Preliminary Prospectus dated October 31, 1997
                              SUBJECT TO COMPLETION

A REGISTRATION  STATEMENT  RELATING TO THESE  SECURITIES HAS BEEN FILED WITH THE
SECURITIES AND EXCHANGE COMMISSION BUT HAS NOT YET BECOME EFFECTIVE. INFORMATION
CONTAINED HEREIN IS SUBJECT TO COMPLETION OR AMENDMENT. THESE SECURITIES MAY NOT
BE SOLD NOR MAY  OFFERS TO BUY BE  ACCEPTED  PRIOR TO THE TIME THE  REGISTRATION
STATEMENT  BECOMES  EFFECTIVE.  THIS PROSPECTUS SHALL NOT CONSTITUTE AN OFFER TO
SELL OR THE SOLICITATION OF AN OFFER TO BUY NOR SHALL THERE BE ANY SALE OF THESE
SECURITIES IN ANY  JURISDICTION IN WHICH SUCH OFFER,  SOLICITATION OR SALE WOULD
BE UNLAWFUL PRIOR TO REGISTRATION OR QUALIFICATION  UNDER THE SECURITIES LAWS OF
ANY SUCH JURISDICTION.

                              The Avatar Advantage
                      International Equity Allocation Fund
                                900 Third Avenue
                               New York, NY 10022
                                 (800) 000-0000

                                   PROSPECTUS


         The Avatar Advantage  International Equity Allocation Fund (the "Fund")
is a mutual fund with the  investment  objective  of seeking  long-term  capital
appreciation.  The Fund attempts to achieve its objective by investing in equity
securities  of issuers  outside of the U.S.  during  rising  stock  markets  and
limiting loss during market declines.  See "Investment  Objective and Policies."
Shares are available on a no-load basis to investors.  There can be no assurance
that the Fund will achieve its investment objective.

         This  Prospectus  sets  forth  basic  information  about  the Fund that
prospective  investors  should  know  before  investing.  It  should be read and
retained for future reference.  The Fund is a separate series of Advisors Series
Trust (the "Trust"),  an open-end  registered  management  investment company. A
Statement of  Additional  Information  (the "SAI") dated January , 1998 has been
filed with the Securities and Exchange  Commission and is incorporated herein by
reference.  This SAI is available without charge upon request to the Fund at the
address given above.

These  securities  have not been approved or  disapproved  by the Securities and
Exchange  Commission nor has the Securities and Exchange  Commission passed upon
the accuracy or adequacy of this prospectus.  Any representation to the contrary
is a criminal offense.

                                 January , 1998

                                Table of Contents

                    Expense Table ....................    2
                    Investment Objective and Policies     3
                    Management of the Fund ...........    6
                    Investor Guide ...................    8
                    Services Available to Shareholders   10
                    How to Redeem Your Shares ........   11
                    Distributions and Taxes ..........   13
                    General Information ..............   13

                                  Expense Table

Expenses  are one of several  factors to consider  when  investing  in the Fund.
There are two types of expenses involved: shareholder transaction expenses, such
as sales loads, and annual operating expenses, such as investment advisory fees.
The Fund is a no-load mutual fund and has no shareholder  transaction  expenses.
The Fund has adopted a plan of distribution under which it will pay the Advisor,
as  Distribution  Coordinator,  a fee at the  annual  rate of up to 0.25% of the
Fund's  net  assets.  A  long-term   shareholder  may  pay  more,  directly  and
indirectly, in such fees than the maximum sales charge permitted under the rules
of the National  Association of Securities  Dealers.  Shares will be redeemed at
net asset value per share.

Annual Operating Expenses
   (As a percentage of average net assets)

Investment Advisory Fee                                          1.00%
12b-1 Fee                                                        0.25%
Other Expenses (1)                                               0.40%
                                                                 ----
Total Fund Operating Expenses (2)                                1.65%
                                                                 ====

(1) Other Expenses are estimated for the first fiscal year of the Fund.

(2) The Advisor has agreed to reduce its fees to insure  that the  expenses  for
the Fund  will not  exceed  1.65%.  If the  Advisor  did not  limit  the  Fund's
expenses, it is expected that "Other Expenses" in the above table would be 1.45%
and "Total Operating  Expenses" would be 3.70%. If the Advisor does waive any of
its fees, the Fund may reimburse the Advisor in future years. See "Management of
the Fund."

Example

This table  illustrates the net operating  expenses that would be incurred by an
investment in the Fund over different time periods assuming a $1,000 investment,
a 5% annual return, and redemption at the end of each time period.

