligations 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. In calculating the
average weighted maturity of a Fund, the maturity of asset-backed securities
will be based on estimates of average life.

Prepayments on asset-backed securities generally increase with falling
interest rates and decrease with rising interest rates; furthermore, prepayment
rates are influenced by a variety of economic and social factors. In general,
the collateral supporting non-mortgage asset-backed securities is of shorter
maturity than mortgage loans and is less likely to experience substantial
prepayments. Like other fixed income securities, when interest rates rise the
value of an asset-backed security generally will decline; however, when
interest rates decline, the value of an asset-backed security with prepayment
features may not increase as much as that of other fixed income securities.

STRIPPED OBLIGATIONS. To the extent consistent with their respective
investment objectives, the Funds may purchase Treasury receipts and other
"stripped" securities that evidence ownership in either the future interest
payments or the future principal payments on U.S. government and other
obligations. These participations, which may be issued by the U.S. government
(or a U.S. government agency or instrumentality) or by private issuers such as
banks and other institutions, are issued at a discount to their "face value,"
and may include stripped mortgage-backed securities ("SMBS"). Stripped
securities, particularly SMBS, may exhibit greater price volatility than
ordinary debt securities because of the manner in which their principal and
interest are returned to investors. The International Equity Fund also may
purchase "stripped" securities that evidence ownership in the future interest
payments or principal payments on obligations of foreign governments.

SMBS are usually structured with two or more classes that receive
different proportions of the interest and principal distributions from a pool
of mortgage-backed obligations. A common type of SMBS will have one class
receiving all of the interest, while the other class receives all of the
principal. However, in some cases, one class will receive some of the interest
and most of the principal while the other class will receive most of the
interest and the remainder of the principal. If the underlying obligations
experience greater than anticipated prepayments of principal, a Fund may fail
to fully recoup its initial investment. The market value of the class
consisting entirely of principal payments can be extremely volatile in response
to changes in interest rates. The yields on a class of SMBS that receives all
or most of the interest are generally higher than prevailing market yields on
other mortgage-backed obligations because their cash flow patterns are also
volatile and there is a greater risk that the initial investment will not be
fully recouped.

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<PAGE> 46

SMBS issued by the U.S. government (or a U.S. government agency or
instrumentality) may be considered liquid under guidelines established by the
Board of Trustees if they can be disposed of promptly in the ordinary course of
business at a value reasonably close to that used in the calculation of a
Fund's per share net asset value.

Within the past several years, the Treasury Department has facilitated
transfers of ownership of zero coupon securities by accounting separately for
the beneficial ownership of particular interest coupon and principal payments
on Treasury securities through the Federal Reserve book-entry record-keeping
system. The Federal Reserve program was established by the Treasury Department
and is known as "STRIPS" or "Separate Trading of Registered Interest and
Principal of Securities." The Funds may purchase securities registered in the
STRIPS program. Under the STRIPS program, the Funds will be able to have their
beneficial ownership of zero coupon securities recorded directly in the
book-entry record-keeping system in lieu of having to hold certificates or
other evidences of ownership of the underlying U.S. Treasury securities.

In addition, the Funds may acquire U.S. government obligations and their
unmatured interest coupons that have been separated ("stripped") by their
holder, typically a custodian bank or investment brokerage firm. Having
separated the interest coupons from the underlying principal of the U.S.
government obligations, the holder will resell the stripped securities in
custodial receipt programs with a number of different names, including
"Treasury Income Growth Receipts" ("TIGRs") and "Certificate of Accrual on
Treasury Securities" ("CATS"). The stripped coupons are sold separately from
the underlying principal, which is usually sold at a deep discount because the
buyer receives only the right to receive a future fixed payment on the security
and does not receive any rights to periodic interest (cash) payments. The
underlying U.S. Treasury bonds and notes themselves are held in book-entry form
at the Federal Reserve Bank or, in the case of bearer securities (i.e.,
unregistered securities which are ostensibly owned by the bearer or holder), in
trust on behalf of the owners. Counsel to the underwriters of these
certificates or other evidences of ownership of U.S. Treasury securities have
stated that, in their opinion, purchasers of the stripped securities most
likely will be deemed the beneficial holders of the underlying U.S. government
obligations for Federal tax purposes. The Adviser is unaware of any binding
legislative, judicial or administrative authority on this issue.

WARRANTS. The Core Equity, Aggressive Equity and International Equity
Funds may purchase warrants and similar rights, which are privileges issued by
corporations enabling the owners to subscribe to and purchase a specified
number of shares of the corporation at a specified price during a specific
period of time. The purchase of warrants involves the risk that a Fund could
lose the purchase value of a warrant if the right to subscribe to additional
shares is not exercised prior to the warrant's expiration. Also, the purchase
of warrants involves the risk that the effective price paid for the warrant
added to the subscription price of the related security may exceed the value of
the subscribed security's market price such as when there is no movement in the
level of the underlying security. A Fund will not invest more than 5% of its
total assets, taken at market value, in warrants, or more than 2% of its total
assets, taken at market value, in warrants not listed on the New York or
American Stock Exchanges or a major foreign exchange. Warrants attached to
other securities acquired by a Fund are not subject to this restriction. The
U.S. Government Securities and Income Funds do not intend to invest in
warrants.

FOREIGN CURRENCY TRANSACTIONS. In order to protect against a possible
loss on investments resulting from a decline or appreciation in the value of a
particular foreign currency against the U.S. dollar or another foreign currency
or for other reasons, the Funds (other than the U.S. Government Securities
Fund) are authorized to enter into forward currency exchange contracts. These
contracts

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<PAGE> 47

involve an obligation to purchase or sell a specified currency at a
future date at a price set at the time of the contract. Forward currency
contracts do not eliminate fluctuations in the values of portfolio securities
but rather may allow a Fund to establish a rate of exchange for a future point
in time.

A Fund may enter into forward foreign currency exchange contracts in
several circumstances. When entering into a contract for the purchase or sale
of a security, a Fund may enter into a contract for the amount of the purchase
or sale price to protect against variations, between the date the security is
purchased or sold and the date on which payment is made or received, in the
value of the foreign currency relative to the U.S. dollar or other foreign
currency.

When a Fund's sub-adviser anticipates that a particular foreign currency
may decline substantially relative to the U.S. dollar or other leading
currencies, in order to reduce risk, a Fund may enter into a forward contract
to sell, for a fixed amount, the amount of foreign currency approximating the
value of some or all of the Fund's securities denominated in such foreign
currency. A Fund may also enter into a forward contract to attempt to hedge
interest or dividend payments payable in a foreign currency. With respect to
any forward foreign currency contract, it will not generally be possible to
match precisely the amount covered by that contract and the value of the
securities involved due to the changes in the values of such securities
resulting from market movements between the date the forward contract is
entered into and the date it matures. While forward contracts may offer
protection from losses resulting from declines or appreciation in the value of
a particular foreign currency, they also limit potential gains that result from
changes in the value of such currency. A Fund will also incur costs in
connection with forward foreign currency exchange contracts and conversions of
foreign currencies into U.S. dollars. In addition, the sub-adviser to the
International Equity Fund may purchase or sell forward foreign currency
exchange contracts to seek to increase total return when the sub-adviser
anticipates that the foreign currency will appreciate or depreciate in value,
but securities denominated in that currency do not in the sub-adviser's view
present attractive investment opportunities and are not held by a Fund.

A separate account consisting of cash, U.S. government securities or other
liquid high-grade debt obligations, equal to the amount of a Fund's assets that
are required to consummate its obligation under forward contracts, will be
established with the Fund's custodian except to the extent the contracts are
otherwise "covered." For the purpose of determining the adequacy of the
securities in the account, the deposited securities will be valued at market or
fair value. If the market or fair value of such securities declines,
additional cash or securities will be placed in the account daily so that the
value of the account will equal the amount of such commitments by the Fund. A
forward contract to sell a foreign currency is "covered" if a Fund owns the
currency (or securities denominated in the currency) underlying the contract,
or holds a forward contract (or call option) permitting the Fund to buy the
same currency at a price no higher than the Fund's price to sell the currency.
A forward contract to buy a foreign currency is "covered" if a Fund holds a
forward contract (or put option) permitting the Fund to sell the same currency
at a price as high as or higher than the Fund's price to buy the currency.

OPTIONS. Each Fund may purchase and sell put and call options. Such
options may relate to particular securities, stock indices, financial
instruments and foreign currencies, and may or may not be listed on a domestic
or foreign securities exchange and may or may not be issued by the Options
Clearing Corporation. Options trading is a highly specialized activity that
entails greater than ordinary investment risk. Options may be more volatile
than the underlying instruments, and therefore, on a percentage basis, an
investment in options may be subject to greater fluctuation than an investment
in the underlying instruments themselves.

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<PAGE> 48

A call option for a particular security gives the purchaser of the option
the right to buy, and a writer (seller) the obligation to sell, the underlying
security at the stated exercise price at any time prior to the expiration of
the option, regardless of the market price of the security. The premium paid
to the writer is in consideration for undertaking the obligation under the
option contract. A put option for a particular security gives the purchaser
the right to sell the security at the stated exercise price at any time prior
to the expiration date of the option, regardless of the market price of the
security. Options on indices and yield curve options provide the holder with
the right to make or receive a cash settlement upon exercise of the option.
With respect to options on indices, the amount of the settlement will equal the
difference between the closing price of the index at the time of exercise and
the exercise price of the option expressed in dollars, times a specified
multiple.

A Fund's obligation to sell an instrument subject to a call option written
by it, or to purchase an instrument subject to a put option written by it, may
be terminated prior to the expiration date of the option by the Fund's
execution of a closing purchase transaction, which is effected by purchasing on
an exchange an option of the same series (i.e., same underlying instrument,
exercise price and expiration date) as the option previously written. A
closing purchase transaction will ordinarily be effected to realize a profit on
an outstanding option, to prevent an underlying instrument from being called,
to permit the sale of the underlying instrument or to permit the writing of a
new option containing different terms on such underlying instrument. The cost
of such a liquidation purchase plus transactions costs may be greater than the
premium received upon the original option, in which event the Fund will have
incurred a loss on the transaction. There is no assurance that a liquid
secondary market will exist for any particular option. An option writer,
unable to effect a closing purchase transaction, will not be able to sell the
underlying instrument or liquidate the assets held in the segregated account
until the option expires or the optioned instrument or currency is delivered
upon exercise with the result that the writer in such circumstances will be
subject to the risk of market decline or appreciation on the instrument during
such period.

If an option purchased by a Fund expires unexercised, the Fund realizes a
loss equal to the premium paid. If a Fund enters into a closing sale
transaction on an option purchased by it, the Fund will realize a gain if the
premium received by the Fund on the closing transaction is more than the
premium paid to purchase the option, or a loss if it is less. If an option
written by a Fund expires on the stipulated expiration date or if a Fund enters
into a closing purchase transaction, it will realize a gain (or loss if the
cost of a closing purchase transaction exceeds the net premium received when
the option is sold). If an option written by a Fund is exercised, the proceeds
of the sale will be increased by the net premium originally received and the
Fund will realize a gain or loss.

There are several risks associated with transactions in options. For
example, there are significant differences between the securities, currency and
options markets that could result in an imperfect correlation between these
markets, causing a given transaction not to achieve its objectives. In
addition, a liquid secondary market for particular options, whether traded
over-the-counter or on an exchange, may be absent for reasons which include the
following: there may be insufficient trading interest in certain options;
restrictions may be imposed by an exchange on opening transactions or closing
transactions or both; trading halts, suspensions or other restrictions may be
imposed with respect to particular classes or series of options or underlying
securities or currencies; unusual or unforeseen circumstances may interrupt
normal operations on an exchange; the facilities of an exchange or the Options
Clearing Corporation may not at all times be adequate to handle current trading
value; or one or more exchanges could, for economic or other reasons, decide or
be compelled at some future date to discontinue the trading of options (or a
particular class or series of options), in which event the secondary market on
that

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<PAGE> 49

exchange (or in that class or series of options) would cease to exist,
although outstanding options that had been issued by the Options Clearing
Corporation as a result of trades on that exchange would continue to be
exercisable in accordance with their terms.

COVER FOR OPTIONS AND FUTURES POSITIONS. Transactions using futures
contracts and options (other than options that a Fund has purchased) expose the
Fund to an obligation to another party. A Fund will not enter into any such
transactions unless it owns either (1) an offsetting ("covered") position in
securities, currencies or other options or futures contracts or (2) cash,
receivables and short-term debt securities with a value sufficient at all times
to cover its potential obligations not covered as provided in (1) above. Each
Fund will comply with Securities and Exchange Commission (the "Commission")
guidelines regarding cover for these instruments and, if the guidelines so
require, set aside cash, U.S. government securities or other liquid, high-grade
debt securities in a segregated account with its Custodian in the prescribed
amount.

Assets used as cover or held in a segregated account cannot be sold while
the position in the corresponding futures contract or option is open, unless
they are replaced with similar assets. As a result, the commitment of a large
portion of a Fund's assets to cover or segregated accounts could impede
portfolio management or the Fund's ability to meet redemption requests or other
current obligations.

FUTURES CONTRACTS AND RELATED OPTIONS. The Funds may purchase and sell
futures contracts and may purchase and sell call and put options on futures
contracts. For a detailed description of futures contracts and related
options, see Appendix B to this Statement of Additional Information.

CONVERTIBLE SECURITIES. Convertible securities entitle the holder to
receive interest paid or accrued on debt or the dividend paid on preferred
stock until the convertible securities mature or are redeemed, converted and
exchanged. Prior to conversion, convertible securities have characteristics
similar to ordinary debt securities in that they normally provide a stable
stream of income with generally higher yields than those of common stock of the
same or similar issuers. Convertible securities rank senior to common stock in
a corporation's capital structure and therefore generally entail less risk than
the corporation's common stock, although the extent to which such risk is
reduced depends in large measure upon the degree to which the convertible
security sells above its value as a fixed income security.

In selecting convertible securities for the Funds, the sub-adviser, as the
case may be, will consider among other factors, its evaluation of the
creditworthiness of the issuers of the securities; the interest or dividend
income generated by the securities; the potential for capital appreciation of
the securities and the underlying common stocks; the prices of the securities
relative to other comparable securities and to the underlying common stocks;
whether the securities are entitled to the benefits of sinking funds or other
protective conditions; diversification of the Fund's portfolio as to issuers;
and whether the securities are rated by a rating agency and, if so, the ratings
assigned.

The value of convertible securities is a function of their investment
value (determined by yield in comparison with the yields of other securities of
comparable maturity and quality that do not have a conversion privilege) and
their conversion value (their worth, at market value, if converted into the
underlying common stock). The investment value of convertible securities is
influenced by changes in interest rates, with investment value declining as
interest rates increase and increasing as interest rates decline, and by the
credit standing of the issuer and other factors. The conversion value of
convertible securities is determined by the market price of the underlying
common stock. If the conversion value is low relative to the investment value,
the price of the convertible securities is governed principally by

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<PAGE> 50

their investment value. To the extent the market price of the underlying
common stock approaches or exceeds the conversion price, the price of the
convertible securities will be increasingly influenced by their conversion
value. In addition, convertible securities generally sell at a premium over
their conversion value determined by the extent to which investors place value
on the right to acquire the underlying common stock while holding fixed income
securities.

Capital appreciation for a Fund may result from an improvement in the
credit standing of an issuer whose securities are held in the Fund or from a
general lowering of interest rates, or a combination of both. Conversely, a
reduction in the credit standing of an issuer whose securities are held by a
Fund or a general increase in interest rates may be expected to result in
capital depreciation to the Fund.

In general, investments in non-investment grade convertible securities
(commonly referred to as "junk" securities) are subject to a significant risk
of a change in the credit rating or financial condition of the issuing entity.
Investments in convertible securities of medium or lower quality are also
likely to be subject to greater market fluctuations and to greater risk of loss
of income and principal due to default than investments of higher rated
fixed-income securities. Such lower rated securities generally tend to reflect
short-term corporate and market developments to a greater extent than higher
rated securities, which react more to fluctuations in the general level of
interest rates. A Fund will generally reduce risk to the investor by
diversification, credit analysis and attention to current developments in
trends of both the economy and financial markets. However, while
diversification reduces the effect on a Fund of any single investment, it does
not reduce the overall risk of investing in lower rated securities.

RISKS RELATED TO LOWER-RATED SECURITIES. While any investment carries
some risk, certain risks associated with lower-rated securities (commonly
referred to as "junk bonds") are different than those for investment-grade
securities. The risk of loss through default is greater because lower-rated
securities are usually unsecured and are often subordinate to an issuer's other
obligations. Additionally, the issuers of these securities frequently have
high debt levels and are thus more sensitive to difficult economic conditions,
individual corporate developments and rising interest rates. Consequently, the
market price of these securities may be quite volatile and may result in wide
fluctuations of a Fund's net asset value per share.

There remains some uncertainty about the performance level of the market
for lower-rated securities under adverse market and economic environments. An
economic downturn or increase in interest rates could have a negative impact on
both the markets for lower-rated securities (resulting in a greater number of
bond defaults) and the value of lower-rated securities held in the portfolio of
investments.

The economy and interest rates can affect lower-rated securities
differently than higher-rated securities. For example, the prices of
lower-rated securities are more sensitive to adverse economic changes or
individual corporate developments than are the prices of higher-rated
investments. In addition, during an economic downturn or period in which
interest rates are rising significantly, highly leveraged issuers may
experience financial difficulties, which, in turn, would adversely affect their
ability to service their principal and interest payment obligations, meet
projected business goals and obtain additional financing.

If an issuer of a security defaults, a Fund may incur additional expenses
to seek recovery. In addition, periods of economic uncertainty would likely
result in increased volatility for the market prices of lower-rated securities
as well as a Fund's net asset value. In general, both the prices and yields of

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<PAGE> 51

lower-rated securities will fluctuate. In certain circumstances it may be
difficult to determine a security's fair value due to a lack of reliable
objective information. Such instances occur where there is not an established
secondary market for the security or the security is lightly traded. As a
result, a Fund's valuation of a security and the price it is actually able to
obtain when it sells the security could differ.

Adverse publicity and investor perceptions, whether or not based on
fundamental analysis, may decrease the value and liquidity of lower-rated
securities held by a Fund, especially in a thinly traded market. Illiquid or
restricted securities held by a Fund may involve special registration
responsibilities, liabilities and costs, and could involve other liquidity and
valuation difficulties. Current laws, such as those requiring
federally-insured savings and loan associations to remove investments in
lower-rated securities from their portfolios, as well as other pending
proposals, may have a material impact on the market for lower-rated securities.

The rating assigned by a rating agency evaluates the safety of a
lower-rated security's principal and interest payments, but does not address
market value risk. Because the ratings of the rating agencies may not always
reflect current conditions and events, in addition to using recognized rating
agencies and other sources, the sub-adviser performs its own analysis of the
issuers whose lower-rated securities a Fund holds. Because of this additional
analysis, a Fund's performance may depend more on its investment adviser's
credit analysis than is the case of mutual funds investing in higher-rated
securities.

YIELDS AND RATINGS. The yields on certain obligations, including the
money market instruments in which the Funds invest, are dependent on a variety
of factors, including general economic conditions, conditions in the particular
market for the obligation, financial condition of the issuer, size of the
offering, maturity of the obligation and ratings of the issue. The ratings of
S&P, Moody's, and other rating agencies represent their respective opinions as
to the quality of the obligations they undertake to rate. Ratings, however,
are general and are not absolute standards of quality. Consequently,
obligations with the same rating, maturity and interest rate may have different
market prices.

INVESTMENT COMPANIES. Each Fund currently intends to limit its
investments in securities issued by other investment companies so that, as
determined immediately after a purchase of such securities is made: (a) not
more than 5% of the value of the Fund's total assets will be invested in the
securities of any one investment company; (b) not more than 10% of the value of
its total assets will be invested in the aggregate in securities of investment
companies as a group; and (c) not more than 3% of the outstanding voting stock
of any one investment company will be owned by the Fund or by the Trust as a
whole.

CALCULATION OF PORTFOLIO TURNOVER RATE. The portfolio turnover rate for
the Funds is calculated by dividing the lesser of purchases or sales of
portfolio investments for the reporting period by the monthly average value of
the portfolio investments owned during the reporting period. The calculation
excludes all securities, including options, whose maturities or expiration
dates at the time of acquisition are one year or less. Portfolio turnover may
vary greatly from year to year as well as within a particular year, and may be
affected by cash requirements for redemption of shares and by requirements
which enable the Funds to receive favorable tax treatment.

UNSEASONED COMPANIES. The Funds may invest up to 10% of their net assets
in unseasoned companies. While smaller 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
securities of smaller

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<PAGE> 52

companies are traded only over-the-counter or on regional securities
exchanges, and 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. When making large sales, a
Fund may have to sell portfolio holdings of small companies at discounts from
quoted prices or may have to make a series of smaller sales over an extended
period of time due to the trading volume in smaller company securities.

ILLIQUID SECURITIES. The Funds may invest up to 15% of their net assets
in illiquid securities (i.e., securities that cannot be disposed of within
seven days in the normal course of business at approximately the amount at
which the Fund has valued the securities). The Board of Trustees or its
delegate has the ultimate authority to determine which securities are liquid or
illiquid for purposes of this limitation. Certain securities exempt from
registration or issued in transactions exempt from registration ("restricted
securities") under the Securities Act of 1933, as amended ("Securities Act")
that may be resold pursuant to Rule 144A or Regulation S under the Securities
Act, may be considered liquid. The Board has delegated Briar Capital
Management L.L.C. (the "Adviser") and each Fund's sub-adviser the day-to-day
determination of the liquidity of a security, although it has retained
oversight and ultimate responsibility for such determinations. Although no
definite quality criteria are used, the Board has directed such Adviser and
sub-adviser to look to such factors as (i) the nature of the market for a
security (including the institutional private or international resale market),
(ii) the terms of these securities or other instruments allowing for the
disposition to a third party or the issuer thereof (e.g., certain repurchase
obligations and demand instruments), (iii) the availability of market
quotations (e.g., for securities quoted in PORTAL system), and (iv) other
permissible relevant factors. Certain securities, such as repurchase
obligations maturing in more than seven days, are currently considered
illiquid.

Restricted securities may be sold in privately negotiated or other exempt
transactions, qualified non-U.S. transactions, such as under Regulation S, or
in a public offering with respect to which a registration statement is in
effect under the Securities Act. Where registration is required, a Fund may be
obligated to pay all or part of the registration expenses and a considerable
time may elapse between the decision to sell and the sale date. If, during
such period, adverse market conditions were to develop, a Fund might obtain a
less favorable price than prevailed when it decided to sell. Restricted
securities will be priced at fair value as determined in good faith by the
Board.

