ICAP FUNDS INC
497, 1998-01-06
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                                      ICAP

                                   Prospectus

                                                
                                                
                                                
                                                  December 31, 1997


                                                  ICAP Funds

                                                  Discretionary
                                                  Equity
                                                  Portfolio

                                                  Equity
                                                  Portfolio

                                                  Select
                                                  Equity
                                                  Portfolio

                                                  Euro Select
                                                  Equity
                                                  Portfolio



               Table of Contents
                                         page

HIGHLIGHTS                                  3

SUMMARY OF PORTFOLIO
EXPENSES                                    5

FINANCIAL HIGHLIGHTS                        7

PRIOR PERFORMANCE OF
PRIVATE ACCOUNTS OF THE ADVISER             9

INVESTMENT OBJECTIVES
AND POLICIES                               11

 DISCRETIONARY EQUITY
 PORTFOLIO                                 11

 EQUITY PORTFOLIO                          12

 SELECT EQUITY PORTFOLIO                   12

 EURO SELECT EQUITY PORTFOLIO              13

INVESTMENT TECHNIQUES
AND RISKS                                  14

INVESTMENT RESTRICTIONS                    18

MANAGEMENT                                 18

HOW TO PURCHASE
SHARES                                     20

HOW TO REDEEM SHARES                       21

EXCHANGE PRIVILEGE                         23

                                         
                                         
                                         page

TAX-SHELTERED
RETIREMENT PLANS                           24

DIVIDENDS, CAPITAL GAIN
DISTRIBUTIONS AND
TAX TREATMENT                              24

DETERMINATION OF
NET ASSET VALUE                            25

SHAREHOLDER REPORTS                        26

FINANCIAL INTERMEDIARIES                   26

ORGANIZATION                               26

ADMINISTRATOR AND
FUND ACCOUNTANT                            27

CUSTODIAN AND
TRANSFER AGENT                             27

COMPARISON OF
INVESTMENT RESULTS                         27

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, and if given or made, such information or
representations may not be relied upon as having been authorized by the Company.
This Prospectus does not constitute an offer to sell securities in any state to
any person to whom it is unlawful to make such offer in such state.

                              
                              
                              
                               December 31, 1997

                                ICAP FUNDS, INC.

                       225 West Wacker Drive, Suite 2400
                            Chicago, Illinois 60606
                                 1-888-221-ICAP
                                (1-888-221-4227)



ICAP FUNDS, INC. is an open-end, management investment company, known as a
mutual fund (the "Company"). The Company is currently comprised of the
following four portfolios, the first two of which are diversified portfolios and
the last two of which are non-diversified portfolios: the ICAP DISCRETIONARY
EQUITY PORTFOLIO (the "Discretionary Equity Portfolio"), the ICAP EQUITY
PORTFOLIO (the "Equity Portfolio"), the ICAP SELECT EQUITY PORTFOLIO (the
"Select Equity Portfolio") and the ICAP EURO SELECT EQUITY PORTFOLIO (the
"Euro Select Portfolio") (collectively referred to as the "Portfolios"). The
Portfolios are 100% "no-load." There are no sales, redemption or 12b-1 fees.

The investment objective of both the Discretionary Equity and Equity Portfolios
is to seek a superior total return with only a moderate degree of risk. This
investment objective is relative to and measured against the Standard & Poor's
500 Stock Index (the "S&P 500"); the Discretionary Equity and Equity
Portfolios each seek to achieve a total return greater than the S&P 500 with an
equal or lesser degree of risk than the S&P 500. Both Portfolios seek to achieve
this investment objective primarily through the capital appreciation of
investments in U.S. dollar-denominated equity securities of companies with
market capitalizations of at least $500 million. The Discretionary Equity and
Equity Portfolios are distinguished in the following manner: the Discretionary
Equity Portfolio has the discretion to invest up to 35% of its total assets and,
for temporary defensive purposes, up to 100% of its total assets, in cash and
short-term fixed income securities, hence the name "Discretionary" Equity
Portfolio, while the Equity Portfolio will not invest in cash or short-term
fixed income securities for investment purposes, but rather intends, under
normal market conditions, to be virtually fully invested at all times.

The investment objective of the Select Equity Portfolio is to seek a superior
total return. This investment objective is relative to and measured against the
S&P 500; the Select Equity Portfolio seeks to achieve a total return greater
than the S&P 500. The Select Equity Portfolio seeks to achieve its investment
objective primarily through the capital appreciation of investments in U.S.
dollar-denominated equity securities of companies with market capitalizations of
at least $500 million. While the Select Equity, Discretionary Equity and Equity
Portfolios are similar in terms of the types of securities in which each
Portfolio may invest, the Select Equity Portfolio will concentrate its
investments in fewer securities and/or companies than the Discretionary Equity
and Equity Portfolios. The Select Equity Portfolio has the discretion to invest
up to 35% of its total assets and, for temporary defensive purposes, up to 100%
of its total assets, in cash and short-term fixed income securities.

The investment objective of the Euro Select Portfolio is to seek a superior
total return with income as a secondary objective. This investment objective is
relative to and measured against the Morgan Stanley Capital International Euro
Index (the "Euro Index"); the Euro Select Portfolio seeks to achieve a total
return greater than the Euro Index. The Euro Select Portfolio seeks to achieve
its investment objective primarily through the capital appreciation of
investments in equity securities, predominantly American Depositary Receipts
("ADRs"), of established European companies with market capitalizations of at
least $1 billion. At any time, the Euro Select Portfolio will be invested in a
relatively limited number of securities and/or companies. The Euro Select
Portfolio has the discretion to invest up to 35% of its total assets and, for
temporary defensive purposes, up to 100% of its total assets, in cash and short-
term fixed income securities.

This Prospectus sets forth concisely the information that you should be aware of
prior to investing in the Company. Please read this Prospectus carefully and
retain it for future reference. Additional information regarding the Company is
included in the Statement of Additional Information dated December 31, 1997,
which has been filed with the Securities and Exchange Commission and is
incorporated in this Prospectus by reference. A copy of the Company's Statement
of Additional Information is available without charge by writing to the Company
at ICAP Funds, Inc., c/o Sunstone Investor Services, LLC, P.O. Box 2160,
Milwaukee, Wisconsin 53201-2160 or by calling 1-888-221-ICAP (1-888-221-4227).

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


                                   HIGHLIGHTS


                             Investment Objectives

GENERAL.  The Company is currently comprised of the following four portfolios,
the first two of which are diversified portfolios and the last two of which are
non-diversified portfolios: the Discretionary Equity Portfolio, the Equity
Portfolio, the Select Equity Portfolio and the Euro Select Portfolio.

DISCRETIONARY EQUITY AND EQUITY PORTFOLIOS.  The investment objective of both
the Discretionary Equity and the Equity Portfolios is to seek a superior total
return with only a moderate degree of risk. This investment objective is
relative to and measured against the S&P 500. Both Portfolios seek to achieve
this investment objective primarily through the capital appreciation of
investments in U.S. dollar-denominated equity securities of companies with
market capitalizations of at least $500 million. The distinction between the two
Portfolios is that the Discretionary Equity Portfolio may invest up to 35% of
its total assets and, for temporary defensive purposes, up to 100% of its total
assets, in cash and short-term fixed income securities, while the Equity
Portfolio intends, under normal market conditions, to be virtually fully
invested at all times.

SELECT EQUITY PORTFOLIO.  The investment objective of the Select Equity
Portfolio is to seek a superior total return. This investment objective is
relative to and measured against the S&P 500. The Select Equity Portfolio seeks
to achieve its investment objective primarily through the capital appreciation
of investments in U.S. dollar-denominated equity securities of companies with
market capitalizations of at least $500 million. At any time, the Select Equity
Portfolio will be invested in a relatively limited number of securities and/or
companies..

EURO SELECT PORTFOLIO.  The investment objective of the Euro Select Portfolio is
to seek a superior total return with income as a secondary objective. The
investment objective of the Euro Select Portfolio is relative to and measured
against the Euro Index. The Euro Select Portfolio seeks to achieve its
investment objective primarily through the capital appreciation of investments
in equity securities, predominantly ADRs, of established European companies with
market capitalizations of at least $1 billion. At any time, the Euro Select
Portfolio will be invested in a relatively limited number of securities and/or
companies.

Each Portfolio's investments are subject to market risk and the value of its
shares will fluctuate with changing market valuations of its portfolio holdings.
See "INVESTMENT OBJECTIVES AND POLICIES" and "INVESTMENT TECHNIQUES AND
RISKS."

                               Investment Adviser

INSTITUTIONAL CAPITAL CORPORATION ("ICAP") is the investment adviser to the
Portfolios. ICAP was organized in 1970 and acts as the investment adviser to
individual and institutional clients. As of November 30, 1997, ICAP had
approximately $10 billion under management.
See "MANAGEMENT."

                           Purchases and Redemptions

Shares of the Portfolios are sold and redeemed at net asset value without the
imposition of any sales or redemption charges. The minimum initial investment
required by each Portfolio is $10,000. The minimum subsequent investment is
$1,000. These minimums may be changed or waived at any time at the discretion of
the Company. See "HOW TO PURCHASE SHARES" and "HOW TO REDEEM SHARES." Shares
in one Portfolio may be exchanged for shares in another Portfolio at their
relative net asset values. See "EXCHANGE PRIVILEGE."

                              
                              Shareholder Services

Questions regarding the Portfolios may be directed to the Company at the address
and telephone number below:

                                ICAP Funds, Inc.
                      c/o Sunstone Investor Services, LLC
                                 P.O. Box 2160
                        Milwaukee, Wisconsin 53201-2160
                                 1-888-221-ICAP
                                (1-888-221-4227)

                         
                         SUMMARY OF PORTFOLIO EXPENSES

The purpose of the following Fee Tables and Example is to assist you in
understanding the various costs and expenses that you will bear directly
(shareholder transaction expenses) or indirectly (annual fund operating
expenses) should you invest in one or more of the Portfolios.