1 Year                             3 Years

$17                                $52

THE EXAMPLE  SHOWN ABOVE SHOULD NOT BE  CONSIDERED A  REPRESENTATION  OF PAST OR
FUTURE  EXPENSES AND ACTUAL EXPENSES MAY BE GREATER OR LESS THAN THOSE SHOWN. IN
ADDITION, FEDERAL
                                                                               2

REGULATIONS  REQUIRE  THE EXAMPLE TO ASSUME A 5% ANNUAL  RETURN,  BUT THE FUND'S
ACTUAL RETURN MAY BE HIGHER OR LOWER. SEE "MANAGEMENT OF THE FUND."

The minimum initial  investment in the Fund is $2,500,  with subsequent  minimum
investments  of $250 or more  ($1,000  and  $50,  respectively,  for  retirement
plans). Shares will be redeemed at their net asset value.

                        Investment Objective And Policies

What is the Fund's investment objective?

The investment objective of the Fund is to seek long-term capital  appreciation,
by  participating  in rising stock markets outside of the United States and then
preserving the bulk of those profits during high-risk  periods.  There can be no
assurance that the Fund will achieve its objective.

How does the Fund seek to achieve its objective?

Avatar Investors  Associates  Corp. (the "Advisor" or "Avatar  Associates") is a
passive  investor  and  utilizes  passive  implementations.  The  Fund  will use
internally constructed baskets of equity securities or other instruments to make
investments and not engage in active security  selection.  The Advisor  believes
that the most important step in its investment process is determining the Fund's
allocation  between  equity  securities  and cash reserves in markets around the
world.  The asset allocation  decision is based on proprietary  asset allocation
models,  which  measure the risk and  potential  reward of  investing  in equity
securities  relative to the safety of cash reserves in markets around the world.
When  the  Advisor  believes  market  risk is low  within  a given  country,  it
maintains  a large  commitment  (as fully  invested  as  practicable)  to equity
securities within a given country. When the Advisor believes market risk is high
within a given  country,  it shifts an  appropriate  amount of the Fund's assets
into cash reserves to protect capital. The Advisor may also shift assets between
countries  around  the world to  position  itself in  markets  it feels are more
favorable.  These shifts from and to equity  securities  are  generally  made in
increments of five to ten per cent of the Fund's total net assets, as conditions
warrant based on the Advisor's asset allocation model.

The Advisor's asset allocation models measure liquidity. Based on its experience
and research,  the Advisor  believes that changes in financial  liquidity -- for
example, money, credit and reserves -- are the best measure of investment market
risk.  When this  liquidity  expands  beyond  what is  needed  by the  "real" or
production side of the economy, much of the excess moves into the stock markets.
This movement  causes stock prices to rise. On the other hand, when liquidity is
contracting,   economic  demands  siphon  money  away  from  the  stock  market.
Investment risks increase,  and stock prices are subject to declines.  Thus, the
Advisor  makes  orderly asset mix decisions by measuring and reacting to current
market risk levels as quantified by the Advisor's  models.  The Liquidity Models
include economic factors such as interest rate trends,  Central Bank policy, and
yield spreads.  It also includes  inflation  variables  (commodity price trends,
industrial production growth, etc.), market momentum factors (such as short-term
trends) and investor sentiment (such as retail  optimism/pessimism,  etc.) These
factors, blended into the model, all help determine the asset mix. Any shifts in
this mix are  dictated by the data  produced by the model.  The model is updated
daily to enable the Advisor to respond to rapidly changing
                                                                               3

environments.  There is, of course,  no assurance that the Fund's objective will
be achieved. Because prices of common stocks and other securities fluctuate, the
value  of an  investment  in the  Fund  will  vary as the  market  value  of its
investment portfolio changes.

What does the Fund invest in?

Under normal market  conditions,  the Fund will invest at least 65% of its total
assets in equity  securities  (i.e.,  common  stocks and  securities  having the
characteristics  of common stocks,  such as convertible  securities,  rights and
warrants) of issuers from at least three countries other than the United States.

In  addition to  investing  in equity  securities,  the Fund may also enter into
foreign  currency  exchange  contracts and purchase other  securities to protect
against fluctuations in exchange rates. These securities are described below and
under "Additional Information."

The Fund may invest in  companies  located  anywhere in the world but intends to
invest  principally  in the  following  countries:  Australia,  Canada,  France,
Germany, Hong Kong, Italy, Japan, Netherlands, Spain, Switzerland and the United
Kingdom.  Although  the Fund intends to invest  primarily  in countries  located
outside  the United  States,  it is  permitted  to invest up to 10% of its total
assets in U.S.  companies.  The Fund may invest more  heavily in U.S.  companies
when the Advisor  believes  foreign markets or economic  conditions or trends in
currency exchange rates favor domestic securities.

