FUNDMANAGER PORTFOLIOS, 485BPOS, 1998-12-28

FUNDMANAGER PORTFOLIOS
485BPOS, 1998-12-28

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1933 Act File No. 33-89754
1940 Act File No. 811-8992

SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

Form N-1A

REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933

Pre-Effective Amendment No. ...............................

Post-Effective Amendment No. 15 .................................

and/or

REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT OF 1940 X

Amendment No. 16 ..............................................
-------
X

FUNDMANAGER PORTFOLIOS
(Exact Name of Registrant as Specified in Charter)

One Beacon Street, Boston, Massachusetts 02108
(Address of Principal Executive Offices)

(412) 288-1900

(Registrant's Telephone Number)

Victor R. Siclari, Esquire
Federated Investors Tower

1001 Liberty Avenue
Pittsburgh, Pennsylvania 15222-3779

(Name and Address of Agent for Service)

It is proposed that this filing will become effective
(check appropriate box)

__ immediately upon filing pursuant to paragraph (b)
X on JANUARY 8, 1999_ pursuant to paragraph (b)(1)(iii)

60 days after filing pursuant to paragraph (a) (i) on ____________ pursuant
to paragraph (a) (i) 75 days after filing pursuant to paragraph (a)(ii) on
_________________ pursuant to paragraph (a)(ii) of Rule 485

If appropriate, check the following box:

[ X ] this post-effective amendment designates a new effective date for a
previously filed post-effective amendment.

Copies to:

John J. Danello Edward T. O'Dell, P.C
Freedom Capital Management Corporation Goodwin, Procter & Hoar
One Beacon Street One Exchange Place
Boston, Massachusetts 02108 Boston, Massachusetts 02109

FundManager Portfolios

- ----------------------
Selecting Leading Fund Managers for Investors Since 1984

AGGRESSIVE GROWTH PORTFOLIO INTERNATIONAL PORTFOLIO
GROWTH PORTFOLIO MANAGED TOTAL RETURN

PORTFOLIO

GROWTH WITH INCOME PORTFOLIO BOND PORTFOLIO

Class A Shares

Class B Shares (Except Bond Portfolio)

TABLE OF CONTENTS

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

Portfolio Goals, Strategies, Performance

and Investment Risks..........................................................
1

Portfolio Information.........................................................
1

Performance Summary...........................................................
2

. Aggressive Growth Portfolio................................................
2

. Growth Portfolio...........................................................
2

. Growth with Income Portfolio...............................................
3

. International Portfolio....................................................
3

. Managed Total Return Portfolio.............................................
4

. Bond Portfolio.............................................................
4

Investment Approach and Main Risks of

Investing in FundManager Portfolios...........................................
5

What are the Portfolios' Fees

and Expenses?.................................................................
8

How to Purchase, Redeem and
Exchange

Shares...............................................................10

Account and Share

Information.................................................16

Who Manages the

Trust?........................................................17

Distribution of Portfolio

Shares..............................................18

Financial

Information.........................................................18

Financial

Highlights..........................................................20
. Aggressive Growth

Portfolio................................................20
. Growth

Portfolio...........................................................20
. Growth with Income

Portfolio...............................................21
. Bond

Portfolio.............................................................21
. Managed Total Return

Portfolio.............................................22
. International

Portfolio....................................................23

An investment in the Portfolios is not a deposit of a bank and is not insured or
guaranteed by the Federal Deposit Insurance Corporation or any other government
agency. Also, the Securities and Exchange Commission has not approved or
disapproved these securities or passed upon the adequacy of this prospectus, and
any representation to the contrary is a criminal offense.

Prospectus

January 1, 1999

PORTFOLIO GOALS, STRATEGIES,
PERFORMANCE AND INVESTMENT RISKS

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

The FundManager Portfolios (the "Trust") offer investment opportunities to a
wide range of investors, from investors with shorter term goals to those with
long-term goals willing to bear the risks of the stock market for potentially
greater rewards.

Each FundManager Portfolio is a "fund-of-funds"-- meaning it invests in other
mutual funds rather than directly in portfolio securities like stocks, bonds,
and money market instruments. These underlying mutual funds will be open-end
funds and have similar investment goals as the Portfolios. Open-end mutual funds
continuously sell their shares to the public and will purchase (redeem) their
shares from shareholders. In addition, the International Portfolio may also
purchase closed-end funds and unit investment trusts. Closed-end funds initially
sell a limited number of shares that are traded on the open market and do not
redeem their shares.

The advantage of a fund-of-funds is that it relieves you of having to select
from the over 9,000 mutual fund investment choices in existence today. Each
FundManager Portfolio invests generally in 6 to 10 mutual funds for each
Portfolio whose styles and objectives are consistent with the Portfolio's.
Through careful research and analysis, the Adviser selects underlying mutual
funds based upon a variety of criteria that provides you with an investment in a
broad array of portfolio management expertise and investment styles. This
approach provides you with a broader diversification of your investment and is
intended to minimize volatility over the long term.

PORTFOLIO INFORMATION

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

Also included on the following pages is performance information for Class A
Shares over a period of time. Since Class B Shares were not offered prior to the
date of this prospectus, no performance information is provided for this Class.
Class A Shares of each Portfolio (except Bond Portfolio) are sold subject to a
sales charge (load). The impact of the sales charges are reflected in the total
return tables on the following pages, but are not reflected in the bar charts.

AGGRESSIVE GROWTH PORTFOLIO

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

What is the Portfolio's goal?

Capital appreciation without regard to current income.

What types of funds does the Portfolio invest in?

The Portfolio offers long-term investors growth potential through a variety of
stock funds, including small-cap, mid-cap, sector, and capital appreciation
funds. These underlying funds will invest primarily in common stocks,
convertible securities, including convertible debentures and warrants. The
Portfolio may also invest in funds that invest primarily in long- or short-term
bonds and other debt securities whenever the Adviser believes that these funds
offer the potential for capital appreciation.

What are the risks of investing in the Portfolio?

As a stock fund, the Portfolio must contend with the volatility and
unpredictability of the stock markets. In addition, smaller stocks involve
special risks since those stocks have historically been more volatile than
stocks of larger companies.

Average Annual
Total Returns

(for the calendar year Past Past Past
ended 12/31/97) One Year 5 Years Ten Years

Portfolio 10.22% 12.56% 12.75%
Russell 2000 Index 22.36% 16.41% 15.76%

[BAR CHART APPEARS HERE]

The Portfolio's year to date total return as of the most recent quarter ended
September 30, 1998 was (10.10)%.

During the 10-year period shown in the bar chart, the highest return for a
quarter was 19.07% (quarter ended March 31, 1991) and the lowest return for a
quarter was (16.56)% (quarter ended Sept. 30, 1990).

GROWTH PORTFOLIO

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

What is the Portfolio's goal?

Capital appreciation with current income a secondary consideration.

What types of funds does the Portfolio invest in?

The Portfolio offers long-term growth investors exposure to funds that invest in
large-cap, blue chip, mid-cap and style (such as value, growth, or
capitalization) index funds. These underlying funds will invest primarily in
common stocks, convertible securities, including convertible debentures and
warrants. The Portfolio may also invest in funds that invest primarily in long-
or short-term bonds and other debt securities whenever the Adviser believes that
these funds offer the potential for capital appreciation.

What are the risks of investing in the Portfolio?

Average Annual
Total Returns

(for the calendar year Past Past Past
ended 12/31/97) One Year 5 Years Ten Years

Portfolio 20.47% 15.59% 13.92%
S & P 500 Index 33.36% 20.27% 18.02%

[BAR CHART APPEARS HERE]

The Portfolio's year to date total return as of the most recent quarter ended
September 30, 1998 was (3.08)%.

During the 10-year period shown in the bar chart, the highest return for a
quarter was 15.09% (quarter ended Dec. 31, 1991) and the lowest return for a
quarter was (12.78)% (quarter ended Sept. 30, 1990).

Class A Shares of the Aggressive Growth Portfolio and Growth Portfolio are sold
subject to a sales charge (load). The impact of the sales charges are reflected
in the average annual total return figures above, but are not reflected in the
bar charts above. If the bar charts reflected sales charges, the returns would
be less than those shown.

The bar charts and tables shown above provide an indication of the risks of
investing in Class A Shares of the Aggressive Growth Portfolio and Growth
Portfolio by showing changes in the Portfolios' performance from year to year
over a 10-year period and by showing how the Portfolios' average annual returns
for one, five, and ten years compare to those of a broad-based securities market
index. While past performance does not necessarily predict future performance,
this information provides you with historical performance information so that
you can analyze whether the Portfolios' investment risks are balanced by its
potential rewards.

Growth with Income Portfolio

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

What is the Portfolio's goal?

A combination of capital appreciation and current income.

What types of funds does the Portfolio invest in?

The Portfolio offers investors the opportunity to participate in a diversified
portfolio of funds that invest in growth and income, equity income and balanced
funds. These underlying funds will invest primarily in common stocks, preferred
stocks, bonds and other debt securities including convertible preferred stock
and convertible debentures.

What are the risks of investing in the Portfolio?

Since the Portfolio will purchase stock funds, the Portfolio must contend with
the volatility and unpredictability of the stock markets. In addition, the
income and bond funds that the Portfolio may own invest in debt securities, the
price of which can be expected to decrease when interest rates increase. If an
underlying fund purchases mortgage-backed or asset-backed securities, the
Portfolio will also be subject to the risks of these investments.

Average Annual
Total Returns

(for the calendar year Past Past Past
ended 12/31/97) One Year 5 Years Ten Years

Portfolio 18.38% 15.35% 13.63%
S & P 500 Index 33.36% 20.27% 18.02%

[BAR CHART APPEARS HERE]

The Portfolio's year to date total return as of the most recent quarter ended
September 30, 1998 was (1.92)%.

During the 10-year period shown in the bar chart, the highest return for a
quarter was 13.63% (quarter ended June 30, 1997) and the lowest return for a
quarter was (13.14)% (quarter ended Sept. 30, 1990).

INTERNATIONAL PORTFOLIO

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

What is the Portfolio's goal?

Long-term capital appreciation with current income a secondary consideration.

What types of funds does the Portfolio invest in?

The Portfolio offers investors the opportunity to invest in international,
global and emerging markets funds as a complement to investing solely in U.S.
domestic securities. The Portfolio will invest at least 65% of its total assets
in international equity funds. These underlying funds will invest primarily in
foreign common stocks, or foreign securities convertible into or exchangeable
for common stock.

What are the risks of investing in the Portfolio?

As a stock fund, the Portfolio must contend with the volatility and
unpredictability of the stock markets, both U.S. and foreign. Underlying funds
may experience additional uncertainty in foreign markets and with foreign
currency transactions.

The Class A Shares of the Growth with Income Portfolio and International
Portfolio are sold subject to a sales charge (load). The impact of the sales
charges are reflected in the average annual total return figures above, but are
not reflected in the bar chart above. If the bar chart reflected sales charges,
the returns would be less than those shown.

The bar chart and table shown above provide an indication of the risks of
investing in Class A Shares of the Growth with Income Portfolio by showing
changes in the Portfolio's performance from year to year over a 10-year period
and by showing how the Portfolio's average annual returns for one, five, and ten
years compare to those of a broad-based securities market index. The
International Portfolio commenced operations June 6, 1998, therefore no prior
performance history is available. While past performance does not necessarily
predict future performance, this information provides you with historical
performance information so that you can analyze whether the Portfolio's
investment risks are balanced by their potential rewards.

Managed Total Return Portfolio

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

What is the Portfolio's goal?

High total return (capital appreciation and current income).

What types of funds does the Portfolio invest in?

The Portfolio offers investors a convenient way to seek high total return
consistent with prudent risk by investing in mutual funds across all asset
classes (including bond funds, style funds (growth or value), growth and income,
equity and income, balanced funds and money market funds). These underlying
funds will invest primarily in common stocks, preferred stocks, convertible
securities (such as convertible preferred stock, convertible debentures and
warrants), long- or short-term bonds and other debt securities (such as
government and corporate securities), and high quality, short-term money market
instruments.

What are the risks of investing in the Portfolio?

Since the Portfolio invests in a broad array of underlying funds that may
purchase a variety of securities, the Portfolio is subject to the risks of both
stock market volatility and the risks of debt securities. In addition, the
income and bond funds that the Portfolio may own invest in debt securities, the
price of which can be expected to decrease when interest rates increase. These
funds may also purchase high yield/high risk securities of lower-rated companies
that are more likely to default on their payment obligations than higher-rated
companies. If an underlying fund purchases mortgage-backed or asset-backed
securities, the Portfolio will also be subject to the risks of these
investments.

Average Annual

Total Returns Since
(for the calendar year Past Past Inception
ended 12/31/97) One Year 5 Years (08/04/88)

Portfolio 7.25% 8.34% 8.83%
Lehman Gov't/CB Total Index 9.75% 7.61% 9.35%

[BAR CHART APPEARS HERE]

The Portfolio's year to date total return as of the most recent quarter ended
September 30, 1998 was 0.75%.

During the 9-year period shown in the bar chart, the highest return for a
quarter was 8.02% (quarter ended March 31, 1991) and the lowest return for a
quarter was (6.44)% (quarter ended Sept. 30, 1990).

Bond Portfolio

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

What is the Portfolio's goal?

A high level of current income.

What types of funds does the Portfolio invest in?

The Portfolio offers income-oriented investors an opportunity to participate in
bond funds that invest in income-producing securities. These underlying funds
will invest primarily in corporate, U.S. government, and mortgage securities
with short-, intermediate- and long-term maturities. The Portfolio may also
invest without limitation in underlying funds that invest significantly in
corporate bonds rated below investment grade, commonly referred to as "junk
bonds."

What are the risks of investing in the Portfolio?

The income and bond funds that the Portfolio may own invest in debt securities,
the price of which can be expected to decrease when interest rates increase.
These funds may also purchase high yield/high risk securities of lower-rated
companies that are more likely to default on their payment obligations than
higher-rated companies. To the extent an underlying fund may purchase
mortgage-backed or asset-backed securities, the Portfolio will also be subject
to the risks of these investments.

Average Annual
Total Returns

(for the calendar year Past Past Past
ended 12/31/97) One Year 5 Years Ten Years

Portfolio 7.80% 6.22% 7.35%
Lehman Gov't/CB Total Index 9.75% 7.61% 9.15%

[BAR CHART APPEARS HERE]

The Portfolio's year to date total return as of the most recent quarter ended
September 30, 1998 was 6.32%.

During the 10-year period shown in the bar chart, the highest return for a
quarter was 5.48% (quarter ended Sept. 30, 1991) and the lowest return for a
quarter was (2.63)% (quarter ended Dec. 31, 1994).

The Class A Shares of Managed Total Return Portfolio are sold subject to a sales
charge (load). The impact of the sales charges are reflected in the average
annual total return figures above, but are not reflected in the bar chart

above.

If the bar chart for the Managed Total Return Portfolio reflected sales charges,
the returns would be less than those shown. The Class A Shares of the Bond
Portfolio are not subject to a sales charge (load). Hence the total returns of
the Bond Portfolio displayed above are based upon net asset value.

The bar charts and tables shown above provide an indication of the risks of
investing in Class A Shares of the Managed Total Return Portfolio and Bond
Portfolio by showing changes in the Portfolios' performance from year to year
over a 9-year and 10-year period, respectively, and by showing how the
Portfolios' average annual returns since inception, and for one, five and ten
years compared to those of a broad-based securities market index. While past
performance does not necessarily predict future performance, this information
provides you with historical performance information so that you can analyze
whether the Portfolios' investment risks are balanced by its potential rewards.

INVESTMENT APPROACH AND MAIN RISKS OF INVESTING IN FUNDMANAGER PORTFOLIOS

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

What is the investment approach of the Portfolios?

The Portfolios' fund-of-funds investment approach relieves you from having to
select from over 9,000 mutual fund investment choices in existence today.
Freedom Capital Management Corporation (the "Adviser") utilizes a disciplined
research and investment selection process to choose generally from 6 to 10
mutual funds for each Portfolio with complementary investment styles. This
provides you with a broader diversification than may be available in one mutual
fund. It also offers you a wider range of portfolio management talent,
investment styles, companies, industries and markets than may be available
through one mutual fund. Also, with the broader diversification of a fund-of-
funds investment approach, the Adviser seeks to minimize the volatility
associated with owning a single mutual fund. Plus, the Portfolios may be able to
invest in institutional funds that are unavailable to individual investors and
may qualify to invest in funds for lower or no sales charges. However, these are
duplicated expenses associated with a fund-of-funds structor (such as advisory,
custodian, administrative costs, etc.) which can affect your return.

Before a fund is chosen for the Portfolios, it must meet the strict investment
criteria of the Adviser. These criteria include one or more of the following
factors:

. the fund's investment style (is it clearly defined and consistently applied,
does it complement rather than duplicate the styles of other selected funds),

. the depth of the portfolio manager's research capability (what kind of
internal research staff exists, how long is the portfolio manager's tenure),

. overlap of the fund's portfolio securities with other selected funds,

. the presence of a long-term, consistent performance history, and

. direct access to the portfolio manager.

The Adviser will allocate each Portfolio's assets among the underlying funds in
which it invests in a manner that in the Adviser's judgement, will most likely
achieve a Portfolio's goals.

The Growth Portfolio, Managed Total Return Portfolio, and Bond Portfolio have
the following additional characteristics.

Growth Portfolio and Bond Portfolio utilize a core/non-core selection of funds.
The "core" component generally consists of unmanaged, index-like mutual funds
that maintain fairly consistent securities holdings and thereby are lower cost
investments with performance that tracks or models certain securities indices.
There is generally low turnover rates for these core mutual fund holdings. This
core component is supplemented by a "non-core" selection of mutual funds, which
are actively managed mutual funds employing various complementary investment
styles. The non-core component tend to have a correspondingly higher portfolio
turnover rate than the core holdings.

Managed Total Return Portfolio utilizes an ongoing assessment of the relative
risk-reward of various classes of assets (such as stock, balanced, bond and
money market funds) deemed appropriate by the Adviser based on past experience
and analysis of current financial and economic conditions.

As a "fund-of-funds", the FundManager Portfolios invest primarily in other
mutual funds that invest in a wide variety of securities and use various
investment practices. The securities in which underlying funds invest and the
practices they utilize are subject to risks; therefore, a Portfolio will be
subject to these same risks as the underlying funds in which it invests.

What are the main risks of investing in the Portfolios?

General Risks. An investment in any of the FundManager Portfolios is not a
deposit of a bank and is not insured or guaranteed by the Federal Deposit
Insurance Corporation or any other government agency.

The principal types of securities in which underlying funds invest generally
fall into two broad categories: equity securities (stocks) and debt securities
(bonds).

Equity Securities Risks. Equity securities are subject to fluctuations in the
stock market which has periods of increasing and decreasing values. Stocks have
greater volatility than debt securities. While greater volatility increases
risk, it offers the potential for greater reward.

Debt Securities Risks. Prices of fixed-rate debt securities generally move in
the opposite direction of interest rates. The interest payments on fixed-rate
debt securities do not change when interest rates change. Therefore, the price
of these securities can be expected to decrease when interest rates increase and

the underlying fund's NAV may go down.

In addition, debt securities with longer maturities or durations will experience
greater price volatility than those with shorter maturities or durations, and an
underlying fund's net asset value ("NAV") can be expected to fluctuate

accordingly.

The credit quality of a debt security is based upon the ability of the issuer to
repay the security. Payments on a debt security may not be paid when due. If the
credit quality of securities declines, the underlying fund's NAV could go down.

If interest rates are declining, an issuer may repay a debt security held in the
underlying fund's portfolio prior to its maturity. If this occurs, the Adviser
may have to reinvest the proceeds in debt securities paying lower interest rates

resulting in lower yields to the underlying fund.

Small/Mid-Cap Risks. Equity risk is also related to the size of the company
issuing stock. Companies may be categorized as having a small, medium, or large
capitalization (market value). The potential risks are higher with small
capitalization companies and lower with large capitalization companies.
Therefore, investors should expect underlying funds which invest primarily in
small-capitalization and medium-capitalization stocks, like the Aggressive
Growth Portfolio, to be more volatile than and to fluctuate independently of,
broad stock market indices such as the S&P 500.

Prepayment/Call Risks. Certain types of debt securities, such as asset-backed
and mortgage-backed securities, are subject to risks of prepayment which
generally occur when interest rates fall. Prepayment risks on mortgage-backed
securities tend to increase during periods of declining mortgage interest rates
because many borrowers refinance their mortgages to take advantage of the more
favorable rates. Prepayments on mortgage-backed securities are also affected by
other factors, such as the frequency with which people sell their homes or elect
to make unscheduled payments on their mortgages. Reinvesting these prepayments
in a lower interest rate environment will reduce an underlying fund's income.
The risk of prepayment may also decrease the value of mortgage-backed
securities. Asset-backed securities may have a higher level of default and
recovery risk than mortgage-backed securities. However, both of these types of
securities may decline in value because of mortgage foreclosures or defaults on
the underlying obligations.

The issuer of debt securities may have the right to prepay principal earlier
than scheduled, which is commonly referred to as a "call". Issuers are more
likely to exercise call features when interest rates decrease. If a security
owned by an underlying fund is called, the fund will have to reinvest the
proceeds in lower-yielding instruments. Call features may also negatively affect
the value of a debt security.

Foreign Securities Risks. The International Portfolio will invest primarily in
international mutual funds that invest significantly in foreign securities.
Foreign securities pose additional risks over domestic securities because
foreign economic, governmental, and political systems may be less favorable than
those of the United States. Foreign governments may exercise greater control
over their economies, industries, and citizen's rights, which can have an
adverse impact on investments. Other risk factors related to foreign securities
include: rates of inflation, structure and regulation of financial markets,
liquidity and volatility of investments, taxation policies, currency exchange
rates, and accounting standards. In addition, a fund may incur higher costs and
expenses when making foreign investments, which could impact the fund's
performance. If an underlying fund invests primarily in a particular country or
region, it may be adversely affected by the above factors or events particular
to that country or region.

Foreign securities in which the underlying funds invest may be listed on foreign
stock exchanges and may trade on weekends and other days when the underlying
funds or the Portfolios do not price their shares. As a result, an underlying
fund's NAV may be significantly affected by trading on days when the Adviser
does not have access to the portfolio and shareholders cannot purchase or redeem
shares.

Foreign securities may be denominated in foreign currencies. Therefore, the
value of an underlying fund's assets and income in U.S. dollars may be affected
by changes in exchange rates and regulations, since exchange rates for foreign
currencies change daily. The combination of currency risk and market risk tends
to make securities traded in foreign markets more volatile than securities
traded exclusively in the United States. Although underlying funds value their
assets daily in U.S. dollars they generally do not convert their holdings of
foreign currencies to U.S. dollars daily. Therefore, the underlying fund may be
exposed to currency risks over an extended period of time.

