1838 INVESTMENT ADVISORS FUNDS, 485BPOS, 1996-02-05

1838 INVESTMENT ADVISORS FUNDS
485BPOS, 1996-02-05

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Filed with the Securities and Exchange Commission on February 5, 1996.

1933 Act Registration File No. 33-87298
1940 Act File No. 811-8902

SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549

FORM N-1A

REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933

Pre-Effective Amendment No. / /

Post-Effective Amendment No. 1 /X/

and

REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT OF 1940

Amendment No. 2 /X/

1838 INVESTMENT ADVISORS FUNDS
(Exact Name of Registrant as Specified in Charter)

Five Radnor Corporate Center, Suite 320, 100 Matsonford Road, Radnor, PA 19087
(Address of Principal Executive Offices) (Zip Code)

Registrant's Telephone Number, including Area Code: (610) 293-4300

Anna M. Bencrowsky, Vice President Copy to:
1838 Investment Advisors Funds Joseph V. Del Raso, Esq.
Five Radnor Corporate Center, Suite 320 Stradley, Ronon, Stevens & Young
100 Matsonford Road 2600 One Commerce Square
Radnor, PA 19087 Philadelphia, PA 19103
(Name and Address of Agent for Service)

It is proposed that this filing will become effective

X immediately upon filing pursuant to paragraph (b)

___ on ______ pursuant to paragraph (b)

___ 60 days after filing pursuant to paragraph (a)(1)

___ on ______ pursuant to paragraph (a)(1)

___ 75 days after filing pursuant to paragraph (a)(2)

<PAGE>

___ on ______ pursuant to paragraph (a)(2) of Rule 485.

If appropriate, check the following box:

___ This post-effective amendment designates a new effective
date for a previously filed post-effective amendment.

Registrant has filed a declaration registering an indefinite amount of
securities pursuant to Rule 24f-2 under the Investment Company Act of 1940,
as amended. Registrant filed the notice required by Rule 24f-2 for its
fiscal year ended October 31, 1995 on or about December 28, 1995.

TOTAL NUMBER OF PAGES: 124 EXHIBIT INDEX ON PAGE: 120

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CROSS-REFERENCE SHEET
Pursuant to Rule 481(a)

1838 INVESTMENT ADVISORS FUNDS

Items Required By Form N-1A

PART A - PROSPECTUS-1838 INTERNATIONAL EQUITY FUND

<TABLE>
<CAPTION>
Item No. Item Caption Prospectus Caption
<S> <C> <C>
1. Cover Page Cover Page

2. Synopsis Synopsis, Expenses of the Fund

3. Condensed Financial Financial Highlights
Information Performance Information

4. General Description of Cover Page; Investment Objective and
Registrant Policies, Risks in Derivatives and
Other Investment Practices, Special
Risk Considerations

5. Management of the Fund Management of the Fund

6. Capital Stock and Other Shares of Beneficial Interest,
Securities Voting Rights and Shareholder
Meetings, Dividends, Distributions
and Taxes

7. Purchase of Securities How to Purchase Shares
Being Offered Determination of Net Asset Value

8. Redemption or Repurchase How to Redeem Shares

9. Pending Legal Proceedings Not Applicable

PART A - PROSPECTUS-SMALL CAP EQUITY FUND
<S> <C> <C>
Item No. Item Caption Prospectus Caption

1. Cover Page Cover Page

2. Synopsis Synopsis, Expenses of the Fund

3. Condensed Financial Not Applicable
Information

<PAGE>

4. General Description of Cover Page; Investment Objective and
Registrant Policies Risks in Derivatives and
Other Investment Restrictions
Special Risk Consideration,
Investment Restrictions

5. Management of the Fund Management of the Fund

6. Capital Stock and Other Shares of Beneficial Interest, Voting
Securities Rights and Shareholder Meetings,
Dividends, Distributions and Taxes

7. Purchase of Securities How to Purchase Shares
Being Offered Determination of Net Asset Value

8. Redemption or Repurchase How to Redeem Shares

9. Pending Legal Proceedings Not Applicable

</TABLE>

CROSS-REFERENCE SHEET
Pursuant to Rule 481(a)

1838 INTERNATIONAL EQUITY FUND

Items Required By Form N-1A (continued)

PART B - STATEMENT OF ADDITIONAL INFORMATION

<TABLE>
<CAPTION>
Caption in Statement of
Item No. Item Caption Additional Information
<S> <C> <C>
10. Cover Page Cover Page

11. Table of Contents Table of Contents

12. General Information Not Applicable

13. Investment Objectives Cover, Investment Objective and
and Policies Policies, Investment Restrictions

14. Management of the Fund Trustees and Officers of the Trust

15. Control Persons and Control Persons and Principal
Principal Holders of Holders of Securities

<PAGE>

Securities

16. Investment Advisory and Investment Advisor and Sub-Advisor,
Other Services Distributor Investment Manager

17. Brokerage Allocation Allocation of Portfolio Brokerage

18. Capital Stock and Other Not Applicable
Securities

19. Purchase, Redemption and Purchase of Shares, Redemptions
Pricing of Securities
Being Offered

20. Tax Status Taxation

21. Underwriters Distributor

22. Calculation of Performance Performance
Data

23. Financial Statements Financial Statements
</TABLE>

PART C - OTHER INFORMATION

Information required to be included in Part C on Form N-1A is set
forth under the appropriate item, so numbered, in Part C of this
Registration Statement.

<PAGE>

1838
INTERNATIONAL EQUITY FUND

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

THE DATE OF THIS PROSPECTUS IS FEBRUARY 1, 1996

FIVE RADNOR CORPORATE CENTER, SUITE 320
100 MATSONFORD ROAD, RADNOR, PA 19087
(610) 293-4300

1838 Investment Advisors Funds (the 'Trust') is an open-end, management
investment company. It is organized as a series Delaware business trust and has
established two series: 1838 International Equity Fund and 1838 Small Cap Equity
Fund. The Trust currently offers shares of 1838 International Equity Fund
series. The Trust currently is not offering shares of 1838 Small Cap Equity Fund
series. Each series of the Trust has a diversified portfolio of assets and a
specific investment objective and policies. This prospectus pertains only to
1838 International Equity Fund (the 'Fund').

The investment objective of the Fund is capital appreciation, with a
secondary objective of income. The Fund seeks to achieve its objective by
investing in a diversified portfolio of equity securities of issuers located in
countries other than the United States. Investments may be shifted among the
various equity markets of the world outside of the U.S., depending upon
management's outlook with respect to prevailing trends and developments. It is
anticipated that a substantial portion of the Fund's assets will be invested in
the developed countries of Europe and the Far East. A portion of the Fund's
assets also may be invested in developing countries. There can be no assurance
that the Fund's investment objective will be achieved. (See 'Investment
Objective and Policies' and 'Special Risk Considerations.')

The shares of the Fund may be purchased or redeemed at any time. Purchases
will be effected at the net asset value next determined following receipt and
acceptance of the investor's purchase order. Redemptions will be effected at the
net asset value next determined following receipt and acceptance of the
investor's request. (See 'Calculation of Net Asset Value,' 'How to Purchase
Shares,' and 'How to Redeem Shares.')

This Prospectus sets forth concisely the information about the Fund that a
prospective investor should know before investing. Investors should read and
retain this Prospectus for future reference. More information about the Fund has
been filed with the Securities and Exchange Commission, and is contained in the
'Statement of Additional Information,' dated February 1, 1996 which is available
at no charge upon written request to the Trust. The Trust's Statement of
Additional Information is incorporated herein by reference.

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

<TABLE>
<S> <C>
SYNOPSIS...................................................................................................... 3

EXPENSES OF THE FUND.......................................................................................... 5

FINANCIAL HIGHLIGHTS.......................................................................................... 6

THE FUND...................................................................................................... 6

INVESTMENT OBJECTIVE AND POLICIES............................................................................. 6

RISKS IN DERIVATIVES AND OTHER INVESTMENT PRACTICES........................................................... 9

SPECIAL RISK CONSIDERATIONS................................................................................... 14

INVESTMENT RESTRICTIONS....................................................................................... 17

MANAGEMENT OF THE FUND........................................................................................ 17

CALCULATION OF NET ASSET VALUE................................................................................ 21

HOW TO PURCHASE SHARES........................................................................................ 22

EXCHANGE OF SHARES............................................................................................ 23

HOW TO REDEEM SHARES.......................................................................................... 24

DIVIDENDS, DISTRIBUTIONS AND TAXES............................................................................ 26

SHAREHOLDER ACCOUNTS.......................................................................................... 28

RETIREMENT PLANS.............................................................................................. 28

SHARES OF BENEFICIAL INTEREST, VOTING RIGHTS
AND SHAREHOLDER MEETINGS.................................................................................... 29

PERFORMANCE................................................................................................... 29

APPLICATION & NEW ACCOUNT REGISTRATION........................................................................ 31
</TABLE>

2
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SYNOPSIS

OPEN-END INVESTMENT COMPANY

1838 Investment Advisors Funds, which was organized as a Delaware business
trust on December 9, 1994, is an open-end, management investment company. It is
organized as a series Delaware business trust and currently offers shares of the
1838 International Equity Fund (the 'Fund'). See 'The Fund' and 'Shares of
Beneficial Interest, Voting Rights and Shareholder Meetings.'

INVESTMENT OBJECTIVE

The objective of the Fund is capital appreciation, with a secondary
objective of income. The Fund seeks to achieve its objective by investing in a
diversified portfolio of equity securities of issuers located in countries other
than the United States. See 'Investment Objective and Policies.'

INVESTMENT ADVISER, SUB-ADVISER, DISTRIBUTOR AND TRANSFER AGENT

1838 Investment Advisors, L.P. (the 'Investment Adviser') is the investment
adviser for the Fund. MeesPierson 1838 Investment Advisors (the 'Sub-Adviser')
serves as the sub-investment adviser for the Fund. Rodney Square Distributors,
Inc. ('RSD') is the distributor for the Fund. Rodney Square Management
Corporation ('Rodney Square') is the administrator, transfer agent and dividend
disbursing agent for the Fund. See 'Management of the Fund.'

HOW TO PURCHASE SHARES

The Fund does not impose any sales load or 12b-1 Plan fees. The public
offering price of shares of the Fund is the net asset value per share next
determined after the receipt in proper form of the purchase order. See 'How to
Purchase Shares.'

MINIMUM INVESTMENT

The minimum initial investment is $1,000 and there is no minimum for
subsequent investments. See 'How to Purchase Shares.'

REDEMPTIONS AND EXCHANGES

Shares of the Fund are redeemed at the net asset value calculated after
receipt of the redemption request. A purchase of shares through an exchange will
be effected at the net asset value per share determined at that time or as next
determined thereafter. See 'How to Redeem Shares' and 'Exchange of Shares.'

INVESTMENT ADVISORY FEES

The Investment Adviser supervises the investment of the assets of the Fund
in accordance with its objective and policies and restrictions and approves the
portfolio of securities selected by the Sub-Adviser, subject to the supervision
and direction of the Board of Trustees. The Sub-Adviser has been retained by the
Investment Adviser pursuant to a sub-investment advisory agreement to assist in
the selection of, and to manage, the Fund's investment securities.

For their services, the Investment Adviser is paid a monthly fee at the
annual rate of .75% of the Fund's average daily net assets and the Sub-Adviser
is paid a monthly fee by the Investment Adviser at the annual rate of .70% of
the Fund's average daily net assets. See 'Management of the Fund.'

3
<PAGE>

RISK FACTORS AND SPECIAL CONSIDERATIONS

Investors should consider a number of factors:

1. Investments on an international basis involve certain risks not involved
in domestic investment, including fluctuations in foreign exchange rates,
future political and economic developments, different legal systems and the
existence or possible imposition of exchange controls or other foreign or
U.S. governmental laws or restrictions applicable to such investments. See
'Investment Objective and Policies' and 'Special Risk Considerations.'

2. Securities prices in different countries are subject to different
economic, financial, political and social factors. Because the Fund will
invest in securities denominated or quoted in currencies other than the U.S.
dollar, changes in foreign currency exchange rates may affect the value of
securities in the portfolio and the unrealized appreciation or depreciation
of investments insofar as U.S. investors are concerned. Further, there will
be costs attendant to converting such currencies into U.S. dollars. See
'Special Risk Considerations.'

3. The Fund may engage in the following portfolio strategies: enter into
forward foreign currency exchange contracts and foreign currency futures and
options; write covered options; purchase options; and engage in transactions
in stock index options and futures and related options on such futures. See
'Portfolio Strategies Involving Forward Foreign Exchange Transactions,
Options and Futures' under 'Risks in Derivatives and Other Investment
Practices' and 'Special Risk Considerations.'

4. The Fund may lend securities from its portfolio, with a value not
exceeding 33 1/3% of its total assets, to banks, brokers and other financial
institutions and receive collateral prior to lending. The principal risk to
the Fund is the risk that the borrower defaults on its obligation to return
borrowed securities. See 'Lending of Portfolio Securities' under 'Risks in
Derivatives and Other Investment Practices.'

5. The Fund may invest in securities pursuant to repurchase agreements or
purchase and sale contracts (which involve risk of loss if a seller defaults
on its obligations under the agreement or contract). See 'Repurchase
Agreements and Purchase and Sale Contracts' under 'Risks in Derivatives and
Other Investment Practices.'

4
<PAGE>

EXPENSES OF THE FUND

<TABLE>
<CAPTION>
SHAREHOLDER TRANSACTION EXPENSES
- --------------------------------
<S> <C>
Maximum Sales Load Imposed on Purchases........................................................ None
Maximum Sales Load Imposed on Reinvested Dividends............................................. None
</TABLE>

<TABLE>
<S> <C>
ANNUAL OPERATING EXPENSES
(as a percentage of average net assets)
- ---------------------------------------
Investment Advisory Expenses (after fee waiver).................................................. 0.00%(1)
12b-1 Fees....................................................................................... None
Other Expenses (after fee waivers)............................................................... 1.25%(1)

Total Operating Costs (after fee waivers)................................................... 1.25%(1)
</TABLE>

(1)The Investment Adviser has voluntarily agreed to waive its fees of 0.75%
of the Fund's average daily net assets, all of which was waived, so that the
Fund's total operating expenses will not exceed 1.25% of the average daily net
assets of the Fund. In addition, the Administrator, Transfer Agent, and the
Accounting Agent have voluntarily agreed to waive a portion of their fees for
the first 12 months following the Fund's commencement of operations. The amount
of 'Other Expenses,' absent the fee waivers, would have been 1.85%. Absent all
expense waivers, the total expenses of the Fund would have been 2.60% of the
Fund's average daily net assets on an annualized basis for the fiscal period
ended October 31, 1995.

The purpose of this table is to assist the investor in understanding the
various expenses that an investor in the Fund will bear directly or indirectly.
The amount of 'Other Expenses' is based on actual amounts incurred during the
most recent fiscal year.

The following example illustrates the expenses that you would pay on a
$1,000 investment over various time periods assuming (1) a 5% annual rate of
return; and (2) redemption at the end of each time period.

1 YR. 3 YRS.
------ -------
$13 $40

THIS EXAMPLE SHOULD NOT BE CONSIDERED A REPRESENTATION OF PAST OR FUTURE
EXPENSES OR PERFORMANCE. ACTUAL EXPENSES MAY BE GREATER OR LESSER THAN THOSE
SHOWN. THE ABOVE EXAMPLE IS BASED UPON ACTUAL EXPENSES FOR THE FISCAL PERIOD
FROM AUGUST 3, 1995 (COMMENCEMENT OF OPERATIONS) TO OCTOBER 31, 1995.

5
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FINANCIAL HIGHLIGHTS

The following table includes selected data for a share outstanding
throughout the period from August 3, 1995 (Commencement of Operations) through
October 31, 1995. The figures in this table are audited and should be read in
conjunction with the Fund's financial statements and notes thereto, and the
auditor's report thereon, all of which are included in the Fund's Statement of
Additional Information.

<TABLE>
<S> <C>
NET ASSET VALUE -- BEGINNING OF PERIOD....................................................... $10.00
-------
INVESTMENT OPERATIONS:
Net investment income...................................................................... 0.02
Net realized and unrealized loss on investment and foreign currency transactions........... (0.41)
-------
Total from investment operations..................................................... (0.39)
-------
NET ASSET VALUE -- END OF PERIOD............................................................. $ 9.61
=======

TOTAL RETURN................................................................................. (3.90)%
Ratios (to average net assets)/Supplemental Data:
Expenses(1)................................................................................ 1.25%*
Net investment income...................................................................... 1.02%*
Portfolio turnover rate...................................................................... 42.21%*
Net assets at end of period (000 omitted).................................................... 16,764
</TABLE>

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

(1)Without waivers the annualized ratio of expenses to average daily net assets
would have been 2.60% for the period.

*Annualized.

THE FUND

1838 Investment Advisors Funds (the 'Trust') is an open-end, management
investment company commonly known as a mutual fund. The Trust was established as
a series Delaware business trust on December 9, 1994 and has established two
series: 1838 International Equity Fund and 1838 Small Cap Equity Fund. The Trust
currently offers shares of 1838 International Equity Fund series. The Trust
currently is not offering shares of 1838 Small Cap Equity Fund series. Each
series of the Trust has a diversified portfolio of assets. This prospectus
relates only to the 1838 International Equity Fund (the 'Fund').

INVESTMENT OBJECTIVE AND POLICIES

The investment objective and policies of the Fund are set forth below. The
investment objective of the Fund is a fundamental policy and may not be changed
without the approval of the holders of a majority of the Fund's outstanding
voting securities. There can be no assurance that the Fund will achieve its
objective.

The Fund's investment objective is capital appreciation, with a secondary
objective of income. The Fund seeks to achieve its objective by investing in a
diversified portfolio of equity securities of issuers located in countries other
than the United States. Under normal conditions, at least 65% of the Fund's
total assets will be invested in the equity securities of issuers from at least
three different

6
<PAGE>

foreign countries. The Fund may employ a variety of investments and techniques
to hedge against market and currency risk. The Fund is designed for investors
seeking to complement their U.S. holdings through foreign equity investments and
should be considered as a vehicle for diversification and not as a balanced
investment program.

The Fund intends to reduce investment risk by allocating its investments
among the capital markets of a number of countries by investing in an
international portfolio of securities of foreign companies located throughout
the world. Specifically, the Fund intends to invest in the capital markets of
more than 20 countries with emphasis on the largest markets of Japan, the United
Kingdom, France and Germany. While there are no prescribed limits on the
geographic allocation of the Fund's investments, management of the Fund
anticipates that a substantial portion of its assets will be invested in the
developed countries of Europe and the Far East. However, for the reasons stated
below, management of the Fund will give special attention to investment
opportunities in the developing countries of the world, including, but not
limited to, Eastern Europe, Latin America and the Far East. Although it is not
anticipated that a significant portion of the Fund's assets may be invested in
such developing countries, the Fund may invest without limitation in such
securities.

The allocation of the Fund's assets among the various foreign securities
markets will be determined by the Sub-Adviser in accordance with the terms of
its contract with the Investment Adviser (see 'Management of the Fund'), based
primarily on an assessment of the phase in the business cycle and long-term
growth potential of the various economies and the valuation of each securities
market, currency and taxation considerations and other pertinent financial,
social, national and political factors. Within such allocations, the Investment
Adviser and Sub-Adviser, using proprietary research and the assistance of the
investment personnel located in the Sub-Adviser's thirteen offices around the
world, will seek to identify equity investments in each market which are
expected to provide long-term capital appreciation which equals or exceeds the
performance benchmark of such market as a whole.

Up to 20% of the Fund's assets may be invested in developing countries.
This allocation of the Fund's assets reflects the belief that attractive
investment opportunities may result from an evolving long-term international
trend favoring more market-oriented economies, a trend that may especially
benefit certain developing countries with smaller capital markets. This trend
may be facilitated by local or international political, economic or financial
developments that could benefit the capital markets of such countries. Certain
such countries, particularly so-called 'emerging' countries (such as Malaysia,
Mexico and Thailand), which may be in the process of developing more
market-oriented economies, may experience relatively high rates of economic
growth. Because of the general illiquidity of the capital markets in certain
developing countries, the Fund may invest in a relatively small number of
leading or relatively actively traded companies in such countries' capital
markets with the expectation that the investment experience of the securities of
such companies will substantially represent the investment experience of the
countries' capital markets as a whole.

The Fund currently does not intend to invest in developing countries that
were recently communist countries. If the Fund determines that it would be
beneficial to the Fund and its shareholders to invest in developing countries
that were recently communist countries, the Fund will notify shareholders that
it intends to invest in such countries, and will provide proper disclosure with
respect to such investments.

7
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While the Fund primarily will emphasize investments in common stock, the
Fund may also invest in other equity securities consisting of preferred stocks,
debt securities which are convertible into or exchangeable for common stock, and
equity securities such as warrants or rights that are convertible into common
stock. The Fund reserves the right, as a temporary defensive measure and to
provide for redemptions, to hold cash or cash equivalents in U.S. dollars or
foreign currencies and short-term securities including money market securities.
Under certain adverse investment conditions, the Fund may restrict the markets
in which its assets will be invested and may increase the proportion of assets
invested in temporary defensive obligations of U.S. issuers. Under normal
conditions, however, at least 65% of the Fund's total assets will be invested in
the equity securities of issuers from at least three different foreign
countries. Investments made for temporary defensive purposes will be maintained
only during periods in which the Investment Adviser or Sub-Adviser determines
that economic or financial conditions are adverse for holding or being fully
invested in equity securities of foreign issuers. A portion of the portfolio
normally will be held in U.S. dollars or short-term interest bearing U.S.
dollar-denominated securities to provide for possible redemptions.

For purposes of the Fund's investment objective, an issuer ordinarily will
be considered to be located in the country under the laws of which it is
organized or where the primary trading market of its securities is located. The
Fund, however, may consider a company to be located in a country, without
reference to its domicile or to the primary trading market of its securities,
when at least 50% of its non-current assets, capitalization, gross revenues or
profits in any one of the two most recent fiscal years represents (directly or
indirectly through subsidiaries) assets or activities located in such country.
The Fund also may consider closed-end investment companies to be located in the
country or countries in which they primarily make their portfolio investments.

The Fund may invest in the securities of foreign issuers in the form of
American Depositary Receipts (ADRs), European Depositary Receipts (EDRs), Global
Depositary Receipts (GDRs) or other securities convertible into securities of
foreign issuers such as convertible preferred stock, convertible bonds and
warrants or rights convertible into common stock. These securities may not
necessarily be denominated in the same currency as the securities into which
they may be converted. If the Fund determines that other securities convertible
into foreign securities are available on the market, the Fund will notify
Shareholders before investing in such securities.

ADRs are receipts typically issued by an American bank or trust company
which evidence ownership of underlying securities issued by a foreign
corporation. EDRs are receipts issued in Europe which evidence a similar
ownership arrangement. GDRs are receipts issued throughout the world which
evidence a similar ownership arrangement. Generally, ADRs, in registered form,
are designed for use in the U.S. securities markets, and EDRs, in bearer form,
are designed for use in European securities markets. GDRs are tradeable both in
the U.S. and Europe and are designed for use throughout the world. The Fund may
invest in unsponsored ADRs, EDRs and GDRs. The issuers of unsponsored ADRs, EDRs
and GDRs are not obligated to disclose material information in the United States
and, therefore, there may not be a correlation between such information and the
market value of such securities.

The Fund may purchase securities that are not registered ('restricted
securities') under the Securities Act of 1933, as amended, but can be offered
and sold to 'qualified institutional buyers' under Rule 144A under that Act.
However, the Fund will not invest more than 15% of its assets in illiquid
investments, which includes securities for which there is no readily available
market, securities subject to contractual restrictions on resale, and otherwise
restricted securities, unless the Fund's Board

8
<PAGE>
of Trustees continuously determines, based on the trading markets for the
specific restricted security, that it is liquid. (However, under the law of
certain states, the Fund presently is limited with respect to such investments
to 10% of its net assets.) The Board of Trustees has determined to treat as
liquid Rule 144A securities which are freely tradeable in their primary markets
offshore. The Board of Trustees may adopt guidelines and delegate to the
Investment Adviser and Sub-Adviser the daily function of determining and
monitoring liquidity of restricted securities. The Board of Trustees, however,
will retain sufficient oversight and be ultimately responsible for the
determinations.

Since it is not possible to predict with assurance exactly how this market
for restricted securities sold and offered under Rule 144A will develop, the
Board of Trustees will carefully monitor the Fund's investments in these
securities, focusing on such factors, among others, as valuation, liquidity and
availability of information. This investment practice could have the effect of
increasing the level of illiquidity in the Fund to the extent that qualified
institutional buyers become for a time uninterested in purchasing these
securities.

RISKS IN DERIVATIVES AND OTHER INVESTMENT PRACTICES

PORTFOLIO STRATEGIES INVOLVING FORWARD FOREIGN EXCHANGE TRANSACTIONS, OPTIONS
AND FUTURES

The following investment practices are practices that involve investment in
derivatives. Derivatives are contracts or securities, the value of which depends
on (or 'derives' from) the future prices of underlying financial assets.
Investment in derivatives entails risk of which investors should be aware, as
described under each heading below. For additional information about derivative
securities in which the Fund may invest, and the risks associated with those
investments, see 'Investment Objectives and Policies' in the Fund's Statement of
Additional Information.

FORWARD FOREIGN CURRENCY EXCHANGE CONTRACTS

The Fund may enter into forward foreign currency exchange contracts.
Forward foreign currency exchange contracts provide for the purchase or sale of
an amount of a specified foreign currency at a future date. The general purpose
of these contracts is both to put currencies in place to settle trades and to
generally protect the United States dollar value of securities held by the Fund
against exchange rate fluctuation. While such forward contracts may limit losses
to the Fund as a result of exchange rate fluctuation, they will also limit any
gains that may otherwise have been realized. The Fund will enter into such
contracts only to protect against the effects of fluctuating rates of currency
exchange and exchange control regulations. Under normal circumstances,
consideration of the prospect for currency parities will be incorporated into
the long-term investment decisions made with regard to overall diversification
strategies. However, the Investment Adviser believes that it is important to
have the flexibility to enter into such forward contracts when it determines
that the best interests of the performance of the Fund will thereby be served.
Except when a Fund enters into a forward contract for the purchase or sale of a
security denominated in a foreign currency, which requires no segregation, a
forward contract which obligates the Fund to buy or sell currency will generally
require the Trust's Custodian to hold an amount of that currency or liquid
securities denominated in that currency equal to the Fund's obligations, or to
segregate liquid high grade assets equal to the amount of the Fund's obligation.
If the value of the segregated assets declines, additional liquid high grade
assets will be segregated on a daily basis so that the value of the segregated
assets will be equal to the amount of

9
<PAGE>

such Fund's commitments with respect to such contracts. See 'Forward Foreign
Currency Exchange Contracts' in the Statement of Additional Information.

FOREIGN CURRENCY FUTURES CONTRACTS AND OPTIONS

As another means of reducing the risks associated with investing in
securities denominated in foreign currencies, the Fund may enter into contracts
for the future acquisition or delivery of foreign currencies and may purchase
foreign currency options. These investment techniques are designed primarily to
hedge against anticipated future changes in currency prices which otherwise
might adversely affect the value of the Fund's portfolio securities. The Fund
will incur brokerage fees when it purchases or sells futures contracts or
options, and it will be required to maintain margin deposits. As set forth
below, futures contracts and options entail risks, but the Investment Adviser
and Sub-Adviser believe that use of such contracts and options may benefit the
Fund by diminishing currency risks. The Fund will not enter into any futures
contract or option if immediately thereafter the value of all the foreign
currencies underlying its futures contracts and foreign currency options would
exceed 50% of the value of its total assets. In addition, the Fund may enter
into a futures contract only if immediately thereafter not more than 5% of its
total assets are required as deposit to secure obligations under such contracts.

WRITING COVERED OPTIONS

The Fund is authorized to write (i.e., sell) covered call options on the
securities in which it may invest and to enter into closing purchase
transactions with respect to certain of such options. A covered call option is
an option where the Fund in return for a premium gives another party a right to
buy specified securities owned by the Fund at a specified future date and price
set at the time of the contract.

The Fund also may write covered put options which give the holder of the
option the right to sell the underlying security to the Fund at the stated
exercise price. The Fund maintains liquid securities with its custodian equal to
or greater than the exercise price of the underlying security. The Fund will
receive a premium for writing a put option which increases the Fund's return.
The Fund will not write put options if the aggregate value of the obligations
underlying the put shall exceed 50% of the Fund's net assets.

PURCHASING OPTIONS

The Fund will not purchase options on securities (including stock index
options discussed below) if, as a result of such purchase, the aggregate cost of
all outstanding options on securities held by the Fund would exceed 5% of the
market value of the Fund's total assets.

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STOCK INDEX OPTIONS AND FUTURES

The Fund may engage in transactions in stock index options and futures, and
related options on such futures. The Fund may purchase or write put and call
options on stock indices to hedge against the risks of market-wide stock price
movements in the securities in which the Fund invests. Options on indices are
similar to options on securities except that on exercise or assignment, the
parties to the contract pay or receive an amount of cash equal to the difference
between the closing value of the index and the exercise price of the option
times a specified multiple. The Fund may invest in stock index options based on
a broad market index, or based on a narrow index representing an industry or
market segment.

The Fund may also purchase and sell stock index futures contracts ('futures
contracts') as a hedge against adverse changes in the market value of its
portfolio securities as described below. A futures contract is an agreement
between two parties which obligates the purchaser of the futures contract to buy
and the seller of a futures contract to sell a security for a set price on a
future date. Unlike most other futures contracts, a stock index futures contract
does not require actual delivery of securities, but results in cash settlement
based upon the difference in value of the index between the time the contract
was entered into and the time of its settlement. The Fund may effect
transactions in stock index futures contracts in connection with equity
securities in which it invests.

The Fund may sell futures contracts in anticipation of or during a market
decline to attempt to offset the decrease in market value of the Fund's
securities that might otherwise result. When the Fund is not fully invested in
the securities markets and anticipates a significant market advance, it may
purchase futures in order to gain rapid market exposure that may in part or
entirely offset increases in the cost of securities that the Fund intends to
purchase. As such purchases are made, an equivalent amount of futures contracts
will be terminated by offsetting sales. The Investment Adviser does not consider
purchases of futures contracts to be a speculative practice under these
circumstances. It is anticipated that, in a substantial majority of these
transactions, the Fund will purchase such securities upon termination of the
long futures position, whether the long position is the purchase of a futures
contract or the purchase of a call option or the writing of a put option on a
future, but under unusual circumstances (e.g., the Fund experiences a
significant amount of redemptions), a long futures position may be terminated
without the corresponding purchase of securities.

The Fund also has authority to purchase and write call and put options on
stock indices in connection with its hedging activities. Generally, these
strategies are utilized under the same market and market sector conditions
(i.e., conditions relating to specific types of investments) in which the Fund
enters into futures transactions. The Fund may purchase put options or write
call options on stock indices rather than selling the underlying futures
contract in anticipation of a decrease in the market value of its securities.
Similarly, the Fund may purchase call options, or write put options on stock
indices, as a substitute for the purchase of such futures to hedge against the
increased cost resulting from an increase in the market value of securities
which the Fund intends to purchase.