If through the appreciation of illiquid securities or the depreciation of
illiquid securities, a Fund should be in a position where more than 15% of the
value of its net assets are invested in illiquid assets, including restricted
securities which are not readily marketable, the Fund will take such steps as
it deems advisable, if any, to reduce the percentage of such securities to 15%
or less of the value of its net assets.

MISCELLANEOUS. The Funds will not normally engage in the trading of
securities for short-term profits. However, the Funds are not restricted by
policy with regard to portfolio turnover and will make changes in their
investment portfolio from time to time as business and economic conditions as
well as market prices may dictate. Securities may be purchased on margin only
to obtain such short-term credits as are necessary for the clearance of
purchases and sales of securities. The Funds will not engage in selling
securities short. The Funds may, however, make short sales against the box.
"Selling short against the box" involves selling a security that a Fund owns
for delivery at a specified date in the future.

-12-

<PAGE> 53
INVESTMENT RESTRICTIONS

Consistent with each Fund's investment objective, each Fund has adopted
certain investment restrictions. The following restrictions supplement those
set forth in the Prospectus. Unless otherwise noted, whenever an investment
restriction states a maximum percentage of a Fund's assets that may be invested
in any security or other asset, such percentage restriction will be determined
immediately after and as a result of the Fund's acquisition of such security or
other asset. Accordingly, any subsequent change in values, net assets, or
other circumstances will not be considered when determining whether the
investment complies with the Fund's investment limitations except with respect
to the Fund's restrictions on borrowings as set forth in restriction 8 below.

A Fund's fundamental restrictions cannot be changed without the approval
of the holders of the lesser of: (i) 67% of the Fund's shares present or
represented at a shareholders meeting at which the holders of more than 50% of
such shares are present or represented; or (ii) more than 50% of the
outstanding shares of the Fund.

THE FOLLOWING ARE THE FUNDS' FUNDAMENTAL INVESTMENT RESTRICTIONS.

Each Fund may not:

1. Issue senior securities, except as permitted under the 1940 Act;
provided, however, a Fund may engage in transactions involving
options, futures, options on futures and foreign currency exchange
contracts.

2. Lend money or securities (except by purchasing debt securities or
entering into repurchase agreements or lending portfolio
securities).

3. With respect to seventy-five percent (75%) of its total assets,
purchase (a) the securities of any issuer (except securities of the
U.S. government or any agency or instrumentality thereof), if such
purchase would cause more than five percent (5%) of the value of
the Fund's total assets to be invested in securities of any one
issuer or (b) more than ten percent (10%) of the outstanding voting
securities of any one issuer.

4. Concentrate 25% or more of the value of its total assets,
determined at the time an investment is made, exclusive of U.S.
government securities, in securities issued by companies primarily
engaged in the same industry.

5. Act as an underwriter or distributor of securities other than
shares of a Fund except to the extent that the Fund's participation
as part of a group in bidding or by bidding alone, for the purchase
or permissible investments directly from an issuer or selling
shareholders for the Fund's own portfolio may be deemed to be an
underwriting, and except to the extent that a Fund may be deemed an
underwriter under the Securities Act, by virtue of disposing of
portfolio securities.

6. Purchase any interest in any oil, gas or any other mineral
exploration or development program, including any oil, gas or
mineral leases.

-13-
<PAGE> 54

7. Purchase or sell real estate (but this shall not prevent the
Fund from investing in securities that are backed by real estate or
issued by companies that invest or deal in real estate or in
participation interests in pools of real estate mortgage loans
exclusive of investments in real estate limited partnerships).

8. Borrow money, except that a Fund may borrow money from a bank
for temporary or emergency purposes (not for leveraging) in an
amount not exceeding 33-1/3% of the value of its total assets
(including the amount borrowed) less liabilities (other than
borrowings). Any borrowings that exceed 33-1/3% of the Fund's
total assets by reason of a decline in net asset value will be
reduced within three days to the extent necessary to comply with
the 33-1/3% limitation. Transactions involving options, futures,
options on futures and forward currency contracts, will not be
deemed to be borrowings if properly covered by a segregated account
where appropriate.

9. Purchase or sell physical commodities or commodities contracts
unless acquired as a result of ownership of securities or other
instruments (but this shall not prevent the Fund from engaging in
transactions involving foreign currencies, futures contracts,
options on futures contracts or options, or from investing in
securities or other instruments backed by physical commodities).

Although restriction 3 does not apply to the Aggressive Equity Fund, 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 its 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).

THE FOLLOWING INVESTMENT RESTRICTIONS ARE NOT FUNDAMENTAL, AND MAY BE
CHANGED WITHOUT SHAREHOLDER APPROVAL.

Each Fund may not:

1. Purchase warrants, valued at the lower of cost or market, in
excess of 5% of a Fund's net assets. Included in that amount, but
not to exceed 2% of net assets, are warrants whose underlying
securities are not traded on principal domestic or foreign
exchanges. Warrants acquired by the Fund in units or attached to
securities are not subject to these restrictions.

2. Purchase securities of other investment companies except to the
extent permitted by the 1940 Act and the rules and regulations
thereunder.

3. Make investments for the purpose of exercising control or
management of any company except that a Fund may vote portfolio
securities in the Fund's discretion.

4. Invest in securities of issuers which have a record of less than
three (3) years continuous operation, including the operation of any
predecessor business of a company which came into existence as a
result of a merger, consolidation, reorganization or purchase of
substantially all of the assets of such predecessor business, if
such purchase would cause

-14-
<PAGE> 55

the value of the Fund's investments in all such companies to
exceed 5% of the value of its total assets.

5. Acquire illiquid securities if, as a result of such investments,
more than fifteen percent (15%) of the Fund's net assets (taken at
market value at the time of each investment) would be invested in
illiquid securities. "Illiquid securities" means securities that
cannot be disposed of within seven days in the normal course of
business at approximately the amount at which the Fund has valued
the securities and includes, among other things, repurchase
agreements maturing in more than seven (7) days.

6. Purchase securities on margin, participate in a joint trading
account or sell securities short (other than short sales "against
the box" and except for such short-term credits as are necessary
for the clearance of transactions); provided, however, the Fund may
(i) purchase or sell futures contracts, (ii) make initial and
variation margin payments in connection with purchases or sales of
futures contracts or options on futures contracts, (iii) write or
invest in put or call options on securities and indexes, and (iv)
engage in foreign currency transactions. (The "bunching" of orders
for the sale or purchase of marketable portfolio securities with
other accounts under the management of the Adviser to save
brokerage costs or average prices among them is not deemed to
result in a securities trading account.)

7. Borrow money except for temporary bank borrowings (not in excess
of five percent (5%) of the value of its total assets) for
emergency or extraordinary purposes, or engage in reverse
repurchase agreements, or pledge any of its assets except to secure
borrowings and only to an extent not greater than ten percent (10%)
of the value of the Fund's net assets; provided, however, a Fund
may engage in transactions involving options, futures, options on
futures and foreign currencies. Each Fund will not purchase any
security while borrowings representing more than 5% of its total
assets are outstanding.

Each Fund may make commitments more restrictive than the restrictions
listed above so as to permit the sale of shares of the Fund in certain states.
Should a Fund determine that a commitment is no longer in the best interest of
the Fund and its shareholders, the Fund reserves the right to revoke the
commitment by terminating the sale of Fund shares in the state involved.

In determining industry classification with respect to the Funds other
than the International Equity Fund, the Adviser and such Fund's sub-adviser
intend to use the industry classification titles in the Standard Industrial
Classification Manual. With respect to the International Equity Fund, the
Adviser and such Fund's sub-adviser intend to use the Morgan Stanley Capital
International industry classification titles.

A security is considered to be issued by the entity, or entities, whose
assets and revenues back the security. A guarantee of a security is not deemed
to be a security issued by the guarantor when the value of all securities
issued and guaranteed by the guarantor, and owned by a Fund, does not exceed
10% of the value of the Fund's total assets.

-15-

<PAGE> 56
ADDITIONAL TRUST INFORMATION

TRUSTEES AND OFFICERS. Information regarding the trustees and officers
of the Trust, including their principal business occupations during at least the
last five years, is set forth below. Each trustee who is an "interested
person," as defined in the 1940 Act, is indicated by an asterisk.

ANTHONY E. CASCINO

Anthony E. Cascino is a Trustee of the Trust. He is also a director of
MacLean-Fogg Company, the Midwest Securities Trust Corporation and
Interholding, S.R.I. of Milan, Italy. Mr. Cascino is currently the
chairman of the Board of United Financial Group, Inc. and is the retired
Vice Chairman of the Board of Directors of International Minerals and
Chemical Corporation ("IMC"). He was the Executive Vice President for
nine (9) of his twenty-six (26) year career at IMC. He received a M.A.
from northwestern University and a B.A. from the Illinois Institute of
Technology.

DAVID S. EVANS*

David S. Evans is a Trustee and Chairman of the Trust. He has 12 years
experience in principal investing, investment banking, venture capital
and money management. He is currently President of Glencoe Investment
Corp., a Vice-President of Pekin, Singer & Shapiro Asset Management,
Inc., a Director and Chairman of the Adviser, a Vice President of S.F.
Investments, and President of the firm's private equity investing group.
He is also a member of the investment committee of the Adviser and of
Pekin, Singer. Mr. Evans was a merchant banking and emerging growth
company specialist in the investment banking department of Donaldson,
Lufkin & Jenrette in New York (1985-1987) and Chicago (1988-1992). In
addition, he served from 1983-1985 as Project Director of the University
of Michigan Growth Capital Symposium, where he advised emerging growth
companies on business development and capital raising strategies. He
received an M.B.A. with Honors from the University of Chicago and his
B.G.S. in Economics and History from the University of Michigan.

THOMAS A. HICKEY*

Thomas A. Hickey is a Trustee and is also the President and Treasurer of
the Trust. He is also a member of the investment committee of the
Adviser and of Pekin, Singer & Shapiro Asset Management, Inc. He is
currently a Director and President of the Adviser and Prairie Investment
Advisors. Prior to his positions with the Advisor and Prairie Investment
Advisors, he was Chairman and CEO of the Investment Management Group of
First Midwest Bankcorp, Inc., which he joined in 1975. Mr. Hickey's
responsibilities included the management of First Midwest's $1.3 billion
trust company with approximately 2,500 clients. Over a 20-year career at
First Midwest, he served in various senior positions, including President
and CEO of a number of their banks and other financial services
companies. He has over 30 years experience in trust banking and
investment management. He was Chairman and CEO of the Investment
Management Group of First Midwest Bankcorp, Inc. He has a B.A. from
Dartmouth College and a J.D. from John Marshall Law School.

-16-
<PAGE> 57

AUSTIN S. LETT

Austin S. Lett is a Trustee of the Trust. He has over 20 years
experience in corporate finance, investment banking and venture capital.
He is currently the Managing Director of Summit-Manhattan Company, an
investment banking and venture capitalization. He is also currently an
officer and director of Bath Pennsylvania, Inc., Saurian Technology,
Inc., and Encore Coating, Inc. Mr. Lett received an M.B.A. from the
University of Michigan and a B.S. from the United States Naval Academy.

CAROLINE WILLIAMS

Caroline Williams is a Trustee of the Trust. She is also a director of
Argyle Television II, Inc., New Argyle Television, Inc., the Franklin
Group, Inc., and several nonprofit organizations. She was a Managing
Director at Donaldson, Lufkin & Jenrette Securities Corporation from 1988
to January, 1992. She received a M.S. in Nonprofit Management from The
New School for Social Research, and a B.A. from Vassar College. Ms.
Williams has over 20 years of experience in merchant and investment
banking.

For the fiscal year ending November 30, 1995, the Trustees received the
aggregate amount of $15,126 in fees and expenses.

INVESTMENT ADVISOR. The investment adviser to the Funds is Briar
Capital Management L.L.C. (the "Adviser"). Pursuant to an Investment Management
and Advisory Agreement entered into between the Trust and the Adviser (the
"Advisory Agreement"), the Adviser provides consulting, investment and
administrative services to the Funds. The Adviser has overall responsibility
for the general management and investment of the assets and securities
portfolios of the Funds, provides overall investment strategies and programs for
the Funds, and selects, allocates, monitors and evaluates sub-advisers. The
Adviser also 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.

The Advisory Agreement is dated January 15, 1995. The Advisory Agreement
has an initial term of two years and thereafter is required to be approved
annually by the Board of Trustees of the Trust or by vote of a majority of the
respective Fund's outstanding voting securities (as defined in the 1940 Act).
Each annual renewal must also be approved by the vote of a majority of the
respective Fund's trustees who are not parties to the Advisory Agreement or
interested persons of any such party, cast in person at a meeting called for
the purpose of voting on such approval. The Advisory Agreement was approved by
the vote of a majority of the trustees who are not parties to the Advisory
Agreement or interested persons of any such party on January 11, 1995, and by
the initial shareholder of each Fund on January 11, 1995. The Advisory
Agreement is terminable without penalty with respect to a Fund, on 60 days'
written notice by the Trustees, by vote of a majority of a Fund's outstanding
voting securities, or by Adviser, and will terminate automatically in the event
of its assignment.

As compensation for its services, each Fund pays to Adviser a monthly
advisory fee at the annual rate specified in the Prospectus. From time to
time, Adviser may voluntarily waive all or a portion of its fee for one or more
Funds. The organizational expenses of the Trust were advanced by the Adviser
and will be reimbursed by each Fund over a period of not more than 60 months.

-17-
<PAGE> 58

The Advisory Agreement requires Adviser to reimburse a Fund in the event
that the expenses and charges payable by the Fund in any fiscal year, including
the advisory fee but excluding taxes, interest, brokerage commissions, and
similar fees, exceed a percentage of the average net asset value of the Fund
for such year which is the most restrictive percentage provided by the state
laws of the various states in which the Fund's common stock is qualified for
sale. Reimbursement of expenses in excess of the applicable limitation will be
made on a monthly basis and will be paid to the Fund by reduction of the
Adviser's fee, subject to later adjustment, month by month, for the remainder
of the Fund's fiscal year. Adviser may from time to time voluntarily absorb
expenses for one or more Funds in addition to the reimbursement of expenses in
excess of applicable limitations.

The Advisory Agreement provides that the Adviser shall not be liable to
the Funds or their shareholders for any error of judgment or mistake of law or
for anything other than willful misfeasance, bad faith, gross negligence or
reckless disregard of its obligations or duties. It also provides that the
Adviser shall not be responsible or liable for the investment merits of any
decision by a sub-adviser to purchase, hold or sell a security for a Fund's
portfolio. The Advisory Agreement also provides that nothing therein shall
limit the freedom of the Adviser and its affiliates to render investment
supervisory and corporate administrative services to other investment companies,
to act as investment adviser or investment counselor to other persons, firms or
corporations, or to engage in other business activities.

The Advisory Agreement also permits the Adviser to employ one or more
sub-advisers to determine what securities and other investments will be
purchased, retained or sold by the Funds, and to place portfolio transactions.
See "Sub-Advisers" below.

For the fiscal year ending November 30, 1995, the Advisor, with respect to
each Fund, waived the following fees and reimbursed each Fund the following
amounts for fees in excess of certain amounts.

<TABLE>
<CAPTION>
Waived Reimbursed
------ ----------
<S> <C> <C>
Core Equity Fund $16,268 $32,102
Agressive Equity Fund $13,581 $32,190
International Equity Fund $8,421 $55,872
U.S. Government Securities Fund $16,247 $32,968
Income Fund $13,041 $28,312
</TABLE>

SUB-ADVISORS. Pursuant to the Advisory Agreement, the Adviser has
selected certain sub-advisers to manage the investment and reinvestment of the
assets of certain of the Funds, subject to the direction of the Adviser. The
sub-advisers are described in the Prospectus. Each sub-adviser has entered into
a sub-advisory agreement with the Trust and the Adviser (the "Sub-Advisory
Agreements"). The Sub-Advisory Agreements are each dated January 15, 1995 and
are for the same terms and subject to the same renewal provisions and
termination rights as the Advisory Agreement except that each Sub-Advisory
Agreement may also be terminated by the respective sub-adviser on no less than
90 days' written notice. In addition, the Sub-Advisory Agreements terminate
automatically upon the termination of the Advisory Agreement.

Pursuant to the Advisory Agreement, the Adviser is responsible for the
payment of the sub-advisory fees. Sub-advisers are employed or terminated by
the Adviser subject to prior approval by the Trustees. The employment of a new
sub-adviser currently requires the prior approval of the shareholders of the
effected Fund.

-18-
<PAGE> 59

The Sub-Advisory Agreements provide that the sub-advisers shall not be
liable to a Fund or its shareholders for any error of judgment or mistake of
law or for anything other than willful misfeasance, bad faith, gross negligence
or reckless disregard of its obligations or duties. The Sub-Advisory
Agreements also provide that nothing therein shall limit the freedom of the
sub-advisers and their affiliates to render investment supervisory services to
other investment companies, to act as investment adviser or investment
counselor to other persons, firms or corporations, or to engage in other
business activities.

For the fiscal year ending November 30, 1995, the sub-advisers for the
funds earned the following fees with respect to each Fund.

<TABLE>
<S> <C>
Core Equity Fund $27,331
Aggressive Equity Fund $21,730
International Equity Fund $20,210
U.S. Government Securities Fund $12,998
Income Fund $10,443
</TABLE>

The fees earned by the sub-adviser with respect to the U.S. Government
Security Fund and the Income Fund have been waived. Of the fees earned by the
sub-adviser to the Core Equity Fund, $5,109 of its fees have been waived as a
result of performance adjustments.

ADMINISTRATOR. Sunstone Financial Group, Inc. (the "Administrator")
provides various administrative and fund accounting services to the
Funds as described in the Prospectus pursuant to an Administration and Fund
Accounting Agreement. Under the Administration and Fund Accounting Agreement,
the Administrator is not liable for any loss suffered by the Funds in connection
with the performance of the Administration and Fund Accounting Agreement, except
a loss resulting from bad faith or negligence on the part of the Administrator
in the performance of its duties. The fees earned and waived by the
Administrator for fiscal year ending November 30, 1995 are as follows:

<TABLE>
<CAPTION>
Earned Waived
<S> <C> <C>
Core Equity Fund $51,823 $7,956
Agressive Equity Fund $43,257 $6,565
International Equity Fund $26,819 $3,817
U.S. Government Securities Fund $51,743 $7,335
Income Fund $41,536 $6,114
</TABLE>

CUSTODIAN, TRANSFER AGENT AND DIVIDEND PAYING AGENT. United Missouri
Bank, N.A. serves as the custodian and Sunstone Financial Group, Inc. as
transfer agent and dividend paying agent for the Trust. Under the terms of the
respective agreements, the custodian and the transfer agent are responsible for
the receipt and delivery of each Fund's securities and cash, processing
purchase and redemption requests for the securities of each Fund as well as the
recordkeeping of ownership of each Fund's securities, payment of dividends as
declared by the Trustees and the issuance of confirmations of transactions and
annual statements to shareholders. The custodian and the transfer agent do not
exercise any supervisory functions over the management of the Funds or the
purchase and sale of securities.

The fees earned with respect to each fund by the previous Transfer Agents (SSC
& DST) for the fiscal year ending November 30, 1995, are as follows:

-19-
<PAGE> 60

<TABLE>
<S> <C>
Core Equity Fund $21,970
Aggressive Equity Fund $21,948
International Equity Fund $21,924
U.S. Government Securities Fund $22,318
Income Fund $22,465
</TABLE>

The fees earned by the Custodian for the fiscal year ending November 30,1995
are as follows:

<TABLE>
<S> <C>
Core Equity Fund $5,012
Agressive Equity Fund $5,517
International Equity Fund $17,405
U.S. Government Securities Fund $3,592
Income Fund $4,323
</TABLE>

LEGAL COUNSEL. Holleb & Coff, with offices at 55 East Monroe Street,
Suite 4100, Chicago, Illinois 60603, serves as counsel to the Funds.

INDEPENDENT AUDITORS. Ernst & Young LLP is the independent auditors for
the Trust. They are responsible for performing an audit of each Fund's
year-end financial statements as well as providing accounting and tax advice
to the management of the Trust.

IN-KIND PURCHASES. Payment for shares of a Fund may, in the discretion of
the Adviser, be made in the form of securities that are permissible
investments for the Fund as described in the Prospectus. For further
information about this form of payment, contact the Transfer Agent. In
connection with an in-kind securities payment, a Fund will require, among other
things, that the securities be valued on the day of purchase in accordance with
the pricing methods used by the Fund and that the Fund receive satisfactory
assurances that it will have good and marketable title to the securities
received by it; that the securities be in proper form for transfer to the Fund;
and that adequate information be provided concerning the basis and other tax
matters relating to the securities. In addition, so long as shares in a Fund
are offered or sold in Texas, any securities that are accepted as payment for
the shares of the Fund will be limited to securities that are issued in
transactions that involve a bona fide reorganization or statutory merger, or
will be limited to other acquisitions of portfolio securities (except for
municipal debt securities issued by state political subdivisions or their
agencies or instrumentalities) that: (a) meet the investment objective and
policies of the Fund; (b) are acquired for investment and not for resale; (c)
are liquid securities that are not restricted as to transfer either by law or
liquidity of market; and (d) have a value that is readily ascertainable (and not
established only by evaluation procedures) as evidenced by a listing on the
American Stock Exchange, New York Stock Exchange or NASDAQ or as evidenced by
their status as U.S. Government Securities, bank certificates of deposit,
banker's acceptances, corporate and other debt securities that are actively
traded, money market securities and other like securities with a readily
ascertainable value.

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<PAGE> 61
DISTRIBUTION OF SHARES

The Trust has entered into a Distribution Agreement (the "Distribution
Agreement") dated January 15, 1995 with the Distributor, pursuant to which the
Distributor acts as underwriter of the shares of the Trust. The Distribution
Agreement provides the Distributor will use its best efforts to distribute the
shares of the Funds on a continuous basis. The Distribution Agreement further
provides that the Distributor bears the costs of advertising and any other
costs attributable to the distribution of the shares of the Funds. (A portion
of these costs may be reimbursed by the Funds pursuant to the Trust's
Distribution and Service Plan pursuant to Rule 12b-1 under the 1940 Act (the
"Plan") described below). The Distributor may enter into service and/or
distribution agreements with other entities to assist in the distribution
effort and/or to provide services to the Trust. Any compensation to these
other entities will be paid by the Distributor from the distribution and
service fees received under the Plan.

The Plan was adopted in anticipation that the Funds will benefit from the
Plan through increased sales of shares of the Funds thereby reducing each
Fund's expense ratio and providing an asset size that allows the Adviser
greater flexibility in management. The Plan may be terminated with respect to
any Fund at any time by a vote of the Trustees who are not interested persons
of the Trust and who have no direct or indirect financial interest in the Plan
or any agreement related thereto (the "Rule 12b-1 Trustees") or by a vote of a
majority of the outstanding shares of a Fund. Any change in the Plan that
would materially increase the distribution expenses of a Fund provided for in
the Plan requires the approval of the shareholders of the respective Fund and
the Board of Trustees, including the Rule 12b-1 Trustees.