High Yield Securities Risks. Each of the Portfolios may invest in underlying
funds that invest in high-yield securities, also known as junk bonds. These
securities generally have greater risks than higher quality debt obligations
because, in comparison, there prices are more volatile, they have less favorable
credit rating, and their trading market may be limited. High yield bonds are
also negatively impacted by economic downturns and declining equity valuations.
In return for their higher risks, they offer the potential for higher yields.
However, there is no guarantee that their total return will exceed that of
higher quality debt obligations.

Other Risks. Each Portfolio may be subject to additional risks associated with
investment policies or techniques used by the particular types of underlying
funds in which they invest, such as risks associated with futures, options,
securities lending.

WHAT ARE THE PORTFOLIOS' FEES AND EXPENSES?

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

This table describes the fees and expenses that you may pay when you buy, hold,
and redeem shares of Class A or Class B Shares of each of the Portfolios.

SHAREHOLDER FEES (Fees Paid Directly By You)

Class A Class B

Maximum Sales Charge (Load) Imposed on
Purchases (as a percentage of offering

price)..........................................................
5.50%(1) None

Maximum Deferred Sales Charge (Load)
(as a percentage of original purchase price or
redemption proceeds, as applicable)....................... 0.00% 5.00%(2)

Maximum Sales Charge (Load) Imposed on Reinvested Dividends (and other
Distributions) (as a percentage of offering
price)............................................ None None

Redemption Fee (as a percentage of amount
redeemed, if applicable)..................... None None
Exchange Fee.................................. None None

</TABLE>

ANNUAL OPERATING EXPENSES (Maximum Expenses that Could be Deducted from a
Portfolio's Assets)*--CLASS A SHARES

Growth Managed

Aggressive with Total

Growth

Growth Income International Return Bond
<S> <C>
<C> <C> <C> <C> <C>
Management Fee.................................. 0.50%
0.50% 0.50% 0.50% 0.50% 0.50%
Distribution (12b-1) and Shareholder
Service Expenses.............................. 0.25%
0.25% 0.25% 0.25% 0.25% 0.25%
Other Expenses.................................. 0.75%
0.68% 0.60% 0.75% 1.65% 0.46%
Total Operating Expenses...................... 1.50%
1.43% 1.35% 1.50% 2.40% 1.21%
Fee Waiver and/or

Expense Reimbursements (3)................ --
- -- -- -- 0.50% --
Net Expenses.................................. --
- -- -- -- 1.90% --
</TABLE>

ANNUAL OPERATING EXPENSES (Maximum Expenses that Could be Deducted from a
Portfolio's Assets)*--CLASS B SHARES

Growth Managed

Aggressive with Total
Growth Growth

Income International Return

<S> <C> <C>
<C> <C> <C>
Management Fee...................................... 0.50%

0.50% 0.50% 0.50% 0.50%
Distribution (12b-1) and Shareholder

Service Expenses.................................. 1.00%
1.00% 1.00% 1.00% 1.00%
Other Expenses...................................... 0.75%
0.68% 0.60% 0.75% 1.65%
Total Operating Expenses.......................... 2.25%
2.18% 2.10% 2.25% 3.15%
Fee Waiver and/or Expense Reimbursements (3).... --
- -- -- -- 0.50%
Net Expenses...................................... --
- -- -- -- 2.65%
</TABLE>

* Expenses are expressed as a percentage of each Portfolio's Class A and

Class

B Shares. Expenses for International Portfolio are based on projected net
assets.

(1) The Bond Portfolio does not currently impose a sales charge.

(2) For shareholders of Class B Shares, the maximum deferred sales charge (load)

is 5.00% in the first year declining to 1.00% in the seventh year and 0.00%
thereafter. For a more complete description, see "Contingent Deferred Sales
Charge". Class B Shares convert to Class A Shares (which pay lower ongoing
expenses) approximately nine years after purchase.

(3) Freedom has contractually agreed to waive fees and/or reimburse the Managed
Total Return Portfolio to limit the Portfolio's expenses. This arrangement
will terminate on the earlier of: September 30, 1999; or the date after the
Portfolio's assets exceed $20 million.

EXAMPLE

This Example is intended to help you compare the cost of investing in a
Portfolio's Class A and B Shares with the cost of investing in other mutual
funds.

The Example assumes that you invest $10,000 in the Portfolio's Class A and B
Shares for the time periods indicated and then redeem all of your shares at the
end of those periods. The Example also assumes that your investment has a 5%
return each year and that the Portfolio's Class A and B Shares operating
expenses remain the same. Although your actual costs may be higher or lower,
based on these assumptions your costs would be:

CLASS A SHARES

(Payment of the maximum sales charge/with or without redemption).

Growth Managed
Aggressive with Total
Growth Growth Income Bond Return International
<S> <C> <C> <C> <C> <C> <C>
1 Year... $694 $ 688 $ 680 $ 123 $ 780 $ 694
3 Years.... $998 $ 978 $ 954 $ 384 $1,257 $ 998
5 Years....$1,323 $1,289 $1,249 $ 665 $1,760 $1,323
10 Years...$2,242 $2,169 $2,085 $1,466 $3,136 $2,242
</TABLE>

CLASS B SHARES

(Payment of the maximum sales charge/Expenses assuming redemption).

Growth Managed

Aggressive with Total
Growth Growth Income Return International

1 Year....$742 $ 735 $ 728 $ 827 $ 742
3 Years...$1,029 $1,008 $ 985 $1,288 $1,029
5 Years...$1,434 $1,399 $1,360 $1,869 $1,778
10 Years..$2,585 $2,513 $2,431 $3,457 $3,241
</TABLE>

CLASS B SHARES

(Payment of the maximum sales charge/Expenses assuming no redemption).

Growth Managed

Aggressive with Total

Growth Growth Income Return International

1 Year.....$228 $ 221 $ 213 $ 318 $ 228
3 Years....$703 $ 682 $ 658 $ 972 $ 703
5 Years....$1,205 $1,170 $1,129 $1,649 $1,205
10 Years...$2,585 $2,513 $2,431 $3,457 $2,585
</TABLE>

Portfolio Turnover

The funds in which the Portfolios invest may actively trade their portfolios. A
higher portfolio turnover rate involves greater transaction expenses which are
borne directly by a fund (and thus, indirectly by its shareholders), and impact
fund performance. In addition, a high rate of portfolio turnover may result in
the realization of larger amounts of capital gains which, when distributed to
that fund's shareholders, are taxable to them.

Temporary Defensive Investments

The Portfolios may temporarily depart from their principal investment strategies
by investing up to 100% of their assets in cash, cash items, and shorter-term,
higher quality debt securities. They may do this to minimize potential losses
and maintain liquidity to meet shareholder redemptions during adverse market
conditions. This may cause the Portfolios to forego greater investment returns
for the safety of principal.

HOW TO PURCHASE, REDEEM AND EXCHANGE SHARES

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

What do Shares Cost?

You can purchase, redeem, or exchange shares any day the New York Stock Exchange
(NYSE) is open. When the Trust receives your transaction request in proper form,
it is processed at the next determined public offering price.

The public offering price is the net asset value (NAV) plus any applicable

sales

charge. NAV is determined at the end of regular trading (normally 4 p.m.

Eastern

time) each day the NYSE is open.

The NAV and public offering price of the Port-folios are listed in your
newspaper's mutual fund quotations section under the heading "FUNDMANAGER
PORTFOLIOS."

The following table summarizes the minimum required investment amount and the
maximum sales charge, if any, that you will pay on an investment in a Portfolio.
Keep in mind that financial intermediaries may charge you fees for their
services in connection with your share transactions.

Minimum Maximum
Initial/ Maximum Contingent

Subsequent Front-End Deferred
Investment Sales Sales
Amounts(1) Charge(2) Charge(3)

----------------------------------------
<S> <C> <C> <C>

Class A Shares $1000/$100 5.50% None
Class B Shares $1000/$100 None 5.00%
</TABLE>

(1) The minimum initial and subsequent investment amounts for retirement plans
are $250 and $100, respectively, except that there are no minimum initial
investment amounts for FundManager prototype defined contribution plans.

The

minimum subsequent investment amounts for Automatic Investment Plans is
$25.

Financial intermediaries may impose higher or lower minimum investment
requirements on their customers than those imposed by the Trust. Class B
Shares will convert to Class A Shares at NAV approximately nine years after
purchase.

(2) Front-End Sales Charge is expressed as a percentage of public offering
price. See "Sales Charge When You Purchase Class A Shares" below. There is
no sales charge imposed on purchases of the Bond Portfolio.

(3) See "Sales Charge When You Redeem Class B Shares" below.

Sales Charge When You Purchase Class A Shares*

Sales Charge

as a Sales Charge
Percentage as a

of Public Percentage

Purchase Amount Offering Price of NAV

- --------------------------------------------------------------------------------
<S> <C> <C>
Less than $50,000 5.50% 5.82%
$50,000 but less
than $100,000 4.75% 4.99%
$100,000 but less
than $250,000 3.75% 3.90%
$250,000 but less
than $500,000 2.75% 2.83%
$500,000 but less
than $1,000,000 2.00% 2.04%
$1 million or greater(1) 0.00% 0.00%
</TABLE>

(1) Freedom Distributors pays a one-time sales commission of 1.00% to
authorized

dealers who initiate or are responsible for purchases of $1 million to $3
million of shares of the Portfolios, 0.50% on purchases from $3 million to
$5 million, and 0.25% on purchases over $5 million. Purchases of $1 million
or more of Class A Shares will be made at NAV with no initial sales charge,
but if the shares are redeemed within 24 months after the end of the
calendar month in which the purchase was made, a contingent deferred sales
charge of 1.25% will be imposed.

* There is no front-end sales charge imposed on purchases of the Bond
Portfolio.

In some situations, Class A Shares may be purchased without a sales charge.

There is no sales charge on Class A Shares purchased with reinvested dividends
and distributions. In addition, certain types of individuals may purchase shares

no-load:

. Shareholders that owned Financial Adviser Class Shares as of January 31,
1998;

. Trustees, officers, and employees (including retired employees) of the Trust,
Freedom Capital Management, Edgewood Services, Inc., Freedom Distributors
Corporation, Tucker Anthony, Incorporated, and Sutro & Co., Inc. (the

"Distributors"), and their affiliates;

. Investment advisory clients of the Adviser;

. Employees or registered representatives of dealers and other financial
institutions that have a sales agreement with the Distributors; and

. Immediate family members (spouses and children under the age of 21) of the
aforementioned persons.

In addition, no sales charge is imposed on:

. Any trust company or bank trust department which exercises discretionary
investment authority and holds unallocated accounts in a fiduciary, agency,
custodial or similar capacity;

. Trustees or other fiduciaries purchasing Class A Shares for employee benefit
plans of employers with ten or more employees; or

. Class A Shares purchased through the Adviser's FundManager Advisory Program,
"wrap accounts" or similar fee based programs sponsored by a registered
investment adviser or financial institution.

No sales charge is imposed on shares acquired by investments through certain
dealers (including registered investment advisers and financial planners) which
have established certain operational arrangements with the Trust which include a
requirement that such shares be sold for the sole benefit of clients
participating in a mutual fund "supermarket" account or a similar program under
which such clients pay a fee to such dealer.

The sales charge on Class A Shares may be reduced or eliminated by:

. quantity purchases of shares;

. combining concurrent purchases of:

* shares by you, your spouse, and your children under age 21; or

* shares of the same class of two or more FundManager Portfolios

. accumulating purchases (in calculating the sales charge on an additional
purchase, you may count the current value of previous Class A Share purchases
still invested in a Portfolio);

. signing a letter of intent to purchase a specific dollar amount of Class A
Shares within 13 months (call the Trust for an application and more
information); or

. using the reinvestment privilege.

If your investment qualifies for a reduction or elimination of the sales charge,
you or your investment professional must notify the Trust's Distributors at the
time of purchase. If you fail to notify a Distributor, you will receive the
reduced sales charge only on additional purchases, and not retroactively on your
previous purchases.

Quantity Discounts and Accumulated Purchases. As shown in the preceding sales
charge schedule, larger purchases reduce the sales charge you will pay. The
Trust will combine purchases of Class A Shares (other than Bond Portfolio since
no sales charges are assessed) made on the same day by the investor and
immediate family members when it calculates the sales charge. In addition, the
sales charge is reduced for purchases made at one time by a trustee or fiduciary
for a single trust estate or a single fiduciary account.

If you purchase additional Class A Shares, the Trust will consider the previous
purchases still invested in the same Portfolio. For example, if a shareholder
already owns Class A Shares having a current value at the public offering price
of $40,000 and the shareholder purchases $10,000 more at the current public
offering price, the sales charge on the additional purchase would be 4.75%, not
5.50%, according to the sales charge schedule for Class A Shares.

Concurrent Purchases. You may also combine concurrent purchases of Class A
Shares of more than one Portfolio (except the Bond Portfolio) to reduce the
sales charge. For example, if you purchase $30,000 of Class A Shares of one
Portfolio, and $20,000 in Class A Shares of another Portfolio, the sales charge
would be reduced to 4.75%, according to the sales charge schedule for Class A
Shares.

Letter of Intent. You may reduce the sales charge by signing a letter of intent
that states the total amount of Class A Shares of the Portfolios (except Bond
Portfolio) you intend to purchase over the next 13 months, which must be at
least $50,000. The Trust's custodian bank will hold up to 5.50% of the total
amount intended to be purchased in escrow (in Class A Shares) until such
purchase is completed. The sales charge you will pay will be adjusted depending
on the total amount you actually purchase over the 13-month period.

The Class A Shares held in escrow will be released when you have purchased the
amount specified in the letter of intent or the end of the 13-month period,
whichever comes first. If the amount specified in the letter of intent is not
purchased, an appropriate number of Class A Shares in escrow may be redeemed in
order to realize the difference in the sales charge.

While this letter of intent will not obligate the shareholder to purchase Class
A Shares, each purchase during the period will be at the sales charge applicable
to the total amount intended to be purchased. When you sign the letter of
intent, you will receive a credit towards the fulfillment of the letter of
intent for your current FundManager Portfolio account balances, excluding Bond
Portfolio. However, prior trade prices will not be adjusted.

Reinvestment Privilege. If you redeem Class A Shares, you may reinvest the
redemption proceeds within 120 days without any sales charge at the current NAV.
The Distributors must be notified by the shareholder in writing or by the
shareholder's financial intermediary of the reinvestment in order to eliminate a
sales charge.

Sales Charge When You Redeem Class B Shares

When you redeem Class B Shares, you may pay a sales charge, commonly referred to
as a contingent deferred sales charge (CDSC), depending on how long ago you

purchased the shares.

Shares Held Up To: CDSC

- ------------------------- -----
1 year................... 5.00%
2 years.................. 4.00%
3 years.................. 4.00%
4 years.................. 3.00%
5 years.................. 2.00%
6 years.................. 2.00%
7 years.................. 1.00%
8 years or more.......... 0.00%

You will not be charged a CDSC when redeeming Class B Shares:

. purchased with reinvested dividends or capital gains;

. that you exchange into Class B Shares of another FundManager Portfolio where
the original shares were held for eight years or more;

. purchased through financial intermediaries that did not receive advanced
sales payments; or

. following the complete disability of the shareholder, as defined by the IRS

In addition, you will not be charged a CDSC:

. when a Portfolio redeems your Class B Shares and closes your account for
failing to meet the minimum balance requirement;

. if your redemption is a required retirement plan distribution;

. upon the death of the shareholder(s) of the account or the redemption of
Class B Shares by a designated beneficiary.

If your redemption qualifies, you or your investment professional must notify
the Distributor at the time of redemption to eliminate the CDSC.

To keep the sales charge as low as possible, the Trust sells your Class B
Shares

in the following order:

. Class B Shares that are not subject to a CDSC;

. Class B Shares held the longest; and

. then, the CDSC is based on the NAV at the time you purchased or redeemed
those Class B Shares, whichever is lower.

HOW TO PURCHASE SHARES

You may purchase shares through an investment professional, directly from the
Portfolios, or through an exchange from another FundManager Portfolio.

If you do not specify the Class choice on your form of payment, you will
automatically receive Class A Shares.

The Fund reserves the right to reject any request to purchase or exchange
shares.

Through an Investment Professional

. Establish an account with your investment professional; and

. Submit your purchase order to the investment professional before the end of
regular trading on the NYSE (normally 4 p.m. Eastern time). You will receive
that day's NAV if the investment professional forwards the order to the Trust
on the same day and the Trust receives payment within three business days.

You

will become the owner of the shares and receive dividends when the Trust
receives your payment.

. Financial intermediaries should send payments according to the instructions

the sections By Wire or By Check.

Directly from the Portfolios

. Establish your account with the Trust by submitting a completed account
application; and

. Send your payment to the Trust by Federal Reserve wire or check.

You will become a shareholder and your shares will be priced at the NAV on the
day the Trust receives your wire or your check.

An institution may establish an account and place an order by calling the Trust
and the shares will be priced at the NAV on the day the Trust receives the
order.

By Wire. Send your wire to:

State Street Bank and Trust Company, Boston, MA
ABA Number 011000028

Attention: TRANSFER AGENT
Wire Order Number, Dealer Number,
or Group Number
Dollar Amount
For Credit to: FundManager Portfolios--
(Name of Portfolio, Name of Class,

Account Name and Number).

You cannot purchase shares by wire on holidays when wire transfers are
restricted.

By Check. Make your check payable to (Portfolio/Class Name), note your account
number on the check, and mail it to:

Federated Shareholder Services Company
P.O. Box 8609, Boston, MA 02266-8609.

If you send your check by a private courier or overnight delivery service that
requires a street address, send it to:

Federated Shareholder Services Company
1099 Hingham Street, Rockland, MA 02370-3317.

Payment should be made in U.S. dollars and drawn on a U.S. bank. The Trust will
not accept third-party checks (checks originally payable to someone other than
the Portfolio). If your check does not clear, your purchase will be canceled
and
you could be liable for any losses or fees the Portfolio or its transfer agent

incurs.

Through an Exchange

You may purchase shares through an exchange from the same share Class of another
FundManager Portfolio. You must meet the minimum initial investment requirement
for purchasing shares and both accounts must have a common owner.

By Automatic Investment Plan

Once you have opened an account, you may automatically purchase additional
shares on a regular basis (at $25 minimum in monthly, quarterly, semiannual or
annual intervals) by completing the Automatic Investment Plan section of the
account application or contacting the Trust or your investment professional.

Retirement Investments

You may purchase shares as retirement investments (such as qualified plans and
IRAs). Application forms and further information about qualified retirement
plans, including applicable fees, are available from the Trust or a Distributor
upon request. To request this information or to ask a question about investing
for retirement, call the Trust or one of the Distributors. We suggest that you
discuss these retirement investments with your tax adviser. You may be charged
an IRA account fee.

FundManager Advisory Program

The Adviser, through the FundManager Advisory Program (the "Program") provides
discretionary advisory services in connection with investments among the
Portfolios. Under the Program, investment executives help investors identify
their financial objectives, preferences and risk tolerances. Based on this
evaluation of the investor's financial goals and circumstances, the Adviser
allocates the investor's assets among some or all of the Portfolios and either
Automated Cash Management Trust, California Municipal Cash Trust, or New York
Municipal Cash Trust money market funds. The Adviser will adjust each investor's
Program portfolio among these money market funds and the Portfolios from time to
time based on the Adviser's assessment of the economy, interest rates, the
financial markets and worldwide macro-economic events. Investors receive
periodic reports (at least quarterly) containing an analysis and evaluation of
the investor's portfolio. Investment executives may review the quarterly report
with the investor, monitor identified changes in the investor's financial
characteristics and communicate any changes to the Adviser.

HOW TO REDEEM AND EXCHANGE SHARES

You should redeem or exchange shares:

. through an investment professional if you purchased shares through an
investment professional or the Program; or

. directly from the Trust if you purchased shares directly from the Trust.

THROUGH AN INVESTMENT PROFESSIONAL

Submit your redemption or exchange request to your investment professional by
the end of regular trading on the NYSE (normally 4 p.m. Eastern time). The
redemption amount you will receive is based upon the NAV on the day the Trust
receives the order from your investment professional.

DIRECTLY FROM THE PORTFOLIOS

By Telephone. You may redeem or exchange shares by calling the Trust at 1-800-
344-9033 once you have completed the appropriate authorization form for
telephone transactions. If you call before the end of regular trading on the
NYSE (normally 4 p.m. Eastern time) you will receive a redemption amount based
on that day's NAV.

By Mail. You may redeem or exchange shares by mailing a written request to the
Trust.

You will receive a redemption amount based on the NAV on the day your written
request is received by the Trust in proper form.

Send requests by mail to:

Federated Shareholder Services Company
P.O. Box 8609, Boston, MA 02266-8609.

All requests must include:

. Portfolio/Class Name, registered account name and number;

. amount to be redeemed or exchanged;

. signatures of all shareholders exactly as registered; and

. if exchanging, the Portfolio/Class Name, registered account name and number
into which you are exchanging.

Signature Guarantees. Signatures must be guaranteed if:

. your redemption is to be sent to an address other than the address of record;

. your redemption is to be sent to an address of record that was changed within
the last thirty days; or

. a redemption is payable to someone other than the shareholder(s) of record.

Your signature can be guaranteed by any federally insured financial institution

(such as a bank or credit union) or a broker/dealer that is a domestic stock
exchange member, but not by a notary public.

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

Payments Options

Your redemption proceeds will be mailed by check to your address of record.
However, the following payment options are available if you complete the
appropriate authorization form. These payment options require a signature
guarantee if they were not established prior to redeeming shares:

. an electronic transfer to your depository account at a financial institution
that is an ACH member; or

. wire payment to your account at a domestic commercial bank that is a Federal
Reserve System member.

Limitations on Redemption Proceeds

Redemption proceeds normally are wired or mailed within one business day after
receiving a request in proper form. However, payment may be delayed up to seven
days:

. to allow your purchase payment to clear;

. during periods of market volatility; or

. when a shareholder's trade activity or amount adversely impacts a Portfolio's
ability to manage its assets.

Exchange Privileges

You may exchange shares of a FundManager Portfolio into shares of the same Share
class of another FundManager Portfolio with common account owners, or shares of
Automated Cash Management Trust-Institutional Service Shares, New York Municipal
Cash Trust or California Municipal Cash Trust at net asset value. To do this,
you must:

. meet any minimum initial investment requirements; and

. receive a prospectus for the fund into which you wish to exchange.

An exchange is treated as a redemption and a subsequent purchase, and is a
taxable transaction. You will be subject to a CDSC when exchanging Class B
Shares of the Portfolios to shares of Automated Cash Management Trust,
California Municipal Cash Trust or New York Municipal Cash Trust. Signatures
must be guaranteed if you request an exchange into another Portfolio with a
different shareholder registration.