The Fund may engage in options and futures transactions on U.S. and foreign
exchanges and in options in the over-the-counter markets ('OTC options').
Exchange-traded contracts are third-party contracts (i.e., performance of the
parties' obligations is guaranteed by an exchange or clearing corporation)
which, in general, have standardized strike prices and expiration dates. OTC
options transactions are two-party contracts with price and terms negotiated by
the buyer and seller. See 'Restrictions on OTC Options' below for information as
to restrictions on the use of OTC options.

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<PAGE>

RESTRICTIONS ON OTC OPTIONS

The Fund will engage in OTC options, including over-the-counter stock index
options, over-the-counter foreign currency options and options on foreign
currency futures, only with member banks of the Federal Reserve System and
primary dealers in United States Government securities or with affiliates of
such banks or dealers that have capital of at least $50 million or whose
obligations are guaranteed by an entity having capital of at least $50 million
or any other bank or dealer having capital of at least $150 million or whose
obligations are guaranteed by an entity having capital of at least $150 million.
The Fund will acquire only those OTC options for which the Sub-Adviser believes
the Fund can receive on each business day at least two independent bids or
offers (one of which will be from an entity other than a party to the option) or
which can be sold at a formula price provided for in the OTC option agreement.

The staff of the Securities and Exchange Commission (the 'SEC') has taken
the position that purchased OTC options and the assets used as cover for written
OTC options are illiquid securities. Therefore, the Fund has adopted an
investment policy pursuant to which it will not purchase or sell OTC options
(including OTC options on futures contracts) if, as a result of such
transaction, the sum of the market value of OTC options currently outstanding
which are held by the Fund, the market value of the underlying securities
covered by OTC call options currently outstanding which were sold by the Fund
and margin deposits on the Fund's existing OTC options on futures contracts
exceed 15% of the net assets of the Fund, taken at market value, together with
all other assets of the Fund which are illiquid or are not otherwise readily
marketable. However, if the OTC option is sold by the Fund to a primary U.S.
Government securities dealer recognized by the Federal Reserve Bank of New York
and the Fund has the unconditional contractual right to repurchase such OTC
option from the dealer at a predetermined price, then the Fund will treat as
illiquid such amount of the underlying securities as is equal to the repurchase
price less the amount by which the option is 'in-the-money' (i.e., current
market value of the underlying security minus the option's strike price). The
repurchase price with the primary dealers is typically a formula price which is
generally based on a multiple of the premium received for the option, plus the
amount by which the option is 'in-the-money.' This policy as to OTC options is
not a fundamental policy of the Fund and may be amended by the Trustees of the
Trust without the approval of the Fund's shareholders. However, the Fund will
not change or modify this policy prior to the change or modification by the
Securities and Exchange Commission's staff of its position.

RESTRICTIONS ON THE USE OF FUTURES TRANSACTIONS

Regulations of the Commodity Futures Trading Commission ('CFTC') applicable
to the Fund provide that the futures trading activities described herein will
not result in the Fund being deemed a 'commodity pool operator' under such
regulations if the Fund adheres to certain restrictions. In particular, the Fund
may purchase and sell futures contracts and options thereon (i) for bona fide
hedging purposes, and (ii) for non-hedging purposes, if the aggregate initial
margin and premiums required to establish positions in such contracts and
options does not exceed 5% of the liquidation value of the Fund's portfolio,
after taking into account unrealized profits and unrealized losses on any such
contracts and options.

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<PAGE>

held in the account of its broker, equals the market value of the futures
contract, thereby ensuring that the use of such futures contract is unleveraged.

PORTFOLIO TRANSACTIONS

In executing portfolio transactions, the Investment Adviser and Sub-Adviser
seek to obtain the best net results for the Fund, taking into account such
factors as price (including the applicable brokerage commission or dealer
spread), size of order, difficulty of execution and operational facilities of
the firm involved and the firm's risk in positioning a block of securities.
While the Investment Adviser and Sub-Adviser generally seek reasonably
competitive commission rates, the Fund does not necessarily pay the lowest
commission or spread available. The Fund has no obligation to deal with any
broker or group of brokers in the execution of transactions in portfolio
securities. Under the Investment Company Act of 1940, as amended (the
'Investment Company Act'), persons affiliated with the Fund and persons who are
affiliated with such affiliated persons, including the Investment Adviser and
Sub-Adviser, are prohibited from dealing with the Fund as a principal in the
purchase and sale of securities unless a permissive order allowing such
transactions is obtained from the Securities and Exchange Commission. Affiliated
persons of the Fund, and affiliated persons of such affiliated persons, may
serve as the Fund's broker in transactions conducted on an exchange and in
over-the-counter transactions conducted on an agency basis and may receive
brokerage commissions from the Fund. In addition, consistent with the Rules of
Fair Practice of the National Association of Securities Dealers, Inc., the Fund
may consider sales of shares of the Fund as a factor in the selection of brokers
or dealers to execute portfolio transactions for the Fund. Brokerage commissions
and other transaction costs on foreign stock exchange transactions are generally
higher than in the U.S., although the Fund will endeavor to achieve the best net
results in effecting its portfolio transactions.

LENDING OF PORTFOLIO SECURITIES

The Fund may from time to time lend securities from its portfolio, with a
value not exceeding 33 1/3% of its total assets, to banks, brokers and other
financial institutions and receive collateral in cash, a letter of credit issued
by a bank or securities issued or guaranteed by the U.S. Government which will
be maintained at all times in an amount equal to at least 100% of the current
market value of the loaned securities. During the period of such a loan, the
Fund receives the income on both the loaned securities and the collateral and
thereby increases its yield. In the event that the borrower defaults on its
obligation to return borrowed securities because of insolvency or otherwise, the
Fund could experience delays and costs in gaining access to the collateral and
could suffer a loss to the extent the value of the collateral falls below the
market value of the borrowed securities.

PORTFOLIO TURNOVER

The Investment Adviser and Sub-Adviser will effect portfolio transactions
without regard to the holding period if, in their judgment, such transactions
are advisable in light of a change in circumstances in general market, economic
or financial conditions. As a result of its investment policies, the Fund may
engage in a substantial number of portfolio transactions. Although it is
impossible to predict the portfolio turnover rate, the Fund does not expect the
portfolio turnover rate to exceed 75%. The portfolio turnover rate is calculated
by dividing the lesser of the Fund's annual sales or purchases of portfolio
securities (exclusive of purchases or sales of securities whose maturities at
the

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<PAGE>

time of acquisition were one year or less) by the monthly average value of the
securities in the portfolio during the year.

REPURCHASE AGREEMENTS AND PURCHASE AND SALE CONTRACTS

The Fund may invest in securities pursuant to repurchase agreements or
purchase and sale contracts. Repurchase agreements may be entered into only with
a member bank of the Federal Reserve System or a primary dealer in U.S.
Government securities. Purchase and sale contracts may be entered into only with
financial institutions which have capital of a least $50 million or whose
obligations are guaranteed by an entity having capital of at least $50 million.
Under such agreements, the other party agrees, upon entering into the contract
with the Fund, to repurchase the security at a mutually agreed upon time and
price in a specified currency, thereby determining the yield during the term of
the agreement. This results in a fixed rate of return insulated from market
fluctuations during such period although it may be affected by currency
fluctuations. In the case of repurchase agreements, the prices at which the
trades are conducted do not reflect accrued interest on the underlying
obligation; whereas, in the case of purchase and sale contracts, the prices take
into account accrued interest. Such agreements usually cover short periods, such
as under one week. Repurchase agreements may be construed to be collateralized
loans by the purchaser to the seller secured by the securities transferred to
the purchaser. In the case of a repurchase agreement, as a purchaser, the Fund
will require the seller to provide additional collateral if the market value of
the securities falls below the repurchase price at any time during the term of
the repurchase agreement; the Fund does not have the right to seek additional
collateral in the case of purchase and sale contracts. In the event of default
by the seller under a repurchase agreement construed to be a collateralized
loan, the underlying securities are not owned by the Fund but only constitute
collateral for the seller's obligation to pay the repurchase price. Therefore,
the Fund may suffer time delays and incur costs or possible losses in connection
with disposition of the collateral. A purchase and sale contract differs from a
repurchase agreement in that the contract arrangements stipulate that the
securities are owned by the Fund. In the event of a default under such a
repurchase agreement or under a purchase and sale contract, instead of the
contractual fixed rate, the rate of return to the Fund would be dependent upon
intervening fluctuations of the market values of such securities and the accrued
interest on the securities. In such event, the Fund would have rights against
the seller for breach of contract with respect to any losses arising from market
fluctuations following the failure of the seller to perform. Repurchase
agreements and purchase and sale contracts maturing in more than seven days are
deemed illiquid by the Securities and Exchange Commission and are therefore
subject to the Fund's investment restriction limiting investments in securities
that are not readily marketable to 15% of the Fund's total assets. (However,
under the law of certain states, the Fund presently is limited with respect to
such investments to 10% of its net assets.)

SPECIAL RISK CONSIDERATIONS

INTERNATIONAL INVESTING

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<PAGE>

will invest in securities denominated or quoted in currencies other than the
U.S. dollar, changes in foreign currency exchange rates may affect the value of
securities in the portfolio and the unrealized appreciation or depreciation of
investments insofar as U.S. investors are concerned. Foreign currency exchange
rates are determined by forces of supply and demand in the foreign exchange
markets. These forces are, in turn, affected by international balance of
payments and other economic and financial conditions, government intervention,
speculation and other factors. With respect to certain countries, there may be
the possibility of expropriation of assets, confiscatory taxation, high rate of
inflation, political or social instability or diplomatic developments which
could affect investment in those countries. In addition, certain foreign
investments may be subject to foreign withholding taxes. As a result, management
of the Fund may determine that, notwithstanding otherwise favorable investment
criteria, it may not be practicable or appropriate to invest in a particular
country.

Most of the securities held by the Fund will not be registered with the
Securities and Exchange Commission nor will the issuers thereof be subject to
the reporting requirements of such agency. Accordingly, there may be less
publicly available information about a foreign company than about a U.S.
company, and foreign companies may not be subject to accounting, auditing and
financial reporting standards and requirements comparable to those to which U.S.
companies are subject.

Foreign financial markets, while often growing in volume, have, for the
most part, substantially less volume than U.S. markets, and securities of many
foreign companies are less liquid and their prices may be more volatile than
securities of comparable domestic companies. Such markets have different
clearance and settlement procedures, and in certain markets there have been
times when settlements have been unable to keep pace with the volume of
securities transactions, making it difficult to conduct such transactions.
Further, satisfactory custodial services for investment securities may not be
available in some countries having smaller capital markets, which may result in
the Fund incurring additional costs and delays in transporting and custodying
such securities outside such countries. Delays in settlement could result in
temporary periods when assets of the Fund are uninvested and no return is earned
thereon. The inability of the Fund to make intended security purchases due to
settlement problems could result in temporary periods when assets of the Fund
are uninvested and no return is earned thereon. The inability of the Fund to
make intended security purchases due to settlement problems could cause the Fund
to miss attractive investment opportunities. Inability to dispose of a portfolio
security due to settlement problems either could result in losses to the Fund
due to subsequent declines in value of the portfolio security or, if the Fund
has entered into a contract to sell the security, could result in possible
liability to the purchaser. Brokerage commissions and other transaction costs on
foreign securities exchanges are generally higher than in the U.S. There is
generally less government supervision and regulation of exchanges, brokers and
issuers in foreign countries than there is in the U.S.

It is anticipated that a portion of the Fund's assets may be invested in
the developing countries of the world, including, but not limited to, countries
located in Eastern Europe, Latin America and the Far East. The risks noted above
as well as in 'Restrictions on Foreign Investment' below are often heightened
for investments in developing countries.

RESTRICTIONS ON FOREIGN INVESTMENT

Some countries prohibit or impose substantial restrictions on investments
in their capital markets, particularly their equity markets, by foreign entities
such as the Fund. As illustrations, certain countries require governmental
approval prior to investments by foreign persons, or limit the amount of

15
<PAGE>

investment by foreign persons in a particular company, or limit the investment
by foreign persons in a company to only a specific class of securities which may
have less advantageous terms than securities of the company available for
purchase by nationals.

A number of countries, such as South Korea, Taiwan and Thailand, have
authorized the formation of closed-end investment companies to facilitate
indirect foreign investment in their capital markets. In accordance with the
Investment Company Act, the Fund may invest up to 10% of its total assets in
securities of closed-end investment companies. This restriction on investments
in securities of closed-end investment companies may limit opportunities for the
Fund to invest indirectly in certain smaller capital markets. Shares of certain
closed-end investment companies may at times be acquired only at market prices
representing premiums to their net asset values. If the Fund acquires shares in
closed-end investment companies, shareholders would bear both their
proportionate share of expenses in the Fund (including investment advisory fees)
and, indirectly, the expenses of such closed-end investment companies. The Fund
also may seek, at its own cost, to create its own investment entities under the
laws of certain countries.

In some countries, banks or other financial institutions may constitute a
substantial number of the leading companies or the companies with the most
actively traded securities. Also, the Investment Company Act prohibits the Fund
from investing in any equity security of an issuer which, in its most recent
fiscal year, derived more than 15% of its revenues from 'securities related
activities,' as defined by the rules thereunder, unless, immediately after
acquisition, the Fund holds neither more than 5% of any class of the issuer's
equity securities nor more than 10% of the issuer's debt securities, and no more
than 5% of the value of the Fund's total assets is invested in the securities of
such issuer. This provision may restrict the Fund's investments in certain
foreign banks and other financial institutions.

FUTURES AND OPTIONS

The primary risks associated with the use of futures and options are (i)
the failure to predict accurately the direction of stock prices, interest rates,
currency movements and other economic factors; (ii) the failure as hedging
techniques in cases where the price movements of the securities underlying the
options and futures do not follow the price movements of the portfolio
securities subject to the hedge; (iii) the potentially unlimited loss from
investing in futures contracts; and (iv) the likelihood of the Fund being unable
to control losses by closing its position where a liquid secondary market does
not exist. The risk that the Fund will be unable to close out a futures position
or options contract will be minimized by the Fund only entering into futures
contracts or options transactions on national exchanges and for which there
appears to be a liquid secondary market. For more detailed information about
options and futures transactions, see the Statement of Additional Information.

Options and futures transactions in foreign markets are also subject to the
risk factors associated with foreign investments generally, as discussed above.

BORROWING

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<PAGE>

The purchase of securities while borrowings are outstanding will have the effect
of leveraging the Fund. Such leveraging increases the Fund's exposure to capital
risk, and borrowed funds are subject to interest costs which will reduce net
income.

INVESTMENT RESTRICTIONS

The Fund has adopted a number of restrictions and policies relating to the
investment of its assets and its activities, which are fundamental policies and
may not be changed without the approval of the holders of a majority of the
Fund's outstanding voting securities, as defined in the Investment Company Act.
Among the more significant restrictions, the Fund may not:

o As to 75% of its total assets, invest in the securities of any one
issuer if, immediately after and as a result of such investment, the
value of the holdings of the Fund in the securities of such issuer
exceeds 5% of the Fund's total assets, taken at market value, except
that such restriction shall not apply to cash and cash items, or
securities issued or guaranteed by the U.S. Government or any of its
agencies or instrumentalities or, with respect to no more than 25%
of the Fund's total assets, to securities issued or guaranteed by
the government of any country which is a member of the Organization
for Economic Co-operation and Development (OECD).

o Invest in the securities of any single issuer if, immediately after
and as a result of such investment, the Fund owns more than 10% of
the outstanding voting securities of such issuer.

o Invest more than 25% of its total assets (taken at market value at
the time of each investment) in the securities of issuers in any
particular industry, except for temporary defensive purposes.

Changes in values of particular Trust assets or the assets of the Fund as a
whole will not cause a violation of the investment restrictions so long as
percentage restrictions are observed by the Fund at the time it purchases a
security.

Nothing in the foregoing investment restrictions shall be deemed to
prohibit the Fund from purchasing the securities of any issuer pursuant to the
exercise of subscription rights distributed to the Fund by the issuer, except
that no such purchase may be made if as a result the Fund will no longer be a
diversified investment company as defined in the Investment Company Act or fail
to meet the diversification requirements of the Internal Revenue Code of 1986,
as amended.

MANAGEMENT OF THE FUND

BOARD OF TRUSTEES

The Board of Trustees of the Trust consists of five individuals, three of
whom are not 'interested persons' of the Fund as defined in the Investment
Company Act. The members of the Fund's Board of Trustees are fiduciaries for the
Fund's shareholders and, in this regard, are governed by the laws of the State
of Delaware. The Trustees establish policy for the operation of the Fund, and
appoint the officers who conduct the daily business of the Fund. The Statement
of Additional Information contains more information regarding the Officers and
Trustees of the Fund.

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<PAGE>

INVESTMENT ADVISER

The Fund's investment adviser is 1838 Investment Advisors, L.P., a Delaware
limited partnership and registered investment adviser under the Investment
Advisers Act of 1940. The Investment Adviser's offices are located at Five
Radnor Corporate Center, Suite 320, 100 Matsonford Road, Radnor, PA 19087. The
Investment Adviser supervises the investment of the assets of the Fund in
accordance with its objective, policies and restrictions. The Investment Adviser
approves the portfolio of securities selected by the Sub-Adviser. (See
'Sub-Adviser' below).

For its services, the Investment Adviser is paid a monthly fee at the
annual rate of .75% of the Fund's average daily net assets. This fee is higher
than that paid by most mutual funds for investment advisory services, but
management of the Fund believes this fee is justified by the additional
investment research and analysis required in connection with investing in
equities on an international basis. This fee is subject to reductions reflecting
certain reductions in the fee of the Investment Adviser pursuant to state
expense limitations and other voluntary reductions in fees paid by the Fund. The
fee paid to the Investment Adviser includes the compensation that it pays to the
Sub-Adviser for its services to the Fund. The fee payable to, and services
provided by, the Sub-Adviser are described under the heading 'Sub-Adviser'
below.

W. Thacher Brown, the President, Chairman and a Trustee of the Trust, is
the President and a 39.5% shareholder of 1838 Investment Advisors, Inc. ('1838
Inc.'), which is the managing general partner of the Adviser. Mr. Brown is also
an individual limited partner of the Investment Adviser. George W. Gephart, Jr.,
a Trustee and Vice President of the Fund, and Anna M. Bencrowsky, a Vice
President, Treasurer and Assistant Secretary of the Fund, are also shareholders
of 1838 Inc. Since 1988, the Investment Adviser has served as the investment
adviser to a registered closed-end investment company.

The Investment Adviser, 1838 Inc. and MeesPierson Capital Management Inc.
('MPCM'), a 24.9% limited partner of the Investment Adviser and indirect wholly
owned subsidiary of MeesPierson N.V., located at Five Radnor Corporate Center,
Suite 320, 100 Matsonford Road, Radnor, PA 19087, have entered into a purchase
agreement whereby MPCM has the option to purchase from 1838 Inc. a limited
partnership interest representing an additional 5.1% of the Investment Adviser.
Under the terms of the purchase agreement, MPCM may not exercise its option
prior to December 31, 1998.

SUB-ADVISER

The Sub-Adviser to the Fund is MeesPierson 1838 Investment Advisors, a
registered investment adviser under the Investment Advisers Act of 1940. The
Sub-Adviser has been retained by the Investment Adviser pursuant to a
sub-investment advisory agreement to assist in the selection of, and to manage,
the Fund's investment securities. The Sub-Adviser will prepare the portfolio of
securities that meets the objective and policies of the Fund. The Investment
Adviser will review the portfolio to ensure compliance with the Fund's
investment objective and policies. The Sub-Adviser may place portfolio
transactions for the Fund. In this regard, the Sub-Adviser will be governed by
the policies set forth in 'Portfolio Transactions' under 'Investment Objective
and Policies.'

For its services, the Sub-Adviser is paid a monthly fee at an annual rate
of .70% of the average daily net assets of the Fund by the Investment Adviser.
The Sub-Adviser has not previously served as an investment adviser to a
registered investment company. However, at September 30, 1994, the

18
<PAGE>

general partners of the Sub-Adviser, the Investment Adviser and MPCM, managed
approximately $4 billion and $9 billion, respectively, in client assets.

The Sub-Adviser is a general partnership governed by the laws of the State
of Delaware, with its principal office at Five Radnor Corporate Center, Suite
320, 100 Matsonford Road, Radnor, PA 19087. The two general partners are MPCM
and the Investment Adviser.

Johannes B. van den Berg is the Managing Director and Portfolio Manager of
the Sub-Adviser and has served as Managing Director-International of MPCM since
1993. He will be principally responsible for the day-to-day management of the
Fund's portfolio. From 1983 to 1993, Mr. van den Berg served as Managing
Director and Chief Investment Officer of the Amsterdam office of MPCM. Since
1991, Mr. van den Berg has managed the World Property Fund, a global real estate
investment trust, and, between 1987 and 1990, Mr. van den Berg managed the
European Growth Fund, a small cap European equity mutual fund.

The Sub-Adviser, MPCM and MeesPierson N.V. are affiliated with the
following banking organizations: Stichting Prioriteit ABN Amro Holding,
Stichting Administratiekantoor ABN Amro Holding and ABN Amro Holding N.V., all
of Amsterdam, The Netherlands, foreign banking organizations subject to the Bank
Holding Company Act and with Amsterdam-Rotterdam Bank N.V., Amsterdam, The
Netherlands, a bank holding company with respect to a U.S. bank (such banking
organizations are collectively referred to herein as 'ABN Amro'). Banking laws
and regulations currently impose restrictions on securities activities of
foreign banking organizations and their affiliates which are comparable to those
imposed upon domestic bank holding companies. These laws and regulations
currently prohibit such organizations and their affiliates from 'sponsoring,'
'organizing,' 'controlling' or 'distributing' the shares of a registered
open-end investment company continuously engaged in the issuance of its shares,
and prohibit such organizations and their affiliates doing business in the
United States from 'underwriting' securities except under limited conditions and
circumstances. Such laws and regulations generally do not prohibit such
organizations and their certain of their affiliates from acting as investment
adviser, administrator, transfer agent or custodian to such an investment
company. ABN Amro, MeesPierson N.V., MCPM and the Sub-Adviser have advised the
Fund that they may be subject to such banking laws and regulations. In addition,
state laws on this issue may differ from the Federal laws and regulations
referred to herein and may, under some circumstances, require registration by
banking organizations and their affiliates for securities related activities
within those states. Management of the Fund believes (and the Sub-Adviser, MCPM,
MeesPierson N.V. and ABN Amro have advised the Fund that they believe) that the
Sub-Adviser and MCPM may perform the services contemplated by their respective
agreements with the Fund and/or the Investment Adviser without violation of
applicable banking laws or regulations. Should such laws or regulations be
interpreted in the future to prohibit or restrict activities of such banking
organizations or their affiliates in connection with the provision of any
services on behalf of the Fund or the holders of investor shares, the Fund might
be required to alter materially or discontinue its arrangements with such
companies or change its methods of operation with respect to investor shares.
However, management does not anticipate that any such alteration or change would
affect its net asset value per share or result in a financial loss to any
investor.

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<PAGE>

DISTRIBUTOR AND DISTRIBUTION AGREEMENT

Rodney Square Distributors, Inc. ('RSD'), 1100 N. Market Street,
Wilmington, DE 19890, has been engaged pursuant to a distribution agreement
dated February 8, 1995, to assist in securing purchasers for shares of the Fund.
RSD also directly, or through its affiliates, provides investor support
services. RSD will receive no compensation for distribution of shares of the
Fund, except for reimbursement of out-of-pocket expenses.

Banking laws limit deposit-taking institutions and certain of their
affiliates from underwriting or distributing securities. RSD is an affiliate of
Wilmington Trust Company ('WTC'), a banking institution organized under the laws
of the State of Delaware. RSD has advised the Fund that RSD believes that it may
perform the services contemplated by its agreements with the Trust without
violation of applicable banking laws or regulations. If RSD were prohibited from
performing these services, it is expected that the Board of Trustees would
consider entering into agreements with other entities. It is not expected that
shareholders would suffer any adverse financial consequences as a result of such
an occurrence.

ADMINISTRATOR, TRANSFER AGENT, DIVIDEND PAYING AGENT AND CUSTODIANS

Rodney Square, Rodney Square North, 1100 N. Market Street, Wilmington, DE
19890-0001 serves as Administrator, Transfer Agent and Dividend Paying Agent of
the Fund and also provides accounting services to the Fund.

As Administrator, Rodney Square supplies office facilities, non-investment
related statistical and research data, stationery and office supplies, executive
and administrative services, internal auditing and regulatory compliance
services. Rodney Square also assists in the preparation of reports to
shareholders, prepares proxy statements, updates prospectuses and makes filings
with the Securities and Exchange Commission and state securities authorities.
Rodney Square performs certain budgeting and financial reporting and compliance
monitoring activities. For the services provided as Administrator, Rodney Square
receives a monthly administration fee from the Trust at the annual rate of .15%
of the average daily net assets of the Trust on the first $50 million; .10% of
such assets in excess of $50 million to $100 million; .07% of such assets in
excess of $100 million to $200 million; and .05% of such assets in excess of
$200 million. Each series pays its pro-rata portion based upon total Trust
assets. Such fees are subject to a minimum fee of $50,000 per year for one
series and $15,000 minimum per year for each additional series. Rodney Square
also serves as Transfer Agent and Dividend Paying Agent of the Fund.

Rodney Square also serves as an Accounting Agent to the Fund. As Accounting
Agent, Rodney Square determines the Fund's net asset value per share and
provides accounting services to the Fund pursuant to an Accounting Services
Agreement with the Trust.

The custodian for the Fund is Bankers Trust Company, 280 Park Avenue, New
York, NY 10017. Bankers Trust Company employs foreign sub-custodians to maintain
the Fund's foreign assets outside the United States subject to the Board of
Trustees' annual review of those foreign custody arrangements.

20
<PAGE>

EXPENSES

Except as indicated above, the Fund is responsible for the payment of its
expenses, other than those borne by the Investment Adviser, and such expenses
may include, but are not limited to: (a) management fees; (b) the charges and
expenses of the Fund's legal counsel and independent accountants; (c) brokers'
commissions, mark-ups and mark-downs and any issue or transfer taxes chargeable
to the Fund in connection with its securities transactions; (d) all taxes and
corporate fees payable by the Fund to governmental agencies; (e) the fees of any
trade association of which the Fund is a member; (f) the cost of certificates,
if any, representing shares of the Fund; (g) amortization and reimbursements of
the organization expenses of the Fund and the fees and expenses involved in
registering and maintaining registration of the Fund and its shares with the
Securities and Exchange Commission, and the preparation and printing of the
Fund's registration statements and prospectuses for such purposes; (h) allocable
communications expenses with respect to investor services and all expenses of
shareholders and trustees' meetings and of preparing, printing and mailing
prospectuses and reports to shareholders; (i) litigation and indemnification
expenses and other extraordinary expenses not incurred in the ordinary course of
the Fund's business; and (j) compensation for employees of the Fund.

CALCULATION OF NET ASSET VALUE

Rodney Square determines the net asset value per share of the Fund as of
the close of regular trading on each day that the New York Stock Exchange is
open for unrestricted trading from Monday through Friday and on which there is a
purchase or redemption of the Fund's shares. The net asset value is determined
by the Fund by dividing the value of the Fund's securities, plus any cash and
other assets, less all liabilities, by the number of shares outstanding.
Expenses and fees of the Fund, including the advisory and the distributor fees,
are accrued daily and taken into account for the purpose of determining the net
asset value.

In valuing the Fund's net assets, all securities for which representative
market quotations are available will be valued at the last quoted sales price on
the security's principal exchange on that day. If there are no sales of the
relevant security on such day, the security will be valued at the mean between
the closing bid and asked price on that day, if any. Securities for which market
quotations are not readily available and all other assets will be valued at
their respective fair market value as determined in good faith by, or under
procedures established by, the Board of Trustees. In determining fair value, the
Trustees may employ an independent pricing service.

Money market securities with less than sixty days remaining to maturity
when acquired by the Fund will be valued on an amortized cost basis by the Fund,
excluding unrealized gains or losses thereon from the valuation. This is
accomplished by valuing the security at cost and then assuming a constant
amortization to maturity of any premium or discount. If the Fund acquires a
money market security with more than sixty days remaining to its maturity, it
will be valued at current market value until the 60th day prior to maturity, and
will then be valued on an amortized cost basis based upon the value on such date
unless the Trustees determine during such 60-day period that this amortized cost
value does not represent fair market value.

Those securities that are quoted in foreign currency will be valued daily
in U.S. dollars at the foreign currency exchange rates prevailing at the time
Rodney Square calculates the daily net asset

21
<PAGE>

value per share. Although the Fund values its assets in U.S. dollars on a daily
basis, it does not intend to convert its holdings of foreign currencies into
U.S. dollars on a daily basis.

HOW TO PURCHASE SHARES

Shares of the Fund are offered on a continuous basis by RSD and may be
purchased by mail or wire at the net asset value next determined after receipt
by Rodney Square, upon acceptance of the purchase order in proper form by RSD.
The Fund and RSD reserve the right to reject any purchase order and the Fund and
RSD may suspend the offering of the Fund's shares. The minimum initial
investment is $1,000, with no minimum subsequent investment. The Fund reserves
the right to vary the initial and subsequent investment minimums at any time.
There is no minimum investment requirement for qualified retirement plans.

Purchases may be made in one of the following ways:

PURCHASES BY MAIL

You may purchase shares by sending a check drawn on a U.S. bank payable to
1838 International Equity Fund, along with a completed Application, to 1838
International Equity Fund, c/o Rodney Square Management Corporation, P.O. Box
8987, Wilmington, DE 19899-9752. A purchase order sent by overnight mail should
be sent to 1838 International Equity Fund, c/o Rodney Square Management
Corporation, 1105 N. Market St., 3rd Floor, Wilmington, DE 19801. If a
subsequent investment is being made, the check should also indicate your Fund
account number.

When you purchase by check, payment on redemptions will be mailed upon
clearance of the check (which may take up to 15 days). If you purchase shares
with a check that does not clear, your purchase will be canceled and you will be
responsible for any losses or fees incurred in that transaction.

PURCHASES BY WIRE

You may purchase shares by wiring federal funds. To advise the Fund of the
wire, and if making an initial purchase, to obtain an account number, you must
telephone Rodney Square at (800) 884-1838. Once you have an account number,
instruct your bank to wire federal funds to:

RODNEY SQUARE MANAGEMENT CORPORATION
C/O WILMINGTON TRUST COMPANY
WILMINGTON, DE
ABA #0311 0009 2
ATTENTION: 1838 INTERNATIONAL EQUITY FUND
DDA #2670-9482
FURTHER CREDIT [SHAREHOLDER NAME AND ACCOUNT NUMBER]

If you make an initial purchase by wire, you must promptly forward a
completed Application to Rodney Square at the address stated above under
'Purchases By Mail.' Investors should be aware that some banks may impose a wire
service fee.