While the Plan is in effect, the selection and nomination of Trustees who
are not interested persons of the Trust will be committed to the discretion of
the Trustees who are not interested persons of the Trust. The Trustees review
the amount and purposes of expenditures pursuant to the Plan quarterly as
reported to it by the Distributor. The Plan will continue in effect with
respect to a Fund for as long as its continuance is specifically approved at
least annually by a majority of the Trustees, including the Rule 12b-1
Trustees. Amounts paid under the Plan (which may not exceed a maximum monthly
percentage of 1/12 of 0.15% per annum of a Fund's average daily net assets) are
paid to the Distributor in connection with its services as distributor.
Payments, if any, are made quarterly and shall be based on reports submitted by
the Distributor which sets forth all amounts expended by the Distributor
pursuant to the Plan. Under no circumstances will the Fund pay a fee pursuant
to the Plan, the effect of which would be to exceed the National Association of
Securities Dealers' ("NASD") limitations on asset based compensation. The NASD
has adopted amendments to its rules which amendments may limit the extent to
which a Fund may make payments under the Plan. Although the NASD's rules do
not apply to the Funds directly, the rules apply to members of the NASD such as
the Distributor and prohibit them from offering or selling shares of a Fund if
the sale charges (including 12b-1 fees) imposed on such shares exceed the
NASD's limitations.

-21-

<PAGE> 62
For the fiscal year ending November 30, 1995, the 12b-1 fees earned by the
Distributor with respect to each Fund are as follows:

<TABLE>
<S> <C>
Core Equity Fund $9,761
Agressive Equity Fund $8,149
International Equity Fund $5,053
U.S. Government Securities Fund $9,748
Income Fund $7,824
</TABLE>

All of the 12b-1 fees were waived by the Distributor.

PORTFOLIO TRANSACTION AND BROKERAGE

Each Fund's sub-adviser is responsible for decisions to buy and sell
securities for a Fund, for the placement of its portfolio business and the
negotiation of the commissions to be paid on such transactions. It is the
policy of each Fund's sub-adviser to seek the best execution at the best
security price available with respect to each transaction, in light of the
overall quality of brokerage and research services provided to the Adviser, the
sub-advisers or the Trust.

The sub-advisers will place orders pursuant to their investment
determinations for the Funds either directly with the issuer or with any broker
or dealer. In executing portfolio transactions and selecting brokers or
dealers, the sub-advisers will use their best efforts to seek on behalf of a
Fund the best overall commissions terms available. In assessing the best
overall terms available for any transaction, the sub-adviser shall consider all
factors that it deems relevant, including the breadth of the market in the
security, the price of the security, the financial condition and execution
capability of the broker or dealer, and reasonableness of the commission, if
any, both for the specific transaction and on a continuing basis. In
evaluating the best overall terms available, and in selecting the broker-dealer
to execute a particular transaction, the sub-adviser may also consider the
brokerage and research services (as those terms are defined in Section 28(e) of
the Securities Exchange Act of 1934) provided to the Funds and/or other
accounts over which the Adviser or an affiliate of the Adviser exercises
investment discretion. The sub-adviser is authorized to pay to a broker or
dealer who provides such brokerage and research services a commission for
executing a portfolio transaction for a Fund which is in excess of the amount
of commission another broker or dealer would have charged for effecting that
transaction if, but only if, the sub-adviser determines in good faith that such
commission was reasonable in relation to the value of the brokerage and
research services provided by such broker or dealer -- viewed in terms of that
particular transaction or in terms of the overall responsibilities the Adviser
and sub-advisers have to the Funds. In addition, the sub-advisers are
authorized to take into account the sale of shares of the Trust in allocating
purchase and sale orders for portfolio securities to brokers or dealers
(including brokers and dealers that are affiliated with the Adviser, any
sub-adviser or the Distributor), provided that the sub-adviser believes that
the quality of the transaction and the commission are comparable to what they
would be with other qualified firms. In no instance, however, will portfolio
securities be purchased from or sold to the Adviser, the Distributor, or any
affiliated person of either the Trust, the Adviser or the Distributor, acting
as principal in the transaction, except to the extent permitted by the
Securities and Exchange Commission through rules, regulations, decisions and
no-action letters.

For the fiscal year ending November 30, 1995 the portfolio transactions and
commissions paid for each fund are as follows:

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<PAGE> 63

<TABLE>
<CAPTION>
Commissions Brokerage Transaction
Paid To Percentage to Percentages With
Distributor Distributor Commissions Distributor
----------- -------------- ----------- ----------------
<S> <C> <C> <C> <C>
Core Equity Fund ------ ------ $20,387 ------
Aggressive Equity Fund ------ ------ $19,829 ------
International Equity Fund ------ ------ $22,944 ------
U.S. Government
Securities Fund ------ ------ -0- ------
Income Fund $9,450 92.8% $10,180 92.6%
</TABLE>

The Adviser and sub-advisers may retain advisory clients in addition to
the Funds and place portfolio transactions for these accounts. Research
services furnished by firms through which the Funds effect their securities
transactions may be used by the Adviser or sub-adviser in servicing all of its
accounts; not all of such services may be used by the Adviser or sub-adviser in
connection with the Funds. In the opinion of the Adviser and the sub-advisers,
it will not be possible to separately measure the benefits from research
services to each of the accounts (including the Fund) to be managed by the
Adviser or sub-advisers. Because the volume and nature of the trading
activities of the accounts will not be uniform, the amount of commissions in
excess of those charged by another broker paid by each account for brokerage
and research services will vary. However, such costs to the Funds will not, in
the opinion of the Adviser or the sub-advisers, be disproportionate to the
benefits to be received by the Funds on a continuing basis.

The Adviser and sub-advisers intend to seek to allocate portfolio
transactions equitably among its accounts whenever concurrent decisions are
made to purchase or sell securities by a Fund and another advisory account. In
some cases, this procedure could have an adverse effect on the price or the
amount of securities available to a Fund. In making such allocations between a
Fund and other advisory accounts, if any, the main factors to be considered by
the Adviser or sub-advisers will be the respective investment objectives, the
relative size of portfolio holdings of the same or comparable securities, the
availability of cash for investment, the size of investment commitments
generally held, and the opinions of the persons responsible for recommending
the investment.

TAXES

GENERAL

In order to qualify for treatment as a regulated investment company ("RIC")
under the Code, each Fund must distribute to its shareholders for each taxable
year at least 90% of its investment company taxable income (consisting generally
of net investment income, net short-term capital gain and net gains from certain
foreign currency transactions) ("Distribution Requirement") and must meet
several additional requirements. With respect to each Fund, these requirements
include the following: (1) the Fund must

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derive at least 90% of its gross income each taxable year from
dividends, interest, payments with respect to securities loans, and gains from
the sale or other disposition of securities or foreign currencies, or other
income (including gains from options, futures or forward contracts) derived
with respect to its business of investing in securities or those currencies
("Income Requirement"); (2) the fund must derive less than 30% of its gross
income each taxable year from the sale or other disposition of securities, or
any of the following, that were held for less than three months: options,
futures or forward contracts (other than those on foreign currencies), or
foreign currencies (or options, futures or forward contracts thereon) that are
not directly related to the Fund's principal business of investing in
securities (or options and futures with respect to securities) ("Short-Short
Limitation"); (3) at the close of each quarter of the Fund's taxable year, at
least 50% of the value of its total assets must be represented by cash and cash
items, U.S. government securities, securities of other RICs, and other
securities, with these other securities limited, with respect to any one
issuer, to an amount that does not exceed 5% of the value of the Fund's total
assets and that does not represent more than 10% of the issuer's outstanding
voting securities; and (4) at the close of each quarter of the Fund's taxable
year, not more than 25% of the value of its total assets may be invested in
securities (other than U.S. government securities or the securities of other
RICs) of any one issuer.

Dividends and other distributions declared by a Fund in, and payable to
shareholders of record as of a date in, October, November or December of any
year will be deemed to have been paid by the Fund and received by the
shareholders on December 31 of that year if the distributions are paid by the
Fund during the following January. Accordingly, those distributions will be
taxed to shareholders for the year in which that December 31 falls.

A portion of the dividends from a Fund's investment company taxable income
(whether paid in cash or reinvested in additional Fund shares) may be eligible
for the dividends-received deduction allowed to corporations. The eligible
portion may not exceed the aggregate dividends received by a Fund from U.S.
corporations. However, dividends received by a corporate shareholder and
deducted by it pursuant to the dividends-received deduction are subject to the
alternative minimum tax.

If shares of a Fund are sold at a loss after being held for six months or
less, the loss will be treated as long-term, instead of short-term, capital
loss to the extent of any capital gain distributions received on those shares.
Investors also should be aware that if shares are purchased shortly before the
record date for any distribution, the shareholder will pay full price for the
shares and receive some portion of the price back as a taxable dividend or
capital gain distribution.

Each Fund will be subject to a nondeductible 4% excise tax to the extent
it fails to distribute by the end of any calendar year substantially all of its
ordinary income for that year and capital gain net income for the one-year
period ending on October 31 of that year, plus certain other amounts.

FOREIGN TAXES

Dividends and interest received by the Funds may be subject to income,
withholding, or other taxes imposed by foreign countries that would reduce the
yield on each Fund's portfolio securities. Tax conventions between certain
countries and the United States may reduce or eliminate these foreign taxes,
however, and many foreign countries do not impose taxes on capital gains in
respect of investments by foreign investors. If more than 50% of the value of
a Fund's total assets at the close of its taxable year consists of securities
of foreign corporations, the Fund will be eligible to, and may, file an
election with the Internal Revenue Service that will enable its shareholders,
in effect, to receive the benefit of the

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foreign tax credit with respect to any foreign income taxes paid by it.
Pursuant to the election, the Fund will treat those taxes as dividends paid to
its shareholders and each shareholder will be required to (1) include in gross
income, and treat as paid by him, his proportionate share of those taxes, (2)
treat his share of those taxes and of any dividend paid by the Fund that
represents income from foreign sources as his own income from those sources,
and (3) either deduct the taxes deemed paid by him in computing his taxable
income or, alternatively, use the foregoing information in calculating the
foreign tax credit against his federal income tax. Each Fund will report to
its shareholders shortly after each taxable year their respective shares of the
Fund's income from sources within, and taxes paid to, foreign countries if it
makes this election.

PASSIVE FOREIGN INVESTMENT COMPANIES

If a Fund acquires stock in certain non-U.S. corporations that receive at
least 75% of their annual gross income from passive sources (such as sources
that produce interest, dividends, rental, royalty or capital gain income) or
hold at least 50% of their assets in such passive sources ("passive foreign
investment companies"), the Fund could be subject to federal income tax and
additional interest charges on "excess distributions" received from such
companies or gains from the sale of stock in such companies, even if all income
or gain actually received by the Fund is timely distributed to its
shareholders. The Fund would not be able to pass through to its shareholders
any credit or deduction for such tax. In some cases, elections may be
available that would ameliorate these adverse tax consequences, but such
elections would require the Fund to include certain amounts as income or gain
(subject to the distribution requirements described above) without a concurrent
receipt of cash and could result in the conversion of capital gain to ordinary
income. A Fund may limit its investments in passive foreign investment
companies or dispose of such investments if potential adverse tax consequences
are deemed material in particular situations.

NON U.S. SHAREHOLDERS

Distributions of net investment income by a Fund to a shareholder who, as
to the United States, is a nonresident alien individual, nonresident alien
fiduciary of a trust or estate, foreign corporation, or foreign partnership
("foreign shareholder") will be subject to U.S. withholding tax at a rate of
30% (or lower treaty rate). Withholding will not apply if a dividend paid by a
Fund to a foreign shareholder is "effectively connected with the conduct of a
U.S. trade or business," in which case the reporting and withholding
requirements applicable to domestic taxpayers will apply. Distributions of net
capital gain are not subject to withholding, but in the case of a foreign
shareholder who is a nonresident alien individual, such distributions
ordinarily will be subject to U.S. income tax at a rate of 30% (or lower treaty
rate) if the individual is physically present in the United States for more
than 182 days during the taxable year and the distributions are attributable to
a fixed place of business maintained by an individual in the United States.

OPTIONS, FUTURES AND FORWARD CURRENCY TRANSACTIONS

The use of options and futures transactions, such as selling (writing) and
purchasing options, and futures contracts and entering into forward contracts
involves complex rules that will determine for federal income tax purposes the
character and timing of recognition of the gains and losses the Fund realizes
in connection therewith. Income from foreign currencies (except certain gains
therefrom that may be excluded by future regulations), and income from
transactions in futures and forward contracts and options derived by a Fund
with respect to its business of investing in securities or foreign currencies,
will

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qualify as permissible income under the Income Requirement. However,
income from the disposition by the Funds of options and futures (other than
those on foreign currencies) will be subject to the Short-Short Limitation if
they are held for less than three months. Income from the disposition by the
Funds of foreign currencies, and options, futures and forward contracts on
foreign currencies, that are not directly related to the Fund's principal
business of investing in securities, will be subject to the Short-Short
Limitation if they are held for less than three months.

If a Fund so elects, any increase in value of a position that is part of a
"designated hedge" will be offset by any decrease in value (whether realized or
not) of the offsetting hedging position during the period of the hedge for
purposes of determining whether a Fund satisfies the Short-Short Limitation.
Thus, only the net gain (if any) from the designated hedge will be included in
gross income for purposes of such limitation. Each Fund intends that, when it
engages in options and futures transactions, it will qualify for this
treatment, but at the present time it is not clear whether this treatment will
be available for all of the Funds' options and futures transactions. To the
extent this treatment is not available, a Fund may be forced to defer the
closing out of certain options, futures and forward contracts beyond the time
when it otherwise would be advantageous to do so, in order for the Fund to
continue to qualify as a RIC.

Each Fund's taxable income for each taxable year will be computed without
regard to any net foreign currency loss attributable to transactions after
October 31, and any such net foreign currency loss will be treated as arising
on the first day of the following taxable year. Moreover, in the case of a
transaction classified as a "mixed straddle," the recognition of losses may be
deferred to a later taxable year.

The foregoing is a general and abbreviated summary of certain U.S. federal
income tax considerations affecting such Fund and its shareholders. Investors
are urged to consult their own tax advisers for more detailed information and
for information regarding any foreign, state and local taxes applicable to
distributions received from a Fund.

DESCRIPTION OF SHARES

The Trust Agreement permits the Board of Trustees to issue an unlimited
number of full and fractional shares of beneficial interest of one or more
separate series representing interests in different investment portfolios. The
Trust may hereafter create series in addition to the Funds' existing series,
the five portfolios discussed in this Statement of Additional Information.
Under the terms of the Trust Agreement, each share of each Fund has no par
value, represents a proportionate interest in the particular Fund with each
other share of its class and is entitled to such dividends and distributions
out of the income belonging to the Fund as are declared by the Trustees. Upon
any liquidation of a Fund, shareholders of each class of a Fund are entitled to
share pro rata in the net assets belonging to that class available for
distribution. Shares do not have any preemptive or conversion rights. The
right of redemption is described in the Prospectus. Pursuant to the terms of
the 1940 Act, the right of a shareholder to redeem shares and the date of
payment by a Fund may be suspended for more than seven days (a) for any period
during which the New York Stock Exchange is closed, other than the customary
weekends or holidays, or trading in the markets the Fund normally utilizes is
closed or is restricted as determined by the Commission, (b) during any
emergency, as determined by the Commission, as a result of which it is not
reasonably practicable for the Fund to dispose of instruments owned by it or
fairly to determine the value of its net assets, or (c) for such other period
as the Commission may by order permit

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for the protection of the shareholders of the Fund. The Trust may also
suspend or postpone the recordation of the transfer of its shares upon the
occurrence of any of the foregoing conditions. In addition, the Trust reserves
the right to adopt, by action of the Trustees, a policy pursuant to which it
may, without shareholder approval, redeem upon not less than 30 days' notice all
of a Fund's shares if such shares have an aggregate value below a designated
amount and if the Trustees determine that it is not practical, efficient or
advisable to continue the operation of such Fund and that any applicable
requirements of the 1940 Act have been met. Shares when issued as described in
the Prospectus are validly issued, fully paid and nonassessable, except as
stated below.

The proceeds received by each Fund for each issue or sale of its shares,
and all net investment income, realized and unrealized gain and proceeds
thereof, subject only to the rights of creditors, will be specifically
allocated to and constitute the underlying assets of that Fund. The underlying
assets of each Fund will be segregated on the books of account, and will be
charged with the liabilities in respect to that Fund and with a share of the
general liabilities of the Trust. Expenses with respect to the portfolios of
the Trust are normally allocated in proportion to the net asset value of the
respective portfolios except where allocations of direct expenses can otherwise
be fairly made.

Delaware law and the Trust's Declaration of Trust explicitly provides that
separate boards of trustees may be authorized for each series of the Trust.
The establishment of any board of trustees of a registered investment company
must comply with applicable securities laws, including the provisions of the
1940 Act regarding the election of trustees by shareholders. Establishing
separate boards of trustees would, among other things, enable each group of
Funds to be governed by individuals that are more familiar with such Funds'
particular operations.

Rule 18f-2 under the 1940 Act provides that any matter required by the
provisions of the 1940 Act or applicable state law, or otherwise, to be
submitted to the holders of the outstanding voting securities of an investment
company such as the Trust shall not be deemed to have been effectively acted
upon unless approved by the holders of a majority of the outstanding shares of
each investment portfolio affected by such matter. Rule 18f-2 further provides
that an investment portfolio shall be deemed to be affected by a matter unless
the interests of each investment portfolio in the matter are substantially
identical or the matter does not affect any interest of the investment
portfolio. Under the Rule, the approval of an investment advisory agreement, a
distribution plan subject to Rule 12b-1 under the 1940 Act or any change in a
fundamental investment policy would be effectively acted upon with respect to
an investment portfolio only if approved by a majority of the outstanding
shares of such investment portfolio. However, the Rule also provides that the
ratification of the appointment of independent accountants, the approval of
principal underwriting contracts and the election of Trustees may be
effectively acted upon by shareholders of the Trust voting together in the
aggregate without regard to a particular investment portfolio.

The term "majority of the outstanding shares" of either the Trust or a
particular Fund or investment portfolio means the vote of the lesser of (i) 67%
or more of the shares of the Trust or such Fund or portfolio present at a
meeting, if the holders of more than 50% of the outstanding shares of the Trust
or such Fund or portfolio are present or represented by proxy, or (ii) more
than 50% of the outstanding shares of the Trust or such Fund or portfolio.

As a general matter, the Trust does not hold annual or other meetings of
shareholders. This is because the Trust Agreement provides for shareholder
voting only for the election or removal of one or more Trustees, if a meeting
is called for that purpose, and for certain other designated matters. Each

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Trustee serves until the next meeting of shareholders, if any, called for the
purpose of considering the election or reelection of such Trustee or of a
successor to such Trustee, and until the election and qualification of his
successor, if any, elected at such meeting, or until such Trustee sooner dies,
resigns, retires or is removed by the shareholders or two-thirds of the
Trustees.

Under Delaware law, shareholders of the Trust are not generally personally
liable for obligations of the Trust. The Delaware Business Trust Act provides
that a shareholder of a Delaware business trust shall be entitled to the same
limitation of liability extended to shareholders of private for-profit
corporations. However, no similar statutory or other authority limiting
business trust shareholder liability exists in many other states. As a result,
to the extent that a Delaware business trust or a shareholder is subject to the
jurisdiction of courts in such other states, the courts may not apply Delaware
law and may thereby subject the Trust shareholders to liability. To guard
against this risk, the Declaration of Trust (i) contains an express disclaimer
of shareholder liability for acts or obligations of the Trust and will require
that notice of such disclaimer be given in each agreement, obligation and
instrument entered into or executed by the Trust or its Trustees and (ii)
provides for indemnification out of the property of the Trust of any
shareholder held personally liable for the obligations of the Trust. Thus, the
risk of a Trust shareholder incurring financial loss beyond his or her
investment because of shareholder liability is limited to circumstances in
which all of the following factors are present: (1) a court refused to apply
Delaware law; (2) the liability arose under tort law or, if not, no contractual
limitation of liability was in effect; and (3) the Trust itself would be unable
to meet its obligations.

The Trust Agreement provides that each Trustee of the Trust will be liable
for his or her own willful misfeasance, bad faith, gross negligence or reckless
disregard of the duties involved in the conduct of the office of Trustees
("disabling conduct"), and for nothing else, and will not be liable for errors
of judgment or mistakes of fact or law. The Trust Agreement provides further
that the Trust will indemnify Trustees and officers of the Trust against
liabilities and expenses incurred in connection with litigation and other
proceedings in which they may be involved (or with which they may be
threatened) by reason of their positions with the Trust, except that no Trustee
or officer will be indemnified against any liability to the Trust or its
shareholders to which he would otherwise be subject by reason of disabling
conduct.

The Trust Agreement provides that each shareholder, by virtue of becoming
such, will be held to have expressly assented and agreed to the terms of the
Trust Agreement and to have become a party thereto.

The Trust Agreement also contains procedures for the removal of trustees
by its shareholders. At any meeting of shareholders, duly called and at which
a quorum is present, the shareholders may, by the affirmative vote of the
holders of two-thirds of the votes entitled to be cast thereon, remove any
trustee or trustees from office and may elect a successor or successors to fill
any resulting vacancies for the unexpired terms of removed trustees.

Upon the written request of the holders of shares entitled to not less
than ten percent (10%) of all the votes entitled to be cast at such meeting,
the Secretary of the Trust shall promptly call a special meeting of
shareholders for the purpose of voting upon the question of removal of any
trustee. Whenever ten or more shareholders of record who have been such for at
least six months preceding the date of application, and who hold in the
aggregate either shares having a net asset value of at least $25,000 or at
least one percent (1%) of the total outstanding shares, whichever is less,
shall apply to the Trust's Secretary in writing, stating that they wish to
communicate with other shareholders with a view to obtaining signatures to
submit a request for a meeting as described above and accompanied by a form of

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communication and request which they wish to transmit, the Secretary shall
within five business days after such application either: (1) afford to such
applicants access to a list of the names and addresses of all shareholders as
recorded on the books of the Trust; or (2) inform such applicants as to the
approximate number of shareholders of record and the approximate cost of
mailing to them the proposed communication and form of request.

If the Secretary elects to follow the course specified in clause (2) of
the last sentence of the preceding paragraph, the Secretary, upon the written
request of such applicants, accompanied by a tender of the material to be
mailed and of the reasonable expenses of mailing, shall, with reasonable
promptness, mail such material to all shareholders of record at their addresses
as recorded on the books unless within five business days after such tender the
Secretary shall mail to such applicants and file with the Commission, together
with a copy of the material to be mailed, a written statement signed by at
least a majority of the Trustees to the effect that in their opinion either
such material contains untrue statements of fact or omits to state facts
necessary to make the statements contained therein not misleading, or would be
in violation of applicable law, and specifying the basis of such opinion.

