1838 INVESTMENT ADVISORS FUNDS, N-30D, 1998-12-30

1838 INVESTMENT ADVISORS FUNDS
N-30D, 1998-12-30

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1838 INTERNATIONAL EQUITY FUND

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

TO THE SHAREHOLDER:

Fiscal 1998 has been a volatile period for capital markets around the world.
What started as a currency crisis in Thailand turned into currency, economic and
political crises throughout most of the developing markets, with negative impact
on global growth and global equity markets. The 1838 International Equity Fund
showed a total return of 6.90% during the fiscal year ending October 31, 1998.
The Fund lagged the Morgan Stanley Capital International Europe, Australia and
Far East (EAFE) Index, which had a total return of 9.6% during this period. The
total return of the Fund takes into account a distribution of $ 0.67 per share
for net investment income and realized capital gains. The Fund commenced
operations in August 1995 and hence has a record of more than three years. Since
inception, the annualized total return through October 1998 for the Fund was
8.99% compared with 6.1% for the EAFE benchmark.

In the performance table below, you will see the total returns during the fiscal
year for the EAFE and for the important overseas regions. While these numbers
show that returns varied considerably between regions, they understate the
volatility during the year, which was particularly pronounced in the emerging
markets and industries with exposure to these markets, such as banks, capital
goods producers and airlines.

[In the printed version of the document, a line graph appears which
depicts the following plot points:]

1838 International Equity Fund EAFE
8/3/95 10000 10000
Oct-95 9610 9548
Apr-96 10824 10823
Oct-96 10489 10563
Apr-97 11381 10740
Oct-97 12087 11078
Apr-98 14173 12784
Oct-98 12892 12146

* Past performance of the portfolio is not predictive of future performance. The
1838 International Equity Fund commenced operations on August 3, 1995.

In Europe, the markets rallied through July for a gain of over 35% in the MSCI
Europe index, after which a severe correction followed in August which lasted
into the first days of October. During the correction, earlier optimism based on
corporate mergers, restructuring and low interest rates gave way to caution over
cuts in global growth forecasts, losses in emerging markets and a lower dollar.
We kept the exposure of the Fund close to the EAFE index weighting,

<PAGE>

1838 INTERNATIONAL EQUITY FUND

- --------------------------------------------------------------------------------
which was over 70% during the year. The UK overtook Japan as the largest market
in the EAFE index and the Fund. In relative terms, we emphasized the Swiss,
German, Dutch, French and Finnish markets during the year.

The Japanese market disappointed again at a (14.6)% total return for the MSCI
Japan index. The Fund kept an exposure to Japan, which was below EAFE weighting,
initially emphasizing Japanese exporters. Near the end of the year, this
investment strategy suffered from a shift in the market to domestic industries
such as construction, banks and utilities, because of the unexpected
strengthening of the Yen.

We have added a few stocks that we believe exhibit potential for long-term
growth in Japan even if the economic growth remains slow.

In Asia, outside Japan and other emerging markets, we scaled back the exposure
as we felt that the road to recovery would take several years. Over the past
weeks, we have however made a new investment again in Korea, and shortly after
the fiscal year ended, in China.

The competitive situation of some Asian companies appears to have been restored
as a result of last year's currency devaluations (more recently again versus the
Yen), and during this summer, more stable currencies and lower interest rates.

Over the last few months, markets in the Far East have rallied strongly,
outperforming the EAFE and US equity indices, even while signs of economic
turmoil were still abundant. While currency and economic crises resulted in last
year's overseas equity benchmark performing below the U.S. market return, we
believe that owning a diversified portfolio of blue chip international stocks,
as represented in the 1838 International Equity Fund, may help diversify your
overall portfolio and may help you achieve your long-term objectives.

Total returns in dollars for 12 months ended October 31, 1998:

<TABLE>
<CAPTION>
MCSI Fund Allocation
Stock Market Index 10/31/98
------------------ ---------------
<S> <C> <C>
EAFE............................................................. 9.6% --
Europe........................................................... 23.1% 74.8%
Japan............................................................ (14.6)% 15.0%
Pacific except Japan............................................. (12.3)% 2.6%
Emerging markets................................................. (31.4)% 3.4%
</TABLE>

Sincerely,

/s/ Hans van den Berg
----------------------------------
Hans van den Berg
Vice President & Portfolio Manager

<PAGE>
1838 INTERNATIONAL EQUITY FUND
SCHEDULE OF INVESTMENTS OCTOBER 31, 1998
- --------------------------------------------------------------------------------

<TABLE>
<CAPTION>
Value
Shares (Note 2)
--------- -----------
<S> <C> <C> <C>
COMMON STOCK -- 94.62%

AUSTRALIA -- 1.18%
News Corp. Ltd-ADR Multimedia....................... 25,000 $ 682,813
-----------
FINLAND -- 3.20%
Nokia Corp. ADR Telecommunications/Equipment..... 15,000 1,395,938
Raisio Group plc Food-Misc/Diversified............ 34,000 458,885
-----------
1,854,823
-----------
FRANCE -- 10.18%
Accor Lodging.......................... 2,500 525,032
Alcatel Alsthom Telecommunications/Equipment..... 4,500 501,278
AXA, Inc. Insurance........................ 8,500 960,625
Cap Gemini IT Services...................... 7,000 1,051,864
Lafarge Cement........................... 7,500 766,628
Schlumberger, Ltd. Exploration Services............. 10,000 525,000
Societe Generale Banking & Financial Services..... 4,834 639,395
Total S.A. (B Shares) Oil & Gas Exploration............ 8,000 922,833
-----------
5,892,655
-----------
GERMANY -- 12.04%
Daimler Automobile Manufacturer.......... 7,100 559,569
Deutsche Lufthansa AG Airlines......................... 35,000 760,824
GEA AG Engineering...................... 28,000 715,174
Henkel KGAA Chemicals........................ 12,000 949,218
Mannesmann AG Machinery/Telecommunications..... 10,000 984,240
Mobilcom AG Telecommunications............... 5,000 1,452,207
SAP ADR Software......................... 20,000 843,750
Volkswagen AG, Preferred Automobile Manufacturer.......... 15,000 704,668
-----------
6,969,650
-----------
HONG KONG -- 2.20%
China Resources Enterprise, Ltd. Real Estate...................... 200,000 267,242
Citic Pacific, Ltd. Holding Company.................. 90,000 221,346
HSBC Holdings Financial Services............... 21,125 484,093
Huaneng Power Int'l., Inc. ADR * Electric Utilities............... 22,000 302,500
-----------
1,275,181
-----------
INDIA -- 0.41%
Videsh Sanchar Nigam, Ltd. GDR Telecommunications............... 25,000 237,500
-----------
</TABLE>

See notes to financial statements.

<PAGE>

IRELAND -- 1.20%
Allied Irish Banks Banking.......................... 8,000 694,500
-----------

ITALY -- 5.14%
ENI Oil Refining..................... 10,000 607,500
Telecom Italia Mobil SPA Telecommunications............... 200,000 1,161,640
Unicredito Italiano SPA Banking.......................... 225,000 1,208,643
-----------
2,977,783
-----------

JAPAN -- 14.84%
Advantest Corp. Electronics...................... 6,930 437,115
Aiful Corp. Consumer Finance................. 11,000 512,587
CSK Computer Services................ 30,000 503,061
EISAI Medical-Drugs.................... 40,000 627,497
Fuji Photo Film Photo Film Manufacturer.......... 13,000 477,750
Fujitsu Support & Service Computer Services................ 5,000 251,016
Honda Motor Corp. Automobile Manufacturer.......... 16,000 480,577
KAO Corp. Household Goods.................. 80,000 1,620,232
Mineba Co. Bearings Manufacturer............ 100,000 939,700
Nintendo Company, Ltd. Entertainment.................... 14,000 1,184,623
Nomura Securities Co. Securities Broker................ 37,000 279,421
NTT Mobile Telecommunications Telephone........................ 10 361,291
TDK Corp Electronic Components............ 8,000 527,262
Toppan Forms Printing......................... 25,000 383,604
-----------
8,585,736
-----------

MEXICO -- 0.70%
Panamerican Beverages (A Shares) Bottling......................... 20,000 405,000
-----------

NETHERLANDS -- 7.10%
Aeogon N.V. Insurance........................ 7,000 607,571
Akzo N.V. Chemicals........................ 16,000 621,975
ING Group, N.V. Financial Services............... 20,000 968,087
Phillips Electronics N.V. Electronics...................... 10,000 548,750
The Unilever Group Consumer Products................ 10,000 752,500
Vedior CVA Human Resources.................. 24,000 611,694
-----------
4,110,577
-----------
</TABLE>

See notes to financial statements.