22
<PAGE>

AUTOMATIC INVESTMENT PLAN

Shareholders may purchase Fund shares through an Automatic Investment Plan
(the 'Plan'). The Plan provides a convenient method by which investors may have
monies deducted directly from their checking, savings or bank money market
accounts for investment in the Fund. Under the Plan, Rodney Square, at regular
intervals, will automatically debit a shareholder's bank checking account in an
amount of $50 or more (subsequent to the $1,000 minimum initial investment), as
specified by the shareholder. A shareholder may elect to invest the specified
amount monthly, bimonthly, quarterly, semi-annually or annually. The purchase of
Fund shares will be effected at the net asset value at the close of regular
trading on the New York Stock Exchange (the 'Exchange') (generally 4:00 p.m.
Eastern time) on or about the 20th day of the month. To obtain an Application
for the Automatic Investment Plan, check the appropriate box of the Application
at the end of this Prospectus or call Rodney Square at (800) 884-1838.

ADDITIONAL PURCHASE INFORMATION

Purchase orders for shares of the Fund which are received by Rodney Square
and accepted by RSD prior to the close of regular trading hours on the Exchange
(generally 4:00 p.m. Eastern time) on any day that the Fund calculates its net
asset value, are priced according to the net asset value determined on that day.
Purchase orders received by Rodney Square and accepted by RSD after the close of
the Exchange on a particular day are priced as of the time the net asset value
per share is next determined.

Shares of the Fund are offered at the net asset value next determined after
a purchase order is received by Rodney Square, upon acceptance of the purchase
order by RSD.

EXCHANGE OF SHARES

You may exchange all or a portion of your Fund shares for shares of any of
the other funds in the 1838 Investment Advisors Funds' complex that currently
offer shares to investors. Shares of a fund are available only in states in
which such shares may be lawfully sold.

A redemption of shares through an exchange will be effected at the net
asset value per share next determined after receipt by Rodney Square of the
request, and a purchase of shares through an exchange will be effected at the
net asset value per share determined at that time. The net asset values per
share of each series of the Trust are determined at the close of regular trading
on the Exchange (generally 4:00 p.m., Eastern time) on any day that such series
calculates its net asset value.

Exchange transactions will be subject to the minimum initial investment and
other requirements of the fund into which the exchange is made. An exchange may
not be made if the exchange would leave a balance in a shareholder's account of
less than $1,000.

To obtain prospectuses of the other funds in the 1838 Investment Advisors
Funds' complex, contact Rodney Square at (800) 884-1838. To obtain more
information about exchanges, or to place exchange orders, also contact Rodney
Square. The Fund reserves the right to terminate or modify the exchange offer
described here and will give shareholders sixty days' notice of such termination
or modification as required by the Securities and Exchange Commission.

23
<PAGE>

HOW TO REDEEM SHARES

Shareholders may redeem their shares of the Fund without charge on any day
that the Fund calculates its net asset value (see 'Calculation of Net Asset
Value'). Redemptions will be effective at the net asset value per share next
determined after receipt and acceptance by Rodney Square of a redemption request
meeting the requirements described below. Redemption proceeds are normally sent
on the next business day following receipt and acceptance by Rodney Square of
the redemption request but, in any event, redemption proceeds are sent within
seven calendar days of receipt and acceptance of the request. Redemption
requests should be accompanied by the Fund's name and your account number.
Corporations, other organizations, trusts, fiduciaries and other institutional
investors may be required to furnish certain additional documentation to
authorize redemptions.

The Fund will honor redemption requests of shareholders who recently
purchased shares by check, but will not mail the proceeds until it is reasonably
satisfied that the purchase check has cleared, which may take up to fifteen days
from the purchase date, at which time the redemption proceeds will be mailed to
the shareholder.

Except as noted below, redemption requests received and accepted by Rodney
Square prior to the close of regular trading hours on the Exchange on any
business day that the Fund calculates its per share net asset value are
effective that day. Redemption requests received and accepted by Rodney Square
after the close of the Exchange are effective as of the time the net asset value
per share is next determined.

IN-KIND REDEMPTION

The Fund will satisfy redemption requests in cash to the fullest extent
feasible, so long as such payments would not, in the opinion of the Investment
Adviser or the Board of Trustees, result in the necessity of the Fund selling
assets under disadvantageous conditions and to the detriment of the remaining
shareholders of the Fund.

Pursuant to the Fund's Agreement and Declaration of Trust, payment for
shares redeemed may be made either in cash or in-kind, or partly in cash and
partly in-kind. However, the Fund has elected, pursuant to Rule 18f-1 under the
Investment Company Act, to redeem its shares solely in cash up to the lesser of
$250,000 or 1% of the net asset value of the Fund, during any 90-day period for
any one shareholder. Payments in excess of this limit will also be made wholly
in cash unless the Board of Trustees believes that economic conditions exist
which would make such a practice detrimental to the best interests of the Fund.
Any portfolio securities paid or distributed in-kind would be valued as
described under 'Net Asset Value.'

In the event that an in-kind distribution is made, a shareholder may incur
additional expenses, such as the payment of brokerage commissions, on the sale
or other disposition of the securities received from the Fund. In-kind payments
need not constitute a cross-section of the Fund's portfolio. Where a shareholder
has requested redemption of all or a part of the shareholder's investment, and
where the Fund completes such redemption in-kind, the Fund will not recognize
gain or loss for federal tax purposes, on the securities used to complete the
redemption but the shareholder will recognize gain or loss equal to the
difference between the fair market value of the securities received and the
shareholder's basis in the Fund shares redeemed.

Shares may be redeemed in one of the following ways:

24
<PAGE>

REDEMPTION BY MAIL

Shareholders redeeming their shares by mail should submit written
instructions with a guarantee of their signature by an 'eligible guarantor
institution' as defined in Rule 17Ad-15 under the Securities Exchange Act of
1934. Eligible guarantor institutions include banks, brokers, dealers, credit
unions, national securities exchanges, registered securities associations,
clearing agencies and savings associations. Broker-dealers guaranteeing
signatures must be a member of a clearing corporation or maintain net capital of
at least $100,000. Credit unions must be authorized to issue signature
guarantees. Signature guarantees will be accepted from any eligible guarantor
institution which participates in a signature guarantee program. A signature and
a signature guarantee are required for each person in whose name the account is
registered.

Written redemption instructions should be submitted to 1838 International
Equity Fund, c/o Rodney Square Management Corporation, P.O. Box 8987,
Wilmington, DE 19899-9752. A redemption order sent by overnight mail should be
sent to 1838 International Equity Fund, c/o Rodney Square Management
Corporation, 1105 N. Market Street, 3rd Floor, Wilmington, DE 19801.

REDEMPTION BY TELEPHONE

Shareholders who prefer to redeem their shares by telephone must elect to
do so by applying in writing for telephone redemption privileges by completing
an Application for Telephone Redemptions (included at the end of this
Prospectus) which describes the telephone redemption procedures in more detail
and requires certain information that will be used to identify the shareholder
when a telephone redemption request is made.

Neither the Fund nor any of its service contractors will be liable for any
loss or expense in acting upon any telephone instructions that are reasonably
believed to be genuine. In attempting to confirm that telephone instructions are
genuine, the Fund will use such procedures as are considered reasonable,
including requesting a shareholder to correctly state his or her Fund account
number, the name in which his or her account is registered, the number of shares
to be redeemed and certain other information necessary to identify you as the
shareholder. To the extent that the Fund fails to use reasonable procedures to
verify the genuineness of telephone instructions, it and/or its service
contractors may be liable for any such instructions that prove to be fraudulent
or unauthorized.

During times of drastic economic or market changes, the telephone
redemption privilege may be difficult to implement. In the event that you are
unable to reach Rodney Square by telephone, you may make a redemption request by
mail. The Fund or Rodney Square reserves the right to refuse a wire or telephone
redemption if it is believed advisable to do so. Procedures for redeeming Fund
shares by wire or telephone may be modified or terminated at any time by the
Fund.

REDEMPTIONS BY WIRE

Redemption proceeds may be wired to your predesignated bank account at any
commercial bank in the United States if the amount is $1,000 or more. The
receiving bank may charge a fee for this service. Amounts redeemed by wire are
normally wired on the next business day after receipt and acceptance of
redemption instructions (if received before the close of regular trading on the
Exchange), but in no event later than seven days following such receipt and
acceptance.

25
<PAGE>

ADDITIONAL REDEMPTION INFORMATION

Redemption proceeds may be mailed to your bank or, for amounts of $10,000
or less, mailed to your Fund account address of record if the address has been
established for a minimum of 60 days. In order to authorize the Fund to mail
redemption proceeds to your Fund account address of record, complete the
appropriate section of the Application for Telephone Redemptions or include your
Fund account address of record when you submit written instructions. You may
change the account which you have designated to receive amounts redeemed at any
time. Any request to change the account designated to receive redemption
proceeds should be accompanied by a guarantee of the shareholder's signature by
an eligible guarantor institution. Further documentation will be required to
change the designated account when shares are held by a corporation, other
organization, trust, fiduciary or other institutional investor.

The Fund also reserves the right to involuntarily redeem an investor's
account where the account is worth less than the minimum initial investment
required when the account is established, presently $1,000. (Any redemption of
shares from an inactive account established with a minimum investment may reduce
the account below the minimum initial investment, and could subject the account
to redemption initiated by the Fund). The Fund will advise the shareholder of
such intention in writing at least sixty (60) days prior to effecting such
redemption, during which time the shareholder may purchase additional shares in
any amount necessary to bring the account back to $1,000. If the value of an
investor's account falls below the minimum initial investment requirement due to
market fluctuations, the fund will not redeem an investor's account except
pursuant to the instructions of the shareholder.

SYSTEMATIC WITHDRAWAL PLAN

Shareholders who own shares with a value of $10,000 or more may participate
in the Systematic Withdrawal Plan. For an Application for the Systematic
Withdrawal Plan, check the appropriate box on the Application or call Rodney
Square at (800) 884-1838. Under the Plan, shareholders may automatically redeem
a portion of their Fund shares monthly, bimonthly, quarterly, semi-annually or
annually. The minimum withdrawal available is $100. The redemption of Fund
shares will be effected at their net asset value at the close of the Exchange on
or about the 25th day of the month. If you expect to purchase additional Fund
shares, it may not be to your advantage to participate in the Systematic
Withdrawal Plan because contemporaneous purchases and redemptions may result in
adverse tax consequences.

For more information on redemption services, contact Rodney Square.

DIVIDENDS, DISTRIBUTIONS AND TAXES

The Fund will declare and pay dividends annually to its shareholders of
substantially all of its net investment income, if any, earned during the year
from its investments. The Fund will distribute net realized capital gains, if
any, once with respect to each year. Expenses of the Fund, including the
advisory fee, are accrued each day. Reinvestments of dividends and distributions
in additional shares of the Fund will be made at the net asset value determined
on the ex date of the dividend or distribution unless the shareholder has
elected in writing to receive dividends or distributions in cash. An election
may be changed by notifying Rodney Square in writing thirty days prior to record
date.

26
<PAGE>

Each series of the Trust, including the Fund, will be treated as a separate
entity for federal income and excise tax purposes. The Fund intends to qualify
annually to be treated as a regulated investment company under Subchapter M of
the Internal Revenue Code of 1986, as amended (the 'Code'). As such, the Fund
will not be subject to federal income tax, or to any excise tax, to the extent
its earnings are distributed as provided in the Code and by satisfying certain
other requirements relating to the sources of its income and diversification of
its assets.

The Fund intends to distribute substantially all of its net investment
income and net capital gains. Dividends from net investment income or net
short-term capital gains will be taxable to you as ordinary income, whether
received in cash or in additional shares. For corporate investors dividends from
net investment income will generally qualify in part for the corporate
dividends-received deduction. However, the portion of the dividends so qualified
depends on the aggregate qualifying dividend income received by the Fund from
domestic (U.S.) sources.

Distributions paid by the Fund from long-term capital gains, whether
received in cash or in additional shares, are taxable to those investors subject
to income tax as long-term capital gains, regardless of the length of time an
investor has owned shares in the Fund. The Fund does not seek to realize any
particular amount of capital gains during a year; rather, realized gains are a
byproduct of Fund management activities. Consequently, capital gains
distributions may be expected to vary considerably from year to year. Also, for
those investors subject to tax, if purchases of shares in a Fund are made
shortly before the record date for a dividend or capital gains distribution, a
portion of the investment will be returned as a taxable distribution.

Dividends which are declared in October, November or December to
shareholders of record in such a month but which, for operational reasons, may
not be paid to the shareholder until the following January, will be treated for
tax purposes as if paid by the Fund and received by the shareholder on December
31 of the calendar year in which they are declared.

A sale of shares of the Fund is a taxable event and may result in a capital
gain or loss to shareholders subject to tax. Capital gain or loss may be
realized from an ordinary redemption of shares or an exchange of shares between
two mutual funds (or two series of a mutual fund). Any loss incurred on sale or
exchange of the Fund's shares, held for six months or less, will be treated as a
long-term capital loss to the extent of capital gain dividends received with
respect to such shares.

The Fund may be subject to foreign withholding taxes on income from certain
of its foreign securities. If more than 50% of the total assets of the Fund at
the end of its fiscal year are invested in securities of foreign corporations,
the Fund may elect to pass-through to its shareholders their pro rata share of
foreign taxes paid by such Fund. If this election is made, shareholders will be
(i) required to include in their gross income their pro rata share of foreign
source income (including any foreign taxes paid by the Fund), and (ii) entitled
to either deduct (as an itemized deduction in the case of individuals) their
share of such foreign taxes in computing their taxable income or to claim a
credit for such taxes against their U.S. income tax, subject to certain
limitations under the Code. Shareholders will be informed by the Fund at the end
of each calendar year regarding the availability of any credits and the amount
of foreign source income (including any foreign taxes paid by the Fund) to be
included on their income tax returns.

Under Code Section 988, foreign currency gains or losses, including those
from forward contracts, from futures contracts that are not 'regulated futures
contracts' and from unlisted options, will generally be treated as ordinary
income or loss. Such Code Section 988 gains or losses will increase or

27
<PAGE>

decrease the amount of the Fund's investment company taxable income available to
be distributed to shareholders as ordinary income. If Code Section 988 losses
exceed other investment company taxable income during a taxable year, the Fund
would not be able to make any ordinary dividend distributions, and any
distributions made before the losses were realized but in the same taxable year,
would be recharacterized as a return of capital to shareholders, thereby
reducing each shareholder's basis in Fund Shares.

Each year, the Fund will mail you information on the tax status of the
Fund's dividends and distributions. The Fund is required to withhold 31% of
taxable dividends, capital gains distributions, and redemptions paid to
shareholders who have not complied with Internal Revenue Service taxpayer
identification regulations. You may avoid this withholding requirement by
certifying on your account registration form your proper taxpayer identification
number and by certifying that you are not subject to backup withholding.

In addition to federal taxes, shareholders may be subject to state and
local taxes on distributions. It is recommended that shareholders consult their
tax advisers regarding specific questions as to federal, state, local or foreign
taxes. The tax discussion set forth above is included for general information
only, prospective investors should consult their own tax advisers concerning the
federal, state, local or foreign tax consequences of an investment in a Fund.
Additional information on tax matters relating to the Fund and to its
shareholders is included in the Statement of Additional Information.

SHAREHOLDER ACCOUNTS

Rodney Square, as Transfer Agent, maintains for each shareholder an account
expressed in terms of full and fractional shares of the Fund rounded to the
nearest 1/1000th of a share.

In the interest of economy and convenience, the Fund does not issue share
certificates. Each shareholder is sent a statement at least quarterly showing
all purchases in or redemption from the shareholder's account. The statement
also sets forth the balance of shares held in the shareholder's account.

RETIREMENT PLANS

Shares of the Fund are available for use in certain tax-deferred plans
(such as Individual Retirement Accounts ('IRAs'), defined contribution, 401(k)
and 403(b)(7) plans).

INDIVIDUAL RETIREMENT ACCOUNTS

Application forms and brochures for IRAs can be obtained from Rodney Square
by calling (800) 884-1838.

WTC makes available its services as an IRA custodian for each shareholder
account that is established as an IRA. For these services, WTC receives an
annual fee of $10.00 per account, which fee is paid directly to WTC by the IRA
shareholder. If the fee is not paid by the date due, shares of the Fund owned by
the IRA will be redeemed automatically for purposes of making the payment.

28
<PAGE>

SHARES OF BENEFICIAL INTEREST, VOTING RIGHTS AND SHAREHOLDER MEETINGS

SHARES OF BENEFICIAL INTEREST AND VOTING RIGHTS

The Trust is organized as a series Delaware business trust. The Trust's
Agreement and Declaration of Trust permits the trustees to issue an unlimited
number of shares of beneficial interest with a $0.001 par value per share. The
Board of Trustees has the power to designate one or more series or
sub-series/classes of shares of beneficial interest and to classify or
reclassify any unissued shares with respect to such series.

The shares of the Fund, when issued, will be fully paid and non-assessable
and within each series or class, have no preference as to conversion, exchange,
dividends, retirement or other features. The shares of the Trust which the
trustees may, from time to time, establish, shall have no preemptive rights. The
shares of the Trust have non-cumulative voting rights, which means that the
holders of more than 50% of the shares voting for the election of trustees can
elect 100% of the trustees if they choose to do so. A shareholder is entitled to
one vote for each full share held (and a fractional vote for each fractional
share held), then standing in his name on the books of the Trust. On any matter
submitted to a vote of shareholders, all shares of the Trust then issued and
outstanding and entitled to vote on a matter shall vote without differentiation
between separate series on a one-vote-per-share basis. Each whole share is
entitled to one vote and each fractional share is entitled to a proportionate
fractional vote. If a matter to be voted on does not affect the interests of all
series of the Trust, then only the shareholders of the affected series shall be
entitled to vote on the matter. The Trust's Agreement and Declaration of Trust
also give shareholders the right to vote (i) for the election or removal of
trustees; (ii) with respect to additional matters relating to the Trust as
required by the Investment Company Act; and (iii) on such other matters as the
trustees consider necessary or desirable.

As of January 5, 1996, Patterson & Co. owned by virtue of shared or sole
voting or investment power on behalf of its underlying customer accounts 51% of
the shares of the Fund and may be deemed to be a controlling person under the
Investment Company Act.

SHAREHOLDER MEETINGS

Pursuant to the Trust's Agreement and Declaration of Trust, the Trust does
not intend to hold shareholder meetings except when required to elect trustees,
or with respect to additional matters relating to the Trust as required under
the Investment Company Act. The trustees have, however, undertaken to the
Securities and Exchange Commission that the trustees will promptly call a
meeting for the purpose of voting upon the question of removal of any trustee
when requested to do so by not less than 10% of the outstanding shareholders of
the Trust. In addition, subject to certain conditions, shareholders of the Trust
may apply to the Trust to communicate with other shareholders to request a
shareholders' meeting to vote upon the removal of a trustee or trustees.

PERFORMANCE

Total return data may from time to time be included in advertisements about
the Fund. The Fund's total return may be calculated on an annualized and
aggregate basis for various periods (which periods will be stated in the
advertisement). Average annual return reflects the average percentage change per

29
<PAGE>

year in value of an investment in the Fund. Aggregate total return reflects the
total percentage change over the stated period.

The Fund may compare its investment performance to appropriate market
indices, such as Lipper Mutual Fund Indices, Financial Times Goldman Sachs
Europe-Asia Index, Morgan Stanley Capital International EAFE Index and
Morningstar, Inc., as well as to other appropriate mutual fund indices; and the
Fund may advertise its ranking compared to other similar mutual funds as
reported by industry analysts such as Lipper Analytical Services, Inc.

All data will be based on the Fund's past investment results and does not
predict future performance. Investment performance, which will vary, is based on
many factors, including market conditions, the composition of the investments in
the Fund, and the Fund's operating expenses. Investment performance also often
reflects the risk associated with the Fund's investment objective and policies.
In addition, averages are generally unmanaged, and items included in the
calculations of such averages may not be identical to the formula used by the
Fund to calculate its performance. These factors should be considered when
comparing the Fund to other mutual funds and other investment vehicles.

<PAGE>

1838 INTERNATIONAL EQUITY FUND
APPLICATION & NEW ACCOUNT REGISTRATION

INSTRUCTIONS
- ------------
FOR WIRING INSTRUCTIONS OR FOR ASSISTANCE IN COMPLETING THIS FORM CALL
(800) 884-1838.

ACCOUNT REGISTRATION
- --------------------
Joint tenants use Lines 1 and 2; Custodian for a minor, use Lines 1 and 3;
Corporation, trust or other organization or any fiduciary capacity, use Line 4.

1. Individual _______________________ ____ _________________________________ _________________________
First Name MI Last Name S.S. or Tax ID No.*
2. Joint Tenancy**_______________________ ____ _________________________________ _________________________
First Name MI Last Name S.S. or Tax ID No.*
3. Gifts to Minors+______________________ ____ _________________________________ _________________________
Minor's Name Minor's S.S. No.* State
4. Other Registration ________________________________________________________________ _________________________
Name S.S. or Tax ID No.*
5. If Trust, Date of Trust Instrument: __________________________________________________________________________

6. ______________________________________________________________________________________________________________
Your Occupation
7. ______________________________________________________________________________________________________________
Employer's Name Employer's Address

ADDRESS OF RECORD
- -----------------

______________________________________________________________________________________________________________
Street

______________________________________________________________________________________________________________
City State Zip Code

INITIAL INVESTMENT ($1,000 MINIMUM)
- -----------------------------------

____ By check. (Make payable to "1838 International Equity Fund")

____ By wire. Account number(s) assigned by RSMC _______________________________________________________________

Bank from which funds will be wired ____________________________________________________________________

Date wired _____________________________________

Amount $ to be Invested _________________________________

</TABLE>

* Customer Tax Identification No.: (a) for an individual, joint tenants, or a
custodial account under the Uniform Gifts/Transfers to Minors Act, supply
the Social Security number of the registered account owner who is to be
taxed; (b) for a trust, a corporation, a partnership, an organization, a
fiduciary, etc., supply the Employer Identification number of the legal
entity or organization that will report income and/or gains.
** "Joint Tenants with Rights of Survivorship" unless otherwise specified.
+ Regulated by the Uniform Gifts/Transfers to Minor's Act.

31
<PAGE>

DISTRIBUTION OPTIONS
- --------------------
All dividends and distributions will be automatically reinvested in additional
shares at net asset value unless otherwise indicated by checking the box(es)
below.

/ / DIVIDENDS IN CASH / / CAPITAL GAINS IN CASH
If you have chosen to receive your dividends in cash, you have the option to
receive your dividends either by direct deposit into your bank account or by
check. Please check one box below.
/ / DIRECT DEPOSIT / / CHECK
Please attach a voided bank check here if you choose direct deposit.

OTHER OPTIONS
- -------------

Check any of the following if you would like additional information about a
particular plan or service sent to you.

/ / AUTOMATIC INVESTMENT PLAN / / SYSTEMATIC WITHDRAWAL PLAN

CERTIFICATIONS
- --------------

1. I have received and read the Prospectus for the 1838 International Equity
Fund and agree to its terms; I am of legal age.
2. If a corporate customer, I certify that appropriate corporate resolutions
authorizing investment in the 1838 International Equity Fund have been duly
adopted.
3. I certify under penalties of perjury that the Social Security number or
taxpayer identification number shown above is correct.
4. Unless the box below is checked, I certify under penalties of perjury
that I am not subject to backup withholding because the
Internal Revenue Service (a) has not notified me that I am subject to
backup withholding as a result of failure to report all interest or
dividends, or (b) has notified me that I am no longer subject to backup
withholding.
The certifications in this paragraph are required from all nonexempt persons to
prevent backup withholding of 31% of all taxable distributions and gross
redemption proceeds under the federal income tax law.

/ / Check here if you are subject to backup withholding.

SIGNATURES
- ----------
Please sign exactly as registered under "Account Registration."

Signature ___________________________ Date ___________________________

Signature ___________________________ Date ___________________________
Joint Owner/Trustee

Check one: / / Owner / / Trustee / / Custodian / / Other

RETURN THIS COMPLETED FORM TO:
1838 International Equity Fund
Rodney Square Management Corporation
P.O. Box 8987
Wilmington, DE 19899-9752

1838 INTERNATIONAL EQUITY FUND
APPLICATION FOR TELEPHONE REDEMPTION

Telephone redemption permits redemption of fund shares by telephone, with
proceeds directed only to the fund account address of record or to the bank
account designated below. For investments by check, telephone redemption is
available only after these shares have been on the Fund's books for 10 days.

This form is to be used to add or change the telephone redemption option on your
1838 International Equity Fund account(s).

ACCOUNT INFORMATION
- -------------------

Fund Account Number(s): ______________________________________________
(Please provide if you are a
current account holder)
Registered in the Name(s) of: ______________________________________________

______________________________________________

Registered Address: ______________________________________________

______________________________________________

Note: If this form is not submitted together with the application, a corporate
resolution must be included for accounts registered to other than an individual,
a fiduciary or partnership.

REDEMPTION INSTRUCTIONS
- -----------------------

/ / ADD / / CHANGE

Check one or more.

/ / MAIL PROCEEDS TO MY FUND ACCOUNT ADDRESS OF RECORD (MUST BE
$10,000 OR LESS AND ADDRESS MUST BE ESTABLISHED FOR A MINIMUM OF
60 DAYS)
/ / MAIL PROCEEDS TO MY BANK
/ / WIRE PROCEEDS TO MY BANK (MINIMUM $1,000)
/ / ALL OF THE ABOVE

Telephone redemption by wire can be used only with financial institutions that
are participants in the Federal Reserve Bank Wire System. If the financial
institution you designate is not a Federal Reserve participant, telephone
redemption proceeds will be mailed to the named financial institution. In either
case, it may take a day or two, upon receipt for your financial institution to
credit your bank account with the proceeds, depending on its internal crediting
procedures.

<PAGE>

BANK INFORMATION
- ----------------
Please complete the following information only if proceeds mailed/wired to your
bank was selected. A voided bank check must be attached to this application.

Name of Bank __________________________________________
Bank Routing Transit # __________________________________________
Bank Address __________________________________________
City/State/Zip __________________________________________
Bank Account Number __________________________________________
Name(s) on Bank Account __________________________________________

AUTHORIZATIONS
- --------------
By electing the telephone redemption option, I appoint Rodney Square
Management Corporation ("Rodney Square") my agent to redeem shares of any
designated fund of the 1838 Investment Advisors Funds when so instructed by
telephone. This power will continue if I am disabled or incapacitated. I
understand that a request for telephone redemption may be made by anyone, but
the proceeds will be sent only to the account address of record or to the
bank listed above. Proceeds in excess of $10,000 will be sent to your
predesignated bank only. By signing below, I agree on behalf of myself, my
assigns, and successors, not to hold Rodney Square and any of its affiliates,
or any fund of the 1838 Investment Advisors Funds responsible for acting
under the powers I have given Rodney Square. I also agree that all account
and registration information I have given will remain the same unless I
instruct Rodney Square otherwise in a written form, including a signature
guarantee. If I want to terminate this agreement, I will give Rodney Square
at least ten days notice in writing. If Rodney Square or 1838 Investment
Advisors Funds want to terminate this agreement, they will give me at least
ten days notice in writing.

All owners on the account must sign below and obtain signature guarantee(s).

____________________________________ ______________________________________
Signature of Individual Owner Signature of Joint Owner (if any)

_______________________________________________________________________________
Signature of Corporate Officer, Trustee or other -- please include your title

You must have a signature(s) guaranteed by an eligible institution acceptable to
Rodney Square, such as a bank, broker/dealer, government securities dealer,
credit union, national securities exchange, registered securities association,
clearing agency or savings association. A Notary Public is not an acceptable
guarantor.
SIGNATURE GUARANTEE(S) (stamp)

<PAGE>

INVESTMENT ADVISER
1838 Investment Advisors, L.P.
Five Radnor Corporate Center
Suite 320
100 Matsonford Road
Radnor, PA 19087

SUB-ADVISER
MeesPierson 1838 Investment Advisors
Five Radnor Corporate Center
Suite 320
100 Matsonford Road
Radnor, PA 19087

UNDERWRITER
Rodney Square Distributors, Inc.
Rodney Square North
1100 N. Market Street
Wilmington, DE 19890

SHAREHOLDER SERVICES
Rodney Square Management Corporation
Rodney Square North
1100 N. Market Street
Wilmington, DE 19890

CUSTODIAN
Bankers Trust Company
280 Park Avenue
New York, NY 10017

LEGAL COUNSEL
Stradley, Ronon, Stevens & Young
2600 One Commerce Square
Philadelphia, PA 19103

AUDITORS
Coopers & Lybrand L.L.P.
2400 Eleven Penn Center
Philadelphia, PA 19103

ET01

1838

INTERNATIONAL EQUITY FUND

PROSPECTUS
FEBRUARY 1, 1996

<PAGE>

1838 INVESTMENT ADVISORS FUNDS

THE DATE OF THIS PROSPECTUS IS ___________, 1995

Five Radnor Corporate Center, Suite 320
100 Matsonford Road, Radnor, PA 19087
(610) 293-4300

1838 Investment Advisors Funds (the "Trust") is an open-end,
management investment company. It is organized as a series Delaware business
trust and currently offers shares of two series: 1838 International Equity Fund
and 1838 Small Cap Equity Fund, each of which has a diversified portfolio of
assets and a specific investment objective and policies. This prospectus
pertains only to 1838 Small Cap Equity Fund (the "Fund").

The investment objective of the Fund is long-term growth. The
Fund seeks to achieve its objective by investing primarily in the common stock
of domestic companies with relatively small market capitalizations, those with a
market value of $800 million or less (small cap), which are believed to be
undervalued and have good prospects for capital appreciation. The Fund will
invest in small capitalization companies using a value approach. There can be no
assurance that the Fund's investment objective will be achieved. (See
"Investment Objective and Policies" and "Special Risk Considerations.")

The shares of the Fund may be purchased or redeemed at any
time. Purchases will be effected at the net asset value next determined
following receipt and acceptance of the investor's purchase order. Redemptions
will be effected at the net asset value next determined following receipt and
acceptance of the investor's request. (See "Calculation of Net Asset Value,"
"How to Purchase Shares," and "How to Redeem Shares.")

This Prospectus sets forth concisely the information about the
Fund that a prospective investor should know before investing. Investors should
read and retain this Prospectus for future reference. More information about the
Fund has been filed with the Securities and Exchange Commission, and is
contained in the "Statement of Additional Information," dated ____________, 1995
which is available at no charge upon written request to the Trust. The Trust's
Statement of Additional Information is incorporated herein by reference.

<PAGE>

1838 Investment Advisors Funds
Prospectus

Contents Page
<S> <C>
Synopsis
Expenses of the Fund.......................................................................
The Fund ..................................................................................
Investment Objective and Policies..........................................................
Special Risk Considerations................................................................
Investment Restrictions....................................................................
Management of the Fund.....................................................................
Board of Trustees..........................................................................
Investment Adviser.........................................................................
Sub-Adviser................................................................................
Distributor and Distribution Agreement.....................................................
Administrator, Transfer Agent, Dividend
Paying Agent and Custodians..............................................................
Expenses
Calculation of Net Asset Value.............................................................
How to Purchase Shares.....................................................................
Exchange of Shares.........................................................................
How to Redeem Shares.......................................................................
Dividends, Distribution and Taxes..........................................................
Shareholder Accounts.......................................................................
Retirement Plans...........................................................................
Shares of Beneficial Interest, Voting Rights and
Shareholder Meetings.....................................................................
Performance................................................................................
</TABLE>

<PAGE>

SYNOPSIS

Open-End Investment Company

1838 Investment Advisors Funds, which was organized as a Delaware business
trust on December 9, 1994, is an open-end, management investment company. It is
organized as a series Delaware business trust and currently offers shares of two
series: 1838 International Equity Fund and 1838 Small Cap Equity Fund (the
"Fund"). See "The Fund" and "Shares of Beneficial Interest, Voting Rights and
Shareholder Meetings."