After opportunity for hearing upon the objections specified in the written
statement so filed, the Commission may, and if demanded by the Trustees or by
such applicants shall, enter an order either sustaining one or more of such
objections or refusing to sustain any of them. If the Commission shall enter
an order refusing to sustain any of such objections, or if, after the entry of
an order sustaining one or more of such objections, the Commission shall find,
after notice and opportunity for hearing, that all objections so sustained have
been met, and shall enter an order so declaring, the Secretary shall mail
copies of such material of all shareholders with reasonable promptness after
the entry of such order and the renewal of such tender.

OTHER INFORMATION

The Prospectus and this Statement of Additional Information do not contain
all the information included in the Registration Statement filed with the
Commission under the Securities Act with respect to the securities offered by
the Trust's Prospectus. Certain portions of the Registration Statement have
been omitted from the Prospectus and this Statement of Additional Information,
pursuant to the rules and regulations of the Commission. The Registration
Statement including the exhibits filed therewith may be examined at the office
of the Commission in Washington, D.C.

Statements contained in the Prospectus or in this Statement of Additional
Information as to the contents of any contract or other documents referred to
are not necessarily complete, and in each instance reference is made to the
copy of such contract or other document filed as an exhibit to the Registration
Statement of which the Prospectus and this Statement of Additional Information
form a part, each such statement being qualified in all respects by such
reference.

PERFORMANCE INFORMATION

The Funds may from time to time advertise performance data such as
"average annual total return," "total return," and "current yield." To
facilitate the comparability of historical performance data from one mutual
fund to another, the Commission has developed guidelines for the calculation of
average annual total return and current yield.

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The average annual total return for a Fund for a specific period is found
by first taking a hypothetical $10,000 investment ("initial investment") in the
Fund's shares on the first day of the period and computing the "redeemable
value" of that investment at the end of the period. The redeemable value is
then divided by the initial investment, and this quotient is taken to the Nth
root (N representing the number of years in the period) and 1 is subtracted
from the result, which is then expressed as a percentage. The calculation
assumes that all income and capital gains dividends paid by the Fund have been
reinvested at net asset value on the reinvestment dates during the period.
This calculation can be expressed as follows:

N
P(1 + T) = ERV

Where:T= average annual total return.

ERV =ending redeemable value at the end of the period covered by
the computation of a hypothetical $1,000 payment made at the
beginning of the period.

P =hypothetical initial payment of $1,000.

N =period covered by the computation, expressed in terms of years.

Total return performance for a specific period is calculated by first
taking an investment ("initial investment") in the Fund's shares on the first
day of the period and computing the "ending value" of that investment at the
end of the period. The total return percentage is then determined by
subtracting the initial investment from the ending value and dividing the
remainder by the initial investment and expressing the result as a percentage.
The calculation assumes that all income and capital gains dividends paid by the
Fund have been reinvested at net asset value on the reinvestment dates during
the period. Total return may also be shown as the increased dollar value of
the investment over the period or as a cumulative total return which represents
the change in value of an investment over a stated period and may be quoted as
a percentage or as a dollar amount.

The calculations of average annual total return and aggregate total return
assume the reinvestment of all dividends and capital gain distributions on the
reinvestment dates during the period. The ending redeemable value is
determined by assuming complete redemption of the hypothetical investment and
the deduction of all nonrecurring charges at the end of the period covered by
the computations.

A Fund's yield is calculated by dividing the Fund's net investment income
per share (as described below) earned 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 semiannual basis by adding one to the quotient, raising the sum to
the power of six, subtracting one from the result and then doubling the
difference. A Fund's net investment income per share earned during the period
is based on the average daily number of shares outstanding during the period
entitled to receive dividends and includes dividends and interest earned during
the period minus expenses accrued for the period, net of reimbursements.

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This calculation can be expressed as follows:

6
Yield = 2 [(a-b + 1) - 1]
----
cd

Where:a =dividends and interest earned during the period.

b =expenses accrued for the period (net of reimbursements).

c =the average daily number of shares outstanding during the period
that were entitled to receive dividends.

d =net asset value per share on the last day of the period.

For the purpose of determining net investment income earned during the
period (variable "a" in the formula), dividend income on equity securities held
by a Fund is recognized by accruing 1/360 of the stated dividend rate of the
security each day that the security is in the portfolio. A Fund calculates
interest earned on any debt obligations held in its portfolio by computing the
yield to maturity of each obligation held by it based on the market value of
the obligation (including actual accrual interest) at the close of business on
the last business day of each month, or, with respect to obligations purchased
during the month, the purchase price (plus actual accrued interest) and
dividing the result by 360 and multiplying the quotient by the market value of
the obligation (including actual accrued interest) in order to determine the
interest income on the obligation for each day of the subsequent month that the
obligation is in the portfolio. For purposes of this calculation, it is
assumed that each month contain 30 days. The maturity of an obligation with a
call provision is the next call date on which the obligation reasonably may be
expected to be called or, if none, the maturity date. With respect to debt
obligations purchased at a discount or premium, the formula generally calls for
amortization of the discount or premium. The amortization schedule will be
adjusted monthly to reflect changes in the market values of such debt
obligations.

The Fund's performance figures will be based upon historical results and
will not necessarily be indicative of future performance. The Fund's returns
and net asset value will fluctuate and the net asset value of shares when sold
may be more or less than their original cost. Any additional fees charged by a
dealer or other financial services firm would reduce the returns described in
this section.

The Funds may include discussions or illustrations of the potential
investment goals of a prospective investor, investment management techniques,
policies or investment suitability of a Fund, economic conditions, the effects
of inflation and historical performance of various asset classes, including but
not limited to, stocks, bonds and Treasury bills. From time to time
advertisements or communications to shareholders may summarize the substance of
information contained in shareholder reports (including the investment
composition of a Fund), as well as the views of the Adviser or a sub-adviser as
to current market, economic, trade and interest rate trends, legislative,
regulatory and monetary developments, investment strategies and related matters
believed to be of relevance to a Fund. The Funds may also include in
advertisements charts, graphs or drawings which illustrate the potential risks
and rewards of investment in various investment vehicles, including but not
limited to, stocks, bonds, treasury bills and shares of a Fund. In addition,
advertisements or shareholder communications may include a discussion of
certain attributes or benefits to be derived by an investment in a Fund. Such
advertisements

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or communications may include symbols, headlines or other material which
highlight or summarize the information discussed in more detail therein.

Any fees imposed by Lafayette American Bank & Trust Company or its
affiliates on their customers in connection with investments in the Funds are
not reflected in the Funds' calculation of performance for the Funds.

Each Fund's performance will fluctuate, unlike bank deposits or other
investments which pay a fixed yield for a stated period of time. Past
performance is not necessarily indicative of future actual yields. Actual
performance will depend on such variables as portfolio quality, average
portfolio mature, the type of portfolio expenses and other factors.
Performance is one basis investors may use to analyze a Fund as compared to
other funds and other investment vehicles. However, performance of other funds
and other investment vehicles may not be comparable because of the foregoing
variables, and differences in the methods used in valuing their portfolio
instruments, computing net asset value and determining performance.

DETERMINATION OF NET ASSET VALUE

As set forth in the Prospectus, the net asset value of the Fund will be
determined as of the close of trading on each day the New York Stock Exchange
is open for trading. The New York Stock Exchange is open for trading Monday
through Friday except New Year's Day, Presidents' Day, Good Friday, Memorial
Day, Independence Day, Labor Day, Thanksgiving Day, and Christmas Day.
Additionally, if any of the aforementioned holidays falls on a Saturday, the
New York Stock Exchange will not be open for trading on the preceding Friday,
and when any such holiday falls on a Sunday, the New York Stock Exchange will
not be open for trading on the following Monday unless unusual business
conditions exist, such as the ending of a monthly or the yearly accounting
period.

FINANCIAL STATEMENTS

The following Financial Statements are attached hereto:

1. Statements of Assets and Liabilities as of
November 30, 1995.
2. Schedule of Investments as of November 30, 1995.
3. Statement of Operations for the Period from
January 27, 1995 through November 30, 1995.
4. Statement of Change in Net Assets for the Period
from January 27, 1995 through November 30, 1995.
5. Financial Highlights for the Period from January
27, 1995 through November 30, 1995.
6. Notes to the Financial Statements.

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APPENDIX A

Commercial Paper Ratings

A Standard & Poor's commercial paper rating is a current assessment of the
likelihood of timely payment of debt having an original maturity of no more
than 365 days. The following summarizes the rating categories used by Standard
and Poor's for commercial paper:

"A-1" - Issue's degree of safety regarding timely payment is strong.
Those issues determined to possess extremely strong safety characteristics are
denoted "A-1+."

"A-2" - Issue's capacity for timely payment is satisfactory. However, the
relative degree of safety is not as high as for issues designated "A-1."

"A-3" - Issue has an adequate capacity for timely payment. It is,
however, more vulnerable to the adverse effects of changes and circumstances
than an obligation carrying a higher designation.

"B" - Issue has only a speculative capacity for timely payment.

"C" - Issue has a doubtful capacity for payment.

"D" - Issue is in payment default.

Moody's commercial paper ratings are opinions of the ability of issuers to
repay punctually promissory obligations not having an original maturity in
excess of 9 months. The following summarizes the rating categories used by
Moody's for commercial paper:

"Prime-1" -- Issuer or related supporting institutions are considered to
have a superior capacity for repayment of short-term promissory obligations.
Prime-1 repayment capacity will normally be evidenced by the following
characteristics: leading market positions in well-established industries; high
rates of return on funds employed; conservative capitalization structures with
moderate reliance on debt and ample asset protection; broad margins in earning
coverage of fixed financial charges and high internal cash generation; and
well-established access to a range of financial markets and assured sources of
alternate liquidity.

"Prime-2" -- Issuer or related supporting institutions are considered to
have a strong capacity for repayment of short-term promissory obligations. This
will normally be evidenced by many of the characteristics cited above but to a
lesser degree. Earnings trends and coverage ratios, while sound, will be more
subject to variation. Capitalization characteristics, while still appropriate,
may be more affected by external conditions. Ample alternative liquidity is
maintained.

"Prime-3" -- Issuer or related supporting institutions have an acceptable
capacity for repayment of short-term promissory obligations. The effects of
industry characteristics and market composition may be more pronounced.
Variability in earnings and profitability may result in changes in the level of
debt protection measurements and the requirement for relatively high financial
leverage. Adequate alternate liquidity is maintained.

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"Not Prime" -- Issuer does not fall within any of the Prime rating
categories.

The three rating categories of Duff & Phelps for investment grade
commercial paper are "Duff 1," "Duff 2" and "Duff 3." Duff & Phelps employs
three designations, "Duff 1+," "Duff 1" and "Duff 1-," within the highest
rating category. The following summarizes the rating categories used by Duff &
Phelps for commercial paper:

"Duff 1+" -- Debt possesses highest certainty of timely payment. Short-term
liquidity, including internal operating factors and/or access to alternative
sources of funds, is outstanding, and safety is just below risk-free U.S.
Treasury short-term obligations.

"Duff 1" -- Debt possesses very high certainty of timely payment. Liquidity
factors are excellent and supported by good fundamental protection factors.
Risk factors are minor.

"Duff 1-" -- Debt possesses high certainty of timely payment. Liquidity
factors are strong and supported by good fundamental protection factors. Risk
factors are very small.

"Duff 2" -- Debt possesses good certainty of timely payment. Liquidity
factors and company fundamentals are sound. Although ongoing funding needs may
enlarge total financing requirements, access to capital markets is good. Risk
factors are small.

"Duff 3" -- Debt possesses satisfactory liquidity, and other protection
factors qualify issue as investment grade. Risk factors are larger and subject
to more variation. Nevertheless, timely payment is expected.

"Duff 4" -- Debt possesses speculative investment characteristics.
Liquidity is not sufficient to insure against disruption in debt service.
Operating factors and market access may be subject to a high degree of
variation.

"Duff 5" -- Issuer has failed to meet scheduled principal and/or interest
payments.

Fitch short-term ratings apply to debt obligations that are payable on
demand or have original maturities of up to three years. The highest rating
category of Fitch for short-term obligations is "F-1." Fitch employs two
designations, "F-1+" and "F-1," within the highest rating category. The
following summarizes the rating categories used by Fitch for short-term
obligations:

"F-1+" -- Securities possess exceptionally strong credit quality. Issues
assigned this rating are regarded as having the strongest degree of assurance
for timely payment.

"F-1" -- Securities possess very strong credit quality. Issues assigned
this rating reflect an assurance of timely payment only slightly less in degree
than issues rated "F-1+."

"F-2" -- Securities possess good credit quality. Issues assigned this
rating have a satisfactory degree of assurance for timely payment, but the
margin of safety is not as great as the "F-1+" and "F-1" categories.

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"F-3" -- Securities possess fair credit quality. Issues assigned this
rating have characteristics suggesting that the degree of assurance for timely
payment is adequate; however, near-term adverse changes could cause these
securities to be rated below investment grade.

"F-S" -- Securities possess weak credit quality. Issues assigned this
rating have characteristics suggesting a minimal degree of assurance for timely
payment and are vulnerable to near-term adverse changes in financial and
economic conditions.

"D" -- Securities are in actual or imminent payment default.

Fitch may also use the symbol "LOC" with its short-term ratings to
indicate that the rating is based upon a letter of credit issued by a
commercial bank.

Thomson BankWatch short-term ratings assess the likelihood of an untimely
or incomplete payment of principal or interest of unsubordinated instruments
having a maturity of one year or less which are issued by a bank holding
company or an entity within the holding company structure. The following
summarizes the ratings used by Thomson BankWatch:

"TBW-1" -- This designation represents Thomson BankWatch's highest rating
category and indicates a very high degree of likelihood that principal and
interest will be paid on a timely basis.

"TBW-2" -- This designation indicates that while the degree of safety
regarding timely payment of principal and interest is strong, the relative
degree of safety is not as high as for issues rated "TBW-1."

"TBW-3" -- This designation represents the lowest investment grade category
and indicates that while the debt is more susceptible to adverse developments
(both internal and external) than obligations with higher ratings, capacity to
service principal and interest in a timely fashion is considered adequate.

"TBW-4" -- This designation indicates that the debt is regarded as
non-investment grade and therefore speculative.

IBCA assesses the investment quality of unsecured debt with an original
maturity of less than one year which is issued by bank holding companies and
their principal bank subsidiaries. The following summarizes the rating
categories used by IBCA for short-term debt ratings:

"A1" -- Obligations are supported by the highest capacity for timely
repayment. Where issues possess a particularly strong credit feature, a rating
of A1+ is assigned.

"A2" -- Obligations are supported by a good capacity for timely repayment.

"A3" -- Obligations are supported by a satisfactory capacity for timely
repayment.
"B" -- Obligations for which there is an uncertainty as to the capacity to
ensure timely repayment.

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"C" -- Obligations for which there is a high risk of default or which are
currently in default.

Corporate and Municipal Long-Term Debt Ratings

The following summarizes the ratings used by Standard & Poor's for
corporate and municipal debt:

"AAA" -- This designation represents the highest rating assigned by
Standard & Poor's to a debt obligation and indicates an extremely strong
capacity to pay interest and repay principal.

"AA" -- Debt is considered to have a very strong capacity to pay interest
and repay principal and differs from AAA issues only in small degree.

"A" -- Debt is considered to have a strong capacity to pay interest and
repay principal although such issues are somewhat more susceptible to the
adverse effects of changes in circumstances and economic conditions than debt
in higher-rated categories.

"BBB" -- Debt is regarded as having an adequate capacity to pay interest
and repay principal. Whereas such issues normally exhibit adequate protection
parameters, adverse economic conditions or changing circumstances are more
likely to lead to a weakened capacity to pay interest and repay principal for
debt in this category than in higher-rated categories.

"BB," "B," "CCC," "CC," and "C" -- Debt that possesses one of these ratings
is regarded, on balance, as predominantly speculative with respect to capacity
to pay interest and repay principal in accordance with the terms of the
obligation. "BB" indicates the lowest degree of speculation and "C" the highest
degree of speculation. While such debt will likely have some quality and
protective characteristics, these are outweighed by large uncertainties or
major risk exposures to adverse conditions.

"CI" -- This rating is reserved for income bonds on which no interest is
being paid.

"D" -- Debt is in payment default, and is used when interest payments or
principal payments are not made on the date due even if the applicable grace
period has not expired, unless S&P believes such payments will be made during
such grace period. "D" rating is also used upon the filing of a bankruptcy
petition if debt service payments are jeopardized.

PLUS (+) OR MINUS (-) -- The ratings from "AA" through "CCC" may be
modified by the addition of a plus or minus sign to show relative standing
within the major rating categories.

The following summarizes the ratings used by Moody's for corporate and
municipal long-term debt:

"Aaa" -- Bonds are judged to be of the best quality. They carry the
smallest degree of investment risk and are generally referred to as "gilt
edged." Interest payments are protected by a large or by an exceptionally
stable margin and principal is secure. While the various protective

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elements are likely to change, such changes as can be visualized are
most unlikely to impair the fundamentally strong position of such issues.

"Aa" -- Bonds are judged to be of high quality by all standards. Together
with the "Aaa" group they comprise what are generally known as high grade
bonds. They are rated lower than the best bonds because margins of protection
may not be as large as in "Aaa" securities or fluctuation of protective
elements may be of greater amplitude or there may be other elements present
which make the long-term risks appear somewhat larger than the "Aaa"
securities.

"A" -- Bonds possess many favorable investment attributes and are to be
considered as upper medium grade obligations. Factors giving security to
principal and interest are considered adequate but elements may be present
which suggest a susceptibility to impairment sometime in the future.

"Baa" -- Bonds considered medium-grade obligations (i.e., they are neither
highly protected nor poorly secured). Interest payments and principal security
appear adequate for the present but certain protective elements may be lacking
or may be characteristically unreliable over any great length of time. Such
bonds lack outstanding investment characteristics and in fact have speculative
characteristics as well.

"Ba," "B," "Caa," "Ca," and "C" -- Bonds that possess one of these ratings
provide questionable protection of interest and principal ("Ba" indicates some
speculative elements; "B" indicates a general lack of characteristics of
desirable investment; "Caa" represents a poor standing; "Ca" represents
obligations which are speculative in a high degree; and "C" represents the
lowest rated class of bonds). "Caa," "Ca" and "C" bonds may be in default.

Con. (---) -- Bonds for which the security depends upon the completion of
some act or the fulfillment of some condition are rated conditionally. These
are bonds secured by (a) earnings of projects under construction, (b) earnings
of projects unseasoned in operation experience, (c) rentals which begin when
facilities are completed, or (d) payments to which some other limiting
condition attaches. Parenthetical rating denotes probable credit stature upon
completion of construction or elimination of basis of condition.

Moody's applies numerical modifiers 1, 2 and 3 in each generic
classification from "Aa" to "B" in its bond rating system. The modifier 1
indicates that the security ranks in the higher end of its generic rating
category; the modifier 2 indicates a mid-range ranking; and the modifier 3
indicates that the issue ranks at the lower end of its generic rating category.

The following summarizes the long-term debt ratings used by Duff & Phelps
for corporate and municipal long-term debt:

"AAA" -- Debt is considered to be of the highest credit quality. The risk
factors are negligible, being only slightly more than for risk-free U.S.
Treasury debt.

"AA" -- Debt is considered of high credit quality. Protection factors are
strong. Risk is modest but may vary slightly from time to time because of
economic conditions.

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"A" -- Debt possesses protection factors which are average but adequate.
However, risk factors are more variable and greater in periods of economic
stress.

"BBB" -- Debt possesses below average protection factors but such
protection factors are still considered sufficient for prudent investment.
Considerable variability in risk is present during economic cycles.

"BB," "B," "CCC," "DD," and "DP" -- Debt that possesses one of these
ratings is considered to be below investment grade. Although below investment
grade, debt rated "BB" is deemed likely to meet obligations when due. Debt
rated "B" possesses the risk that obligations will not be met when due. Debt
rated "CCC" is well below investment grade and has considerable uncertainty as
to timely payment of principal, interest or preferred dividends. Debt rated
"DD" is a defaulted debt obligation, and the rating "DP" represents preferred
stock with dividend arrearages.

To provide more detailed indications of credit quality, the "AA," "A,"
"BBB," "BB" and "B" ratings may be modified by the addition of a plus (+) or
minus (-) sign to show relative standing within these major categories.

The following summarizes the highest four ratings used by Fitch for
corporate and municipal bonds:

"AAA" -- Bonds considered to be investment grade and of the highest credit
quality. The obligor has an exceptionally strong ability to pay interest and
repay principal, which is unlikely to be affected by reasonably foreseeable
events.

"AA" -- Bonds considered to be investment grade and of very high credit
quality. The obligor's ability to pay interest and repay principal is very
strong, although not quite as strong as bonds rated "AAA." Because bonds rated
in the "AAA" and "AA" categories are not significantly vulnerable to
foreseeable future developments, short-term debt of these issuers is generally
rated "F-1+."

"A" -- Bonds considered to be investment grade and of high credit quality.
The obligor's ability to pay interest and repay principal is considered to be
strong, but may be more vulnerable to adverse changes in economic conditions
and circumstances than bonds with higher ratings.

"BBB" -- Bonds considered to be investment grade and of satisfactory credit
quality. The obligor's ability to pay interest and repay principal is
considered to be adequate. Adverse changes in economic conditions and
circumstances, however, are more likely to have an adverse impact on these
bonds, and therefore, impair timely payment. The likelihood that the ratings of
these bonds will fall below investment grade is higher than for bonds with
higher ratings.

"BB," "B," "CCC," "CC," "C," "DDD," "DD," and "D" -- Bonds that possess one
of these ratings are considered by Fitch to be speculative investments. The
ratings "BB" to "C" represent Fitch's assessment of the likelihood of timely
payment of principal and interest in accordance with the terms of obligation
for bond issues not in default. For defaulted bonds, the rating "DDD" to "D" is
an assessment of the ultimate recovery value through reorganization or
liquidation.

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To provide more detailed indications of credit quality, the Fitch ratings
from and including "AA" to "C" may be modified by the addition of a plus (+) or
minus (-) sign to show relative standing within these major rating categories.

Thomson BankWatch assesses the likelihood of an untimely repayment of
principal or interest over the term to maturity of long-term debt and preferred
stock which are issued by United States commercial banks, thrifts and non-bank
banks; non-United States banks; and broker-dealers. The following summarizes
the rating categories used by Thomson BankWatch for long-term debt ratings:

"AAA" -- This designation represents the highest category assigned by
Thomson BankWatch to long-term debt and indicates that the ability to repay
principal and interest on a timely basis is very high.