                                   
                                   Fee Tables

                        
                        SHAREHOLDER TRANSACTION EXPENSES

                         
                          DISCRETIONARY               SELECT        EURO
                             EQUITY       EQUITY      EQUITY       SELECT
                            PORTFOLIO   PORTFOLIO    PORTFOLIO   PORTFOLIO
                            ---------   ---------    ---------   ---------

Sales Load Imposed on
  Purchases                   NONE         NONE        NONE         NONE

Sales Load Imposed on
  Reinvested Dividends        NONE         NONE        NONE         NONE

Deferred Sales Load
  Imposed on Redemptions      NONE         NONE        NONE         NONE

Redemption Fees               NONE         NONE        NONE         NONE

Exchange Fees                 NONE         NONE        NONE         NONE


                          
                           ANNUAL OPERATING EXPENSES
 (after waivers and/or reimbursements) (as a percentage of average net assets)

                          
                          DISCRETIONARY               SELECT       EURO
                             EQUITY       EQUITY      EQUITY      SELECT
                            PORTFOLIO   PORTFOLIO    PORTFOLIO   PORTFOLIO
                            ---------   ---------    ---------   ---------

Management Fees               0.80%        0.80%       0.80%       1.00%

12b-1 Fees                     NONE         NONE        NONE        NONE

Other Expenses (net of
  reimbursements)                0%           0%          0%          0%
                              -----        -----       -----       -----

TOTAL OPERATING EXPENSES
  (after waivers and/or
  reimbursements)             0.80%        0.80%       0.80%       1.00%
                              =====        =====       =====       =====



For the year ended December 31, 1996, the Portfolios' investment adviser, ICAP,
voluntarily agreed to waive its management fee and/or reimburse the operating
expenses of the Discretionary Equity and Equity Portfolios to the extent
necessary to ensure that neither Portfolio's total operating expenses exceeded
0.80% of that Portfolio's average net assets. Absent these waivers/
reimbursements, other expenses and total operating expenses for the
Discretionary Equity Portfolio would have been 0.31% and 1.11%, respectively,
and other expenses and total operating expenses for the Equity Portfolio would
have been 0.32% and 1.12%, respectively. ICAP has voluntarily agreed to continue
this waiver/reimbursement policy for the year ending December 31, 1997, and for
an indefinite amount of time beyond that date.

For the year ending December 31, 1998, and for an indefinite period of time
beyond that date, ICAP has also voluntarily agreed to waive its management fee
and/or reimburse the operating expenses of the Select Equity and Euro Select
Portfolios to the extent necessary to ensure that the Select Equity Portfolio's
total operating expenses do not exceed 0.80% of the Portfolio's average net
assets, and the Euro Select Portfolio's total operating expenses do not exceed
1.00% of the Portfolio's average net assets. Absent these waivers/
reimbursements, other expenses and total operating expenses for the Select
Equity Portfolio are estimated to be 0.50% and 1.30%, respectively, for the year
ending December 31, 1998, and other expenses and total operating expenses for
the Euro Select Portfolio are estimated to be 0.51% and 1.51%, respectively, for
the year ending December 31, 1998. For additional information concerning fees
and expenses, see "MANAGEMENT."

There are certain charges associated with certain services offered by the
Portfolios, such as a service fee of $10.00 for redemptions effected via wire
transfer. See "HOW TO REDEEM SHARES." Purchases and redemptions may also be
made through broker/dealers or others who may charge a commission or other
transaction fee for their services.


                                    Example

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


             DISCRETIONARY                     SELECT          EURO
                EQUITY          EQUITY         EQUITY         SELECT
               PORTFOLIO      PORTFOLIO      PORTFOLIO      PORTFOLIO
              ----------      ----------     ----------     ----------

    1 Year       $  8           $  8            $  8           $ 11

    3 Years      $ 26           $ 26            $ 26           $ 33
                                              
    5 Years      $ 46           $ 46            $ 46           $ 57

    10 Years     $102           $102            $102           $126


The Example is based on the total operating expenses specified in the Annual
Operating Expenses table above. The amounts in the Example may increase absent
the waivers and/or reimbursements. PLEASE REMEMBER THAT THE EXAMPLE SHOULD NOT
BE CONSIDERED REPRESENTATIVE OF PAST OR FUTURE EXPENSES AND THAT ACTUAL EXPENSES
MAY BE GREATER OR LESSER THAN THOSE SHOWN. The assumption in the Example of a 5%
annual rate of return is required by regulations of the Securities and Exchange
Commission ("SEC") applicable to all mutual funds. This return is hypothetical
and should not be considered representa tive of the past or future performance
of the Portfolios.
                             
                              FINANCIAL HIGHLIGHTS
                         
                         Discretionary Equity Portfolio

The following Financial Highlights of the Discretionary Equity Portfolio for the
years ended December 31, 1996 and 1995 have been audited by Coopers & Lybrand
L.L.P., independent certified public accountants. Their report is included in
the Portfolios' Annual Report for the year ended December 31, 1996. The Annual
Report is incorporated by reference into the Statement of Additional Information
for the Portfolios. The following Financial Highlights for the six months ended
June 30, 1997 have not been audited. The year-end Financial Highlights should be
read in conjunction with the financial statements and related notes included in
the Annual Report and the Semi-Annual Financial Highlights should be read in
conjunction with the Semi-Annual Report for the six months ended June 30, 1997,
copies of which may be obtained without charge by writing to or calling the
Company at ICAP Funds, Inc., c/o Sunstone Investor Services, LLC, P.O. Box 2160,
Milwaukee, Wisconsin 53201-2160, 1-888-221-ICAP (1-888-221-4227). The
Discretionary Equity Portfolio commenced operations on January 1, 1995. As of
the date hereof, neither the Select Equity nor the Euro Select Portfolio has
commenced operations.

- --------------------------------------------------------------------------------
                                     SIX MONTHS        YEAR           YEAR
(For a share outstanding                ENDED          ENDED          ENDED
throughout the period)              JUNE 30, 1997  DEC. 31,1996   DEC. 31, 1995
- --------------------------------------------------------------------------------

Net asset value, beginning of period   $29.55         $25.42         $20.00

Income from investment operations:
  Net investment income                  0.29           0.36           0.31
  Net realized and unrealized gain
     on investments                      5.83           6.09           6.70
                                       ------         ------         ------
     Total income from investment
       operations                        6.12           6.45           7.01
                                       ------         ------         ------

Less distributions:
  From net investment income            (0.30)         (0.36)         (0.31)
  From net realized gain on
     investments                            -          (1.96)         (1.27)
  In excess of book net realized
     gain on investments                    -              -          (0.01)
                                       ------         ------         ------
     Total distributions                (0.30)         (2.32)         (1.59)
                                       ------         ------         ------

Net asset value, end of period         $35.37         $29.55         $25.42
                                       ======         ======         ======

Total return <F1>                      20.75%         25.55%         35.21%

Supplemental data and ratios:
  Net assets, end of period
     (in thousands)                  $145,438       $110,280        $37,362
  Ratio of expenses to average
     net assets <F2><F3>                0.80%          0.80%          0.80%
  Ratio of net investment income to
     average net assets <F2><F3>        1.79%          1.35%          1.71%
  Portfolio turnover rate <F1>            61%           138%           102%
  Average commission rate paid on
     portfolio investment
     transactions                     $0.0376        $0.0356            N/A

<F1> Not annualized for the six months ended June 30, 1997.

<F2> Net of waivers by ICAP. Without waivers of expenses, the ratio of expenses
     to average net assets for the Discretionary Equity Portfolio would have
     been 1.03%, 1.11% and 1.56%, and the ratio of net investment income to
     average net assets would have been 1.56%, 1.04% and 0.95% for the six
     months ended June 30, 1997 and the years ended December 31, 1996 and
     December 31, 1995, respectively.

<F3> Annualized for the six months ended June 30, 1997.


                              FINANCIAL HIGHLIGHTS
                              
                                Equity Portfolio

The following Financial Highlights of the Equity Portfolio for the years ended
December 31, 1996 and 1995 have been audited by Coopers & Lybrand L.L.P.,
independent certified public accountants. Their report is included in the
Portfolios' Annual Report for the year ended December 31, 1996. The Annual
Report is incorporated by reference into the Statement of Additional Information
for the Portfolios. The following Financial Highlights for the six months ended
June 30, 1997 have not been audited. The year-end Financial Highlights should be
read in conjunction with the financial statements and related notes included in
the Annual Report and the Semi-Annual Financial Highlights should be read in
conjunction with the Semi-Annual Report for the six  months ended June 30, 1997,
copies of which may be obtained without charge by writing to or calling the
Company at ICAP Funds, Inc., c/o Sunstone Investor Services, LLC, P.O. Box 2160,
Milwaukee, Wisconsin 53201-2160, 1-888-221-ICAP (1-888-221-4227). The Equity
Portfolio commenced operations on January 1, 1995. As of the date hereof,
neither the Select Equity nor the Euro Select Portfolio has commenced
operations.