The Trust may modify or terminate the exchange privilege at any time. The
Trust's management or Adviser may determine from the amount, frequency and
pattern of exchanges that a shareholder is engaged in excessive trading which is
detrimental to the Portfolios and other shareholders. If this occurs, the Trust
or management may terminate the availability of exchanges to that shareholder
and may bar that shareholder from purchasing shares of other Portfolios.

When exchanging into and out of Portfolios with a sales charge and Portfolios
without a sales charge, shareholders who have paid a sales charge once upon
purchasing shares of any Portfolio, including those shares acquired by the
reinvestment of dividends, will not have to pay a sales charge again on an
exchange. Class A Shares of the Bond Portfolio acquired by direct purchase may
be exchanged for Class A Shares of the other Portfolios with a sales charge at
NAV plus the applicable sales charge.

For further information on exchanging shares, you should contact the Trust or
their investment professional.

Systematic Withdrawal/Exchange Program

You may automatically redeem or exchange shares on a regular basis by completing
the appropriate form or contacting your investment professional or the Trust.
Your account value must meet the minimum initial investment amount at the time
the program is established. This program may reduce, and eventually deplete,
your account, and the payments should not be considered yield or income.
Generally, it is not advisable to continue to purchase shares subject to a sales
charge while redeeming shares using this program.

Systematic Withdrawal Program (SWP) On Class B Shares. You will not be charged

CDSC on SWP redemptions if:

. you redeem 10% or less of your account value in a single year;

. you reinvest all dividends and capital gains distributions;

. your account has at least a $50,000 balance when you establish the SWP (you
cannot aggregate multiple Class B Share accounts to meet this minimum
balance); and

. you withdraw a minimum of $500 per month.

You will be subject to a CDSC on redemption amounts that exceed the 10% annual
limit. In measuring the redemption percentage, your account is valued when you
establish the SWP and then annually at calendar year-end.

ADDITIONAL CONDITIONS

Telephone Transactions. The Trust will record your telephone instructions. If
the Trust does not follow reasonable procedures, it may be liable for losses
due
to unauthorized or fraudulent telephone instructions. The Trust will notify you

if it changes telephone transaction privileges.

Share Certificates. The Portfolios do not issue share certificates. If you are
redeeming or exchanging shares represented by certificates previously issued by
a Portfolio, you must return the certificates with your written redemption or
exchange request. For your protection, send your certificates by registered or
certified mail, but do not endorse them.

Redemptions in-kind. Large cash redemptions may be detrimental to the best
interests of a Portfolio and its shareholders. A Portfolio may pay redemption
proceeds in whole or in part by a distribution of Portfolio securities (mutual
fund shares or money market instruments), in lieu of cash, in conformity with
applicable rules of the SEC. The Trust will, however, redeem Shares solely in
cash up to the lesser of $250,000 or 1% of its net assets during any 90-day
period for any one shareholder.

ACCOUNT AND SHARE INFORMATION

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

Confirmations and Account Statements

You will receive confirmation of purchases, redemptions and exchanges (except
for systematic program transactions). In addition, you will receive periodic
statements reporting all account activity, including systematic transactions,
dividends and capital gains paid.

Dividends and Capital Gains

Dividends are paid to all shareholders invested in the Portfolios on the record
date. The frequency of these distributions is as follows:

Portfolio Capital Gains (if any) Dividends
<S> <C> <C>
Aggressive Growth Annually Annually
Growth Annually Semi-Annually
Growth with Income Annually Quarterly
International Annually Annually
Managed Total Return Annually Quarterly
Bond Annually Monthly
</TABLE>

Your dividends and capital gains distributions will be automatically reinvested
in additional shares without a sales charge, unless you elect cash payments. If
you elect cash payments and the payment is returned as undeliverable, your cash
payment will be reinvested in shares and your distribution option will convert
to automatic reinvestment.

If you purchase shares just before a Portfolio declares a dividend or capital
gain distribution, you will pay the full price for the shares and then receive a
portion of the price back in the form of a distribution, whether or not you
reinvest the distribution in shares. Therefore, you should consider the tax
implications of purchasing shares shortly before a Portfolio declares a dividend
or capital gain. Contact your investment professional or the Portfolios for
information concerning the date dividends and capital gains will be paid.

Accounts with Low Balances

Non-retirement accounts may be closed if redemptions or exchanges cause the
account balance to fall below $500 at the end of any month. Before an account is
closed, the shareholder will be notified and allowed 30 days to purchase

additional shares to meet the minimum.

Tax Information

You will receive an annual statement of your account activity to assist you in
completing your federal, state and local tax returns. Distributions of dividends
and capital gains are taxable to you whether paid in cash or reinvested in a
Portfolio. Capital gains distributions are taxable at different rates depending
upon the length of time the Portfolio holds its assets.

With respect to the Aggressive Growth Portfolio, Growth Portfolio and
International Portfolio, distributions are expected to be primarily capital
gains. Bond Portfolio's distributions are expected to primarily be dividends.
With respect to the Growth with Income Portfolio and Managed Total Return
Portfolio, distributions are expected to be both dividends and capital gains.

Redemptions and exchanges are taxable sales.

Please consult your tax adviser regarding your federal, state, and local tax
liability.

WHO MANAGES THE TRUST?

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

The Board of Trustees governs the Trust and each Portfolio. The Board selects
and oversees the Adviser, Freedom Capital Management Corporation. The Adviser
advises the Portfolios and manages the Portfolios' assets, including buying and
selling portfolio securities, through the FundManager Division of Freedom
Capital Management Corporation. The Adviser's address is One Beacon Street,
Boston, MA 02108.

Adviser's Background

Freedom Capital Management Corporation, founded in 1930, serves as the
investment adviser for each Portfolio. The Adviser provides a number of mutual
funds and other clients with investment research and portfolio management
services. Assets under the Adviser's supervision currently exceed $6 billion.
The Adviser is a wholly-owned subsidiary of Freedom Securities Corporation. On
April 2, 1998, 7,400,000 shares of common stock of Freedom Securities
Corporation, formerly known as JHFSC Acquisition Corporation, were sold to the
public in an initial public offering. As a consequence of this offering of
stock, as well as other transactions, the previous controlling shareholder of
Freedom Securities Corporation, Thomas H. Lee Equity Fund III, L.P. (and certain
related equity shareholders), own less than 25% of the common stock of Freedom
Securities Corporation. In addition to managing the Portfolios, the Adviser also
manages the Freedom Group of Money Market Funds.

Portfolio Managers

Michael D. Hirsch is the Portfolio Manager of the Portfolios and is responsible
for the day to day management of the Portfolios. Currently, Mr. Hirsch is Chief
Investment Officer of the FundManager Division of Freedom Capital Management.
Prior to February 21, 1995, Mr. Hirsch was the Vice Chairman and Managing
Director of the M.D. Hirsch Division of Republic Asset Management. Mr. Hirsch
served as President of M.D. Hirsch Investment Management, Inc. from February,
1991 until June, 1993 and Chief Investment Officer of Republic National Bank of
New York from 1981 until February, 1991. Mr. Hirsch pioneered the concept of
investing his clients' assets in a portfolio of mutual funds in 1975. Mr.
Hirsch
is now a noted authority on mutual funds and has authored two books, "Multifund
Investing" in 1987 and "The Mutual Fund Wealth Builder" in 1991.

Martin S. Orgel is the Senior Investment Analyst and Assistant Portfolio
Manager

for the Portfolios.

Mr. Orgel graduated from the University of California at Los Angeles (U.C.L.A.)
in 1994 with a B.A. degree, double-majoring in Business Economics and Political
Science. Upon graduating from school, Mr. Orgel spent a brief tenure as a
trading assistant with Swiss Bank Corporation. Mr. Orgel has been employed by
the Adviser since November 1995.

Advisory Fees

The Adviser is entitled to receive an annual investment advisory fee equal to
0.50% of each Portfolio's average daily net assets up to $500 million and 0.40%
of each Portfolio's average daily net assets in excess of $500 million.

DISTRIBUTION OF PORTFOLIO SHARES

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

The Distributors

The Trustees have approved a Distribution Contract (the "Distribution Contract")
between the Trust and each of Edgewood Services, Inc., Freedom Distributors
Corporation, Tucker Anthony, Incorp-orated and Sutro & Co., Inc. pursuant to
which each will serve as a Distributor of the Trust and of the shares of each of
the Portfolios.

The Trust's Distributors market the Class A and Class B Shares to institutions
or individuals, directly, or through financial intermediaries. When the
Distributor receives sales charges and marketing fees, it may pay some or all of
them to financial intermediaries. The Distributor and its affiliates may pay out
of their assets other amounts (including items of material value) to financial
intermediaries for marketing and servicing shares.

Distribution Plan

The Portfolios have adopted a Distribution Plan under Rule 12b-1 of the
Investment Company Act of 1940, which allows them to pay a fee of up to 0.25% of
the Class A Shares assets and up to 1.00% of the Class B Shares assets. Payments
under the Distribution Plan are designed to compensate the Distributors for
costs and expenses incurred by the Distributors in connection with the sale,
distribution and customer servicing of the Portfolios' Class A Shares and Class
B Shares. Because these shares pay marketing fees on an ongoing basis, your
investment cost may be higher over time than shares with different sales charges
and marketing fees.

Year 2000 Readiness. The "Year 2000" problem is the potential for computer
errors or failures because certain computer systems may be unable to interpret
dates after December 31, 1999. The Year 2000 problem may cause systems to
process information incorrectly and could disrupt businesses (like the Trust)
that rely on computers.

While it is impossible to determine in advance all of the risks to the Trust,
the Trust could experience interruptions in basic financial and operational
functions. Trust shareholders could experience errors or disruptions in share
transactions or Portfolio communications.

The Trust's service providers are making changes to their computer systems to
fix any Year 2000 problems. In addition, they are working to gather information
from third-party providers to determine their Year 2000 readiness.

Year 2000 problems would also increase the risks of a Portfolio's investments.
To assess the potential effect of the Year 2000 problem, the Adviser is
reviewing information regarding the Year 2000 readiness of the underlying funds
the Portfolios may purchase.

The financial impact of these issues for the Trust is still being determined.
There can be no assurance that potential Year 2000 problems would not have a
material adverse effect on any of the Portfolios.

FINANCIAL INFORMATION

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

Financial Highlights

The following financial highlights of Class A Shares are intended to help you
understand each Portfolio's financial performance for its past five fiscal
years. Effective January 1, 1999, Financial Adviser Class of shares were renamed
Class A Shares. Some of the information is presented on a per share basis. Total
returns represent the rate an investor would have earned (or lost) on an
investment in the Portfolio, assuming reinvestment of all dividends and
distributions.

This information has been audited by Ernst & Young LLP whose report, along with
the Portfolios' audited financial statements, is included in the Annual Report.
The Annual Report is incorporated by reference into and accompanies the
Portfolio's Statement of Additional Information. It is available upon request
free of charge. Since all of the Portfolios, except Bond Portfolio, began
offering Class B Shares on January 1, 1999, there are no financial highlights
for Class B Shares.

Aggressive Growth Portfolio--Class A Shares

- --------------------------------------------------------------------------------
Selected data for a share outstanding throughout the:

Year Ended September 30,

1998 1997 1996 1995(a) 1994
<S> <C> <C> <C> <C> <C>
Net Asset Value, beginning of period....$ 18.44 $ 16.80 $ 18.31 $ 15.57 $ 16.70
Income from investment operations

Net investment income (loss).......... 0.16 (0.12)(b) 0.12(b) (0.13) (0.08)
Net realized and unrealized gain on
investments............... (2.34) 3.75 1.64 3.70 0.62
Total from investment operations..........(2.18) 3.63 1.76 3.57 0.54
Less distributions

Distributions from net investment
income.... (0.38) (0.07) (0.38) -- --
Distributions from net realized gain on
investments........... (1.81) (1.92) (2.89) (0.83) (1.67)
Total distributions.......................(2.19) (1.99) (3.27) (0.83) (1.67)
Net Asset Value, end of period............$ 14.07 $18.44 $ 16.80 $ 18.31 $ 15.57
Total return(c)..........................(13.03)% 24.16% 12.10% 24.30% 3.30%
Ratios/Supplemental data

Net assets, end of period (in 000's)....$ 23,994 $36,200 $38,944 $33,668 $37,766

Ratio of expenses to average net assets... 1.78% 1.59% 1.67% 1.65% 1.70%
Ratio of net investment income to average
net assets.......... (0.74)% (0.70)% 0.74% (0.68)% (0.57)%
Ratio of expense waivers to average net
assets(d)............. -- 0.03% 0.06% -- --
Portfolio turnover.........................38% 56% 158% 50% 43%
Paid from realized net short-term gain.......-- $0.28 $ 0.27 $ 0.04 $ 0.25
</TABLE>

Growth Portfolio-- Class A Shares

- --------------------------------------------------------------------------------
Selected data for a share outstanding throughout the:

Year Ended September 30,
<S> <C> <C> <C> <C> <C>
1998 1997 1996 1995(a) 1994
Net Asset Value, beginning of period $ 17.81 $14.99 $ 16.14 $ 14.09 $ 14.62
Income from investment operations

Net investment income (loss)............ 0.18 0.04(b) 0.01(b) (0.02) (0.05)
Net realized and unrealized gain (loss)
on investments........ (0.48) 4.91 1.85 2.99 0.69
Total from investment operations........(0.30) 4.95 1.86 2.97 0.64
Less distributions

Distributions from net investment
income...................... (0.26) (0.30) (0.24) -- --
Distributions from net realized gain
on investments........... (2.44) (1.83) (2.77) (0.92) (1.17)
Total distributions....................(2.70) (2.13) (3.01) (0.92) (1.17)
Net Asset Value, end of period........$ 14.81 $17.81 $ 14.99 $ 16.14 $ 14.09
Total return(c)........................(2.21)% 36.92% 13.46% 22.60% 4.50%
Ratios/Supplemental data

Net assets, end of period (in 000's)..$ 29,431 $32,835 $26,639 $26,022 $34,205

Ratio of expenses to average net assets...1.70% 1.65% 1.61% 1.71% 1.71%
Ratio of net investment income (loss) to
average net assets... (0.32)% 0.23% 0.05% (0.11)% (0.52)%
Ratio of expense waivers to average net
assets(d)............. -- 0.05% 0.06% -- --
Portfolio turnover....................... 33% 95% 93% 68% 44%
Paid from realized net short-term gain......$0.28 $ 0.12 $ 0.48 $ 0.10 $ 0.22
</TABLE>

(a) On February 21, 1995, Freedom Capital Management Corporation became the
Investment Adviser.

(b) Per share information is based on average shares outstanding.

(c) Based on net asset value, which does not reflect the sales charge payable on
purchases of shares. Effective January 31, 1998, the Portfolio imposed a
maximum sales charge of 4.50%.

(d) This voluntary expense decrease is reflected in both the expense and net
investment income ratios shown above.

Growth with Income Portfolio-- Class A Shares

- --------------------------------------------------------------------------------
Selected data for a share outstanding throughout the:

Year

Ended September 30,

1998 1997 1996 1995(a) 1994
<S> <C> <C> <C> <C> <C>
Net Asset Value, beginning of period.........$ 18.97 $16.69 $ 18.28 $ 15.99 $ 16.50
Income from investment operations
Net investment income........................ 0.37 0.26(b) 0.60(b) 0.27 0.35
Net realized and unrealized gain (loss) on
investments... (0.62) 4.78 1.60 3.19 0.18
Total from investment operations............ (0.25) 5.04 2.20 3.46 0.53
Less distributions
Distributions from net investment income.......(0.34) (0.43) (0.86) (0.33) (0.30)
Distributions from net realized gain on
investments...... (2.35) (2.33) (2.93) (0.84) (0.74)
Total distributions............................(2.69) (2.76) (3.79) (1.17) (1.04)
Net Asset Value, end of period.................$ 16.03 $18.97 $ 16.69 $ 18.28 $ 15.99
Total return(c)................................(1.61)% 34.27% 13.73% 23.30% 3.30%
Ratios/Supplemental data
Net assets, end of period (in 000's).........$37,256 $37,274 $31,571 $35,643 $52,595
Ratio of expenses to average net assets....... 1.61% 1.62% 1.77% 1.59% 1.55%
Ratio of net investment income to average net
assets..... 0.16% 1.49% 3.57% 1.72% 1.88%
Ratio of waiver to average net assets(d)...... -- 0.05% 0.06% -- --
Portfolio turnover.............................. 14% 61% 85% 12% 35%
Paid from realized net short-term gain......... $ 0.31 -- $ 0.06 -- $ 0.14
</TABLE>

Bond Portfolio -- Class A Shares

- --------------------------------------------------------------------------------
Selected data for a share outstanding throughout the:

Year

Ended September 30,

1998

1997 1996 1995(a) 1994
<S> <C> <C> <C> <C> <C>
Net Asset Value, beginning of period...................... $ 10.28 $10.00 $ 10.21 $ 9.66 $ 10.67
Income from investment operations

Net investment income.................................... 0.54 0.51(b) 0.52(b) 0.52 0.48
Net realized and unrealized gain (loss) on investments... 0.32 0.31 (0.14) 0.49 (0.84)
Total from investment operations.......................... 0.86 0.82 0.38 1.01 (0.36)
Less distributions
Distributions from net investment income................. (0.61) (0.54) (0.59) (0.46) (0.53)
Distributions from net realized gain on investments...... -- -- -- -- (0.12)
Total distributions....................................... (0.61) (0.54) (0.59) (0.46) (0.65)
Net Asset Value, end of period............................ $ 10.53 $10.28 $ 10.00 $ 10.21 $ 9.66
Total return(c)........................................... 8.69% 8.45% 3.78% 10.80% (3.60)%
Ratios/Supplemental data

Net assets, end of period (in 000's)...................... $60,080 $63,557 $70,166 $77,419 $76,769

Ratio of expenses to average net assets.................. 1.47% 1.43% 1.47% 1.45% 1.43%
Ratio of net investment income to average net assets..... 4.69% 5.07% 5.19% 5.38% 4.67%
Ratio of expense waivers to average net assets(d)........ -- 0.04% 0.05% -- --
Portfolio turnover....................................... 33% 142% 93% 53% 41%
</TABLE>

(a) On February 21, 1995, Freedom Capital Management Corporation became the
Investment Adviser.

(b) Per share information is based on average shares outstanding.

purchases of shares. Effective January 31, 1998, the Growth with Income
Portfolio imposed a maximum sales charge of 4.50%. Effective May 8, 1995,
the Bond Portfolio no longer imposed a one time sales charge.

(d) This voluntary expense decrease is reflected in both the expense and net
investment income ratios shown above.

Managed Total Return Portfolio -- Class A Shares

- --------------------------------------------------------------------------------
Selected data for a share outstanding throughout the:

Year

Ended September 30,

1998

1997 1996 1995(a) 1994
<S> <C> <C> <C> <C> <C>
Net Asset Value, beginning of period...................... $12.06 $11.45 $ 11.65 $ 11.24 $ 12.03
Income from investment operations

Net investment income..................................... 0.29 0.28(b) 0.42(b) 0.28 0.18
Net realized and unrealized gain (loss) on investments... (0.08) 1.55 0.40 1.18 (0.16)
Total from investment operations.......................... 0.21 1.83 0.82 1.46 0.02
Less distributions

Distributions from net investment income................. (0.31) (0.32) (0.50) (0.30) (0.31)
Distributions from net realized gain on investments...... (1.15) (0.90) (0.52) (0.75) (0.50)
Total distributions....................................... (1.46) (1.22) (1.02) (1.05) (0.81)
Net Asset Value, end of period............................ $10.81 $12.06 $ 11.45 $ 11.65 $ 11.24
Total return(c)........................................... 1.75% 17.42% 7.58% 14.30% 0.10%
Ratios/Supplemental data

Net assets, end of period (in 000's)..................... $9,762 $11,606 $12,123 $14,749 $17,515

Ratio of expenses to average net assets.................. 2.65% 2.08% 2.21% 2.09% 1.94%
Ratio of net investment income to average net assets..... 1.40% 2.26% 3.68% 2.29% 1.60%
Ratio of expense waivers to average net assets(d)........ -- 0.11% 0.06% -- --
Portfolio turnover....................................... 98% 73% 159% 50% 50%
Paid from realized net short-term gain.................... $ 0.11 -- $ 0.01 -- $ 0.13
</TABLE>

(a) On February 21, 1995, Freedom Capital Management Corporation became the
Investment Adviser.

(b) Per share information is based on average shares outstanding.

purchases of shares. Effective January 31, 1998, the Portfolio imposed a
maximum sales charge of 4.80%.

(d) This voluntary expense decrease is reflected in both the expense and net
investment income ratios shown above.

International Portfolio -- Class A Shares

- --------------------------------------------------------------------------------
Selected data for a share outstanding throughout the:

Period Ended
September 30,

1998(a)

<S> <C>
Net Asset Value, beginning of period.......................... $10.00
Income from investment operations
Net investment loss.......................................... (0.07)(b)
Net realized and unrealized loss on investments.............. (1.66)
Total from investment operations.............................. (1.73)
Less distributions

Distributions from net investment income..................... --
Distributions from net realized gain on investments.......... --
Total distributions........................................... --
Net Asset Value, end of period................................ $ 8.27
Total return(c)............................................... (17.30)%(d)
Ratios/Supplemental data

Net assets, end of period (in 000's)......................... $10.196
Ratio of expenses to average net assets...................... 2.72%(e)
Ratio of net investment loss to average net assets........... (2.50)%(e)
Ratio of expense waivers to average net assets............... --
Portfolio turnover........................................... 18%

Paid from realized net short-term gain........................ --
</TABLE>

(a) Portfolio commenced investment operations on June 6, 1998.

(b) Per share information is based on average shares outstanding.

(c) Total Return for the period from commencement of operations (June 6, 1998)
through September 30, 1998, based on net asset value, which does not

reflect

the sales charge payable on purchases of shares. The fund imposes a maximum
sales charge of 4.50%.

(d) Not annualized.

(e) Annualized.

FundManager Portfolios

- --------------------------------------------------------
Selecting Leading Fund Managers for Investors Since 1984

A Statement of Additional Information (SAI) dated January 1, 1999 is
incorporated by reference into this prospectus. Additional information about
each Portfolio's investments is available in the Portfolios' annual and
semi-annual report to shareholders. The annual report discusses market
conditions and investment strategies that significantly affected each
Portfolio's performance during its last fiscal year. To obtain the SAI, the
annual and semi-annual report, and other information without charge call your
investment professional or the Trust at 1-800-344-9033.

You can obtain information about the Fund by visiting or writing the Public
Reference Room of the Securities and Exchange Commission in Washington, D.C.
20549-6009 or from the Commission's Internet site at http://www.sec.gov. You can
call 1-800-SEC-0330 for information on the Public Reference Room's operations

and copying charges.