"AA" -- This designation indicates a superior ability to repay principal
and interest on a timely basis with limited incremental risk versus issues
rated in the highest category.

"A" -- This designation indicates that the ability to repay principal and
interest is strong. Issues rated "A" could be more vulnerable to adverse
developments (both internal and external) than obligations with higher ratings.

"BBB" -- This designation represents Thomson BankWatch's lowest investment
grade category and indicates an acceptable capacity to repay principal and
interest. Issues rated "BBB" are, however, more vulnerable to adverse
developments (both internal and external) than obligations with higher ratings.

"BB," "B," "CCC," and "CC" -- These designations are assigned by Thomson
BankWatch to non-investment grade long-term debt. Such issues are regarded as
having speculative characteristics regarding the likelihood of timely payment
of principal and interest. "BB" indicates the lowest degree of speculation and
"CC" the highest degree of speculation.

"D" -- This designation indicates that the long-term debt is in default.

PLUS (+) OR MINUS (-) -- The ratings from "AAA" through "CC" may include a
plus or minus sign designation which indicates where within the respective
category the issue is placed.

IBCA assesses the investment quality of unsecured debt with an original
maturity of more than one year which is issued by bank holding companies and
their principal bank subsidiaries. The following summarizes the rating
categories used by IBCA for long-term debt ratings:

"AAA" -- Obligations for which there is the lowest expectation of
investment risk. Capacity for timely repayment of principal and interest is
substantial such that adverse changes in business, economic or financial
conditions are unlikely to increase investment risk substantially.

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"AA" -- Obligations for which there is a very low expectation of investment
risk. Capacity for timely repayment of principal and interest is substantial.
Adverse changes in business, economic or financial conditions may increase
investment risk albeit not very significantly.

"A" -- Obligations for which there is a low expectation of investment risk.
Capacity for timely repayment of principal and interest is strong, although
adverse changes in business, economic or financial conditions may lead to
increased investment risk.

"BBB" -- Obligations for which there is currently a low expectation of
investment risk. Capacity for timely repayment of principal and interest is
adequate, although adverse changes in business, economic or financial
conditions are more likely to lead to increased investment risk than for
obligations in higher categories.

"BB," "B," "CCC," "CC," and "C" -- Obligations are assigned one of these
ratings where it is considered that speculative characteristics are present.
"BB" represents the lowest degree of speculation and indicates a possibility of
investment risk developing. "C" represents the highest degree of speculation
and indicates that the obligations are currently in default.

IBCA may append a rating of plus (+) or minus (-) to a rating to denote
relative status within major rating categories.

Municipal Note Ratings

A Standard and Poor's rating reflects the liquidity concerns and market
access risks unique to notes due in three years or less. The following
summarizes the ratings used by Standard & Poor's Corporation for municipal
notes:

"SP-1" -- The issuers of these municipal notes exhibit very strong or
strong capacity to pay principal and interest. Those issues determined to
possess overwhelming safety characteristics are given a plus (+) designation.

"SP-2" -- The issuers of these municipal notes exhibit satisfactory
capacity to pay principal and interest.

"SP-3" -- The issuers of these municipal notes exhibit speculative capacity
to pay principal and interest.

Moody's ratings for state and municipal notes and other short-term loans
are designated Moody's Investment Grade ("MIG") and variable rate demand
obligations are designated Variable Moody's Investment Grade ("VMIG"). Such
ratings recognize the differences between short-term credit risk and long-term
risk. The following summarizes the ratings by Moody's Investors Service, Inc.
for short-term notes:

"MIG-1"/"VMIG-1" -- Loans bearing this designation are of the best quality,
enjoying strong protection by established cash flows, superior liquidity
support or demonstrated broad-based access to the market for refinancing.

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"MIG-2"/"VMIG-2" -- Loans bearing this designation are of high quality,
with margins of protection ample although not so large as in the preceding
group.

"MIG-3"/"VMIG-3" -- Loans bearing this designation are of favorable
quality, with all security elements accounted for but lacking the undeniable
strength of the preceding grades. Liquidity and cash flow protection may be
narrow and market access for refinancing is likely to be less well established.

"MIG-4"/"VMIG-4" -- Loans bearing this designation are of adequate quality,
carrying specific risk but having protection commonly regarded as required of
an investment security and not distinctly or predominantly speculative.

"SG" -- Loans bearing this designation are of speculative quality and lack
margins of protection.

Duff & Phelps and Fitch use the short-term ratings described under
Commercial Paper Ratings for municipal notes.

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APPENDIX B

ADDITIONAL INFORMATION CONCERNING FUTURES AND RELATED OPTIONS

As stated in the Prospectus, the Fund may enter into index futures
contracts and related options. Such transactions are described in this
Appendix. The Fund may purchase and sell index futures contracts and related
options to maintain cash reserves, to keep substantially all of its assets
exposed to the markets (included in the GDP EAFE Index), to facilitate trading
and to reduce transaction costs. During the current fiscal year, the Fund
intends to limit its transactions in futures contracts and options so that not
more than 10% of its total assets are subject to futures transactions.
Furthermore, in no event would the Fund purchase or sell futures contracts, or
related options thereon if, immediately thereafter, the aggregate initial
margin that is required to be posted by the Fund under the rules of the
exchange on which the futures contract (or futures option) is traded, plus any
premiums paid by the Fund on its open futures options positions, exceeds 5% of
the Fund's total assets, after taking into account any unrealized profits and
unrealized losses on the Fund's open contracts and excluding the amount that a
futures option is "in-the-money" at the time of purchase. (An option to buy a
futures contract is "in-the-money" if the value of the contract that is subject
to the option exceeds the exercise price; and an option to sell a futures
contract is "in-the-money" if the exercise price exceeds the value of the
contract that is subject of the option.) The Fund will only enter into futures
contracts and futures options which are standardized and traded on a U.S. or
foreign exchange, board of trade or similar entity, or in the case of futures
options, for which an established over-the-counter market exists.

I. Index Futures Contracts.

A stock index assigns relative values to the stocks included in the index
and the index fluctuates with changes in the market values of the stocks
included. Some stock index futures contracts are based on broad market indexes.
In contrast, certain exchanges offer futures contracts on narrower market
indexes. The Adviser and Sub-Adviser anticipate engaging in transactions, from
time to time, in foreign stock index futures such as the ALL-ORDS (Australia),
CAC-40 (France), TOPIX (Japan), and the FTSE-100 (United Kingdom). The Fund may
sell index futures contracts in order to offset a decrease in market value of
its portfolio securities that might otherwise result from a market decline. The
Fund may purchase index futures contracts to maintain cash reserves while
simulating full investment in stocks underlying the GDP EAFE Index and to keep
substantially all of its assets exposed to the market.

In addition, the Fund may utilize index futures contracts in anticipation
of changes in the composition of its portfolio holdings. For example, in the
event that the Fund expects to narrow the range of industry groups or countries
represented in its holdings it may, prior to making purchases of the actual
securities, establish a long futures position based on a more restricted index,
such as an index comprised of securities of a particular industry or county
group. The Fund may also sell futures contracts in connection with this
strategy, in order to protect against the possibility that the value of the
securities to be sold as part of the restructuring of the portfolio will
decline prior to the time of sale.

The following are examples of transactions in stock index futures (net of
commissions and premiums, if any).

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II. Margin Payments.

Unlike when a Fund purchases or sells a security, no price is paid or
received by the Fund upon the purchase or sale of a futures contract.
Initially, in accordance with the terms of the exchange on which such futures
contract is traded, the Fund may be required to deposit with the broker or in a
segregated account with the Fund's custodian an amount of cash or cash
equivalents, the value of which may vary but is generally equal to 10% or less
of the value of the contract. This amount is known as initial margin. The
nature of initial margin in futures transactions is different from that of
margin in security transactions in that futures contract margin does not
involve the borrowing of funds by the customer to finance the transactions.
Rather, the initial margin is in the nature of a performance bond or good faith
deposit on the contract which is returned to the Fund upon termination of the
futures contract assuming all contractual obligations have been satisfied.
Subsequent payments, called variation margin, to and from the broker, may be
required on a daily basis as the price of the underlying security or index
fluctuates making the long and short positions in the futures contract more or
less valuable, a process known as marking to the market. For example, when the
Fund has purchased a futures contract and the price of the contract has risen
in response to a rise in the underlying instruments, that position will have
increased in value and the Fund will be entitled to receive from the broker a
variation margin payment equal to that increase in value. Conversely, where the
Fund has purchased a futures contract and the price of the future contract has
declined in response to a decrease in the underlying instruments, the position
would be less valuable and the Fund would be required to make a variation
margin payment to the broker. At any time prior to expiration of the futures
contract, the Adviser and Sub-Adviser may elect to close the position by taking
an opposite position, subject to the availability of a secondary market, which
will operate to terminate the Fund's position in the futures contract. A final
determination of variation margin is then made, additional cash is required to
be paid by or released to the Fund, and the Fund realizes a loss or gain.

III. Risks of Transactions in Futures Contracts.

There are several risks in connection with the use of futures by the Fund.
One risk arises because of the imperfect correlation between movements in the
price of the future and movements in the price of the underlying securities.
The price of the future may move more than or less than the price of the
underlying securities. Because there is presently no index futures contract
that is based on the GDP EAFE Index, there is an imperfect correlation between
the securities represented by the various international stock index futures
available to the Fund and the GDP EAFE Index.

In instances involving the purchase of futures contracts by the Fund, an
amount of cash and cash equivalents, equal to the market value of the futures
contracts, will be deposited in a segregated account with the Fund's custodian
and, with respect to initial margin payments, in a margin account with a broker
to collateralize the position. The effect of these accounts will be to reduce
the potential leverage resulting from a futures transaction.

In addition to the possibility that there may be an imperfect correlation,
or no correlation at all, between movements in the futures and the underlying
securities, the price of futures may not correlate perfectly with movement in
the cash market due to certain market distortions. Rather than meeting
additional margin deposit requirements, investors may close futures contracts
through off-setting transactions which could distort the normal relationship
between the cash and futures markets. Second, the liquidity of the futures
market depends on participants entering into off-setting transactions rather
than

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making or taking delivery. To the extent participants decide to make or
take delivery, liquidity in the futures market could be reduced thus producing
distortions. Third, from the point of view of speculators, the deposit
requirements in the futures market are less onerous than margin requirements in
the securities market. Therefore, increased participation by speculators in the
futures market may also cause temporary price distortions. Due to the
possibility of price distortion in the futures market, and because of the
imperfect correlation between the movements in the cash market and movements in
the price of futures, a correct forecast of general market trends or interest
rate movements by the Adviser and Sub-Adviser may still not result in a
successful hedging transaction over a short time frame.

Positions in futures may be closed out only on an exchange or board of
trade which provides a secondary market for such futures. Although the Fund
intends to purchase or sell futures only on exchanges or boards of trade where
there appear to be active secondary markets, there is no assurance that a
liquid secondary market on any exchange or board of trade will exist for any
particular contract or at any particular time. In such event, it may not be
possible to close a futures investment position, and in the event of adverse
price movements, the Fund would continue to be required to make daily cash
payments of variation margin.

Further, it should be noted that the liquidity of a secondary market in a
futures contract may be adversely affected by "daily price fluctuation limits"
established by commodity exchanges which limit the amount of fluctuation in a
futures contract price during a single trading day. Once the daily limit has
been reached in the contract, no trades may be entered into at a price beyond
the limit, thus preventing the liquidation of open futures positions.

IV. Options on Futures Contracts.

The Fund may purchase options on the futures contracts described above. A
futures option gives the holder, in return for the premium paid, the right to
buy (call) from or sell (put) to the writer of the option a futures contract at
a specified price at any time during the period of the option. Upon exercise,
the writer of the option is obligated to pay the difference between the cash
value of the futures contract and the exercise price. Like the buyer or seller
of a futures contract, the holder, or writer, of an option has the right to
terminate its position prior to the scheduled expiration of the option by
selling, or purchasing, an option of the same series, at which time the person
entering into the closing transaction will realize a gain or loss.

Investments in futures options involve some of the same considerations
that are involved in connection with investments in futures contracts (for
example, the existence of a liquid secondary market). In addition, the purchase
of an option also entails the risk that changes in the value of the underlying
futures contract will not be fully reflected in the value of the option
purchased. Depending on the pricing of the option compared to either the
futures contract upon which it is based, or upon the price of the securities
being hedged, an option may or may not be less risky than ownership of the
futures contract or such securities. In general, the market prices of options
can be expected to be more volatile than the market prices on the underlying
futures contract. Compared to the purchase or sale of futures contracts,
however, the purchase of call or put options on futures contracts may
frequently involve less potential risk to the Fund because the maximum amount
at risk is the premium paid for the options (plus transaction costs).

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V. Accounting and Tax Treatment.

Accounting for futures contracts and options will be in accordance with
generally accepted accounting principles.

Generally, futures contracts held by the Fund at the close of the Fund's
taxable year will be treated for federal income tax purposes as sold for their
fair market value on the last business day of such year, a process known as
"marking-to-market." Forty percent of any gain or loss resulting from such
constructive sale will be treated as short-term capital gain or loss and 60% of
such gain or loss will be treated as long-term capital gain or loss without
regard to the length of time the Fund holds the futures contract ("the 40%-60%
rule"). The amount of any capital gain or loss actually realized by the Fund in
a subsequent sale or other disposition of those futures contracts will be
adjusted to reflect any capital gain or loss taken into account by the Fund in
a prior year as a result of the constructive sale of the contracts. With
respect to futures contracts to sell, which will be regarded as parts of a
"mixed straddle" because their values fluctuate inversely to the values of
specific securities held by the Fund, losses as to such contracts to sell will
be subject to certain loss deferral rules which limit the amount of loss
currently deductible on either part of the straddle to the amount thereof which
exceeds the unrecognized gain (if any) with respect to the other part of the
straddle, and to certain wash sales regulations. Under short sales rules, which
will also be applicable, the holding period of the securities forming part of
the straddle will (if they have not been held for the long-term holding period)
be deemed not to begin prior to termination of the straddle. With respect to
certain futures contracts, deductions for interest and carrying charges will
not be allowed. Notwithstanding the rules described above, with respect to
futures contracts to sell which are properly identified as such, the Fund may
make an election which will exempt (in whole or in part) those identified
futures contracts from being treated for federal income tax purposes as sold on
the last business day of the Fund's taxable year, but gains and losses will be
subject to such short sales, wash sales, loss deferral rules and the
requirement to capitalize interest and carrying charges. Under temporary
regulations, the Fund would be allowed (in lieu of the foregoing) to elect to
either (1) offset gains or losses from portions which are part of a mixed
straddle by separately identifying each mixed straddle to which such treatment
applies, or (2) establish a mixed straddle account for which gains and losses
would be recognized and offset on a periodic basis during the taxable year.
Under either election, the 40%-60% rule will apply to the net gain or loss
attributable to the futures contracts, but in the case of a mixed straddle
account election, not more than 50% of any net gain may be treated as long-term
and no more than 40% of any net loss may be treated as short-term. Options on
futures contracts generally receive federal tax treatment similar to that
described above.

Special rules govern the federal income tax treatment of certain
transactions denominated in terms of a currency other than the U.S. dollar or
determined by reference to the value of one or more currencies other than the
U.S. dollar. The types of transactions covered by the special rules include the
following: (i) the acquisition of, or becoming the obligor under, a bond or
other debt instrument (including, to the extent provided in Treasury
regulations, preferred stock); (ii) the accruing of certain trade receivables
and payables; and (iii) the entering into or acquisition of any forward
contract, futures contract, option or similar financial instrument. The
disposition of a currency other than the U.S. dollar by a U.S. taxpayer is also
treated as a transaction subject to the special currency rules. However,
foreign currency-related regulated futures contracts and nonequity options are
generally not subject to the special currency rules if they are or would be
treated as sold for their fair market value at year-end under the
marking-to-market rules, unless an election is made to have such currency rules
apply. With respect to transactions covered by the special rules, foreign
currency gain or loss is calculated separately from any gain or loss on the
underlying transaction and is normally taxable as ordinary gain or loss. The
Fund may

B-4
<PAGE> 86

elect to treat as capital gain or loss foreign currency gain or loss
arising from certain identified forward contracts, futures contracts and
options that are capital assets in the hands of the Fund and which are not part
of a straddle. In accordance with Treasury regulations certain transactions
subject to the special currency rules that are part of a "Section 988 hedging
transaction" (as defined in the Code and the Treasury regulations) will be
integrated and treated as a single transaction or otherwise treated
consistently for purposes of the Code. "Section 988 hedging transactions" are
not subject to the marking-to-market or loss deferral rules under the Code. It
is possible that some of the non-U.S. dollar denominated investments that the
Fund may make will be subject to the special currency rules described above.
Gain or loss attributable to the foreign currency component of transactions
engaged in by the Fund which are not subject to the special currency rules
(such as foreign equity investments other than certain preferred stocks) will
be treated as capital gain or loss and will not be segregated from the gain or
loss on the underlying transaction.

Qualification as a regulated investment company under the Code requires
that the Fund satisfy certain requirements with respect to the source of its
income during a taxable year. At least 90% of the Fund's gross income must be
derived from dividends, interest, certain payments with respect to securities
loans, gains from the sale or other disposition of stock, securities or foreign
currencies, and other income (including but not limited to gains from options,
futures or forward contracts) derived with respect to the Fund's business of
investing in such stock, securities or currencies. The Treasury Department may
by regulation exclude from qualifying income foreign currency gains which are
not directly related to the Fund's principal business of investing in stock or
securities, or options and futures with respect to stock or securities. Any
income derived by the Fund from a partnership or trust is treated as derived
with respect to the Fund's business of investing in stock, securities or
currencies only to the extent that such income is attributable to items of
income which would have been qualifying income if realized by the Fund in the
same manner as by the partnership or trust.

An additional requirement for qualification as a regulated investment
company under the Code is that less than 30% of the Fund's gross income must be
derived from gains realized on the sale or other disposition of the following
investments held for less than three months: (1) stock and securities (as
defined in section 2(a)(36) of the 1940 Act); (2) options, futures and forward
contracts other than those on foreign currencies; and (3) foreign currencies
(and options, futures and forward contracts on foreign currencies) that are not
directly related to the Fund's principal business of investing in stock and
securities (and options and futures with respect to stock and securities).
With respect to futures contracts and other financial instruments subject to
the marking-to-market rules, the Internal Revenue Service has ruled in private
letter rulings that a gain realized from such a futures contract or financial
instrument will be treated as being derived from a security held for three
months or more (regardless of the actual period for which the contract or
instrument is held) if the gain arises as a result of a constructive sale under
the marking-to-market rules, and will be treated as being derived from a
security held for less than three months only if the contract or instrument is
terminated (or transferred) during the taxable year (other than by reason of
market-to-market) and less than three months have elapsed between the date the
contract or instrument is acquired and the termination date.

B-5
<PAGE> 87
[LOGO]

STATEMENTS OF ASSETS AND LIABILITIES

NOVEMBER 30, 1995

<TABLE>
<CAPTION>
U.S. GOVERNMENT CORE AGGRESSIVE INTERNATIONAL
SECURITIES INCOME EQUITY EQUITY EQUITY
FUND FUND FUND FUND FUND
- ----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
ASSETS:
Investments at value (cost $6,582,165,
$5,633,072, $6,819,917, $5,801,015
and $3,394,333, respectively) $7,116,354 $6,018,716 $8,215,524 $6,294,044 $3,669,162
Cash 190 -- 3,103 -- 1,814
Receivables for investments sold -- 267,490 -- 175,975 --
Dividends and interest receivable 92,713 87,636 19,334 3,321 12,814
Due from Adviser 8,381 7,520 4,305 8,391 15,447
Organization costs, net of
accumulated amortization 31,497 31,496 31,496 31,497 31,496
- -----------------------------------------------------------------------------------------------------------------------------------
TOTAL ASSETS 7,249,135 6,412,858 8,273,762 6,513,228 3,730,733
- -----------------------------------------------------------------------------------------------------------------------------------

LIABILITIES:
Dividends payable 34,478 19,791 76,397 -- 13,123
Payables for investments purchased -- 263,675 -- -- --
Other payables and accrued expenses 20,157 21,145 25,526 202,582 25,169
- -----------------------------------------------------------------------------------------------------------------------------------
TOTAL LIABILITIES 54,635 304,611 101,923 202,582 38,292
- -----------------------------------------------------------------------------------------------------------------------------------
NET ASSETS $7,194,500 $6,108,247 $8,171,839 $6,310,646 $3,692,441
===================================================================================================================================
NET ASSETS CONSIST OF:
Capital stock $6,492,177 $5,420,989 $6,453,762 $4,882,457 $3,277,884
Accumulated net realized gains
on investments 163,085 291,896 319,764 931,817 97,843
Accumulated net realized gains from
foreign currency transactions -- -- -- -- 37,861
Unrealized net appreciation on
investments 534,189 385,644 1,395,607 493,029 298,535
Unrealized depreciation on translation of
assets and liabilities in
foreign currencies -- -- -- -- (23,776)
Undistributed net investment income 5,049 9,718 2,706 3,343 4,094
- -----------------------------------------------------------------------------------------------------------------------------------
TOTAL NET ASSETS $7,194,500 $6,108,247 $8,171,839 $6,310,646 $3,692,441
===================================================================================================================================

CAPITAL STOCK, NO PAR VALUE
Authorized Unlimited Unlimited Unlimited Unlimited Unlimited
Issued and outstanding 656,465 545,802 654,753 512,662 336,451

OFFERING PRICE, REDEMPTION PRICE AND
NET ASSET VALUE PER SHARE $10.96 $11.19 $12.48 $12.31 $10.97
===================================================================================================================================
</TABLE>
See notes to the financial statements.