<PAGE>

SPAIN -- 3.02%
Corp Bancaria De Espana-Argentina Banking.......................... 30,000 651,593
Telefonica de Espana ADR Telecommunication Equipment...... 8,000 1,095,500
-----------
1,747,093
-----------

SOUTH KOREA -- 1.33%
Pohang Iron & Steel Steel Producer................... 14,000 769,254
-----------

SWEDEN -- 3.74%
Electrolux AB Appliances....................... 57,000 856,808
Nordbanken Holdings AB Banking.......................... 90,000 538,839
Telefonkatiebolaget LM Ericsson ADR Telecommunication Equipment...... 34,000 769,250
-----------
2,164,897
-----------

SWITZERLAND -- 10.65%
Adecco S.A. Business Services................ 2,500 997,045
Ciba Specialty Chemicals AG* Chemicals........................ 6,000 615,952
Nestle S.A. ADR Food Processing.................. 11,300 1,201,690
Novartis AG (Bearer Shares) Pharmaceuticals.................. 426 767,053
Roche Holding AG Genuss Pharmaceuticals.................. 70 816,840
UBS AG Banking.......................... 2,000 548,745
Zurich Allied AG Insurance........................ 2,000 1,215,658
-----------
6,162,983
-----------

TAIWAN -- 0.94%
Taiwan Semiconductor Manufacturing Co. Electronics...................... 36,250 541,484
-----------

UNITED KINGDOM -- 16.00%
Barratt plc Building & Construction.......... 200,000 768,715
Bass plc Brewery.......................... 60,000 727,516
British Aerospace plc Aerospace........................ 172,000 1,264,579
British Petroleum Co plc Oil.............................. 65,000 959,596
Glaxo Wellcome plc ADR Pharmaceuticals.................. 13,000 809,250
Kingfisher plc Retail Department Stores......... 110,838 967,118
Lloyds TSB Group plc Banking.......................... 55,209 683,294
Prudential Group plc Insurance........................ 65,000 852,370
</TABLE>

See notes to financial statements.

<PAGE>

1838 INTERNATIONAL EQUITY FUND
SCHEDULE OF INVESTMENTS -- CONTINUED OCTOBER 31, 1998
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Value
Shares (Note 2)
--------- -----------
UNITED KINGDOM -- (CONTINUED)
<S> <C> <C> <C>
Siebe plc Machinery Manufacturer........... 212,000 $ 883,185
Thompson Travel Group ORD Travel........................... 225,000 538,854
Vodafone Group plc ADR Telecommunications............... 6,000 807,750
-----------
9,262,227
-----------

TOTAL INVESTMENTS (Cost $49,490,009)+ -- 94.62%...................................................... $54,763,827

OTHER ASSETS AND LIABILITIES, NET -- 5.38%........................................................... 3,111,078
-----------

NET ASSETS -- 100.00%................................................................................ $57,874,905
===========
</TABLE>

* Non-income producing security.

+ The cost for federal income tax purposes was $49,490,009. The aggregate gross
unrealized appreciation for all securities in which there was an excess of
fair value over tax cost was $10,198,066 and aggregate gross unrealized
depreciation for all securities in which there was an excess of tax cost over
fair value was $4,924,248.

ADR -- American Depository Receipt

GDR -- Global Depository Receipt

See notes to financial statements.

<PAGE>

1838 SMALL CAP EQUITY FUND

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

TO THE SHAREHOLDER:

For the fiscal year ending October 31, 1998, the 1838 Small Cap Equity Fund
demonstrated a -15.33% return versus a -11.8% return for its small cap
benchmark, the Russell 2000 Index. The Fund's fiscal year encompassed a period
of high volatility with the first half providing a strong 17.6% return versus an
11.8% return for the benchmark. During the second half of the fiscal year,
problems on the world stage caused substantial disarray in the financial markets
and led to a -26.5% return for the Fund, compared to -21.1% for the Russell
2000. The end of the Fund's fiscal year coincided closely with the conclusion of
the equity market correction.

[In the printed version of the document, a line graph appears which
depicts the following plot points:]

1838 Small Cap Equity Fund Russell 2000 Index
Initial value 10000 10000
Oct-96 9570.81 9972.92
Oct-97 13198.18 12898.86
Oct-98 11174.9 11365.45

* Past performance of the portfolio is not predictive of future performance. The
1838 Small Cap Equity Fund commenced operations on June 17, 1996.

What happened during this period of high volatility is really rather simple.
During the first half, investors operated comfortably with the notion that the
economic expansion which had begun in the early 1990s was still on course,
despite serious problems observed elsewhere in the world. During the second
half, almost to the precise dates, fears multiplied rapidly as to whether or not
the U.S. economy would be substantially impacted by the aforementioned problems
in the rest of the world. The snap conclusion was that it would indeed be
impacted and that a recession would be the inevitable result. As it turns out,
those fears seem not to have been well-founded.

The real story in the U. S. equity markets resided in the stocks of large U.S.
multinationals whose products are typically household names. Simply speaking,
the bigger a company was the better it tended to perform in the markets. During
August the S&P 500 Index sold at a premium valuation of about 25x trailing
twelve months earnings, while the Russell 2000 Index was priced at 18x earnings.
At the same time the aggregate price to earnings multiple for the 1838 Small Cap
Equity Fund was less than 15x. In the seven quarters since the beginning of
1997, however, the aggregate earnings growth of small cap companies has exceeded
that of their large caps brethren by nearly 50%. It appears, therefore, that
stocks of smaller companies have underperformed not because of inferior results
in recent periods, but because investors have felt more comfortable with the
larger and more familiar names, evidently, regardless of valuations.

<PAGE>

1838 SMALL CAP EQUITY FUND

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

Within the small cap universe, leadership throughout the year resided in the
technology (especially Internet) areas as well as in the banking sector.
Generally, the Fund's portfolio is restricted from investing heavily in the
technology leadership sector due to high valuations, which contradicts the
strict valuation criteria to which the Fund adheres. Additionally, the Fund has
de-emphasized the banking sector for new commitments over the last year, again
due to high historic valuations. The 1838 Small Cap Equity Fund did, however,
enjoy some notable successes during its fiscal year, especially during the first
half. For example, the portfolio made substantial profits in the airline sector
and benefited from several corporate takeovers, which tend to occur with some
regularity in the value style utilized in managing the Fund.

At the end of the 1998 fiscal year, the 1838 Small Cap portfolio was comprised
of many small companies whose valuations remain cheap yet have better than
average prospects. Additionally, the following summary characteristics of all
the companies held in the Fund were calculated and compared with those of the
Russell 2000 Index. The results are interesting.

<TABLE>
<CAPTION>
Summary Characteristics*
--------------------------------------------------------------------
Average Average
Average Average EPS Growth Return on Debt/Total
Market Cap** P/E Ratio 5 years Equity Capitalization
------------ ------------ ------------ ------------ ------------
<S> <C> <C> <C> <C> <C>
1838 Small Cap Fund.......................... $331 MM 11.3x 24.0% 17.2% 31.7%
Russell 2000 Index........................... $500 MM 15.5x 16.0% 14.3% 38.7%
</TABLE>

* This chart represents the characteristics of the Fund's portfolio at October
31, 1998.
** 1838 measures market float (excluding closely held shares) only in
calculating equity capitalization for the Fund's holdings.

At the end of October 1998, the stocks of small companies were cheap, especially
when compared with large cap indices like the S&P 500, which had a P/E ratio of
24x. What does the chart above tell us about the Fund's portfolio? It says that
the stocks held therein are relatively cheap by virtually all measures.
Additionally, it indicates that the portfolio continues to employ the
disciplined style which it has consistently maintained and rigorously applied.
Unfortunately, that style in recent months has not delivered the results which
should accrue to the collection of companies whose aggregate valuations and
prospects are as compelling as theirs are. Additionally, the valuation
discrepancy between small and large companies is at an historic extreme. History
suggests that such disparities shouldn't persist indefinitely.