The  baskets  the  Fund  may  invest  in  include  foreign  securities,  foreign
securities  in  the  form  of  American  Depositary  Receipts  (ADRs),  European
Depositary  Receipts (EDRs),  Global Depositary  Receipts (GDRs),  International
Depositary Receipts (IDRs) or other similar securities  representing an interest
in securities of foreign issuers. The Fund may also invest in other open-end and
closed-end investment companies that invest in international equities, including
World Equity Benchmark Shares, commonly known as "WEBS."

Because the Fund invests primarily in foreign  securities,  it may be subject to
greater  risks and higher  expenses  than equity funds that invest  primarily in
securities  of U.S.  issuers.  These  risks  may be  even  greater  in  emerging
industrialized and less developed countries.  Most of the securities held by the
Fund are denominated in foreign  currencies,  and the value of these investments
can be adversely affected by fluctuations in foreign currency values.

The Advisor does not expect the Fund's annual turnover rate to exceed 150%. High
portfolio  turnover  will  increase  transaction  costs and may result in higher
taxes for investors.

How does the Advisor create the Fund's portfolio?

In creating an international portfolio, the Advisor follows a three-step process
that incorporates its proprietary asset allocation model.  First, each country's
asset  allocation  between  stocks and cash is  determined.  Next, the portfolio
weight  for each  country  is set  within  specified  guidelines.  Finally,  and
independent from our investment models, currency risk is systematically assessed
to determine whether a hedge is appropriate.

         Step 1. Within Country Portfolio  Allocation.  Each country has its own
proprietary  liquidity  model for stocks because there are  characteristics  and
historical development issues that
                                                                               4

vary from market to market.  These models  measure the degree of market risk for
each country. The model readings formulate the asset allocation mix daily.

         Step 2. Between Country Portfolio Allocation.  Benchmark guidelines are
set for each country based on the market capitalization weight of each market in
the benchmark.  These guidelines are rebalanced monthly. A range above and below
the benchmark is then set based on the trading  volume and available  investment
vehicles for that country. Given these specified guidelines,  the model readings
or market risk determine the country weights.

         Step 3. Currency  Management.  Currency movements are an important part
of the total investment return for non-dollar or international investments.  The
Advisor uses a  proprietary  quantitative  approach to determine  when  currency
exposure will enhance portfolio  performance.  Since exchange rate movements are
generally  independent from stock  movements,  the Advisor's  currency  exposure
decision is determined  independently  from its asset allocation  decision.  The
Advisor's currency models combine economic fundamentals with trend data.

What does the Fund use for cash reserves?

The Advisor  uses high  quality,  short-term  debt  securities  and money market
instruments as cash reserves for the Fund.  These short-term debt securities and
money market  instruments  include  commercial  paper,  certificates of deposit,
bankers' acceptances,  U.S. Government securities and repurchase agreements,  as
well  as  short-term  securities  issued  by  other  sovereign  governments  and
investment   grade  money   market   instruments   issued  by  foreign   banking
institutions.

Other  investments  and  investment  techniques.  The  Fund  may  also  make the
following  investments or use the techniques  described below.  More information
about them, including the special risks entailed, is contained in the SAI.

         Options on  Securities.  The Fund may buy options as a  substitute  for
positions in the  underlying  securities.  The Fund may also buy call options on
securities  in  order  to fix the cost of a future  purchase  or to  attempt  to
enhance  return.  The Fund may buy put options on  securities to hedge against a
decline in the value of securities  it owns.  The Fund may also write (sell) put
and covered  call options on  securities  in which it is  authorized  to invest.
Options  transactions  will be entered  into for  hedging  purposes  and not for
speculation.  The Fund's  ability  to use these  instruments  successfully  will
depend on an investment manager's ability to predict accurately movements in the
prices of securities,  interest rates and the  securities  markets.  There is no
assurance that liquid  secondary  markets for options will always exist, and the
correlation  between  hedging  instruments  and the  securities or sectors being
hedged  may be  imperfect.  The  requirement  to cover  obligations  may  impede
portfolio management or the ability to meet redemption requests.  It may also be
necessary  to  defer  closing  out  options   positions  to  avoid  adverse  tax
consequences.

         Futures  and  Options  on  Futures.  The Fund may  enter  into  futures
contracts and forward foreign currency exchange  contracts,  or options on those
contracts,  involving  interest rates,  securities and securities  indices,  for
hedging purposes or as a substitute for positions in the underlying  securities,
as well as in an attempt to realize income. As a general rule, the Fund will not
purchase or sell futures if, immediately thereafter,  more than 25% of its total
net assets would be hedged.  There are risks  involved in the use of futures and
options on futures, including the
                                                                               5

risk that the prices of the hedging  vehicles may not correlate  perfectly  with
the prices of the securities in the Fund's portfolio. This may cause the futures
contracts or options to react  differently from the Fund's portfolio  securities
to  market  changes.  In  addition,  the  Advisor  could  be  incorrect  in  its
expectations about the direction or extent of market movements. In these events,
the Fund could lose money on the futures  contracts  or options.  It is also not
certain that a secondary  market for  positions in futures  contracts or options
will exist at all times,  although the Advisor will  consider  liquidity  before
entering into these transactions.