Investment Objective

The objective of the Fund is long-term growth. The Fund seeks to achieve
its objective by investing primarily in the common stock of domestic companies
with relatively small market capitalization, those with a market value of $800
million or less (small cap), which are believed to be undervalued and have good
prospects for capital appreciation. The Fund will invest in small capitalization
companies using a value approach. See "Investment Objective and Policies."

Investment Adviser, Distributor and Transfer Agent

1838 Investment Advisors, L.P. (the "Investment Adviser") is the investment
adviser for the Fund. Rodney Square Distributors, Inc. ("RSD") is the
distributor for the Fund. Rodney Square Management Corporation ("Rodney Square")
is the administrator, transfer agent and dividend disbursing agent for the Fund.
See "Management of the Fund."

How to Purchase Shares

Minimum Investment

The minimum initial investment is $1,000 and there is no minimum for
subsequent investments. See "How to Purchase Shares."

Redemptions and Exchanges

Investment Advisory Fees

The Investment Adviser manages the investment of the assets of the Fund in
accordance with its objective and policies and restrictions, subject to the
supervision and direction of the Board of Trustees. For its services, the
Investment Adviser is paid a monthly fee by the Fund at the annual rate of .75%
of the Fund's average daily net assets. See "Management of the Fund."

Special Risk Considerations

Investors should consider a number of factors:

1. Investments in the securities of companies with small market
capitalizations are generally considered to offer greater opportunity for
appreciation and to involve greater risks of depreciation than securities of
companies with larger market capitalizations. See "Investment Objective and
Policies" and "Special Risk Considerations."

2. The Fund may invest up to 20% of its total assets in foreign securities.
Investments on an international basis involve certain risks not involved in
domestic investment, including fluctuations in foreign exchange rates, future
political and economic developments, different legal systems and the existence
or possible imposition of exchange controls or other foreign or U.S.
governmental laws or restrictions applicable to such investments. See
"Investment Objective and Policies" and "Special Risk Considerations."

3. The Fund may engage in the following portfolio strategies: enter into
forward foreign currency exchange contracts and foreign currency futures and
options; write covered options; purchase options; and engage in transactions in
stock index options and futures and related options on such futures. See
"Portfolio Strategies Involving Forward Foreign Exchange Transactions, Options
and Futures" under "Other Investment Practices" and "Futures and Options" under
"Special Risk Considerations."

4. The Fund may lend securities from its portfolio, with a value not
exceeding 331/3% of its total assets, to banks, brokers and other financial
institutions and receive collateral prior to lending. The principal risk to the
Fund is the risk that the borrower defaults on its obligation to return borrowed
securities. See "Lending of Portfolio Securities" under "Other Investment
Practices."

5. The Fund may invest in securities pursuant to repurchase agreements or
purchase and sale contracts (which involve risk of loss if a seller defaults on
its obligations under the agreement or contract). See "Repurchase Agreements and
Purchase and Sale Contracts" under "Other Investment Practices."

EXPENSES OF THE FUND

The following table illustrates all estimated expenses and fees that a
shareholder of the Fund will incur.

Shareholder Transaction Expenses
<TABLE>
<CAPTION>
<S> <C>
Maximum Sales Load Imposed on Purchases.............................................................. None
Maximum Sales Load Imposed on Reinvested Dividends.................................................. None

Estimated Annual Operating Expenses
(as a percentage of average net assets)

Investment Advisory Expenses......................................................................... 0.75%
12b-1 Fees ........................................................................................ None
Other Expenses (after fee waivers)................................................................... 0.50%1

Total Operating Costs (after fee waivers)................................................... 1.25%1
</TABLE>

1 For the current fiscal year, the Investment Adviser has voluntarily agreed to
waive its fees so that the Fund's total operating expenses will not exceed
1.25% of the average daily net assets of the Fund. In addition, the
Administrator, Transfer Agent, Accounting Agent, and Wilmington Trust Company
have voluntarily agreed to waive a portion of their fees for the first 12
months following the Fund's commencement of operations. The amount of "Other
Expenses," absent the fee waivers, would be 0.78%. Absent all expense
waivers, it is estimated that the total expenses of the Fund would be 1.22%
of the Fund's average daily net assets on an annualized basis.

The purpose of this table is to assist the investor in understanding the
various expenses that an investor in the Fund will bear directly or indirectly.
The amount of "Other Expenses" is based on estimated amounts for the current
fiscal year.

1 yr. 3 yrs.
----- ------
<S> <C>
$ 13 $ 40
</TABLE>

This example should not be considered a representation of past or future
expenses or performance. Actual expenses may be greater or lesser than those
shown.

<PAGE>

THE FUND

1838 Investment Advisors Funds (the "Trust") is an open-end, management
investment company commonly known as a mutual fund. The Trust was established as
a series Delaware business trust on December 9, 1994. The Trust currently offers
two series of shares, each of which has a diversified portfolio of assets: 1838
International Equity Fund and 1838 Small Cap Equity Fund. This prospectus
relates only to 1838 Small Cap Equity Fund (the "Fund").

INVESTMENT OBJECTIVE AND POLICIES

The Fund's investment objective is long-term capital growth. The Fund seeks
to achieve its objective by investing primarily in the common stock of domestic
companies with relatively small market capitalizations, those with market value
of $800 million or less (small cap), which are believed to be undervalued and
have good prospects for capital appreciation. During normal market conditions,
at least 65% of the Fund's total assets will be invested in the equity
securities of companies with market capitalizations of $800 million or less, at
the time of initial purchase.

The Fund will invest primarily in small capitalization companies using a
value approach. This approach entails finding companies whose current stock
prices (i) are believed not to adequately reflect their underlying value as
measured by assets; and (ii) are low in relation to current earnings, cash flow
or business franchises, and which, in the Investment Adviser's opinion, seem
capable of recovering from any out of favor considerations. Companies with a
market value of $800 million or less may offer greater potential for capital
appreciation since they are often overlooked or undervalued by investors.
Because of their size, small cap stocks are less actively followed by stock
analysts and less information is available on which to base stock price
evaluations. As a result, greater variations often exist between the current
stock price and its estimated underlying value which may present greater
opportunity for long-term capital growth.

The Investment Adviser will rely on its proprietary research to identify
undervalued, small cap stocks before their value is recognized by the investment
community. Stocks will be selected when the Investment Adviser believes (1) the
current stock price is undervalued in relation to current earnings, cash flow or
estimated asset value per share; and (2) the potential for a catalyst exists
(such as increased investor attention, asset sales or a change in management)
which will cause the stock's price to increase to reflect the company's
underlying value.

The Fund's holdings will generally be traded in established
over-the-counter markets, but assets may also be invested in securities listed
on a national or regional securities exchange. The Fund may also invest a
portion of its assets in publicly traded stocks with limited marketability and
up to 15% of its assets in restricted securities, as described below.

Higher risks are often associated with investment in the securities of
small capitalization companies. See "Special Risk Considerations."

In addition to the investments described above, the Fund's investments may
include, but are not limited to, those described below.

While the Fund will remain primarily invested in common stocks, it may, for
temporary defensive purposes, invest in reserves without limitation. Reserves in
which the Fund may invest are cash or short-term cash equivalents, including
Treasury obligations, direct obligations of federal agencies, and high quality,
private sector short-term instruments. The Fund may also establish and maintain
reserves as the Investment Adviser believes is advisable to facilitate the
Fund's cash flow needs (e.g., redemptions, expenses, and purchases of portfolio
securities). The Fund's reserves will be invested in domestic and foreign money
market instruments rated within the top two credit categories by a national
rating organization or, if unrated, the Investment Adviser's equivalent.

While the Fund has no current intention to do so, the Fund may invest in
debt or preferred equity securities convertible into or exchangeable for equity
securities and warrants. The Fund may purchase both rated and unrated
convertible debt securities, depending upon prevailing market and economic
conditions. Debt securities rated as investment grade means that they have a
rating of Baa or better as determined by Moody's or BBB by S&P, or are of
comparable quality. These are the highest ratings or categories as defined by
Moody's and S&P. Debt securities that are rated Baa by Moody's or BBB by S&P or,
if unrated, are of comparable quality, may have speculative characteristics, and
changes in economic conditions or other circumstances are more likely to lead to
a weakened capacity to make principal and interest payments than is the case
with higher rated debt securities. Debt rated BB and below by S&P and Ba and
below by Moody's is regarded, on balance, as predominantly speculative with
respect to capacity to pay interest and repay principal in accordance with the
terms of the obligation. While such debt will likely have some quality and
protective characteristics, these are outweighed by large uncertainties or major
risk exposures to adverse conditions. The Fund may invest up to 5% (measured at
the time of purchase) of its total assets in corporate debt securities without
regard to quality or rating.

The Investment Adviser expects that a majority of investments in the Fund
will be in U.S. based companies; however, from time to time, the Fund may invest
up to 20% of its total assets in securities principally traded in markets
outside the United States, if they meet the Fund's investment criteria. Under
normal circumstances, investments in foreign securities will comprise no more
than 10% of portfolio assets. While investments in foreign securities are
intended to reduce risk by providing further diversification, such investments
involve certain risks not involved in domestic investment. See "Special Risk
Considerations."

Foreign securities of the Fund are subject to currency risk, that is, the
risk that the U.S. dollar value of these securities may be affected favorably or
unfavorably by changes in foreign currency exchange rates and exchange control
regulations. To manage this risk and facilitate the purchase and sale of foreign
securities, the Fund will engage in foreign currency transactions involving the
purchase and sale of forward foreign currency exchange contracts. Although
foreign currency transactions will be used primarily to protect the Fund from
adverse currency movements, they also involve the risk that anticipated currency
movements will not be accurately predicted and the Fund's total return could be
adversely affected as a result. See "Portfolio Strategies Involving Forward
Foreign Exchange Transactions, Options and Futures" under "Other Investment
Practices" and "Special Risk Considerations."

The Fund may invest in the securities of foreign issuers in the form of
American Depositary Receipts (ADRs), European Depositary Receipts (EDRs), Global
Depositary Receipts (GDRs) or other securities convertible into securities of
foreign issuers, such as convertible preferred stock, convertible bonds and
warrants or rights convertible into common stock. These securities may not
necessarily be denominated in the same currency as the securities into which
they may be converted. If the Fund determines that other securities convertible
into foreign securities are available in the market, the Fund will notify
shareholders before investing in such securities.

The Fund may purchase securities that are not registered ("restricted
securities") under the Securities Act of 1933, as amended, but can be offered
and sold to "qualified institutional buyers" under Rule 144A under that Act.
However, the Fund will not invest more than 15% of its assets in illiquid
investments, which includes securities for which there is no readily available
market, securities subject to contractual restrictions on resale, and otherwise
restricted securities, unless the Fund's Board of Trustees continuously
determines, based on the trading markets for the specific restricted security,
that it is liquid. (However, under the law of certain states, the Fund presently
is limited with respect to such investments to 10% of its net assets.) The Board
of Trustees has determined to treat as liquid Rule 144A securities which are
freely tradeable in their primary markets offshore. The Board of Trustees may
adopt guidelines and delegate to the Investment Adviser the daily function of
determining and monitoring liquidity of restricted securities. The Board of
Trustees, however, will retain sufficient oversight and be ultimately
responsible for the determinations.

OTHER INVESTMENT PRACTICES

When-Issued, Forward Delivery and Delayed Settlement Securities

The Fund will invest in securities whose terms and characteristics are
already known but which have not yet been issued. These are called "when-issued"
or "forward delivery" securities. "Delayed settlements" occur when the Fund
agrees to buy or sell securities at some time in the future, making no payment
until the transaction is actually completed. Such transactions will be limited
to no more than 25% of the Fund's assets. The Fund engages in these types of
purchases in order to buy securities that fit with its investment objective at
attractive prices -- not to increase its investment leverage. Securities
purchased on a when-issued basis may decline or appreciate in market value prior
to their actual delivery to the Fund.

Portfolio Strategies Involving Forward Foreign Exchange Transactions,
Options and Futures

The following investment practices are practices that involve investment in
derivatives. Derivatives are contracts or securities, the value of which depends
on (or "derives" from) the future prices of underlying financial assets.
Investment in derivatives entails risk of which investors should be aware, as
described under each heading below. For additional information about derivative
securities in which the Fund may invest, and the risks associated with these
investments, see "Investment Objectives and Policies" in the Fund's Statement of
Additional Information.

Forward Foreign Currency Exchange Contracts

Foreign Currency Futures Contracts and Options

As another means of reducing the risks associated with investing in
securities denominated in foreign currencies, the Fund may enter into contracts
for the future acquisition or delivery of foreign currencies and may purchase
foreign currency options. These investment techniques are designed primarily to
hedge against anticipated future changes in currency prices which otherwise
might adversely affect the value of the Fund's portfolio securities. The Fund
will incur brokerage fees when it purchases or sells futures contracts or
options, and it will be required to maintain margin deposits. As set forth
below, futures contracts and options entail risks, but the Investment Adviser
believes that use of such contracts and options may benefit the Fund by
diminishing currency risks. The Fund will not enter into any futures contract or
option if immediately thereafter the value of all the foreign currencies
underlying its futures contracts and foreign currency options would exceed 10%
of the value of its total assets. In addition, the Fund may enter into a futures
contract only if immediately thereafter not more than 5% of its total assets are
required as deposit to secure obligations under such contracts.

Writing Covered Options

Purchasing Options

The Fund is authorized to purchase put options to hedge against a decline
in the market value of its securities. By buying a put option the Fund has a
right to sell the underlying security at the exercise price, thus limiting the
Fund's risk of loss through a decline in the market value of the security until
the put option expires. In certain circumstances, the Fund may purchase call
options on securities held in its portfolio on which it has written call options
or on securities it intends to purchase.

The Fund will not purchase options on securities (including stock index
options discussed below) if as a result of such purchase, the aggregate cost of
all outstanding options on securities held by the Fund would exceed 5% of the
market value of the Fund's total assets.

Stock Index Options and Futures

The Fund may also purchase and sell stock index futures contracts ("futures
contracts") as a hedge against adverse changes in the market value of its
portfolio securities as described below. A futures contract is an agreement
between two parties which obligates the purchaser of the futures contract to buy
and the seller of a futures contract to sell a security for a set price on a
future date. Unlike most other futures contracts, a stock index futures contract
does not require actual delivery of securities, but results in cash settlement
based upon the difference in value of the index between the time the contract
was entered into and the time of its settlement. The Fund may effect
transactions in stock index futures contracts in connection with equity
securities in which it invests.

The Fund also has authority to purchase and write call and put options on
futures contracts and stock indices in connection with its hedging activities.
Generally, these strategies are utilized under the same market and market sector
conditions (i.e., conditions relating to specific types of investments) in which
the Fund enters into futures transactions. The Fund may purchase put options or
write call options on futures contracts and stock indices rather than selling
the underlying futures contract in anticipation of a decrease in the market
value of its securities. Similarly, the Fund may purchase call options, or write
put options on futures contracts and stock indices, as a substitute for the
purchase of such futures to hedge against the increased cost resulting from an
increase in the market value of securities which the Fund intends to purchase.

The Fund may engage in options and futures transactions on U.S. and foreign
exchanges and in options in the over-the-counter markets ("OTC options").
Exchange-traded contracts are third-party contracts (i.e., performance of the
parties' obligations is guaranteed by an exchange or clearing corporation)
which, in general, have standardized strike prices and expiration dates. OTC
options transactions are two-party contracts with price and terms negotiated by
the buyer and seller. See "Restrictions on OTC Options" below for information as
to restrictions on the use of OTC options.

Restrictions on OTC Options

The Fund will engage in OTC options, including over-the-counter stock index
options, over-the-counter foreign currency options and options on foreign
currency futures, only with member banks of the Federal Reserve System and
primary dealers in United States Government securities or with affiliates of
such banks or dealers that have capital of at least $50 million or whose
obligations are guaranteed by an entity having capital of at least $50 million
or any other bank or dealer having capital of at least $150 million or whose
obligations are guaranteed by an entity having capital of at least $150 million.
The Fund will acquire only those OTC options for which the Investment Adviser
believes the Fund can receive on each business day at least two independent bids
or offers (one of which will be from an entity other than a party to the option)
or which can be sold at a formula price provided for in the OTC option
agreement.

The staff of the Securities and Exchange Commission has taken the position
that purchased OTC options and the assets used as cover for written OTC options
are illiquid securities. Therefore, the Fund has adopted an investment policy
pursuant to which it will not purchase or sell OTC options (including OTC
options on futures contracts) if, as a result of such transaction, the sum of
the market value of OTC options currently outstanding which are held by the
Fund, the market value of the underlying securities covered by OTC call options
currently outstanding which were sold by the Fund and margin deposits on the
Fund's existing OTC options on futures contracts exceed 15% of the net assets of
the Fund, taken at market value, together with all other assets of the Fund
which are illiquid or are not otherwise readily marketable. However, if the OTC
option is sold by the Fund to a primary U.S. Government securities dealer
recognized by the Federal Reserve Bank of New York and the Fund has the
unconditional contractual right to repurchase such OTC option from the dealer at
a predetermined price, then the Fund will treat as illiquid such amount of the
underlying securities as is equal to the repurchase price less the amount by
which the option is "in-the-money" (i.e., current market value of the underlying
security minus the option's strike price). The repurchase price with the primary
dealers is typically a formula price which is generally based on a multiple of
the premium received for the option, plus the amount by which the option is
"in-the-money." This policy as to OTC options is not a fundamental policy of the
Fund and may be amended by the Trustees of the Trust without the approval of the
Fund's shareholders. However, the Fund will not change or modify this policy
prior to the change or modification by the Securities and Exchange Commission's
staff of its position.

Restrictions on the Use of Futures Transactions

Regulations of the Commodity Futures Trading Commission ("CFTC") applicable
to the Fund provide that the futures trading activities described herein will
not result in the Fund being deemed a "commodity pool operator" under such
regulations if the Fund adheres to certain restrictions. In particular, the Fund
may purchase and sell futures contracts and options thereon (i) for bona fide
hedging purposes, and (ii) for non-hedging purposes, if the aggregate initial
margin and premiums required to establish positions in such contracts and
options does not exceed 5% of the liquidation value of the Fund's portfolio,
after taking into account unrealized profits and unrealized losses on any such
contracts and options.

When the Fund purchases a futures contract, or writes a put option or
purchases a call option thereon, an amount of cash and cash equivalents will be
deposited in a segregated account with the Fund's custodian so that the amount
so segregated, plus the amount of initial and variation margin held in the
account of its broker, equals the market value of the futures contract, thereby
ensuring that the use of such futures contract is unleveraged.

Portfolio Transactions

In executing portfolio transactions, the Investment Adviser seeks to obtain
the best net results for the Fund, taking into account such factors as price
(including the applicable brokerage commission or dealer spread), size of order,
difficulty of execution and operational facilities of the firm involved and the
firm's risk in positioning a block of securities. While the Investment Adviser
generally seeks reasonably competitive commission rates, the Fund does not
necessarily pay the lowest commission or spread available. The Fund has no
obligation to deal with any broker or group of brokers in the execution of
transactions in portfolio securities. Under the Investment Company Act, persons
affiliated with the Fund and persons who are affiliated with such affiliated
persons, including the Investment Adviser, are prohibited from dealing with the
Fund as a principal in the purchase and sale of securities unless a permissive
order allowing such transactions is obtained from the Securities and Exchange
Commission. Affiliated persons of the Fund, and affiliated persons of such
affiliated persons, may serve as the Fund's broker in transactions conducted on
an exchange and in over-the-counter transactions conducted on an agency basis
and may receive brokerage commissions from the Fund. In addition, consistent
with the Rules of Fair Practice of the National Association of Securities
Dealers, Inc., the Fund may consider sales of shares of the Fund as a factor in
the selection of brokers or dealers to execute portfolio transactions for the
Fund. Brokerage commissions and other transaction costs on foreign stock
exchange transactions are generally higher than in the U.S., although the Fund
will endeavor to achieve the best net results in effecting its portfolio
transactions.

Lending of Portfolio Securities

The Fund may from time to time lend securities from its portfolio, with a
value not exceeding 33 1/3% of its total assets, to banks, brokers and other
financial institutions and receive collateral in cash, a letter of credit issued
by a domestic U.S. bank or securities issued or guaranteed by the U.S.
Government which will be maintained at all times in an amount equal to at least
100% of the current market value of the loaned securities. During the period of
such a loan, the Fund receives the income on both the loaned securities and the
collateral and thereby increases its yield. In the event that the borrower
defaults on its obligation to return borrowed securities because of insolvency
or otherwise, the Fund could experience delays and costs in gaining access to
the collateral and could suffer a loss to the extent the value of the collateral
falls below the market value of the borrowed securities.

Portfolio Turnover

The Investment Adviser will effect portfolio transactions without regard to
holding period if, in its judgment, such transactions are advisable in light of
a change in circumstances in general market, economic or financial conditions.
As a result of its investment policies, the Fund may engage in a substantial
number of portfolio transactions. Although it is impossible to predict the
portfolio turnover rate, the Fund does not expect the portfolio turnover rate to
exceed 100%. High portfolio turnover involves additional transaction costs (such
as brokerage commissions or sales charges) which are borne by the Fund, and
might involve adverse tax effects. (See "Dividends, Distributions and Taxes").

The portfolio turnover rate is calculated by dividing the lesser of the
Fund's annual sales or purchases of portfolio securities (exclusive of purchases
or sales of securities whose maturities at the time of acquisition were one year
or less) by the monthly average value of the securities in the portfolio during
the year.

Repurchase Agreements and Purchase and Sale Contracts

The Fund may invest in securities pursuant to repurchase agreements or
purchase and sale contracts. Repurchase agreements may be entered into only with
a member bank of the Federal Reserve System or a primary dealer in U.S.
Government securities. Purchase and sale contracts may be entered into only with
financial institutions which have capital of at least $50 million or whose
obligations are guaranteed by an entity having capital of at least $50 million.
Under such agreements, the other party agrees, upon entering into the contract
with the Fund, to repurchase the security at a mutually agreed upon time and
price in a specified currency, thereby determining the yield during the term of
the agreement. This results in a fixed rate of return insulated from market
fluctuations during such period although it may be affected by currency
fluctuations. In the case of repurchase agreements, the prices at which the
trades are conducted do not reflect accrued interest on the underlying
obligation; whereas, in the case of purchase and sale contracts, the prices take
into account accrued interest. Such agreements usually cover short periods, such
as under one week. Repurchase agreements may be construed to be collateralized
loans by the purchaser to the seller secured by the securities transferred to
the purchaser. In the case of a repurchase agreement, as a purchaser, the Fund
will require the seller to provide additional collateral if the market value of
the securities falls below the repurchase price at any time during the term of
the repurchase agreement; the Fund does not have the right to seek additional
collateral in the case of purchase and sale contracts. In the event of default
by the seller under a repurchase agreement construed to be a collateralized
loan, the underlying securities are not owned by the Fund but only constitute
collateral for the seller's obligation to pay the repurchase price. Therefore,
the Fund may suffer time delays and incur costs or possible losses in connection
with disposition of the collateral. A purchase and sale contract differs from a
repurchase agreement in that the contract arrangements stipulate that the
securities are owned by the Fund. In the event of a default under such a
repurchase agreement or under a purchase and sale contract, instead of the
contractual fixed rate, the rate of return to the Fund would be dependent upon
intervening fluctuations of the market values of such securities and the accrued
interest on the securities. In such event, the Fund would have rights against
the seller for breach of contract with respect to any losses arising from market
fluctuations following the failure of the seller to perform. Repurchase
agreements and purchase and sale contracts maturing in more than seven days are
deemed illiquid by the Securities and Exchange Commission and are therefore
subject to the Fund's investment restriction limiting investments in securities
that are not readily marketable to 15% of the Fund's total assets. (However,
under the law of certain states, the Fund presently is limited with respect to
such investments to 10% of its net assets.)

SPECIAL RISK CONSIDERATIONS

Small Capitalization Companies

Investments in securities of companies with small market capitalizations
are generally considered to offer greater opportunity for appreciation and to
involve greater risks of depreciation than securities of companies with larger
market capitalizations. Since the securities of such companies are not as
broadly traded as those of companies with larger market capitalizations, these
securities are often subject to wider and more abrupt fluctuations in market
price.

Among the reasons for the greater price volatility of these securities are
the less certain growth prospects of smaller firms, a lower degree of liquidity
in the markets for such stocks compared to larger capitalization stocks, and the
greater sensitivity of small companies to changing economic conditions. Besides
exhibiting greater volatility, small company stocks may, to a degree, fluctuate
independently of larger company stocks. Small company stocks may decline in
price as large company stock prices rise, or rise in price as large company
stock prices decline. Investors should therefore expect that the value of the
Fund's shares may be more volatile than the shares of a fund that invest in
larger capitalization stocks.

International Investing

Investments on an international basis involve certain risks not involved in
domestic investment, including fluctuations in foreign exchange rates, future
political and economic developments, different legal systems and the existence
or possible imposition of exchange controls or other foreign or U.S.
governmental laws or restrictions applicable to such investments. Securities
prices in different countries are subject to different economic, financial,
political and social factors. Because the Fund may invest in securities
denominated or quoted in currencies other than the U.S. dollar, changes in
foreign currency exchange rates may affect the value of securities in the
portfolio and the unrealized appreciation or depreciation of investments insofar
as U.S. investors are concerned. Foreign currency exchange rates are determined
by forces of supply and demand in the foreign exchange markets. These forces
are, in turn, affected by international balance of payments and other economic
and financial conditions, government intervention, speculation and other
factors. With respect to certain countries, there may be the possibility of
expropriation of assets, confiscatory taxation, high rate of inflation,
political or social instability or diplomatic developments which could affect
investment in those countries. In addition, certain foreign investments may be
subject to foreign withholding taxes. As a result, management of the Fund may
determine that, notwithstanding otherwise favorable investment criteria, it may
not be practicable or appropriate to invest in a particular country.

There may be less publicly available information about a foreign company
than about a U.S. company, and foreign companies may not be subject to
accounting, auditing and financial reporting standards and requirements
comparable to those to which U.S. companies are subject.

Futures and Options

The primary risks associated with the use of futures and options are (i)
the failure to predict accurately the direction of stock prices, interest rates,
currency movements and other economic factors; (ii) the failure as hedging
techniques in cases where the price movements of the securities underlying the
options and futures do not follow the price movements of the portfolio
securities subject to the hedge; (iii) the potentially unlimited loss from
investing in futures contracts; and (iv) the likelihood of the Fund being unable
to control losses by closing its position where a liquid secondary market does
not exist. The risk that the Fund will be unable to close out a futures position
or options contract will be minimized by the Fund only entering into futures
contracts or options transactions on national exchanges and for which there
appears to be a liquid secondary market. For more detailed information about
futures transactions and options, see the Statement of Additional Information.

Options and futures transactions in foreign markets are also subject to the
risk factors associated with foreign investments generally, as discussed above.

Borrowing

The Fund may borrow up to 20% of its total assets, taken at market value,
but only from banks as a temporary measure for extraordinary or emergency
purposes, including to meet redemptions or to settle securities transactions.
The Fund will not purchase securities while borrowings exceed 5% of its total
assets, except (a) to honor prior commitments or (b) to exercise subscription
rights when outstanding borrowings have been obtained exclusively for
settlements of other securities transactions. The purchase of securities while
borrowings are outstanding will have the effect of leveraging the Fund. Such
leveraging increases the Fund's exposure to capital risk, and borrowed funds are
subject to interest costs which will reduce net income.

INVESTMENT RESTRICTIONS

o Invest in the securities of any single issuer if, immediately
after and as a result of such investment, the Fund owns more
than 10% of the outstanding voting securities of such issuer.

o Invest more than 25% of its total assets (taken at market
value at the time of each investment) in the securities of
issuers in any particular industry, except for temporary
defensive purposes.

Changes in values of particular Fund assets or the assets of the Fund as a
whole will not cause a violation of the investment restrictions so long as
percentage restrictions are observed by the Fund at the time it purchases a
security.

MANAGEMENT OF THE FUND

Board of Trustees

The Board of Trustees of the Fund consists of five individuals, three of
whom are not "interested persons" of the Fund as defined in the Investment
Company Act. The members of the Fund's Board of Trustees are fiduciaries for the
Fund's shareholders and, in this regard, are governed by the laws of the State
of Delaware. The Trustees establish policy for the operation of the Fund, and
appoint the officers who conduct the daily business of the Fund. The Statement
of Additional Information contains more information regarding the Officers and
Trustees of the Fund.

Investment Adviser

For its services, the Investment Adviser is paid a monthly fee at the
annual rate of .75% of the Fund's average daily net assets. This fee is higher
than that paid by most mutual funds for investment advisory services, but
management of the Fund believes this fee is justified by the additional
investment research and analysis required in connection with investing in small
capitalization companies. This fee is subject to reductions reflecting certain
reductions in the fee of the Investment Adviser pursuant to state expense
limitations and other voluntary reductions in fees paid by the Fund.

W. Thacher Brown, the President, Chairman and a Trustee of the Fund, is the
President and a 39.5% shareholder of 1838 Investment Advisors, Inc. ("1838
Inc."), which is the managing general partner of the Investment Adviser. Mr.
Brown is also an individual limited partner of the Investment Adviser. George W.
Gephart, Jr., a Trustee and Vice President of the Fund, Anna M. Bencrowsky, a
Vice President, Treasurer and Assistant Secretary of the Fund, and Edwin B.
Powell, Vice President and portfolio manager of the Fund are also shareholders
of 1838 Inc. Since 1988, the Investment Adviser has served as the investment
adviser to a registered closed-end investment company and, as of September 30,
1994, the Investment Adviser managed approximately $4 billion in client assets.

The Investment Adviser, 1838 Inc. and MeesPierson Capital Management Inc.
("MPCM"), a 24.9% limited partner of the Investment Adviser and indirect wholly
owned subsidiary of MeesPierson N.V., located at Five Radnor Corporate Center,
Suite 320, 100 Matsonford Road, Radnor, PA 19087, have entered into a purchase
agreement whereby MPCM has the option to purchase from 1838 Inc. a limited
partnership interest representing an additional 5.1% of the Investment Adviser.
Under the terms of the purchase agreement, MPCM may not exercise its option
prior to December 31, 1998.

Edwin B. Powell, Principal of the Investment Adviser, will be principally
responsible for the day-to-day management of the Fund's portfolio. Since June of
1994, Mr. Powell has served as a money manager with the Investment Adviser,
managing a number of separate portfolios in the small cap style. Prior to
joining the Investment Adviser, Mr. Powell was employed by Provident Capital
Management (a subsidiary of PNC Bancorp) where for seven years he managed a
number of large and small cap portfolios in a value style. While at Provident
Capital Management, Mr. Powell managed two publicly traded, open-end mutual
funds: PNC Value Fund and PNC Small Cap Value Fund.