Edgewood Services, Inc. Distributor
360850101 3608508853
3608508200 36085088846
3608508309 3608508838
3608508408 3608508820
3608508507 3608508812
3608508879 3608508796
3608508408 3608508820

811-08992
G01966-02 (1/99)

FundManager Portfolios

- --------------------------------------------------------
Selecting Leading Fund Managers for Investors Since 1984

Prospectus

Class A Shares

Class B Shares
(Except Bond Portfolio)

. Aggressive Growth Portfolio

. Growth Portfolio

. Growth with Income Portfolio

. International Portfolio

. Managed Total Return Portfolio

. Bond Portfolio

January 1, 1999

APPENDIX

AGGRESSIVE GROWTH PORTFOLIO

The graphic presentation here displayed consists of a bar chart which shows the
Aggressive Growth Portfolio's (the "Portfolio") year-to-date total returns for
each of the last 10 calendar years.. The "x " axis reflects the total return
percentages and the "y" axis reflects the calendar years beginning with 1988
through 1997. The total return figure for each year, expressed as a percentage,
appears directly above each bar. The portfolio's year-to-date total return for
the years 1988 through 1997 are as follows: 1988 11.76%, 1989 21.87%, 1990
- -7.43%, 1991 38.02% 1992 5.50%, 1993 14.08%, 1994 -1.15%, 1995 24.75%, 1996
16.58%, 1997 16.65%.

Beneath the bar chart are the Portfolio's highest and lowest return for a
quarter during the 10-year period. The Portfolio's highest quarterly return was
19.07%, and its lowest quarterly return was -16.56%.

Following the bar chart is a table which indicates the Portfolio's average
annual total returns for one, five and ten years relative to the average annual
total returns of Russell 2000 Index for the same periods.

The average annual total return of the Portfolio for the calendar years ended
12/31/97 for the one-year and five-year and ten periods; were 10.22%, 12.56%,
and 12.75%, respectively.

The average annual total return of the Russell 2000 Index for the same period
for the one-year and five-year and ten periods; were 22.36%, 16.41%, 15.76%,
respectively.

GROWTH PORTFOLIO

The graphic presentation here displayed consists of a bar chart which shows the
Growth Portfolio's (the "Portfolio") year-to-date total returns for each of the
last 10 calendar years.. The "x " axis reflects the total return percentages and
the "y" axis reflects the calendar years beginning with 1988 through 1997. The
total return figure for each year, expressed as a percentage, appears directly
above each bar. The portfolio's year-to-date total return for the years 1988
through 1997 are as follows: 1988 14.40%, 1989 18.62%, 1990 -6.22%, 1991 28.83%
1992 8.87%, 1993 12.52%, 1994 -0.48%, 1995 28.15%, 1996 19.32%, 1997 27.51%.

Beneath the bar chart are the Portfolio's highest and lowest return for a
quarter during the 10-year period. The Portfolio's highest quarterly return was
15.09%, and its lowest quarterly return was -12.78%.

Following the bar chart is a table which indicates the Portfolio's average
annual total returns for one, five and ten years relative to the average annual
total returns of S&P 500 Index for the same periods.

The average annual total return of the Portfolio for the calendar years ended
12/31/97 for the one-year and five-year and ten periods; were 20.47%, 15.59%,
and 13.92%, respectively.

The average annual total return of the S&P 500 Index for the same period for the
one-year and five-year and ten periods; were 33.36%, 20.27%, 18.02%,
respectively.

GROWTH WITH INCOME PORTFOLIO

The graphic presentation here displayed consists of a bar chart which shows the
Growth Portfolio's (the "Portfolio") year-to-date total returns for each of the
last 10 calendar years.. The "x " axis reflects the total return percentages and
the "y" axis reflects the calendar years beginning with 1988 through 1997. The
total return figure for each year, expressed as a percentage, appears directly
above each bar. The portfolio's year-to-date total return for the years 1988
through 1997 are as follows: 1988 19.21%, 1989 19.38%, 1990 -8.31%, 1991 23.30%
1992 9.19%, 1993 12.75%, 1994 -0.12%, 1995 32.55%, 1996 15.59%, 1997 25.24%.

Beneath the bar chart are the Portfolio's highest and lowest return for a
quarter during the 10-year period. The Portfolio's highest quarterly return was
13.63%, and its lowest quarterly return was -13.14%.

The average annual total return of the Portfolio for the calendar years ended
12/31/97 for the one-year and five-year and ten periods; were 18.38%, 15.35%,
and 13.63%, respectively.

The average annual total return of the S&P 500 Index for the same period for the
one-year and five-year and ten periods; were 33.36%, 20.27%, 18.02%,
respectively.

MANAGED TOTAL RETURN PORTFOLIO

The graphic presentation here displayed consists of a bar chart which shows the
Growth Portfolio's (the "Portfolio") year-to-date total returns for each of the
last 10 calendar years.. The "x " axis reflects the total return percentages and
the "y" axis reflects the calendar years beginning with 1989 through 1997. The
total return figure for each year, expressed as a percentage, appears directly
above each bar. The portfolio's year-to-date total return for the years 1989
through 1997 are as follows: 1989 14.56%, 1990 -0.31%, 1991 18.78% 1992 6.34%,
1993 9.00%, 1994 -1.15%, 1995 19.26%, 1996 8.25%, 1997 13.50%.

Beneath the bar chart are the Portfolio's highest and lowest return for a
quarter during the 10-year period. The Portfolio's highest quarterly return was
8.02%, and its lowest quarterly return was -6.44%.

Following the bar chart is a table which indicates the Portfolio's average
annual total returns for one, five and ten years relative to the average annual
total returns of Lehman Government/CB Total Index for the same periods.

The average annual total return of the Portfolio for the calendar years ended
12/31/97 for the one-year and five-year periods and since inception (8/4/88);
were 7.25%, 8.34%, 8.83%, respectively.

The average annual total return of the Lehman Government/CB Total Index for the
same period for the one-year and five-year and since 8/4/88; were 9.75%, 7.61%,
and 9.35%, respectively.

BOND PORTFOLIO

The graphic presentation here displayed consists of a bar chart which shows the
Growth Portfolio's (the "Portfolio") year-to-date total returns for each of the
last 10 calendar years.. The "x " axis reflects the total return percentages and
the "y" axis reflects the calendar years beginning with 1988 through 1997. The
total return figure for each year, expressed as a percentage, appears directly
above each bar. The portfolio's year-to-date total return for the years 1988
through 1997 are as follows: 1988 8.30%, 1989 7.66%, 1990 4.81%, 1991 14.81%
1992 7.14%, 1993 10.57%, 1994 -4.29%, 1995 15.89%, 1996 2.27%, 1997 7.80%.

Beneath the bar chart are the Portfolio's highest and lowest return for a
quarter during the 10-year period. The Portfolio's highest quarterly return was
5.48%, and its lowest quarterly return was -2.63%.

The average annual total return of the Portfolio for the calendar years ended
12/31/97 for the one-year and five-year periods and ten-year periods were 7.80%,
6.22%, 7.35%, respectively.

The average annual total return of the Lehman Government/CB Total Index for the
same period for the one-year and five-year and ten year periods; were 9.75%,
7.61%, and 9.35%, respectively.

STATEMENT OF ADDITIONAL INFORMATION

FUNDMANAGER PORTFOLIOS

CLASS A SHARES

CLASS B SHARES (except Bond Portfolio)

AGGRESSIVE GROWTH PORTFOLIO INTERNATIONAL
PORTFOLIO

GROWTH PORTFOLIO MANAGED TOTAL RETURN
PORTFOLIO

GROWTH WITH INCOME PORTFOLIO BOND PORTFOLIO

This Statement of Additional Information (SAI) is not a prospectus. Read
this SAI in conjunction with the prospectus for FundManager Portfolios,
dated January 1, 1999. This SAI incorporates by reference the Portfolios'
Annual Report. You may obtain the prospectus or the Annual Report without
charge by calling 1-800-344-9033.

CONTENTS

How are the Portfolios Organized?
Securities in Which the Underlying
Funds Invest
Securities Descriptions, Techniques
and Risks
Investment Limitations
Who Manages and Provides Services
to the Portfolios?
What do Shares Cost?
How to Redeem Shares
Tax Information
How Do the Portfolios Measure
Performance?
Financial Information
Investment Ratings
Addresses

3608508101
3608508853
3608508200
3608508846
3608508309
3608508838
3608508408
3608508820
3608508507
3608508812
3608508879
3608508796
3608508408
3608508820
811-08992

G01966-0 (1/99)

<PAGE>

HOW ARE THE PORTFOLIOS ORGANIZED?

FundManager Portfolios (the "Trust") is an open-end management investment
company that was established as a Delaware business trust on February 7, 1995.
Prior to May 8, 1995, the Portfolios were series of the Republic Funds (formerly
FundTrust), a Massachusetts business trust (organized April 22, 1987). Republic
Funds was a successor to two previously existing Massachusetts business trusts,
FundTrust Tax-Free Trust (organized on July 30, 1986) and FundVest organized on
July 17, 1984, and since renamed Fund Source). The Portfolios are six separate
diversified series of the Trust. The Trust may offer additional series of
shares. The shares in any one series may be offered in separate classes. This
Statement uses the same terms as defined in the prospectus.

SECURITIES IN WHICH THE UNDERLYING FUNDS INVEST

Following is a table that indicates which types of securities are a:

o P = PRINCIPAL investment of an underlying fund; (shaded in chart) o A =
ACCEPTABLE (but not principal) investment of an underlying fund; or o N = NOT AN
ACCEPTABLE investment of an underlying fund. As funds-of-funds, the Portfolios
consist principally of other open-end mutual funds and thus, indirectly, all of
the securities noted in the table.
<TABLE>
<CAPTION>

- ----------------------------------- ------------ ------------ ------------ ------------- ----------- -----------
SECURITIES AGGRESSIVE GROWTH GROWTH WITH MANAGED INTERNATIONABOND
GROWTH PORTFOLIO INCOME TOTAL PORTFOLIO PORTFOLIO
PORTFOLIO PORTFOLIO RETURN
PORTFOLIO
<S> <C> <C> <C> <C> <C> <C>
- ----------------------------------- ------------ ------------ ------------ ------------- ----------- -----------
- ----------------------------------- ------------ ------------ ------------ ------------- ----------- -----------
AMERICAN DEPOSITARY RECEIPTS A A A A A A
- ----------------------------------- ------------ ------------ ------------ ----------- -----------
- ----------------------------------- ------------ ------------ ------------ ------------- ----------- -----------
BANK OBLIGATIONS A A A P A A
- ----------------------------------- ------------ ------------ ------------ ------------- ----------- -----------
- ----------------------------------- ------------ ------------ ------------ ----------- -----------
BORROWING A A A A A A
- -----------------------------------
- ----------------------------------- ------------ ------------ ------------ ------------- ----------- -----------
CLOSED-END INVESTMENT COMPANIES N N N N A N
- -----------------------------------
- ----------------------------------- ------------ ------------ ------------ ------------- ----------- -----------
COMMERCIAL PAPER A A A A A P
- ----------------------------------- ------------ ------------ ------------ ------------- -----------
- ----------------------------------- -----------
COMMON STOCK P P P P P N
- ----------------------------------- ------------ -----------
- ----------------------------------- ------------ ------------ ------------ ------------- -----------
CONVERTIBLE SECURITIES A A P P A P
- ----------------------------------- ------------ ------------ ----------- -----------
- ----------------------------------- ------------ -------------
DEBT OBLIGATIONS A A P P A P
- ----------------------------------- ------------ ------------ ------------ ------------- ----------- -----------
- ----------------------------------- ------------ ------------ ------------ ------------- ----------- -----------
EUROPEAN DEPOSITARY RECEIPTS A A A A A A
- ----------------------------------- ------------ ------------ ------------ ------------- ----------- -----------
- ----------------------------------- ------------ ------------ ------------ ------------- ----------- -----------
FOREIGN CURRENCY TRANSACTIONS A A A A A N
- ----------------------------------- ------------ ------------ ------------
- ----------------------------------- ------------ ------------ ------------ ------------- ----------- -----------
FOREIGN SECURITIES A A A A P N
- ----------------------------------- ------------ ------------ ------------ ------------- ----------- -----------
- ----------------------------------- ------------ ------------ ------------
FORWARD COMMITMENTS, WHEN-ISSUED A A A A A A
AND

DELAYED DELIVERY TRANSACTIONS

- ----------------------------------- ------------ ------------ ------------ ------------- ----------- -----------
- ----------------------------------- ------------ ------------ ------------ ------------- ----------- -----------
FUTURES AND OPTIONS TRANSACTIONS A A A A A A
- ----------------------------------- ------------ ------------ ------------ ------------- ----------- -----------
- ----------------------------------- ------------ ------------ ------------ ------------- ----------- -----------
GLOBAL DEPOSITARY RECEIPTS A A A A A A
- ----------------------------------- ------------ ------------ ------------ ------------- ----------- -----------
- ----------------------------------- ------------ ------------ ------------ ------------- ----------- -----------
HIGH-YIELD SECURITIES A A A A A A
- ----------------------------------- ------------ ------------ ------------ ------------- ----------- -----------
- ----------------------------------- ------------ ------------ ------------ ------------- ----------- -----------
ILLIQUID SECURITIES A A A A A A
- ----------------------------------- ------------ ------------ ------------ ------------- ----------- -----------
- ----------------------------------- ------------ ------------ ------------ ------------- ----------- -----------
LENDING OF PORTFOLIO SECURITIES A A A A A A
- ----------------------------------- ------------ ------------ ------------ ------------- ----------- -----------
- ----------------------------------- ------------ ------------ ------------ ------------- ----------- -----------
MASTER DEMAND NOTES A A A A A A
- -----------------------------------
- ----------------------------------- ------------ ------------ ------------ ------------- ----------- -----------
OPEN-END INVESTMENT COMPANIES A A A A A A
- ----------------------------------- ------------ -------------
- ----------------------------------- ------------ ------------ ------------ ------------- ----------- -----------
PREFERRED STOCKS A A P P A P
- ----------------------------------- ------------ ------------ ------------ ------------- ----------- -----------
- ----------------------------------- ------------ ------------ ------------ ------------- ----------- -----------
REPURCHASE AGREEMENTS A A A A A A
- ----------------------------------- ------------ ------------ ------------ ------------- ----------- -----------
- ----------------------------------- ------------ ------------ ------------ ------------- ----------- -----------
REVERSE REPURCHASE AGREEMENTS N N N N A N
- ----------------------------------- ------------ ------------ ------------ -----------
- ----------------------------------- ------------ ------------ ------------ ------------- ----------- -----------
U.S. GOVERNMENT SECURITIES A A A P A P
- ----------------------------------- ------------ ------------ ------------ ------------- ----------- -----------
- ----------------------------------- ------------ ------------ ------------ -----------
UNIT INVESTMENT TRUSTS N N N N A N
- -----------------------------------
- ----------------------------------- ------------ ------------ ------------ ------------- ----------- -----------
WARRANTS A A A A A A
- ----------------------------------- ------------ ------------ ------------ ------------- ----------- -----------

</TABLE>

SECURITIES DESCRIPTIONS, TECHNIQUES AND RISKS

TEMPORARY DEFENSIVE INVESTMENTS. Although the Portfolios invest primarily in
shares of other mutual funds, they are also authorized to invest for temporary
investment purposes (or as necessary to accumulate cash for investments or to
meet anticipated redemptions) in a variety of short-term debt securities,
including U.S. government Securities, commercial paper, bank instruments, and
repurchase agreements.

BANK INSTRUMENTS. The Portfolios and underlying funds may invest in debt
instruments of U.S. banks (including certificates of deposit and bankers'
acceptances) that have total assets in excess of $1 billion at the time of
purchase and are members of the Federal Deposit Insurance Corporation (FDIC).

Bank instruments are unsecured interest bearing deposits with banks. A
certificate of deposit is a debt instrument issued by a bank against funds
deposited in the bank. A bankers' acceptance is a short-term draft drawn on a
bank by a borrower, usually in connection with an international commercial
transaction. Although the borrower is liable for payment of the draft, the bank
unconditionally guarantees to pay the draft at its face value on the maturity
date.

BORROWING. The funds may borrow money from banks or through reverse repurchase
agreements in amounts up to one-third of total assets, and pledge some assets as
collateral. A fund that borrows will pay interest on borrowed money and may
incur other transaction costs. These expenses could exceed the income received
or capital appreciation realized by a fund from any securities purchased with
borrowed money. With respect to borrowings, the funds are required to maintain
continuous asset coverage to 300% of the amount borrowed. If the coverage
declines to less than 300%, a fund must sell sufficient portfolio securities to
restore the coverage even if it must sell the securities at a loss.

COMMERCIAL PAPER. The Portfolios and underlying funds may purchase commercial
paper which represents unsecured, short-term obligations with maturities of less
than nine months. Commercial paper is issued by banks, corporations and other
borrowers to investors with temporarily idle cash. Most issuers constantly
reissue their commercial paper and use the proceeds (or bank loans) to repay
maturing paper. Commercial paper may default if the issuer cannot continue to
obtain liquidity by repaying maturing paper in this manner. The short maturity
of commercial paper reduces both the market and credit risk as compared to other
debt securities of the same issuer.

The Portfolios may purchase commercial paper of domestic issuers which, at the
time of purchase, are:

(i) rated in the highest commercial paper rating category by a nationally
recognized statistical rating organization ("NRSRO"),

(ii) issued or guaranteed as to principal and interest by issuers or guarantors
having an existing debt security rating of "Aa" or better by Moody's or "AA" or
better by Standard & Poor's or a similar high grade rating by another NRSRO; or

(iii) securities which, if unrated, are, in the opinion the Adviser, of an
investment quality comparable to rated commercial paper in which the funds may
invest.

CONVERTIBLE SECURITIES. The funds may invest in convertible securities which are
fixed income securities that an underlying fund has the option to exchange for
equity securities at a specified conversion price. The option allows the
underlying fund to realize additional returns if the market price of the equity
securities exceeds the conversion price. For example, an underlying fund may
hold fixed income securities convertible into shares of common stock at a
conversion price of $10 per share. If the market value of the shares reached
$12, the underlying fund could realize an additional $2 per share by converting
its fixed income securities into the underlying common stock.

Convertible securities have lower yields than comparable fixed income securities
to compensate for the value of the conversion option. In addition, the
conversion price exceeds the market value of the underlying equity securities at
the time a convertible security is issued. Thus, convertible securities may
provide lower returns than non-convertible fixed income securities or equity
securities depending upon changes in the price of the underlying equity
securities. However, convertible securities permit the underlying fund to
realize some of the potential appreciation of the underlying equity securities
with less risk of losing its initial investment.

DEPOSITARY RECEIPTS. American Depositary Receipts (ADRs) are receipts, issued by
a U.S. bank, that represent an interest in shares of a foreign-based
corporation. ADRs provide a way to buy shares of foreign-based companies in the
U.S. rather than in overseas markets. European Depositary Receipts (EDRs) and
Global Depositary Receipts (GDRs) are receipts, issued by foreign banks or trust
companies, or foreign branches of U.S. banks, that represent an interest in
shares of either a foreign or U.S. corporation. Depositary Receipts may not be
denominated in the same currency as the underlying securities into which they
may be converted, and are subject to currency risks. Depositary Receipts
involves many of the same risks of investing directly in foreign securities.

EQUITY SECURITIES. Equity securities represent ownership in a company. They
represent a share of the issuer's earnings and assets, after the issuer pays its
liabilities. Generally, issuers have discretion as to the payment of any
dividends or distributions. As a result, investors cannot predict the income
they will receive from equity securities. However, equity securities offer
greater potential for appreciation than many other types of securities, because
their value increases directly with the value of the issuer's business. The
following describes the types of equity securities in which the funds invest.

COMMON STOCKS are the most prevalent type of equity security. Common
stockholders receive the residual value of the issuer's earnings and assets
after the issuer pays its creditors and any preferred stockholders. As a
result, changes in an issuer's earnings directly influence the value of its
common stock.

PREFERRED STOCKS have the right to receive specified dividends or
distributions before the payment of dividends or distributions on common
stock. Some preferred stocks also participate in dividends and distributions
paid on common stock. Preferred stocks may provide for the issuer to redeem
the stock on a specified date. An underlying fund may treat such redeemable
preferred stock as a fixed income security.

WARRANTS give an underlying fund the option to buy the issuer's stock or
other equity securities at a specified price. A fund may buy the designated
shares by paying the exercise price before the warrant expires. Warrants may
become worthless if the price of the stock does not rise above the exercise
price by the expiration date. Rights are the same as warrants, except they
are typically issued to existing stockholders.

FIXED INCOME SECURITIES. Fixed income securities pay interest, dividends or
distributions at a specified rate. The rate may be fixed or adjusted
periodically. Generally, investors in fixed income securities are creditors of
the issuer. The issuer must repay the principal amount of the security, normally
within a specified time. Fixed income securities provide more regular income
than equity securities. However, the returns on fixed income securities are
limited and normally do not increase with the issuer's earnings. This limits the
potential appreciation of fixed income securities as compared to equity
securities.

A security's YIELD measures the annual income earned on a security as a
percentage of its price. Securities with higher credit risks generally have
higher yields. A security's yield will increase or decrease depending upon
whether it costs less (a discount) or more (a premium) than the principal
amount. Under normal market conditions, securities with longer maturities will
also have higher yields. If the issuer may redeem the security before its
scheduled maturity, the price and yield on a discount or premium security may
change based upon the probability of an early redemption.

The following describes the types of fixed income securities in which an
underlying fund may invest.

AGENCY SECURITIES are issued or guaranteed by a federal agency or other
government sponsored entity acting under federal authority (a "GSE"). Some
GSEs are supported by the full, faith and credit of the United States. Other
GSEs receive support through federal subsidies, loans or other benefits. A
few GSEs have no explicit financial support, but are regarded as having
implied support because the federal government sponsors their activities.
Investors regard agency securities as having low credit risk, but not as low
as Treasury securities.

The Portfolios and underlying funds treat mortgage-backed securities
guaranteed by GSEs as agency securities. Although a GSE guarantee protects
against credit risk, it does not reduce the market and prepayment risks of
these mortgage backed securities.

ASSET-BACKED SECURITIES are payable from pools of obligations other than
mortgages, such as car loans or credit card receivables. Almost any type of
fixed income asset (including other fixed income securities) may be used to
create an asset-backed security. However, most asset-backed securities
involve consumer or commercial debts with maturities of less than ten years.
Asset-backed securities may take the form of commercial paper or notes, in
addition to pass through certificates. Asset-backed securities may also
resemble some types of CMOs, such as Floaters, Inverse Floaters, IOs and
POs.