Sincerely,

/s/ Edwin B. Powell
-------------------------
Edwin B. Powell
Vice President & Portfolio Manager

8
<PAGE>

1838 SMALL CAP EQUITY FUND
SCHEDULE OF INVESTMENTS OCTOBER 31, 1998
- --------------------------------------------------------------------------------

<TABLE>
<CAPTION>
Value
Shares (Note 2)
--------- ------------
<S> <C> <C>
COMMON STOCK -- 89.27%

BASIC MATERIALS AND MANUFACTURING -- 20.26%
Homebuilders -- 1.70%
Engle Homes........................................................................... 17,800 $ 229,175
Toll Brothers, Inc.*.................................................................. 18,500 428,969
------------
658,144
------------
Retail Building Materials -- .96%
Building Materials Holding Corp.*..................................................... 33,315 370,612
------------
Chemical & Allied Products -- 1.91%
General Chemical Group, Inc........................................................... 22,285 396,952
OM Group, Inc......................................................................... 10,500 342,563
------------
739,515
------------
Electronic Materials & Manufacturing -- 1.45%
Belden, Inc........................................................................... 10,700 155,819
General Cable Corp.................................................................... 20,450 403,888
------------
559,707
------------
Misc. Containers & Packaging -- 3.11%
Shorewood Packaging Corp.............................................................. 30,650 490,400
Silgan Holdings, Inc.................................................................. 14,100 352,500
US Can Corp.*......................................................................... 22,365 360,636
------------
1,203,536
------------
Misc. Manufacturing Industries -- 1.37%
Velcro Industries N.V................................................................. 4,380 527,790
------------
Printing & Publishing -- 4.15%
American Bank Note Holographics*...................................................... 27,000 254,813
Journal Register Co................................................................... 15,400 247,363
Valassis Communications, Inc.......................................................... 15,100 602,113
World Color Press, Inc.*.............................................................. 16,400 498,150
------------
1,602,439
------------
Steel & Aluminum Products -- .48%
Quanex Corp........................................................................... 10,900 183,938
------------
Textiles & Apparel -- 5.13%
Dan River, Inc.*...................................................................... 28,300 245,856
Galey & Lord, Inc.*................................................................... 11,600 158,050
Gerber Childrenswear*................................................................. 20,250 172,125
Guilford Mills, Inc................................................................... 20,300 253,750
Maxwell Shoe Company*................................................................. 19,800 232,650
</TABLE>

See notes to financial statements.

9
<PAGE>

1838 SMALL CAP EQUITY FUND
SCHEDULE OF INVESTMENTS -- CONTINUED OCTOBER 31, 1998
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Value
Shares (Note 2)
--------- ------------
Textiles & Apparel -- Continued
<S> <C> <C>
Quiksilver, Inc.*..................................................................... 18,200 376,513
Tarrant Apparel Group*................................................................ 500 9,438
Tropical Sportswear International*.................................................... 26,700 534,000
------------
1,982,382
------------
TOTAL BASIC MATERIALS & MANUFACTURING............................................... 7,828,063
------------
CONSUMER PRODUCTS -- 25.30%
CONSUMER STAPLES -- 7.56%
Food & Beverage -- 3.11%
M & F Worldwide Corp.................................................................. 26,400 262,350
Smithfield Foods, Inc.*............................................................... 27,500 539,688
Sylvan, Inc.*......................................................................... 29,880 399,645
------------
1,201,683
------------
Manufacturing & Distribution -- 4.04%
American Safety Razor Co.*............................................................ 17,330 193,879
Block Drug Co., Inc.*................................................................. 6,023 217,581
Buckeye Technology, Inc.*............................................................. 34,880 697,600
Libbey, Inc........................................................................... 14,615 453,065
------------
1,562,125
------------
Tobacco & Related Products -- 0.41%
Schweitzer-Maudit International, Inc.................................................. 8,710 158,413
------------
TOTAL CONSUMER STAPLES.............................................................. 2,922,221
------------
CONSUMER CYCLICALS -- 17.74%
Entertainment -- 1.09%
Primadonna Resorts, Inc.*............................................................. 50,000 362,500
Royal Olympic Cruise Line*............................................................ 15,900 57,638
------------
420,138
------------
Furniture, Fixtures & Appliances -- 4.22%
American Woodmark Corp................................................................ 11,500 299,000
Fedders Corp. (A Shares).............................................................. 38,540 178,248
Furniture Brands International, Inc.*................................................. 20,100 432,150
Holophane Corp.*...................................................................... 14,100 300,506
Pameco Corp.*......................................................................... 11,500 161,000
Wolverine Tube, Inc.*................................................................. 12,175 257,958
------------
1,628,862
------------
Office Products -- 1.59%
Day Runner, Inc.*..................................................................... 10,400 208,000
United Stationers, Inc................................................................ 15,400 408,100
------------
616,100
------------
</TABLE>

See notes to financial statements.

10
<PAGE>

1838 SMALL CAP EQUITY FUND
SCHEDULE OF INVESTMENTS -- CONTINUED OCTOBER 31, 1998
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Value
Shares (Note 2)
--------- ------------
Restaurants -- 1.41%
<S> <C> <C>
O'Charley's, Inc...................................................................... 23,600 283,200
Rare Hospitality Intl, Inc.*.......................................................... 21,900 262,800
------------
546,000
------------
Retail Trade -- 9.43%
Ames Department Stores, Inc.*......................................................... 15,900 292,163
BJ's Wholesale Club, Inc.............................................................. 19,000 682,813
Bon-Ton Stores, Inc.*................................................................. 23,900 156,844
Brylane, Inc.......................................................................... 10,100 162,863
Claire's Stores, Inc.................................................................. 13,400 226,963
Cole National Corp.*.................................................................. 17,200 356,900
Hastings Entertainment, Inc.*......................................................... 24,200 242,000
Jan Bell Marketing, Inc.*............................................................. 59,000 283,938
Ruddick Corp.......................................................................... 35,035 680,993
Zale Corp............................................................................. 23,475 556,064
------------
3,641,541
------------
TOTAL CONSUMER CYCLICALS............................................................ 6,852,641
------------
TOTAL CONSUMER PRODUCTS............................................................. 9,774,862
------------
ENERGY -- 1.67%
Petroleum Services -- 1.67%
Seacor Smit, Inc...................................................................... 11,600 554,625
Willbros Group, Inc.*................................................................. 13,200 87,450
------------
TOTAL ENERGY........................................................................ 642,075
------------
FINANCE & INSURANCE -- 17.69%
Commercial Finance -- 1.24%
Heller Financial, Inc................................................................. 19,900 477,600
------------
Insurance Providers & Services -- 11.84%
Allmerica Financial Corp.............................................................. 7,100 355,000
ARM Financial Group, Inc.-Cl A........................................................ 18,500 354,969
CNA Surety Corp....................................................................... 22,000 309,375
E.W. Blanch Holdings, Inc............................................................. 15,870 617,938
Enhance Financial Services Group, Inc................................................. 6,380 156,709
Everest Re Holdings, Inc.............................................................. 15,525 534,642
FPIC Insurance Group, Inc.*........................................................... 14,200 413,575
Harleysville Group, Inc............................................................... 21,000 448,875
HCC Insurance Holdings, Inc........................................................... 18,100 324,669
</TABLE>

See notes to financial statements.

11
<PAGE>

1838 SMALL CAP EQUITY FUND
SCHEDULE OF INVESTMENTS -- CONTINUED OCTOBER 31, 1998
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Value
Shares (Note 2)
--------- ------------
Insurance Providers & Services -- Continued
<S> <C> <C>
Penn Treaty American Corp.*........................................................... 7,100 149,544
Reliance Group Holdings, Inc.......................................................... 25,000 348,438
State Auto Financial Corp............................................................. 20,100 283,913
Stirling Cooke Brown Holdings, Ltd.................................................... 11,500 205,563
Zenith National Insurance............................................................. 2,700 69,019
------------
4,572,229
------------
Real Estate Investment Trusts -- 3.03%
Brandywine Reality Trust.............................................................. 14,000 250,250
Burnham Pacific Properties, Inc....................................................... 25,000 328,125
Healthcare Reality Trust, Inc......................................................... 13,700 321,094
Pacific Gulf Properties, Inc.......................................................... 13,700 271,431
------------
1,170,900
------------
State & National Banks -- 1.58%
Dime Community Bancorp, Inc........................................................... 20,100 481,144
United Security Bancorporation*....................................................... 7,381 131,013
------------
612,157
------------
TOTAL FINANCE & INSURANCE........................................................... 6,832,886
------------
HEALTHCARE -- 7.47%
Medical & Health Services -- 3.08%
Genesis Health Ventures*.............................................................. 22,500 303,750
Mariner Post Acute Network, Inc.*..................................................... 30,784 178,932
Sun Healthcare Group, Inc.*........................................................... 31,131 182,895
Trigon Healthcare, Inc................................................................ 14,000 525,000
------------
1,190,577
------------
Precision Instruments & Medical Supplies -- 4.39%
Del Global Technologies Corp.*........................................................ 35,100 329,063
Haemonetics Corp.*.................................................................... 28,200 608,063
Marquette Medical Systems (A Shares)*................................................. 17,000 757,563
------------
1,694,689
------------
TOTAL HEALTHCARE.................................................................... 2,885,266
------------
TECHNOLOGY --10.36%
Computer & Office Equipment -- .36%
Kentek Information Systems, Inc....................................................... 24,400 140,300
------------
Computer Services -- .87%
Wall Data, Inc........................................................................ 22,500 334,688
------------
</TABLE>

See notes to financial statements.