Distributor and Distribution Agreement

Rodney Square Distributors, Inc. ("RSD"), 1100 N. Market Street,
Wilmington, DE 19890, has been engaged pursuant to a distribution agreement
dated February 8, 1995, to assist in securing purchasers for shares of the Fund.
RSD also directly, or through its affiliates, provides investor support
services. RSD will receive no compensation for distribution of shares of the
Fund, except for reimbursement of out-of-pocket expenses.

Banking laws limit deposit-taking institutions and certain of their
affiliates from underwriting or distributing securities. RSD is an affiliate of
Wilmington Trust Company ("WTC"), the Fund's custodian bank for its domestic
assets. RSD believes that it may perform the services contemplated by its
agreement with the Trust without violation of applicable banking laws or
regulations. If RSD were prohibited from performing these services, it is
expected that the Board of Trustees would consider entering into agreements with
other entities. It is not expected that shareholders would suffer any adverse
financial consequences as a result of such an occurrence.

Administrator, Transfer Agent, Dividend Paying Agent and Custodians

As Administrator, Rodney Square supplies office facilities, non-investment
related statistical and research data, stationery and office supplies, executive
and administrative services, internal auditing and regulatory compliance
services. Rodney Square also assists in the preparation of reports to
shareholders, prepares proxy statements, updates prospectuses and makes filings
with the Securities and Exchange Commission and state securities authorities.
Rodney Square performs certain budgeting and financial reporting and compliance
monitoring activities. For the services provided as Administrator, Rodney Square
receives a monthly administration fee from the Trust at the annual rate of 0.15%
of the average daily net assets of the Trust on the first $50 million; 0.10% of
such assets in excess of $50 million to $100 million; 0.07% of such assets in
excess of $100 million to $200 million; and 0.05% of such assets in excess of
$200 million. Each Series pays its pro-rata portion based upon total Trust
assets. Such fees are subject to a minimum fee of $50,000 per year for one
series and $15,000 minimum per year for each additional series. Rodney Square
also serves as Transfer Agent and Dividend Paying Agent of the Fund.

The custodian for the assets of the Fund is WTC, Rodney Square North, 1100
N. Market Street, Wilmington, DE 19890-0001.

Expenses

Except as indicated above, the Fund is responsible for the payment of its
expenses, other than those borne by the Investment Adviser and such expenses may
include, but are not limited to: (a) management fees; (b) the charges and
expenses of the Fund's legal counsel and independent accountants; (c) brokers'
commissions, mark-ups and mark-downs and any issue or transfer taxes chargeable
to the Fund in connection with its securities transactions; (d) all taxes and
corporate fees payable by the Fund to governmental agencies; (e) the fees of any
trade association of which the Fund is a member; (f) the cost of certificates,
if any, representing shares of the Fund; (g) amortization and reimbursements of
the organization expenses of the Fund and the fees and expenses involved in
registering and maintaining registration of the Fund and its shares with the
Securities and Exchange Commission, and the preparation and printing of the
Fund's registration statements and prospectuses for such purposes; (h) allocable
communications expenses with respect to investor services and all expenses of
shareholders and trustees' meetings and of preparing, printing and mailing
prospectuses and reports to shareholders; (i) litigation and indemnification
expenses and other extraordinary expenses not incurred in the ordinary course of
the Fund's business; and (j) compensation for employees of the Fund.

CALCULATION OF NET ASSET VALUE

In valuing the Fund's assets, all securities for which representative
market quotations are available will be valued at the last quoted sales price on
the security's principal exchange on that day. If there are no sales of the
relevant security on such day, the security will be valued at the mean between
the closing bid and asked price on that day, if any. Securities for which market
quotations are not readily available and all other assets will be valued at
their respective fair market value as determined in good faith by, or under
procedures established by, the Board of Trustees. In determining fair value, the
Trustees may employ an independent pricing service.

Those securities that are quoted in foreign currency will be valued daily
in U.S. dollars at the foreign currency exchange rates prevailing at the time
Rodney Square calculates the daily net asset value per share. Although the Fund
values its assets in U.S. dollars on a daily basis, it does not intend to
convert its holdings of foreign currencies into U.S. dollars on a daily basis.

HOW TO PURCHASE SHARES

Purchases may be made in one of the following ways:

Purchases by Mail

You may purchase shares by sending a check drawn on a U.S. bank payable to
1838 Small Cap Equity Fund, along with a completed Application, to 1838 Small
Cap Equity Fund, c/o Rodney Square Management Corporation, P.O. Box 8987,
Wilmington, DE 19899-9752. A purchase order sent by overnight mail should be
sent to 1838 Small Cap Equity Fund, c/o Rodney Square Management Corporation,
1100 N. Market St., 3rd Floor, Wilmington, DE 19890. If a subsequent investment
is being made, the check should also indicate your Fund account number.

When you purchase by check, payment on redemptions will be mailed upon
clearance of the check (which may take up to 15 days). If you purchase shares
with a check that does not clear, your purchase will be cancelled and you will
be responsible for any losses or fees incurred in that transaction.

Purchases by Wire

RODNEY SQUARE MANAGEMENT CORPORATION
C/O WILMINGTON TRUST COMPANY
WILMINGTON, DE
ABA #0311 0009 2
ATTENTION: 1838 SMALL CAP EQUITY FUND
DDA #2670-9482
FURTHER CREDIT [SHAREHOLDER NAME AND ACCOUNT NUMBER]

If you make an initial purchase by wire, you must promptly forward a
completed Application to Rodney Square at the address stated above under
"Purchases By Mail." Investors should be aware that some banks may impose a wire
service fee.

Automatic Investment Plan

Shareholders may purchase Fund shares through an Automatic Investment Plan.
The Plan provides a convenient method by which investors may have monies
deducted directly from their checking, savings or bank money market accounts for
investment in the Fund. Under the Plan, Rodney Square, at regular intervals,
will automatically debit a shareholder's bank checking account in an amount of
$50 or more (subsequent to the $1,000 minimum initial investment), as specified
by the shareholder. A shareholder may elect to invest the specified amount
monthly, bimonthly, quarterly, semi-annually or annually. The purchase of Fund
shares will be effected at the net asset value at the close of regular trading
on the New York Stock Exchange (the "Exchange") (generally 4:00 p.m. Eastern
time) on or about the 20th day of the month. To obtain an Application for the
Automatic Investment Plan, check the appropriate box of the Application at the
end of this Prospectus or call Rodney Square at (800) 884-1838.

Additional Purchase Information

Shares of the Fund are offered at the net asset value next determined after
a purchase order is received by Rodney Square, upon acceptance of the purchase
order by RSD.

EXCHANGE OF SHARES

A redemption of shares through an exchange will be effected at the net
asset value per share next determined after receipt by Rodney Square of the
request, and a purchase of shares through an exchange will be effected at the
net asset value per share determined at that time. The net asset values per
share of each series of the Trust are determined at the close of regular trading
on the Exchange (generally 4:00 pm., Eastern time) on any day that such series
calculates its net asset value.

HOW TO REDEEM SHARES

Shareholders may redeem their shares of the Fund without charge on any day
that the Fund calculates its net asset value (see "Calculation of Net Asset
Value"). Redemptions will be effective at the net asset value per share next
determined after receipt and acceptance by Rodney Square of a redemption request
meeting the requirements described below. Redemption proceeds are normally sent
on the next business day following receipt and acceptance by Rodney Square of
the redemption request but, in any event, redemption proceeds are sent within
seven calendar days of receipt and acceptance of the request. Redemption
requests should be accompanied by the Fund's name and your account number.
Corporations, other organizations, trusts, fiduciaries and other institutional
investors may be required to furnish certain additional documentation to
authorize redemptions.

In-Kind Redemption

Pursuant to the Fund's Agreement and Declaration of Trust, payment for
shares redeemed may be made either in cash or in-kind, or partly in cash and
partly in-kind. However, the Fund has elected, pursuant to Rule 18f-1 under the
Act, to redeem its shares solely in cash up to the lesser of $250,000 or 1% of
the net asset value of the Fund, during any 90-day period for any one
shareholder. Payments in excess of this limit will also be made wholly in cash
unless the Board of Trustees believes that economic conditions exist which would
make such a practice detrimental to the best interests of the Fund. Any
portfolio securities paid or distributed in-kind would be valued as described
under "Net Asset Value."

Shares may be redeemed in one of the following ways:

Redemption by Mail

Shareholders redeeming their shares by mail should submit written
instructions with a guarantee of their signature by an "eligible guarantor
institution" as defined in Rule 17Ad-15 under the Securities Exchange Act of
1934. Eligible guarantor institutions include banks, brokers, dealers, credit
unions, national securities exchanges, registered securities associations,
clearing agencies and savings associations. Broker-dealers guaranteeing
signatures must be a member of a clearing corporation or maintain net capital of
at least $100,000. Credit unions must be authorized to issue signature
guarantees. Signature guarantees will be accepted from any eligible guarantor
institution which participates in a signature guarantee program. A signature and
a signature guarantee are required for each person in whose name the account is
registered.

Written redemption instructions should be submitted to 1838 Small Cap
Equity Fund, c/o Rodney Square Management Corporation, P.O. Box 8987,
Wilmington, DE 19899-9752. A redemption order sent by overnight mail should be
sent to 1838 Small Cap Equity Fund, c/o Rodney Square Management Corporation,
1105 N. Market Street, 3rd Floor, Wilmington, DE 19890.

Redemption by Telephone

Redemptions by Wire

Additional Redemption Information

The Fund also reserves the right to involuntarily redeem an investor's
account where the account is worth less than the minimum initial investment
required when the account is established, presently $1,000. (Any redemption of
shares from an inactive account established with a minimum investment may reduce
the account below the minimum initial investment, and could subject the account
to redemption initiated by the Fund). The Fund will advise the shareholder of
such intention in writing at least sixty (60) days prior to effecting such
redemption, during which time the shareholder may purchase additional shares in
any amount necessary to bring the account back to $1,000. If the value of an
investor's account falls below the minimum initial investment requirement due to
market fluctuations, the Fund will not redeem an investor's account except
pursuant to the instructions of the shareholder.

Systematic Withdrawal Plan

For more information on redemption services, contact Rodney Square.

DIVIDENDS, DISTRIBUTIONS AND TAXES

Each series of the Trust, including the Fund, will be treated as a separate
entity for federal income and excise tax purposes. The Fund intends to qualify
annually to be treated as a regulated investment company under Subchapter M of
the Internal Revenue Code of 1986, as amended (the "Code"). As such, the Fund
will not be subject to federal income tax, or to any excise tax, to the extent
its earnings are distributed as provided in the Code and by satisfying certain
other requirements relating to the sources of its income and diversification of
its assets.

The Fund intends to distribute substantially all of its net investment income
and net capital gains. Dividends from net investment income or net short-term
capital gains will be taxable to you as ordinary income, whether received in
cash or in additional shares. For corporate investors dividends from net
investment income will generally qualify in part for the corporate
dividends-received deduction. However, the portion of the dividends so qualified
depends on the aggregate qualifying dividend income received by the Fund from
domestic (U.S.) sources.

Distributions paid by the Fund from long-term capital gains, whether received in
cash or in additional shares, are taxable to those investors subject to income
tax as long-term capital gains, regardless of the length of time an investor has
owned shares in the Fund. The Fund does not seek to realize any particular
amount of capital gains during a year; rather, realized gains are a byproduct of
Fund management activities. Consequently, capital gains distributions may be
expected to vary considerably from year to year. Also, for those investors
subject to tax, if purchases of shares in a Fund are made shortly before the
record date for a dividend or capital gains distribution, a portion of the
investment will be returned as a taxable distribution.

Dividends which are declared in October, November or December to shareholders of
record in such a month but which, for operational reasons, may not be paid to
the shareholder until the following January, will be treated for tax purposes as
if paid by the Fund and received by the shareholder on December 31 of the
calendar year in which they are declared.

A sale of shares of the Fund is a taxable event and may result in a capital gain
or loss to shareholders subject to tax. Capital gain or loss may be realized
from an ordinary redemption of shares or an exchange of shares between two
mutual funds (or two series of a mutual fund). Any loss incurred on sale or
exchange of the Fund's shares, held for six months or less, will be treated as a
long-term capital loss to the extent of capital gain dividends received with
respect to such shares.

The Fund may be subject to foreign withholding taxes on income from certain of
its foreign securities. If more than 50% of the total assets of the Fund at the
end of its fiscal year are invested in securities of foreign corporations, the
Fund may elect to pass-through to its shareholders their pro rata share of
foreign taxes paid by such Fund. If this election is made, shareholders will be
(i) required to include in their gross income their pro rata share of foreign
source income (including any foreign taxes paid by the Fund), and (ii) entitled
to either deduct (as an itemized deduction in the case of individuals) their
share of such foreign taxes in computing their taxable income or to claim a
credit for such taxes against their U.S. income tax, subject to certain
limitations under the Code. Shareholders will be informed by the Fund at the end
of each calendar year regarding the availability of any credits and the amount
of foreign source income (including any foreign taxes paid by the Fund) to be
included on their income tax returns.

Under Code Section 988, foreign currency gains or losses, including those from
forward contracts, from futures contracts that are not "regulated futures
contracts" and from unlisted options, will generally be treated as ordinary
income or loss. Such Code Section 988 gains or losses will increase or decrease
the amount of the Fund's investment company taxable income available to be
distributed to shareholders as ordinary income. If Code Section 988 losses
exceed other investment company taxable income during a taxable year, the Fund
would not be able to make any ordinary dividend distributions, and any
distributions made before the losses were realized but in the same taxable year,
would be recharacterized as a return of capital to shareholders, thereby
reducing each shareholder's basis in Fund Shares.

Each year, the Fund will mail you information on the tax status of the Fund's
dividends and distributions.

The Fund is required to withhold 31% of taxable dividends, capital gains
distributions, and redemptions paid to shareholders who have not complied with
IRS taxpayer identification regulations. You may avoid this withholding
requirement by certifying on your account registration form your proper taxpayer
identification number and by certifying that you are not subject to backup
withholding.

The tax discussion set forth above is included for general information only,
prospective investors should consult their own tax advisers concerning the
federal, state, local or foreign tax consequences of an investment in a Fund.

Additional information on tax matters relating to the Fund and to its
shareholders is included in the Statement of Additional Information.

SHAREHOLDER ACCOUNTS

Rodney Square, as Transfer Agent, maintains for each shareholder an account
expressed in terms of full and fractional shares of the Fund rounded to the
nearest 1/1000th of a share.

RETIREMENT PLANS

Shares of the Fund are available for use in certain tax-deferred plans
(such as Individual Retirement Accounts ("IRAs"), defined contribution, 401(k)
and 403(b)(7) plans).

Individual Retirement Accounts

Application forms and brochures for IRAs can be obtained from Rodney Square
by calling (800) 884-1838.

WTC makes available its services as an IRA custodian for each shareholder
account that is established as an IRA. For these services, WTC receives an
annual fee of $10.00 per series, which fee is paid directly to WTC by the IRA
shareholder. If the fee is not paid by the date due, shares of the Fund owned by
the IRA will be redeemed automatically for purposes of making the payment.

SHARES OF BENEFICIAL INTEREST,
VOTING RIGHTS AND SHAREHOLDER MEETINGS

Shares of Beneficial Interest and Voting Rights

The Trust is organized as a Delaware business trust. The Trust's Agreement
and Declaration of Trust permits the trustees to issue an unlimited number of
shares of beneficial interest with a $0.001 par value per share. The Board of
Trustees has the power to designate one or more series or sub-series/classes of
shares of beneficial interest and to classify or reclassify any unissued shares
with respect to such series.

The shares of the Fund, when issued, will be fully paid and non-assessable
and within each series or class, have no preference as to conversion, exchange,
dividends, retirement or other features. The shares of the Trust which the
trustees may, from time to time, establish, shall have no preemptive rights. The
shares of the Trust have non-cumulative voting rights, which means that the
holders of more than 50% of the shares voting for the election of trustees can
elect 100% of the trustees if they choose to do so. A shareholder is entitled to
one vote for each full share held (and a fractional vote for each fractional
share held), then standing in his name on the books of the Trust. On any matter
submitted to a vote of shareholders, all shares of the Trust then issued and
outstanding and entitled to vote on a matter shall vote without differentiation
between separate series on a one-vote-per share basis. Each whole share is
entitled to one vote and each fractional share is entitled to a proportionate
fractional vote. If a matter to be voted on does not affect the interests of all
series, then only the shareholders of the affected series shall be entitled to
vote on the matter. The Trust's Agreement and Declaration of Trust also give
shareholders the right to vote (i) for the election or removal of trustees; (ii)
with respect to additional matters relating to the Trust as required by the
Investment Company Act; and (iii) on such other matters as the trustees consider
necessary or desirable.

Shareholder Meetings

PERFORMANCE

The Fund may compare its investment performance to appropriate market
indices such as the Russell 2000 Index, Nasdaq Industrial Index, Standard &
Poor's 500 Composite Stock Price Index and Morningstar, Inc., as well as to
appropriate mutual fund indices; and the Fund may advertise its ranking compared
to other similar mutual funds as reported by industry analysts such as Lipper
Analytical Services, Inc.

<PAGE>

INVESTMENT ADVISER
1838 Investment Advisors, L.P.
Five Radnor Corporate Center
Suite 320
100 Matsonford Road
Radnor, PA 19087

UNDERWRITER
Rodney Square Distributors, Inc.
1100 N. Market Street
Wilmington, DE 19890

SHAREHOLDER SERVICES
Rodney Square Management Corporation
Rodney Square North
1100 N. Market Street
Wilmington, DE 19890-0001

CUSTODIANS
Wilmington Trust Company
Rodney Square North
1100 N. Market Street
Wilmington, DE 19890-0001

LEGAL COUNSEL
Stradley, Ronon, Stevens & Young
2600 One Commerce Square
Philadelphia, PA 19103-7098

AUDITORS
Coopers & Lybrand L.L.P.
2400 Eleven Penn Center
Philadelphia, PA 19103

<PAGE>

1838 INVESTMENT ADVISORS FUNDS

STATEMENT OF ADDITIONAL INFORMATION DATED FEBRUARY 1, 1996

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

Five Radnor Corporate Center, Suite 320, 100 Matsonford Road, Radnor, PA 19087

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

1838 Investment Advisors Funds (the "Trust") has established two series:
1838 International Equity Fund (the "International Equity Fund") and 1838 Small
Cap Equity Fund (the "Small Cap Equity Fund") (individually, a "Fund" and
collectively, the "Funds") each with its own investment objective. The Trust
currently offers shares of the International Equity Fund. The Trust is
currently not offering shares of the Small Cap Equity Fund. Information
concerning the International Equity Fund is included in a separate Prospectus
dated February 1, 1996. No investment in shares should be made without first
reading the Prospectus. A copy of the International Equity Fund Prospectus may
be obtained without charge from the Trust at the address and telephone numbers
listed below. The Small Cap Equity Fund Prospectus is currently not available.

INVESTMENT ADVISER: UNDERWRITER:
1838 Investment Advisors, L.P. Rodney Square Distributors, Inc.
Five Radnor Corporate Center, Suite 320 1100 N. Market Street
100 Matsonford Road Wilmington, DE 19890
Radnor, PA 19087 (800) 884-1838
(610) 293-4300

- --------------------------------------------------------------------------------
THIS STATEMENT OF ADDITIONAL INFORMATION IS NOT A PROSPECTUS AND SHOULD BE READ
IN CONNECTION WITH THE CURRENT PROSPECTUS OF THE TRUST DATED FEBRUARY 1, 1996.
RETAIN THIS STATEMENT OF ADDITIONAL INFORMATION FOR FUTURE REFERENCE.
- --------------------------------------------------------------------------------

<PAGE>

TABLE OF CONTENTS

<TABLE>
<CAPTION>
Page
<S> <C>
INVESTMENT OBJECTIVE AND POLICIES 1

INVESTMENT RESTRICTIONS 11

INVESTMENT ADVISER AND SUB-ADVISER 14

ALLOCATION OF PORTFOLIO BROKERAGE 16

DISTRIBUTOR 16

CONTROL PERSONS AND PRINCIPAL HOLDERS OF
SECURITIES 17

PURCHASE OF SHARES 18

REDEMPTIONS 18

TRUSTEES AND OFFICERS OF THE TRUST 19

TAXATION 23

GENERAL INFORMATION 25

PERFORMANCE 25

FINANCIAL STATEMENTS 28

REPORT OF INDEPENDENT ACCOUNTANTS 41
</TABLE>

<PAGE>

INVESTMENT OBJECTIVE AND POLICIES

Each Fund seeks to achieve its respective objective by making
investments selected in accordance with its investment policies and
restrictions. The Funds will vary their investment strategy as described in
each Fund's prospectus to achieve their objectives. This Statement of
Additional Information contains further information concerning the techniques
and operations of each Fund, the securities in which they will invest, and the
policies they will follow.

The following discussion of investment techniques and instruments
should be read in conjunction with the "Investment Objective and Policies" and
"Special Risk Considerations" sections of the Prospectus of each Fund.

Foreign Investment

The securities markets of many countries have at times in the past
moved relatively independently of one another due to different economic,
financial, political and social factors. When such lack of correlation, or
negative correlation, in movements of these securities markets occurs, it may
reduce risk for a Fund's portfolio as a whole. This negative correlation also
may offset unrealized gains a Fund has derived from movements in a particular
market. To the extent the various markets move independently, total portfolio
volatility is reduced when the various markets are combined into a single
portfolio. Of course, movements in the various securities markets may be
offset by changes in foreign currency exchange rates. Exchange rates
frequently move independently of securities markets in a particular country.
As a result, gains in a particular securities market may be affected by
changes in exchange rates.

Portfolio Turnover

While it is the policy of each Fund generally not to engage in trading
for short-term gains, 1838 Advisors, L.P. (the "Investment Adviser"), and
MeesPierson 1838 Investment Advisors, the International Equity Fund's
sub-adviser ("Sub-Adviser"), will effect portfolio transactions without regard
to holding period if, in their judgment, such transactions are advisable in
light of a change in circumstances of a particular company or within a
particular industry or in general market, economic or financial conditions.
While the International Equity Fund anticipates that its annual portfolio
turnover rate should not exceed 75% under normal conditions and the Small Cap
Equity Fund anticipates its portfolio turnover rate should not exceed 100%
under normal conditions, it is impossible to predict portfolio turnover rates.
The International Equity Fund's annualized portfolio turnover rate for the
period from August 3, 1995 (commencement of operations) to October 31, 1995
was 42.21%. The portfolio turnover rate is calculated by dividing the lesser
of a Fund's annual sales or purchases of portfolio securities (exclusive of
purchases or sales of securities whose maturities at the time of acquisition
were one year or less) by the monthly average value of the securities in the
portfolio during the year. High portfolio turnover would involve additional
transaction costs (such as brokerage commissions) which are borne by a Fund,
or adverse tax effects. (See "Dividends, Distributions and Taxes" in the
Prospectus). Each Fund is subject to the federal income tax

-1-

<PAGE>

requirement that less than 30% of a Fund's gross income must be derived from
gains from the sale or other disposition of securities held for less than
three months.

The U.S. Government has from time to time in the past imposed
restrictions, through taxation and otherwise, on foreign investments by U.S.
investors such as the Funds. If such restrictions should be reinstituted, it
might become necessary for a Fund to invest all or substantially all of its
assets in U.S. securities. In such event, the Fund would review its
investment objective and policies to determine whether changes are
appropriate. Any changes in the investment objective or fundamental policies
set forth under "Investment Restrictions" below would require the approval of
the holders of a majority of the Fund's outstanding voting securities.

A Fund's ability and decisions to purchase or sell portfolio
securities may be affected by laws or regulations relating to the
convertibility and repatriation of assets. Because the shares of a Fund are
redeemable on a daily basis on each day the Fund determines its net asset
value in U.S. dollars, the Fund intends to manage its portfolio so as to give
reasonable assurance that it will be able to obtain U.S. dollars to the extent
necessary to meet anticipated redemptions. Under present conditions, the
Investment Adviser does not believe that these considerations will have any
significant effect on its portfolio strategy, although there can be no
assurance in this regard.

Securities Lending

Each Fund may lend its investment securities to approved borrowers who
need to borrow securities in order to complete certain transactions, such as
covering short sales, avoiding failures to deliver securities or completing
arbitrage operations. By lending its investment securities, a Fund attempts
to increase its income through the receipt of interest on the loan. Any gain
or loss in the market price of the securities loaned that might occur during
the term of the loan would be for the account of the Fund. Each Fund may lend
its investment securities to qualified brokers, dealers, domestic and foreign
banks or other financial institutions, so long as the terms, the structure and
the aggregate amount of such loans are not inconsistent with the Investment
Company Act of 1940, as amended, or the Rules and Regulations or
interpretations of the Securities and Exchange Commission (the "SEC")
thereunder, which currently require that (a) the borrower pledge and maintain
with a Fund collateral consisting of cash, an irrevocable letter of credit
issued by a bank or securities issued or guaranteed by the United States
Government having a value at all times not less than 100% of the value of the
securities loaned, (b) the borrower add to such collateral whenever the price
of the securities loaned rises (i.e., the borrower "marks to the market" on a
daily basis), (c) the loan be made subject to termination by a Fund at any
time, and (d) the Fund receives reasonable interest on the loan (which may
include the Fund investing any cash collateral in interest bearing short-term
investments). All relevant facts and circumstances, including the
creditworthiness of the broker, dealer or institution, will be considered in
making decisions with respect to the lending of securities, subject to review
by the Board of Trustees.

<PAGE>

At the present time, the staff of the SEC does not object if an
investment company pays reasonable negotiated fees in connection with loaned
securities so long as such fees are set forth

-2-

<PAGE>

in a written contract and approved by the investment company's Board of
Trustees. In addition, voting rights may pass with the loaned securities, but
if a material event occurs affecting an investment on a loan, the loan must be
called and the securities voted.

Hedging Strategies

Each Fund may engage in various portfolio strategies to
hedge against adverse movements in the equity, debt and currency markets.
Each Fund may buy or sell futures contracts, write (i.e., sell) covered call
and put options on its portfolio securities, purchase put and call options on
securities and engage in transactions in related options on such futures.
Each of these portfolio strategies is described below. Although certain risks
are involved in options and futures transactions, the Investment Adviser
believes that, because the Funds will engage in options and futures
transactions only for hedging purposes, the options and futures portfolio
strategies of a Fund will not subject it to the risks frequently associated
with the speculative use of options and futures transactions. While a Fund's
use of hedging strategies is intended to reduce the volatility of the net
asset value of the Fund's shares, the Fund's net asset value will fluctuate.
There can be no assurance that a Fund's hedging transactions will be
effective. Also, a Fund may not necessarily be engaging in hedging activities
when movements in any equity, debt or currency market occurs.

Forward Foreign Currency Exchange Contracts

The U.S. dollar value of the assets of the Funds may be affected
favorably or unfavorably by changes in foreign currency exchange rates and
exchange control regulations, and the Funds may incur costs in connection with
conversions between various currencies. The Funds will conduct their foreign
currency exchange transactions either on a spot (i.e., cash) basis at the spot
rate prevailing in the foreign currency exchange market, or through entering
into forward contracts to purchase or sell foreign currencies. A forward
foreign currency exchange contract involves an obligation to purchase or sell
a specific currency at a future date, which may be any fixed number of days
from the date of the contract agreed upon by the parties, at a price set at
the time of the contract. These contracts are traded in the interbank market
conducted directly between currency traders (usually large commercial banks)
and their customers. A forward contract generally has no deposit requirement,
and no commissions are charged at any stage for such trades.

The Funds may enter into forward foreign currency exchange contracts
in several circumstances. When a Fund enters into a contract for the purchase
or sale of a security denominated in a foreign currency, or when a Fund

<PAGE>

anticipates the receipt in a foreign currency of dividends or interest
payments on a security which it holds, the Fund may desire to "lock-in" the
U.S. dollar price of the security or the U.S. dollar equivalent of such
dividend or interest payment, as the case may be. By entering into a forward
contract for a fixed amount of dollars, for the purchase or sale of the amount
of foreign currency involved in the underlying transactions, the Fund will be
able to protect itself against a possible loss resulting from an adverse
change in the relationship between the U.S. dollar and the subject foreign
currency during the period between the date on which the security is

-3-

purchased or sold, or on which the dividend or interest payment is declared,
and the date on which such payments are made or received.

Additionally, when either of the Funds anticipates that the currency
of a particular foreign country may suffer a substantial decline against the
U.S. dollar, it may enter into a forward contract for a fixed amount of
dollars, to sell the amount of foreign currency approximating the value of
some or all of such Fund's securities denominated in such foreign currency.
The precise matching of the forward contract amounts and the value of the
securities involved will not generally be possible since the future value of
securities in foreign currencies will change as a consequence of market
movements in the value of these securities between the date on which the
forward contract is entered into and the date it matures. The projection of
short-term currency market movement is extremely difficult, and the successful
execution of a short-term hedging strategy is highly uncertain. From time to
time, each Fund may enter into forward contracts to protect the value of
portfolio securities and enhance Fund performance. The Funds will not enter
into such forward contracts or maintain a net exposure to such contracts where
the consummation of the contracts would obligate such Fund to deliver an
amount of foreign currency in excess of the value of such Fund securities or
other assets denominated in that currency.

The Funds generally will not enter into a forward contract with a term
of greater than one year. At the maturity of a forward contract, a Fund may
either sell the portfolio security and make delivery of the foreign currency,
or it may retain the security and terminate its contractual obligation to
deliver the foreign currency by purchasing an "offsetting" contract with the
same currency trader obligating it to purchase, on the same maturity date, the
same amount of the foreign currency.

It is impossible to forecast with absolute precision the market value
of a particular portfolio security at the expiration of the contract.
Accordingly, it may be necessary for a Fund to purchase additional foreign
currency on the spot market (and bear the expense of such purchase) if the
market value of the security is less than the amount of foreign currency that
such Fund is obligated to deliver and if a decision is made to sell the
security and make delivery of the foreign currency.

If a Fund retains the portfolio security and engages in an offsetting
transaction, such Fund will incur a gain or loss (as described below) to the
extent that there has been movement in forward contract prices. Should

<PAGE>

forward prices decline during the period between a Fund entering into a
forward contract for the sale of a foreign currency and the date it enters
into an offsetting contract for the purchase of the foreign currency, such
Fund will realize a gain to the extent that the price of the currency it has
agreed to sell exceeds the price of the currency it has agreed to purchase.
Should forward prices increase, such Fund would suffer a loss to the extent
that the price of the currency it has agreed to purchase exceeds the price of
the currency it has agreed to sell.

Each of the Funds' dealings in forward foreign currency exchange
contracts will be limited to the transactions described above. Of course, the
Funds are not required to enter into such transactions with regard to their
foreign currency-denominated securities. It also should be realized

-4-

that this method of protecting the value of portfolio securities against a
decline in the value of a currency does not eliminate fluctuations in the
underlying prices of the securities. It simply establishes a rate of exchange
which one can achieve at some future point in time. Additionally, although
such contracts tend to minimize the risk of loss due to a decline in the value
of the hedged currency, at the same time, they tend to limit any potential
gain which might result should the value of such currency increase.