         Selling  Short.  The  Fund  may  sell  securities  short  by  borrowing
securities  it does not own and  selling  them.  The Fund is then  obligated  to
replace the  securities  borrowed by purchasing  them at the market price at the
time of replacement.  If the securities sold short increase in value between the
time of sale and the time the Fund  purchases  them, the Fund will incur a loss.
On the other hand, if the securities  decline in value,  the Fund may repurchase
them at a lower  price and  realize a profit.  There are limits on the extent to
which the Fund may engage in short sales, as described in the SAI.

Investment restrictions.

The Fund has adopted certain investment restrictions,  which are described fully
in the SAI. Like the Fund's investment objective,  certain of these restrictions
are  fundamental  and may be  changed  only  by a  majority  vote of the  Fund's
outstanding shares. As a fundamental policy, the Fund is a diversified fund.


                             Management of The Fund

The  Board  of  Trustees  of the  Trust  establishes  the  Fund's  policies  and
supervises and reviews the management of the Fund.

The Advisor.

The Fund's Advisor, Avatar Associates,  900 Third Avenue, New York, NY 10022 has
provided asset management  services to individuals and  institutional  investors
since 1970.  Currently the Advisor manages  approximately  $4 billion in assets.
The  Advisor was  established  and is  controlled  by its  President,  Edward S.
Babbitt,  Jr. Two  members of the firm,  Theodore  M.  Theodore  and  MaryAnn C.
Bartels, are principally responsible for the management of the Fund's portfolio.
Mr.  Theodore is a Managing  Director  and Director of Research for the Advisor,
having  joined  the firm in 1989.  Ms.  Bartels is a Vice  President  and Global
Portfolio  Manager for the Advisor,  having been  associated with the firm since
1994.  Prior to joining the  Advisor  she was an  Assistant  Vice  President  at
Merrill Lynch,  Pierce,  Fenner & Smith, Inc.

The Advisor  provides  the Fund with  advice on buying and  selling  securities,
manages the  investments  of the Fund,  furnishes the Fund with office space and
certain  administrative  services,  and provides most of the personnel needed by
the Fund. As  compensation,  the Fund pays the Advisor a monthly  management fee
based upon the average daily net assets of the Fund at the annual rate of 1.00%.

Prior Performance of the Advisor.

The  following  table sets forth  composite  performance  data  relating  to the
historical  performance  of an  institutional  private  account  managed  by the
Advisor  for the  periods  indicated.  Although  having  investment  objectives,
policies and risks substantially similar to those of the Fund, the
                                                                               6

private  account  also  utilized a strategy of investing in bonds which the Fund
will not pursue.  The data is provided to illustrate the past performance of the
Advisor in managing  substantially  similar  accounts and does not represent the
performance  of the Fund.  You should not consider this  performance  data as an
indication of future performance of the Fund or of the Advisor.

The returns  presented below were calculated on a total return basis and include
all dividends and interest, accrued income and realized and unrealized gains and
losses. All returns reflect the deduction of investment advisory fees, brokerage
commission and execution costs paid by the institutional private account without
provision  for federal or state income taxes.  Custodial  fees, if any, were not
included in the  calculation.  Securities  transactions are accounted for on the
trade date and accrual  accounting is used. Cash and equivalents are included in
performance  returns.  The quarterly  returns  combine the individual  account's
returns  (calculated on a time-weighted rate of return that is revalued whenever
cash  flows  exceed  5% of the  value of the  account)  by  asset-weighting  the
individual  account's asset value as of the beginning of the quarter. The yearly
returns are computed by geometrically linking the returns of each quarter within
the calendar year.

The  institutional  private account is not subject to the same types of expenses
to which the Fund is subject nor to the diversification  requirements,  specific
tax  restrictions  and  investment  limitations  imposed  on  the  Fund  by  the
Investment  Company  Act  or  the  Internal  Revenue  Code.  Consequently,   the
performance  results for the private account could have been adversely  affected
if it had been regulated as an investment company.

The investment  results of the private account presented below are unaudited and
are not intended to predict or suggest the returns that might by  experienced by
the Fund or an individual  investing in the Fund. Investors should also be aware
that the use of a  methodology  different  from  that  used  below to  calculate
performance could result in different performance data.

Annualized Total Return For Periods ended June 30, 1997


          Number of Years                         Private Account
          ---------------                         ---------------
          One Year                                     12.1%
          Inception (1/1/96 - 6/30/97)                 12.3%

The Administrator.