CORPORATE DEBT SECURITIES are fixed income securities issued by businesses.
Notes, bonds, debentures and commercial paper are the most prevalent types
of corporate debt security. The credit risks of corporate debt securities
vary widely among issuers.

MORTGAGE-BACKED SECURITIES represent interests in pools of mortgages. The
underlying mortgages normally have similar interest rates, maturities and
other terms. Mortgages may have fixed or adjustable interest rates.
Interests in pools of adjustable rate mortgages are know as ARMs.

Mortgage-backed securities come in a variety of forms. Many have extremely
complicated terms. The simplest form of mortgage-backed securities are
"pass-through certificates." Holders of pass-through certificates receive a
pro rata share of the payments from the underlying mortgages. Holders also
receive a pro rata share of any prepayments, so they assume all the
prepayment risk of the underlying mortgages.

Collateralized mortgage obligations (CMOs), including interests in real
estate mortgage investment conduits (REMICs), allocate payments and
prepayments from an underlying pass-through certificate among holders of
different classes of mortgage-backed securities. This creates different
prepayment and market risks for each CMO class. For example, in a sequential
pay CMO, one class of CMOs receives all principal payments (including
prepayments). The next class of CMOs receives all principal payments after
the first class is paid off. This process repeats for each sequential class
of CMO. As a result, each class of sequential pay CMOs reduces the
prepayment risk of subsequent classes.

In addition, CMOs may allocate interest payments to one class (IOs) and
principal payments to another class (POs). POs increase in value when
prepayment rates increase. In contrast, IOs decrease in value when
prepayments increase, because the underlying mortgages generate less
interest payments. However, IOs prices tend to increase when interest rates
rise (and prepayments fall), making IOs a useful hedge against market risk.

TREASURY SECURITIES are direct obligations of the federal government of the
United States. Investors regard treasury securities as having the lowest
credit risk.

FOREIGN SECURITIES. Investments may be in securities of foreign issuers,
whether located in developed or emerging countries.

Investments in foreign securities where delivery of the securities takes place
outside the United States must be made in compliance with U.S. and foreign
currency restrictions and tax laws (including laws imposing withholding taxes on
any dividend or interest income) and laws limiting the amount and types of
foreign investments.

Foreign securities are considered to be liquid provided that: (i) the securities
are purchased and held with the intention of reselling them in the foreign
trading market, (ii) a fund believes it can readily sell the securities in the
foreign trading market or for cash in the United States, or (iii) foreign market
and current market quotations are readily available.

If a fund invests in foreign securities, its Board or adviser must determine
that the foreign securities are maintained with foreign custodians who will
exercise reasonable care. The Board or adviser continually monitors the
appropriateness of foreign custody arrangements. However, a fund could lose
money if the Board or adviser is incorrect in its expectations about the
performance of either the foreign securities or the foreign custodians chosen to
hold the securities.

FOREIGN CURRENCY TRANSACTIONS In order to hedge against foreign currency
exchange rate risks, the underlying funds may enter into forward foreign
currency exchange contracts and foreign currency futures contracts, as well as
purchase put or call options on foreign currencies, as described below. The
underlying funds may also conduct foreign currency exchange transactions on a
spot (i.e., cash) basis at the spot rate prevailing in the foreign currency
exchange market.

FORWARD FOREIGN CURRENCY EXCHANGE CONTRACTS (Forward Contracts) are used
to minimize the risks associated with changes in the relationship
between the U.S. dollar and foreign currencies. They are used to lock in
the U.S. dollar price of a foreign security. A Forward Contract is a
commitment to purchase or sell a specific currency for an agreed price
at a future date.

If the fund's adviser believes a foreign currency will decline against
the U.S. dollar, a Forward Contract may be used to sell an amount of the
foreign currency approximating the value of a fund's security that is
denominated in the foreign currency. The success of this hedging
strategy is highly uncertain due to the difficulties of predicting the
values of foreign currencies, of precisely matching Forward Contract
amounts, and because the constantly changing value of the securities
involved. A fund will not enter into Forward Contracts for hedging
purposes in a particular currency in an amount in excess of a fund's
assets denominated in that currency. Conversely, if the fund's adviser
believes that the U.S. dollar will decline against a foreign currency, a
Forward Contract may be used to buy that foreign currency for a fixed
dollar amount, otherwise known as cross-hedging.

In these transactions, a fund will segregate assets with a market value
equal to the amount of the foreign currency purchased. Therefore, a fund
will always have cash, cash equivalents or high quality debt securities
available to cover Forward Contracts or to limit any potential risk. The
segregated assets will be priced daily.

Forward Contracts may limit potential gain from a positive change in the
relationship between the U.S. dollar and foreign currencies.
Unanticipated changes in currency prices may result in poorer overall
performance for a fund than if it had not engaged in such contracts.

PURCHASING AND WRITING PUT AND CALL OPTIONS on foreign currencies are
used to protect a fund's investments against declines in the U.S. dollar
value of foreign portfolio securities and against increases in the
dollar cost of foreign securities to be acquired. Writing an option on
foreign currency constitutes only a partial hedge, up to the amount of
the premium received. A fund could lose money if it is required to
purchase or sell foreign currencies at disadvantageous exchange rates.
If exchange rate movements are adverse to a fund's position, a fund may
forfeit the entire amount of the premium plus related transaction costs.
These options are traded on U.S. and foreign exchanges or
over-the-counter.

EXCHANGE-TRADED FUTURES CONTRACTS are used for the purchase or sale of
foreign currencies (Foreign Currency Futures) AND will be used to hedge
against anticipated changes in exchange rates that might adversely
affect the value of a fund's securities or the prices of securities that
a fund intends to purchase in the future. The successful use of Foreign
Currency Futures depends on the ability to forecast currency exchange
rate movements correctly. Should exchange rates move in an unexpected
manner, a fund may not achieve the anticipated benefits of Foreign
Currency Futures or may realize losses.

FUTURES AND OPTIONS TRANSACTIONS. As a means of reducing fluctuations in
its net asset value, a fund may buy and sell futures contracts and
options on futures contracts, and buy put and call options on portfolio
securities and securities indices to hedge its portfolio. A fund may
also write covered put and call options on portfolio securities to
attempt to increase its current income or to hedge its portfolio. There
is no assurance that a liquid secondary market will exist for any
particular futures contract or option at any particular time. A fund's
ability to establish and close out futures and options positions depends
on this secondary market.

FUTURES CONTRACTS. A futures contract is a commitment by two parties
under which one party agrees to make delivery of an asset (seller) and
another party agrees to take delivery of the asset at a certain time in
the future. A futures contract may involve a variety of assets including
commodities (such as oil, wheat, or corn) or a financial asset (such as
a security). A fund may purchase and sell financial futures contracts to
hedge against anticipated changes in the value of its portfolio without
necessarily buying or selling the securities. Although some financial
futures contracts call for making or taking delivery of the underlying
securities, in most cases these obligations are closed out before the
settlement date. The closing of a futures contract is accomplished by
purchasing or selling an identical offsetting futures contract. Other
financial futures contracts call for cash settlements.

A fund may purchase and sell stock index futures contracts to hedge
against anticipated price changes with respect to any stock index traded
on a recognized stock exchange or board of trade. A stock index futures
contract is an agreement in which two parties agree to take or make
delivery of an amount of cash equal to the difference between the price
of the original contract and the value of the index at the close of the
last trading day of the contract. No physical delivery of the underlying
securities in the index is made. Settlement is made in cash upon
termination of the contract.

MARGIN IN FUTURES TRANSACTIONS. Since a fund does not pay or receive
money upon the purchase or sale of a futures contract, it is required to
deposit an amount of initial margin in cash, U.S. government securities
or highly-liquid debt securities as a good faith deposit. The margin is
returned to a fund upon termination of the contract. Initial margin in
futures transactions does not involve borrowing to finance the
transactions.

As the value of the underlying futures contract changes daily, a fund
pays or receives cash, called variation margin, equal to the daily
change in value of the futures contract. This process is known as
marking-to-market. Variation margin does not represent a borrowing or
loan by a fund. It may be viewed as settlement between a fund and the
broker of the amount one would owe the other if the futures contract
expired. When a fund purchases futures contracts, an amount of cash
and/or cash equivalents, equal to the underlying commodity value of the
futures contracts (less any related margin deposits), will be deposited
in a segregated account with a fund's custodian to collateralize the
position and insure that the use of futures contracts is unleveraged.
The funds are also required to deposit and maintain margin when it
writes call options on futures contracts.

A fund will not enter into a futures contract or purchase an option
thereon for other than hedging purposes if immediately thereafter the
initial margin deposits for futures contracts held by it, plus premiums
paid by it for open options on futures contracts, would exceed 5% of the
market value of its net assets, after taking into account the unrealized
profits and losses on those contracts it has entered into. However, in
the case of an option that is in-the-money at the time of purchase, the
in-the-money amount may be excluded in computing such 5%.

PUT OPTIONS ON FINANCIAL AND STOCK INDEX FUTURES CONTRACTS. A fund may
purchase listed put options on financial and stock index futures
contracts to protect portfolio securities against decreases in value.
Unlike entering directly into a futures contract, which requires the
purchaser to buy a financial instrument on a set date at a specified
price, the purchase of a put option on a futures contract entitles (but
does not obligate) its purchaser to decide on or before a future date
whether to assume a short position at the specified price.

Generally, if the hedged portfolio securities decrease in value during
the term of an option, the related futures contracts will also decrease
in value and the option will increase in value. In such an event, a fund
will normally close out its option by selling an identical option. If
the hedge is successful, the proceeds received by a fund upon the sale
of the second option will be large enough to offset both the premium
paid by a fund for the original option plus the decrease in value of the
hedged securities.

Alternatively, a fund may exercise its put option to close out the
position. To do so, it would simultaneously enter into a futures
contract of the type underlying the option (for a price less than the
strike price of the option) and exercise the option. The fund would then
deliver the futures contract in return for payment of the strike price.
If a fund neither closes out nor exercises an option, the option will
expire on the date provided in the option contract, and only the premium
paid for the contract will be lost.

A fund may also write (sell) listed put options on financial or stock
index futures contracts to hedge its portfolio against a decrease in
market interest rates or an increase in stock prices. A fund will use
these transactions to purchase portfolio securities in the future at
price levels existing at the time it enters into the transaction. When a
fund sells a put on a futures contract, it receives a cash premium in
exchange for granting to the buyer of the put the right to receive from
a fund, at the strike price, a short position in such futures contract.
This is so even though the strike price upon exercise of the option is
greater than the value of the futures position received by such holder.
As market interest rates decrease or stock prices increase, the market
price of the underlying futures contract normally increases. When the
underlying futures contract increases, the buyer of the put option has
less reason to exercise the put because the buyer can sell the same
futures contract at a higher price in the market. If the value of the
underlying futures position is not such that exercise of the option
would be profitable to the option holder, the option will generally
expire without being exercised. The premium received by a fund can then
be used to offset the higher prices of portfolio securities to be
purchased in the future.

In order to avoid the exercise of an option sold by it, generally a fund
will cancel its obligation under the option by entering into a closing
purchase transaction, unless it is determined to be in a fund's interest
to deliver the underlying futures position. A closing purchase
transaction consists of the purchase by a fund of an option having the
same term as the option sold by a fund, and has the effect of canceling
a fund's position as a seller. The premium which a fund will pay in
executing a closing purchase transaction may be higher than the premium
received when the option was sold, depending in large part upon the
relative price of the underlying futures position at the time of each
transaction. If the hedge is successful, the cost of buying the second
option will be less than the premium received by a fund for the initial
option.

CALL OPTIONS ON FINANCIAL AND STOCK INDEX FUTURES CONTRACTS. A fund may
write (sell) listed and over-the-counter call options on financial and
stock index futures contracts to hedge its portfolio. When a fund writes
a call option on a futures contract, it undertakes to sell a futures
contract at the fixed price at any time during the life of the option.
As stock prices fall or market interest rates rise, causing the prices
of futures to go down, a fund's obligation to sell a futures contract
costs less to fulfill, causing the value of a fund's call option
position to increase. In other words, as the underlying futures price
goes down below the strike price, the buyer of the option has no reason
to exercise the call, so that a fund keeps the premium received for the
option. This premium can substantially offset the drop in value of a
fund's portfolio securities.

Prior to the expiration of a call written by a fund, or exercise of it
by the buyer, a fund may close out the option by buying an identical
option. If the hedge is successful, the cost of the second option will
be less than the premium received by a fund for the initial option. The
net premium income of a fund will then substantially offset the decrease
in value of the hedged securities.

A fund may buy a listed call option on a financial or stock index
futures contract to hedge against decreases in market interest rates or
increases in stock price. A fund will use these transactions to purchase
portfolio securities in the future at price levels existing at the time
it enters into the transaction. When a fund purchases a call on a
financial futures contract, it receives in exchange for the payment of a
cash premium the right, but not the obligation, to enter into the
underlying futures contract at a strike price determined at the time the
call was purchased, regardless of the comparative market value of such
futures position at the time the option is exercised. The holder of a
call option has the right to receive a long (or buyer's) position in the
underlying futures contract. As market interest rates fall or stock
prices increase, the value of the underlying futures contract will
normally increase, resulting in an increase in value of a fund's option
position. When the market price of the underlying futures contract
increases above the strike price plus premium paid, a fund could
exercise its option and buy the futures contract below market price.
Prior to the exercise or expiration of the call option, a fund could
sell an identical call option and close out its position. If the premium
received upon selling the offsetting call is greater than the premium
originally paid, a fund has completed a successful hedge.

LIMITATION ON OPEN FUTURES POSITIONS. A fund will not maintain open
positions in futures contracts it has sold or call options it has
written on futures contracts if together the value of the open positions
exceeds the current market value of a fund's portfolio plus or minus the
unrealized gain or loss on those open positions, adjusted for the
correlation of volatility between the hedged securities and the futures
contracts. If this limitation is exceeded at any time, a fund will take
prompt action to close out a sufficient number of open contracts to
bring its open futures and options positions within this limitation.

PURCHASING PUT AND CALL OPTIONS ON SECURITIES. A fund may purchase put
options on portfolio securities to protect against price movements in a
fund's portfolio. A put option gives a fund, in return for a premium,
the right to sell the underlying security to the writer (seller) at a
specified price during the term of the option. A fund may purchase call
options on securities acceptable for purchase to protect against price
movements by locking in on a purchase price for the underlying security.
A call option gives a fund, in return for a premium, the right to buy
the underlying security from the seller at a specified price during the
term of the option.

WRITING COVERED CALL AND PUT OPTIONS ON SECURITIES. A fund may write
covered call and put options to generate income and thereby protect
against price movements in a fund's portfolio securities. As writer of a
call option, a fund has the obligation, upon exercise of the option
during the option period, to deliver the underlying security upon
payment of the exercise price. The fund may only sell call options
either on securities held in its portfolio or on securities which it has
the right to obtain without payment of further consideration (or has
segregated cash or U.S. government securities in the amount of any
additional consideration). As a writer of a put option, a fund has the
obligation to purchase a security from the purchaser of the option upon
the exercise of the option. In the case of put options, a fund will
segregate cash or U.S. Treasury obligations with a value equal to or
greater than the exercise price of the underlying securities.

STOCK INDEX OPTIONS. A fund may purchase or sell put or call options on
stock indices listed on national securities exchanges or traded in the
over-the-counter market. A stock index fluctuates with changes in the
market values of the stocks included in the index. Upon the exercise of
the option, the holder of a call option has the right to receive, and
the writer of a put option has the obligation to deliver, a cash payment
equal to the difference between the closing price of the index and the
exercise price of the option. The effectiveness of purchasing stock
index options will depend upon the extent to which price movements in a
fund's portfolio correlate with price movements of the stock index
selected. The value of an index option depends upon movements in the
level of the index rather than the price of a particular stock.
Accordingly, successful use by a fund of options on stock indices will
be subject to the adviser correctly predicting movements in the
directions of the stock market generally or of a particular industry.
This requires different skills and techniques than predicting changes in
the price of individual stocks.

OVER-THE-COUNTER OPTIONS. Over-the-counter options are two-party
contracts with price and terms negotiated between buyer and seller. In
contrast, exchange-traded options are third-party contracts with
standardized strike prices and expiration dates and are purchased from a
clearing corporation. Exchange-traded options have a continuous liquid
market while over-the-counter options may not. A fund may generally
purchase and write over-the-counter options on portfolio securities or
securities indices in negotiated transactions with the buyers or writers
of the options when options on a fund's portfolio securities or
securities indices are not traded on an exchange. The fund purchases and
writes options only with investment dealers and other financial
institutions deemed creditworthy by the adviser.

RISKS. When a fund uses futures and options on futures as hedging
devices, there is a risk that the prices of the securities or foreign
currency subject to the futures contracts may not correlate perfectly
with the prices of the securities or currency in a fund's portfolio.
This may cause the futures contract and any related options to react
differently to market changes than the portfolio securities or foreign
currency. In addition, the adviser could be incorrect in its
expectations about the direction or extent of market factors such as
stock price movements or foreign currency exchange rate fluctuations. In
these events, a fund may lose money on the futures contract or option.

When a fund purchases futures contracts, an amount of cash and cash
equivalents, equal to the underlying commodity value of the futures
contracts (less any related margin deposits), will be deposited in a
segregated account with a fund's custodian or the broker, to
collateralize the position and thereby insure that the use of such
futures contract is unleveraged. When a fund sells futures contracts, it
will either own or have the right to receive the underlying future or
security, or will make deposits to collateralize the position as
discussed above.

HIGH YIELD SECURITIES. An underlying fund may invest in high yield, high risk
securities. Investing in these securities (also called "junk bonds") involves
special risks in addition to the risks associated with investments in higher-
rated debt securities. High yield, high risk securities may be regarded as
predominantly speculative with respect to the issuer's continuing ability to
meet principal and interest payments.

High yield, high risk securities may be more susceptible to real or perceived
adverse economic and competitive industry conditions than higher grade
securities. The prices of high yield, high risk securities have been found to be
less sensitive to interest rate changes than more highly rated investments, but
more sensitive to adverse economic downturns or individual corporate
developments. A projection of an economic downturn or of a period of rising
interest rates, for example, could cause a decline in high yield, high risk
security prices because the advent of a recession could lessen the ability of a
highly leveraged company to make principal and interest payments on its debt
securities. If the issuer of high yield, high risk securities defaults, a fund
may incur additional expenses to seek recovery. In the case of high yield, high
risk securities structured as zero coupon or payment-in-kind securities, the
market prices of such securities are affected to a greater extent by interest
rate changes, and therefore tend to be more volatile than securities which pay
interest periodically and in cash.

The secondary markets on which high yield, high risk securities are traded may
be less liquid than the market for higher grade securities. Less liquidity in
the secondary trading markets could adversely affect and cause large
fluctuations in the daily net asset value of a fund's shares. Adverse publicity
and investor perceptions, whether or not based on fundamental analysis, may
decrease the values and liquidity of high yield, high risk securities,
especially in a thinly traded market.

There may be special tax considerations associated with investing in high yield,
high risk securities structured as zero coupon or payment-in-kind securities. A
fund records the interest on these securities as income even though it receives
no cash interest until the security's maturity or payment date. A fund will be
required to distribute all or substantially all such amounts annually and may
have to obtain the cash to do so by selling securities which otherwise would
continue to be held. Shareholders will be taxed on these distributions.

The use of credit ratings as the sole method of evaluating high yield, high risk
securities can involve certain risks. For example, credit ratings evaluate the
safety of principal and interest payments, not the market value risk of high
yield, high risk securities. Also, credit rating agencies may fail to change
credit ratings in a timely fashion to reflect events since the security was last
rated.

LENDING OF PORTFOLIO SECURITIES. In order to generate additional income, a fund
may lend portfolio securities. When a fund lends its securities, it will receive
either cash or liquid securities as collateral from the borrower. A fund will
reinvest cash collateral in short-term liquid securities that qualify as an
otherwise acceptable investment for a fund. If the market value of the loaned
securities increases, the borrower must furnish additional collateral to a fund.
During the time portfolio securities are on loan, the borrower pays a fund any
dividends or interest paid on such securities. Loans are subject to termination
at the option of a fund or the borrower. The fund may pay reasonable
administrative and custodial fees in connection with a loan and may pay a
negotiated portion of the interest earned on the cash or equivalent collateral
to a securities lending agent or broker.

REPURCHASE AGREEMENTS. A repurchase agreement is a transaction in which a
Portfolio or underlying fund buys a security from a dealer or bank and agrees to
sell the security back at a mutually agreed upon time and price. The repurchase
price exceeds the sale price, reflecting an agreed upon interest rate effective
for the period the buyer owns the security subject to repurchase. The agreed
upon interest rate is unrelated to the interest rate on that security.

The adviser will continually monitor the value of the underlying security to
ensure that the value of the security always equals or exceeds the repurchase
price. In the event of default by the seller, a Portfolio or underlying fund may
have problems in exercising its rights to the underlying securities and may
incur costs and experience time delays in connection with the disposition of
such securities.

RESTRICTED AND ILLIQUID SECURITIES The funds will not invest more than 15% of
the value of their net assets in illiquid securities including certain
restricted securities not determined to be liquid under criteria established by
the Trustees.

REVERSE REPURCHASE AGREEMENTS. Reverse repurchase agreement transactions are
similar to borrowing cash. In a reverse repurchase agreement, a Portfolio or
underlying fund sells a portfolio security to another person, such as a
financial institution, broker, or dealer, in return for a percentage of the
instrument's market value in cash, and agrees that on a stipulated date in the
future a Portfolio or underlying fund will repurchase the portfolio at a price
equal to the original sale price plus interest. A Portfolio or underlying fund
may use reverse repurchase agreements for liquidity and may enable a Portfolio
or underlying fund to avoid selling portfolio instruments at a time when a sale
may be deemed to be disadvantageous. When effecting reverse repurchase
agreements, liquid assets of a Portfolio or underlying fund, in a dollar amount
sufficient to make payment for the obligations to be purchased, are segregated
at the trade date. These securities are marked to market daily and maintained
until the transaction is settled.

SHORT SALES. An underlying fund may sell securities short. In a short sale, the
fund sells stock which it does not own, making delivery with securities
"borrowed" from a broker. The fund is then obligated to replace the security
borrowed by purchasing it at the market price at the time of replacement. This
price may or may not be less than the price at which the security was sold by
the fund. Until the security is replaced, the fund is required to pay to the
lender any dividends or interest which accrue during the period of the loan. In
order to borrow the security, the fund may also have to pay a premium which
would increase the cost of the security sold. The proceeds of the short sale
will be retained by the broker, to the extent necessary to meet margin
requirements, until the short position is closed out.