ANNUAL REPORT / PAGE 5
<PAGE> 88
[STALWART FUNDS LOGO]

SCHEDULE OF INVESTMENTS
U.S. GOVERNMENT SECURITIES FUND
NOVEMBER 30, 1995

<TABLE>
<CAPTION>
PAR
VALUE VALUE
----- -----
<S> <C> <C>

U.S. GOVERNMENT AGENCIES 54.01%

FEDERAL HOME LOAN MORTGAGE
CORPORATION 21.68%
$ 92,276 Federal Home Loan Mortgage
Corporation 1606 KA PAC-2,
6.25%, 11/15/08 $ 92,940
156,459 Federal Home Loan Mortgage
Corporation FHR 1618 K,
6.00%, 11/15/08 155,633
189,888 Federal Home Loan Mortgage
Corporation - GNMA FHG
12-IPAC-2, 6.00%, 11/25/08 186,181
300,000 Federal Home Loan Mortgage
Corporation, 8.05%, 4/5/10 323,835
250,000 Federal Home Loan Mortgage
Corporation, Real Estate
Mortgage Investment Conduit,
6.95%, 9/15/20 250,000
300,000 Federal Home Loan Mortgage
Corporation, 7.75%, 12/15/22 309,000
262,373 Federal Home Loan Mortgage
Corporation, Real Estate
Mortgage Investment Conduit
1608 QA, 6.10%, 7/15/23 242,210
---------
1,559,799
---------

FEDERAL NATIONAL MORTGAGE
ASSOCIATION 32.33%

250,000 Federal National Mortgage
Association, 7.68%, 11/22/99 267,105
250,000 Federal National Mortgage
Association, 8.625%, 11/10/04 270,625
500,000 Federal National Mortgage
Association GLB Bond, 8.50%,
2/1/05 544,215
250,000 Federal National Mortgage
Association, 7.80%, 3/29/05 264,937
100,000 Federal National Mortgage
Association FNR 1992-186 N,
6.00%, 10/25/07 95,720
176,241 Federal National Mortgage
Association 1993-101 CL B,
6.50%, 12/25/07 178,082
183,634 Federal National Mortgage
Association FNR 1993-18 B,
6.50%, 2/25/08 177,341
255,751 Federal National Mortgage
Association FNR 1993-43 K,
6.50%, 4/25/08 258,977
250,000 Federal National Mortgage
Association, 8.17%, 9/1/09 268,995
---------
2,325,997
---------

Total U.S. Government Agencies
(cost $3,659,782) 3,885,796
---------
U.S. TREASURIES 42.47%

500,000 U.S. Treasury Note,
7.125%, 2/29/00 529,430
400,000 U.S. Treasury Bond,
7.50%, 5/15/02 440,208
500,000 U.S. Treasury Bond,
6.25%, 2/15/03 516,595
500,000 U.S. Treasury Bond,
7.25%, 8/15/04 549,355
750,000 U.S. Treasury Bond,
10.75%, 8/15/05 1,019,970
---------
Total U.S. Treasuries
(cost $2,747,383) 3,055,558
---------
</TABLE>

ANNUAL REPORT / PAGE 6

<PAGE> 89
[STALWART FUNDS LOGO]

SCHEDULE OF INVESTMENTS
U.S. GOVERNMENT SECURITIES FUND (CONT'D.)
NOVEMBER 30, 1995

<TABLE>
<CAPTION>
PAR
VALUE VALUE
----- -----
<S> <C> <C>
REPURCHASE AGREEMENTS 2.43%

$175,000 United Missouri Bank
Repurchase Agreement, 5.40%,
dated 11/30/95, repurchase price
$175,026, maturing 12/1/95
(collateralized by U.S. Treasury
Note, 7.625%, 4/30/96) $ 175,000
----------

Total Repurchase Agreements
(cost $175,000) 175,000
----------

Total Investments 98.91%
(cost $6,582,165) 7,116,354

Cash and Other Assets,
less Liabilities 1.09% 78,146
----------

NET ASSETS 100.00% $7,194,500
==========
</TABLE>

See notes to the financial statements.

ANNUAL REPORT / PAGE 7
<PAGE> 90
[LOGO]

SCHEDULE OF INVESTMENTS
INCOME FUND
NOVEMBER 30, 1995

<TABLE>
<CAPTION>
PAR
VALUE VALUE
----- -----
<S> <C> <C>
FIXED INCOME BONDS 67.25%

ASSET-BACKED SECURITIES 4.63%
$300,000 Sears Mortgage Security Subordinated
Debentures, Series 1993-7M,
7.00%, 6/25/08 $282,750
--------

CONVERTIBLE BONDS 4.80%
150,000 Browning-Ferris Industries, Inc.
Convertible Subordinated
Debenture, 6.25%, 8/15/12 149,812
150,000 McKesson Corp. Convertible
Bond, 4.50%, 3/1/04 143,250
--------
293,062
--------

CORPORATE BONDS 47.21%
150,000 Aetna Life & Casualty Co.
Debenture, 6.75%, 9/15/13 143,062
250,000 BankAmerica Corp. Subordinated
Note, 7.625%, 6/15/04 268,125
250,000 Chase Manhattan Corp.
Subordinated Note,
6.75%, 8/15/08 252,500
250,000 Cigna Corp. Note,
8.25%, 1/1/07 282,813
250,000 Commonwealth Edison Co. Note,
7.625%, 6/1/03 256,250
250,000 Ford Motor Credit Co. Note,
6.375%, 4/15/00 252,813
250,000 Gulf States Utilities Co. Note,
8.21%, 1/1/02 262,500
260,000 K-Mart Corp. Sinking Fund,
8.80%, 7/1/10 219,050
150,000 Lehman Brothers Holding, Inc.
Medium Term Note, 8.25%, 4/11/02 162,187
250,000 Morgan Stanley Group, Inc.
Note, 6.375%, 12/15/03 248,438
250,000 Paine Webber Group Notes,
6.50%, 11/1/05 242,500
250,000 Texas Instruments, Inc. Note,
8.75%, 4/1/07 294,063
---------
2,884,301
---------

TAXABLE MUNICIPALS 2.37%
125,000 University of Southern California
Note, 9.80%, 10/1/06 144,531
---------

U.S. GOVERNMENT AGENCIES 3.91%
225,000 Federal Home Loan Bank Note,
8.00%, 9/20/04 238,657
---------

U.S. TREASURIES 4.33%
250,000 U.S. Treasury Note,
7.125%, 2/29/00 264,715
---------

Total Fixed Income Bonds
(cost $3,892,667) 4,108,016
---------

<CAPTION>
NUMBER
OF SHARES
- ---------
<S> <C> <C>
PREFERRED STOCKS 6.92%

5,000 American General Capital Corp.,
8.45%, Series A, Cumulative
Monthly Income Preferred
Security 129,375
5,000 Citicorp, 8.50%, Series 21,
Non-cumulative 135,000
2,000 Corning Delaware, 6.00% 98,000
2,300 Midland Bank PLC, 10.25%,
Series B, Non-cumulative 60,375
--------

Total Preferred Stocks
(cost $409,465) 422,750
--------
</TABLE>

ANNUAL REPORT / PAGE 8

<PAGE> 91
[LOGO]

SCHEDULE OF INVESTMENTS
INCOME FUND (CON'T)
NOVEMBER 30, 1995

<TABLE>
<CAPTION>
NUMBER
OF
SHARES VALUE
- --------- -----
<S> <C> <C>
COMMON STOCKS 24.11%

CHEMICALS 2.90%
2,500 Dow Chemical Co. $177,187
--------

ELECTRICAL PRODUCTS 5.35%
2,500 General Electric Co. 168,125
10,000 Juno Lighting, Inc. 158,750
--------
326,875
--------
ENVIRONMENTAL SERVICES 1.48%
3,000 Browning-Ferris Industries, Inc. 90,375
--------

FINANCIAL SERVICES 2.32%
3,000 Bank of New York Co., Inc. 141,375
--------

OIL AND GAS 2.56%
1,500 Mobil Corp. 156,563
--------
REAL ESTATE 2.30%
7,500 AMLI Residential
Properties Trust 140,625
--------

STEEL 3.99%
13,000 Reliance Steel &
Aluminum Co. 243,750
---------

TELECOMMUNICATIONS 3.21%
1,500 AT&T Corp. 99,000
1,800 SBC Communications, Inc. 97,200
--------
196,200
--------

Total Common Stocks
(cost $1,315,940) 1,472,950
---------

<CAPTION>
PAR
VALUE VALUE
----- -----
<S> <C> <C>
REPURCHASE AGREEMENTS 0.25%

$15,000 United Missouri Bank Repurchase
Agreement, 5.40%, dated 11/30/95,
repurchase price $15,002,
maturing 12/1/95 (collateralized by
U.S. Treasury Note, 7.625%,
4/30/96) $ 15,000
---------

Total Repurchase Agreements
(cost $15,000) 15,000
---------

Total Investments 98.53%
(cost $5,633,072) 6,018,716

Cash and Other Assets,
less Liabilities 1.47% 89,531
---------

NET ASSETS 100.00% $6,108,247
=========
</TABLE>

See notes to the financial statements.

ANNUAL REPORT / PAGE 9

<PAGE> 92
[LOGO]

SCHEDULE OF INVESTMENTS
CORE EQUITY FUND
NOVEMBER 30, 1995

<TABLE>
<CAPTION>
NUMBER
OF
SHARES VALUE
- --------- -----
<S> <C> <C>
COMMON STOCKS 97.53%

AEROSPACE 7.30%
4,001 Lockheed Martin Corp. $293,573
3,400 McDonnell Douglas Corp. 303,025
--------
596,598
--------

BANKING 7.22%
4,400 BankAmerica Corp. 279,950
5,800 Mellon Bank Corp. 310,300
-------
590,250
-------

BEVERAGES 5.83%
4,200 Anheuser-Busch Cos., Inc. 278,250
5,200 Brown-Forman Corp. - Class B 198,250
-------
476,500
-------

BROADCAST, RADIO, TV 7.47%
2,900 Tele-Communications, Inc.
Liberty Media Unit - Class A * 81,200
15,000 Tele-Communications, Inc. - Class A * 277,500
14,000 U.S. West Media Group * 252,000
-------
610,700
-------

BUILDING MATERIALS 3.59%
7,400 Sherwin-Williams Co. 293,225
-------

CHEMICALS 3.48%
4,000 Great Lakes Chemical Corp. 284,500
-------

FINANCIAL SERVICES 6.91%
2,600 Federal National Mortgage Assn. 284,700
6,100 First USA, Inc. 279,837
-------
564,537
-------

FOOD 9.83%
8,700 Heinz (H.J.) Co. 277,313
8,900 Nabisco Holdings Corp. - Class A 251,425
7,900 Quaker Oats Co. 274,525
-------
803,263
-------

HARDWARE 3.57%
7,800 Black & Decker Corp. 291,525
-------

HOUSEHOLD PRODUCTS 3.62%
3,900 Clorox Co. 295,425
-------

INSURANCE 7.32%
3,900 MBIA, Inc. 300,300
4,200 SAFECO Corp. 298,200
-------
598,500
-------

MANUFACTURING 3.50%
13,000 Whitman Corp. 286,000
-------

MINING 3.29%
9,700 De Beers Consolidated Mines Ltd. ADR 269,175
-------

OIL AND GAS 6.83%
6,700 Murphy Oil Corp. 263,813
15,100 YPF Sociedad Anonima ADR 294,450
-------
558,263
-------

PHARMACEUTICALS 3.57%
3,200 American Home Products Corp. 292,000
-------

PRINTING AND PUBLISHING 7.59%
5,200 Gannett Co., Inc. 317,200
4,700 Knight-Ridder, Inc. 303,150
-------
620,350
-------

RETAIL 3.39%
9,500 Federated Department
Stores, Inc. * 276,688
-------
</TABLE>

ANNUAL REPORT / PAGE 10

<PAGE> 93
[STALWART FUNDS LOGO]

SCHEDULE OF INVESTMENTS
CORE EQUITY FUND (CONT'D.)
NOVEMBER 30, 1995

<TABLE>
<CAPTION>
NUMBER
OF
SHARES VALUE
- --------- -----
<S> <C> <C>

TOBACCO PRODUCTS 3.22%
6,300 American Brands, Inc. $ 263,025
----------

Total Common Stocks
(cost $6,574,917) 7,970,524
----------

PAR
VALUE
- -----
REPURCHASE AGREEMENTS 3.00%

$245,000 United Missouri Bank
Repurchase Agreement, 5.40%,
dated 11/30/95, repurchase price
$245,036, maturing 12/1/95,
(collateralized by U.S. Treasury
Note, 7.75%, 3/31/96) 245,000
----------

Total Repurchase Agreements
(cost $245,000) 245,000
----------

Total Investments 100.53%
(cost $6,819,917) 8,215,524

Liabilities, less Cash
and Other Assets (0.53)% (43,685)
----------

NET ASSETS 100.00% $8,171,839
==========
</TABLE>

* Non-income producing security.

See notes to the financial statements.

ANNUAL REPORT / PAGE 11
<PAGE> 94
[STALWART FUNDS LOGO]

SCHEDULE OF INVESTMENTS
AGGRESSIVE EQUITY FUND
NOVEMBER 30, 1995

<TABLE>
<CAPTION>
NUMBER
OF
SHARES VALUE
- --------- -----
<S> <C> <C>
COMMON STOCKS 96.53%

BUSINESS PRODUCTS 5.00%
11,450 American Business Information,
Inc. * $208,962
3,800 Wabash National Corp. 106,400
--------
315,362
--------
BUSINESS SERVICES 4.19%
14,000 Franklin Quest Co. * 264,250
--------

COMPUTER SOFTWARE 13.13%
10,200 FTP Software, Inc. * 309,825
3,000 Parametric Technology
Corp. * 212,250
5,600 Softkey International, Inc. * 189,000
3,400 Synopsys, Inc. * 117,300
--------
828,375
--------

COMMUNICATION PRODUCTS 8.95%
3,800 Hummingbird Communication
Ltd. * 190,950
8,300 Madge, N.V. * 374,019
--------
564,969
--------

ELECTRONICS 8.36%
4,300 Altron, Inc. * 126,850
18,500 Cincinnati Microwave, Inc. * 129,500
5,000 Kent Electronics Corp. * 271,250
--------
527,600
--------

FINANCIAL SERVICES 4.79%
4,400 Green Tree Financial Corp. 124,300
8,750 Mercury Finance Co. 124,687
2,200 Washington Federal, Inc. 53,075
--------
302,062
--------

HEALTH CARE SERVICES 6.29%
6,000 Express Scripts, Inc. - Class A * 247,500
2,000 HBO & Co. 149,500
--------
397,000
--------

PERSONAL SERVICES 3.21%
10,700 Barefoot, Inc. 123,050
3,000 Loewen Group, Inc. 79,500
--------
202,550
--------
PHARMACEUTICALS 1.83%
2,144 Cardinal Health, Inc. 115,776
--------

REAL ESTATE 10.91%
12,500 National Health Investors, Inc. REIT 385,937
14,500 Oasis Residential, Inc. REIT 302,688
--------
688,625
--------

RETAIL 6.56%
4,700 Doubletree Corp. * 99,875
9,500 Heilig-Meyers Co. 192,375
2,600 St. John Knits, Inc. 121,875
--------
414,125
--------

SEMICONDUCTORS 6.75%
2,500 Atmel Corp. * 75,000
6,500 Lattice Semiconductor Corp. * 209,625
4,600 Integrated Process Equipment Corp. * 141,450
--------
426,075
--------

TELECOMMUNICATIONS 12.79%
11,100 Century Telephone Enterprises 346,875
4,600 United States Cellular Corp. * 161,000
9,200 WorldCom, Inc. * 299,000
--------
806,875
--------

TRANSPORTATION 3.77%
4,800 Expeditors International of
Washington, Inc. 122,400
</TABLE>

ANNUAL REPORT / PAGE 12

<PAGE> 95
[STALWART FUNDS LOGO]

SCHEDULE OF INVESTMENTS
AGGRESSIVE EQUITY FUND (CONT'D.)
NOVEMBER 30, 1995

<TABLE>
<CAPTION>
NUMBER
OF
SHARES VALUE
- --------- -----
<S> <C> <C>
TRANSPORTATION 3.77% (CONT'D)
6,000 M.S. Carriers, Inc. * $ 115,500
---------
237,900
---------

Total Common Stocks
(cost $5,609,015) 6,091,544
---------

<CAPTION>
PAR
VALUE
- -----
<S> <C> <C>
CONVERTIBLE BONDS 3.21%

$100,000 National Healthcare LP
Convertible Debentures
maturing 6.00%, 7/1/00 202,500
---------
Total Convertible Bonds
(cost $192,000) 202,500
---------

Total Investments 99.74%
(cost $5,801,015) 6,294,044

Cash and Other Assets,
less Liabilities 0.26% 16,602
---------

NET ASSETS 100.00% $6,310,646
=========

</TABLE>

* Non-income producing security.

See notes to the financial statements.

ANNUAL REPORT / PAGE 13
<PAGE> 96
[STALWART FUNDS LOGO]

SCHEDULE OF INVESTMENTS
INTERNATIONAL EQUITY FUND
NOVEMBER 30, 1995

<TABLE>
<CAPTION>
NUMBER
OF SHARES VALUE
- --------- -----
<S> <C> <C>
COMMON STOCKS 94.69%

BERMUDA 1.44%
2,000 PartnerRe Holdings ADR $ 53,000
---------
CANADA 1.89%
2,000 Imperial Oil ADR 69,750
---------
FRANCE 8.05%
3,000 Coflexip ADR 46,125
247 Gaz et Eaux 88,294
2,100 Institute de Developpement des
Industries Agricoles 61,952
1,350 Primagaz 100,854
---------
297,225
---------

GERMANY 7.05%
1,700 Deutsche Bank 79,812
140 Hochtief 62,870
132 Linde 77,454
22 MunichRe 40,203
---------
260,339
---------

HONG KONG 5.87%
27,000 Hutchison Whampoa 152,538
31,000 Johnson Electric 64,123
---------
216,661
---------

INDONESIA 0.85%
12,000 Wicaksana Overseas
International 31,531
---------
JAPAN 17.26%
6,000 Canon 105,782
3,000 Canon Sales 74,461
2,000 Honda Motor 36,245
2,000 Ito-Yokado 110,706
1,000 Kyocera 79,287
15,000 Mitsubishi Heavy Industries 119,817
6,000 Nippon Denso 111,100
---------
637,398
---------

LUXEMBOURG 1.61%
3,600 Quilmes Industrial 59,400
---------

MALAYSIA 5.98%
9,000 Nestle Malaysia 63,173
25,000 Nylex Malaysia 74,924
32,000 Sime Darby 82,653
---------
220,750
---------

NETHERLANDS 8.93%
1,200 IHC Caland 36,204
1,600 Randstad 67,165
1,100 Royal Dutch Petroleum ADR 141,213
1,010 Wolters Kluwer 85,296
---------
329,878
---------

NORWAY 3.68%
2,000 Norsk Hydro ADR 81,250
4,200 Unitor ADR 54,726
---------
135,976
---------

SINGAPORE 5.65%
8,000 Development Bank of Singapore 93,584
14,000 Keppel 115,136
---------
208,720
---------

SOUTH AFRICA 2.48%
24,000 Liblife Strategic Investments 91,628
---------

SPAIN 2.57%
1,000 Banco Intercontinental 95,021
---------

SWEDEN 2.79%
2,800 Astra 102,803
---------
</TABLE>

ANNUAL REPORT / PAGE 14
<PAGE> 97
[STALWART FUNDS LOGO]

SCHEDULE OF INVESTMENTS
INTERNATIONAL EQUITY FUND (CONT'D.)
NOVEMBER 30, 1995

<TABLE>
<CAPTION>
NUMBER
OF
SHARES VALUE
- --------- ----------
<S> <C> <C>
SWITZERLAND 11.76%
620 Brown Boveri Registered $ 139,985
2,000 Nestle ADR 106,760
225 Sika Finanz Registered 52,718
400 Societe Generale de Surveillance
Registered 134,617
----------
434,080
----------

UNITED KINGDOM 6.83%
22,000 Blenheim Exhibitions 77,057
5,000 Hanson ADR 76,250
20,000 Rentokil 98,807
----------
252,114
----------

Total Common Stocks
(cost $3,237,820) 3,496,274
----------

WARRANTS 0.03%

FRANCE 0.03%
150 Primagaz Warrants * 1,169
----------

Total Warrants
(cost $754) 1,169
----------

<CAPTION>
PAR
VALUE
-----
<C> <S> <C>
CONVERTIBLE BONDS 3.43%

THAILAND 3.43%
$125,000 Bangkok Bank Convertible
Bond, 3.25%, 3/3/04 126,719
----------

Total Convertible Bonds
(cost $110,759) 126,719
----------

<CAPTION>
PAR
VALUE VALUE
- --------- ----------
<C> <S> <C>
REPURCHASE AGREEMENTS 1.22%

$45,000 United Missouri Bank Repurchase
Agreement, 5.40%, dated 11/30/95,
repurchase price $45,007
maturing 12/1/95 (collateralized by
U.S. Treasury Note, 7.625%,
4/30/96) $ 45,000
----------

Total Repurchase Agreements
(cost $45,000) 45,000
----------

Total Investments 99.37%
(cost $3,394,333) 3,669,162

Cash and Other Assets,
less Liabilities 0.63% 23,279
----------

NET ASSETS 100.00% $3,692,441
==========
</TABLE>

* Non-income producing security.

At November 30, 1995, the International Equity Fund's investments, excluding
repurchase agreements, were diversified as follows:

<TABLE>
<S> <C>
Basic Industries 16.15%
Capital Goods & Technology 16.10
Consumer - Cyclical 25.59
Consumer - Non-Cyclical 16.82
Financial Services 13.47
Holding Companies 2.53
Natural Resources 9.34
-------
100.00%
=======
</TABLE>

See notes to the financial statements.

ANNUAL REPORT / PAGE 15
<PAGE> 98
[STALWART FUNDS LOGO]

STATEMENTS OF OPERATIONS

FOR THE PERIOD FROM JANUARY 27, 1995(1) THROUGH NOVEMBER 30, 1995

<TABLE>
<CAPTION>
U.S. GOVERNMENT CORE AGGRESSIVE INTERNATIONAL
SECURITIES INCOME EQUITY EQUITY EQUITY
FUND FUND FUND FUND FUND
---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C>
INVESTMENT INCOME:
Interest income $ 458,179 $262,771 $ 17,682 $ 33,794 $ 19,781
Dividend income (less withholding taxes of
$0, $442, $948, $47 and $13,758, respectively) - 84,496 159,266 47,601 74,529
---------- -------- ---------- ---------- --------
Total investment income 458,179 347,267 176,948 81,395 94,310
---------- -------- ---------- ---------- --------
EXPENSES:
Fund accounting and administration fees 51,743 41,536 51,823 43,257 26,819
Transfer agent fees and expenses 22,318 22,465 21,970 21,948 21,924
Investment advisory fees 16,247 13,041 16,268 13,581 8,421
Professional fees 14,012 14,012 14,012 14,013 16,712
Sub-advisory fees 12,998 10,433 27,331 21,730 20,210
12b-1 fees 9,748 7,824 9,761 8,149 5,053
Amortization of organization costs 6,391 6,391 6,391 6,391 6,391
Directors' fees 4,540 4,540 4,540 4,540 4,540
Custody fees 3,592 4,323 5,012 5,517 17,405
Printing and mailing expenses 4,122 4,122 4,122 4,122 4,122
Federal and state registration fees 2,821 2,404 2,809 2,355 1,719
Pricing expense 2,203 2,389 944 1,261 3,859
Insurance expense 698 577 611 540 327
---------- -------- ---------- ---------- --------
Total expenses before reimbursement 151,433 134,057 165,594 147,404 137,502
Reimbursement of expenses (79,296) (65,724) (66,087) (60,485) (73,163)
---------- -------- ---------- ---------- --------
Net expenses 72,137 68,333 99,507 86,919 64,339
---------- -------- ---------- ---------- --------
Net investment income (loss) 386,042 278,934 77,441 (5,524) 29,971
---------- -------- ---------- ---------- --------
REALIZED AND UNREALIZED GAIN (LOSS) FROM INVESTMENTS
AND FOREIGN CURRENCIES:
Net realized gain on:
Investments 165,322 290,455 319,764 939,022 97,843
Foreign currency transactions - - - - 23,445
---------- -------- ---------- ---------- --------

Total net realized gain 165,322 290,455 319,764 939,022 121,288
Net increase in unrealized appreciation
(depreciation) on:
Investments 534,189 385,644 1,395,607 493,029 298,535
Translation of assets and liabilities in foreign
currencies - - - - (23,776)
---------- -------- ---------- ---------- --------
Total net unrealized gain 534,189 385,644 1,395,607 493,029 274,759
Net realized and unrealized gain from investments
and foreign currencies 699,511 676,099 1,715,371 1,432,051 396,047
---------- -------- ---------- ---------- --------
NET INCREASE IN NET ASSETS
RESULTING FROM OPERATIONS $1,085,553 $955,033 $1,792,812 $1,426,527 $426,018
========== ======== ========== ========== ========
</TABLE>
- ------------------------------
(1)Commencement of operations.