Investment Company  Administration  Corporation (the  "Administrator")  prepares
various federal and state regulatory filings,  reports and returns for the Fund,
prepares  reports and  materials  to be supplied to the  trustees,  monitors the
activities of the Fund's custodian, shareholder servicing agent and accountants,
and  coordinates  the  preparation  and payment of Fund expenses and reviews the
Fund's expense accruals.  For its services, the Administrator receives a monthly
fee at the  annual  rate of 0.20% of  average  daily net  assets,  subject  to a
$30,000 annual minimum.

Other operating expenses.

The  Fund is  responsible  for its own  operating  expenses,  including  but not
limited to, the  advisory  and  administration  fees,  custody  and  shareholder
servicing  agent  fees,   legal  and  auditing   expenses,   federal  and  state
registration fees, and fees to the Trust's disinterested trustees. The
                                                                               7

Advisor may reduce its fees or  reimburse  the Fund for  expenses at any time in
order to reduce the Fund's expenses.  Reductions made by the Advisor in its fees
or payments or  reimbursements  of expenses which are the Fund's  obligation are
subject  to  reimbursement  by the Fund  provided  the Fund is able to do so and
remain in compliance with any applicable expense limitations.

The Fund has  adopted a  Distribution  Plan  pursuant  to Rule  12b-1.  The Plan
permits the Fund to pay for  distribution and related expenses at an annual rate
of up to 0.25% of the Fund's average net assets. The expenses which the Fund may
pay include:  preparing and distributing  prospectuses and other sales material;
advertising and public relations expenses;  payments to financial intermediaries
and compensation of personnel involved in selling shares of the Fund.

Brokerage transactions.

The  Advisor  considers  a number of factors  in  determining  which  brokers or
dealers to use for the Fund's portfolio transactions. While these are more fully
discussed in the Statement of Additional  Information,  the factors include, but
are not limited to, the  reasonableness of commissions,  quality of services and
execution,  and the  availability of research which the Advisor may lawfully and
appropriately  use in its  investment  advisory  capacities.  Provided  the Fund
receives prompt execution at competitive  prices,  the Advisor may also consider
the sale of Fund shares as a factor in selecting  broker-dealers  for the Fund's
portfolio transactions.

                                 INVESTOR GUIDE

How to purchase shares of the Fund.

The Fund was  established  primarily to serve those  investors in the  qualified
retirement  plan market.  There are several ways to purchase shares of the Fund.
An Application  Form, which  accompanies  this  Prospectus,  is used if you send
money directly to a Fund by mail or by wire. If you have questions  about how to
invest,  or about how to complete the Application  Form,  please call an account
representative  at  (800)  000-0000.  First  Fund  Distributors,  Inc.,  4455 E.
Camelback  Road,  Suite  261E,  Phoenix,  Arizona  85018,  an  affiliate  of the
Administrator,  is the  principal  underwriter  ("Distributor")  of  the  Funds'
shares.

You may send money to the Fund by mail.

If you wish to invest by mail,  simply complete the Application Form and mail it
with  a  check  (made  payable  to the  Avatar  Advantage  International  Equity
Allocation  Fund) to the  Fund's  Shareholder  Servicing  Agent,  American  Data
Services, Inc. at the following address:

         Avatar Advantage International Equity Allocation Fund
         P.O. Box 000
         Cincinnati, OH 45264-0856

You may wire money to the Fund.

Before sending a wire,  you should call the Fund at (800) 000-0000  between 9:00
a.m.  and 5:00 p.m.,  Eastern  time,  on a day when the New York Stock  Exchange
("NYSE")  is open for  trading,  in order to receive an  account  number.  It is
important to call and receive this account number,  because if your wire is sent
without it or without  the name of the Fund,  there may be a delay in  investing
the money you wire. You should then ask your bank to wire money to:
                                                                               8

         Star Bank, N.A. Cinti/Trust
         ABA # 0420-0001-3
         for credit to Avatar Advantage International Equity Allocation Fund
         DDA # 
         for further credit to [your name and account number]

Your bank may charge you a fee for sending a wire to the Fund.

You may purchase shares through an investment dealer.

You may be able to invest in shares of the Fund through an investment dealer, if
the dealer has made arrangements  with the Distributor.  The dealer may place an
order for you with the Fund;  the price you will pay will be the net asset value
which is next calculated  after receipt of the order from the dealer.  It is the
responsibility  of the dealer to place your order promptly.  A dealer may charge
you a fee for  placing  your  order,  but you could  avoid  paying such a fee by
sending an  Application  Form and payment  directly to the Fund.  The dealer may
also hold the shares you  purchase  in its omnibus  account  rather than in your
name in the records of the Fund's  transfer  agent.  The Fund may  reimburse the
dealer for  maintaining  records of your  account as well as for other  services
provided to you. 