- -------------------------------------------------------------------------------
                                     SIX MONTHS        YEAR           YEAR
(FOR A SHARE OUTSTANDING                ENDED          ENDED          ENDED
THROUGHOUT THE PERIOD)              JUNE 30, 1997  DEC. 31,1996   DEC. 31, 1995
- -------------------------------------------------------------------------------

Net asset value, beginning of period   $31.16         $26.03         $20.00

Income from investment operations:
  Net investment income                  0.23           0.31           0.28
  Net realized and unrealized gain
     on investments                      6.52           6.49           7.45
                                       ------         ------         ------

     Total income from investment
       operations                        6.75           6.80           7.73
                                       ------         ------         ------
Less distributions:
  From net investment income            (0.24)         (0.30)         (0.28)
  From net realized gain on
     investments                            -          (1.37)         (1.41)
  In excess of book net realized
     gain on investments                    -              -          (0.01)
                                       ------         ------         ------

     Total distributions                (0.24)         (1.67)         (1.70)
                                       ------         ------         ------

Net asset value, end of period         $37.67         $31.16         $26.03
                                       ======         ======         ======

Total return <F1>                      21.71%         26.26%         38.85%

Supplemental data and ratios:
  Net assets, end of period
     (in thousands)                  $280,992       $149,125        $46,788
  Ratio of expenses to average
     net assets<F2><F3>                 0.80%          0.80%          0.80%
  Ratio of net investment income to
     average net assets<F2><F3>         1.56%          1.15%          1.49%
  Portfolio turnover rate<F1>             51%           125%           105%
  Average commission rate paid on
     portfolio investment
     transactions                     $0.0370        $0.0365            N/A

<F1> Not annualized for the six months ended June 30, 1997.

<F2> Net of waivers by ICAP. Without waivers of expenses, the ratio of expenses
     to average net assets for the Equity Portfolio would have been 0.97%, 1.12%
     and 1.44%, and the ratio of net investment income to average net assets
     would have been 1.39%, 0.83% and 0.85% for the six months ended June 30,
     1997 and for the years ended December 31, 1996 and December 31, 1995,
     respectively.

<F3> Annualized for the six months ended June 30, 1997.


              PRIOR PERFORMANCE OF PRIVATE ACCOUNTS OF THE ADVISER

The performance information set forth below for the private accounts of the
Adviser has been calculated in accordance with recommended standards of the
Association of Investment Management and Research ("AIMR"), retroactively
applied to all time periods. All returns presented were calculated on a total
return basis and include all dividends and interest, if any, accrued income, if
any, and realized and unrealized gains and losses. Total return is calculated
quarterly in accordance with the "time-weighted" rate of return method
provided for by AIMR standards, accounted for on a trade-date and accrual basis.
Principal additions and withdrawals are weighted in computing the quarterly
returns based on the timing of these transactions. The quarterly returns are
geometrically linked to derive annual total returns.

Since 1970, ICAP has managed separate private accounts (the "Private
Accounts") which pursue substantially the same investment objective, policies
and strategies, and which are managed in the same manner, as the Discretionary
Equity Portfolio, and since 1991, ICAP has managed Private Accounts which pursue
substantially the same investment objective, policies and strategies, and which
are managed in the same manner, as the Equity Portfolio. ICAP believes that it
has produced outstanding investment results over time for its Private Accounts.
The Private Accounts are not subject to the same types of expenses to which the
Discretionary Equity and Equity Portfolios are subject nor to the specific tax
restrictions and investment limitations imposed on the Portfolios by the
Internal Revenue Code of 1986, as amended (the "Code"), and the Investment
Company Act of 1940, as amended (the "1940 Act"), respectively. The following
chart illustrates how the performance of ICAP's Discretionary Equity Composite
(a composite including all of ICAP's discretionary equity Private Accounts) and
its Equity Composite (a composite including all of ICAP's equity Private
Accounts) compares, where applicable, to the average performance of the S&P 500
for the most recent 1-, 3-, 5- and 10-year periods ended September 30, 1997.
Also included in the chart is the performance of the Discretionary Equity and
Equity Portfolios. The performance results of the composites described below
could have been adversely affected if the Private Accounts included in the
composites had been regulated as investment companies under the federal tax and
securities laws.

               
               ICAP's Discretionary Equity and Equity Composites
                 and Discretionary Equity and Equity Portfolios
                       Annualized Performance vs. S&P 500
                     Performance through September 30, 1997
                        
                        Average Annualized Total Return
                        -------------------------------
                        

                  ICAP         Discretionary      ICAP
  Time       Discretionary        Equity         Equity       Equity
 Period     Equity Composite     Portfolio      Composite   Portfolio   S&P 500
 ------     ----------------     ---------      ---------   ---------   -------
  1 year         43.6%             45.2%          46.3%       46.9%      40.4%
 3 years         30.1%               N/A          31.7%         N/A      29.9%
 5 years         22.5%               N/A          24.6%         N/A      20.8%
10 years         16.8%               N/A            N/A         N/A      14.7%

The ICAP composite performance presented on the preceding page reflects the
performance of the Private Accounts included in the Discretionary Equity and
Equity Composites reduced by the annual total operating expenses (before waivers
and/or reimbursements) for the Discretionary Equity and Equity Portfolios,
respectively, as set forth in "SUMMARY OF PORTFOLIO EXPENSES." The performance
of the Discretionary Equity and Equity Portfolios presented above reflects the
performance of each Portfolio reduced by the total operating expenses actually
incurred by each Portfolio for the period indicated. The S&P 500 returns assume
reinvestment of all dividends paid by the stocks included in the index, but do
not include brokerage commissions or other fees an investor would incur by
investing in the portfolio of stocks comprising the index. The Discretionary
Equity and Equity Composites represent ICAP's past performance in managing
private accounts and should not be interpreted as indicative of the past or
future performance of the Discretionary Equity or Equity Portfolios. See
"FINANCIAL HIGHLIGHTS."

In addition to the Private Accounts, since January 1997, ICAP has funded and
managed a single separate account (the "Account") which pursues substantially
the same investment objective, policies and strategies, and employs the same
management style, as that of the Euro Select Portfolio. Like the Private
Accounts, the Account is not subject to the same types of expenses to which the
Euro Select Portfolio is subject nor to the specific tax restrictions and
investment limitations imposed on the Portfolio by the Code and the 1940 Act,
respectively. The following chart illustrates how the performance of the Account
compares to the average performance of the Euro Index for each of the three
quarters ended September 30, 1997 and for the period from January 1, 1997 to
September 30, 1997. The performance results of the Account described below could
have been adversely affected if the Account had been regulated as an investment
company under the federal tax and securities laws.

                   
                   ICAP's Account Performance vs. Euro Index
                     Performance through September 30, 1997


                              Total Return
                             --------------

              Time Period         ICAP Account         Euro Index
              -----------         ------------         ----------
              1st Quarter             6.6%                4.9%
              2nd Quarter            13.6%                8.9%
              3rd Quarter            10.4%                8.3%
         1/1/97 - 9/30/97            33.7%               23.7%

The ICAP performance presented above reflects the performance of the Account
reduced by the estimated annual total operating expenses (before waivers and/or
reimbursements) for the Euro Select Portfolio as set forth in "SUMMARY OF
PORTFOLIO EXPENSES." The Euro Index returns assume reinvestment of all
dividends paid by the stocks included in the index net of foreign withholding
taxes, but do not include brokerage commissions or other fees an investor would
incur by investing in the portfolio of stocks comprising the index. The Account
performance represents ICAP's past performance in managing a private account and
should not be interpreted as indicative of future performance of the Euro Select
Portfolio.
                       
                       INVESTMENT OBJECTIVES AND POLICIES

The initial step in the investment process focuses on top-down research. ICAP
develops an economic framework (including an interest rate, inflation and
business cycle outlook) and analyzes strategic economic and/or industry themes
to identify appropriate investments.

The key to the investment process is bottom-up stock selection and the
identification of a catalyst. A variety of proprietary research techniques and
computer models are used to search for issuers possessing the best relative
value based on proprietary price/earnings projections and analysis of earnings
momentum. Furthermore, a clear catalyst, either stock-specific, industry or
economic, which ICAP believes will trigger significant price appreciation in a
definable time period must exist. In order to enhance its internal research,
ICAP also utilizes a wide variety of external sources for investment information
including recognized strategists, economists, technical and fundamental
analysts, corporate executives and industry sources.

For each investment, ICAP establishes an upside price target and a downside risk
potential. This strategy allows for continuous monitoring of fundamental
conditions and stock price performance. Although ICAP typically expects the
investment potential of each investment to be realized over a nine to fifteen
month time period, it is not unusual for equities to be held for a longer period
if the potential is justified. Investments that underperform the market are
reviewed intensively. If the risk/reward of a particular investment becomes
unattractive or the reasons for owning the security no longer appear valid, the
investment is typically sold expeditiously to avoid future underperformance.

The investment objectives presented below may not be changed without shareholder
approval.  Since all investments are subject to inherent market risks, there is
no assurance that these objectives will be realized. Except for each Portfolio's
investment objective and the investment restrictions enumerated in the Company's
Statement of Additional Information, a Portfolio's investment policies may be
changed without a vote of the Portfolio's shareholders.


                         DISCRETIONARY EQUITY PORTFOLIO

                              Investment Objective

The Discretionary Equity Portfolio's investment objective is to seek a superior
total return with only a moderate degree of risk. This investment objective is
relative to and measured against the S&P 500; the Portfolio seeks to achieve a
total return greater than the S&P 500 with an equal or lesser degree of risk
than the S&P 500. The distinction between the Discretionary Equity Portfolio and
the Equity Portfolio is that the Discretionary Equity Portfolio may invest up to
35% of its total assets and, for temporary defensive purposes, up to 100% of its
total assets, in cash and short-term fixed income securities while the Equity
Portfolio intends to be virtually fully invested in equity securities at all
times.