See notes to the financial statements.

ANNUAL REPORT / PAGE 16

<PAGE> 99
[STALWART FUNDS LOGO]

STATEMENTS OF CHANGES IN NET ASSETS

FOR THE PERIOD FROM JANUARY 27, 1995(1) THROUGH NOVEMBER 30, 1995

<TABLE>
<CAPTION>
U.S. GOVERNMENT CORE AGGRESSIVE INTERNATIONAL
SECURITIES INCOME EQUITY EQUITY EQUITY
FUND FUND FUND FUND FUND
---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C>
OPERATIONS:
Net investment income (loss) $ 386,042 $ 278,934 $ 77,441 $ (5,524) $ 29,971
Net realized gain on investments 165,322 290,455 319,764 939,022 97,843
Net realized gain on foreign currency
transactions - - - - 23,445
Net increase in unrealized appreciation
on investments 534,189 385,644 1,395,607 493,029 298,535
Net increase in unrealized depreciation
on translation of assets and liabilities
in foreign currencies - - - - (23,776)
---------- ---------- ---------- ---------- ----------
Net increase in net assets
resulting from operations 1,085,553 955,033 1,792,812 1,426,527 426,018
---------- ---------- ---------- ---------- ----------
DISTRIBUTIONS PAID FROM:
Net investment income (384,892) (269,437) (76,397) - (13,123)
---------- ---------- --------- ---------- ----------
CAPITAL SHARE TRANSACTIONS:
Proceeds from sale of shares 9,530,364 7,052,894 8,951,962 7,262,913 4,665,365
Proceeds from reinvestment of dividends 339,630 242,950 - - -
Value of shares redeemed (3,396,155) (1,893,193) (2,516,538) (2,398,794) (1,405,819)
---------- ---------- ---------- ---------- ----------
Net increase from capital share transactions 6,473,839 5,402,651 6,435,424 4,864,119 3,259,546
---------- ---------- ---------- ---------- ----------
TOTAL INCREASE IN NET ASSETS 7,174,500 6,088,247 8,151,839 6,290,646 3,672,441

NET ASSETS:
Beginning of period 20,000 20,000 20,000 20,000 20,000
---------- ---------- ---------- ---------- ----------
End of period $7,194,500 $6,108,247 $8,171,839 $6,310,646 $3,692,441
========== ========== ========== ========== ==========

</TABLE>

(1)Commencement of operations.

See notes to the financial statements.

ANNUAL REPORT / PAGE 17

<PAGE> 100
[STALWART FUNDS LOGO]

FINANCIAL HIGHLIGHTS

FOR THE PERIOD FROM JANUARY 27, 1995 (1) THROUGH NOVEMBER 30, 1995

INCOME FROM INVESTMENT OPERATIONS:
Net investment income (loss) 0.52 0.48 0.12 (0.01) 0.09
Net realized and unrealized gains on
investments and foreign currencies 0.96 1.17 2.48 2.32 0.92
- -----------------------------------------------------------------------------------------------------------------------------------

TOTAL FROM INVESTMENT OPERATIONS 1.48 1.65 2.60 2.31 1.01

LESS DISTRIBUTIONS:
Dividends from net investment income (0.52) (0.46) (0.12) -- (0.04)
- -----------------------------------------------------------------------------------------------------------------------------------

TOTAL DISTRIBUTIONS (0.52) (0.46) (0.12) -- (0.04)
- -----------------------------------------------------------------------------------------------------------------------------------

NET ASSET VALUE, END OF PERIOD $10.96 $11.19 $12.48 $12.31 $10.97
===================================================================================================================================

TOTAL RETURN (2) 15.13% 16.81% 25.97% 23.10% 10.09%

SUPPLEMENTAL DATA AND RATIOS:
Net assets, end of period (in 000s) $7,195 $6,108 $8,172 $6,311 $3,692
Ratio of net expenses to average
net assets (3)(4) 1.11% 1.31% 1.53% 1.60% 1.91%
Ratio of net investment income (loss)
to average net assets (3)(4) 5.94% 5.35% 1.19% (0.10)% 0.89%
Portfolio turnover rate (2) 55.29% 63.76% 34.71% 140.94% 38.09%
</TABLE>

1 Commencement of operations.

2 Not annualized for the period from January 27, 1995 through November 30,
1995.

3 Annualized for the period from January 27, 1995 through November 30, 1995.

4 Without fees waived, the ratio of net expenses to average net assets would
have been 2.33% for the U.S. Government Securities Fund; 2.57% for the
Income Fund; 2.54% for the Core Equity Fund; 2.71% for the Aggressive Equity
Fund; and 4.08% for the International Equity Fund.

Without fees waived, the ratio of net investment income (loss) to
average net assets would have been 4.72% for the U.S. Government Securities
Fund; 4.09% for the Income Fund; 0.18% for the Core Equity Fund; (1.21)% for
the Aggressive Equity Fund; and (1.28)% for the International Equity Fund.

See notes to the financial statements.

ANNUAL REPORT / PAGE 18
<PAGE> 101
[STALWART FUNDS LOGO]

NOTES TO THE FINANCIAL STATEMENTS

1. ORGANIZATION

Briar Funds Trust (the "Trust") was organized October 7, 1994 as a Delaware
business trust and is registered under the Investment Company Act of 1940 (the
"1940 Act"). The Stalwart Funds (the "Funds"), the separate portfolios of the
Trust, are currently authorized to issue an unlimited number of shares of
beneficial interest (no par value per share). The Funds commenced operations on
January 27, 1995. Each of the Funds initially issued and sold 2,000 shares to
Briar Capital Management L.L.C. (the "Adviser") on January 12, 1995, for
consideration in the amount of $100,000.

Costs of $189,437 incurred by the Funds in connection with their organization,
registration and the initial public offering of shares have been deferred and
are being amortized on a straight-line basis over a period of five years from
the date upon which the Funds commenced their investment activities. These
costs were advanced by the Adviser and reimbursed by the Funds. The proceeds of
any redemption of the initial shares by any holder thereof will be reduced by a
pro rata portion of any then unamortized deferred organizational costs in the
same proportion as the number of initial shares being redeemed bears to the
number of initial shares outstanding at the time of such redemption.

2. SIGNIFICANT ACCOUNTING POLICIES

The following is a summary of significant accounting policies followed by the
Funds in the preparation of their financial statements.

a) INVESTMENT VALUATION -- Securities which are traded on a recognized stock
exchange are valued at the last sale price on the securities exchange on which
such securities are primarily traded or at the last sale price on a national
securities exchange. Exchange-traded securities for which there were no
transactions are valued at the current bid prices. Portfolio securities traded
on a foreign exchange are valued at the respective closing prices on that
exchange.Securities traded on only over-the-counter markets are valued on the
basis of closing over-the-counter bidprices. Fixed income/debt securities are
priced at fair value using the bid price. However, in circumstances where the
Adviser or sub-adviser deems it appropriate to do so, the Funds' fixed income
securities are valued utilizing prices obtained for the day of valuation from a
bond pricing service. Debt securities with a maturity date less than 60 days
are valued at amortized cost basis which approximates value. Securities for
which quotations are not readily available, and other assets, are valued at
fair value, as determined in good faith by the Board of Trustees.

b) FOREIGN CURRENCY TRANSACTIONS -- The books and records of the Funds are
maintained in U.S. dollars as follows:

(I) market value of investment securities and other assets and liabilities
are recorded at the exchange rate on the valuation date; and

(II) purchases and sales of investment securities, income and expenses are
recorded at the exchange rate prevailing on the respective date of
such transactions.

The Funds isolate that portion of the results of operations resulting from
changes in foreign exchange rates on investments from the fluctuation arising
from changes in market prices of investments held. For the International Equity
Fund, the amount of net unrealized depreciation on the translation of assets
and liabilities in foreign currencies related to investments as of November 30,
1995 was $23,706.

c) FEDERAL INCOME TAXES -- No provision for federal income taxes has been made
since the Funds have complied to date with the provisions of the Internal
Revenue Code available to regulated investment companies and intend to continue
to so comply in future years.

d) DISTRIBUTIONS TO SHAREHOLDERS -- Generally, dividends from net investment
income will be declared and paid monthly for the U.S. Government Securities and
Income

ANNUAL REPORT / PAGE 19
<PAGE> 102
[STALWART FUNDS LOGO]

NOTES TO THE FINANCIAL STATEMENTS (CONT'D)

Funds, and annually for the Core Equity, Aggressive Equity and International
Equity Funds. Distributions of net realized capital gains, if any, will be
declared and paid annually. For the year ended November 30, 1995, 14.3%, 35.4%
and 5.1% of dividends paid or to be paid from taxable income for the Income
Fund, Core Equity Fund and Aggressive Equity Fund, respectively, qualify for
the dividends received deduction available to corporate shareholders.

The Funds may periodically make reclassifications among certain of their
capital accounts as a result of the timing and characterization of certain
income and capital gains distributions determined annually in accordance with
federal tax regulations which may differ from generally accepted accounting
principles. These differences are primarily due to differing treatments for
foreign currency transactions and organizational costs. Accordingly, at
November 30, 1995, reclassifications were recorded to increase (decrease)
undistributed net investment income by $3,899, $221, $1,662, $8,867 and
$(12,754); increase (decrease) accumulated net realized gains on investments by
$(2,237), $1,441, $0, $(7,205) and $0; increase accumulated net realized gains
from foreign currency transactions $0, $0, $0, $0 and $14,416; and decrease
capital stock by $1,662 for each of the U.S. Government Securities, Income,
Core Equity, Aggressive Equity and International Equity Funds, respectively.

e) OTHER -- For financial reporting, investment transactions are recorded on
the trade date. The Funds determine the gain or loss realized from investment
transactions by comparing the original cost of the security lot sold with the
net sale proceeds. Dividend income is recognized on the ex-dividend date,
except for certain dividends from foreign securities which are recorded as soon
as information is available to the Funds. Interest income is recognized on an
accrual basis and includes amortization of premiums and discounts.

3. INVESTMENT ADVISORY AGREEMENT AND OTHER AGREEMENTS

The Trust has an agreement with the Adviser, with whom certain officers and
trustees of the Trust are affiliated, to furnish investment advisory services
to the Funds. Under the terms of the agreement, the Funds will pay the Adviser
a monthly fee on average daily net assets at the following annual rates: 0.45%
for the U.S. Government Securities and Income Funds; 0.75% for the Core Equity
Fund; 0.65% for the Aggressive Equity Fund; and 0.85% for the International
Equity Fund. The basic fee for the Core Equity Fund is subject to a performance
adjustment (up to a maximum +/- 0.10%) based on the Core Equity Fund's
investment performance as compared to the S&P 500 over a specified period of
time. For the period from January 27, 1995 through November 30, 1995, the
sub-adviser reduced its fee by $5,109 for a performance adjustment. Of the
above annual fees, the Adviser retains 0.25% and has directed the Funds to pay
each respective sub-adviser the remainder.

The Adviser voluntarily agreed to waive its fees and/or reimburse the Funds to
the extent that total expenses (excluding interest, taxes, brokerage
commissions and other costs incurred in connection with the purchase or sale of
portfolio securities, and extraordinary items) exceed 1.11% of average net
assets of the U.S. Government Securities Fund; 1.31% of average net assets of
the Income Fund; 1.53% of average net assets of the Core Equity Fund; 1.60% of
average net assets of the Aggressive Equity Fund; and 1.91% of average net
assets of the International Equity Fund. Accordingly, for the period from
January 27, 1995 through November 30, 1995, the Adviser waived advisory fees of
$16,247 and reimbursed an additional $32,968 to the U.S. Government Securities
Fund; waived advisory fees of $13,041 and reimbursed an additional $28,312 to
the Income Fund; waived advisory fees of $16,268 and reimbursed an additional
$32,102 to the Core Equity Fund; waived advisory fees of $13,581 and reimbursed
an additional $32,190 to the Aggressive Equity Fund; and waived advisory fees
of $8,421 and reimbursed an additional $55,872 to the International Equity
Fund.

Sub-advisory services are provided to the U.S. Government Securities and Income
Funds by Pekin,

ANNUAL REPORT / PAGE 20
<PAGE> 103
[STALWART FUNDS LOGO]

NOTES TO THE FINANCIAL STATEMENTS (CONT'D.)

Singer & Shapiro Asset Management, Inc. ("Pekin, Singer"), an affiliate of the
Adviser; to the Core Equity Fund by Harris Associates L.P.; to the Aggressive
Equity Fund by Wasatch Advisors, Inc.; and to the International Equity Fund by
Harding, Loevner Management, L.P. Pekin, Singer waived their sub-advisory
fees of $12,998 and $10,433 for the U.S. Government Securities and Income
Funds, respectively.

Sunstone Financial Group, Inc. (the "Administrator") acts as Administrator for
each of the Funds. As compensation for its administrative services and the
assumption of certain administrative expenses, the Administrator is entitled to
a fee, computed daily and payable monthly, at an annual rate of 0.20% on the
first $100 million of average net assets of the Funds, 0.125% on the next $150
million of average net assets of the Funds, and 0.075% on average net assets in
excess of $250 million, subject to a minimum fee at an annual rate of $255,000,
plus out-of-pocket expenses. For the period from January 27, 1995 to November
30, 1995, the Administrator waived fees of $7,335 for the U.S. Government
Securities Fund; $6,114 for the Income Fund; $7,956 for the Core Equity Fund;
$6,565 for the Aggressive Equity Fund; and $3,817 for the International Equity
Fund.

4. DISTRIBUTION PLAN

The Trust has adopted a Distribution Plan (the "Plan") pursuant to Rule 12b-1
under the 1940 Act. The Plan permits the Trust to employ one or more
distributors of its shares. Payments under the Plan may be made only to
distributors so employed by the Trust. The Trust pays to each distributor a
monthly fee for distribution of each Fund's shares at the rate of 0.15% per
annum of the average net asset value of the Fund shares beneficially owned by
each distributor's clients. Currently, S.F. Investments, Inc. (the
"Distributor"), an affiliate of the Adviser, is the underwriter of the Funds.
It is the only entity which has entered into an agreement under the Plan. For
the period from January 27, 1995 to November 30, 1995, the Distributor waived
distribution fees of $9,748 for the U.S. Government Securities Fund; $7,824 for
the Income Fund; $9,761 for the Core Equity Fund; $8,149 for the Aggressive
Equity Fund; and $5,053 for the International Equity Fund.

5. INVESTMENT TRANSACTIONS

The aggregate purchases and sales of securities, excluding short-term
investments, for each Fund for the period from January 27,
1995 through November 30, 1995, were as follows:

<TABLE>
<CAPTION>
U.S. GOVERNMENT CORE AGGRESSIVE INTERNATIONAL
SECURITIES INCOME EQUITY EQUITY EQUITY
FUND FUND FUND FUND FUND
---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C>
PURCHASES:
U.S. Government $4,401,816 $ 571,597 - - -
Other 5,729,383 8,363,242 $8,775,403 $12,706,903 $4,545,162

SALES:
U.S. Government 1,787,297 344,273 - - -
Other 2,094,449 3,272,939 2,520,508 7,844,778 1,332,703
</TABLE>

For the period from January 27, 1995 through November 30, 1995, the Income Fund
paid brokerage commissions of $9,450 on trades of securities to an affiliate
of the Adviser.

ANNUAL REPORT / PAGE 21

<PAGE> 104
[STALWART FUNDS LOGO]

NOTES TO THE FINANCIAL STATEMENTS (CONT'D.)

Costs of investments are substantially the same for financial reporting
purposes and federal income tax purposes for each Fund, except the Aggressive
Equity and International Equity Funds whose cost of investments for federal
income tax purposes was $5,804,205 and $3,400,217, respectively. At November
30, 1995, gross unrealized appreciation and depreciation of investments for
each Fund were as follows:

<TABLE>
<CAPTION>
U.S. GOVERNMENT CORE AGGRESSIVE INTERNATIONAL
SECURITIES INCOME EQUITY EQUITY EQUITY
FUND FUND FUND FUND FUND
---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C>
Appreciation $534,189 $473,274 $1,460,071 $868,644 $388,965

Depreciation - (87,630) (64,464) (378,805) (120,020)
-------- -------- ---------- -------- --------

Net appreciation on investments $534,189 $385,644 $1,395,607 $489,839 $268,945
======== ======== ========== ======== ========
</TABLE>

6. CAPITAL SHARE TRANSACTIONS

Transactions of capital shares for the period from January 27, 1995 through
November 30, 1995 for each Fund were as follows:

<TABLE>
<CAPTION>
U.S. GOVERNMENT CORE AGGRESSIVE INTERNATIONAL
SECURITIES INCOME EQUITY EQUITY EQUITY
FUND FUND FUND FUND FUND
---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C>
Shares sold 941,876 695,775 871,149 719,847 463,166

Shares issued in reinvestment
of dividends 32,022 22,598 - - -
Shares redeemed (319,433) (174,571) (218,396) (209,185) (128,715)
-------- -------- --------- -------- --------

Net increase in shares 654,465 543,802 652,753 510,662 334,451
======== ======== ========= ======== ========

</TABLE>

ANNUAL REPORT / PAGE 22

<PAGE> 105
[STALWART FUNDS LOGO]

REPORT OF INDEPENDENT AUDITORS

To the Board of Trustees and Shareholders of the Stalwart Funds:

We have audited the accompanying statements of assets and liabilities of the
Stalwart Funds (comprised of the U.S. Government Securities Fund, Income Fund,
Core Equity Fund, Aggressive Equity Fund and International Equity Fund),
including the schedules of investments, as of November 30, 1995, and the
related statements of operations, changes in net assets and financial
highlights for the period from January 27, 1995 (commencement of operations)
through November 30, 1995. These financial statements and financial highlights
are the responsibility of the Funds' management. Our responsibility is to
express an opinion on these financial statements and financial highlights based
on our audits.

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

In our opinion, the financial statements and financial highlights referred to
above present fairly, in all material respects, the financial position of the
Stalwart Funds as of November 30, 1995, and the results of their operations,
changes in their net assets and financial highlights for the period from
January 27, 1995 through November 30, 1995, in conformity with generally
accepted accounting principles.

Ernst & Young LLP

Chicago, Illinois
December 22, 1995
<PAGE> 106

PART C

OTHER INFORMATION

ITEM 24. FINANCIAL STATEMENTS AND EXHIBITS

A. The following Financial Statements (unaudited)
are included in Parts A & B of this Registration
Statement:

1. Statements of Assets and Liabilities as of November 30, 1995
2. Schedule of Investments as of November 30, 1995
3. Statement of Operations for the Period from January 27, 1995
through November 30, 1995
4. Statement of Change in Net Assets for the Period from January
27, 1995 through November 30, 1995
5. Financial Highlights for the Period from January 27, 1995
through November 30, 1995
6. Notes to the Financial Statements.

B. Exhibits

* 1. Declaration of Trust.

* 2. By-Laws.

3. None.

4. Not Applicable.

5.1 Management and Advisory Agreement by and between Registrant and
Briar Capital Management L.L.C.

* 5.2 Sub-Advisory Agreements by and between Registrant, Briar Capital
Management L.L.C. and Sub-Advisers.

* 6.1 Distribution Agreement by and between Registrant and S.F.
Investments, Inc.

6.2 Not applicable.

7. Not Applicable.

* 8. Custodian Agreement by and between Registrant and United Missouri
Bank, N.A.

* 8.2 Transfer Agency Agreement by and between Registrant and
Supervised Service Company, Inc.

* 9. Administration and Fund Accounting Agreement by and between
Registrant and Sunstone Financial Group, Inc.

* 10. Opinion of Holleb & Coff, counsel for Registrant.

* 11. Ernst & Young, L.L.P. independent auditors.

<PAGE> 107

12. None.

* 13. Subscription Agreement.

14. Not Applicable.

* 15. Distribution Plan pursuant to Rule 12b-1 under the Investment
Company Act of 1940.

16. Performance Data.

27. Financial Data Schedules.
____________________________

* Previously filed with initial Registration Statement filed October 13,
1994 or Pre-Effective Amendment No. 1 as filed on December 12, 1994 or No.
2 as filed on January 13, 1995.

ITEM 25. PERSONS CONTROLLED BY OR UNDER COMMON CONTROL WITH REGISTRANT.

Registrant is controlled by its Board of Trustees. As of the commencement
of operations of the Stalwart Funds, all of the outstanding shares of said
Funds were held by Briar Capital Management, L.L.C., the Adviser of Registrant.

ITEM 26. NUMBER OF HOLDERS OF SECURITIES.

NUMBER OF RECORD
TITLE OF CLASS HOLDERS AS OF MARCH 31, 1996
-------------- ----------------------------

Core Equity Fund 2
Aggressive Equity Fund 2
International Equity Fund 2
U.S. Government Securities Fund 2
Income Fund 2

ITEM 27. INDEMNIFICATION.

Section 5 of the Administration and Fund Accounting Agreement between the
Registrant and Sunstone Financial Group, Inc. ("Sunstone") provides for
indemnification of Sunstone in connection with certain claims and liabilities
to which Sunstone, in its capacity as Registrant's Administrator, may be
subject. A copy of the Administration and Fund Accounting Agreement is filed
as Exhibit 9 hereto.

