VAN WAGONER FUNDS INC, 485BPOS, 2000-04-28

VAN WAGONER FUNDS INC
485BPOS, 2000-04-28

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As filed with the Securities and Exchange Commission on April 28, 2000
Securities Act Registration No. 33-98358
Investment Company Act Registration No. 811-9116

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

SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

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

FORM N-1A

REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 [ ]
Post-Effective Amendment No. 8 [ ]

and/or
REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT OF 1940 [ ]
Amendment No. 9 [ ]
(Check appropriate box or boxes)

VAN WAGONER FUNDS, INC.
(Exact Name of Registrant as Specified in Charter)

345 CALIFORNIA STREET
SUITE 2450
SAN FRANCISCO, CA 94104
(Address of Principal Executive Offices)

REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE: (800) 228-2121

GARRETT R. VAN WAGONER Copy to:
Van Wagoner Funds, Inc. Richard L. Teigen
345 California Street, Suite 2450 Foley & Lardner
San Francisco, CA 94104 777 East Wisconsin Avenue
(Name and Address of Agent for Service) Milwaukee, WI 3202

It is proposed that this filing will become effective:

[ ] immediately upon filing pursuant to paragraph (b)

[X] on April 30, 2000 pursuant to paragraph (b)

[ ] 60 days after filing pursuant to paragraph (a)(i)

[ ] on April 30, 1999 pursuant to paragraph (a)(i)

[ ] 75 days after filing pursuant to paragraph (a)(ii)

[ ] on (date) pursuant to paragraph (a)(ii) of Rule 485.

If appropriate, check the following box:

[ ] this Post-Effective Amendment designates a new effective date for a
previously filed Post-Effective Amendment.

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XXXXX

VAN WAGONER FUNDS

Growth Stock Investing

Mid-Cap Growth Fund
Technology Fund
Post-Venture Fund
Micro-Cap Growth Fund
Emerging Growth Fund

PROSPECTUS
APRIL 30, 2000

The Securities and Exchange Commission has not approved or disapproved these
securities or passed on the accuracy or adequacy of this Prospectus. Any
representation to the contrary is a criminal offense.

(LOGO)

<PAGE>

TABLE OF CONTENTS
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The Funds 2
- --------------------------------------------------
WHAT YOU SHOULD KNOW ABOUT EACH
FUND'S INVESTMENT STRATEGIES, RISKS,
PERFORMANCE AND EXPENSES
Mid-Cap Growth Fund............................. 2
Technology Fund................................. 4
Post-Venture Fund............................... 7
Micro-Cap Growth Fund.......................... 10
Emerging Growth Fund........................... 12
Other Policies and Risks....................... 14
Management..................................... 15

Your Investment 16
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OPENING AND MAINTAINING YOUR
VAN WAGONER ACCOUNT
How Shares Are Priced......................... 16
Buying Shares.................................. 16
Opening an Account............................. 18
Adding to an Account........................... 19
Selling Shares................................. 20
Exchanging Shares.............................. 22
Other Purchase, Redemption
and Exchange Policies.......................... 23
Dividends, Distributions and Taxes............. 24
12b-1 Fees..................................... 24

Shareholder Services 25
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Financial Highlights 26
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Learn More
- --------------------------------------------------

Where to Get More Information
About the Funds........................ Back cover

http://WWW.VANWAGONER.COM

Van Wagoner Funds TABLE OF CONTENTS

<PAGE>

Van Wagoner MID-CAP GROWTH FUND
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Investment Objective
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CAPITAL APPRECIATION

Main Strategy
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THE MID-CAP GROWTH FUND INVESTS PRIMARILY (AT LEAST 65% OF ITS TOTAL ASSETS) IN
COMMON STOCKS OF GROWTH COMPANIES THAT, AT TIME OF PURCHASE, HAVE MARKET
CAPITALIZATIONS BETWEEN $500 MILLION AND $10 BILLION.

THE FUND BASES INVESTMENT BUY AND SELL DECISIONS ON:

- - Intensive company-specific research, which includes on-site visits

- - Interviews with management, customers, competitors and suppliers

- - Review of analysis by brokerage houses, industry consultants, trade
publications and other sources

The Mid-Cap Growth Fund looks for companies that are more established than those
in the Micro-Cap Growth Fund as discussed on p. 10. These companies are still
growing, usually because of a new, improved or upgraded product, service or
business operation.

The Fund may engage in short-term trading to try to achieve its investment
objective and is likely to have an annual portfolio turnover rate over 100%.

The Fund may sell stocks short to try to achieve its investment objective.

This Fund purchases restricted securities in private placement transactions.

Main Risks
- --------------------------------------------------------------------------------

Common stock prices rise and fall as market and economic conditions change. The
sectors of the stock market in which the Fund invests are particularly volatile.
The value of your Fund shares will fluctuate, and you could lose money.

Also, the mid-cap companies in which the Fund invests may be developing or
changing. They may be subject to greater business risks and more sensitive to
changes in economic conditions than larger, more established companies. As a
result, their prices may rise and fall more sharply.