                              Investment Policies

The Discretionary Equity Portfolio will seek, under normal market conditions, to
achieve its investment objective by investing its assets primarily in U.S.
dollar-denominated equity securities of companies with market capitalizations of
at least $500 million, which include, but are not limited to, common stocks;
preferred stocks; warrants to purchase common or preferred stocks; ADRs; and
securities convertible into common or preferred stocks, such as convertible
bonds and debentures rated Baa or higher by Moody's Investors Service
("Moody's"), BBB or higher by Standard & Poor's ("S&P"), Duff & Phelps, Inc.
("D&P") or Fitch Investors Service, Inc. ("Fitch"), or securities of
comparable quality as determined by ICAP (i.e., investment-grade debt
securities). Under normal market conditions, the Discretionary Equity Portfolio
will invest at least 65% of the value of its total assets in equity securities.
In addition, the Discretionary Equity Portfolio may invest up to 35% of its
total assets in cash and short-term fixed income securities for any purpose,
including pending investment or reinvestment, and may invest up to 100% of its
total assets in such instruments as a temporary defensive measure.


                                EQUITY PORTFOLIO

                              Investment Objective

The Equity Portfolio's investment objective is to seek a superior total return
with only a moderate degree of risk. This investment objective is relative to
and measured against the S&P 500; the Portfolio seeks to achieve a total return
greater than the S&P 500 with an equal or lesser degree of risk than the S&P
500. The Equity Portfolio intends to be virtually fully invested at all times
with only nominal cash or short-term fixed income positions held at any time. If
cash or short-term fixed income securities are held, however, the purpose of
such holdings would be to meet anticipated redemption requests, pay expenses and
pending investment, which, in any case, generally would not exceed 5% of the
Equity Portfolio's total assets. The Equity Portfolio may, however, temporarily
exceed this 5% limitation, but only in circumstances pending investment and only
for short periods of time. Because the Equity Portfolio will hold only nominal
cash and short-term fixed income positions, it may be subject to greater risk in
times of market volatility than the other Portfolios.

                              Investment Policies

The Equity Portfolio will seek to achieve its investment objective by investing
its assets primarily in U.S. dollar-denominated equity securities of companies
with market capitalizations of at least $500 million, which include, but are not
limited to, common stocks; preferred stocks; warrants to purchase common stocks
or preferred stocks; ADRs; and securities convertible into common or preferred
stocks, such as convertible bonds and debentures which are rated investment
grade. Under normal market conditions, at least 65% of the value of the Equity
Portfolio's total assets will be invested in such equity securities. The Equity
Portfolio will only hold cash or short-term fixed income securities to meet
anticipated redemption requests, pay expenses and pending investment. As a
result, the Equity Portfolio's investment in such securities generally will not
exceed 5% of its total assets.


                            SELECT EQUITY PORTFOLIO

                              Investment Objective

The Select Equity Portfolio's investment objective is to seek a superior total
return. This investment objective is relative to and measured against the S&P
500; the Portfolio seeks to achieve a total return greater than the S&P 500.
Under normal market conditions, the Select Equity Portfolio will invest at least
65% of its total assets in U.S. dollar-denominated equity securities of
companies with market capitalizations of $500 million or more. At any time, the
Select Equity Portfolio will be invested in a relatively limited number of
securities and/or companies.

                              Investment Policies

The Select Equity Portfolio will seek to achieve its investment objective by
investing its assets in U.S. dollar-denominated equity securities of at least 15
companies with market capitalizations of $500 million or more. These securities
include, but are not limited to, commons stocks; preferred stocks; warrants to
purchase common or preferred stocks; ADRs; and securities convertible into
common or preferred stocks, such as convertible bonds and debentures which are
rated investment grade. Under normal market conditions, the Select Equity
Portfolio will invest at least 65% of its total assets in such securities. In
addition, the Select Equity Portfolio may invest up to 35% of its total assets
in cash and short-term fixed income securities for any purpose, including
pending investment or reinvestment, and may invest up to 100% of its total
assets in such instruments as a temporary defensive measure.


                             EURO SELECT PORTFOLIO

                              Investment Objective

The Euro Select Portfolio's investment objective is to seek a superior total
return with income as a secondary objective. This investment objective is
relative to and measured against the Euro Index; the Euro Select Portfolio seeks
to achieve a total return greater than the Euro Index. Under normal market
conditions, the Euro Select Portfolio will invest at least 65% of its total
assets in equity securities, predominately ADRs, of established European
companies with market capitalizations of $1 billion or more. At any time, the
Euro Select Portfolio will be invested in a relatively limited number of
securities and/or companies.

                              Investment Policies

The Euro Select Portfolio will seek to achieve its investment objective by
investing its assets in the equity securities of at least 15 companies which
generally pay dividends and which have market capitalizations of $1 billion or
more. These securities include, but are not limited to, common stocks; preferred
stocks; warrants to purchase common or preferred stocks; ADRs; and securities
convertible into common or preferred stocks, such as convertible bonds and
debentures which are rated investment grade. Under normal market conditions, the
Euro Select Portfolio will invest at least 65% of its total assets in such
securities. In addition, the Euro Select Portfolio may invest up to 35% of its
total assets in cash and short-term fixed income securities for any purpose,
including pending investment or reinvestment, and may invest up to 100% of its
total assets in such instruments as a temporary defensive measure.

                        INVESTMENT TECHNIQUES AND RISKS

None of the Portfolios will invest more than 5% of their net assets in any one
of the following types of investments: investment-grade debt securities; non-
investment grade debt securities (commonly referred to as "junk bonds");
illiquid securities; and transactions in short sales against the box.

                       Short-Term Fixed Income Securities

The Discretionary Equity, Select Equity and Euro Select Portfolios may invest up
to 35% of their respective total assets in cash and short-term fixed income
securities, while the Equity Portfolio may generally not invest more than 5% of
its total assets in such instruments. In addition, when ICAP believes that
market conditions warrant, the Discretionary Equity, Select Equity and Euro
Select Portfolios may invest up to 100% of their respective total assets in such
instruments for temporary defensive purposes. Short-term fixed income securities
must be rated at least A or higher by S&P, Moody's or Fitch or A- or higher by
D&P or determined by ICAP to be of comparable quality, and include, without
limitation, the following securities, each of which has a stated maturity of one
year or less from the date of purchase unless otherwise indicated: U.S.
government securities, including bills, notes and bonds, differing as to
maturity and rate of interest, which are either issued or guaranteed by the U.S.
Treasury or U.S. governmental agencies or instrumentalities; certificates of
deposit issued against funds deposited in a U.S. or foreign bank and its
subsidiaries and branches, or a U.S. savings and loan association; bank time
deposits, which are monies kept on deposit with U.S. and foreign banks and their
subsidiaries and branches, or U.S. savings and loan associations for a stated
period of time at a fixed rate of interest; bankers' acceptances which are
short-term credit instruments used to finance commercial transactions;
commercial paper and commercial paper master notes (which are demand instruments
without a fixed maturity bearing interest at rates which are fixed to known
lending rates and automatically adjusted when such lending rates change) rated
A-1 or better by S&P, Prime-1 or better by Moody's, Duff 2 or higher by D&P, or
Fitch 2 or higher by Fitch; and repurchase agreements entered into only with
respect to obligations of the U.S. government, its agencies or
instrumentalities. Repurchase agreements could involve certain risks in the
event of the default or insolvency of the other party to the agreement,
including possible delays or restrictions upon a Portfolio's ability to dispose
of the underlying securities.

                             When-Issued Securities

Each Portfolio may invest without limitation in securities purchased on a when-
issued or delayed delivery basis ("when-issued securities"). Although the
payment and terms of these securities are established at the time the purchaser
enters into the commitment, these securities may be delivered and paid for at a
future date, generally within 45 days. Purchasing when-issued securities allows
a Portfolio to lock in a fixed price on a security it intends to purchase. Each
Portfolio will segregate and maintain cash; or other liquid assets in an amount
at least equal to the amount of outstand ing commitments for when-issued
securities at all times. Such securities involve a risk of loss if the value of
the security to be purchased declines prior to the settlement date.

                                    Warrants

Each Portfolio may invest without limitation in warrants. Investing in warrants
is purely speculative in that they have no voting rights, pay no dividends and
have no rights with respect to the assets of the corporation issuing them.
Warrants basically are options to purchase equity securities at a specific price
for a specific period of time. They do not represent ownership of the securities
but only the right to buy them. Warrants are issued by the issuer of the
security, which may be purchased on their exercise. The prices of warrants do
not necessarily parallel the prices of the underlying securities.

                          ADRs and Foreign Securities
                          
Each Portfolio may invest without limitation in ADRs and other foreign
instruments denominated in U.S. dollars. ADRs are securities, typically issued
by a U.S. financial institution (a "depositary"), which evidence ownership
interests in a security or pool of securities issued by a foreign company which
have been deposited with the depositary. ADRs are denominated in U.S. dollars
and trade in the U.S. securities markets. ADRs may be "sponsored" or
"unsponsored." Sponsored ADRs are established jointly by a depositary and a
foreign company, whereas unsponsored ADRs may be established by a depositary
without participation by the underlying foreign company. Holders of unsponsored
ADRs generally bear all the costs associated with establishing the unsponsored
ADR. The depositary of an unsponsored ADR is under no obligation to distribute
shareholder communications, including financial statements, received from the
foreign company or to pass through to the holders of the unsponsored ADR voting
rights with respect to the deposited securities or pool of securities. While the
Portfolios may invest without limitation in sponsored or unsponsored ADRs, the
ADRs purchased by the Portfolios will generally be sponsored. In addition to
ADRs, the Euro Select Portfolio may invest directly and without limitation in
foreign securities.