12
<PAGE>

1838 SMALL CAP EQUITY FUND
SCHEDULE OF INVESTMENTS -- CONTINUED OCTOBER 31, 1998
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Value
Shares (Note 2)
--------- ------------
Misc Electrical Equipment & Manufacturing -- 3.65%
<S> <C> <C>
AVX Corp.............................................................................. 38,200 678,050
HMT Technology Corp.*................................................................. 25,500 219,938
Oak Industries, Inc.*................................................................. 18,890 511,211
------------
1,409,199
------------
Semiconductors -- 1.75%
Burr-Brown Corp.*..................................................................... 15,818 293,622
Lattice Semiconductor*................................................................ 11,300 384,200
------------
677,822
------------
Software -- 2.56%
GT Interactive Software Corp*......................................................... 38,900 265,006
The Learning Co.*..................................................................... 28,000 722,750
------------
987,756
------------
Wholesale Electronic Equipment & Computers -- 1.17%
Marshall Industries*.................................................................. 15,745 452,670
------------
TOTAL TECHNOLOGY.................................................................... 4,002,435
------------
TRANSPORTATION -- 3.52%
Rollins Truck Leasing Corp............................................................ 53,550 622,519
Indigo Aviation AB-SPON ADR*.......................................................... 22,200 188,700
Sea Containers, Ltd................................................................... 19,400 550,475
------------
TOTAL TRANSPORTATION................................................................ 1,361,694
------------
TRANSPORTATION EQUIPMENT -- 3.00%
Avondale Industries, Inc.*............................................................ 17,600 458,700
Coachmen Industries, Inc.............................................................. 22,500 520,313
Delco Remy International, Inc.*....................................................... 16,200 181,238
------------
TOTAL TRANSPORTATION EQUIPMENT...................................................... 1,160,251
------------
TOTAL COMMON STOCK (COST $37,378,985) -- 89.27%..................................... 34,487,532
------------
SHORT-TERM INVESTMENTS -- 2.85%
Corefund Elite Cash Fund (Cost $1,099,525)............................................ 1,099,525 1,099,525
TOTAL INVESTMENTS (COST $38,478,510)+ -- 92.12%..................................... 35,587,057
------------
OTHER ASSETS AND LIABILITIES, NET -- 7.88%................................................ 3,045,843
------------
NET ASSETS -- 100.00%..................................................................... $ 38,632,900
============
</TABLE>

* Non-income producing security.

+ The cost for federal income tax purposes was $38,482,179. The aggregate gross
unrealized appreciation for all securities in which there was an excess of
fair value over tax cost was $3,071,559 and aggregate gross unrealized
depreciation for all securities in which there was an excess of tax cost over
fair value was $5,966,681.

See notes to financial statements.

13
<PAGE>

1838 FIXED INCOME FUND

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

TO THE SHAREHOLDER:

The third quarter 1998 witnessed a continued deterioration in the global economy
as financial contagion spread from Asia to other emerging markets and culminated
in a default by Russia on its local debt. While fixed income market participants
were already reassessing the prospects for slower U.S. growth, the events in
Russia served as a negative catalyst causing a wholesale re-pricing of risk in
both bonds and stocks. Indeed, fear began to quickly grip the market with as
much force as had been previously ascribed to the "irrational exuberance"
registered several months earlier. The result was a flight to quality into
treasuries and away from nearly every risk asset class. This flight to quality
drove long treasury yields down 66 basis points during the third quarter to
4.71% -- an historic low. The powerful buying was concentrated in the safer and
shorter maturity treasuries, which served to steepen the yield curve from 15
basis points to 70 basis points. The spiral of fear showed little signs of
slowing as illiquidity entered the markets and several "hedge funds" became
insolvent. This activity led the Federal Reserve to lower rates by 25 basis
points in late September. This moderate decrease proved disappointing to the
markets, leading to further financial deterioration. Continued declines led the
Fed to "surprise" the market with an additional 25 basis point ease on October
15th. Finally convinced the Fed was at the ready to quell any further financial
slow down, liquidity gradually returned to the market and long treasury yields
began to increase above 5% as the flight to quality trade unwound. The result of
third quarter volatility was a significant widening of spreads across all
non-treasury sectors of the bond market to near 10-year highs. And despite the
recent return of liquidity, bond spreads still remain significantly wider than
where we ended the second quarter. The result was under performance versus the
index for our fund, which was over weighted in corporate bonds during the
quarter.

[In the printed version of the document, a line graph appears which
depicts the following plot points:]

1838 Fixed Income Lehman Aggregate
9/2/97 10000 10000
Oct-97 10210 10460
Jan-98 10490 10720
Apr-98 10570 10840
Jul-98 10720 10990
Oct-98 10920 11250

* Past performance of the portfolio is not predictive of future performance. The
1838 Fixed Income Fund commenced operations on September 2, 1997.

14
<PAGE>
1838 FIXED INCOME FUND

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

Despite the recent bout of widening, and indeed because of it, we remain
convinced that the opportunity for enhancing our performance by maintaining our
position in "spread product" (corporates and agencies) is attractive. Spreads
are at levels that appear to discount a recession as all but a certainty. With
GDP at 3.9% for the third quarter, inflation and unemployment at low levels, an
improving international backdrop and a Fed on an easing path we believe that a
recession is avoidable and expect GDP growth to remain in solid positive
territory in early 1999. Significant risks to our outlook, however, have led to
a conservative repositioning of our corporate bond exposure with less emphasis
on long dated issues and more exposure to shorter maturity corporates. In
addition, we have added exposure to non-callable agencies offering attractive
yield pick-ups versus treasuries with the highest of credit quality.
Mortgage-backed securities remain under weighted to the index and the potential
for high prepays argues for staying under weight to neutral for the immediate
future. Our economic outlook argues for treasuries to remain in a 50 basis point
trading range with a pivot point at 5% for the long bond yield. As such, the
duration on the portfolio will remain at or near index levels. Portfolio
exposures to the Index at October 30,1998 were as follows:

<TABLE>
<CAPTION>
1838
Fixed Lehman
Income Aggregate
Fund Index
--------- ------------
<S> <C> <C>
Corporate Bonds................................................. 28% 20%
Mortgage-Backed................................................. 24% 31%
Asset-Backed.................................................... 0% 1%
Agencies........................................................ 10% 7%
Treasuries...................................................... 36% 41%
</TABLE>

The total return for the 1838 Fixed Income Fund Year to Date through October,
was 6.26% versus 7.74% for the Lehman Aggregate Index. Inception to Date
(September, 1997), the Fund returned 9.24% versus the Index at 9.16%.

Sincerely,

/s/ Clifford D. Corso
--------------------------------
Clifford D. Corso
Vice President & Portfolio Manager

15
<PAGE>
1838 FIXED INCOME FUND
SCHEDULE OF INVESTMENTS OCTOBER 31, 1998
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>

Moody's/S&P Principal Value
Rating* Amount (Note 2)
--------- ------------ -----------
<S> <C> <C> <C>
CORPORATE BONDS -- 27.65%
ELECTRIC UTILITIES -- 3.27%
Korea Electric Power Co., 7.00%, 02/01/27............................... Ba1/BB+ $2,000,000 $ 1,455,768
Utilicorp United, Inc., 9.00%, 11/15/21................................. Baa3/BBB 800,000 892,043
-----------
2,347,811
-----------

FINANCIAL -- 14.89%
Associates Corp. of N.A., 6.50%, 10/15/02............................... Aa3/AA- 1,800,000 1,852,900
FBS Capital I, Capital Securities, 8.09%, 11/15/26...................... A1/BBB+ 600,000 658,507
Fleet Financial Group, 7.125%, 05/01/00................................. A2/A 2,300,000 2,363,044
Ford Motor Credit Global, 7.20%, 06/15/07............................... A1/A 1,150,000 1,252,526
Keycorp Institutional Capital - A, 7.826%, 12/01/26..................... A1/BBB 900,000 928,709
Lehman Brothers, 6.25%, 04/01/03........................................ Baa1/A 1,000,000 972,660
Salomon, Inc., 6.75%, 02/15/03.......................................... Aa3/A 1,000,000 1,027,937
Salomon, Inc., 6.75%, 08/15/03.......................................... Aa3/A 100,000 103,791
Suntrust Banks Inc., 6.00%, 02/15/26.................................... A2/A 1,500,000 1,516,566
-----------
10,676,640
-----------

INDUSTRIAL & MISCELLANEOUS -- 6.59%
Dell Computer Corp., 7.10%, 04/15/28.................................... Baa1/BBB+ 1,300,000 1,275,539
Harcourt General, Inc., 7.30%, 08/01/97................................. Baa2/BBB 1,950,000 1,768,207
Societe Generale (NY), 7.40%, 06/01/06.................................. A1/A+ 1,600,000 1,681,010
-----------
4,724,756
-----------

TELEPHONE & COMMUNICATIONS -- 2.90%
Worldcom Inc., 6.40%, 08/15/05.......................................... Baa2/BBB+ 2,000,000 2,081,720
-----------

TOTAL CORPORATE BONDS (COST $19,865,659)........................................................... 19,830,927
-----------

MORTGAGE BACKED SECURITIES -- 24.06%
FHLMC Pool #G10557, 6.50%, 07/01/11..................................... NR/NR 2,096,751 2,114,175
FHLMC, Ser. T-008, Class A6, 7.00%, 01/15/19............................ NR/NR 1,000,000 1,020,850
FHLMC Pool #C80342, 6.50%, 09/01/25..................................... NR/NR 1,414,777 1,426,067
FNMA Pool #250890, 7.00%, 04/01/04...................................... NR/NR 1,887,557 1,926,309
FNMA Pool #303728, 6.00%, 01/01/11...................................... NR/NR 1,894,870 1,903,492
GNMA Pool #780374, 7.50%, 12/15/23...................................... NR/NR 1,402,713 1,446,057
GNMA Pool #2038, 8.50%, 07/20/25........................................ NR/NR 197,640 207,777
GNMA Pool #780312, 6.00%, 01/15/26...................................... NR/NR 1,655,972 1,641,268
GNMA Pool #417239, 7.00%, 02/15/26...................................... NR/NR 2,365,491 2,419,212
GNMA Pool #448178, 6.50%, 03/15/28...................................... NR/NR 196,516 198,695
GNMA Pool #462556, 6.50%, 03/15/28...................................... NR/NR 2,916,957 2,949,306
-----------

TOTAL MORTGAGE BACKED SECURITIES (COST $16,901,638)................................................ 17,253,208
-----------
</TABLE>

See notes to financial statements.