The underlying fund also must deposit in a segregated account (or earmark) an
amount of cash or U.S. government securities equal to the difference between (a)
the market value of the securities sold short at the time they were sold short
and (b) the value of the collateral deposited with the broker in connection with
the short sale (not including the proceeds from the short sale). While the short
position is open, the fund must maintain daily the segregated account at such a
level that (i) the amount deposited in it plus the amount deposited with the
broker as collateral equals the current market value of the securities sold
short and (ii) the amount deposited in it plus the amount deposited with the
broker as collateral is not less than the market value of the securities at the
time they were sold short. Depending upon market conditions, up to 80% of the
value of an underlying fund's net assets may be deposited as collateral for the
obligation to replace securities borrowed to effect short sales and allocated to
a segregated account in connection with short sales.

The fund will incur a loss as a result of the short sale if the price of the
security increases between the date of the short sale and the date on which the
fund replaces the borrowed security. The underlying fund will realize a gain if
the security declines in price between those dates. The amount of any gain will
be decreased and the amount of any loss increased by the amount of any premium,
dividends or interest the underlying fund may be required to pay in connection
with a short sale.

A short sale is "against the box" if at all times when the short position is
open the underlying fund owns an equal amount of the securities or securities
convertible into, or exchangeable without further consideration for, securities
of the same issue as the securities sold short. Such a transaction serves to
defer a gain or loss for federal income tax purposes.

WHEN-ISSUED AND DELAYED DELIVERY TRANSACTIONS. These transactions are made to
secure what is considered to be an advantageous price or yield. Settlement dates
may be a month or more after entering into these transactions, and the market
values of the securities purchased may vary from the purchase prices. Other than
normal transaction costs, no fees or expenses are incurred. However, liquid
assets of a fund are segregated on a fund's records at the trade date in an
amount sufficient to make payment for the securities to be purchased. These
assets are marked to market daily and are maintained until the transaction has
been settled.

INVESTMENT LIMITATIONS

FUNDAMENTAL LIMITATIONS

THE FOLLOWING FUNDAMENTAL RESTRICTIONS MAY NOT BE CHANGED WITHOUT THE APPROVAL
OF A MAJORITY OF THAT PORTFOLIO'S SHAREHOLDERS.

1. A Portfolio will not purchase or otherwise acquire interests in real estate
or real estate mortgage loans, except that a Portfolio may purchase securities
issued by companies, including real estate investment trusts, which invest in
real estate or interests therein. Except for International Portfolio, the
Portfolios will not purchase or otherwise acquire interests in oil, gas, or
other mineral leases, as well as exploration or development programs.

2. With respect to securities comprising 75% of the value of its total assets,
the International Portfolio will not invest more than 5% in securities of any
one issuer (other than cash, cash items, securities of investment companies or
securities issued or guaranteed by the government of the United States or its
agencies or instrumentalities and repurchase agreements collateralized by such
securities) if, as a result, more than 5% of the value of its total assets would
be invested in the securities of that issuer, and will not acquire more than 10%
of the outstanding voting securities of any one issuer.

3. The International Portfolio will not invest 25% or more of the value of its
total assets in any one industry other than investment companies, except that
the Portfolio may invest in securities issued by the U.S. government, its
agencies or instrumentalities.

4. A Portfolio will not make loans, except that a Portfolio may purchase and
hold publicly distributed debt securities and it may enter into repurchase
agreements.

5. Except for International Portfolio, a portfolio will not invest in securities
of any issuer which, together with any predecessor, has been in operation for
less than three years if, as a result, more than 5% of the total assets of the
Portfolio would then be invested in such securities.

6. Except for International Portfolio, a portfolio will not purchase the
securities of an issuer if, to a Portfolio's knowledge, one or more of the
Trustees or Officers of the Trust individually owns more than one half of 1% of
the outstanding securities of such issuer and together beneficially own more
than 5% of such securities.

7. A Portfolio will not sell securities short or invest in puts, calls,
straddles, spreads or combinations thereof.

8. A Portfolio will not purchase securities on margin, except such short-term
credits as are necessary for the clearance of transactions. The deposit or
payment by the International Portfolio of initial or variation margin in
connection with financial futures contracts or options transactions is not
considered the purchase of a security on margin.

9. A Portfolio will not purchase or acquire commodities or commodity contracts
(except that the International Portfolio may engage in foreign currency
exchanges contracts and futures contracts).

10. Act as an underwriter of securities.

11. Except for International Portfolio, a portfolio will not issue senior
securities, except insofar as a Portfolio may be deemed to have issued a senior
security in connection with any repurchase agreement or any permitted borrowing.

12. The International Portfolio will not issue senior securities, except that
the Portfolio may borrow money directly or through reverse repurchase agreements
in amounts up to one-third of the value of its total assets, including the
amount borrowed, and except to the extent that the Portfolio may enter into
futures contracts. The Portfolio will not borrow money or engage in reverse
repurchase agreements for investment leverage, but rather as a temporary,
extraordinary, or emergency measure or to facilitate management of the portfolio
by enabling the Portfolio to meet redemption requests when the liquidation of
portfolio securities is deemed to be inconvenient or disadvantageous. The
Portfolio will not purchase any securities while any borrowings in excess of 5%
of its total assets are outstanding.

13. Except for International Portfolio, a Portfolio will not purchase warrants,
valued at the lower of cost or market, in excess of 10% of the value of a
Portfolio's net assets. Included within that amount, but not to exceed 2% of the
value of the Portfolio's net assets, may be warrants that are not listed on the
New York or American Stock Exchanges or an exchange with comparable listing
requirements. Warrants attached to securities are not subject to this
limitation.

NON-FUNDAMENTAL LIMITATIONS

THE FOLLOWING INVESTMENT LIMITATIONS ARE NON-FUNDAMENTAL AND, THEREFORE MAY BE
CHANGED BY THE TRUSTEES WITHOUT SHAREHOLDER APPROVAL. SHAREHOLDERS WILL BE
NOTIFIED BEFORE ANY MATERIAL CHANGE IN THESE LIMITATIONS BECOMES EFFECTIVE.

1. A Portfolio will not invest in securities for the purpose of exercising
control over or management of the issuer, although the International Portfolio
may own more than 25% of the assets of another investment company.

2. A Portfolio will not invest more than 15% of the Portfolios' net assets
(taken at the greater of cost or market value) in Illiquid Securities (excluding
144A securities that have been determined to be "liquid" under procedures
established by the Trustees).

3. A Portfolio, except for International Portfolio, will not invest, with
respect to 75% of the Portfolio's total assets, purchase securities of any
issuer (other than U.S. government securities, cash, cash items, and securities
of other investment companies) if such purchase at the time thereof would cause
the Portfolio to hold more than 10% of any class of securities of such issuer,
for which purposes all indebtedness of an issuer shall be deemed a single class
and all preferred stock of an issuer shall be deemed a single class, except that
futures or option contracts shall not be subject to this restriction. In
addition, the International Portfolio may not purchase securities of any
closed-end investment company or any investment company which is not registered
in the United States.

The underlying funds in which a Portfolio invests may, but need not, have the
same investment policies as a Portfolio. Although all of the Portfolios may,
from time to time, invest in shares of the same underlying fund, the percentage
of each Portfolio's Fund's assets so invested may vary, and the Adviser will
determine that such investments are consistent with the investment objectives
and policies of each particular Portfolio.

<PAGE>

WHO MANAGES AND PROVIDES SERVICES TO THE PORTFOLIOS?

OFFICERS AND TRUSTEES

The Board is responsible for managing the Trust's business affairs and for
exercising all the Trust's powers except those reserved for the shareholders.
Information about each Board member is provided below and includes the following
data: name, address, age, present position(s) held with the Trust, principal
occupations for the past five years, total compensation received as a Trustee
from the Trust for its most recent fiscal year. The Trust is comprised of six
portfolios and four other investment companies which comprise the Freedom
Complex.

As of September 18, 1998, the Fund's Board and Officers as a group owned less
than 1% of the Portfolios' outstanding Class A Shares.

An asterisk (*) denotes a Trustee who is deemed to be an interested person as
defined in the Investment Company Act of 1940.

DEXTER A. DODGE*

One Beacon Street
Boston, MA 02108

Age: 62

Trustee, Chairman and Chief Executive Officer

Chairman of the Adviser since October 1994. Director of the Adviser since 1983.
Vice President of Freedom Distributors Corporation since 1989. Chairman of the
Boards and Chief Executive Officer of Freedom Mutual Fund and Freedom Group of
Tax Exempt Funds since July 1992.

Compensation from Trust $0
Compensation from the Freedom Complex $0

ERNEST T. KENDALL

230 Beacon Street
Boston, MA 02116
Age: 65

Trustee

President, Commonwealth Research Group, Inc., Boston, Massachusetts, a
consulting firm specializing in microeconomics, regulatory economics and labor
economics, since 1978. Trustee of Freedom Mutual Fund and Freedom Group of Tax
Exempt Funds since September 1993.

Compensation from Trust $6,600
Compensation from the Freedom Complex $14,900

<PAGE>

JOHN R. HAACK
311 Commonwealth Avenue, #81

Boston, MA 02115
Age: 55

Trustee

Superintendent, Suffolk County House of Correction, Boston, Massachusetts,
1996 to present. Vice President of Operations, Reliable Transaction
Processing, 1995 to 1996. Major General, Assistant to the Commander in Chief,
U.S. Space Command and Commander in Chief, North American Aerospace Command,
1993 to 1995. General Manager, Unilect Industries, 1993 to 1994. Brigadier
General, Commander of 102nd Fighter Wing, 1986 to 1993.

Compensation from Trust $4,241
Compensation from the Freedom Complex $9,759

RICHARD B. OSTERBERG

84 State Street
Boston, MA 02109
Age: 53

Trustee

Member of the law firm of Weston, Patrick, Willard & Redding, Boston,
Massachusetts, since 1969. Trustee of Freedom Mutual Fund and Freedom Group of

Tax Exempt Funds since September 1993.

Compensation from Trust $6,600
Compensation from the Freedom Complex $18,900

CHARLES B. LIPSON

One Beacon Street
Boston, MA 02108

Age: 51

Executive Vice President

Executive Vice President of the FundManager Division since January 1995.
President and Chief Operating Officer of the M.D. Hirsch Division of Republic
Asset Management Corporation from February 1991 to December 1994. Senior Vice
President and Chief Operating Officer of Home Capital Services, Inc. prior to
February 1991.

Compensation from Trust $0
Compensation from the Freedom Complex $0

<PAGE>

JOHN J. DANELLO*

One Beacon Street
Boston, MA 02108

Age: 43

President

Executive Vice President and Director of the Adviser since 1992. Clerk and
Counsel of the Adviser since 1986. Executive Vice President of Freedom
Distributors Corporation since 1988. President and Secretary of Freedom Mutual
Fund and Freedom Group of Tax Exempt Funds since 1992.

Compensation from Trust $0
Compensation from the Freedom Complex $0

MICHAEL D. HIRSCH

One Beacon Street
Boston, MA 02108

Age: 52

Executive Vice President and Chief Investment Officer

Executive Vice President and Chief Investment Officer of the FundManager
Division of the Adviser since 1995. Vice Chairman and Managing Director, M.D.
Hirsch Division of Republic Asset Management Corporation from June 1993 to
February 1994. President M.D. Hirsch Investment Management, Inc. from February
1991 to June 1993. Chief Investment Officer, Republic National Bank of New
York prior to February 1991.

Compensation from Trust $0
Compensation from the Freedom Complex $0

CAREY C. CORT

One Beacon Street
Boston, MA 02108

Age: 40

Executive Vice President

Executive Vice President and Director of Marketing of the FundManager
Division. Employed by Freedom Capital Management Corporation since July
1995. Formerly Marketing Director of Key Accounts at John Hancock Funds from

July 1992 to July 1995.

Compensation from Trust $0
Compensation from the Freedom Complex $0

<PAGE>

MARTIN S. ORGEL

One Beacon Street
Boston, MA 02108

Age: 26

Vice President and Assistant Portfolio Manager

Vice President and Assistant Portfolio Manager of the FundManager Division
of the Adviser. Employed by Freedom Capital Management Corporation since
1995. Trading Assistant with Swiss Bank Corporation from June 1994 to

February 1995.

Compensation from the Trust $0
Compensation from the Freedom Complex $0

VICTOR R. SICLARI

Federated Investors Tower
1001 Liberty Avenue

Pittsburgh, PA
Age: 36

Secretary

Senior Corporate Counsel & Vice President, Federated Administrative Services
since 1992, and Associate of the law firm of Morrison & Foerster from 1990 to
1992.

Compensation from Trust $0
Compensation from the Freedom Complex $0

JUDITH J. MACKIN

Federated Investors Tower
1001 Liberty Avenue

Pittsburgh, PA
Age: 37

Treasurer

Vice President and Director of Administration for Mutual Fund Services Group
of Federated Investors, Inc.

Compensation from Trust $0
Compensation from the Freedom Complex $0

EDWARD C. GONZALES

Federated Investors Tower
1001 Liberty Avenue

Pittsburgh, PA
Age: 67

Executive Vice President

Vice Chairman, Federated Investors, Inc.; Vice President, Federated Advisers,
Federated Management, Federated Research, Federated Research Corp., Federated
Global Research Corp., and Passport Research, Ltd.; Executive Vice President and
Director, Federated Securities Corp.; Trustee, Federated Shareholder Services
Company.

Compensation from Trust $0
Compensation from the Freedom Complex $0

*Mr. Danello is also an officer of certain other investment companies for
which the Adviser or an affiliate is the investment adviser. Messrs. Gonzales
and Siclari and Ms. Mackin are also directors, trustees and/or officers of
certain other investment companies for which Federated Investors, Inc. or its
subsidiaries serve as investment adviser, administrator and/or principal
underwriter.

VOTING RIGHTS

Each share of each Portfolio gives the shareholder one vote per share (with
proportional voting for fractional shares) in Trustee elections and other
matters submitted to shareholders for vote. All shares of the Trust have equal
voting rights, except that in matters affecting only a particular Portfolio or
class, only shares of that Portfolio or class are entitled to vote.

Holders of not less than two-thirds of the outstanding shares of the Trust may
remove a person serving as Trustee whether by declaration in writing or at a
meeting called for such purpose. A special meeting of shareholders will be
called by the Trustees upon the written request of shareholders who own at least
10% of the Trust's outstanding shares of all series entitled to vote.

Shares of the underlying funds owned by the Portfolios will be voted in the same
proportion as the vote of all other holders of those shares.

As of November 6, 1998, the following shareholders owned of record,
beneficially, or both, 5% or more of the outstanding Class A Shares of the
Portfolios:

AGGRESSIVE GROWTH PORTFOLIO - Turtle & Co. FC 1202, c/o State Street Bank and
Trust Company, Boston, MA, owned 10.38%; Charles Schwab & Co. Inc., Special
Custody Account for the Exclusive Benefit of Customers, San Francisco, CA, owned
7.23; and Turtle & Co. FC-RR, Boston, MA, owned 7.49%.

GROWTH PORTFOLIO - Turtle & Co. FC1202, c/o State Street Bank & Trust Co.,
Boston, MA, owned 23.33%; and Turtle & Co., FC-RR, Boston, MA, owned 13.34%.

GROWTH WITH INCOME PORTFOLIO - Turtle & Co. FC1202, c/o State Street Bank &
Trust Co., Boston, MA, owned 29.24%; Turtle & Co., FC- RR, Boston, MA, owned
20.88%; and Andrei Dragomer Radiology Inc., Munster, IN, owned 5.32%.

INTERNATIONAL PORTFOLIO - Turtle & Co., FC1202, c/o State Street Bank & Trust
Co., Boston, MA, owned 47.23%; and Turtle & Co., FC-RR, Boston, MA, owned
16.63%.

MANAGED TOTAL RETURN PORTFOLIO - None

Shareholders owning 25% or more of outstanding Shares may be in control and be
able to affect the outcome of certain matters presented for a vote of
shareholders.

BOND PORTFOLIO - Turtle & Co. FC1202, c/o State Street Bank & Trust Co., Boston,
MA, owned 44.19%; and Turtle & Co., FC-RR, Boston, MA, owned 31.41%.

INVESTMENT ADVISER

The Portfolios' investment adviser is Freedom Capital Management which is an
indirect, wholly-owned subsidiary of Freedom Securities Corporation (formerly
known as JHFSC Acquisition corporation). For each Portfolio, the Adviser
conducts investment research, makes investment decisions and places orders for
the purchase and sale of each Portfolio's investments directly with the issuers
or with brokers or dealers selected by it in its discretion. The Adviser also
furnishes to the Trustees, which have overall responsibility for the business
and affairs of the Trust, periodic reports on the investment performance of the
Portfolios. The Adviser is a registered investment advisory firm which maintains
a large securities research department, the efforts of which will be made
available to the Portfolios.

For its services, the Adviser receives from each Portfolio a fee at the annual
rate of 0.50% of the Portfolio's average daily net assets up to $500 million and
0.40% of its average daily net assets in excess of $500 million.

The Adviser shall not be liable to the Trust, the Portfolios, or any Portfolio
shareholder for any losses that may be sustained in the purchase, holding, or
sale of any security or for anything done or omitted by it, except acts or
omissions involving willful misfeasance, bad faith, gross negligence, or
reckless disregard of the duties imposed upon it by its contract with the Trust.

OTHER SERVICES

ADMINISTRATIVE SERVICES

Federated Administrative Services, a subsidiary of Federated Investors, Inc.,
provides administrative personnel and services (including certain legal and
financial reporting services) to the Portfolios for a fee at an annual rate as
specified below:

MAXIMUM AVERAGE AGGREGATE DAILY NET

ADMINISTRATIVE FEE ASSETS OF THE TRUST
.150% on the first $250 million
.125% on the next $250 million
.100% on the next $250 million
.075% on assets in excess of $750 million

The administrative fee received during any fiscal year shall be at least $75,000
per Portfolio and $35,000 per each additional class of shares. Federated
Administrative Services may choose voluntarily to reimburse a portion of its fee
at any time.

TRANSFER AGENT AND DIVIDEND DISBURSING AGENT
AND SHAREHOLDER SERVICING AGENT

Federated Services Company, Pittsburgh, Pennsylvania, through its registered
transfer agent, Federated Shareholder Services Company, maintains all necessary
shareholder records. The Portfolios pay the transfer agent a fee based on the
size, type, and number of accounts and transactions made by shareholders.

CUSTODIAN

State Street Bank and Trust Company, Boston, Massachusetts, is custodian for the
securities and cash of the Portfolios. Foreign instruments purchased by the
Portfolios are held by foreign banks participating in a network coordinated by
State Street Bank.

INDEPENDENT AUDITORS

Ernst & Young LLP is the independent auditor for the Portfolios.

BROKERAGE TRANSACTIONS

The Adviser places orders for the purchase and sale of portfolio investments for
a Portfolio's accounts with brokers or dealers, selected by it in its
discretion, including Freedom Distributors and Edgewood. With respect to
purchases of certain money market instruments, purchase orders are placed
directly with the issuer or its agent. With respect to purchases of shares of
underlying funds, the Portfolio may pay a sales charge. Sales charges of the
underlying funds generally consist of two parts, the "dealer reallowance" (which
typically comprises at least 80% of the amount of the charge and is paid to the
broker participating in the sale of the underlying fund shares) and the
underwriter's retention. To the extent permissible by law, Freedom Distributors
and Edgewood will be designated as the participating brokers entitled to receive
the dealer reallowance portion of the sales charge on purchases of load fund
shares by the Portfolios. However, Freedom Distributors will not retain any
dealer reallowance in excess of 1% of the public offering price on any
transaction nor will it be designated as the broker entitled to receive the
dealer reallowance portion of the sales charge where such reallowance would
exceed 1% of the public offering price. With respect to purchases of underlying
fund shares, the Adviser directs substantially all of the Portfolios' orders to
either Freedom Distributors or Edgewood, which may, in its discretion, direct
the order to other broker-dealers in consideration of sales of that Portfolio's
Shares, except where the direction to another broker-dealer would increase the
dealer reallowance paid by a fund to Freedom Distributors above 1% of the public
offering price.

Freedom Distributors and Edgewood may also assist in the execution of a
Portfolio's purchase of underlying fund shares and they may receive additional
compensation (such as distribution payments, shareholder servicing fees, and/or
trailer fees) from the underlying funds or their underwriters. In providing
execution assistance, Freedom Distributors and Edgewood receive orders from the
Adviser; place them with the underlying fund's distributor, transfer agent or
other person, as appropriate; confirm the trade, price and number of Shares
purchased; and assure prompt payment by the Portfolio and proper completion of
the order. Payment of sales charges or other forms of compensation to Freedom
Distributors or Edgewood is not a factor that the Adviser considers when
selecting an underlying fund for purchase.

Freedom Distributors and Edgewood may receive dealer reallowances (up to a
maximum of 1% of the public offering price with respect to Freedom Distributors)
and/or distribution payments, shareholder servicing fees or "trailer fees" from
the underlying mutual funds purchased by the Portfolios. Freedom Distributors
has received $0 of brokerage commissions on underlying funds purchased during
the fiscal year ended September 30, 1998.

DISTRIBUTION PLAN

The Trustees of the Trust have approved a Distribution Contract between the
Trust and each of Edgewood Services, Inc., Freedom Distributors Corporation,
Tucker Anthony, Incorporated and Sutro & Co., Inc. (the "Distributors"),
pursuant to which such Distributors provide shareholder servicing services
and/or distribute the of shares of each of the Portfolios.

Under a Distribution Plan (the "Plan") adopted by the Portfolios, each Portfolio
may reimburse the distributors monthly (who may then pay investment
professionals such as banks, broker/dealers, trust departments of banks, and
registered investment advisers) for marketing activities (such as advertising,
printing and distributing prospectuses, and providing incentives to investment
professionals) to promote sales of shares of the Portfolios.

The Plan also permits the Distributors to receive and retain brokerage
commissions with respect to portfolio transactions for mutual funds in the
Portfolios' portfolios, including funds which have a policy of considering sales
of their shares in selecting broker-dealers for the execution of their portfolio
transactions.

SHAREHOLDER SERVICES

The Portfolios may pay the Distributors for providing shareholder services and
maintaining shareholder accounts. The Distributors may select others to perform
these services and may pay them fees.