Investments in securities of foreign issuers involve risks which are in addition
to the usual risks inherent in domestic investments. An investment in ADRs is
subject to some of the same risks as direct investments in foreign securities.
In many countries there is less publicly available information about issuers
than is available in the reports and ratings published about companies in the
U.S.  Additionally, foreign companies are not subject to uniform accounting,
auditing and financial reporting standards. Other risks inherent in foreign
investment include expropriation; confiscatory taxation; withholding taxes on
dividends and interest; less extensive regulation of foreign brokers, securities
markets and issuers; costs incurred in conversions between currencies; the
illiquidity and volatility of foreign securities markets; the possibility of
delays in settlement in foreign securities markets; limitations on the use or
transfer of assets (including suspension of the ability to transfer currency
from a given country); the difficulty of enforcing obligations in other
countries; diplomatic developments; and political or social instability. Foreign
economies may differ favorably or unfavorably from the U.S. economy in various
respects, and many foreign securities are less liquid and their prices are more
volatile than comparable U.S. securities. From time to time, foreign securities
may be difficult to liquidate rapidly without adverse price effects. Certain
costs attributable to foreign investing, such as custody charges and brokerage
costs, are higher than those attributable to domestic investing.

                        Options and Futures Transactions

Each Portfolio may engage in options and futures transactions which are
sometimes referred to as "derivative" transactions. A Portfolio's options and
futures transactions may include instruments such as stock index options and
futures contracts. Such transactions may be used for several reasons, including
hedging unrealized portfolio gains. The Commodity Futures Trading Commission
(the "CFTC") regulates the trading of futures and options on futures
transactions. The Portfolios will only engage in futures and options on futures
transactions which must, pursuant to regulations promulgated by the CFTC,
constitute bona fide hedging or other permissible risk management transactions
and will not enter into such transactions if the sum of the initial margin
deposits and premiums paid for unexpired options exceeds 5% of a Portfolio's net
assets. In addition, with respect to both its options and futures (including
options on futures) transactions, no Portfolio will enter into any such
transaction if more than 30% of a Portfolio's net assets would be committed to
such instruments. A Portfolio may hold an options or futures position until its
expiration, or it can close out such a position before then at current value if
a liquid secondary market is available. If a Portfolio cannot close out a
position, it may suffer a loss apart from any loss or gain experienced at the
time the Portfolio decided to close the position. When required by guidelines of
the SEC or the CFTC, a Portfolio will set aside permissible liquid assets in a
segregated account to secure its potential obligations under its options or
futures positions.

The use of derivative instruments, such as options and futures, involves risks
and special considerations which include, among others, the following:

                                Correlation Risk

When a derivative transaction is used to completely hedge another position,
changes in the market value of the combined position (the derivative instrument
plus the position being hedged) can result from an imperfect correlation between
the price movements of the two instruments. With a perfect hedge, the value of
the combined position remains unchanged for any change in the price of the
underlying asset. With an imperfect hedge, the value of the derivative
instrument and its hedge are not perfectly correlated. Correlation risk is the
risk that there might be imperfect correlation, or even no correlation, between
price movements of a derivative instrument and price movements of investments
being hedged.

                                 Liquidity Risk

Derivatives are also subject to liquidity risk. Liquidity risk is the risk that
a derivative instrument cannot be sold, closed out or replaced quickly at or
very close to its fundamental value. Generally, exchange-traded contracts are
very liquid because the exchange clearinghouse is the counterparty of every
contract. Over-the-counter transactions are less liquid than exchange-traded
derivatives since they often can only be closed out with the other party to the
transaction.

In addition to the foregoing risks, there is the risk of potentially unlimited
losses that may result from investing in certain derivatives. For additional
information, please see the Statement of Additional Information.

                     Foreign Currency Hedging Transactions
                     
The Euro Select Portfolio may enter into forward foreign currency exchange
contracts ("forward contracts") and foreign currency futures contracts and
options thereon. See "OPTIONS AND FUTURES TRANSACTIONS," above. Forward
contracts provide for the purchase, sale or exchange of an amount of a specified
foreign currency at a future date. The Euro Select Portfolio will enter into
forward contracts for hedging purposes only; that is, only to protect against
the effects of fluctuating rates of currency exchange and exchange control
regulations between trade and settlement dates, dividend declaration and
distribution dates and purchase and sale dates. A foreign currency futures
contract is a standardized contract for the future delivery of a specified
amount of a foreign currency at a future date at a price set at the time of the
contract. Foreign currency futures contracts and options thereon traded in the
U.S. are traded on regulated exchanges. Parties to a futures contract must make
"margin" deposits to secure performance of the contract, which generally range
from 2% to 5% of the contract price, and may be required to make "variation"
margin deposits as the value of the futures contract fluctuates. The Euro Select
Portfolio will enter into foreign currency futures and options transactions for
hedging and other permissible risk management purposes only and may segregate
assets to cover its futures contracts obligations.

At the maturity of a forward or futures contract, the Euro Select Portfolio may
either accept or make delivery of the currency specified in the contract or,
prior to maturity, enter into a closing purchase transaction involving the
purchase or sale of an offsetting contract. Closing purchase transactions with
respect to forward contracts are usually effected with the currency trader who
is a party to the original forward contract. Closing purchase transactions with
respect to futures contracts are effected on an exchange. The Euro Select
Portfolio will only enter into such a forward or futures contract if it is
expected that there will be a liquid market in which to close out such contract.
There can, however, be no assurance that such a liquid market will exist in
which to close a forward or futures contract, in which case the Euro Select
Portfolio may suffer a loss.

The Euro Select Portfolio may attempt to accomplish objectives similar to those
described above with respect to forward and futures contracts for currency by
means of purchasing put or call options on foreign currencies on exchanges. A
put option gives the Portfolio the right to sell a currency at the exercise
price until the expiration of the option. A call option gives the Portfolio the
right to purchase a currency at the exercise price until the expiration of the
option. The Euro Select Portfolio will not enter into foreign currency forwards,
futures or related options on futures contracts if, along with the Portfolio's
investments in other options, more than 30% of its net assets would be committed
to such instruments.

                    Non-Diversification of the Select Equity
                           and Euro Select Portfolios

The Select Equity and Euro Select Portfolios are "non-diversified" and, as
such, are permitted to invest their respective assets in a more limited number
of issuers than other investment companies. Under the Code, however, for income
tax purposes, neither Portfolio may (i) invest more than 25% of its total assets
in the securities of any one company or in the securities of any two or more
companies controlled by the Portfolio which, pursuant to regulations under the
Code, may be deemed to be engaged in the same, similar or related trades or
businesses, and (ii) with respect to 50% of its total assets, invest more than
5% of its total assets in the securities of any one company or own more than 10%
of the outstanding voting securities of a single company. Thus, as a "non-
diversified" fund, each Portfolio may invest (i) up to 50% of its total assets
in the securities of as few as two companies, up to 25% each, so long as the
Portfolio does not control the two companies and the two companies are engaged
in different businesses, and (ii) up to 50% of its total assets in the
securities of as few as ten companies, up to 5% each, so long as the Portfolio
does not own in excess of 10% of any company's outstanding voting stock. This
practice involves an increased risk of loss to the Select Equity and Euro Select
Portfolios if the market value of a security should decline or its issuer were
otherwise unable to meet its obligations.

                               Portfolio Turnover

The Discretionary Equity and Equity Portfolios' historical portfolio turnover
rate is listed under "FINANCIAL HIGHLIGHTS." Under normal market conditions,
each of these Portfolios anticipate that its portfolio turnover rate will
generally not exceed 150% and is expected to be between 100% and 125%. The
Select Equity and Euro Select Portfolios anticipate that their respective
portfolio turnover rates will generally not exceed 200% and are expected to be
between 100% and 150%. A turnover rate of 100% would occur, for example, if all
of the securities held by a Portfolio were replaced within one year. In the
event a Portfolio has a turnover rate of 100% or more in any year, it would
result in the payment by the Portfolio of increased brokerage costs and could
result in the payment by shareholders of increased taxes on realized investment
gains. See "DIVIDENDS, CAPITAL GAIN DISTRIBUTIONS AND TAX TREATMENT."


                            INVESTMENT RESTRICTIONS

The Company has adopted several restrictions on the investments and other
activities of the Portfolios that may not be changed without shareholder
approval. For example, no Portfolio may:

(1) Borrow money, except that the Portfolio may (i) borrow money from banks for
temporary or emergency purposes (but not for leverage or the purchase of
investments) and (ii) make other investments or engage in other transactions
permissible under the 1940 Act which may involve a borrowing, provided that the
combination of (i) and (ii) shall not exceed 33 1/3% of the value of the
Portfolio's total assets (including the amount borrowed), less the Portfolio's
liabilities (other than borrowings); or

(2) Act as an underwriter of another issuer's securities, except to the extent
that the Portfolio may be deemed to be an underwriter within the meaning of the
Securities Act of 1933, as amended, in connection with the purchase and sale of
portfolio securities.

In addition, since the Discretionary Equity and Equity Portfolios are
"diversified," neither Portfolio may, with respect to 75% of its total assets,
purchase the securities of any issuer (except securities issued or guaranteed by
the U.S. government or any agency or instrumentality thereof) if, as a result,
(i) more than 5% of the Portfolio's total assets would be invested in securities
of that issuer or (ii) the Portfolio would hold more than 10% of the outstanding
voting securities of that issuer.

For additional investment restrictions, see the Company's Statement of
Additional Information.


                                   MANAGEMENT

Under the laws of the State of Maryland, the Board of Directors is responsible
for managing the Company's business and affairs. The Company has entered into an
investment advisory agreement with ICAP dated as of December 30, 1994, as
amended (the "Advisory Agreement"), pursuant to which ICAP manages the
investments and business affairs of each of the Portfolios, subject to the
supervision of the Company's Board of Directors. The Board of Directors also
oversees duties required by applicable state and federal law.