16
<PAGE>
1838 FIXED INCOME FUND
SCHEDULE OF INVESTMENTS -- CONTINUED OCTOBER 31, 1998
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Moody's/S&P Principal Value
Rating* Amount (Note 2)
----------- ---------- -----------

U.S GOVERNMENT AGENCIES -- 10.08%
<S> <C> <C> <C>
FNMA 6.00%, 06/15/08.................................................... NR/NR 3,500,000 3,710,977
Federal Home Loan 5.125%, 09/15/03...................................... NR/NR 3,500,000 3,522,810
-----------

TOTAL U.S. GOVERNMENT AGENCIES (COST $7,110,418)................................................... 7,233,787
-----------

U.S TREASURY OBLIGATIONS -- 36.17%
U.S. Treasury Notes, 5.625%, 10/31/99................................... NR/NR 2,000,000 2,023,126
U.S. Treasury Notes, 7.75%, 11/30/99.................................... NR/NR 5,200,000 5,380,378
U.S. Treasury Notes, 5.500%, 04/15/00................................... NR/NR 1,200,000 1,219,501
U.S. Treasury Notes, 5.875%, 06/30/00................................... NR/NR 200,000 204,938
U.S. Treasury Notes, 5.625%, 11/30/00................................... NR/NR 3,000,000 3,077,814
U.S. Treasury Notes, 6.250%, 04/30/01................................... NR/NR 2,600,000 2,717,003
U.S. Treasury Notes, 6.625%, 06/30/01................................... NR/NR 2,000,000 2,113,752
U.S. Treasury Notes, 6.25%, 08/31/02.................................... NR/NR 1,300,000 1,384,094
U.S. Treasury Notes, 5.875%, 11/15/05................................... NR/NR 1,200,000 1,299,751
U.S. Treasury Notes, 3.375%, 01/15/07................................... NR/NR 1,600,000 1,572,501
U.S. Treasury Notes, 5.625%, 05/15/08................................... NR/NR 2,575,000 2,774,565
U.S. Treasury Bonds, 7.875%, 02/15/21................................... NR/NR 1,565,000 2,064,334
U.S. Treasury Bonds, 6.25%, 08/15/23.................................... NR/NR 100,000 112,031
-----------

TOTAL U.S TREASURY OBLIGATIONS (COST $25,565,563).................................................. 25,943,788
-----------
</TABLE>

<TABLE>
<CAPTION>
Shares
----------
<S> <C> <C> <C>
SHORT TERM INVESTMENTS -- 0.71%
Corefund Elite Cash Fund (Cost $510,084)................................ 510,084 510,084
-----------
TOTAL INVESTMENTS (COST $69,954,362)+ -- 98.67%.......................................................... $70,771,794
===========
OTHER ASSETS AND LIABILITIES, NET -- 1.33%............................................................... 951,500
-----------
NET ASSETS -- 100.00%.................................................................................... $71,723,294
===========
</TABLE>

* Although certain securities are not rated (NR) by either Moody's or S&P,
they have been determined to be of comparable quality to investment grade
securities by the Portfolio Adviser. The Moody's/S&P rating for debt
securities is not covered by the report of independent accountants.

+ The cost for federal income tax purposes was $69,954,362. The aggregate
gross unrealized appreciation for all securities in which there was an
excess of fair value over tax cost was $1,267,567 and aggregate gross
unrealized depreciation for all securities in which there was an excess of
tax cost over fair value was $450,135.

See notes to financial statements.

<PAGE>
1838 INVESTMENT ADVISORS FUNDS, INC.
STATEMENTS OF ASSETS AND LIABILITIES OCTOBER 31, 1998
- --------------------------------------------------------------------------------

<TABLE>
<CAPTION>
International Small Cap Fixed Income
Equity Fund Equity Fund Fund
<S> <C> <C> <C> <C>
--------------------------------------------
ASSETS:
Investments, at value (identified cost $49,490,009, $38,478,510, and
$69,954,362 respectively) (Note 2)..................................... $54,763,827 $35,587,057 $ 70,771,794
Investments in foreign currency, at value (identified cost $2,997,062)... 3,056,699 -- --
Cash -- 5,157 --
Receivables:
Dividends and interest................................................. 92,253 33,133 1,124,953
Foreign taxes recoverable.............................................. 73,659 -- --
Fund shares sold....................................................... 1,064,275 3,194,709 60,056
Investment securities sold............................................. 1,413,082 -- 2,165,204
Reimbursement due from adviser........................................... -- -- 93
Deferred organizational costs (Note 2)................................... 45,266 -- --
--------------------------------------------
Total assets......................................................... 60,509,061 38,820,056 74,122,100
--------------------------------------------

LIABILITIES:
Cash overdraft......................................................... 833,471 -- --
Payable to custodian................................................... 1,022,192 -- --
Due to adviser......................................................... 79,015 20,254 --
Payable for fund shares purchased...................................... 2,493 -- 1,103
Payable for investment securities purchased............................ 651,552 123,119 2,367,767
Accrued expenses (Note 4).............................................. 45,433 43,783 29,936
--------------------------------------------
Total liabilities.................................................... 2,634,156 187,156 2,398,806
--------------------------------------------

NET ASSETS............................................................... $57,874,905 $38,632,900 $ 71,723,294
============================================

NET ASSETS CONSIST OF:
Common stock............................................................. $ 4,789 $ 3,767 $ 7,004
Additional capital paid - in............................................. 48,245,847 42,124,711 70,970,141
Accumulated realized gain (loss) on investments.......................... 4,286,753 (604,125) (71,283)
Net unrealized appreciation (depreciation) on:
Investments............................................................ 5,333,455 (2,891,453) 817,432
Translation of assets and liabilities in foreign currencies............ 4,061 -- --
--------------------------------------------

NET ASSETS, for 4,789,497, 3,766,748, and 7,004,447 shares of beneficial
interest outstanding, respectively..................................... $57,874,905 $38,632,900 $ 71,723,294
============================================

Net Asset Value, offering and redemption price per share................. $ 12.08 $ 10.26 $ 10.24
============================================
</TABLE>

See notes to financial statements.

18
<PAGE>
1838 INVESTMENT ADVISORS FUNDS, INC.
STATEMENTS OF OPERATIONS FOR THE YEAR ENDED OCTOBER 31, 1998
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
International Small Cap Fixed Income
Equity Fund Equity Fund Fund
<S> <C> <C> <C>
--------------------------------------------
INVESTMENT INCOME:
Interest................................................................ $ 76,407 $ 98,573 $3,614,814
Dividends............................................................... 627,676 254,179 --
--------------------------------------------
Total Investment Income............................................... 704,083 352,752 3,614,814
--------------------------------------------

EXPENSES:
Investment advisory fees (Note 4)......................................... 427,140 273,360 284,698
Administration fee (Note 4)............................................... 50,511 33,520 41,717
Accounting fee (Note 4)................................................... 41,908 27,822 27,822
Custodian fees............................................................ 49,246 21,108 6,085
Transfer agency fees...................................................... 18,157 16,740 16,060
Directors' fees and expenses (Note 4)..................................... 12,500 12,500 12,500
Audit fees................................................................ 17,700 11,700 11,700
Legal fees................................................................ 39,270 7,045 10,950
Registration fees......................................................... 13,735 12,264 29,456
Reports to shareholders................................................... 24,032 19,002 17,035
Amortization of organizational costs (Note 2)............................. 25,853 -- --
Other..................................................................... (71,093) (33,551) 41,851
--------------------------------------------
Total expenses before reimbursement....................................... 648,959 401,510 499,874
Advisory fee waived (Note 4).......................................... -- -- (72,827)
--------------------------------------------
Total expenses, net................................................... 648,959 401,510 427,047
--------------------------------------------

Net investment (income) loss............................................ 55,124 (48,758) 3,187,767
--------------------------------------------

REALIZED GAIN (LOSS) ON INVESTMENTS AND FOREIGN CURRENCY:
Net realized gain (loss) on:
Investments........................................................... 4,316,341 (684,440) (71,283)
Foreign currency transactions......................................... (1,100,539) -- --
Net unrealized appreciation (depreciation) during the period on:
Investments........................................................... 370,237 (6,586,969) 526,819
Translation of assets and liabilities in foreign currencies........... 1,691 -- --
--------------------------------------------
Net gain (loss) on investments and currency............................. 3,587,730 (7,271,409) 455,536
--------------------------------------------

NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS........... $ 3,642,854 $(7,320,167) $3,643,303
============================================

</TABLE>

See notes to financial statements.