Your dealer is  responsible  for sending your money to the Fund  promptly  after
placing  the order to  purchase  shares,  and the Fund may  cancel  the order if
payment is not received from the dealer promptly.

Minimum investments.

The minimum  initial  investment in the Fund is $2,500.  The minimum  subsequent
investment is $50.  However,  if you are  investing in an Individual  Retirement
Account ("IRA"), or you are starting a Automatic Investing Plan (see below), the
minimum initial and subsequent  investments  are $1,000 and $250,  respectively.

Subsequent  investments.  

You may purchase additional shares of the Fund by sending a check, with the stub
from an account statement,  to the Fund at the address above.  Please also write
your  account  number on the  check.  (If you do not have a stub from an account
statement,  you can write your name,  address and  account  number on a separate
piece of paper and enclose it with your  check.) If you want to send  additional
money for  investment by wire, it is important for you to call the Fund at (800)
000-0000.  You may also make additional  purchases through an investment dealer,
as described above.

When is money invested in the Fund?

Any money received for investment in the Fund from an investor,  whether sent by
check or by wire,  is  invested at the net asset value of the Fund which is next
calculated  after the money is received  (assuming  the check or wire  correctly
identifies the Fund and account).  Orders  received from dealers are invested at
the net asset value next calculated  after the order is received.  The net asset
value is calculated at the close of regular trading of the NYSE,  currently 4:00
p.m.,  Eastern time. A check or wire received  after the NYSE closes is invested
as of the next calculation of the Fund's net asset value.
                                                                               9

What is the net asset value of the Fund?

The Fund's net asset value per share is  calculated by dividing the value of the
Fund's  total  assets,  less  its  liabilities,  by the  number  of  its  shares
outstanding. In calculating the net asset value, portfolio securities are valued
using  current  market  values,  if  available.   Securities  for  which  market
quotations  are not readily  available  are valued at fair values  determined in
good faith by or under the  supervision  of the Board of  Trustees of the Trust.
The fair value of short-term obligations with remaining maturities of 60 days or
less is considered to be their amortized cost.

Other information.

The Distributor may waive the minimum  investment  requirements for purchases by
certain group or retirement plans. All investments must be made in U.S. dollars,
and checks must be drawn on U.S. banks. Third party checks will not be accepted.
A charge may be imposed  if a check used to make an  investment  does not clear.
The Fund and the  Distributor  reserve  the right to reject any  investment,  in
whole or in part.  Federal tax law requires that  investors  provide a certified
taxpayer identification number and other certifications on opening an account in
order to avoid backup  withholding of taxes.  See the Application  Form for more
information  about backup  withholding.  The Fund is not required to issue share
certificates; all shares are normally held in non-certificated form on the books
of the  Fund,  for the  account  of the  shareholder.  The Fund,  under  certain
circumstances,  may accept investments of securities  appropriate for the Fund's
portfolio, in lieu of cash. Prior to making such a purchase, you should call the
Advisor to determine if such an investment  may be made. The Advisor may, at its
own expense, pay third parties for assistance in gathering assets for the Fund.

                       Services Available to Shareholders

Retirement Plans

You may obtain a prototype  IRA plan from the Fund.  Shares of the Fund are also
eligible investments for other types of retirement plans.

Automatic investing by check

You may make  regular  monthly  investments  in the Fund  using  the  "Automatic
Investment  Plan." A check is  automatically  drawn  on your  personal  checking
account each month for a  predetermined  amount (but not less than $100),  as if
you had written it  directly.  Upon  receipt of the  withdrawn  funds,  the Fund
automatically  invests the money in additional shares of the Fund at the current
net asset  value.  Applications  for this service are  available  from the Fund.
There is no  charge  by the Fund for this  service.  The Fund may  terminate  or
modify  this  privilege  at any  time,  and  shareholders  may  terminate  their
participation   by  notifying  the  Shareholder   Servicing  Agent  in  writing,
sufficiently in advance of the next withdrawal.

Automatic withdrawals

The Fund offers a Systematic Withdrawal Program whereby shareholders may request
that a check  drawn in a  predetermined  amount  be sent to them  each  month or
calendar quarter. To start this Program, your account must have Fund shares with
a value of at least $10,000, and the minimum
                                                                              10

amount that may be withdrawn  each month or quarter is $50.  This Program may be
terminated or modified by a shareholder  or the Fund at any time without  charge
or penalty.  A withdrawal  under the Systematic  Withdrawal  Program  involves a
redemption  of shares of the Fund,  and may result in a gain or loss for federal
income tax purposes.  In addition, if the amount withdrawn exceeds the dividends
credited to your account, the account ultimately may be depleted.