Futures Contracts

Each Fund may enter into futures contracts for the purposes of
hedging, remaining fully invested and reducing transaction costs. Futures
contracts provide for the future sale by one party and purchase by another
party of a specified amount of a specific security at a specified future time
and at a specified price. Futures contracts which are standardized as to
maturity date and underlying financial instrument are traded on national
futures exchanges. Futures exchanges and trading are regulated under the
Commodity Exchange Act by the Commodity Futures Trading Commission ("CFTC"), a
U.S. Government Agency.

Although most futures contracts by their terms call for actual
delivery or acceptance of the underlying securities, in most cases the
contracts are closed out before the settlement date without the making or
taking of delivery. Closing out an open futures position is done by taking an
opposite position ("buying" a contract which has previously been "sold" or
"selling" a contract previously "purchased") in an identical contract to
terminate the position. Brokerage commissions are incurred when a futures
contract is bought or sold.

Futures traders are required to make a good faith initial margin
deposit in cash or acceptable securities with a broker or custodian to
initiate and maintain open positions in futures contracts. An initial margin
deposit is intended to assure completion of the contract (delivery or
acceptance of the underlying security) if it is not terminated prior to the
specified delivery date. Minimal initial margin requirements are established
by the futures exchange and may be changed. Brokers may establish initial
deposit requirements which are higher than the exchange minimums. Futures

<PAGE>

contracts are customarily purchased and sold on initial margin that may range
upward from less than 5% of the value of the contract being traded. After a
futures contract position is opened, the value of the contract is marked to
market daily. A second type of deposit called variation margin is used to
adjust the futures position account for the daily marked to market variations.
If the marked to market value declines, additional deposits in cash are
required to balance this decline (variation margin). Conversely, if the
marked to market value increases, deposits in cash may be withdrawn from the
account to the extent of the increase (variation margin). Variation margin
payments are made to and from the futures broker for as long as the contract
remains open. The Funds expect to earn interest income on their initial
margin deposits.

Traders in futures contracts may be broadly classified as either
"hedgers" or "speculators." Hedgers use the futures markets primarily to
offset unfavorable changes in the value of securities otherwise held for
investment purposes or expected to be acquired by them. Speculators

-5-

are less inclined to own the securities underlying the futures contracts which
they trade and use futures contracts with the expectation of realizing profits
from a fluctuation in interest rates. The Funds intend to use futures
contracts only for hedging purposes.

Regulations of the CFTC applicable to the Funds require that all of
its futures transactions constitute bona fide hedging transactions or that the
Funds' commodity futures and option positions be for other purposes, to the
extent that the aggregate initial margins and premiums required to establish
such non-hedging positions do not exceed five percent of the liquidation value
of each Fund. Each Fund will only sell futures contracts to protect
securities it owns against price declines or purchase contracts to protect
against an increase in the price of securities it intends to purchase. As
evidence of this hedging interest, each Fund expects that approximately 75% of
its futures contracts purchases will be "completed," that is, equivalent
amounts of related securities will have been purchased or are being purchased
by the Fund upon sale of open futures contracts.

Although techniques other than the sale and purchase of futures
contracts could be used to control a Fund's exposure to market fluctuations,
the use of futures contracts may be a more effective means of hedging this
exposure. While a Fund will incur commission expenses in both opening and
closing out future positions, these costs are lower than transaction costs
incurred in the purchase and sale of the underlying securities.

Restrictions on the Use of Futures Contracts

The Funds will not enter into futures contract transactions to the
extent that, immediately thereafter, the sum of its initial margin deposits on
open contracts exceeds 5% of the market value of its total assets. Each Fund
will not enter into futures contracts to the extent that its outstanding
obligations to purchase securities under these contracts exceed 50% and 20% of
the total assets of the International Equity Fund and the Small Cap Equity
Fund, respectively.

<PAGE>

Risk Factors in Futures Transactions

Positions in futures contracts may be closed out only on an exchange
which provides a market for such futures. However, there can be no assurance
that a liquid market will exist for any particular futures contract at any
specific time. Thus, it may not be possible to close a futures position. In
the event of adverse price movements, each Fund would continue to be required
to make daily cash payments to maintain its required margin. In such
situations, if a Fund has insufficient cash, it may have to sell securities to
meet daily margin requirements at a time when it may be disadvantageous to do
so. In addition, a Fund may be required to make delivery of the instruments
underlying futures contracts it holds. The inability to close futures
positions also could have an adverse impact on a Fund's ability to effectively
hedge.

A Fund will minimize the risk that it will be unable to close out a
futures position by only entering into futures which are traded on national
futures exchanges and for which there appears

-6-

to be a liquid market. There can be no assurance, however, that a liquid
market will exist for a particular futures contract at any given time.

The risk of loss in trading futures contracts in some strategies can
be substantial due both to the low margin deposits required and the extremely
high degree of leverage involved in futures pricing. As a result, a
relatively small price movement in a futures contract may result in immediate
and substantial loss (as well as gain) to the investor. For example, if at
the time of purchase, 10% of the value of the futures contract is deposited as
margin, a subsequent 10% decrease in the value of the futures contract would
result in a total loss of the margin deposit, before any deduction for the
transaction costs, if the account were then closed out. A 15% decrease would
result in a loss equal to 150% of the original margin deposit if the contract
were closed out. Thus, a purchase or sale of a futures contract may result in
excess of the amount invested in the contract. However, because the futures
strategies of the Funds are engaged in only for hedging purposes, the
Investment Adviser does not believe that a Fund is subject to the risks of
loss frequently associated with futures transactions. A Fund would presumably
have sustained comparable losses if, instead of the futures contract, it had
invested in the underlying financial instrument and sold it after the decline.

Utilization of futures transactions by a Fund does involve the risk of
imperfect or no correlation where the securities underlying the futures
contracts have different maturities than the Fund securities being hedged. It
is also possible that a Fund could both lose money on futures contracts and
also experience a decline in value of portfolio securities. There is also the
risk of loss on margin deposits in the event of bankruptcy of a broker with
whom a Fund has an open position in a futures contract or related option.

Most futures exchanges limit the amount of fluctuation permitted in
futures contract prices during a single trading day. The daily limit

<PAGE>

establishes the maximum amount that the price of a futures contract may vary
either up or down from the previous day's settlement price at the end of a
trading session. Once the daily limit has been reached in a particular type
of contract, no trades may be made on that day at a price beyond that limit.
The daily limit governs only price movement during a particular trading day
and, therefore, does not limit potential losses because the limit may prevent
the liquidation of unfavorable positions. Futures contract prices have
occasionally moved to the daily limit for several consecutive trading days
with little or no trading thereby preventing prompt liquidation of futures
positions and subjecting some futures traders to substantial losses.

Options

The Funds may purchase and sell put and call options on futures
contracts for hedging purposes. Investments in options involve some of the
same considerations that are involved in connection with investments in
futures contracts (e.g., the existence of a liquid market). In addition, the
purchase of an option also entails the risk that changes in the value of the
underlying security or contract will not be fully reflected in the value of
the option purchased. Depending on the pricing of the option compared to
either the futures contract on which it is based or the price of the
securities being hedged, an option may or may not be less risky than ownership
of the futures contract or such

-7-

securities. In general, the market prices of options can be expected to be
more volatile than the market prices on the underlying futures contract or
securities.

Writing Covered Call Options

The general reason for writing call options is to attempt to realize
income. By writing covered call options, each Fund gives up the opportunity,
while the option is in effect, to profit from any price increase in the
underlying security above the option exercise price. In addition, each Fund's
ability to sell the underlying security will be limited while the option is in
effect unless the Fund effects a closing purchase transaction. A closing
purchase transaction cancels out the Fund's position as the writer of an
option by means of offsetting purchase of an identical option prior to the
expiration of the option it has written. Covered call options serve as a
partial hedge against the price of the underlying security declining. Each
Fund writes only covered options, which means that so long as a Fund is
obligated as the writer of the option it will, through its custodian, have
deposited the underlying security of the option or, if there is a commitment
to purchase the security, a segregated cash reserve of cash, cash equivalents,
U.S. Government securities or other high grade liquid debt securities
denominated in U.S. dollars or non-U.S. currencies with a securities
depository with a value equal to or greater than the exercise price of the
underlying securities. By writing a put, a Fund will be obligated to purchase
the underlying security at a price that may be higher than the market value of
that security at the time of exercise for as long as the option is
outstanding. Each Fund may engage in closing transactions in order to
terminate put options that it has written.

<PAGE>

Purchasing Options

A put option may be purchased to partially limit the risks of the
value of an underlying security or the value of a commitment to purchase that
security for forward delivery. The amount of any appreciation in the value of
the underlying security will be partially offset by the amount of the premium
paid for the put option and any related transaction costs. Prior to its
expiration, a put option may be sold in a closing sale transaction and profit
or loss from a sale will depend on whether the amount received is more or less
than the premium paid for the put option plus the related transaction costs.
A closing sale transaction cancels out a Fund's position as purchaser of an
option by means of an offsetting sale of an identical option prior to the
expiration of the option it has purchased. In certain circumstances, a Fund
may purchase call options on securities held in its investment portfolio on
which it has written call options or on securities which it intends to
purchase.

Options on Foreign Currencies

The Funds may purchase and write options on foreign currencies for
hedging purposes in a manner similar to that in which futures contracts on
foreign currencies, or forward contracts, will be utilized. For example, a
decline in the dollar value of a foreign currency in which portfolio dollar
value of a foreign currency in which portfolio securities are denominated will
reduce the dollar value of such securities, even if their value in the foreign
currency remains constant. In order to protect against such diminution in the
value of portfolio securities, a Fund may purchase put

-8-

options on the foreign currency. If the value of the currency does decline,
the Fund will have the right to sell such currency for a fixed amount in
dollars and will thereby offset, in whole or in part, the adverse effect on
its portfolio which otherwise would have resulted.

Conversely, where a rise in the dollar value of a currency in which
securities to be acquired are denominated is projected, thereby increasing the
cost of such securities, a Fund may purchase call options thereon. The
purchase of such options could offset, at least partially, the effects of the
adverse movements in exchange rates. As in the case of other types of
options, however, the benefit to a Fund deriving from purchases of foreign
currency options will be reduced by the amount of the premium and related
transaction costs. In addition, where currency exchange rates do not move in
the direction or to the extent anticipated, a Fund could sustain losses on
transactions in foreign currency options which would require it to forego a
portion or all of the benefits of advantageous changes in such rates.

Each Fund may write options on foreign currencies for the same types
of hedging purposes. For example, where a Fund anticipates a decline in the
dollar value of foreign currency denominated securities due to adverse
fluctuations in exchange rates it could, instead of purchasing a put option,
write a call option on the relevant currency. If the anticipated decline
occurs, the option will most likely not be exercised, and the diminution in

<PAGE>

value of portfolio securities will be offset by the amount of the premium
received.

Similarly, instead of purchasing a call option to hedge against an
anticipated increase in the dollar cost of securities to be acquired, a Fund
could write a put option on the relevant currency which, if rates move in the
manner projected, will expire unexercised and allow the Fund to hedge such
increased cost up to the amount of the premium. As in the case of other types
of options, however, the writing of a foreign currency option will constitute
only a partial hedge up to the amount of the premium, and only if rates move
in the expected direction. If this does not occur, the option may be
exercised and the Fund would be required to purchase or sell the underlying
currency at a loss which may not be offset by the amount of the premium.
Through the writing of options on foreign currencies, a Fund also may be
required to forego all or a portion of the benefits which might otherwise have
been obtained from favorable movements in exchange rates.

Each Fund may write covered call options on foreign currencies. A
call option written on a foreign currency by a Fund is "covered" if the Fund
owns the underlying foreign currency covered by the call or has an absolute
and immediate right to acquire that foreign currency without additional cash
consideration (or for additional cash consideration held in a segregated
account by the Custodian) upon conversion or exchange of other foreign
currency held in its portfolio. A call option is also covered if a Fund has a
call on the same foreign currency and in the same principal amount as the call
written where the exercise price of the call held (a) is equal to or less than
the exercise price of the call written or (b) is greater than the exercise
price of the call written if the difference is maintained by the Fund in cash,
U.S. Government securities or other high grade liquid debt securities in a
segregated account with the Custodian.

-9-

Each Fund may write call options on foreign currencies that are not
covered for cross-hedging purposes. A call option on a foreign currency is
for cross-hedging purposes if it is not covered, but is designed to provide a
hedge against a decline in the U.S. dollar value of a security which a Fund
owns or has the right to acquire and which is denominated in the currency
underlying the option due to an adverse change in the exchange rate. In such
circumstances, a Fund collateralized the option by maintaining in a segregated
account with the Custodian, cash or U.S. Government securities or other high
grade liquid debt securities in an amount not less than the value of the
underlying foreign currency in U.S. dollars marked to market daily.

Risks of Options on Futures Contracts, Forward Contracts and Options on
Foreign Currencies

Options on foreign currencies and forward contracts are not traded on
contract markets regulated by the CFTC or (with the exception of certain
foreign currency options) by the SEC. To the contrary, such instruments are
traded through financial institutions acting as market-makers, although
foreign currency options are also traded on certain national securities
exchanges, such as the Philadelphia Stock Exchange and the Chicago Board
Options Exchange, subject to the regulation of the SEC. Similarly, options on

<PAGE>

currencies may be traded over-the-counter. In an over-the-counter trading
environment, many of the protections afforded to exchange participants will
not be available. For example, there are no daily price fluctuation limits,
and adverse market movements could therefore continue to an unlimited extent
over a period of time. Although the purchase of an option cannot lose more
than the amount of the premium plus related transaction costs, this entire
amount could be lost. Moreover, the option writer and a trader of forward
contracts could lose amounts substantially in excess of their initial
investments, due to the margin and collateral requirements associated with
such positions.

Options on foreign currencies traded on national securities exchanges
are within the jurisdiction of the SEC, as are other securities traded on such
exchanges. As a result, many of the protections provided to traders on
organized exchanges will be available with respect to such transactions. In
particular, all foreign currency option positions entered into on a national
securities exchange are cleared and guaranteed by the Options Clearing
Corporation ("OCC"), thereby reducing the risk of counterparty default.
Furthermore, a liquid secondary market in options traded on a national
securities exchange may be more readily available than in the over-the-counter
market, potentially permitting a Fund to liquidate open positions at a profit
prior to exercise or expiration, or to limit losses in the event of adverse
market movements.

The purchase and sale of exchange-traded foreign currency options,
however, is subject to the risks of the availability of a liquid secondary
market described above, as well as the risks regarding adverse market
movements, margining of options written, the nature of the foreign currency
market, possible intervention by governmental authorities and the effect of
other political and economic events. In addition, exchange-traded options of
foreign currencies involve certain risks not presented by the over-the-counter
market. For example, exercise and settlement of such options must be made
exclusively through the OCC, which has established banking relationships in
applicable foreign countries for this purpose. As a result, the OCC may, if
it determines that foreign

-10-

governmental restrictions or taxes would prevent the orderly settlement of
foreign currency option exercises, or would result in undue burdens on the OCC
or its clearing member, impose special procedures on exercise and settlement,
such as technical changes in the mechanics of delivery of currency, the fixing
of dollar settlement prices or prohibitions, on exercise.

In addition, futures contracts, options on futures contracts, forward
contracts and options of foreign currencies may be traded on foreign
exchanges. Such transactions are subject to the risk of governmental actions
affecting trading in or the prices of foreign currencies or securities. The
value of such positions also could be adversely affected by (i) other complex
foreign political and economic factors, (ii) lesser availability than in the
United States of data on which to make trading decisions, (iii) delays in a
Fund's ability to act upon economic events occurring in foreign markets during
nonbusiness hours in the United States, (iv) the imposition of different

<PAGE>

exercise and settlement terms and procedures and margin requirements than in
the United States, and (v) lesser trading volume.

INVESTMENT RESTRICTIONS

In addition to those set forth in each Fund's current Prospectus, the
Funds have adopted the investment restrictions set forth below, which are
fundamental policies of each Fund and cannot be changed without the approval
of a majority of the outstanding voting securities. As provided in the
Investment Company Act of 1940, a "vote of a majority of the outstanding
voting securities" means the affirmative vote of the lesser of (i) more than
50% of the outstanding shares, or (ii) 67% or more of the shares present at a
meeting if more than 50% of the outstanding shares are represented at the
meeting in person or by proxy. Each Fund may not:

1. Issue senior securities.

2. Make investments for the purpose of exercising control or
management of another company.

3. Purchase securities of other investment companies, except in
connection with a merger, consolidation, acquisition or
reorganization, or by purchase in the open market of
securities of closed-end investment companies where no
underwriter or dealer's commission or profit, other than
customary broker's commission, is involved and any investments
in the securities of other investment companies will be in
compliance with the Investment Company Act of 1940.

4. Purchase or sell real estate or interests therein; provided
that the Fund may invest in securities secured by real estate
or interests therein or issued by companies which invest in
real estate or interests therein.

-11-

5. Purchase or sell commodities or commodity contracts, except
that the Fund may deal in forward foreign exchange between
currencies of the different countries in which it may invest
and that the Fund may purchase or sell stock index and
currency options, stock index futures, financial futures and
currency futures contracts and related options on such
futures.

6. Purchase any securities on margin, except that the Fund may
obtain such short-term credit as may be necessary for the
clearance of purchases and sales of portfolio securities, or
make short sales of securities or maintain a short position.
The payment by the Fund of initial or variation margin in
connection with futures or related options transactions, if
applicable, shall not be considered the purchase of a security
on margin. Also, engaging in futures transactions and related
options will not be deemed a short sale or maintenance of a

<PAGE>

short position in securities.

7. Make loans to other persons (except as provided in (8) below);
provided that for purposes of this restriction the acquisition
of bonds, debentures, or other corporate debt securities and
investment in government obligations, short-term commercial
paper, certificates of deposit, bankers' acceptances,
repurchase agreements and any fixed-income obligations in
which the Fund may invest consistent with its investment
objective and policies shall not be deemed to be the making of
a loan.

8. Lend its portfolio securities in excess of 33 1/3% of its total
assets, taken at market value; provided that such loans shall
be made in accordance with the guidelines set forth below.

9. Borrow amounts in excess of 20% of its total assets, taken at
market value, and then only from banks as a temporary measure
for extraordinary or emergency purposes such as the redemption
of Fund shares. Utilization of borrowings may exaggerate
increases or decreases in an investment company's net asset
value. However, the Fund will not purchase securities while
borrowings exceed 5% of its total assets, except to honor
prior commitments and to exercise subscription rights when
outstanding borrowings have been obtained exclusively for
settlements of other securities transactions. (See
restriction (10) below regarding the exclusion from this
restriction of arrangements with respect to options, futures
contracts and options on futures contracts.)

10. Mortgage, pledge, hypothecate or in any manner transfer
(except as provided in (8) above), as security for
indebtedness, any securities owned or held by the Fund except
as may be necessary in connection with borrowings mentioned in
(9) above, and then such mortgaging, pledging or hypothecating
may not exceed 10% of the Fund's total assets, taken at market
value. (For the purpose of this restriction and restriction
(9) above, collateral arrangements with respect to the writing
of options, futures contracts, options on futures contracts,
and collateral arrangements with respect to initial and
variation margin are not deemed to be a pledge of assets, and
neither such arrangements

-12-

nor the purchase and sale of options, futures or related
options are deemed to be the issuance of a senior security.)

11. Invest in securities which cannot be readily resold because of
legal or contractual restrictions or which are not otherwise
readily marketable if, regarding all such securities, more

<PAGE>

than 15% of its total assets, taken at market value, would be
invested in such securities.

12. Underwrite securities of other issuers except insofar as the
Fund may be deemed an underwriter under the Securities Act of
1933, as amended, in selling portfolio securities.

13. Purchase or sell interests in oil, gas or other mineral
exploration or development programs or leases, except that the
Fund may invest in securities of companies which invest in or
sponsor such programs.

Under the law of certain states, each Fund is presently
limited with respect to the investment restriction described in (11) above to
10% of its net assets.

The policies set forth below are non-fundamental policies of
each Fund and may be amended without the approval of the shareholders of the
respective Funds. Each Fund will not:

(a) purchase or retain the securities of any issuer if those
individual officers and Trustees of the Fund, the officers and
directors of the Investment Adviser and, in the case of the
International Equity Fund, its Sub-Adviser, each owning
beneficially more than one-half of 1% of the securities of
such issuer, own in the aggregate more than 5% of any class of
securities of such issuer;

(b) invest in securities of issuers having a record, together with
predecessors, of less than three years of continuous operation
if more than 5% of its total assets, taken at market value,
would be invested in such securities;

(c) invest in warrants if, at the time of acquisition, its
investment in warrants, valued at the lower of cost or market
value, would exceed 5% of the Fund's net assets; included
within such limitation, but not to exceed 2% of the Fund's net
assets, are warrants which are not listed on the New York or
American Stock Exchanges. For purposes of this policy,
warrants acquired by the Fund in units or attached to
securities may be deemed to be without value;

(d) invest in real estate limited partnerships or in oil, gas or
mineral leases;

(e) buy and sell options on securities or enter into futures
contracts and options thereon unless (i) the premiums paid on
all such options do not exceed 20% of the Fund's total

-13-

net assets; and (ii) the margin deposits required to secure

<PAGE>

all such futures or options thereon do not exceed 5% of the
Fund's total assets;

(f) invest in securities of any issuer whose primary business is
in the tobacco or tobacco products industry.

The investment restrictions set forth in the Prospectus
contain an exception that permits each Fund to purchase securities pursuant to
the exercise of subscription rights, subject to the condition that such
purchase will not result in the Fund ceasing to be a diversified investment
company. Japanese and European corporations frequently issue additional
capital stock by means of subscription rights offerings to existing
shareholders at a price substantially below the market price of the shares.
The failure to exercise such rights would result in the Fund's interest in the
issuing company being diluted. The market for such rights is not well
developed and, accordingly, the Fund may not always realize full value on the
sale of rights. Therefore, the exception applies in cases where the limits
set forth in the investment restrictions in the Prospectus would otherwise be
exceeded by exercising rights or have already been exceeded as a result of
fluctuations in the market value of a Fund's portfolio securities with the
result that the Fund would otherwise be forced either to sell securities at a
time when it might not otherwise have done so or to forego exercising the
rights.

INVESTMENT ADVISER AND SUB-ADVISER

The Trust, on behalf of each Fund, entered into an investment advisory
agreement with the Investment Adviser, effective February 8, 1995 (the
"Investment Advisory Agreements"), for the provision of investment advisory
services, subject to the supervision and direction of the Board of Trustees.
Pursuant to the Investment Advisory Agreements, each Fund is obligated to pay
the Investment Adviser a monthly fee equal to an annual rate of .75% of the
respective Fund's average daily net assets. The Investment Advisory
Agreements specify that the advisory fee will be reduced to the extent
necessary to comply with the most stringent limits prescribed by any state in
which a Fund's shares are offered for sale. The most stringent current state
restriction limits a fund's allowable aggregate operating expenses (excluding
interest, taxes, brokerage commissions and extraordinary expenses such as
litigation costs) in any fiscal year to 2.5% of the first $30 million of net
assets of the Fund, 2% of the next $70 million of net assets of the Fund, and
1.5% of average annual net assets of the Fund in excess of $100 million. With
respect to the International Equity Fund, the Investment Advisor has
voluntarily agreed to waive its advisory fee or reimburse the International
Equity Fund monthly to the extent that the International Equity Fund's total
operating expenses exceed 1.25% of its average daily net assets. The advisory
fee payable to the Investment Advisor in connection with the services provided
to the International Equity Fund for the period August, 3, 1995 (commencement
of operations) through October 31, 1995 amounted to $29,563, all of which was
waived.

The Investment Advisory Agreements became effective on February 8,

<PAGE>

1995 for a two-year period. Such Agreements may be renewed after their
initial term only so long as such renewal

-14-

and continuance are specifically approved at least annually by the Board of
Trustees or by vote of a majority of the outstanding voting securities of each
respective Fund, and only if the terms of the renewal thereof have been
approved by the vote of a majority of the Trustees who are not parties thereto
or interested persons of any such party, cast in person at a meeting called
for the purpose of voting on such approval. The Investment Advisory
Agreements will terminate automatically in the event of their assignment.

With respect to the International Equity Fund, pursuant to an
agreement between the Investment Adviser and the Sub-Adviser, effective
February 8, 1995 (the "Sub-Investment Advisory Agreement"), the Sub-Adviser
provides advice and assistance to the Investment Adviser in the selection of
appropriate investments for the International Equity Fund, subject to the
supervision and direction of the Board of Trustees. As compensation for its
services, the Sub-Adviser receives from the Investment Adviser an annual fee
at a rate equal to .70% of the Fund's average daily net assets, and subject to
the reductions discussed above. The fee is payable monthly upon receipt by
the Investment Adviser of the advisory fee paid by the Fund. For the period
August 3, 1995 (commencement of operations) through October 31, 1995, the
Sub-Advisor received no compensation as the Advisor waived its entire fee
payable for that period.

The Sub-Investment Advisory Agreement became effective on February 8,
1995 for a two-year period. The Agreement may be renewed by the parties after
its initial term only so long as such renewal and continuance are specifically
approved at least annually by the Board of Trustees or by vote of a majority
of the outstanding voting securities of the Fund, and only if the terms of
renewal thereof have been approved by the vote of a majority of the Trustees
who are not parties thereto or interested persons of any such party, cast in
person at the meeting called for the purpose of voting on such approval. The
Sub-Investment Advisory Agreement will terminate automatically in the event of
its assignment.

-15-

ALLOCATION OF PORTFOLIO BROKERAGE

The Investment Adviser and, in the case of the International Equity
Fund, the Sub-Adviser, when effecting the purchases and sales of portfolio
securities for the account of a Fund, will seek execution of trades either (i)
at the most favorable and competitive rate of commission charged by any
broker, dealer or member of an exchange, or (ii) at a higher rate of
commission charges if reasonable in relation to brokerage and research
services provided to the Fund, the Investment Adviser or Sub-Adviser by such
member, broker, or dealer when viewed in terms of either a particular

<PAGE>

transaction or the Investment Adviser's or Sub-Adviser's overall
responsibilities to the Trust. Such services may include, but are not limited
to, any one or more of the following: information as to the availability of
securities for purchase or sale, statistical or factual information, or
opinions pertaining to investments. The Investment Adviser and, in the case
of the International Equity Fund, the Sub-Adviser, may use research and
services provided to it by brokers and dealers in servicing all its clients;
however, not all such services will be used by the Investment Adviser or
Sub-Adviser in connection with the Funds. Brokerage may also be allocated to
dealers in consideration of a Fund's share distribution, but only when
execution and price are comparable to that offered by other brokers.

With respect to the International Equity Fund, the Investment Adviser,
through the Sub-Adviser, is responsible for making the Fund's portfolio
decisions subject to instructions described in the Prospectus. The Board of
Trustees, however, impose limitations on the allocation of portfolio
brokerage. During the period August 3, 1995 (commencement of operations)
through October 31, 1995, the International Equity Fund paid $52,090 in
brokerage commissions.

It is anticipated that its brokerage transactions involving securities
of companies domiciled in countries other than the U.S. will be conducted
primarily on the principal stock exchanges of such countries. Brokerage
commissions and other transaction costs on foreign stock exchange transactions
are generally higher than in the U.S., although the Funds will endeavor to
achieve the best net results in effecting their portfolio transactions. There
is generally less government supervision and regulation of foreign stock
exchanges and brokers than in the U.S.

Foreign equity securities may be held by a Fund in the form of ADRs,
EDRs, GDRs or other securities convertible into foreign equity securities.
ADRs, EDRs and GDRs may be listed on stock exchanges or traded in
over-the-counter markets in the U.S. or Europe, as the case may be. ADRs,
like other securities traded in the U.S., as well as GDRs traded in the U.S.,
will be subject to negotiated commission rates.

DISTRIBUTOR

Rodney Square Distributors, Inc. ("RSD") serves as the Distributor of
each Fund's shares pursuant to a Distribution Agreement with the Trust. Under
the terms of the Distribution Agreement, RSD agrees to assist in securing
purchasers for shares of the Funds. RSD will receive no

-16-

compensation for distribution of shares of the Funds, except for reimbursement
of out-of-pocket expenses.

The Distribution Agreement provides that RSD, in the absence of
willful misfeasance, bad faith or gross negligence in the performance of its
duties or by reason of reckless disregard of its obligations and duties under
the agreement, will not be liable to the Trust or the Fund's shareholders for
losses arising in connection with the sale of Fund shares.

<PAGE>

The Distribution Agreement became effective as of February 8, 1995,
and will remain in effect for a period of two years. Thereafter, the
Distribution Agreement continues in effect from year to year as long as its
continuance is approved at least annually by a majority of the Trustees,
including a majority of the trustees who are not parties to the Distribution
Agreement or interested persons of any such party (the "Independent
Trustees"). The Distribution Agreement terminates automatically in the event
of its assignment. The Distribution Agreement is also terminable without
payment of any penalty with respect to either Fund (i) by the Fund (by vote of
a majority of the Independent Trustees or by vote of a majority of the
outstanding voting securities of the Fund) on sixty (60) days' written notice
to RSD, or (ii) by RSD on sixty (60) days' written notice to the Fund.

CONTROL PERSONS AND PRINCIPAL HOLDERS OF SECURITIES

As of January 5, 1996, the following shareholders were known to own of
record more than 5% of the outstanding shares of the International Equity
Fund:

<TABLE>
<CAPTION>
Name and Address Percentage Ownership
<S> <C>
Patterson & Co. 51.06
P.O. Box 7829
Philadelphia, PA 19101

Saxon & Co. 13.57
FBO American College of Physicians
P.O. Box 7780-1888
Philadelphia, PA 19182

Saxon & Co. 5.70
FBO Philadelphia Maritime Museum
P.O. Box 7780-1888
Philadelphia, PA 19182
</TABLE>

-17-

PURCHASE OF SHARES

Tax-Deferred Retirement Plans

Shares of each Fund are available to all types of tax-deferred
retirement plans such as IRAs, employer-sponsored defined contribution plans
(including 401(k) plans) and tax-sheltered custodial accounts described in
Section 403(b)(7) of the Internal Revenue Code of 1986, as amended. Qualified

<PAGE>

investors benefit from the tax-free compounding of income dividends and
capital gains distributions.

Individual Retirement Accounts (IRA)

Individuals, who are not active participants (and, when a joint return
is filed, who do not have a spouse who is an active participant) in an
employer maintained retirement plan are eligible to contribute on a deductible
basis to an IRA account. The IRA deduction is also retained for individual
taxpayers and married couples with adjusted gross incomes not in excess of
certain specified limits. All individuals who have earned income may make
nondeductible IRA contributions to the extent that they are not eligible for a
deductible contribution. Income earned by an IRA account will continue to be
tax deferred. A special IRA program is available for employers under which
the employers may establish IRA accounts for their employees in lieu of
establishing tax-qualified retirement plans. Known as SEP-IRAs (Simplified
Employee Pension-IRA), they free the employer of many of the recordkeeping
requirements of establishing and maintaining a tax-qualified retirement plan
trust.