19
<PAGE>

1838 INVESTMENT ADVISORS FUNDS, INC.
STATEMENTS OF CHANGES IN NET ASSETS
- --------------------------------------------------------------------------------

<TABLE>
<CAPTION>
International Small Cap Fixed Income
Equity Fund Equity Fund Fund**
<S> <C> <C> <C>
--------------------------------------------
FOR THE YEAR ENDED OCTOBER 31, 1998
INCREASE IN NET ASSETS
Operations:
Net investment income (loss)........................................... $ 55,124 $ (48,758) $ 3,187,767
Net realized gain (loss) on:
Investments.......................................................... 4,316,341 (684,440) (71,283)
Foreign currency transactions........................................ (1,100,539) -- --
Net unrealized appreciation (depreciation) during the period on:
Investments.......................................................... 370,237 (6,586,969) 526,819
Translation of assets and liabilities in foreign currencies.......... 1,691 -- --
--------------------------------------------
Net increase (decrease) in net assets resulting from operations.......... 3,642,854 (7,320,167) 3,643,303
--------------------------------------------
Distributions to shareholders from:
Net investment income ($0.004, $0, and $0.592 per share,
respectively)...................................................... (17,086) -- (3,369,397)
Return of capital ($0, $0, and $0.04 per share, respectively)........ -- -- (236,732)
Net realized gain ($0.669, $0.948, and $0.021 per share,
respectively)...................................................... (2,857,635) (2,137,768) (92,049)
--------------------------------------------
Total Distributions...................................................... (2,874,721) (2,137,768) (3,698,178)
--------------------------------------------
Increase in net assets from Fund share transactions (Note 5)............. 6,061,174 19,168,298 39,241,000
--------------------------------------------
Increase in net assets................................................... 6,829,307 9,710,363 39,186,125

NET ASSETS:
Beginning of period.................................................... 51,045,598 28,922,537 32,537,169
--------------------------------------------
End of period.......................................................... $57,874,905 $38,632,900 $ 71,723,294
============================================

FOR THE PERIOD ENDED OCTOBER 31, 1997
INCREASE IN NET ASSETS
Operations:
Net investment income (loss)........................................... $ 136,987 $ (50,699) $ 181,298
Net realized gain (loss) on:
Investments.......................................................... 3,183,377 2,095,990 92,381
Foreign currency transactions........................................ (126,955) -- --
Net unrealized appreciation during the period on:
Investments.......................................................... 3,571,590 3,538,690 290,613
Translation of assets and liabilites in foreign currencies........... 8,250 -- --
--------------------------------------------
Net increase in net assets resulting from operations..................... 6,773,249 5,583,981 564,292
--------------------------------------------
Distributions to shareholders from:
Net investment income ($0.04, $0, and $0 per share, respectively).... (148,857) -- --
Net realized gain ($0, $0.09, and $0 per share, respectively)........ -- (67,511) --
--------------------------------------------
Total Distributions...................................................... (148,857) (67,511) --
--------------------------------------------
Increase in net assets from Fund share transactions (Note 5)............. 3,212,276 17,978,416 31,972,877
--------------------------------------------
Increase in net assets................................................... 9,836,668 23,494,886 32,537,169

NET ASSETS:
Beginning of period.................................................... 41,208,930 5,427,651 --
--------------------------------------------
End of period.......................................................... $51,045,598 $28,922,537 $ 32,537,169
============================================
</TABLE>

** The Fixed Income Fund commenced operations on September 2, 1997.

See notes to the financial statements

20
<PAGE>

1838 INVESTMENT ADVISORS FUNDS, INC.
FINANCIAL HIGHLIGHTS
- --------------------------------------------------------------------------------

The following tables include selected data for a share outstanding throughout
each fiscal year or period and other performance information derived from
financial statements. They should be read in conjunction with the financial
statements and notes thereto.

INTERNATIONAL EQUITY FUND
<TABLE>
<CAPTION>
For the Fiscal Year or Period Ended October 31,
----------------------------------------------------------
1998 1997 1996 1995+
<S> <C> <C> <C> <C>
----------------------------------------------------------

NET ASSET VALUE - BEGINNING OF YEAR................................ $ 11.99 $ 10.44 $ 9.61 $ 10.00
----------------------------------------------------------
INVESTMENT OPERATIONS:
Net investment income............................................ 0.01 0.02 0.07 0.02
Net realized and unrealized gain (loss) on investments and
foreign currency transactions.................................. 0.75 1.57 0.80 (0.41)
----------------------------------------------------------
Total from investment operations............................. 0.76 1.59 0.87 (0.39)
----------------------------------------------------------
Distributions:
From net investment income....................................... -- (0.04) (0.04) 0.00
From net realized capital gain................................... (0.67) -- -- 0.00
----------------------------------------------------------
Total distributions.......................................... (0.67) (0.04) (0.04) 0.00
----------------------------------------------------------
NET ASSET VALUE - END OF YEAR...................................... $ 12.08 $ 11.99 $ 10.44 $ 9.61
==========================================================

TOTAL RETURN....................................................... 6.90% 15.23% 9.11% (3.90)%***
Ratios (to average net assets)/Supplemental Data:
Expenses1...................................................... 1.13% 1.25% 1.25% 1.25%*
Net investment income.......................................... 0.10% 0.28% 0.70% 1.02%*
Portfolio turnover rate............................................ 166.77% 92.33% 59.11% 42.21%*
Net assets, end of period (in 000's)............................... $57,875 $51,046 $41,209 $16,764
</TABLE>

See notes to financial statements.

21
<PAGE>

1838 INVESTMENT ADVISORS FUNDS, INC.
FINANCIAL HIGHLIGHTS -- CONTINUED
- --------------------------------------------------------------------------------

SMALL CAP EQUITY FUND
<TABLE>
<CAPTION>
For the Fiscal Year or
Period Ended October 31,
------------------------------------------------
1998 1997 1996+
<S> <C> <C> <C>
------------------------------------------------

NET ASSET VALUE - BEGINNING OF YEAR........................................... $ 13.08 $ 9.57 $ 10.00
------------------------------------------------
INVESTMENT OPERATIONS:
Net investment loss......................................................... (0.01) (0.02) (0.02)
Net realized and unrealized gain (loss) on investments
and foreign currency transactions......................................... (1.86) 3.62 (0.41)
------------------------------------------------
Total from investment operations........................................ (1.87) 3.60 (0.43)
------------------------------------------------
Distributions:
From net investment income.................................................. -- -- --
From net realized capital gains............................................. (0.95) (0.09) --
------------------------------------------------
Total distributions..................................................... (0.95) (0.09) --
------------------------------------------------
NET ASSET VALUE - END OF YEAR................................................. $ 10.26 $ 13.08 $ 9.57
================================================

TOTAL RETURN.................................................................. (15.33)% 37.81% 4.30%***
Ratios (to average net assets)/Supplemental Data:
Expenses(2)................................................................ 1.10% 1.25% 1.25 %*
Net investment loss......................................................... (0.13)% (0.27)% (0.52)%*
Portfolio turnover rate....................................................... 42.64% 67.66% 94.38%*
Net assets, end of period (in 000's).......................................... $ 38,633 $28,923 $ 5,428
</TABLE>

See notes to financial statements.

22
<PAGE>

1838 INVESTMENT ADVISORS FUNDS, INC.
FINANCIAL HIGHLIGHTS -- CONTINUED
- --------------------------------------------------------------------------------

FIXED INCOME FUND
<TABLE>
<CAPTION>
For the Fiscal Year or
Period Ended October 31,
----------------------------------
1998 1997+
<S> <C> <C>
----------------------------------
NET ASSET VALUE - BEGINNING OF YEAR.......................................................... $ 10.27 $ 10.00
----------------------------------
INVESTMENT OPERATIONS:
Net investment income...................................................................... 0.54 0.06
Net realized and unrealized gain on investments and foreign currency transactions.......... 0.08 0.21
----------------------------------
Total from investment operations....................................................... 0.62 0.27
----------------------------------
Distributions:
From net investment income................................................................. (0.59) --
Return of capital.......................................................................... (0.04) --
From net realized capital gains............................................................ (0.02) --
----------------------------------
Total distributions.................................................................... (0.65) 0.00
----------------------------------
NET ASSET VALUE - END OF YEAR................................................................ $ 10.24 $ 10.27
==================================
TOTAL RETURN................................................................................. 6.26% 2.70%**
Ratios (to average net assets)/Supplemental Data:
Expenses(3)................................................................................ 0.75% 0.75%*
Net investment income...................................................................... 5.60% 5.83%*
Portfolio turnover rate...................................................................... 92.65% 39.12%*
Net assets, end of period (in 000's)......................................................... $71,723 $ 32,537
</TABLE>

* Annualized.