FEES PAID BY THE PORTFOLIOS FOR SERVICES

FOR THE FISCAL YEAR ENDED SEPTEMBER 30, 1998 (CLASS A SHARES ONLY)

- ------------------------ ----------- --------------- ------------------
FUND NAME ADVISORY ADMINISTRATIVE 12B-1
FEE FEE/ FEE FEE/SHAREHOLDER

WAIVED SERVICING FEE

- ------------------------ ----------- --------------- ------------------
- ------------------------ ----------- --------------- ------------------
AGGRESSIVE GROWTH $179,155 $95,063/$879 $170,157
PORTFOLIO

- ------------------------ ----------- --------------- ------------------
- ------------------------ ----------- --------------- ------------------
GROWTH PORTFOLIO $189,945 $94,943/$809 $183,409

- ------------------------ ----------- --------------- ------------------
- ------------------------ ----------- --------------- ------------------
GROWTH WITH INCOME $209,030 $95,799/$883 $204,497
PORTFOLIO

- ------------------------ ----------- --------------- ------------------
- ------------------------ ----------- --------------- ------------------
BOND PORTFOLIO $283,059 $103,110/$1381 $275,559

- ------------------------ ----------- --------------- ------------------
- ------------------------ ----------- --------------- ------------------
MANAGED TOTAL RETURN $54,131 $67,963/$260 $54,124
PORTFOLIO

- ------------------------ ----------- --------------- ------------------
- ------------------------ ----------- --------------- ------------------
INTERNATIONAL PORTFOLIO $17,802 $24,041/$0 $17,798

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

FOR THE FISCAL YEAR ENDED SEPTEMBER 30, 1997

- ------------------------ ----------- --------------- ------------------
FUND NAME ADVISORY ADMINISTRATIVE 12B-1
FEE FEE/ FEE FEE/SHAREHOLDER

WAIVED1 SERVICING FEE

- ------------------------ ----------- --------------- ------------------
- ------------------------ ----------- --------------- ------------------
GROWTH PORTFOLIO $154,313 $47,373/$8,360 $126,586

- ------------------------ ----------- --------------- ------------------
- ------------------------ ----------- --------------- ------------------
BOND PORTFOLIO $340,908 $105,098/$19,270$300,136

- ------------------------ ----------- --------------- ------------------
- ------------------------ ----------- --------------- ------------------
INTERNATIONAL N/A N/A N/A

PORTFOLIO2

- ------------------------ ----------- --------------- ------------------
N/A - Not Applicable

1. Represents fees paid from October 1, 1996 through November 11, 1996 to
Signature Broker-Dealer Services, Inc., the former Administrator, and fees paid
from November 12, 1996 through September 30, 1997 to Federated Administrative
Services. 2. The International Portfolio commenced business on June 6, 1998.

FOR THE FISCAL YEAR ENDED SEPTEMBER 30, 1996

- ------------------------ ----------- --------------- ------------------
FUND NAME ADVISORY ADMINISTRATIVE 12B-1
FEE FEE/ FEE FEE/SHAREHOLDER

WAIVED 1 SERVICING FEE

- ------------------------ ----------- --------------- ------------------
- ------------------------ ----------- --------------- ------------------
AGGRESSIVE GROWTH $183,337 $91,669/$22,675 N/A

PORTFOLIO

- ------------------------ ----------- --------------- ------------------
- ------------------------ ----------- --------------- ------------------
GROWTH PORTFOLIO $132,472 $66,236/$14,995 N/A

- ------------------------ ----------- --------------- ------------------
- ------------------------ ----------- --------------- ------------------
GROWTH WITH INCOME $167,996 $83,998/$19,270 N/A

PORTFOLIO

- ------------------------ ----------- --------------- ------------------
- ------------------------ ----------- --------------- ------------------
BOND PORTFOLIO $367,138 $171,868/$37,200N/A

- ------------------------ ----------- --------------- ------------------
- ------------------------ ----------- --------------- ------------------
MANAGED TOTAL RETURN $67,171 $33,586/$7,522 N/A

PORTFOLIO

- ------------------------ ----------- --------------- ------------------
- ------------------------ ----------- --------------- ------------------
INTERNATIONAL N/A N/A N/A

PORTFOLIO 2

- ------------------------ ----------- --------------- ------------------
N/A - Not Applicable

1. Fees paid to Signature Broker-Dealer Services, Inc., the former
Administrator. 2. The International Portfolio commenced business on June 6,
1998.

DETERMINING MARKET VALUE OF SECURITIES

Market values of the Portfolios' securities are determined as follows:

o for equity securities, according to the last sale price in the market in which
they are primarily traded (either a national securities exchange or the
over-the-counter market), if available;

o in the absence of recorded sales for equity securities, according to the
mean between the last closing bid and asked prices;

o for bonds and other fixed income securities, at the last sale price on a
national securities exchange, if available, otherwise, as determined by an
independent pricing service;

o for short-term obligations, according to the mean between bid and asked prices
as furnished by an independent pricing service, except that short-term
obligations with remaining maturities of less than 60 days at the time of
purchase may be valued at amortized cost or at fair market value as determined
in good faith by the Board; and

o for all other securities, at fair value as determined in good faith by the
Board.

Prices provided by independent pricing services may be determined without
relying exclusively on quoted prices and may consider: institutional trading in
similar groups of securities, yield, quality, stability, risk, coupon rate,
maturity, type of issue, trading characteristics, and other market data or
factors. From time to time, when prices cannot be obtained from an independent
pricing service, securities may be valued based on quotes from broker-dealers or
other financial institutions that trade the securities.

The Portfolios value futures contracts and options at their market values
established by the exchanges on which they are traded at the close of trading on
such exchanges. Options traded in the over-the-counter market are valued
according to the mean between the last bid and the last asked price for the
option as provided by an investment dealer or other financial institution that
deals in the option. The Board may determine in good faith that another method
of valuing such investments is necessary to appraise their fair market value.

TRADING IN FOREIGN SECURITIES. Trading in foreign securities may be completed at
times which vary from the closing of the New York Stock Exchange (NYSE). In
computing its NAV, the Portfolios value foreign securities at the latest closing
price on the exchange on which they are traded immediately prior to the closing
of the NYSE. Certain foreign currency exchange rates may also be determined at
the latest rate prior to the closing of the NYSE. Foreign securities quoted in
foreign currencies are translated into U.S. dollars at current rates.
Occasionally, events that affect these values and exchange rates may occur
between the times at which they are determined and the closing of the NYSE. If
such events materially affect the value of portfolio securities, these
securities may be valued at their fair value as determined in good faith by the
Portfolios' Board, although the actual calculation may be done by others.

WHAT DO SHARES COST?

The Portfolios' net asset value (NAV) per share fluctuates and is based on the
market value of all securities and other assets of the Portfolios. The NAV per
share is calculated by dividing the aggregate value of a Portfolio's assets
allocable to the class less all liabilities by the number of that Class'
outstanding shares. The NAV for each class of shares may differ due to the
variance in daily net income realized by each class. Such variance will reflect
only accrued net income to which the shareholders of a particular class are
entitled.

When the Portfolios' distributors receive sales charges and marketing fees, they
may pay some or all of them to Authorized Dealers. The distributors and their
affiliates may pay out of their own assets amounts (including items of material
value) to Authorized Dealers or other service providers for marketing and /or
servicing shareholders.

REDUCING OR ELIMINATING THE FRONT-END SALES CHARGE. You can reduce or eliminate
the applicable front-end sales charge for Class A Shares, as follows.

QUANTITY DISCOUNTS. Larger purchases of the same share class reduce the sales
charge you pay. You can combine purchases of shares made on the same day by you,
your spouse, and your children under age 21. In addition, purchases made at one
time by a trustee or fiduciary for a single trust estate or a single fiduciary
account can be combined.

ACCUMULATED PURCHASES. If you make an additional purchase of shares, you can
count previous share purchases still invested in the Portfolio in calculating
the applicable sales charge on the additional purchase.

CONCURRENT PURCHASES. You can combine concurrent purchases of the
corresponding share class of two or more Portfolios in calculating the

applicable sales charge.

LETTER OF INTENT. You can sign a letter of intent committing to purchase a
certain amount of the same or corresponding class of shares within a 13 month
period in order to combine such purchases in calculating the applicable sales
charge. The Portfolios' custodian will hold shares in escrow equal to the
maximum applicable sales charge. If you complete your commitment, the escrowed
shares will be released to your account. If you do not complete your commitment
within 13 months, the custodian will redeem an appropriate number of escrowed
shares to pay for the applicable sales charge.

REINVESTMENT PRIVILEGE. You may reinvest, within 120 days, your share redemption
proceeds at the next determined NAV, without any sales charge. This sales charge
elimination is offered because a sales charge was previously assessed.

REDUCING OR ELIMINATING THE CONTINGENT DEFERRED SALES CHARGE - CLASS B SHARES

These reductions or eliminations are offered because no sales commissions have
been advanced to the selling financial intermediary, the shareholder has already
paid a Contingent Deferred Sales Charge (CDSC), or nominal sales efforts are
associated with the original purchase of shares.

Upon notification to the Distributor or the Portfolios' transfer agent, no CDSC
will be imposed on redemptions: o following the death or complete disability, as
defined in Section 72(m)(7)

of the Internal Revenue Code of 1986, of the last surviving shareholder; o
representing minimum required distributions from an Individual Retirement

Account or other retirement plan to a shareholder who has attained the age
of 70-1/2;

o which are involuntary redemptions of shareholder accounts that do not comply
with the minimum balance requirements;

o which are qualifying redemptions of Class B Shares under a Systematic
Withdrawal Program (as described below); of Shares that represent a
reinvestment within 120 days of a previous redemption that was assessed a
CDSC; of Shares held by the Trustees, employees, and sales representatives of
a Portfolio, the Adviser, the Distributor and their affiliates; employees of
any financial intermediary that sells Class B Shares pursuant to a sales
agreement with the Distributor; and the immediate family members of the
foregoing persons; and of shares originally purchased through a bank trust
department, a registered investment adviser or retirement plans where the
third party administrator has entered into certain arrangements with the
Distributor or its affiliates, or any other financial intermediary, to the
extent that no payments were advanced for purchases made through such
entities.

HOW TO REDEEM SHARES

REDEMPTION IN KIND

Although the Portfolios intend to pay share redemptions in cash, they reserve
the right, as described below, to pay the redemption price in whole or in part
by a distribution of a Portfolio's securities.

Any share redemption payment greater than this amount will also be in cash
unless the Portfolios' Board determines that payment should be in kind. In such
a case, a Portfolio will pay all or a portion of the remainder of the redemption
in portfolio securities, valued in the same way as a Portfolio determines its
NAV. The portfolio securities will be selected in a manner that the Portfolios'
Board deems fair and equitable and, to the extent available, such securities
will be readily marketable.

Redemption in kind is not as liquid as a cash redemption. If redemption is made
in kind, shareholders receiving the portfolio securities and selling them before
their maturity could receive less than the redemption value of the securities
and could incur certain transaction costs.

TAX INFORMATION

FEDERAL INCOME TAX

The Portfolios will pay no federal income tax because they expect to meet
requirements of Subchapter M of the Internal Revenue Code (Code) applicable to
regulated investment companies and to receive the special tax treatment afforded
such companies.

A Portfolio will be treated as a single, separate entity for federal income tax
purposes so that income earned and capital gains and losses realized by each
Portfolios will be separate .

FOREIGN INVESTMENTS

If a Portfolio purchases foreign securities, its investment income may be
subject to foreign withholding or other taxes that could reduce the return on
these securities. Tax treaties between the United States and foreign countries,
however, may reduce or eliminate the amount of foreign taxes to which a
Portfolio would be subject. The effective rate of foreign tax cannot be
predicted since the amount of Portfolio assets to be invested within various
countries is uncertain. However, a Portfolio intends to operate so as to qualify
for treaty-reduced tax rates when applicable.

Distributions from a Portfolio may be based on estimates of book income for the
year. Book income generally consists solely of the coupon income generated by a
Portfolio, whereas tax basis income includes gains or losses attributable to
currency fluctuation. Due to differences in the book and tax treatment of fixed
income securities denominated in foreign currencies, it is difficult to project
currency effects on an interim basis. Therefore, to the extent that currency
fluctuations cannot be anticipated, a portion of distributions to shareholders
could later be designated as a return of capital, rather than income, for income
tax purposes, which may be of particular concern to simple trusts.

If a Portfolio invests in the stock of certain foreign corporations, they may
constitute Passive Foreign Investment Companies (PFIC), and the Portfolio may be
subject to Federal income taxes upon disposition of PFIC investments.

If more than 50% of the value of a Portfolio's assets at the end of the tax year
is represented by stock or securities of foreign corporations, the Portfolio
intends to qualify for certain Code stipulations that would allow shareholders
to claim a foreign tax credit or deduction on their U.S. income tax returns. The
Code may limit a shareholder's ability to claim a foreign tax credit.
Shareholders who elect to deduct their portion of a Portfolio's foreign taxes
rather than take the foreign tax credit must itemize deductions on their income
tax returns.

The underlying funds' transactions in foreign currencies and hedging activities
may give rise to ordinary income or loss to the extent such income or loss
results from fluctuations in value of the foreign currency concerned. In
addition, such activities will likely produce a difference between book income
and taxable income. This difference may cause a portion of the underlying funds'
income distributions to constitute a return of capital for tax purposes or
require the underlying fund to make distributions exceeding book income to
qualify as a regulated investment company for tax purposes.

HOW DO THE PORTFOLIOS MEASURE PERFORMANCE?

The Portfolios may advertise share performance by using the Securities and
Exchange Commission's (SEC) standard method for calculating performance
applicable to all mutual funds. The SEC also permits this standard performance
information to be accompanied by non-standard performance information.

Unless otherwise stated, any quoted share performance reflects the effect of
non-recurring charges, such as maximum sales charges, which, if excluded, would
increase the total return and yield. The performance of shares depends upon such
variables as: portfolio quality; average portfolio maturity; type and value of
portfolio securities; changes in interest rates; changes or differences in a
Portfolio's or any class of shares' expenses; and various other factors.

Share performance fluctuates on a daily basis largely because net earnings and
offering price per share fluctuate daily. Both net earnings and offering price
per share are factors in the computation of yield and total return.

TOTAL RETURN

Total return represents the change (expressed as a percentage) in the value of
shares over a specific period of time, and includes the investment of income and
capital gains distributions.

The average annual total return for shares is the average compounded rate of
return for a given period that would equate a $1,000 initial investment to the
ending redeemable value of that investment. The ending redeemable value is
computed by multiplying the number of shares owned at the end of the period by
the NAV per share at the end of the period. The number of shares owned at the
end of the period is based on the number of shares purchased at the beginning of
the period with $1,000, less any applicable sales charge, adjusted over the
period by any additional shares, assuming the annual reinvestment of all
dividends and distributions.

FOR THE FISCAL YEAR ENDED SEPTEMBER 30, 1998 (CLASS A SHARES ONLY)

- ------------------------ -------------- ---------------- -----------------
FUND NAME 1 YEAR TOTAL 5-YEAR TOTAL 10-YEAR TOTAL
RETURN RETURN RETURN (AVERAGE

(AVERAGE ANNUAL)**
ANNUAL)

- ------------------------ -------------- ---------------- -----------------
- ------------------------ -------------- ---------------- -----------------
AGGRESSIVE GROWTH -13.03% 13.85% 13.38%
PORTFOLIO

- ------------------------ -------------- ---------------- -----------------
- ------------------------ -------------- ---------------- -----------------
GROWTH PORTFOLIO -2.21% 16.90% 14.57%

- ------------------------ -------------- ---------------- -----------------
- ------------------------ -------------- ---------------- -----------------
GROWTH WITH INCOME -1.61% 16.66% 14.27%
PORTFOLIO

- ------------------------ -------------- ---------------- -----------------
- ------------------------ -------------- ---------------- -----------------
BOND PORTFOLIO 8.69% 6.22% 7.35%

- ------------------------ -------------- ---------------- -----------------
- ------------------------ -------------- ---------------- -----------------
MANAGED TOTAL RETURN 1.67% 9.56% 9.49% (Since
PORTFOLIO Inception)
- ------------------------ -------------- ---------------- -----------------
- ------------------------ -------------- ---------------- -----------------
INTERNATIONAL PORTFOLIO -17.30* N/A N/A

- ------------------------ -------------- ---------------- -----------------
* Not annualized

** Does not reflect the sales charge.

<PAGE>

FOR THE FISCAL YEAR ENDED SEPTEMBER 30, 1997 (CLASS A SHARES ONLY)

- ------------------------ -------------- ---------------- -----------------
FUND NAME 1 YEAR TOTAL 5-YEAR TOTAL 10-YEAR TOTAL
RETURN RETURN RETURN (AVERAGE

(AVERAGE ANNUAL)
ANNUAL)

- ------------------------ -------------- ---------------- -----------------
- ------------------------ -------------- ---------------- -----------------
GROWTH PORTFOLIO 36.92% 18.20% 12.24%

- ------------------------ -------------- ---------------- -----------------
- ------------------------ -------------- ---------------- -----------------
BOND PORTFOLIO 8.45% 5.75% 7.24%

- ------------------------ -------------- ---------------- -----------------
- ------------------------ -------------- ---------------- -----------------
INTERNATIONAL N/A N/A N/A

PORTFOLIO1

- ------------------------ -------------- ---------------- -----------------
1. The International Portfolio commenced business on June 6, 1998.

YIELD

The yield of shares is calculated by dividing: (i) the net investment income per
share earned by the shares over a thirty-day period; by (ii) the maximum
offering price per share on the last day of the period. This number is then
annualized using semi-annual compounding. This means that the amount of income
generated during the thirty-day period is assumed to be generated each month
over a 12-month period and is reinvested every six months. The yield does not
necessarily reflect income actually earned by shares because of certain
adjustments required by the SEC and, therefore, may not correlate to the
dividends or other distributions paid to shareholders.

To the extent investment professional and broker/dealers charge fees in
connection with services provided in conjunction with an investment in shares,
the share performance is lower for shareholders paying those fees.

PERFORMANCE COMPARISONS

Advertising and sales literature may include:

o references to ratings, rankings, and financial publications and/or
performance comparisons of shares to certain indices;

o charts, graphs and illustrations using a Portfolio's returns, or returns in
general, that demonstrate investment concepts such as tax-deferred
compounding, dollar-cost averaging and systematic investment;

o discussions of economic, financial and political developments and their impact
on the securities market, including the portfolio manager's views on how such
developments could impact the Portfolios; and

o information about the mutual fund industry from sources such as the Investment
Company Institute.

A Portfolio may compare its performance, or performance for the types of
securities in which it invests, to a variety of other investments, including
federally insured bank products such as bank savings accounts, certificates of
deposit, and Treasury bills.

A Portfolio may quote information from reliable sources regarding individual
countries and regions, world stock exchanges, and economic and demographic
statistics.

You may use financial publications and/or indices to obtain a more complete view
of share performance. When comparing performance, you should consider all
relevant factors such as the composition of the index used, prevailing market
conditions, portfolio compositions of other funds, and methods used to value
portfolio securities and compute offering price. The financial publications
and/or indices which the Portfolios use in advertising may include:

BARRON'S, a Dow Jones and Company, Inc. business and financial weekly that
periodically reviews mutual fund performance data.

BOTTOM LINE, a bi-weekly newsletter which periodically reviews mutual funds and
interviews their portfolio managers.

BUSINESS WEEK, a national business weekly that periodically reports the
performance rankings and ratings of a variety of mutual funds investing abroad.

CHANGING TIMES, THE KIPLINGER MAGAZINE, a monthly investment advisory
publication that periodically features the performance of a variety of
securities.

CNBC, a cable financial news television station which periodically reviews
mutual funds and interviews portfolio managers.

CONSUMER DIGEST, a monthly business/financial magazine that includes a "money
watch" section featuring financial news.

FORBES, a national business publication that from time to time reports the
performance of specific investment companies in the mutual fund industry.

FORTUNE, a national business publication that periodically rates the performance
of a variety of mutual funds.

Lipper Analytical Services, Inc.'s MUTUAL FUND PERFORMANCE ANALYSIS, a weekly
publication of industry-wide mutual fund averages by type of fund.

MONEY, a monthly magazine that from time to time features both specific funds
and the mutual fund industry as a whole. Morningstar, Inc., a publisher of
financial information and mutual fund research. Mutual Funds Magazine, a
magazine for the mutual fund investor which frequently reviews and ranks mutual
funds and interviews their portfolio managers. New York Times, a nationally
distributed newspaper which regularly covers financial news.

PERSONAL INVESTING NEWS, a monthly news publication that often reports on
investment opportunities and market conditions.

PERSONAL INVESTOR, a monthly investment advisory publication that includes a
"mutual funds outlook" section reporting on mutual fund performance measures,
yields, indices and portfolio holdings.

SUCCESS, a monthly magazine targeted to the world of entrepreneurs and growing
business, often featuring mutual fund performance data.

U.S. NEWS AND WORLD REPORT, a national business weekly that periodically
reports mutual fund performance data.

VALUE LINE, a bi-weekly publication that reports on the largest 15,000 mutual
funds.

WALL STREET JOURNAL, A DOW JONES AND COMPANY, INC. newspaper which regularly
covers financial news.

WEISENBERGER INVESTMENT COMPANIES SERVICES, an annual compendium of information
about mutual funds and other investment companies, including comparative data on
funds' backgrounds, management policies, salient features, management results,
income and dividend records, and price ranges.

WORTH MAGAZINE, a monthly magazine for the individual investor which frequently
reviews and ranks mutual funds and interviews their portfolio managers.

FINANCIAL INFORMATION

The Financial Statements for the Portfolios for the fiscal year ended September
30, 1998 are incorporated herein by reference to the Annual Report to
Shareholders of FundManager Portfolios dated September 30, 1998.

<PAGE>

INVESTMENT RATINGS

STANDARD AND POOR'S LONG-TERM DEBT RATING DEFINITIONS AAA--Debt rated AAA has
the highest rating assigned by Standard & Poor's. Capacity to pay interest and
repay principal is extremely strong.

AA--Debt rated AA has a very strong capacity to pay interest and repay principal
and differs from the higher rated issues only in small degree.

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

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

BB--Debt rated BB has less near-term, vulnerability to default than other
speculative issues. However, it faces major ongoing uncertainties or exposure to
adverse business, financial, or economic conditions which could lead to
inadequate capacity to meet timely interest and principal payments. The BB
rating category is also used for debt subordinated to senior debt that is
assigned an actual or implied BBB-rating.

B--Debt rated B has a greater vulnerability to default but currently has the
capacity to meet interest payments and principal repayments. Adverse business,
financial, or economic conditions will likely impair capacity or willingness to
pay interest and repay principal. The B rating category is also used for debt
subordinated to senior debt that is assigned an actual or implied BB or BB-
rating.

CCC--Debt rated CCC has a currently identifiable vulnerability to default, and
is dependent upon favorable business, financial, and economic conditions to meet
timely payment of interest and repayment of principal. In the event of adverse
business, financial, or economic conditions, it is not likely to have the
capacity to pay interest and repay principal. The CCC rating category is also
used for debt subordinated to senior debt that is assigned an actual or implied
B or B-rating.

CC--The rating CC typically is applied to debt subordinated to senior debt that
is assigned an actual or implied CCC debt rating.

C--The rating C typically is applied to debt subordinated to senior debt which
is assigned an actual or implied CCC-debt rating. The C rating may be used to
cover a situation where a bankruptcy petition has been filed, but debt service
payments are continued.