If you are entitled to receive a distribution from a qualified
retirement plan, you may rollover all or part of that distribution into a
Fund's IRA. Your rollover contribution is not subject to the limits on annual
IRA contributions. You can continue to defer federal income taxes on your
contribution and on any income that is earned on that contribution.

REDEMPTIONS

Under normal circumstances, you may redeem your shares at any time
without a fee. The redemption price will be based upon the net asset value
per share next determined after receipt of the redemption request, provided it
has been submitted in the manner described in the Prospectus of each Fund.
See "How to Redeem Shares" in the Prospectus. The redemption price may be
more or less than your cost, depending upon the net asset value per share at
the time of redemption.

Payment for shares tendered for redemption is made by check within
seven days after receipt and acceptance of your redemption request by Rodney
Square, except that each Fund reserves the right to suspend the right of
redemption, or to postpone the date of payment upon redemption beyond seven
days, (i) for any period during which the New York Stock Exchange is
restricted, (ii) for any period during which an emergency exists as determined
by the SEC as a result of which

-18-

disposal of securities owned by a given Fund is not reasonably predictable or
it is not reasonably practicable for such Fund fairly to determine the value
of its net assets, or (iii) for such other periods as the SEC may by order
permit for the protection of Fund shareholders.

<PAGE>

TRUSTEES AND OFFICERS OF THE TRUST

The Trustees and principal executive officers of the Trust and their
principal occupations for the past five years are listed below.

<TABLE>
<CAPTION>
Position and Office Principal Occupation
Name and Address Age with the Trust during the Past Five Years
- ---------------- --- ------------------- --------------------------
<S> <C> <C> <C>
*W. Thacher Brown 48 President, Chairman and President and Chief Executive
Five Radnor Corporate Trustee Officer, 1838 Investment Advisors,
Center, Suite 320 L.P. (1988 - Present); President
100 Matsonford Road and Chief Executive Officer, 1838
Radnor, PA 19087 Investment Advisors, Inc. (1988 -
Present); and Director, 1838 Bond
-Debenture Trading Fund; Airgas,
Inc. and Harleysville Mutual
Insurance Company.

Charles D. Dickey, Jr. 77 Trustee Retired. Formerly Chairman and CEO
1 Tower Bridge of Scott Paper Company (retired as
Suite 1420 CEO 1983; retired as Director,
West Conshohocken, PA 19428 1988); Formerly Director of General
Electric Company (retired 1991).

Frank B. Foster, III 61 Trustee Managing Director, CIP, Inc.
20 Valley Stream Parkway (Investments) (1989 - Present);
Suite 265 Consultant, DBH, Inc. (1987-1993).
Malvern, PA 19355

*George W. Gephart, Jr. 42 Trustee and Vice Principal, 1838 Investment
Five Radnor Corporate Center, President Advisors, L.P. (1988 - Present);
Suite 320 Chairman, Bryn Mawr Rehab Hospital
100 Matsonford Road (Present); and Director, Main
Radnor, PA 19087

</TABLE>

-19-

Line Health Systems (Present).

<PAGE>

Robert P. Hauptfuhrer 64 Trustee Chairman and CEO, Oryx Energy
100 Matsonford Road Company (1988-1994); Director, Oryx
Building 5, Suite 300 Energy Company (1994-Present).
Radnor, PA 19087

Johannes B. van den Berg 38 Vice President Managing Director and Portfolio
Five Radnor Corporate Center, Manager, MeesPierson 1838
Suite 320 Investment Advisors
100 Matsonford Road (1994-Present); Managing
Radnor, PA 19087 Director-International, MeesPierson
Capital Management, Inc. (1993 -
Present); Managing Director and
Chief Investment Officer,
MeesPierson Capital Management,
Inc. (1983 - 1993); and Director,
Asian Selection Fund.

Edwin B. Powell 58 Vice President Principal and Portfolio Manager,
Five Radnor Corporate Center, 1838 Investment Advisors, L.P.
Suite 320 (1994 - Present); Vice President
100 Matsonford Road and Portfolio Manager, Provident
Radnor, PA 19087 Capital Management (1987 - 1994).

Anna M. Bencrowsky 44 Vice President, Associate, 1838 Investment
Five Radnor Corporate Center, Treasurer and Assistant Advisors, L.P. (1988 - Present);
Suite 320 Secretary and Vice President and Assistant
100 Matsonford Road Secretary, 1838 Bond-Debenture
Radnor, PA 19087 Trading Fund.
</TABLE>

-20-

Joseph V. Del Raso, Esq. 43 Secretary Partner, Stradley, Ronon, Stevens &
2600 One Commerce Square Young (1992-Present); and
Philadelphia, PA 19103 Partner, Holland & Knight
(1989-1992).

John J. Kelley 36 Assistant Treasurer Vice President, Rodney Square
1100 N. Market Street Management Corporation (1995 -
Wilmington, DE 19890-0001 Present); Assistant Vice President,
Rodney Square Management
Corporation (1989 - 1995).

<PAGE>

Laurie V. Brooks 33 Assistant Secretary Fund Administrator, Rodney Square
1100 N. Market Street Management Corporation (1994 -
Wilmington, DE 19890-0001 Present); Legal Assistant, Skadden,
Arps, Slate, Meagher & Flom (1989 -
1994).
</TABLE>

__________________

*Trustees who are "interested persons" as defined in the Investment Company
Act of 1940.

The officers conduct and supervise the daily business operations of
the Trust, while the Trustees, in addition to the functions set forth under
"Investment Adviser and Sub-Adviser," and "Distributor" review such actions
and decide on general policy. Compensation to officers and trustees of the
Trust who are affiliated with the Investment Adviser is paid by the Investment
Adviser, and not by the Trust.

-21-

Information relating to the compensation paid to the Trustees of the
Trust for the fiscal period ended October 31, 1995 is set forth below:

<TABLE>
<CAPTION>
Name and Position Compensation
- ----------------- ------------
<S> <C>
W. Thacher Brown None
Chairman of the Board and President

George W. Gephart, Jr. None
Vice President and Trustee

Charles D. Dickey, Jr. $1,500
Trustee

Frank B. Foster, III $1,500
Trustee

<PAGE>

Robert P. Hauptfuhrer $1,500
Trustee

</TABLE>

_____________________

1 The interested Trustees of the Trust receive no compensation for their
service as Trustees. For their service as Trustees, the disinterested
Trustees receive a $6,000 annual fee and $500 per series per Trust meeting
attended, as well as reimbursement for out-of-pocket expenses. If any special
or additional meetings are held during a fiscal year, the disinterested
Trustees will be entitled to receive $500 per series per such meeting
attended. For the fiscal year ended October 31, 1995, such fees and expenses
amounted to $4,500. This amount was paid to the Trustees by the International
Equity Fund. On January 5, 1996, Trustees and officers of the International
Equity Fund, as a group, owned beneficially less than 1% of the outstanding
shares of the International Equity Fund.

The Trust has not adopted a pension plan or any other plan that would
afford benefits to its Trustees.

-22-

<PAGE>

TAXATION

Each Fund intends to qualify each year as a regulated investment
company under Subchapter M of the Internal Revenue Code of 1986, as amended
(the "Code").

In order to so qualify, a Fund must, among other things (i) derive at
least 90% of its gross income from dividends, interest, payments with respect
to certain securities loans, gains from the sale of securities or foreign
currencies, or other income (including but not limited to gains from options,
futures or forward contracts) derived with respect to its business of
investing in such stock, securities or currencies; (ii) derive less than 30%
of its gross income from the sale or other disposition of stock or securities
or certain futures and options thereon held for less than three months
("short-short gains"); (iii) distribute at least 90% of its dividends,
interest and certain other taxable income each year; and (iv) at the end of
each fiscal quarter maintain at least 50% of the value of its total assets in
cash, government securities, securities of other regulated investment
companies, and other securities of issuers which represent, with respect to
each issuer, no more than 5% of the value of a Fund's total assets and 10% of
the outstanding voting securities of such issuer, and with no more than 25% of
its assets invested in the securities (other than those of the government or
other regulated investment companies) of any one issuer or of two or more
issuers which the Fund controls and which are engaged in the same, similar or
related trades and businesses.

To the extent a Fund qualifies for treatment as a regulated investment
company, it will not be subject to federal income tax on income and net
capital gains paid to shareholders in the form of dividends or capital gains
distributions.

An excise tax at the rate of 4% will be imposed on the excess, if any,
of a Fund's "required distributions" over actual distributions in any calendar
year. Generally, the "required distribution" is 98% of a fund's ordinary
income for the calendar year plus 98% of its capital gain net income
recognized during the one-year period ending on October 31 plus undistributed
amounts from prior years. The Funds intend to make distributions sufficient
to avoid imposition of the excise tax. Distributions declared by the Funds
during October, November or December to shareholders of record during such
month and paid by January 31 of the following year will be taxable to
shareholders in the calendar year in which they are declared, rather than the
calendar year in which they are received.

Each Fund will provide an information return to shareholders
describing the federal tax status of the dividends paid by the Fund during the
preceding year within 60 days after the end of each year as required by
present tax law. Individual shareholders will receive Form 1099-DIV and Form
1099-B as required by present tax law during January of each year. If the
Fund makes a distribution after the close of its fiscal year which is
attributable to income or gains earned in such earlier fiscal year, then the
Fund shall send a notice to its shareholders describing the amount and
character of such distribution within 60 days after the close of the year in
which the distribution is made. Shareholders should consult their tax

<PAGE>

advisors concerning the state or local taxation of such dividends, and the
federal, state and local taxation of capital gains distributions.

-23-

The foregoing is a general and abbreviated summary of the applicable
provisions of the Code and Treasury regulations currently in effect. For the
complete provisions, reference should be made to the pertinent Code sections
and regulations. The Code and regulations are subject to change by
legislative or administrative action at any time, and retroactively.

Dividends and distributions also may be subject to state and local
taxes.

Federal Tax Treatment of Forward Currency and Futures Contracts

Except for transactions the Funds have identified as hedging
transactions, each Fund is required for federal income tax purposes to
recognize as income for each taxable year its net unrealized gains and losses
on forward currency and futures contracts as of the end of each taxable year
as well as those actually realized during the year. In most cases, any such
gain or loss recognized with respect to a regulated futures contract is
considered to be 60% long-term capital gain or loss and 40% short-term capital
gain or loss without regard to the holding period of the contract. Realized
gain or loss attributable to a foreign currency forward contract is treated as
100% ordinary income. Furthermore, foreign currency futures contracts which
are intended to hedge against a change in the value of securities held by a
Fund may affect the holding period of such securities and, consequently, the
nature of the gain or loss on such securities upon disposition.

In order for each Fund to continue to qualify for federal income tax
treatment as a regulated investment company under the Code, at least 90% of
each Fund's gross income for a taxable year must be derived from certain
qualifying income, i.e., dividends, interest, income derived from loans of
securities and gains from the sale or other disposition of stock, securities
or foreign currencies, or other related income, including gains from options,
futures and forward contracts, derived with respect to its business investing
in stock, securities or currencies. Any net gain realized from the closing
out of futures contracts will, therefore, generally be qualifying income for
purposes of the 90% requirement. Qualification as a regulated investment
company also requires that less than 30% of a Fund's gross income be derived
from the sale or other disposition of stock, securities, options, futures or
forward contracts (including certain foreign currencies not directly related
to the Fund's business of investing in stock or securities) held less than
three months. In order to avoid realizing excessive gains on securities held
for less than three months, a Fund may be required to defer the closing out of
futures contracts beyond the time when it would otherwise be advantageous to
do so. It is anticipated that unrealized gains on futures contracts which
have been open for less than three months as of the end of a Fund's taxable
year, and which are recognized for tax purposes, will not be considered gains
on securities held for less than three months for the purposes of the 30%
test.

<PAGE>

Each Fund will distribute to shareholders annually any net capital
gains which have been recognized for federal income tax purposes (including
unrealized gains at the end of the Fund's taxable year) on futures
transactions. Such distribution will be combined with distributions of
capital

-24-

gains realized on a Fund's other investments, and shareholders will be advised
on the nature of the payment.

Shareholders are urged to consult their tax advisers regarding
specific questions as to federal, state and local taxes.

GENERAL INFORMATION

Audits and Reports

The accounts of the Trust are audited each year by Coopers & Lybrand
L.L.P., independent certified public accountants. Shareholders receive
semi-annual and annual reports of the Trust including the annual audited
financial statements and a list of securities owned.

PERFORMANCE

Current yield and total return may be quoted in advertisements,
shareholder reports or other communications to shareholders. Yield is the
ratio of income per share derived from a Fund's investments to a current
maximum offering price expressed in terms of percent. The yield is quoted on
the basis of earnings after expenses have been deducted. Total return is the
total of all income and capital gains paid to shareholders, assuming
reinvestment of all distributions, plus (or minus) the change in the value of
the original investment, expressed as a percentage of the purchase price.
Occasionally, a Fund may include its distribution rate in advertisements. The
distribution rate is the amount of distributions per share made by a Fund over
a 12-month period divided by the current maximum offering price.

The SEC rules require the use of standardized performance quotations
or, alternatively, that every non-standardized performance quotation furnished
by a Fund be accompanied by certain standardized performance information
computed as required by the SEC. Current yield and total return quotations
used by a Fund are based on the standardized methods of computing performance
mandated by the SEC. An explanation of those and other methods used by a Fund
to compute or express performance follows.

As indicated below, current yield is determined by dividing the net
investment income per share earned during the period by the maximum offering
price per share on the last day of the period and annualizing the result.
Expenses accrued for the period include any fees charged to all shareholders
during the 30-day base period. According to the SEC formula:

<PAGE>

-25-

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

where

a = dividends and interest earned during the period.

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

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

d = the maximum offering price per share on the last day of the
period.

As the following formula indicates, the average annual total return is
determined by multiplying a hypothetical initial purchase order of $1,000 by
the average annual compound rate of return (including capital
appreciation/depreciation and dividends and distributions paid and reinvested)
for the stated period less any fees charged to all shareholder accounts and
annualizing the result. The calculation assumes the maximum sales load is
deducted from the initial $1,000 purchase order and that all dividends and
distributions are reinvested at the public offering price on the reinvestment
dates during the period. The quotation assumes the account was completely
redeemed at the end of each one, five and ten-year period and assumes the
deduction of all applicable charges and fees. According to the SEC formula:

n
P(1+T) = ERV

where:

P = a hypothetical initial payment of $1,000.

T = average annual total return.

n = number of years.

ERV = ending redeemable value of a hypothetical $1,000 payment made at
the beginning of the 1, 5 or 10-year periods, determined at the
end of the 1, 5 or 10-year periods (or fractional portion thereof).

The International Equity Fund's total return for the period form
August 3, 1995 (commencement of operations) through October 31, 1995 was
(3.90)%.

Regardless of the method used, past performance is not necessarily

<PAGE>

indicative of future results, but is an indication of the return to
shareholders only for the limited historical period used.

-26-

Comparisons and Advertisements

To help investors better evaluate how an investment in a Fund might
satisfy their investment objective, advertisements regarding a Fund may
discuss yield or total return for such Fund as reported by various financial
publications. Advertisements may also compare yield or total return to yield
or total return as reported by other investments, indices, and averages. The
following publications, indices, and averages may be used:

Financial Times Goldman Sachs Europe-Asia Index

Lipper Mutual Fund Indices

Lipper Mutual Fund Performance Analysis

Morgan Stanley Capital International EAFE Index

Morningstar, Inc.

Nasdaq Industrial Index

Russell 2000 Index

Standard & Poor's 500 Composite Stock Price Index

A Fund may also from time to time along with performance
advertisements, present its investments, as of a current date, in the form of
the "Schedule of Investments" included in the Semi-Annual and Annual Reports
to the shareholders of the Trust.

-27-

<PAGE>

FINANCIAL STATEMENTS

CONTENTS

FINANCIAL STATEMENTS

Schedule of Net Assets

Statement of Assets and Liabilities

Statement of Operations

Statements of Changes in Net Assets

Financial Highlights

Notes to Financial Statements

REPORT OF INDEPENDENT ACCOUNTANTS

TAX INFORMATION

<PAGE>

SCHEDULE OF NET ASSETS October 31, 1995

<TABLE>
<CAPTION>
Principal
Amount (000's) Value
or Number (Note 2)
Sector of Shares
<S> <C> <C> <C>
COMMON STOCK (92.6%)
Australia (1.2%)
Broken Hill Propriety Co. Metals - Diversified..................... 8,000 $107,905
News Corp. Ltd. Publishing............................... 18,000 90,396
----------
198,301
----------
Brazil (1.1%)
Telecomunicacoes Brasileiras Telecommunications........................ 4,400 177,276
Sponsor ADR ----------

Chile (0.9%)
Compania Telecomunicacion Chile ADR Telecommunications....................... 2,000 144,000
----------

France (4.8%)
Accor Lodging.................................. 1,300 154,256
Alcatel Alsthom Telecommunications, Energy & Electricity. 1,700 144,988
Carrefour Supermarche Retail Grocery........................... 300 175,966
Cetelem Financial Services....................... 900 143,371
LVMH (Moet-Hennessy) Wines & Spirits.......................... 900 178,846
----------
797,427
----------
Germany (5.3%)
Allianz AG Holding Insurance................................ 90 165,156
Bayer AG Chemical................................. 630 166,177
Bayerische Motoren Werke AG Automobile Manufacturer.................. 250 133,394
Deutsche Bank AG Banking.................................. 3,400 153,088
Hochtief AG Construction............................. 300 117,422
Viag AG Metal Manufacturer, Energy............... 400 161,668
----------
896,905
----------
Hong Kong (4.3%)
Cheung Kong Holdings, Ltd. Real Estate.............................. 22,000 124,061
China Light & Power Co., Ltd. Utility.................................. 20,000 106,574
HSBC Holdings Financial Services....................... 10,000 145,505
Hutchinson Whampoa Real Estate, Transportation and Telecomm. 22,000 121,215
Sun Hung Kai Properties Real Estate.............................. 15,000 119,799
Swire Pacific, Ltd. (A Shares) General Trading and Air Transportation... 14,000 105,022

<PAGE>

----------
722,176
----------
Italy (1.0%)
Assicurazioni Generali SPA Insurance................................ 7,000 162,885
----------

Japan (34.0%)
All Nippon Airways Air Transportation....................... 17,000 164,877
Asahi Bank, Ltd. Banking.................................. 15,000 150,040
Asahi Glass Co., Ltd. Glass Manufacturer....................... 15,000 147,098
Dai-Ichi Kangyo Bank Banking.................................. 9,000 152,688
Daiwa House Industries House Manufacturer....................... 11,000 165,044
Fuji Bank, Ltd. Banking.................................. 10,000 186,324
Hitachi, Ltd. Electronics.............................. 17,000 175,047

</TABLE>

See accompanying notes to financial statements.

SCHEDULE OF NET ASSETS -- continued October 31, 1995

<TABLE>
<CAPTION>
Principal
Amount (000's) Value
or Number (Note 2)
Sector of Shares
<S> <C> <C> <C>

Japan -- cont.
Hoya Corp. Glass Manufacturer....................... 6,000 $176,517
Industrial Bank of Japan Banking.................................. 7,000 191,521
Kinki Nippon Railway Railroad Transportation.................. 21,000 162,690
Kirin Brewery Co. Ltd. Brewery.................................. 16,000 161,612
Konica Corp. Photography Equipment.................... 25,000 167,937
Kyocera Corp. Bioceramics Manufacturer................. 2,000 164,357
Marubeni Corp. Miscellaneous Distributor................ 35,000 170,928
Mitsubishi Estate Co. Ltd. Real Estate.............................. 14,000 149,648
Mitsubishi Oil Co. Oil Distributor.......................... 17,000 135,369
Mitsubishi Materials Corp. Metals - Diversified..................... 35,000 158,572
Mitsubishi Trust & Banking Banking.................................. 10,000 140,233
Nippon Meat Packers, Inc. Food Processor........................... 12,000 163,573
Nippon Paper Industries Co. Paper Manufacturer....................... 25,000 172,350
Nippon Steel Corp. Steel Manufacturer....................... 52,000 172,869
Nippon Television Network Broadcasting............................. 800 191,423
Nippondenso Co. Ltd. Electronics.............................. 9,000 165,044
Nomura Securities, Co., Ltd. Securities Dealer........................ 9,000 165,044

<PAGE>

Obayashi Corp. Construction............................. 23,000 171,644
Ricoh Company, Ltd. Office Equipment......................... 18,000 194,169
Seven-Eleven Retail - Grocery......................... 2,000 133,760
Sharp Corp. Electronics.............................. 11,000 153,178
Sumitomo Bank Banking.................................. 8,000 141,999
Sumitomo Trust & Banking Banking.................................. 13,000 150,432
Takeda Chemicals Industries Pharmaceuticals.......................... 13,000 183,578
Tokio Marine & Fire Insurance................................ 15,000 154,453
Tokyo Electric Power Electric Utility......................... 6,060 159,266
Toyota Motor Corp. Automobile Manufacturer.................. 8,000 149,059
Wacoal Corp. Textile Manufacturer..................... 14,000 166,123
----------
5,708,466
----------
Malaysia (1.7%)
Genting Berhad Resorts - Plantation..................... 11,000 94,638
Maylayan Banking Banking.................................. 13,000 104,695
United Engineers, Ltd. Engineering & Construction............... 15,000 93,105
----------
292,438
----------
Mexico (0.9%)
CIFRA SA ADR Retail................................... 150,000 157,031
----------
Netherlands (5.6%)
Akzo N.V. Chemicals................................ 1,250 142,087
Heineken N.V. Brewery.................................. 1,200 212,537
International Nederlanden Groep Financial Services....................... 2,961 176,248
Nedlloyd Groep N.V., Koninklijke Transportation........................... 4,300 109,070
Philips Electronics N.V. Electronics.............................. 3,300 127,333
Unilever N.V. Food, Detergents......................... 1,300 169,973
----------
937,248
----------

</TABLE>

See accompanying notes to financial statements.

<PAGE>

SCHEDULE OF NET ASSETS -- continued October 31, 1995

<TABLE>
<CAPTION>
Principal
Amount (000's) Value
or Number (Note 2)
Sector of Shares
<S> <C> <C> <C>

Republic of Korea (1.8%)
Pohang Iron & Steel Company, Ltd. ADR Steel Manufacturer....................... 5,500 $141,625
Samsung Electronics - GDR* Electronics.............................. 2,500 166,875
----------
308,500
----------
Singapore (3.2%)
DBS Land Real Estate.............................. 35,000 103,327
IPC Corp. Computer Manufacturer.................... 160,000 109,047
Keppel Corp. Shipbuilding, Real Estate................ 12,000 98,312
Singapore Press Holdings Publishing............................... 8,000 124,868
United O/S Bank Banking.................................. 11,000 96,334
----------
531,888
----------
Spain (1.8%)
Empresa Nacional DE Electricidad SA Utility.................................. 3,000 148,880
Repsol SA Oil and Gas Exploration.................. 5,000 149,005
297,885
Sweden (3.0%)
Aga AB (A Shares) Industrial Gas Production................ 12,000 160,662
Astra AB (A Shares) Pharmaceuticals.......................... 5,000 183,528
Hennes & Mauritz AB (B Shares) Retail - Clothing........................ 2,500 163,219
----------
507,409
----------
Switzerland (4.4%)
BBC Brown Boveri Group Ptg. Certificate Electrical Engineering................... 160 184,988
Credit Suisse Holding AG Banking.................................. 2,000 203,670
Holderbank Finan Glaris (B Shares) Building Materials....................... 200 160,126
Roche Holding AG - Genusshein Pharmaceuticals.......................... 25 181,064
----------
729,848
----------
Taiwan (0.9%)
China Steel Corp.* Steel Manufacturer....................... 8,000 145,440
----------

Thailand (2.1%)
Land & House Co. Ltd. Real Estate.............................. 6,000 96,839
Telecomasia Corp.* Telephone Utility........................ 30,000 88,849
Thai Farmers Bank Co. Banking.................................. 11,000 90,956
The Siam Cement Co., Ltd. Building Materials....................... 1,500 81,812
----------
358,456
----------
United Kingdom (14.6%)
Arjo Wiggins Appleton Ord. plc Paper Manufacturer....................... 39,000 143,875
British Petroleum Co. plc Oil & Gas Exploration and Distribution... 23,000 168,792
BTR plc Miscellaneous Manufacturing.............. 33,000 174,807
Cable & Wireless plc Telecommunications....................... 25,000 163,172
Great Universe Stores plc Retail - Clothing........................ 17,000 152,901

<PAGE>

Lloyds Bank plc Banking.................................. 16,197 198,792
Powergen plc Electric Utility......................... 20,000 179,095
Prudential Corp. plc Insurance................................ 32,000 199,527
Reed International plc Publishing............................... 11,300 171,379
Shell Transport and Trading Co. plc Oil & Gas Exploration and Distribution... 14,000 163,440
Siebe plc Machinery Manufacturer................... 16,000 189,816

</TABLE>

See accompanying notes to financial statements.

SCHEDULE OF NET ASSETS -- continued October 31, 1995

<TABLE>
<CAPTION>
Principal
Amount (000's) Value
or Number (Note 2)
Sector of Shares
<S> <C> <C> <C>

United Kingdom -- cont.
Smithkline Beecham (A Shares) Pharmaceuticals.......................... 19,000 $197,848
Tesco plc Retail - Grocery......................... 34,000 160,807
TI Group plc Miscellaneous Manufacturing.............. 26,262 179,483
----------
2,443,734
----------
TOTAL COMMON STOCK (COST $16,196,718) ...................................... 15,517,313
----------

COMMERCIAL PAPER (5.4%)
Ford Motor Credit Corp., 5.76%, 11/01/95 Finance.................................. $913 912,665
(COST $912,665) ----------

CORPORATE BONDS (0.9%)
United Micro Electron, Convertible, Electronics.............................. 100 149,880
1.25%, 06/08/04 ----------
(COST $150,000)

TOTAL INVESTMENTS (COST $17,259,383)+ (98.9%) ....................................... $16,579,858

OTHER ASSETS AND LIABILITIES, NET (1.1%)............................................ 183,884
-----------

NET ASSETS (100.0%)................................................................. $16,763,742
===========

<PAGE>

</TABLE>

______________________

* Non-income producing security.

+ Also the cost for Federal income tax purposes. The aggregate gross
unrealized appreciation in which there was an excess of market value
over tax cost was $637,586, and aggregate gross unrealized depreciation
for all securities in which there was an excess of tax cost over
market value was $1,317,111.

ADR -- American Depository Receipt

GDR -- Global Depository Receipt

See accompanying notes to financial statements.

<PAGE>

FINANCIAL STATEMENTS
STATEMENT OF ASSETS AND LIABILITIES
October 31, 1995

<TABLE>
<S> <C> <C>
Assets:
Investments, at market (identified cost $17,259,383) (Note 2) ............. $ 16,579,858
Cash ..................................................................... 632,431
Receivables:
Fund shares sold ....................................................... 25,000
Dividends and interest ................................................. 55,900
Foreign taxes recoverable .............................................. 1,312
Forward foreign currency exchange contracts sold (Note 6) .............. 2,848
Deferred organizational costs (Note 2)..................................... 122,895
Other assets .............................................................. 1,497
-----------
Total Assets ........................................................ 17,421,741

Liabilities:
Payables:
Investment securities purchased......................................... $ 632,431
Accrued expenses (Note 4) .............................................. 22,721
Foreign currencies to deliver (Note 6) ................................. 2,847
------------
Total Liabilities ................................................... 657,999
------------

Net Assets ................................................................ $ 16,763,742
============
Net Assets consist of:
Common stock .............................................................. $ 1,745
Additional capital paid in ................................................ 17,387,849
Undistributed net investment income ....................................... 40,266
Accumulated net realized on:
Investments ............................................................ (23,539)
Foreign currency transactions .......................................... 36,990
Net unrealized depreciation on:
Investments ............................................................ (679,525)
Translation of assets and liabilities in foreign currencies ............ (44)
------------

Net Assets, for 1,745,264 shares outstanding .............................. $ 16,763,742
============

Net Asset Value offering price and redemption price per share ($16,763,742
+ 1,745,264 outstanding shares of common stock, $0.001 par value) ...... $ 9.61
========
</TABLE>

See accompanying notes to financial statements.

<PAGE>

STATEMENT OF OPERATIONS
For the Period August 3, 1995 (Commencement of Operations) through October 31,
1995

Investment Income:
Dividends ........................................................... $ 73,417
Interest ............................................................ 24,750
------------
98,167
Less foreign taxes withheld ......................................... (8,629)
------------
89,538
Expenses:
Investment advisory fee (Note 4) .................................... $ 29,563
Administration fee (Note 4) ......................................... 12,329
Accounting fee (Note 4) ............................................. 14,794
Custodian fees ...................................................... 5,000
Amortization of organizational expenses (Note 2) .................... 6,375
Legal ............................................................... 8,190
Audit ............................................................... 3,200
Registration fees ................................................... 7,956
Directors' fees and expenses (Note 4) ............................... 4,500
Transfer agency fees ................................................ 5,881
Other ............................................................... 4,541
------------

Total expenses before fee waivers ................................ 102,329
Advisory fee waived (Note 4) ..................................... (29,563)
Administration fee waived (Note 4) ............................... (9,247)
Accounting fee waived (Note 4) ................................... (11,096)
Transfer agency fee waived (Note 4) .............................. (3,151)
------------
Total Expenses, net ........................................... 49,272
------------

Net Investment Income ............................................... 40,266
------------

Realized and unrealized gain (loss) from investments and foreign currency:
Net realized gain (loss) from:
Investments ......................................................... (23,539)
Foreign currency transactions ....................................... 36,990
Net unrealized depreciation during the period on:
Investments ......................................................... (679,525)
Translation of assets and liabilities in foreign currencies ......... (44)
------------
Net realized and unrealized loss from investments and foreign currency.. (666,118)
------------

<PAGE>

Net decrease in net assets resulting from operations ...................... $ (625,852)
============
</TABLE>

See accompanying notes to financial statements.

STATEMENT OF CHANGES IN NET ASSETS
For the Period August 3, 1995 (Commencement of Operations) through October 31,
1995

Increase (Decrease) in Net Assets:
Operations:
Net investment income .................................................. $ 40,266
Net realized gain (loss) on:
Investments ......................................................... (23,539)
Foreign currency transactions ....................................... 36,990
Net unrealized depreciation during the period on:
Investments ......................................................... (679,525)
Translation of assets and liabilities in foreign currencies ......... (44)
------------

Net decrease in net assets resulting from operations ................... (625,852)
------------

Increase in net assets from Fund share transactions (Note 5) .............. 17,289,594
------------

Increase in net assets ................................................. 16,663,742

Net Assets:
Beginning of period .................................................... 100,000
------------
End of period (including undistributed net investment income of
$40,266) ............................................................ $ 16,763,742
============
</TABLE>

See accompanying notes to financial statements.

<PAGE>

FINANCIAL HIGHLIGHTS

The following table includes selected data for a share outstanding throughout
the period from August 3, 1995 (Commencement of Operations) through October
31, 1995.