** Total return not annualized.

+ The International Equity Fund commenced operations on August 3, 1995. The
Small Cap Equity Fund commenced operations on June 17, 1996. The Fixed
Income Fund commenced operations on September 2, 1997.

1 Without waivers the annualized ratio of expenses to average daily net
assets would have been 1.44%, 1.80% and 2.60% for the fiscal years ended
October 31, 1997, 1996 and the period ended October 31, 1995, respectively.

2 Without waivers the annualized ratio of expenses to average daily net
assets would have been 1.84% and 4.63% for the fiscal year ended October
31, 1997 and the period ended October 31, 1996, respectively.

3 Without waivers and reimbursements the annualized ratio of expenses to
average daily net assets would have been 0.88% and 2.12% for the fiscal
year ended October 31, 1998 and the period ended October 31, 1997,
respectively.

See notes to financial statements.

23
<PAGE>
1838 INVESTMENT ADVISORS FUNDS, INC.
NOTES TO THE FINANCIAL STATEMENTS OCTOBER 31, 1998
- --------------------------------------------------------------------------------

NOTE 1 -- DESCRIPTION OF THE FUNDS

The 1838 Investment Advisors Funds (the "Trust"), a diversified,
open-end management investment company, was established as a series of
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 three series: the 1838 International Equity Fund, the 1838
Small Cap Equity Fund and the 1838 Fixed Income Fund (each a "Fund" and
collectively, the "Funds"). The investment objectives of each Fund are set
forth below.

The 1838 International Equity Fund (the "International Equity Fund"), the
first of the series currently offered by the Trust, commenced operation on
August 3, 1995. 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.

The 1838 Small Cap Equity Fund (the "Small Cap Equity Fund") commenced
operations on June 17, 1996. The Fund's investment objective 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 $1 billion or less, 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.

The 1838 Fixed Income Fund (the "Fixed Income Fund") commenced operations
on September 2, 1997. The Fund's investment objective is maximum current
income, with a secondary objective of growth. The Fund seeks to achieve
its objective by investing, under normal circumstances, at least 65% of
its assets in a diversified portfolio of fixed income securities.

NOTE 2 -- SIGNIFICANT ACCOUNTING POLICIES

Security Valuation. Each 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
value as determined in good faith by, or under procedures established by,
the Board of Trustees.

Federal Income Taxes. Each Fund is treated as a separate entity and
intends to qualify 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.

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 for the International Equity Fund and
differing cost basis for securities sold for the Small Cap Equity Fund,
since certain securities were transferred to the Fund at its inception.
These distributions by each Fund will be made annually in December.
Additional distributions may be made by each Fund to the extent necessary.

<PAGE>
1838 INVESTMENT ADVISORS FUNDS, INC.
NOTES TO THE FINANCIAL STATEMENTS -- CONTINUED OCTOBER 31, 1998
- --------------------------------------------------------------------------------

NOTE 2 -- SIGNIFICANT ACCOUNTING POLICIES -- (CONTINUED)
Deferred Organizational Costs. Costs incurred by the International Equity
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 International
Equity Fund are maintained in U.S. dollars. Foreign currency amounts are
translated into U.S. dollars on the following basis:

(i) fair 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 as the rates of
exchange prevailing on the respective dates of such
transactions.

The International Equity 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 prices of
securities held. Such fluctuations are included with the net realized and
unrealized gain or loss from investments.

Reported net realized gain (loss) on foreign currency transactions 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 and 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 at the
end of the fiscal year arise from changes in the value of assets and
liabilities, other than investments in securities, 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
International Equity Fund may enter into forward foreign currency exchange
contracts. Additionally, the International Equity Fund may enter into
these contracts to hedge certain foreign currency assets. Foreign currency
exchange contracts are recorded at fair 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. There are no forward foreign
currency exchange contracts outstanding at October 31, 1998.

Use of Estimates in the Preparation of Financial Statements. The
preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and
assumptions that may affect the reported amounts of assets and liabilities
at the date of the financial statements and the reported amounts of
revenue and expenses during the reporting period. Actual results could
differ from those estimates.

Other. Investment security transactions are accounted for on a trade date
basis. The specific identification method is utilized 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.

25
<PAGE>
1838 INVESTMENT ADVISORS FUNDS, INC.
NOTES TO THE FINANCIAL STATEMENTS -- CONTINUED OCTOBER 31, 1998
- --------------------------------------------------------------------------------

NOTE 3 -- PURCHASES AND SALES OF INVESTMENT SECURITIES

During the period ended October 31, 1998, purchases and sales of
investment securities, other than U.S. government securities and
short-term investments, were as follows:

<TABLE>
<CAPTION>
International Small Cap Fixed Income
Equity Fund Equity Fund Fund
------------- ----------- ------------
<S> <C> <C> <C>
Purchases.......................................... $93,368,575 $28,980,894 $ 39,849,346
Sales.............................................. 91,622,571 14,920,641 23,547,651
</TABLE>

Purchases of sales of U.S. Government securities, during the period ended
October 31, 1998, were as follows:

<TABLE>
<CAPTION>
International Small Cap Fixed Income
Equity Fund Equity Fund Fund
------------- ----------- ------------
<S> <C> <C> <C>
Purchases.............................................. $ 0 $ 0 $ 43,864,865
Sales.................................................. 0 0 26,775,580
</TABLE>

NOTE 4 -- ADVISORY FEE AND OTHER TRANSACTIONS WITH AFFILIATES

The Trust, on behalf of each Fund, employs 1838 Investment Advisors, Inc.
(the "Investment Advisor"), a Delaware corporation and registered investment
adviser under the 1940 Act, to furnish investment advisory services to the
Funds pursuant to an Investment Advisory Agreement with the Trust. The
Investment Advisor supervises the investment of the assets of the Fund in
accordance with each Fund's investment objective, policies and restrictions.
Effective July 31, 1998, the Investment Advisor became a wholly-owned
subsidiary of MBIA, Inc. The terms of the Investment Advisory Agreement have
not changed.

The Trust pays the Investment Advisor a monthly fee at the following annual
rates of each Fund's average daily net assets: 0.75% for the International
Equity Fund, 0.75% for the Small Cap Equity Fund and 0.50% for the Fixed
Income Fund. The Investment Advisor has voluntarily agreed to waive its
advisory fee or reimburse each Fund monthly to the extent that the total
operating expenses will exceed the following annual rates of each Fund's
average daily net assets: 1.25% for the International Equity Fund, 1.25% for
the Small Cap Equity Fund and 0.75% for the Fixed Income Fund. This
undertaking may be rescinded at any time in the future.

The following table summarizes the advisory fees for the year ended October
31, 1998:

<TABLE>
<CAPTION>
Gross Advisory Fee Net
Advisory Fee Waiver Advisory Fee
------------ ------------ ------------
<S> <C> <C> <C>
International Equity Fund............................... $427,140 $ -0- $427,140
Small Cap Equity Fund................................... 273,360 -0- 273,360
Fixed Income Fund....................................... 284,698 72,827 211,871
</TABLE>

Effective March 1, 1998, Declaration Service Company, Inc. ("DSC"), serves
as Administrator to the Trust pursuant to an Administration Agreement with
the Trust on behalf of each Fund. As Administrator, DSC is responsible for
services such as financial reporting, compliance monitoring and corporate
management. For the services provided, Declaration 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
portfolio added to a series. For the period ended October 31, 1998, DSC's
administration fees amounted to $50,511, $33,520 and $41,717, for the
International Equity Fund, the Small Cap Equity Fund and the Fixed Income
Fund,

26
<PAGE>
1838 INVESTMENT ADVISORS FUNDS, INC.
NOTES TO THE FINANCIAL STATEMENTS -- CONTINUED OCTOBER 31, 1998
- --------------------------------------------------------------------------------

NOTE 4 -- ADVISORY FEE AND OTHER TRANSACTIONS WITH
AFFILIATES -- (CONTINUED)
respectively. At October 31, 1998, administration fees payable to DSC
amounted to $1,667, $1,667, and $2,292, for the International Equity Fund,
the Small Cap Equity Fund, and the Fixed Income Fund, respectively.