MOODY'S INVESTORS SERVICE, INC. LONG-TERM BOND RATING DEFINITIONS AAA--Bonds
which are rated AAA are judged to be of the best quality. They carry the
smallest degree of investment risk and are generally referred to as gilt edged.
Interest payments are protected by a large or by an exceptionally stable margin
and principal is secure. While the various protective elements are likely to
change, such changes as can be visualized are most unlikely to impair the
fundamentally strong position of such issues.

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

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

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

BA--Bonds which are BA are judged to have speculative elements; their future
cannot be considered as well assured. Often the protection of interest and
principal payments may be very moderate and thereby not well safeguarded during
both good and bad times over the future. Uncertainty of position characterizes
bonds in this class.

B--Bonds which are rated B generally lack characteristics of the desirable
investment. Assurance of interest and principal payments or of maintenance of
other terms of the contract over any long period of time may be small.

CAA--Bonds which are rated CAA are of poor standing. Such issues may be in
default or there may be present elements of danger with respect to principal or
interest.

CA--Bonds which are rated CA represent obligations which are speculative in a
high degree. Such issues are often in default or have other marked shortcomings.

C--Bonds which are rated C are the lowest rated class of bonds, and issues so
rated can be regarded as having extremely poor prospects of ever attaining any
real investment standing.

FITCH IBCA, INC. LONG-TERM DEBT RATING DEFINITIONS AAA--Bonds considered to be
investment grade and of the highest credit quality. The obligor has an
exceptionally strong ability to pay interest and repay principal, which is
unlikely to be affected by reasonably foreseeable events.

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

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

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

BB--Bonds are considered speculative. The obligor's ability to pay interest and
repay principal may be affected over time by adverse economic changes. However,
business and financial alternatives can be identified which could assist the
obligor in satisfying its debt service requirements.

B--Bonds are considered highly speculative. While bonds in this class are
currently meeting debt service requirements, the probability of continued timely
payment of principal and interest reflects the obligor's limited margin of
safety and the need for reasonable business and economic activity throughout the
life of the issue.

CCC--Bonds have certain identifiable characteristics which, if not remedied, may
lead to default. The ability to meet obligations requires an advantageous
business and economic environment.

CC--Bonds are minimally protected. Default in payment of interest and/or
principal seems probable over time.

C--Bonds are imminent default in payment of interest or principal.

MOODY'S INVESTORS SERVICE, INC. COMMERCIAL PAPER RATINGS PRIME-1--Issuers rated
Prime-1 (or related supporting institutions) have a superior capacity for
repayment of short-term promissory obligations. Prime-1 repayment capacity will
normally be evidenced by the following characteristics:

o Leading market positions in well established industries.

o High rates of return on funds employed.

o Conservative capitalization structure with moderate reliance on debt and ample
asset protection.

o Broad margins in earning coverage of fixed financial charges and high internal
cash generation.

o Well established access to a range of financial markets and assured sources of
alternate liquidity.

PRIME-2--Issuers rated Prime-1 (or related supporting institutions) have a
strong capacity for repayment of short-term promissory obligations. This will
normally be evidenced by many of the characteristics cited above but to a lesser
degree. Earnings trends and coverage ratios, while sound, will be more subject
to variation. Capitalization characteristics, while still appropriate, may be
more affected by external conditions. Ample alternate liquidity is maintained.

STANDARD AND POOR'S COMMERCIAL PAPER RATINGS

A-1--This designation indicates that the degree of safety regarding timely
payment is strong. Those issues determined to possess extremely strong safety
characteristics are denoted with a plus sign (+) designation.

A-2--Capacity for timely payment on issues with this designation is
satisfactory. However, the relative degree of safety is not as high as for
issues designated A-1.

FITCH IBCA, INC. COMMERCIAL PAPER RATING DEFINITIONS

FITCH-1--(Highest Grade) Commercial paper assigned this rating is regarded as
having the strongest degree of assurance for timely payment.

FITCH-2--(Very Good Grade) Issues assigned this rating reflect an assurance of
timely payment only slightly less in degree than the strongest issues.

<PAGE>

ADDRESSES

FUNDMANAGER PORTFOLIOS

Aggressive Growth Portfolio 5800 Corporate Drive
Growth Portfolio Pittsburgh, PA 15237-7010
Growth with Income Portfolio
Bond Portfolio
Managed Total Return Portfolio
International Portfolio

DISTRIBUTORS

Tucker Anthony, Incorporated 200 World Financial Center
New York, NY 10281

Sutro & Co., Inc. 201 California Street
San Francisco, CA 94111

Freedom Distributors Corporation One Beacon Street

Boston, MA 02108

Edgewood Services, Inc. Clearing Operations
P.O. Box 897
Pittsburgh, PA 15230-0897

INVESTMENT ADVISER

Freedom Capital Management Corporation One Beacon Street
Boston, MA 02108

CUSTODIAN

State Street Bank and Trust Company P.O. Box 8600
Boston, MA 02266-8600

TRANSFER AGENT AND DIVIDEND DISBURSING AGENT
Federated Shareholder Services Company P.O. Box 8600
Boston, MA 02266-8600

INDEPENDENT AUDITORS

Ernst & Young LLP 200 Clarendon Street
Boston, MA 02116

PART C OTHER INFORMATION

ITEM 23. EXHIBITS

(a) (i) Conformed copy of the Master Trust Agreement of the
Registrant; (4)
(ii) Conformed copy of the Amendment No. 1 to Master Trust
Agreement; (4)
(iii) Conformed copy of the Amendment No. 2 to Master Trust
Agreement; (11)

(iv) Conformed copy of the Amendment No. 3 to Master Trust
Agreement; (11)

(b) Copy of By-Laws of the Registrant; (4)
(c) Not Applicable

(d) (i) Conformed copy of the new Master Investment Advisory

Contract and Investment Advisory Contract Supplement for Aggressive Growth
Portfolio, Growth Portfolio, Growth with Income Portfolio, Bond Portfolio,
Managed Total Return Portfolio; (11)

(ii) Conformed copy of the Investment Advisory Contract
Supplement for the International Portfolio; (15)
(iii) Conformed copy of Master Investment Advisory Contract

dated 5/20/98 between FundManager Portfolios and
Freedom Capital Management Corporation; (16)

(e) (i) Conformed copy of the Distributors Contract between
Edgewood Services Company and FundManager

Portfolios; (11)

(ii) Conformed copy of the Master Distributors Contract between
Tucker Anthony Incorporated and FundManager Portfolios; (11)

(iii) Conformed copy of the Master Distributors Contract between
Sutro & Co. Incorporated and FundManager Portfolios; (11)

(iv) Conformed copy of the Master Distributors Contract
between Freedom Distributors Corporation and

FundManager Portfolios; (11)

(v) Form of Mutual Funds Sales and Service Agreement; (14) (vi)
Conformed copy of Exhibit B to the Distributor's

Contract between FundManager Portfolios and Edgewood

Services, Inc. with respect to the Financial Adviser
Class and the No-Load Class of the International

Portfolio; (15)

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

+ All exhibits have been filed electronically.

(4) Incorporated by reference to Post-Effective Amendment No.2 to the
Registrant's Registration Statement as filed with the Commission on January
30, 1996. (File Nos. 33-89754 and 811-8992)

(11) Incorporated by reference to Post-Effective Amendment No.4 to the
Registrant's Registration Statement as filed with the Commission on January
23, 1997. (File Nos. 33-89754 and 811-8992)

(14) Incorporated by reference to Post-Effective Amendment No. 10 to the
Registrant's Registration Statement as filed with the Commission on
December 29, 1997. (File Nos. 33-89754 and 811-8992)

(15) Incorporated by reference to Post-Effective Amendment No.11 to the
Registrant's Registration Statement as filed with the Commission on January
28, 1998. (File Nos. 33-89754 and 811-8992)

(16) Incorporated by reference to Post-Effective Amendment No.12 to the
Registrant's Registration Statement as filed with the Commission on October
1, 1998. (File Nos. 33-89754 and 811-8992)

<PAGE>

(vii) Conformed copy of the Distribution Contract Supplement between
FundManager Portfolios and Freedom Distributors with respect
to the International Portfolio; (15)

(f) Not Applicable

(viii) Conformed copy of Master Distribution Contract dated
5/20/98 between FundManager Portfolios and Freedom Distributors Corporation;
(16)

(viv) Conformed copy of Master Distribution Contract dated
5/20/98 between FundManager Portfolios and Tucker Anthony
Incorporated; (16)

(x) Conformed copy of Master Distribution Contract dated
5/20/98 between FundManager Portfolios and Sutro & Co. Incorporated;

(16)

(g) Conformed copy of Custodian Agreement between FundManager Portfolios
and Investors Bank & Trust Company; (11)

(i) Domestic Custody and Accounting Fee Schedule; (12)
(ii) Conformed copy of Custodian Contract between

FundManager Portfolios and State Street Bank and
Trust Company; (13)

(iii) Conformed copy of Amendment No. 1 to Custodian
Contract; (16)

(h) (i) Conformed copy of the Administrative Services
Agreement between FundManager Portfolios and Federated

Administrative Services; (11)

(ii) Conformed copy of the Transfer Agency and Service Agreement
between FundManager Portfolios and Investors Bank & Trust Company; (11)

(iii) Conformed copy of Agreement for Transfer Agency
Services between FundManager Portfolios and Federated
Shareholder Services Company; (13)

(iv) Conformed copy of Amendment #1 to Schedule A to Administrative
Services Agreement between FundManager Portfolios and
Federated Administrative Services; (15)

(i) Opinion and Consent of counsel; (2) (j) Conformed copy of Consent of
Independent Auditors; + (k) Not Applicable (l) Not Applicable (m) (i)
Amended and Restated Master Distribution Plan and

Supplements for the Financial Adviser Class of
shares; (3)

(ii) Amended and Restated Master Distribution Plan and
Supplements for the Financial Adviser Class of
shares; (13)

(iii) Conformed copy of the Amended and Restated

Distribution Plan Supplement for the Financial
Adviser Class of International Portfolio; (15)

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

+ All exhibits have been filed electronically.

Registrant's Registration Statement as filed with the Commission
on October 21, 1997. (File Nos. 33-89754 and 811-8992)

(13) Incorporated by reference to Post-Effective Amendment No.8 to the
Registrant's Registration Statement as filed with the Commission on
November 26, 1997. (File Nos. 33-89754 and 811-8992)
(15) Incorporated by reference to Post-Effective Amendment No.11 to the
Registrant's Registration Statement as filed with the Commission on
January 28, 1998. (File Nos. 33-89754 and 811-8992)

<PAGE>

(n) Copy of Financial Data Schedules; (15)
(o) (i) Multiple Class Expense Allocation Plan; (3)

(ii) Amended Multiple Class Expense Allocation Plan; (13)
(iii) Addendum #1 to the Multiple Class Expense

Allocation Plan; (15)

(p) Conformed copy of Powers of Attorney of Trustees and
Officers of Registrant; (11)

ITEM 24. PERSONS CONTROLLED BY OR UNDER COMMON CONTROL WITH REGISTRANT:

Not Applicable

ITEM 25. INDEMNIFICATION; (4)

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

+ All exhibits have been filed electronically.

(2) Incorporated by reference to Pre-Effective Amendment No. 1 to the
Registrant's Registration Statement as filed with the Commission on May 3,
1995. (File Nos. 33-89754 and 811-8992)
(3) Incorporated by reference to Post-Effective Amendment No.1 to the
Registrant's Registration Statement as filed with the Commission on
July 28, 1995. (File Nos. 33-89754 and 811-8992)
(4) Incorporated by reference to Post-Effective Amendment No.2 to the
Registrant's Registration Statement as filed with the Commission on
January 30, 1996. (File Nos. 33-89754 and 811-8992)
(11) Incorporated by reference to Post-Effective Amendment No.4 to the
Registrant's Registration Statement as filed with the Commission on
January 23, 1997. (File Nos. 33-89754 and 811-8992)
(13) Incorporated by reference to Post-Effective Amendment No.8 to the
Registrant's Registration Statement as filed with the Commission on
November 26, 1997. (File Nos. 33-89754 and 811-8992)
(15) Incorporated by reference to Post-Effective Amendment No.11 to the
Registrant's Registration Statement as filed with the Commission on
January 28, 1998. (File Nos. 33-89754 and 811-8992)

<PAGE>

ITEM 26. BUSINESS AND OTHER CONNECTIONS OF INVESTMENT ADVISER:

For a description of the other business of the investment adviser, see
the section entitled "Who Manages The Trust" in Part A.

The names and principal occupations of each director and executive officer of
Freedom Capital Management Corporation are set forth below:

NAME BUSINESS AND OTHER CONNECTIONS

John H. Goldsmith President and Chief Executive Officer of
Freedom Securities Corporation; Chairman and Chief
Executive Officer of Tucker Anthony Incorporated;
Director of Freedom Capital

Dexter A. Dodge Chairman, C.E.O. and Director of Freedom Capital;
Chairman of the Board of Trustees of the FundManager

Portfolios; Vice President of Freedom Distributors
Corporation

William C. Dennis Chief Financial Officer of Freedom
Securities Corporation; Director of Freedom Capital

John J. Danello Chief Operating Officer, Managing Director, Clerk
and General Counsel of Freedom Capital;
Executive Vice President, President and Director of
Freedom Distributors Corporation; President of the
FundManager Portfolios

Michael M. Spencer Senior Vice President and Director of Freedom
Capital; Portfolio Manager at Shawmut Investment
Advisers

Michael D. Hirsch Chief Investment Officer, FundManager Division of
the Adviser since February 1995; Vice President and
Executive Vice Chairman and Managing Director,
Portfolio Manager of M.D. Hirsch Division of
Republic Asset Management Corporation from
June 1993 to February 1994

<PAGE>

ITEM 27. PRINCIPAL UNDERWRITERS:

(a) Edgewood Services, Inc. the Distributor for shares of the Registrant,
acts as principal underwriter for the following open-end investment
companies, including the Registrant: Deutsche Portfolios, Deutsche
Funds, Inc., Excelsior Funds, Excelsior Funds, Inc., (formerly, UST
Master Funds, Inc.), Excelsior Institutional Trust, Excelsior
Tax-Exempt Funds, Inc. (formerly, UST Master Tax-Exempt Funds, Inc.),
FTI Funds, FundManager Portfolios, Great Plains Funds, Old Westbury
Funds, Inc., Robertsons Stephens Investment Trust, WesMark Funds, WCT
Funds.
<TABLE>
<CAPTION>

(b)

(1) (2) (3)
<S> <C> <C>

Name and Principal Positions and Offices Positions and Offices
BUSINESS ADDRESS WITH DISTRIBUTOR WITH REGISTRANT

Lawrence Caracciolo Director, President, --
5800 Corporate Drive Edgewood Services, Inc.

Pittsburgh, PA 15237-5829

Arthur L. Cherry Director, --
5800 Corporate Drive Edgewood Services, Inc.

Pittsburgh, PA 15237-5829

J. Christopher Donahue Director, --
5800 Corporate Drive Edgewood Services, Inc.

Pittsburgh, PA 15237-5829

Thomas P. Sholes Vice President, --
5800 Corporate Drive Edgewood Services, Inc.

Pittsburgh, PA 15237-5829

Ernest L. Linane Assistant Vice President, --
5800 Corporate Drive Edgewood Services, Inc.

Pittsburgh, PA 15237-5829

Christine T. Johnson Assistance Vice President, --
5800 Corporate Drive Edgewood Services, Inc.

Pittsburgh, PA 15237-5829

Denis McAuley Treasurer, --
5800 Corporate Drive Edgewood Services, Inc.

Pittsburgh, PA 15237-5829

Leslie K. Ross Secretary, --
5800 Corporate Drive Edgewood Services, Inc.

Pittsburgh, PA 15237-5829

Amanda J. Reed Assistant Secretary, --
5800 Corporate Drive Edgewood Services, Inc.

Pittsburgh, PA 15237-5829

<PAGE>

(ai) Freedom Distributors Corp., a Distributor for shares of the Registrant,
also acts as principal underwriter for the following open-end investment
companies:

Freedom Mutual Fund and Freedom Group of Tax Exempt Funds.

(bi)

(1) (2) (3)
Name and Principal Positions and Offices Positions and Offices
BUSINESS ADDRESS WITH DISTRIBUTOR WITH REGISTRANT

John J. Danello President and Director Executive
Vice
One Beacon Street of Freedom Distributors President of
the
Boston, MA 02108 Corp. Registrant.

Michael G. Ferry Treasurer of Freedom --
One Beacon Street Distributors Corp.

Boston, MA 02108

Dexter A. Dodge Director of Freedom Trustee,
Chairman
One Beacon Street Distributors Corp. and Chief
Boston, MA 02108 Executive
Officer of the
Registrant.

Maureen M. Renzi Vice President and Clerk Assistant
One Beacon Street of Freedom Distributors Secretary of
the
Boston, MA 02108 Corp. Registrant.

(aii) Tucker Anthony Incorporated, a Distributor for shares of the Registrant,
also acts as principal underwriter for the following open-end investment
companies:

Freedom Mutual Fund and Freedom Group of Tax Exempt Funds.

(bii)

(1) (2) (3)
Name and Principal Positions and Offices Positions and Offices
BUSINESS ADDRESS WITH DISTRIBUTOR WITH REGISTRANT

John H. Goldsmith Chairman, Chief Executive --
One World Financial Center Officer and Director of
New York, NY 10281 Tucker Anthony Incorporated.

Robert H. Yevich President and Director of --
One World Financial Center Tucker Anthony Incorporated.

New York, NY 10281

Marc Menchel Executive Vice President, --
One World Financial Center Secretary and Clerk of
New York, NY 10281 Tucker Anthony Incorporated.

John Mullin Treasurer and Chief Financial --
One World Financial Center Officer of Tucker Anthony

New York, NY 10281 Incorporated.

<PAGE>

(aiii) Sutro & Co. Incorporated, a Distributor for shares of the Registrant,
also acts as principal underwriter for the following open-end investment companies:

Freedom Mutual Fund and Freedom Group of Tax Exempt Funds.

(biii)

(1) (2) (3)
Name and Principal Positions and Offices Positions and Offices
BUSINESS ADDRESS WITH DISTRIBUTOR WITH REGISTRANT

John F. Luikart President and Chief Executive --
201 California Street Officer of Sutro & Co.

San Francisco, CA 94111 Incorporated.

Mary Jane Delaney Executive Vice President --
201 California Street and General Counsel of
San Francisco, CA 94111 Sutro & Co. Incorporated.

John H. Goldsmith Chairman of Sutro & Co. --
One Beacon Street Incorporated.

Boston, MA 02108

John W. Eisele Executive Vice President of --
201 California Street Sutro & Co. Incorporated.

San Francisco, CA 94111

Thomas R. Weinberger Executive Vice President of --
11150 Santa Monica Blvd. Sutro & Co. Incorporated.

Suite 1500
Los Angeles, CA 90025

Ray Minehan Executive Vice President of
201 California Street Sutro & Co. Incorporated

San Francisco, CA 94111

Jerry Phillips Executive Vice President of
201 California Street Sutro & Co. Incorporated

San Francisco, CA 94111

</TABLE>

<PAGE>

ITEM 28. LOCATION OF ACCOUNTS AND RECORDS:

All accounts and records required to be maintained by Section 31(a) of the
Investment Company Act of 1940 and the Rules 31a-1 through 31a-3 promulgated
thereunder will be maintained at one of the following locations:

Registrant Federated Investors Tower

1001 Liberty Avenue
Pittsburgh, Pennsylvania 15222-3779
(Notices should be sent to the

Agent for Service at above address.)

One Beacon Street

Boston, Massachusetts 02018

Freedom Capital Management Corporation One Beacon Street
("Adviser") Boston Massachusetts 02108.

Federated Administrative Services Federated Investors Tower
("Administrator") 1001 Liberty Avenue

Pittsburgh, Pennsylvania 15222-3779

Federated Shareholder Services Company P.O. Box 8600
("Transfer Agent and Dividend Boston, Massachusetts 02266-8600
Disbursing Agent and Shareholder

Servicing Agent")

State Street Bank and Trust Company P.O. Box 8600
("Custodian and Portfolio Boston, Massachusetts 02266-8600

Accountant")

ITEM 29. MANAGEMENT SERVICES:
Not applicable.

ITEM 30. UNDERTAKINGS

Registrant hereby undertakes to comply with Section 16(c) of the 1940
Act with respect to the removal of Trustees and the calling of special
shareholder meetings by shareholders.

<PAGE>

SIGNATURES

Pursuant to the requirements of the Securities Act of 1933 and the
Investment Company Act of 1940, the Registrant, FUNDMANAGER PORTFOLIOS,
certifies that it meets all of the requirements for effectiveness of this
Amendment to its Registration Statement pursuant to Rule 485(b) under the
Securities Act of 1933 and has duly caused this Amendment to its Registration
Statement to be signed on its behalf by the undersigned, thereto duly
authorized, in the City of Pittsburgh and Commonwealth of Pennsylvania, on the
28rd day of December, 1998.

FUNDMANAGER PORTFOLIOS

By: /s/ Victor R. Siclari
Victor R. Siclari, Secretary
December 28, 1998

Pursuant to the requirements of the Securities Act of 1933, this
Amendment to its Registration Statement has been signed below by the following
person in the capacity and on the date indicated:

NAME TITLE DATE

By: /s/ Victor R. SiclariAttorney in Fact December 28, 1998
Victor R. Siclari For the Persons
SECRETARY Listed Below

/s/Dexter A. Dodge* Chairman and Trustee
Dexter A. Dodge (Chief Executive Officer)

/s/Charles B. Lipson* President

Charles B. Lipson (Principal Executive Officer)

/s/Judith J. Mackin* Treasurer

Judith J. Mackin (Principal Financial and
Accounting Officer)

/s/Ernest T. Kendall* Trustee
Ernst T. Kendall

/s/Richard B. Osterberg* Trustee
Richard B. Osterberg

/s/John R. Haack* Trustee
John R. Haack

* By Power of Attorney

Exhibit 23(j) under Form N-1A
Exhibit 23 under Item 601/Reg.S-K

CONSENT OF ERNST & YOUNG LLP, INDEPENDENT AUDITORS

We consent to the references to our firm under the captions "Financial
Highlights" in the FundManager Portfolios combined Class A and Class B Shares
Prospectus and "Independent Auditors" in the FundManager Portfolios combined
Class A and Class B Shares Statement of Additional Information in Post-Effective
Amendment No. 15 to the Registration Statement (Form N-1A, No.

33-89754) of FundManager Portfolios.

We also consent to the incorporation by reference therein of our report dated
November 13, 1998, with respect to the financial statements and financial
highlights of the FundManager Portfolios in the Form N-1A.

ERNST & YOUNG

Boston, Massachusetts
December 28, 1998