ICAP, an independent investment advisory firm, was founded in 1970 and is
located at 225 West Wacker Drive, Suite 2400, Chicago, Illinois 60606. With
respect to the Advisory Agreement as it relates to the Discretionary Equity and
Equity Portfolios, each Portfolio compensates ICAP for its investment advisory
services at the annual rate of 0.80% of the Portfolio's average net assets. For
the year ended December 31, 1996, ICAP voluntarily agreed to waive its
management fee and/or reimburse each Portfolio's operating expenses to the
extent necessary to ensure that neither Portfolio's total operating expenses
exceeded 0.80% of the Portfolio's average net assets. ICAP has voluntarily
agreed to continue this waiver/reimbursement policy for the year ending December
31, 1997 and for an indefinite amount of time beyond that date. Any such waiver
or reimbursement will have the effect of lowering the overall expense ratio for
the Portfolio and increasing the Portfolio's overall return to investors for the
time any such amounts were waived and/or reimbursed. For the year ended December
31, 1996, after waivers and reimbursements, these expenses totaled 0.80% of each
Portfolio's average net assets.

With respect to the Advisory Agreement as it relates to the Select Equity and
Euro Select Portfolios, the Select Equity Portfolio compensates ICAP for its
investment advisory services at the annual rate of 0.80% of the Portfolio's
average net assets, while the Euro Select Portfolio compensates ICAP at the
annual rate of 1.00% of the Portfolio's average net assets. For the year ending
December 31, 1998 and for an indefinite amount of time beyond that date, ICAP
has voluntarily agreed to waive its management fee and/or reimburse each
Portfolio's operating expenses to the extent necessary to ensure that the Select
Equity Portfolio's total operating expenses do not exceed an annual rate of
0.80% of the Portfolio's average net assets, and the Euro Select Portfolio's
total operating expenses do not exceed an annual rate of 1.00% of the
Portfolio's average net assets.

The investment decisions for each Portfolio are made through a team approach,
with all of the ICAP investment professionals contributing to the process. Each
of the officers and other investment professionals of ICAP has developed an
expertise in at least one functional investment area, including equity research,
strategy, fixed income analysis, quantitative research, technical research and
trading. A key element in the decision-making process is a formal investment
committee meeting generally held several times each week and attended by all the
investment professionals. At this meeting, a comprehensive review of ICAP's
investment position is undertaken. Pertinent information from outside sources is
shared and incorporated into the investment outlook. The investment strategy,
each asset sector and each individual security holding are reviewed to verify
their continued appropriateness. Investment recommendations are presented to the
committee for decisions.

ICAP provides continuous advice and recommendations concerning each Portfolio's
investments and is responsible for selecting the broker/dealers who execute the
portfolio transactions. In executing such transactions, ICAP seeks to obtain the
best net results for the Portfolios. ICAP provides office space for the Company
and pays the salaries, fees and expenses of all officers and directors of the
Company who are interested persons of ICAP. ICAP also serves as investment
adviser to pension and profit-sharing plans, and other institutional and private
investors. As of November 30, 1997, ICAP had approximately $10 billion under
management. Mr. Robert H. Lyon, President of ICAP, owns shares representing 51%
of the voting rights of ICAP, which constitutes a controlling interest.


                             HOW TO PURCHASE SHARES

Shares of the Portfolios are offered and sold on a continuous basis at the next
offering price calculated after receipt of the purchase order by the Portfolio.
This price is the net asset value of the Portfolio and is determined as of the
close of trading (generally 4:00 p.m., Eastern Time, or the close of
the New York Stock Exchange (the "NYSE") if different) on each day the NYSE is
open. See "DETERMINATION OF NET ASSET VALUE." The price at which your
purchase will be effected is based on the Portfolio's net asset value next
determined after the Portfolio receives your request in proper form. A
confirmation indicating the details of the transaction will be sent to you
promptly. Shares are credited to your account, but certificates are not issued.
However, you will have full shareholder rights.

The minimum initial investment required by each Portfolio is $10,000. Subsequent
investments may be made by mail or wire with a minimum subsequent investment of
$1,000. The Company reserves the right to change or waive these minimums at any
time. Shareholders will be given at least 30 days' notice of any increase in the
minimum dollar amount of purchases.

Payment may be delayed for up to seven business days on redemption requests for
recent purchases made by check in order to ensure that the check has cleared.
This is a security precaution only and does not affect your investment.

                      Initial Investment - Minimum $10,000

You may purchase shares of a Portfolio by completing a Purchase Application
(which can be obtained by calling 1-888-221-ICAP (1-888-221-4227)) and mailing
it along with a check or money order payable to "ICAP Funds" to: ICAP Funds,
Inc., c/o Sunstone Investor Services, LLC (the "Transfer Agent"), P.O. Box
2160, Milwaukee, Wisconsin 53201-2160. For overnight deliveries, please use 207
East Buffalo Street, Suite 315, Milwaukee, Wisconsin 53202-5712. Pur chases must
be made in U.S. dollars and all checks must be drawn on a U.S. bank. Cash,
credit cards, third party checks and credit card checks will not be accepted. If
your check does not clear, you will be charged a $23 service fee. You will also
be responsible for any losses suffered by the Portfolio as a result. All
applications to purchase shares of a Portfolio are subject to acceptance by the
Company and are not binding until so accepted. The Company reserves the right to
decline to accept a purchase order application in whole or in part.

Alternatively, you may place an order to purchase shares of a Portfolio through
a broker/dealer. Broker/dealers may charge a transaction fee for placing orders
to purchase Portfolio shares. It is the responsibility of the broker/dealer to
place the order with the appropriate Portfolio on a timely basis.

In addition, you may purchase shares of a Portfolio by wire. To purchase shares
by wire transfer, please follow the wire instructions listed on the next page.

                    Subsequent Investments - Minimum $1,000
                    
Additions to your account in amounts of $1,000 or more may be made by mail or by
wire. When making an additional purchase by mail, enclose a check payable to
"ICAP Funds" along with the additional investment form provided on the lower
portion of your account statement and send both the check and the form to ICAP
Funds, Inc., c/o Sunstone Investor Services, LLC, P.O. Box 2160, Milwaukee,
Wisconsin 53201-2160. For overnight deliveries, please use 207 East Buffalo
Street, Suite 315, Milwaukee, Wisconsin 53202-5712. To make an additional
purchase by wire, please follow the wire instructions listed below.

                               Wire Instructions

To establish a new account by wire transfer, please call the Transfer Agent at
1-888-221-ICAP (1-888-221-4227). The Transfer Agent will assign an account 
number to you at that time.

Initial and subsequent investments should be wired through the Federal Reserve
System as follows:

          UMB Bank, n.a.
          ABA Number 101000695
          For credit to ICAP Funds, Inc.
          Account Number 987-0609665
          For further credit to ICAP Funds, Inc.
          (investor account number)
          (name or account registration)
          (Social Security or Taxpayer Identification Number)
          (identify which Portfolio to purchase)

Wired funds are considered received and accepted on the day they are deposited
in the Portfolio's account if they reach the account by the Portfolio's cut-off
time for purchases and all required information is provided in the wire
instructions. The Company is not responsible for the consequences of delays
resulting from the banking or Federal Reserve wire system.

                           Automatic Investment Plan

The Company offers an Automatic Investment Plan (the "AIP") whereby you may
automatically make purchases of Portfolio shares on a regular, convenient basis
($250 minimum per transaction). A $5,000 minimum initial investment must be met
before the AIP may be established. In addition, the Company requires 10 business
days after receipt of your request to initiate the AIP to verify your account
information. Under the AIP, your designated bank or other financial institution
debits a preauthorized amount in your account each month and applies the amount
to the purchase of Portfolio shares. No service fee is currently charged by the
Company for participating in the AIP; however, a $23 fee will be imposed by the
Transfer Agent if sufficient funds are not available in your account at the time
of the automatic transaction. Applications to establish the AIP are available
from the Transfer Agent. Investors who wish to make a change in investments made
through the AIP may do so by calling 1-888-221-ICAP (1-888-221-4227).


                              HOW TO REDEEM SHARES

You may request redemption of part or all of your Portfolio shares at any time.
The price you receive will be the net asset value next determined after the
Portfolio receives your request in proper form. Once your redemption request is
received in proper form, the Portfolio normally will mail or wire your
redemption proceeds the next business day and, in any event, no later than seven
business days after receipt of a redemption request. In addition, payment may be
delayed for up to seven business days on redemption requests for recent
purchases made by check in order to ensure that the check has cleared. In
addition to the redemption procedures described below, redemptions may also be
made through broker/dealers who may charge a commission or other transaction
fee.
                               Written Redemption

You may redeem your Portfolio shares by mailing a written, unconditional request
to:  ICAP Funds, Inc., c/o Sunstone Investor Services, LLC, P.O. Box 2160,
Milwaukee, Wisconsin 53201-2160. For redemption requests sent via overnight
delivery, please use 207 East Buffalo Street, Suite 315, Milwaukee, Wisconsin
53202-5712. If your redemption request is inadvertently sent to ICAP, the
investment adviser to the Portfolios, it will be forwarded to Sunstone Investor
Services, LLC, but the effective date of redemption will be delayed until the
request is received by Sunstone Investor Services, LLC. The request must: (i) be
signed exactly as the shares are registered, including the signature of each
owner and (ii) specify the number of Portfolio shares or dollar amount to be
redeemed. Additional documentation may be requested from corporations,
executors, administrators, trustees, guardians, agents or attorneys-in-fact. In
case you have any questions concerning the nature of such documentation, the
Transfer Agent should be contacted at 1-888-221-ICAP (1-888-221-4227).
Redemption proceeds may be wired to a commercial bank authorized on your account
application. However, you will be charged a $10.00 service fee for such wire
redemptions.