                            How to Redeem Your Shares

You have the right to redeem all or any  portion  of your  shares of the Fund at
their net asset value on each day the NYSE is open for trading.

Redemption in writing.

You may redeem your shares by simply sending a written  request to the Fund. You
should give your account  number and state  whether you want all or part of your
shares redeemed.  The letter should be signed by all of the  shareholders  whose
names  appear in the  account  registration.  You  should  send your  redemption
request to:

         Avatar Advantage International Equity Allocation Fund
         24 West Carver Street, 2nd Floor
         Huntington, NY 11743

Signature guarantee.

If the value of the shares you wish to redeem exceeds $25,000, the signatures on
the   redemption   request  must  be  guaranteed   by  an  "eligible   guarantor
institution." These institutions  include banks,  broker-dealers,  credit unions
and savings  institutions.  A  broker-dealer  guaranteeing a signature must be a
member of a clearing  corporation or maintain net capital of at least  $100,000.
Credit  unions  must be  authorized  to issue  signature  guarantees.  Signature
guarantees  will be  accepted  from any  eligible  guarantor  institution  which
participates  in a  signature  guarantee  program.  A  notary  public  is not an
acceptable guarantor.

Redemption by telephone.

If you complete the  Redemption by Telephone  portion of the Fund's  Application
Form,  you may redeem shares on any business day the NYSE is open by calling the
Fund's  Shareholder  Servicing Agent at (800) 000-0000 before 4:00 p.m.  Eastern
time.  Redemption  proceeds will be mailed or wired, at your  direction,  on the
next business day to the bank account you  designated on the  Application  Form.
The minimum  amount that may be wired is $1,000 (wire  charges,  if any, will be
deducted from redemption proceeds). Telephone redemptions cannot be made for IRA
accounts.

By establishing telephone redemption privileges,  you authorize the Fund and its
Shareholder  Servicing Agent to act upon the instruction of any person who makes
the telephone  call to redeem shares from your account and transfer the proceeds
to the  bank  account  designated  in the  Application  Form.  The  Fund and the
Shareholder  Servicing  Agent will use  procedures  to confirm  that  redemption
instructions received by telephone are genuine, including recording of telephone
instructions  and requiring a form of personal  identification  before acting on
these instructions. If
                                                                              11

these normal  identification  procedures are followed,  neither the Fund nor the
Shareholder  Servicing  Agent  will be liable for any loss,  liability,  or cost
which  results  from  acting  upon  instructions  of a person  believed  to be a
shareholder  with respect to the telephone  redemption  privilege.  The Fund may
change, modify, or terminate these privileges at any time upon at least 60-days'
notice to shareholders.

You may request  telephone  redemption  privileges after your account is opened;
however,  the authorization  form will require a separate  signature  guarantee.
Shareholders may experience delays in exercising telephone redemption privileges
during periods of abnormal market activity.

What price is used for a redemption?

The  redemption  price  is the  net  asset  value  of the  Fund's  shares,  next
determined after shares are validly  tendered for redemption.  All signatures of
account holders must be included in the request, and a signature  guarantee,  if
required, must also be included for the request to be valid.

When are redemption payments made?

As noted above,  redemption  payments for telephone  redemptions are sent on the
day after the  telephone  call is  received.  Payments for  redemptions  sent in
writing  are  normally  made  promptly,  but no later  than seven days after the
receipt of a request that meets requirements  described above. However, the Fund
may suspend the right of redemption under certain extraordinary circumstances in
accordance with rules of the Securities and Exchange Commission.

If shares were  purchased by wire,  they cannot be redeemed  until the day after
the  Application  Form is received.  If shares were  purchased by check and then
redeemed  shortly  after the check is received,  the Fund may delay  sending the
redemption  proceeds  until it has been notified that the check used to purchase
the  shares has been  collected,  a process  which may take up to 15 days.  This
delay may be avoided by  investing  by wire or by using a certified  or official
bank check to make the purchase.

Repurchases from dealers

The Fund may accept  orders to repurchase  shares from an  investment  dealer on
behalf of a dealer's  customers.  The net asset value for a  repurchase  is that
next  calculated  after  receipt  of the order  from the  dealer.  The dealer is
responsible  for  forwarding  any  documents   required  in  connection  with  a
redemption,  including a signature guarantee,  promptly, and the Fund may cancel
the order if these documents are not received promptly.

Other information about redemptions.

A redemption  may result in recognition of a gain or loss for federal income tax
purposes.  Due to the relatively high cost of maintaining smaller accounts,  the
shares in your  account  (unless it is a  retirement  plan or  Uniform  Gifts or
Transfers  to  Minors  Act  account)  may be  redeemed  by the Fund  if,  due to
redemptions  you have made,  the total value of your  account is reduced to less
than $500. If the Fund  determines to make such an involuntary  redemption,  you
will first be notified that the value of your account is less than $500, and you
will be allowed 30 days to make an  additional  investment to bring the value of
your account to at least $500 before the Fund takes any action.
                                                                              12

                             Distributions and Taxes

Dividends and Distributions.