In addition, Article X of Registrant's Declaration of Trust, a copy of
which is filed as Exhibit 1 hereto, provides for indemnification of trustees,
officers, employees, agents and shareholders as follows:

INDEMNIFICATION OF TRUSTEES, OFFICERS, EMPLOYEES AND AGENTS

Section 10.02 The Trust shall indemnify each of its Trustees, officers,
employees, and agents (including persons who serve at its request as directors,
officers, or trustees of another organization in which it has any interest, as
a shareholder, creditor, or otherwise) to the fullest extent permitted by law
against all liabilities and expenses (including, without limitation, amounts
paid in satisfaction of judgments, in compromise or settlement, as fines and
penalties, and as counsel and attorneys' fees) reasonably incurred by such
person in connection with

<PAGE> 108

the defense or disposition of any claim, action, suit, or other
proceeding, whether civil or criminal, in which such person may be involved or
with which such person may be threatened, while in office or thereafter, by
reason of his or her being or having been such a Trustee, officer, employee, or
agent, except with respect to any matter as to which he or she shall have been
adjudicated to have acted in bad faith, willful misfeasance, gross negligence,
or reckless disregard of his or her duties; provided, however, that as to any
matter disposed of by a compromise payment by such person, pursuant to a
consent decree or otherwise, no indemnification either for said payment or for
any other expenses shall be provided unless there has been a determination that
such person did not engage in bad faith, willful misfeasance, gross negligence,
or reckless disregard of the duties involved in the conduct of such person's
office by the court or other body approving the settlement or other disposition
or by a reasonable determination, based upon review of readily available facts
(as opposed to a full trial-type inquiry), that such person did not engage in
such conduct by written opinion from independent legal counsel approved by the
Trustees. The rights accruing to any person under these provisions shall not
exclude any other right to which he or she may be lawfully entitled; provided
that no person may satisfy any right of indemnity or reimbursement granted
herein or in Section 10.01 or to which he or she may be otherwise entitled
except out of the Trust Property. The Trustees may make advance payments in
connection with indemnification under this Section 10.02, provided that the
indemnified person shall have given a written undertaking to reimburse the
Trust in the event it is subsequently determined that such person is not
entitled to such indemnification.

LIABILITY OF SHAREHOLDERS; INDEMNIFICATION

Section 10.03. "Shareholders" shall mean as of any particular time any or
all holders of record of interests in the Trust or in Trust Property, as the
case may be, at such time. The Trust shall indemnify and hold each Shareholder
harmless from and against any claim or liability to which such Shareholder may
become subject solely by reason of his or her being or having been a
Shareholder and not because of such Shareholder's acts or omissions or for some
other reason, and shall reimburse such Shareholder for all legal and other
costs and expenses reasonably incurred by him or her in connection with any
such claim or liability (upon proper and timely request by the Shareholder).
The rights accruing to a Shareholder under this Section 10.03 shall not exclude
any other right to which such Shareholder may be lawfully entitled, nor shall
anything herein contained restrict the right of the Trust to indemnify or
reimburse a Shareholder in any appropriate situation even though not
specifically provided herein.

________ ________ ________

Insofar as indemnification for liability arising under the Securities Act
of 1933 (the "Act") may be permitted to trustees, officers and controlling
persons of the Registrant pursuant to the foregoing provisions, or otherwise,
Registrant has been advised that in the opinion of the Securities and Exchange
Commission such indemnification is against public policy as expressed in the
Act and is, therefore, unenforceable. In the event that a claim for
indemnification against such liabilities (other than the payment by the
Registrant of expenses incurred or paid by a trustee, officer or controlling
person of the Registrant in a successful defense of any action, suit or
proceeding) is asserted by such trustee, officer or controlling person in
connection with the securities being registered, Registrant will, unless in the
opinion of its counsel the matter has been settled by controlling precedent,
submit to a court of appropriate jurisdiction the question whether such
indemnification by it is against public policy as expressed in the Act and will
be governed by the final adjudication of such issue.

ITEM 28. BUSINESS AND OTHER CONNECTIONS OF INVESTMENT ADVISER.

The Adviser was organized on September 29, 1994 for the purpose of
providing investment supervisory services for the Registrant. The Adviser is
not, nor has it been, engaged in any other business since its inception.
Certain information regarding each director and officer of the Adviser
including any business, profession, vocation or employment in which such person
is or has been at any time during the past two fiscal years engaged for his or
her own account or in the capacity of director, officer, employee, partner or
trustee, is set forth below:

<PAGE> 109
NAME AND PRINCIPAL
NAME AND POSITION BUSINESS ADDRESS CONNECTION WITH
WITH ADVISER OF OTHER COMPANY OTHER COMPANY
------------ ---------------- -------------
David S. Evans Pekin, Singer & Shapiro Asset Vice President
Manager Management, Inc.
311 South Wacker Drive
Suite 4990
Chicago, IL 60606

Glencoe Growth Fund President
311 South Wacker Drive
Suite 4990
Chicago, IL 60606

Thomas A. Hickey Prairie Asset Management, Inc. President
Manager 5844 Elaine Drive
Rockford, IL 61108

and

900 Western Avenue
Joliet, IL 60435

First Midwest Trust Corp.
121 North Chicago Street
Joliet, IL 60431
Chairman and CEO
First Midwest Asset
Management
121 North Chicago Street
Joliet, IL 60431

First Midwest Bancorp Chairman and CEO
184 East Shuman Boulevard
Naperville, IL 60566

Sheridan Bancorp Senior Vice President
130 West Si Johnson Avenue and Director
Sheridan, IL 60551

Sheridan State Bank Treasurer and Director
130 West Si Johnson Avenue
Sheridan, IL 60551
Director

JoAnne B. Pekin Pekin, Singer & Shapiro Asset President and Director
Director Management, Inc.
311 South Wacker Drive
Suite 4490
Chicago, IL 60606

S.F. Investments, Inc. Vice President

<PAGE> 110

311 South Wacker Drive
Suite 4990
Chicago, IL 60606

Sheldon M. Pekin Pekin, Singer & Shapiro Asset Senior Vice-President
Director Management, Inc. and Director
311 South Wacker Drive
Suite 4490
Chicago, IL 60606

S.F. Investments, Inc. Managing Director
311 South Wacker Drive
Suite 4490
Chicago, IL 60606

Richard A. Singer Pekin, Singer & Shapiro Asset Senior Vice-President
Director Management, Inc.
311 South Wacker Drive
Suite 4490
Chicago, IL 60606

Richard A. Singer S.F. Investments, Inc. Managing Director
Director 311 South Wacker Drive
Suite 4990
Chicago, IL 60606

Nathan Shapiro Pekin, Singer & Shapiro Asset Senior Vice President
Management, Inc.
311 South Wacker Drive
Suite 4490
Chicago, IL 60606

Nathan Shapiro S.F. Investments, Inc.
Director 311 South Wacker Drive
Suite 4490
Chicago, IL 60606
President

Certain information regarding each of the sub-advisers, including any
business, profession, vocation or employment in which such person is or has
been at any time during the past two fiscal years engaged for his or her own
account or in the capacity of director, officer, employee partner or trustee,
is set forth below:

PEKIN, SINGER & SHAPIRO ASSET MANAGEMENT, INC.

Name and Position Name and Principal Business Connection with
with Sub-Advisor Address of Other Company Other Company
- ---------------- ------------------------ -------------
JoAnne B. Pekin S.F. Investments, Inc. Managing Director
Senior Vice President 311 South Wacker Drive
Director Suite 4990
Chicago, IL 60606

<PAGE> 111

Sheldon M. Pekin S.F. Investments, Inc. Managing Director
Senior Vice President 311 South Wacker Drive
Director Suite 4990
Chicago, IL 60606

Richard A. Singer S.F. Investments, Inc. Managing Director
Senior Vice President 311 South Wacker Drive
Director Suite 4990
Chicago, IL 60606

Nathan Shapiro S.F. Investments, Inc. President
Senior Vice President 311 South Wacker Drive
Director Suite 4990
Chicago, IL 60606

Stephen A. Shapiro S.F. Investments, Inc. Vice-President
Vice President 311 South Wacker Drive
Suite 4990
Chicago, IL 60606

David S. Evans Glencoe Growth Fund President
Vice President 311 South Wacker Drive
Suite 4990
Chicago, IL 60606

HARRIS ASSOCIATES, L.P.

Name and Position Name and Principal Business Connection with
with Sub-Adviser Address of Other Company Other Company
- ----------------- ------------------------ -------------

Joseph E. Braucher Two North LaSalle Street Partner, Officer
Secretary, Treasurer Chicago, IL 60602-3790

Robert H. Harper Two North LaSalle Street Partner, Officer
Vice President Chicago, IL 60602-3790

Robert M. Levy Two North LaSalle Street Partner, Officer
Vice President Chicago, IL 60602-3790

Roxanne M. Martino Two North LaSalle Street Partner, Officer
Vice President Chicago, IL 60602-3790

Victor A. Morgenstern Two North LaSalle Street Partner, Officer
President Chicago, IL 60602-3790

HARDING, LOEVNER MANAGEMENT, L.P.

Name and Position Name and Principal Business Connection with
with Sub-Adviser Address of Other Company Other Company
- ----------------- ------------------------ -------------

Simon Hallett 50 Division Street, Suite 401 Principal

<PAGE> 112

Senior Investment Manager Somerville, NJ 08876

David R. Loevner 50 Division Street, Suite 401 Principal
Chief Executive Officer Somerville, NJ 08876

David D. Harding 50 Division Street, Suite 401 Principal
Chief Investment Officer Somerville, NJ 08876

WASATCH ADVISORS, INC.

Name and Position Name and Principal Business Connection with
with Sub-Adviser Address of Other Company Other Company
- ----------------- ------------------------ -------------

Samuel S. Stewart, Jr. 68 South Main Street Owner
President, Director, Salt Lake City, UT 84101
Director of Research

Mark E. Bailey 68 South Main Street Employee
Vice President, Director, Salt Lake City, UT 84101
Portfolio Manager

Luana R. Buhler 68 South Main Street Employee
Secretary, Treasurer Salt Lake City, UT 84101

Jeffrey S. Cardon 68 South Main Street Employee
Vice President, Director, Salt Lake City, UT 84101
Analyst

ITEM 29. PRINCIPAL UNDERWRITERS.

(a) S.F. Investments, Inc., the distributor of the shares of Registrant, does
not serve as the principal underwriter, depositor or investment adviser
of any registered investment company other than the Registrant.

(b) Certain information regarding the officers and directors of the distributor
is set forth below.

Name and Principal Position and Offices Positions and Offices
Business Address with Distributor with Registrant
- ---------------- ---------------- ---------------

Nathan Shapiro President None
311 South Wacker Drive
Suite 4990
Chicago, IL 60606

Sherwin Begoun Treasurer and Secretary None
311 South Wacker Drive
Suite 4990
Chicago, IL 60606

Daniel Declue Vice President None
311 South Wacker Drive
Suite 4990

<PAGE> 113

Chicago, IL 60606

Steven Shapiro Vice President None
311 South Wacker Drive
Suite 4990
Chicago, IL 60606

Sheldon Pekin Managing Director None
311 South Wacker Drive
Suite 4990
Chicago, IL 60606

Joanne Pekin Managing Director None
311 South Wacker Drive
Suite 4990
Chicago, IL 60606

Rick Singer Managing Director None
311 South Wacker Drive
Suite 4990
Chicago, IL 60606

ITEM 30. LOCATION OF ACCOUNTS AND RECORDS.

All accounts, books or other documents required to be maintained by
Section 31(a) of the Investment Company Act of 1940 and the rules promulgated
thereunder are in the possession of Thomas A. Hickey, Registrant's President,
at Registrant's corporate offices, except (1) records held and maintained by
the Fund's custodian and transfer agent relating to its functions as custodian
and transfer agent, and (2) records held and maintained by Sunstone Financial
Group, Inc., 207 East Buffalo Street, Suite 400, Milwaukee, Wisconsin, 53202,
relating to its functions as administrator and fund accountant.

ITEM 31. MANAGEMENT SERVICES.

All management-related service contracts entered into by Registrant are
discussed in Parts A and B of this Registration Statement.

ITEM 32. UNDERTAKINGS

(a) Registrant undertakes to provide its Annual Report when it is
available upon request without charge to any recipient of a
Prospectus.

(b) Registrant undertakes, if requested to do so by the holders of at
least 10% of its outstanding shares, to call a meeting of
shareholders for the purpose of voting upon the question of
removal of a trustee or trustees and to assist in communications
with other shareholders as required by Section 16(c) of the
Investment Company Act of 1940.

<PAGE> 114

SIGNATURES

Pursuant to requirements of the Securities Act of 1933 and the
Investment Company Act of 1940, the Registrant hereby certifies that it has
duly caused this Amendment to the Registration Statement of Form N-1A to be
signed on its behalf by the undersigned, thereunto duly authorized, in the City
of Chicago, State of Illinois, on tbe 22nd day of April, 1996.

BRIAR FUNDS TRUST
(Registrant)

By: David S. Evans
---------------------
David S. Evans
Chairman
<PAGE> 115

EXHIBIT INDEX

* 1. Declaration of Trust.

* 2. By-Laws.

3. None.

4. Not Applicable.

* 5.1 Management and Advisory Agreement by and between Registrant and Briar
Capital Management L.L.C.

* 5.2 Sub-Advisory Agreement by and between Registrant, Briar Capital
Management L.L.C. and Sub-Adviser.

* 6.1 Distribution Agreement by and between Registrant and S.F.
Investments, Inc.

6.2 Not Applicable.

7. Not Applicable.

* 8. Custodian Agreement by and between Registrant and United Missouri.

* 8.2 Transfer Agency Agreement by and between Registrant and Supervised
Service Company, Inc.

* 9. Administration and Fund Accounting Agreement by and between Registrant
and Sunstone Financial Group, Inc.

* 10. Opinion of Holleb & Coff, counsel for Registrant.

* 11. Consent of Ernst & Young, L.L.P., independent auditors.

12. None.

* 13. Subscription Agreement.

14. Not Applicable.

* 15. Distribution Plan pursuant to Rule 12b-1 under the Investment Company
Act of 1940 as adopted by the Fund.

16. Performance Data.

27. Financial Data Schedules.

____________________________

* Previously filed with initial Registration Statement filed October 13,
1994 or Pre-Effective Amendment No. 1 as filed on December 12, 1994 or No.
2 as filed on January 13, 1995.

<PAGE> 1
EXHIBIT 16

BRIAR FUNDS TRUST - THE STALWART FUNDS
SCHEDULE FOR COMPUTATION OF PERFORMANCE QUOTATIONS
TOTAL RETURN

The Stalwart U.S. Government Securities Fund
For the period from January 27, 1995 (commencement of operations) to
November 30, 1995
Total Return = (Ending Redeemable Value/Initial Value) - 1
Total Return = 15.13%
15.13% = (1,151.34/1,000) - 1

The Stalwart Income Fund
For the period from January 27, 1995 (commencement of operations) to
November 30, 1995
Total Return = (Ending Redeemable Value/Initial Value) - 1
Total Return = 16.81%
16.81% = (1,168.06/1,000) - 1

The Stalwart Core Equity Fund
For the period from January 27, 1995 (commencement of operations) to
November 30, 1995
Total Return = (Ending Redeemable Value/Initial Value) - 1
Total Return = 25.97%
25.97% = (1,259.67/1,000) - 1

The Stalwart Aggressive Equity Fund
For the period from January 27, 1995 (commencement of operations) to
November 30, 1995
Total Return = (Ending Redeemable Value/Initial Value) - 1
Total Return = 23.10%
23.10% = (1,231/1,000) - 1

The Stalwart International Equity Fund
For the period from January 27, 1995 (commencement of operations) to
November 30, 1995
Total Return = (Ending Redeemable Value/Initial Value) - 1
Total Return = 10.09%
10.09% = (1,100.90/1,000) - 1

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<NAME> BRIAR FUNDS TRUST/THE STALWART FUNDS
<SERIES>
<NUMBER> 1
<NAME> STALWART CORE EQUITY FUND
<PERIOD-TYPE> 11-MOS
<FISCAL-YEAR-END> NOV-30-1995
<PERIOD-END> NOV-30-1995
<INVESTMENTS-AT-COST> 6,819,917
<INVESTMENTS-AT-VALUE> 8,215,524
<RECEIVABLES> 23,639
<ASSETS-OTHER> 34,599
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 8,273,762
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 101,923
<TOTAL-LIABILITIES> 101,923
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 6,453,762
<SHARES-COMMON-STOCK> 654,753
<SHARES-COMMON-PRIOR> 0
<ACCUMULATED-NII-CURRENT> 2,706
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 319,764
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 1,395,607
<NET-ASSETS> 8,171,839
<DIVIDEND-INCOME> 159,266
<INTEREST-INCOME> 17,682
<OTHER-INCOME> 0
<EXPENSES-NET> 99,507
<NET-INVESTMENT-INCOME> 77,441
<REALIZED-GAINS-CURRENT> 319,764
<APPREC-INCREASE-CURRENT> 1,395,607
<NET-CHANGE-FROM-OPS> 1,792,812
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 76,397
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 871,149
<NUMBER-OF-SHARES-REDEEMED> 218,396
<SHARES-REINVESTED> 0
<NET-CHANGE-IN-ASSETS> 8,151,839
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 0
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 43,599
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 165,594
<AVERAGE-NET-ASSETS> 7,711,669
<PER-SHARE-NAV-BEGIN> 10.00
<PER-SHARE-NII> 0.12
<PER-SHARE-GAIN-APPREC> 2.48
<PER-SHARE-DIVIDEND> (0.12)
<PER-SHARE-DISTRIBUTIONS> 0
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 12.48
<EXPENSE-RATIO> 1.53
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0

</TABLE>

<ARTICLE> 6
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<NAME> BRIAR FUNDS TRUST/THE STALWART FUNDS
<SERIES>
<NUMBER> 2
<NAME> STALWART AGGRESSIVE EQUITY FUND
<PERIOD-TYPE> 11-MOS
<FISCAL-YEAR-END> NOV-30-1995
<PERIOD-END> NOV-30-1995
<INVESTMENTS-AT-COST> 5,801,015
<INVESTMENTS-AT-VALUE> 6,294,044
<RECEIVABLES> 187,687
<ASSETS-OTHER> 31,497
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 6,513,228
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 202,582
<TOTAL-LIABILITIES> 202,582
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 4,882,457
<SHARES-COMMON-STOCK> 512,662
<SHARES-COMMON-PRIOR> 0
<ACCUMULATED-NII-CURRENT> 3,343
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 931,817
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 493,029
<NET-ASSETS> 6,310,646
<DIVIDEND-INCOME> 47,601
<INTEREST-INCOME> 33,794
<OTHER-INCOME> 0
<EXPENSES-NET> 86,919
<NET-INVESTMENT-INCOME> (5,524)
<REALIZED-GAINS-CURRENT> 939,022
<APPREC-INCREASE-CURRENT> 439,029
<NET-CHANGE-FROM-OPS> 1,426,527
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 0
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 719,847
<NUMBER-OF-SHARES-REDEEMED> 209,185
<SHARES-REINVESTED> 0
<NET-CHANGE-IN-ASSETS> 6,290,646
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 0
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 35,311
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 147,404
<AVERAGE-NET-ASSETS> 6,436,801
<PER-SHARE-NAV-BEGIN> 10.00
<PER-SHARE-NII> (0.01)
<PER-SHARE-GAIN-APPREC> 2.32
<PER-SHARE-DIVIDEND> 0
<PER-SHARE-DISTRIBUTIONS> 0
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 12.31
<EXPENSE-RATIO> 1.60
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0

</TABLE>

<ARTICLE> 6
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<SERIES>
<NUMBER> 3
<NAME> STALWART INTERNATIONAL EQUITY FUND
<PERIOD-TYPE> 11-MOS
<FISCAL-YEAR-END> NOV-30-1995
<PERIOD-END> NOV-30-1995
<INVESTMENTS-AT-COST> 3,394,333
<INVESTMENTS-AT-VALUE> 3,669,162
<RECEIVABLES> 28,261
<ASSETS-OTHER> 33,310
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 3,730,733
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 38,292
<TOTAL-LIABILITIES> 38,292
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 3,277,884
<SHARES-COMMON-STOCK> 336,451
<SHARES-COMMON-PRIOR> 0
<ACCUMULATED-NII-CURRENT> 4,094
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 135,704
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 274,759
<NET-ASSETS> 3,692,441
<DIVIDEND-INCOME> 74,529
<INTEREST-INCOME> 19,781
<OTHER-INCOME> 0
<EXPENSES-NET> 64,339
<NET-INVESTMENT-INCOME> 29,971
<REALIZED-GAINS-CURRENT> 121,288
<APPREC-INCREASE-CURRENT> 274,759
<NET-CHANGE-FROM-OPS> 426,018
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 13,123
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 463,166
<NUMBER-OF-SHARES-REDEEMED> 128,715
<SHARES-REINVESTED> 0
<NET-CHANGE-IN-ASSETS> 3,672,441
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 0
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 28,631
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 137,502
<AVERAGE-NET-ASSETS> 3,990,972
<PER-SHARE-NAV-BEGIN> 10.00
<PER-SHARE-NII> 0.09
<PER-SHARE-GAIN-APPREC> 0.92
<PER-SHARE-DIVIDEND> (0.04)
<PER-SHARE-DISTRIBUTIONS> 0
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 10.97
<EXPENSE-RATIO> 1.91
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0

</TABLE>

<ARTICLE> 6
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<SERIES>
<NUMBER> 4
<NAME> STALWART U.S. GOVERNMENT SECURITIES FUND
<PERIOD-TYPE> 11-MOS
<FISCAL-YEAR-END> NOV-30-1995
<PERIOD-END> NOV-30-1995
<INVESTMENTS-AT-COST> 6,582,165
<INVESTMENTS-AT-VALUE> 7,116,354
<RECEIVABLES> 101,094
<ASSETS-OTHER> 31,687
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 7,249,135
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 54,635
<TOTAL-LIABILITIES> 54,635
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 6,429,177
<SHARES-COMMON-STOCK> 656,465
<SHARES-COMMON-PRIOR> 0
<ACCUMULATED-NII-CURRENT> 5,049
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 163,085
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 534,189
<NET-ASSETS> 7,194,500
<DIVIDEND-INCOME> 0
<INTEREST-INCOME> 458,179
<OTHER-INCOME> 0
<EXPENSES-NET> 72,137
<NET-INVESTMENT-INCOME> 386,042
<REALIZED-GAINS-CURRENT> 165,322
<APPREC-INCREASE-CURRENT> 534,189
<NET-CHANGE-FROM-OPS> 1,085,553
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 384,892
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 941,876
<NUMBER-OF-SHARES-REDEEMED> 319,433
<SHARES-REINVESTED> 32,022
<NET-CHANGE-IN-ASSETS> 7,174,500
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 0
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 29,245
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 151,433
<AVERAGE-NET-ASSETS> 7,700,626
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<NAME> STALWART INCOME FUND
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