                              Telephone Redemption

You may also redeem your Portfolio shares via telephone by simply calling the
Transfer Agent at 1-888-221-ICAP (1-888-221-4227). You may redeem between $500
and $50,000 per account per day by telephone. You must make your telephone
redemption request by 3:00 p.m., Central Time. If you did not authorize
telephone redemptions in your original Purchase Application, you may do so by
contacting the Transfer Agent and requesting the relevant documentation
necessary to authorize such transactions; a signature guarantee will be required
at that time. Proceeds from telephone redemptions will be mailed or wired only
to your address or bank of record. You should realize that in using the
telephone redemption service, you may be giving up a measure of security that
you may have had if you redeemed your Portfolio shares in writing. Neither the
Company nor its agents will be liable for following instructions communicated by
telephone that they reasonably believe to be genuine. Reasonable procedures will
be employed on behalf of each Portfolio to confirm that instructions
communicated by telephone are genuine. Such procedures may include providing
written confirmation of telephone transactions, tape recording telephone
instructions or requiring specific personal information prior to acting upon
telephone instructions.


                           Systematic Withdrawal Plan

You may set up automatic withdrawals from your Portfolio account at regular
intervals. To begin distributions, you must have an initial balance of $10,000
in your account and withdraw at least $1,000 per payment. To establish the
Systematic Withdrawal Plan ("SWP"), you must complete a SWP Application and
return it to ICAP Funds, Inc., c/o Sunstone Investor Services, LLC, P.O. Box
2160, Milwaukee, Wisconsin 53201-2160. For overnight delivery, please use 207
East Buffalo Street, Suite 315, Milwaukee, Wisconsin 53202-5712. Redemptions
will take place on the 5th and/or 20th day of the month (or the following
business day), as indicated on your SWP Application. Depending upon the size of
the account and the withdrawals requested (and fluctuations in the net asset
value of the shares redeemed), redemptions for the purpose of satisfying
such withdrawals may reduce or even exhaust your account. If the amount
remaining in your account is not sufficient to meet a plan payment, the
remaining amount will be redeemed and the SWP will be terminated.

                              Signature Guarantees

As a protection to both you and the Company, the Company requires a signature
guarantee for all authorized owners of an account: (i) if you request that
redemption proceeds be mailed or wired to a person other than the registered
owner(s) of the shares; (ii) if you request that redemption proceeds be mailed
or wired to other than the address or bank account of record; or (iii) if you
submit a redemption request within 30 days of an address change. A signature
guarantee may be obtained from any eligible guarantor institu tion, as defined
by the SEC. These institutions include banks, savings associations, credit
unions, brokerage firms and others. Please note that a notary public stamp or
seal is not acceptable.

Your account may be terminated by the Company on not less than 30 days' notice
if, at the time of any redemption of shares in your account, the value of the
remaining shares in the account falls below $1,000. Upon any such termination, a
check for the redemption proceeds will be sent to the account of record within
seven business days of the redemption.


                               EXCHANGE PRIVILEGE

You may exchange your shares in a Portfolio for shares in any other Portfolio of
the Com pany at any time by written request. You may also make exchange requests
by telephone. If you did not authorize the use of the telephone exchange service
in your original Purchase Application, you may do so by contacting the Transfer
Agent and requesting the relevant documentation necessary to authorize such
service. The value of the shares to be exchanged and the price of the shares
being purchased will be the net asset value next determined after receipt and
acceptance of instructions for exchange. AN EXCHANGE FROM ONE PORTFOLIO TO
ANOTHER IS TREATED THE SAME AS AN ORDINARY SALE AND PURCHASE FOR FEDERAL INCOME
TAX PURPOSES AND YOU WILL REALIZE A CAPITAL GAIN OR LOSS. THIS IS NOT A TAX-FREE
EXCHANGE. Written exchange requests should be directed to:  ICAP Funds, Inc.,
c/o Sunstone Investor Services, LLC, P.O. Box 2160, Milwaukee, Wisconsin 53201-
2160. For exchange requests sent via overnight delivery, please use 207 East
Buffalo Street, Suite 315, Milwaukee, Wisconsin 53202-5712. Telephone exchange
requests may be made by calling the Transfer Agent at 1-888-221-ICAP (1-888-221-
4227). Neither the Company nor its agents will be liable for following exchange
instructions communicated by telephone that they reasonably believe to be
genuine. Reasonable procedures will be employed on behalf of each Portfolio to
confirm that instructions communicated by telephone are genuine. Exchange
requests may be subject to limitations, including those relating to frequency,
that may be established from time to time to ensure that the exchanges do not
disadvantage the Portfolios or their investors. The Company 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.


                         
                         TAX-SHELTERED RETIREMENT PLANS

Through its custodian, UMB Bank, n.a. (the "Custodian"), the Company offers
several qualified retirement plans for adoption by individuals and employers
(including, but not limited to, IRAs, SEP-IRAs and Roth IRAs). For further
information, please call 1-888-221-ICAP (1-888-221-4227) or write to ICAP Funds,
Inc., c/o Sunstone Investor Services, LLC, P.O. Box 2160, Milwaukee, Wisconsin
53201-2160.


                            DIVIDENDS, CAPITAL GAIN
                        DISTRIBUTIONS AND TAX TREATMENT

Each Portfolio intends to operate as a "regulated investment company" under
Subchapter M of the Code, and therefore will not be liable for federal income
taxes to the extent earnings are distributed on a timely basis.

FOR FEDERAL INCOME TAX PURPOSES, ALL DIVIDENDS PAID BY THE PORTFOLIOS AND NET
REALIZED SHORT-TERM CAPITAL GAINS ARE TAXABLE AS ORDINARY INCOME WHETHER
REINVESTED OR RECEIVED IN CASH UNLESS YOU ARE EXEMPT FROM TAXATION OR ENTITLED
TO A TAX DEFERRAL. DISTRIBUTIONS PAID BY A PORTFOLIO FROM NET CAPITAL GAINS,
WHETHER RECEIVED IN CASH OR REINVESTED IN ADDITIONAL SHARES, ARE TAXABLE AS A
CAPITAL GAIN. The capital gain holding period is determined by the length of
time the Portfolio has held the security and not the length of time you have
held shares in the Portfolio. Investors are informed annually as to the amount
and nature of all dividends and capital gains paid during the prior year. Such
capital gains and dividends may also be subject to state or local taxes. If you
are not required to pay taxes on your income, you are generally not required to
pay federal income taxes on the amounts distributed to you.

Dividends are usually distributed quarterly and capital gains, if any, are
usually distributed annually in December. When a dividend or capital gain is
distributed, a Portfolio's net asset value decreases by the amount of the
payment. IF YOU PURCHASE SHARES SHORTLY BEFORE A DISTRIBUTION, YOU WILL BE
SUBJECT TO INCOME TAXES ON THE DISTRIBUTION, EVEN THOUGH THE VALUE OF YOUR
INVESTMENT (PLUS CASH RECEIVED, IF ANY) REMAINS THE SAME. All dividends or
capital gain distributions will automatically be reinvested in Portfolio shares
at the then prevailing net asset value unless an investor specifically requests
that dividends or capital gains or both be paid in cash. The election to receive
dividends or reinvest them may be changed by writing to:  ICAP Funds, Inc., c/o
Sunstone Investor Services, LLC, P.O. Box 2160, Milwaukee, Wisconsin 53201-2160.
For overnight deliveries, please use 207 East Buffalo Street, Suite 315,
Milwaukee, Wisconsin 53202-5712. Such notice must be received at least five days
prior to the record date of any dividend or capital gain distribution. Income
dividends and capital gain distributions received in cash may only be sent by
wire if in amounts of $500 or more.

If you do not furnish the Company with your correct Social Security Number or
Taxpayer Identification Number, or if required by another section of the Code,
the Company is required by federal law to withhold federal income tax from your
distributions and redemption proceeds at a rate of 31%.

This section is not intended to be a full discussion of federal income tax laws
and the effect of such laws on you. There may be other federal, state or local
tax considerations applicable to a particular investor. You are urged to consult
your own tax adviser.

                        DETERMINATION OF NET ASSET VALUE

Each Portfolio's net asset value per share is determined as of the close of
trading of the NYSE (generally 4:00 p.m., Eastern Time, unless the NYSE closes
at a different time) on each day the NYSE is open for business. Purchase orders
received or shares tendered for redemption on a day the NYSE is open for
trading, prior to the close of trading on that day, will be valued as of the
close of trading on that day. Applications for purchase of shares and requests
for redemption of shares received after the close of trading on the NYSE will be
valued as of the close of trading on the next day the NYSE is open. A
Portfolio's net asset value is not required to be calculated on days during
which a Portfolio receives no orders to purchase shares and no shares are
tendered for redemption. Net asset value is calculated by taking the fair value
of the Portfolio's total assets, including interest or dividends accrued but not
yet collected, less all liabilities and dividing by the total number of shares
outstanding. The result, rounded to the nearest cent, is the net asset value per
share.

In determining the net asset value, expenses are accrued and applied daily and
securities and other assets for which market quotations are available are valued
at market value. Common stocks and other equity-type securities are valued at
the last sales price on the national securities exchange or Nasdaq on which such
securities are primarily traded; however, securities traded on a national
securities exchange or Nasdaq for which there were no transactions on a given
day and securities not listed on a national securities exchange or Nasdaq are
valued at the most recent bid prices. Other exchange traded securities
(generally foreign securities) will be valued based on market quotations.