Dividends from net investment  income, if any, are normally declared and paid by
the Fund in December.  Capital  gains  distributions,  if any, are also normally
made in December,  but the Fund may make an  additional  payment of dividends or
distributions if it deems it desirable at another time during any year.

Dividends and capital gain  distributions  (net of any required tax withholding)
are  automatically  reinvested in additional shares of the Fund at the net asset
value per share on the reinvestment date unless you have previously requested in
writing to the Shareholder Servicing Agent that payment be made in cash.

Any dividend or distribution paid by the Fund has the effect of reducing the net
asset  value per share on the  record  date by the  amount  of the  dividend  or
distribution.  You should  note that a dividend or  distribution  paid on shares
purchased  shortly  before that  dividend or  distribution  was declared will be
subject to income taxes even though the dividend or distribution represents,  in
substance, a partial return of capital to you.

Taxes

The Fund  intends to qualify and elect to be treated as a  regulated  investment
company  under  Subchapter  M of the  Code.  As long as the  Fund  continues  to
qualify,  and as long as the Fund distributes all of its income each year to the
shareholders,  the Fund  will not be  subject  to any  federal  income or excise
taxes.  Distributions  made by the Fund will be taxable to shareholders  whether
received in shares (through  dividend  reinvestment ) or in cash.  Distributions
derived from net investment  income,  including net short-term capital gains and
certain  net  foreign  currency  gains  received  by the Fund,  are  taxable  to
shareholders  as ordinary  income.  Distributions  designated  as capital  gains
dividends  are taxable as long-term  capital  gains  regardless of the length of
time shares of the Fund have been held.  Although  distributions  are  generally
taxable when received,  certain  distributions made in January are taxable as if
received  the prior  December.  You will be informed  annually of the amount and
nature of the Fund's  distributions.  Additional  information about taxes is set
forth in the Statement of Additional  Information.  You should  consult your own
advisers concerning federal,  state and local taxation of distributions from the
Fund.

                               General Information

The Trust.

The Trust was  organized as a Delaware  business  trust on October 3, 1996.  The
Agreement  and  Declaration  of Trust  permits the Board of Trustees to issue an
unlimited number of full and fractional shares of beneficial  interest,  without
par value,  which may be issued in any number of series.  The Board of  Trustees
may, from time to time, issue other series,  the assets and liabilities of which
will be  separate  and  distinct  from any  other  series.  The  Board  may also
authorize the issuance of additional  classes of shares for an existing  series.
The fiscal year of the Fund ends on December 31.
                                                                              13

Shareholder Rights

Shares  issued  by the Fund  have no  preemptive,  conversion,  or  subscription
rights.  Shareholders  have  equal  and  exclusive  rights as to  dividends  and
distributions  as  declared  by the Fund and to the net  assets of the Fund upon
liquidation or dissolution.  The Fund, as a separate series of the Trust,  votes
separately on matters affecting only the Fund (e.g.,  approval of the Investment
Advisory  Agreement);  all series of the Trust vote as a single class on matters
affecting all series jointly or the Trust as a whole (e.g.,  election or removal
of Trustees). Voting rights are not cumulative, so that the holders of more than
50% of the shares  voting in any  election of  Trustees  can, if they so choose,
elect all of the  Trustees.  While the Trust is not required and does not intend
to hold annual  meetings of  shareholders,  such  meetings  may be called by the
Trustees  in their  discretion,  or upon demand by the holders of 10% or more of
the  outstanding  shares of the Trust for the  purpose of  electing  or removing
Trustees.

Performance Information.

From time to time, the Fund may publish its total return in  advertisements  and
communications  to investors.  Total return  information will include the Fund's
average  annual  compounded  rate of return over the most  recent four  calendar
quarters and over the period from the Fund's  inception of operations.  The Fund
may also advertise aggregate and average total return information over different
periods of time.  The Fund's  total  return  will be based upon the value of the
shares acquired through a hypothetical $1,000 investment at the beginning of the
specified  period  and the net  asset  value of those  shares  at the end of the
period,  assuming  reinvestment of all distributions.  Total return figures will
reflect all  recurring  charges  against Fund  income.  You should note that the
investment results of the Fund will fluctuate over time, and any presentation of
the Fund's  total  return for any prior  period  should not be  considered  as a
representation of what an investor's total return may be in any future period.

Shareholder Inquiries.

Shareholder  inquiries should be directed to the Shareholder  Servicing Agent at
(800) 000-0000.
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