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

DSC serves as Accounting Agent to the Funds. As Accounting Agent, DSC
determines each Fund's net asset value per share and provides accounting
services to the Funds pursuant to an Accounting Services Agreement with
the Trust. At October 31, 1998, accounting service fees payable to DSC
amounted to $2,083, $1,458, and $1,458 for the International Equity Fund,
the Small Cap Equity Fund, and the Fixed Income Fund, respectively.

DSC also serves as the Fund's Transfer Agent pursuant to a Transfer Agency
Agreement with the Trust. For these services, DSC receives a monthly fee
computed on the basis of the number of shareholder accounts that the
Transfer Agent maintains for each Fund during the month, and is reimbursed
for out-of-pocket expenses. At October 31, 1998, Transfer Agent fees
payable to DSC amounted to $1,050, $690, and $1,260 for the International
Equity Fund, the Small Cap Equity Fund, and the Fixed Income Fund,
respectively.

The Trustees of the Trust who are "interested persons" of the Trust, the
Investment Advisor or its affiliates and all personnel of the Trust or the
Investment Advisor performing services related to research, statistical
and investment activities are paid by the Investment Advisor or its
affiliates. There are no fees or expenses payable to the "non-interested"
Trustees.

NOTE 5 -- FUND SHARE TRANSACTIONS

At October 31, 1998, there were an unlimited number of shares of
beneficial interest with a $0.001 par value, authorized. The following
table summarizes the activity in shares of each Fund:

INTERNATIONAL EQUITY FUND

<TABLE>
<CAPTION>
For the Fiscal Year For the Fiscal Year
Ended October 31, 1998 Ended October 31, 1997
------------------------- -------------------------
Shares Amount Shares Amount
--------- ----------- --------- -----------
<S> <C> <C> <C> <C>
Shares sold............................................. 586,353 $ 7,038,369 891,866 $10,719,953
Shares issued to shareholders in reinvestment of
distributions......................................... 234,719 2,586,605 12,343 133,064
Shares redeemed......................................... (289,378) (3,563,800) (592,270) (7,640,741)
--------- ----------- --------- -----------
Net increase............................................ 531,694 $ 6,061,174 311,939 $ 3,212,276
=========== ===========
Shares outstanding:
Beginning of period................................... 4,257,803 3,945,864
--------- ---------
End of period......................................... 4,789,497 4,257,803
========= =========
</TABLE>

27
<PAGE>
1838 INVESTMENT ADVISORS FUNDS, INC.
NOTES TO THE FINANCIAL STATEMENTS -- CONTINUED OCTOBER 31, 1998
- --------------------------------------------------------------------------------

NOTE 5 -- FUND SHARE TRANSACTIONS -- (CONTINUED)
SMALL CAP EQUITY FUND

<TABLE>
<CAPTION>
For the Fiscal Year For the Fiscal Year
Ended October 31, 1998 Ended October 31, 1997
------------------------- -------------------------
Shares Amount Shares Amount
--------- ----------- --------- -----------
<S> <C> <C> <C> <C>
Shares sold............................................. 1,563,530 $19,341,335 1,708,267 $18,663,076
Shares issued to shareholders in reinvestment of
distributions......................................... 167,292 1,995,798 6,771 67,511
Shares redeemed......................................... (175,962) (2,168,835) (70,119) (752,171)
--------- ----------- --------- -----------
Net increase............................................ 1,554,860 $19,168,298 1,644,919 $17,978,416
=========== ===========
Shares outstanding:
Beginning of period................................... 2,211,888 566,969
--------- ---------
End of period......................................... 3,766,748 2,211,888
========= =========
</TABLE>

FIXED INCOME FUND

<TABLE>
<CAPTION>
For the Period
September 1, 1997
(Commencement of
For the Fiscal Year Operations)
Ended October 31, 1998 Through October 31, 1997
------------------------- -------------------------
Shares Amount Shares Amount
--------- ----------- --------- -----------
<S> <C> <C> <C> <C>
Shares sold............................................. 4,099,344 $41,981,069 3,209,597 $32,384,250
Shares issued to shareholders in reinvestment of
distributions......................................... 326,222 3,334,313 0 0
Shares redeemed......................................... (590,184) (6,074,382) (40,532) (411,373)
--------- ----------- --------- -----------
Net increase............................................ 3,835,382 $39,241,000 3,169,065 $31,972,877
=========== ===========
Shares outstanding:
Beginning of period................................... 3,169,065 0
--------- ---------
End of period......................................... 7,004,447 3,169,065
========= =========
</TABLE>

NOTE 6 -- CONCENTRATION OF RISKS

The International Equity Fund invests in securities of foreign issuers in
respective countries. These investments may involve certain considerations
and risks not typically associated with investments in the U.S., as a
result of, among other factors, the possibility of future political and
economical developments and the level of government supervision and
regulation of securities markets in the various countries.

NOTE 7 -- CAPITAL LOSS CARRYOVERS

At October 31, 1998, a capital loss carryover of $600,456 and $ 71,283,
which expire on October 31, 2006 was available to offset possible future
realized capital gains in the Small Cap Equity Fund and the Fixed Income
Fund, respectively.

28
<PAGE>
1838 INVESTMENT ADVISORS FUNDS, INC.
REPORT OF INDEPENDENT ACCOUNTANTS OCTOBER 31, 1998
- --------------------------------------------------------------------------------

TO THE SHAREHOLDERS AND BOARD OF TRUSTEES
OF THE 1838 INVESTMENT ADVISORS FUNDS

In our opinion, the accompanying statements of assets and liabilities, including
the schedules of investments, and the related statements of operations, changes
in net assets, and the financial highlights present fairly, in all material
respects, the financial position of the 1838 International Equity Fund, the 1838
Small Cap Equity Fund and the 1838 Fixed Income Fund, each a series of the 1838
Investment Advisors Funds (the "Funds"), at October 31, 1998 and the results of
its operations, changes in its net assets, and its financial highlights for each
of the periods presented, in conformity with generally accepted accounting
principles. These financial statements and financial highlights (hereafter
referred to as "financial statements") are the responsibility of the Funds'
management; our responsibility is to express an opinion on these financial
statements based on our audits.

We conducted our audits of these financial statements in accordance with
generally accepted auditing standards which require that we plan and perform the
audit to obtain reasonable assurance about whether the financial statements are
free of material misstatement. An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in the financial statements,
assessing the accounting principles used and significant estimates made by
management, and evaluating the overall financial statement presentation. We
believe that our audits, which included confirmation of securities at October
31, 1998 by correspondence with the custodian, provide a reasonable basis for
the opinion expressed above.

PRICEWATERHOUSECOOPERS LLP

Philadelphia, PA
December 14, 1998

29
<PAGE>
1838 INVESTMENT ADVISORS FUNDS, INC.
SHAREHOLDER INFORMATION (UNAUDITED)
- --------------------------------------------------------------------------------

The 1838 International Equity Fund paid distributions of $0.455 per share
from net long-term capital gains during the fiscal year ended October 31,
1998. Pursuant to section 852 of the Internal Revenue Code, the 1838
International Equity Fund designated $1,943,000 as capital gain
distributions for the fiscal year ended October 31, 1998.

The 1838 Small Cap Equity Fund paid distributions of $0.226 per share from
net long-term capital gains during the fiscal year ended October 31, 1998.
Pursuant to section 852 of the Internal Revenue Code, the 1838 Small Cap
Equity Fund designated $509,600 as capital gain distributions for the
fiscal year ended October 31, 1998.

<PAGE>

- --------------------------------------------------------------------------------
I N V E S T M E N T A D V I S E R

1838 Investment Advisors, Inc.
Five Radnor Corporate Center
Suite 320
100 Matsonford Road
Radnor, PA 19087

U N D E R W R I T E R
- --------------------------------------------------------------------------------
Declaration Distributors, Inc.
555 North Lane
Suite 6160
Conshohocken, PA 19428

S H A R E H O L D E R S E R V I C E S
- --------------------------------------------------------------------------------
Declaration Service Company, Inc.
555 North Lane
Suite 6160
Conshohocken, PA 19428

C U S T O D I A N S
- --------------------------------------------------------------------------------
Bankers Trust Company
280 Park Avenue
New York, NY 10017
CoreStates Bank, N.A.
530 Walnut Street
Philadelphia, PA 19101

L E G A L C O U N S E L
- --------------------------------------------------------------------------------
Pepper Hamilton LLP
3000 Two Logan Square
Eighteenth & Arch Streets
Philadelphia, PA 19103

A U D I T O R S
- --------------------------------------------------------------------------------
Pricewaterhouse Coopers LLP
2400 Eleven Penn Center
Philadelphia, PA 19103

1838
INVESTMENT ADVISORS FUNDS
-------------------------

INTERNATIONAL EQUITY FUND

SMALL CAP EQUITY FUND

FIXED INCOME FUND

ANNUAL REPORT
OCTOBER 31, 1998

<PAGE>