Securities quoted in foreign currency will be valued in U.S. dollars at the
foreign currency exchange rates that are prevailing at the time the daily net
asset value per share is determined. Although foreign assets are valued in U.S.
dollars on a daily basis, foreign assets are not converted into U.S. dollars on
a daily basis. Foreign currency exchange rates are generally determined prior to
the close of trading on the NYSE. Occasionally, events affecting the value of
foreign investments and such exchange rates occur between the time at which they
are determined and the close of trading on the NYSE. Such events would not
normally be reflected in the calculation of a Portfolio's net asset value on
that day. If events that materially affect the value of a Portfolio's foreign
investments or the foreign currency exchange rates occur during such period, the
investments will be valued at their fair value as determined in good faith by or
under the direction of the Board of Directors of the Company or its delegate.
Certain of the securities holdings of the Portfolios may, from time to time, be
listed primarily on foreign exchanges that trade on other days than those on
which the NYSE is open for business (i.e., Saturday). As a result, the net asset
value of the applicable Portfolio may be significantly affected by such trading
on days when investors cannot effect transactions in their accounts.

Debt securities are valued by a pricing service that utilizes electronic data
processing techniques to determine values for normal institutional-sized trading
units of debt securities without regard to the existence of sale or bid prices
when such values are believed to more accurately reflect the fair value of such
securities; otherwise, actual sale or bid prices are used. Any securities or
other assets for which market quotations are not readily available are valued at
fair value as determined in good faith by the Board of Directors or its
delegate. Debt securities having remaining maturities of 60 days or less when
purchased are valued by the amortized cost method when the Board of Directors
determines that the fair value of such securities is their amortized cost. Under
this method of valuation, a security is initially valued at its acquisition cost
and, thereafter, amortization of any discount or premium is assumed each day,
regardless of the impact of fluctuating interest rates on the value of the
security. Regardless of the method employed to value a particular security, all
valuations are subject to review by the Company's Board of Directors or its
delegate who may determine the fair value of a security pursuant to the
Company's pricing procedures.

                              SHAREHOLDER REPORTS

You will be provided at least semi-annually with a report showing the
Portfolio's or Portfolios' holdings and annually after the close of the
Company's fiscal year, which ends December 31, with an annual report containing
audited financial statements. In addition, an individual account statement will
be sent to you by the Transfer Agent at least quarterly. You will also receive
an annual statement after the end of the calendar year listing all transactions
in shares of the Portfolios during such year.

If you have questions about your account(s), the Portfolios or the Company, you
should call the Transfer Agent at 1-888-221-ICAP (1-888-221-4227) or write to
ICAP Funds, Inc., c/o Sunstone Investor Services, LLC, P.O. Box 2160, Milwaukee,
Wisconsin 53201-2160.


                            FINANCIAL INTERMEDIARIES

Broker/dealers, financial institutions and other financial intermediaries that
have entered into agreements with ICAP may enter purchase or redemption orders
on behalf of their customers. If you purchase or redeem shares of a Portfolio
through a financial intermediary, certain features of the Portfolio relating to
such transactions may not be available or may be modified in accordance with the
terms of the intermediaries' agreement with ICAP. In addition, certain
operational policies of a Portfolio, including those related to settlement and
dividend accrual, may vary from those applicable to direct shareholders of the
Portfolio and may vary among intermediaries. We urge you to consult your
financial intermediary for more information regarding these matters. In
addition, a Portfolio may pay, directly or indirectly through arrangements with
ICAP, amounts to financial intermediaries that provide transfer agent and/or
other administrative services relating to the Portfolio to their customers
provided, however, that the Portfolio will not pay more for these services
through intermediary relationships than it would if the intermediaries'
customers were direct shareholders in the Portfolio. Certain financial
intermediaries may charge a commission or other transaction fee for their
services. You will not be charged for such fees if you purchase or redeem your
Portfolio shares directly from a Portfolio without the intervention of a
financial intermediary.


                                  ORGANIZATION

The Company was organized as a Maryland corporation on November 1, 1994. The
Company is authorized to issue 200,000,000, $.01 par value shares, in addition
to the 100,000,000, $.01 par value shares of the Discretionary Equity Portfolio,
the 100,000,000, $.01 par value shares of the Equity Portfolio, the 50,000,000,
$.01 par value shares of the Select Equity Portfolio and the 50,000,000, $.01
par value shares of the Euro Select Portfolio. The assets belonging to the
Discretionary Equity, Equity, Select Equity and Euro Select Portfolios are held
separately by the Custodian, and if the Company were to issue  additional
series, each additional series would be held separately. In effect, each series
is a separate portfolio.

Each share, irrespective of Portfolio, is entitled to one vote on all questions,
except that matters affecting only one Portfolio are voted upon only by that
Portfolio. Shares have non-cumulative voting rights, which means that the
holders of more than 50% of the shares voting for the election of directors can
elect all of the directors if they choose to do so and, in such event, the
holders of the remaining shares will not be able to elect any person or persons
to the Board of Directors.

The Company will not hold annual shareholders meetings except when required by
the 1940 Act. The Company has adopted procedures in its Bylaws for the removal
of directors by the shareholders as well as by the Board of Directors. As of
November 30, 1997, no person owned a controlling interest in the Company.


                               ADMINISTRATOR AND
                                FUND ACCOUNTANT

Pursuant to an Administration and Fund Accounting Agreement, Sunstone Financial
Group, Inc. (the "Administrator"), 207 East Buffalo Street, Suite 400,
Milwaukee, Wisconsin 53202-5712, calculates the daily net asset value of each
Portfolio and provides administrative services (which include clerical,
compliance and regulatory services such as filing all federal income and excise
tax returns and state income tax returns, assisting with regulatory filings,
preparing financial statements and monitoring expense accruals). For the
foregoing, the Administrator receives from the Portfolios a fee, computed daily
and payable monthly based on each Portfolio's average annual net assets at the
annual rate of .175 of 1% on the first $50,000,000, .10 of 1% on the next
$50,000,000, .05 of 1% on the next $150,000,000 and .03 of 1% on average annual
net assets in excess of $250,000,000, subject to an annual aggregate minimum
from all Portfolios of $230,000, plus out-of-pocket expenses.


                          CUSTODIAN AND TRANSFER AGENT

UMB Bank, n.a., 928 Grand Boulevard, Kansas City, Missouri 64141-6226 acts as
Custodian of each Portfolio's assets. Sunstone Investor Services, LLC, 207 East
Buffalo Street, Suite 315, P.O. Box 2160, Milwaukee, Wisconsin 53201-2160 acts
as Dividend-Disbursing and Transfer Agent for the Portfolios.


                        COMPARISON OF INVESTMENT RESULTS

Each Portfolio may, from time to time, compare its investment results to various
passive indices or other mutual funds and cite such comparisons in reports to
shareholders, sales literature and advertisements. The results may be calculated
on the basis of average annual total return, total return or cumulative total
return.

All total return figures assume the reinvestment of all dividends and measure
the net investment income generated by, and the effect of, any realized and
unrealized appreciation or depreciation of the underlying investments in each
Portfolio over a specified period of time. Average annual total return figures
are annualized and therefore represent the average annual percentage change over
the specified period. Total return figures are not annualized and represent the
aggregate percentage or dollar value change over the period. Cumulative total
return simply reflects a Portfolio's performance over a stated period of time.

Average annual total return, total return and cumulative total return are based
upon the historical results of each Portfolio and are not necessarily
representative of the future performance of the respective Portfolio. Additional
information concerning the performance of the Discretionary Equity and Equity
Portfolios appears in the Annual and Semi-Annual Report of the Discretionary
Equity and Equity Portfolios, a copy of which may be obtained without charge by
calling or writing to the Company. Since, as of the date hereof, the Select
Equity and Euro Select Portfolios have not commenced operations, performance
information is not yet available for such Portfolios.

THE COMPANY RESERVES THE RIGHT TO CHANGE ANY OF THE POLICIES, PRACTICES AND
PROCEDURES DESCRIBED IN THIS PROSPECTUS WITH RESPECT TO ANY PORTFOLIO, INCLUDING
THE STATEMENT OF ADDITIONAL INFORMATION, WITHOUT SHAREHOLDER APPROVAL EXCEPT IN
THOSE INSTANCES WHERE SHAREHOLDER APPROVAL IS EXPRESSLY REQUIRED.


Directors

Pamela H. Conroy
Senior Vice President, Secretary and Director,
Institutional Capital Corp.

Dr. James A. Gentry
Professor of Finance, University of Illinois

Joseph A. Hays
Retired Vice President/Corporate Relations,
Tribune Company

Robert H. Lyon
President, Chief Investment Officer and Director,
Institutional Capital Corp.

Gary S. Maurer
Executive Vice President and Director,
Institutional Capital Corp.

Harold W. Nations
Partner, Holleb & Coff

Donald D. Niemann
Executive Vice President and Director,
Institutional Capital Corp.

Barbara C. Schanmier
Senior Vice President and Director,
Institutional Capital Corp.


Officers

Robert H. Lyon
President

Pamela H. Conroy
Vice President and Treasurer

Donald D. Niemann
Vice President and Secretary


Investment Adviser

Institutional Capital Corporation
225 West Wacker Drive, Suite 2400
Chicago, Illinois 60606-1229


Custodian

UMB Bank, n.a.
928 Grand Boulevard
Kansas City, Missouri 64141-6226


Dividend-Disbursing and Transfer Agent

Sunstone Investor Services, LLC
P.O. Box 2160
Milwaukee, Wisconsin 53201-2160


Administrator and
Fund Accountant

Sunstone Financial Group, Inc.
207 East Buffalo Street, Suite 400
Milwaukee, Wisconsin 53202-5712


Auditors

Coopers & Lybrand L.L.P.
411 East Wisconsin Avenue
Milwaukee, Wisconsin 53202-9905


Legal Counsel

Godfrey & Kahn, S.C.
780 North Water Street
Milwaukee, Wisconsin 53202-3590


ICAP Funds, Inc.   225 West Wacker Drive   Suite 2400   Chicago, Illinois  60606




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