<TABLE>
<S> <C>
Net Asset Value - Beginning of Period ...... $ 10.00
----------
Investment Operations:
Net investment income ................ 0.02
Net realized and unrealized loss
on investment and foreign currency
transactions ...................... (0.41)
----------
Total from investment operations (0.39)
----------

Net Asset Value - End of Period ............ $ 9.61
==========

Total Return .............................. (3.90)%
Ratios (to average net assets)/Supplemental Data:
Expenses1 ........................... 1.25%*
Net investment income ................ 1.02%*
Portfolio turnover rate .................... 42.21%*
Net assets at end of period (000 omitted)... 16,764
</TABLE>

1 Without waivers the annualized ratio of expenses to average daily net
assets would have been 2.60% for the period.

* Annualized.

See accompanying notes to financial statements.

<PAGE>

NOTES TO FINANCIAL STATEMENTS

1. Description of the Fund. The 1838 Investment Advisors Funds (the
"Trust"), a diversified, open-end management investment company, was
established as a series Delaware business trust on December 9, 1994, and is
registered under the Investment Company Act of 1940, as amended (the "1940
Act"). The Trust's Agreement and Declaration of Trust permits the Trustees to
issue an unlimited number of shares of beneficial interest. The Trust has
established two series: the 1838 International Equity Fund and the 1838 Small
Cap Equity Fund. The 1838 International Equity Fund (the "Fund"), the only
series currently offered by the Trust, commenced operations on August 3, 1995.

2. Significant Accounting Policies.

Security Valuation. The Fund's securities, except investments with remaining
maturities of 60 days or less, are valued at the last quoted sales price on
the security's principal exchange on that day. If there are no sales of the
relevant security on such day, the security will be valued at the mean between
the closing bid and asked price on that day, if any. Debt securities having a
maturity of 60 days or less are valued at amortized cost. Securities for
which market quotations are not readily available and all other assets will be
valued at their respective fair market value as determined in good faith by,
or under procedures established by, the Board of Trustees.

Federal Income Taxes. The Fund intends to qualify annually and elect to be
treated as a regulated investment company under Subchapter M of the Internal
Revenue Code of 1986 and to distribute all of its taxable income to its
shareholders. Therefore, no federal income or excise tax provision is
required. At October 31, 1995, the Fund had a net tax basis capital loss
carryforward available to offset future capital gains of approximately
$24,000, which will expire on October 31, 2003.

Dividends and Capital Gain Distributions. Distributions of net investment
income and net realized gains are determined in accordance with income tax
regulations which may differ from generally accepted accounting principles.
These differences are primarily due to differing treatments for foreign
currency transactions. These distributions will be made annually in December.
Additional distributions may be made to the extent necessary to avoid the
payment of a 4% excise tax.

Deferred Organizational Costs. Costs incurred by the Fund in connection with
the initial registration and public offering of shares have been deferred and
are being amortized on a straight-line basis over a five-year period beginning
on the date that the Fund commenced operations.

Foreign Currency Translations. The books and records of the Fund are

<PAGE>

maintained in U.S. dollars. Foreign currency amounts are translated into U.S.
dollars on the following basis:

(i) market value of investment securities, assets and liabilities
at the daily rates of exchange, and

(ii) purchases and sales of investment securities, dividend and

interest income and certain expenses at the rates of exchange
prevailing on the respective dates of such transactions.

NOTES TO FINANCIAL STATEMENTS -- continued

2. Significant Accounting Policies -- continued

The Fund does not isolate that portion of the results of operations resulting
from changes in foreign exchange rates on investments from the fluctuations
arising from changes in market prices of securities held. Such fluctuations
are included with the net realized and unrealized gain or loss from
investments.

Reported net realized foreign exchange gains or losses arise from sales and
maturities of short-term securities, sales of foreign currencies, currency
gains or losses realized between the trade and settlement dates on securities
transactions, the difference between the amounts of dividends, interest, and
foreign withholding taxes recorded on the Fund's books, and the U.S. dollar
equivalent of the amounts actually received or paid. Net unrealized foreign
exchange gains and losses arise from changes in the value of assets and
liabilities other than investments in securities at the end of the fiscal
period, resulting from changes in exchange rates.

Forward Foreign Currency Exchange Contracts. In connection with portfolio
purchases and sales of securities denominated in a foreign currency, the Fund
may enter into forward foreign currency exchange contracts. Additionally, the
Fund may enter into these contracts to hedge certain foreign currency assets.
Foreign currency exchange contracts are recorded at market value. Certain
risks may arise upon entering into these contracts from the potential
inability of counterparties to meet the terms of their contracts. Realized
gains or losses arising from such transactions are included in net realized
gain (loss) from foreign currency transactions.

Other. Investment security transactions are accounted for on a trade date

<PAGE>

basis. The Fund uses the specific identification method for determining
realized gain or loss on investments for both financial and federal income tax
reporting purposes. Dividend income and distributions to shareholders are
recorded on the ex-dividend date. Interest income is recorded on an accrual
basis.

3. Purchases and Sales of Investment Securities. Purchases and sales of
investment securities (excluding short-term investments) for the period ended
October 31, 1995 were $17,988,756 and $1,618,499, respectively.

4. Advisory Fee and Other Transactions with Affiliates. The Trust, on
behalf of the Fund, employs 1838 Investment Advisors, L.P. (the "Investment
Adviser"), a Delaware limited partnership and registered investment adviser
under the 1940 Act, to furnish investment advisory services to the Fund
pursuant to an Investment Advisory Agreement with the Trust. The Investment
Adviser supervises the investments of the assets of the Fund in accordance
with its objective, policies and restrictions. The Fund's assets are managed
by MeesPierson 1838 Investment Advisors (the "Sub-Adviser") pursuant to a
Sub-Investment Advisory Agreement between the Investment Adviser and the
Sub-Adviser. The Sub-Adviser is compensated by the Investment Adviser for the
services it provides.

The Fund pays the Investment Adviser a monthly fee at the annual rate of 0.75%
of the average daily net assets of the Fund. The Investment Adviser has
voluntarily agreed to waive its advisory fee or reimburse the Fund monthly to
the extent that the Fund's total operating expenses will exceed 1.25% of the
average daily net assets of the Fund. This undertaking may be rescinded at
any time in the future. The advisory fee for the period ended October 31,
1995 amounted to $29,563, all of which was waived.

NOTES TO FINANCIAL STATEMENTS -- continued

4. Advisory Fee and Other Transactions with Affiliates -- continued

Rodney Square Management Corporation ("RSMC"), a wholly owned subsidiary of
Wilmington Trust Company ("WTC"), serves as Administrator to the Fund pursuant
to an Administration Agreement with the Trust. As Administrator, RSMC is
responsible for services such as financial reporting, compliance monitoring
and corporate management. For the services provided, RSMC receives a monthly
administration fee from the Trust at the annual rate of 0.15% of the average
daily net assets of the Trust on the first $50 million; 0.10% of such assets
in excess of $50 million to $100 million; 0.07% of such assets in excess of
$100 million to $200 million; and 0.05% of such assets in excess of $200
million. Each series pays its pro-rata portion based upon total Trust assets.
Such fees are subject to a minimum fee of $50,000 per year for one series and

<PAGE>

$15,000 minimum per year for each additional series. RSMC has agreed to waive
a portion of its fees. For the period ended October 31, 1995, RSMC's
administration fees amounted to $12,329, of which $9,247 was waived. At
October 31, 1995 Administration fees payable to RSMC amounted to $3,082.

Rodney Square Distributors, Inc. ("RSD"), a wholly owned subsidiary of WTC,
has been engaged pursuant to a Distribution Agreement with the Trust to assist
in securing purchasers for shares of the Fund. RSD also directly, or through
its affiliates, provides investor support services. RSD receives no
compensation for distribution of shares of the Fund, except for reimbursement
of out-of-pocket expenses.

RSMC serves as Accounting Agent to the Fund. As Accounting Agent, RSMC
determines the Fund's net asset value per share and provides accounting
services to the Fund pursuant to an Accounting Services Agreement with the
Trust. At October 31, 1995, Accounting fees payable to RSMC amounted to
$3,698.

RSMC also serves as the Fund's transfer agent pursuant to a Transfer Agency
Agreement with the Trust. For these services, RSMC receives a monthly fee
computed on the basis of the number of shareholder accounts that the Transfer
Agent maintains for the Fund during the month, and is reimbursed for
out-of-pocket expenses. At October 31, 1995, Transfer Agent fees payable to
RSMC amounted to $2,730.

The Trustees of the Trust who are "interested persons" of the Trust, the
Investment Adviser or its affiliates and all personnel of the Trust or the
Investment Adviser performing services related to research, statistical and
investment activities are paid by the Investment Adviser or its affiliates.
The fees and expenses payable to the "non-interested" Trustees amounted to
$4,500 on October 31, 1995.

NOTES TO FINANCIAL STATEMENTS -- continued

5. Fund Share Transactions. At October 31, 1995, there were an unlimited
number of shares of beneficial interest with a $0.001 par value, authorized.
Transactions in shares of the Fund for the period from August 3, 1995
(commencement of operations) through October 31, 1995 were as follows:

<TABLE>
<CAPTION>
Shares Amount
------ ------
<S> <C> <C>
Shares sold 1,742,436 $17,357,801

Shares redeemed (7,172) (68,207)
--------- -----------
Net increase 1,735,264 $17,289,594

Shares outstanding:
Beginning of period 10,000
---------

End of period 1,745,264
=========
</TABLE>

6. Commitments. As of October 31, 1995, the Fund had entered into a
forward foreign currency exchange contract which contractually obligates the
Fund to deliver currencies at specified future dates. The open contract is as
follows:

<TABLE>
<CAPTION>
Net Unrealized
Appreciation
Contracts to Deliver In Exchange for Settlement Date U.S. $
<S> <C> <C> <C>

British Pound 1,806 U.S. $2,848 11/02/95 1
</TABLE>

<PAGE>

REPORT OF INDEPENDENT ACCOUNTANTS

To the Shareholders and Board of Trustees of
the 1838 Investment Advisors Funds

We have audited the accompanying statement of assets and liabilities,
including the schedule of net assets of the 1838 Investment Advisors Funds,
comprised of the 1838 International Equity Fund, as of October 31, 1995 and
the related statements of operations, changes in net assets and the financial
highlights for the period August 3, 1995 (commencement of operations) through
October 31, 1995. These financial statements and financial highlights are
the responsibility of the Fund's management. Our responsibility is to
express an opinion on these financial statements and financial highlights
based upon on our audit.

We conducted our audit in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements and
financial highlights are free of material misstatement. An audit includes
examining, on a test basis, evidence supporting the amounts and disclosures
in the financial statements. Our procedures included confirmation of
securities owned as of October 31, 1995, by correspondence with the custodian
and brokers. An audit also includes assessing the accounting principles used
and significant estimates made by management, as well as evaluating the
overall financial statement presentation. We believe that our audit provides
a reasonable basis for our opinion.

In our opinion, the financial statements and financial highlights referred to
above present fairly, in all material respects, the financial position of the
1838 International Equity Fund as of October 31, 1995, the results of its
operations, the changes in its net assets and its financial highlights for
the period August 3, 1995 (commencement of operations) through October 31,
1995 in conformity with generally accepted accounting principles.

COOPERS & LYBRAND L.L.P.

2400 Eleven Penn Center
Philadelphia, Pennsylvania
November 30, 1995

TAX INFORMATION

<PAGE>

During the period ended October 31, 1995, the Fund recognized $36,568 of
foreign source income.

In January 1996, shareholders will receive federal income tax information on
all distributions paid to their accounts in the calendar year 1995. Please
consult a tax advisor if you have any questions about federal or state income
tax laws, or how to prepare your tax return.

<PAGE>

Form N-1A

PART C
OTHER INFORMATION

Item 24. FINANCIAL STATEMENTS AND EXHIBITS

(a) Financial Statements:
See "Financial Statements" in Part B of this
Registration Statement

(b) Exhibits:

(1) Agreement and Declaration of Trust.
Incorporated by reference to Exhibit 1 to
Registrant's Registration Statement on
Form N-1A filed with the U.S. Securities
and Exchange Commission on December 13,
1994.

(2) By-laws.
Incorporated by reference to Exhibit 2 to
Registrant's Registration Statement on
Form N-1A filed with the U.S. Securities
and Exchange Commission on December 13,
1994.

(3) Voting Trust Agreement:
Not Applicable.

(4) Specimen copy of each security to be
issued by the registrant.
Not Applicable.

(5) Investment Advisory Agreements:

(a)(i) Form of Investment Advisory
Agreement re: 1838 International
Equity Fund series. Incorporated
by reference to Exhibit 5(a)(i) to
Registrant's Registration
statement on Form N-1A filed with
the U.S. Securities and
Exchange Commission on December
13, 1994.

(ii) Form of Investment Advisory
Agreement re: 1838 Small Cap
Equity Fund series. Incorporated
by reference to Exhibit 5(a)(ii)
to Registrant's Registration
Statement on Form N-1A filed with
the U.S. Securities and Exchange
Commission on December 13, 1994.

<PAGE>

(b)(i) Form of Sub-Investment Advisory
Agreement re: 1838 International
Equity Fund series. Incorporated
by reference to Exhibit 5(b)(i) to
Registrant's Registration
statement on Form N-1A filed with
the U.S. Securities and Exchange
Commission on December 13, 1994.

(6) (a) DISTRIBUTION AGREEMENTS:

(i) Form of Distribution Agreement
between the Registrant and Rodney
Square Distributors, Inc.
Incorporated by reference to
Exhibit 6(a)(i) to Registrant's
Registration Statement on Form
N-1A filed with the U.S.
Securities and Exchange Commission
on December 13, 1994.

(b) DEALER AGREEMENTS:
Not applicable.

(7) BONUS, PROFIT SHARING AND PENSION CONTRACTS:
Not Applicable.

(8) CUSTODIAN AGREEMENT:

(a) Form of Custodial Agreement
between the Registrant and
Wilmington Trust Company.
Incorporated by reference to
Exhibit 8(a) to Registrant's
Registration Statement on Form
N-1A filed with the U.S.
Securities and Exchange
Commission on December 13, 1994.

(b) Form of Custodial Agreement
between the Registrant and Bankers
Trust Company. Incorporated by
reference to Exhibit 8(b) to
Registrant's Registration
Statement on Form N-1A filed with
the U.S. Securities and Exchange
Commission on March 8, 1995.

(9) OTHER MATERIAL CONTRACTS:

(a) Form of Transfer Agency Agreement

<PAGE>

with Rodney Square Management
Corporation. Incorporated by
referenced to Exhibit 9(a) to
Registrant's Registration
Statement on Form N-1A filed with
the U.S. Securities and Exchange
Commission on December 13, 1994.

(b) Form of Administration Agreement
with Rodney Square Management
Corporation. Incorporated by
reference to Exhibit 9(b) to
Registrant's Registration
Statement on Form N-1A filed with
the U.S. Securities and Exchange
Commission on December 13, 1994.

(c) Form of Accounting Services
Agreement with Rodney Square
Management Corporation.
Incorporated by reference to
Exhibit 9(c) to Registrant's
Registration Statement on From
N-1A filed with the U.S.
Securities and Exchange
Commission on December 13, 1994.

(10) OPINION AND CONSENT OF COUNSEL AS TO THE
LEGALITY OF THE SECURITIES TO BE ISSUED:

(a) To be filed by the Registrant on a
yearly basis along with its Rule
24f-2 Notice.

(11) CONSENT OF CERTIFIED PUBLIC ACCOUNTANTS

(12) NOT APPLICABLE

(13) LETTER OF UNDERSTANDING RELATING TO
INITIAL CAPITAL

Incorporated by reference
to Exhibit 13 to Registrant's
Registration Statement on Form N-1A filed
with the U.S. Securities and Exchange
Commission on March 8, 1995.

(14) MODEL PLANS:
Not Applicable.

(15) PLANS UNDER RULE 12b-1:
Not Applicable.

<PAGE>

(16) SCHEDULE FOR COMPUTATION OF PERFORMANCE
QUOTATIONS

(17) FINANCIAL DATA SCHEDULE

(18) NOT APPLICABLE

ITEM 25. PERSONS CONTROLLED OR UNDER COMMON CONTROL WITH THE
REGISTRANT:
None.

ITEM 26. NUMBER OF HOLDERS OF SECURITIES:

The number of record holders of securities of the Registrant
as of January 15, 1996 is as follows:

<TABLE>
<CAPTION>
(1) (2)
Title of Class Number of Record Holders
<S> <C>
1838 International
Equity Fund series 42

1838 Small Cap Equity
Fund series 0
</TABLE>

ITEM 27. INDEMNIFICATION

Under the terms of the Delaware Business Trust Act and the
Registrant's Agreement and Declaration of Trust and By-Laws, no officer or
trustee of the Fund shall have any liability to the Trust or its
shareholders, except to the extent such limitation of liability is precluded
by Delaware law, the Agreement and Declaration of Trust, or the By-Laws.

Subject to the standards and restrictions set forth in the Trust's
Agreement and Declaration of Trust, the Delaware Business Trust Act, section
3817, permits a business trust to indemnify and hold harmless any trustee,
beneficial owner, or other person from and against any and all claims and
demands whatsoever. Section 3803 protects a trustee, when acting in such
capacity, from personal liability to any person other than the business trust
or a beneficial owner for any act, omission, or obligation of the business
trust or any trustee thereof, except as otherwise provided in the Agreement
and Declaration of Trust.

<PAGE>

The Agreement and Declaration of Trust provides that the Trustees
shall not be responsible or liable in any event for any neglect or
wrong-doing of any officer, agent, employee, Manager or Principal Underwriter
of the Fund, nor shall any Trustee be responsible for the act or omission of
any other Trustee. Subject to the provisions of the By-Laws, the Trust, out
of its assets, may indemnify and hold harmless each and every Trustee and
officer of the Trust from and against any and all claims, demands, costs,
losses, expenses, and damages whatsoever arising out of or related to such
Trustees' performance of his or her duties as a Trustee or officer of the
Trust; provided that nothing in the Declaration of Trust shall indemnify,
hold harmless or protect any Trustee or officer from or against any liability
to the Trust or any Shareholder to which he or she would otherwise be subject
by reason of willful misfeasance, bad faith, gross negligence or reckless
disregard of the duties involved in the conduct of his or her office.

The By-Laws provide indemnification for each Trustee and officer who
was or is a party or is threatened to be made a party to any proceeding, by
reason of service in such capacity, to the fullest extent, if it is
determined that Trustee or officer acted in good faith and reasonably
believed: (a) in the case of conduct in his official capacity as an agent of
the Fund, that his conduct was in the Trust's best interests; (b) in all other
cases, that his conduct was at least not opposed to the Trust's best
interests; and (c) in the case of a criminal proceeding, that he had no
reasonable cause to believe the conduct of that person was unlawful.
However, there shall be no right to indemnification for any liability arising
by reason of willful misfeasance, bad faith, gross negligence, or the
reckless disregard of the duties involved in the conduct of the Trustee's or
officer's office with the Trust. Further, no indemnification shall be made:

(a) In respect of any proceeding as to which any
Trustee or officer shall have been adjudged to be
liable on the basis that personal benefit was
improperly received by him, whether or not the
benefit resulted from an action taken in the
person's official capacity; or

(b) In respect of any proceeding as to which any
Trustee or officer shall have been adjudged to be
liable in the performance of that person's duty to
the Trust, unless and only to the extent that the
court in which that action was brought shall
determine upon application that in view of all the
relevant circumstances of the case, that person is
fairly and reasonably entitled to indemnity for the
expenses which the court shall determine; however,
in such case, indemnification with respect to any
proceeding by or in the right of the Trust or in
which liability shall have been adjudged by reason
of the disabling conduct set forth in the
preceding paragraph shall be limited to expenses;
or

<PAGE>

or of expenses incurred in defending a proceeding
which is settled or otherwise disposed of without
court approval, unless the required court approval
set forth in the By-Laws is obtained.

In any event, the Fund shall indemnify each officer and Trustee
against expenses actually and reasonably incurred in connection with the
successful defense of any proceeding to which each such officer or Trustee is
a party by reason of service in such capacity, provided that the Board of
Trustees, including a majority who are disinterested, non-party trustees,
also determines that such officer or Trustee was not liable by reason of
willful misfeasance, bad faith, gross negligence, or reckless disregard of his
or her duties of office. The Trust shall advance to each officer and Trustee
who is made a party to a proceeding by reason of service in such capacity the
expenses incurred by such person in connection therewith, if (a) the officer
or Trustee affirms in writing that his good faith belief that he has met the
standard of conduct necessary for indemnification, and gives a written
undertaking to repay the amount of advance if it is ultimately determined that
he has not met those requirements, and (b) a determination that the facts
then known to those making the determination would not preclude
indemnification.

The Trustees and officers of the Fund are entitled and empowered under
the Declaration of Trust and By-Laws, to the fullest extent permitted by law,
to purchase errors and omissions liability insurance with assets of the Fund,
whether or not the Fund would have the power to indemnify him against such
liability under the Declaration of Trust or By-Laws.

Insofar as indemnification for liabilities arising under the
Securities Act of 1933 may be permitted to Trustees, officers, the
underwriter or control persons of the Registrant pursuant to the foregoing
provisions, the Registrant has been informed that, in the opinion of the
Securities and Exchange Commission, such indemnification is against public
policy as expressed in that Act and is, therefore, unenforceable.

ITEM 28. BUSINESS AND OTHER CONNECTIONS OF THE
INVESTMENT ADVISER

1838 Investment Advisors, L.P.:

1838 Investment Advisors, L.P. ("Adviser") serves as
investment adviser of each Series of the Registrant.
Information as to the partners and officers of the Adviser
is included in its Form ADV, File No. 801-33025, filed on
August 19, 1988 and most recently supplemented on March 31,
1995, with the Securities and Exchange Commission. Such
Form ADV is incorporated by reference herein.

MeesPierson 1838 Investment Advisors:

MeesPierson 1838 Investment Advisors serves as the
sub-adviser ("Sub-Adviser") to the 1838 International
Equity Fund series of the Registrant.

<PAGE>

Information as to the partners and officers of the
Sub-Adviser is included in its Form ADV, File No.
801-47860, filed on November 3, 1994 and most recently
supplemented on March 31, 1995, with the Securities and
Exchange Commission. Such Form ADV is incorporated by
reference herein.

Item 29. PRINCIPAL UNDERWRITER:

(a) Rodney Square Distributors, Inc. ("RSD"), the
distributor for the Registrant's securities,
currently acts as distributor for the following
entities:

The Rodney Square Fund
The Rodney Square International Securities Fund, Inc.
The Rodney Square Multi-Manager Fund
The Rodney Square Tax-Exempt Fund
The Rodney Square Strategic Fixed-Income Fund

Heitman Real Estate Fund-Heitman/PRA Institutional
Class
Kiewit Mutual Fund
The Dracena Funds, Inc.
The Olstein Funds
The Homestate Group

(b) The table below sets forth certain information as
to the Distributor's Directors, officers and
Control Persons:

Positions and Officers Positions and
Name and Principal with Rodney Square Offices with
Business Address Distributors, Inc. Registrant
- ------------------ ---------------------- -------------
<S> <C> <C>
Jeffrey O. Stroble President, Secretary, None
1105 North Market St. Treasurer & Director
Wilmington, DE 19890

Martin L. Klopping Director None

<PAGE>

Rodney Square North
1100 North Market St.
Wilmington, DE 19890

Cornelius G. Curran Vice President None
1105 North Market St.
Wilmington, DE 19890
</TABLE>

Item 30. LOCATION OF ACCOUNTS AND RECORDS:

Each account, book or other document required to be
maintained by Section 31(a) of the 1940 Act and the Rules
(17 CFR 270-31a-1 to 31a-3) promulgated thereunder, is
maintained by the Registrant, except for those maintained
by the Fund's administrator, transfer agent, dividend paying
agent and accounting services agent, Rodney Square
Management Corporation, at Rodney Square North, 1100 North
Market Street, Wilmington, DE 19890.

Item 31. MANAGEMENT SERVICES:

There are no management related service contracts not
discussed in Part A or Part B.

Item 32. UNDERTAKINGS

(a) Inapplicable.

(b) Inapplicable.

(c) The Registrant hereby undertakes to furnish each
person to whom a prospectus is delivered with a
copy of the Registrant's annual report for the
fiscal year ended October 31, 1995, upon request
and without charge.

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

<PAGE>

SIGNATURES

Pursuant to the requirements of the Securities Act of 1933 and the
Investment Company Act of 1940, the Registrant, 1838 Investment Advisors
Funds has duly caused this Post-Effective Amendment to its Registration
Statement to be signed on its behalf by the undersigned, thereunto duly
authorized, in the City of Radnor, Pennsylvania on the 29th day of
January, 1996.

1838 INVESTMENT ADVISORS FUNDS

By: /s/ W. Thacher Brown
-----------------------------
W. Thacher Brown, President

Pursuant to the requirements of the Securities Act of 1933, this Post
Effective Amendment to the Registration Statement has been signed below by
the following persons in the capacities and on the dates indicated.

Signature Title Date
--------- ----- ----

/s/ W. Thacher Brown President and Trustee January 29, 1996
- ----------------------------
W. Thacher Brown

/s/ George W. Gephart, Jr. Vice President and January 19, 1996
- ---------------------------- Trustee
George W. Gephart, Jr.

/s/ Charles D. Dickey, Jr.* Trustee January 29, 1996
- ----------------------------
Charles D. Dickey, Jr.

Frank B. Foster, III* Trustee January 29, 1996
- ----------------------------
Frank B. Foster, III

/s/ Robert P. Hauptfurher* Trustee January 29, 1996
- ----------------------------
Robert P. Hauptfurher*

/s/ Anna M. Bencrowsky Vice President January 29, 1996
- ---------------------------- Assistant Secretary,
Anna M. Bencrowsky Treasurer
(Principal Financial
Officer)

* By: /s/ W. Thacher Brown
--------------------------
W. Thacher Brown, Attorney-in-Fact
(Pursuant to Power of Attorney filed herewith)

<PAGE>

POWER OF ATTORNEY

The undersigned officers and trustees of 1838 Investment Advisors Funds
(the "Fund") hereby appoints W. THACHER BROWN, GEORGE W. GEPHART, JR. and ANNA
M. BENCROWSKY (each with full power to act alone) as attorney-in-fact and agent,
in all capacities, to execute and to file any and all post-effective amendments
to the Fund's Registration Statement on Form N-1A under the Investment Company
Act of 1940, as amended, and under the Securities Act of 1933, as amended, and
all instruments necessary or desirable in connection therewith. Each of said
attorneys and agents have power and authority to do and perform in the name and
on behalf of each of the undersigned, in any and all capacities, every act
whatsoever necessary or advisable to be done in the premises as fully and to all
intents and purposes as each of the undersigned might or could do in person,
hereby ratifying and approving the act of said attorneys and agents and each of
them. This Power of Attorney may be executed in counterparts.

Signature Title Date
<S> <C> <C>

/s/ W. Thacher Brown President and Trustee January 12, 1996
- -------------------------------------
W. Thacher Brown

/s/ George W. Gephart, Jr. Vice President and Trustee January 12, 1996
- -------------------------------------
George W. Gephart, Jr.

/s/ Charles D. Dickey, Jr. Trustee January 12, 1996
- -------------------------------------
Charles D. Dickey, Jr.

/s/ Frank B. Foster, III Trustee January 12, 1996
- -------------------------------------
Frank B. Foster, III

/s/ Robert P. Hauptfurher Trustee January 12, 1996
- -------------------------------------
Robert P. Hauptfurher

/s/ Anna M. Bencrowsky Vice President January 12, 1996
- ------------------------------------- Assistant Secretary, Treasurer
Anna M. Bencrowsky

</TABLE>

<PAGE>

File No. 33-87298
File No. 811-8902

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

EXHIBITS

FORM N-1A

POST-EFFECTIVE AMENDMENT NO. 1

TO REGISTRATION STATEMENT

UNDER

THE SECURITIES ACT OF 1933

AND

AMENDMENT NO. 2

TO REGISTRATION STATEMENT

UNDER

THE INVESTMENT COMPANY ACT OF 1940

1838 INVESTMENT ADVISORS FUNDS

<PAGE>

EXHIBIT INDEX

Item 24(b)
Exhibit No. Exhibit Page No.

11 Consent of Certified Public Accountants 121

16 Schedule for Computation of Performance
Quotations 122

17 Financial Data Schedule 123

Exhibit 11

CONSENT OF INDEPENDENT ACCOUNTANTS

We consent to the inclusion in this Post-Effective Amendment No. 1 to the
Registration Statement on Form N-1A (File No. 33-87298) under the Securities
Act of 1933 of 1838 Investment Advisors Funds and our report dated November
30, 1995 on our audit of the financial statements and financial highlights
of the 1838 International Equity Fund as of October 31, 1995 and for the
respective period then ended.

We also consent to the reference to our Firm under the caption "Audits and
Reports" in the Statement of Additional Information.

/s/ COOPERS & LYBRAND L.L.P.
- ---------------------------------
COOPERS & LYBRAND L.L.P.

2400 Eleven Penn Center
Philadelphia, Pennsylvania
January 29, 1996

Exhibit 16

1838 INTERNATIONAL EQUITY FUND

For the period from August 3, 1995 (commencement of operations) through
October 31, 1995:

Cumulative Total Return

(ERV/P) - 1 = T

($961/$1,000) - 1 = T

(0.039) = T

(3.90)% = T

<ARTICLE> 6

<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE 1838
INTERNATIONAL EQUITY FUND'S ANNUAL REPORT DATED OCTOBER 31, 1995 AND IS
QUALIFIED IN ITS ENTIRETY BY REFERENCE TO THE ANNUAL REPORT DATED OCTOBER 31,
1995.
</LEGEND>
<MULTIPLIER> 1,000

<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> OCT-31-1995
<PERIOD-START> AUG-03-1995
<PERIOD-END> SEP-30-1995
<INVESTMENTS-AT-COST> 17,259
<INVESTMENTS-AT-VALUE> 16,580
<RECEIVABLES> 85
<ASSETS-OTHER> 124
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 16,789
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 25
<TOTAL-LIABILITIES> 25
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 17,388
<SHARES-COMMON-STOCK> 2
<SHARES-COMMON-PRIOR> 0
<ACCUMULATED-NII-CURRENT> 40
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 14
<OVERDISTRIBUTION-GAINS> 8
<ACCUM-APPREC-OR-DEPREC> (680)
<NET-ASSETS> 16,764
<DIVIDEND-INCOME> 73
<INTEREST-INCOME> 25
<OTHER-INCOME> (9)
<EXPENSES-NET> 49
<NET-INVESTMENT-INCOME> 40
<REALIZED-GAINS-CURRENT> 14
<APPREC-INCREASE-CURRENT> (680)
<NET-CHANGE-FROM-OPS> (626)
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 0
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 927
<NUMBER-OF-SHARES-REDEEMED> 68
<SHARES-REINVESTED> 0
<NET-CHANGE-IN-ASSETS> 17,290
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 0
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 30
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 102
<AVERAGE-NET-ASSETS> 15,986
<PER-SHARE-NAV-BEGIN> 10.00
<PER-SHARE-NII> (.02)
<PER-SHARE-GAIN-APPREC> (.41)
<PER-SHARE-DIVIDEND> 0
<PER-SHARE-DISTRIBUTIONS> 0
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 9.61
<EXPENSE-RATIO> 1.25
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0

</TABLE>