When the Fund holds restricted securities, it may have difficulty accurately
pricing them. The Fund may not be able to sell these securities at the prices at
which it has valued them for purposes of calculating its net asset value without
experiencing delays or additional costs, if at all.

The Fund's investment performance will suffer if a security that it has sold
short appreciates in value. The Fund's investment performance may also suffer if
it is required to close out a short position earlier than it had intended. This
would occur if the securities lender required it to deliver the securities the
Fund borrowed at the commencement of the short sale and the Fund was unable to
borrow the securities from other securities lenders.

As a result of the Fund being likely to have an annual portfolio turnover rate
over 100%, the Fund will incur greater transaction costs for buying and selling
securities than it otherwise would. High portfolio turnover will result in
increased realized gains (or losses) to shareholders. Distributions to
shareholders of short-term capital gains are taxed as ordinary income under
federal income tax laws.

In general, this Fund is likely to be less volatile than the Micro-Cap Growth
Fund but significantly more volatile than the S&P 500/R Index.

Call toll-free 1-800-228-2121

<PAGE>

Fund Performance
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ANNUAL TOTAL RETURNS OF THE FUND Year Ended 12/31
- -------------------------------------------------
1996 23.90%
1997 (13.88)%
1998 16.49%
1999 126.88%

BEST QUARTER
4th Quarter 1999
38.11%
----------------

WORST QUARTER
4th Quarter 1997
(23.24)%
----------------

AVERAGE ANNUAL RETURN(as of 12/31/99)
- -----------------------------------------------------------------
SINCE INCEPTION
1 YEAR 12/31/95
VW Mid-Cap Growth Fund 126.88% 29.59%
- -----------------------------------------------------------------
S&P MidCap 400 Index<F1> 14.72% 21.15%
- -----------------------------------------------------------------

The bar chart and table at left give some indication of the risks of investing
in the Mid-Cap Growth Fund by showing how its performance can change from year
to year and how its average annual returns compare with those of a broad market
index. Please note that past performance does not necessarily indicate how the
Fund will perform in the future. The Fund's investments, including its
investments in privately placed securities and initial public offerings, are in
sectors of the stock market that since the beginning of the fourth quarter of
1998 have experienced far greater returns than the market as a whole. Investors
should not expect the Fund to consistently achieve these returns in the future.

<F1> The S&P MidCap 400 Index is a capitalization-weighted index that measures
the performance of the mid-range sector of the U.S. stock market where the
median market capitalization is approximately $700 million.

Fees and Expenses of the Fund
- --------------------------------------------------------------------------------

This table describes the fees and expenses you may pay if you buy and hold
shares of the Fund. Shareholder transaction expenses are direct expenses such as
fees and sales loads that you pay when buying or selling shares of some mutual
funds. There are no fees or sales loads charged to your account when you buy or
sell shares of the Van Wagoner Mid-Cap Growth Fund. However, if you sell shares
and request your money by wire transfer, there is a $10 fee. There is also a $15
fee for a redemption from an IRA account.

ANNUAL FUND OPERATING EXPENSES
- -------------------------------------------------------
(expenses that are deducted from Fund assets)

Management Fees 1.00%
- -------------------------------------------------------
Distribution (12b-1) Fees 0.25%
- -------------------------------------------------------
Other Fees 0.60%
- -------------------------------------------------------
Total Annual Fund Operating Expenses<F1> 1.85%
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<F1> THE ADVISER HAS AGREED TO LIMIT THE TOTAL EXPENSES OF EACH FUND (EXCLUDING
INTEREST, TAXES, BROKERAGE AND EXTRAORDINARY EXPENSES) TO AN ANNUAL RATE OF
1.95% OF THE FUND'S AVERAGE NET ASSETS UNTIL AT LEAST JANUARY 1, 2001.
After such date, the expense limitation may be revised at any time but not
to exceed the 2.00% limitation specified in the Investment Advisory
Agreement.

This example is intended to help you compare the cost of investing in the Van
Wagoner Mid-Cap Growth Fund with the cost of investing in other mutual funds.
The example assumes that you invest $10,000 in the Fund 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
Fund's operating expenses remain the same. Although your actual costs may be
higher or lower, based on these assumptions your net costs would be:
- --------------------------------------------------------------------------------
1 Year: $188 3 Years: $582 5 Years: $1,001 10 Years: $2,169
- --------------------------------------------------------------------------------

http://WWW.VANWAGONER.COM

Van Wagoner MID-CAP GROWTH FUND

<PAGE>

Van Wagoner TECHNOLOGY FUND
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Investment Objective
- --------------------------------------------------------------------------------

CAPITAL APPRECIATION

Main Strategy
- --------------------------------------------------------------------------------

THE TECHNOLOGY FUND INVESTS PRIMARILY (AT LEAST 65% OF ITS TOTAL ASSETS) IN
TECHNOLOGY COMPANIES OF ALL SIZES, IN INDUSTRIES CHARACTERIZED BY ADVANCES BASED
ON RESEARCH AND DEVELOPMENT. SUCH INDUSTRIES INCLUDE (BUT ARE NOT LIMITED TO):

- - Computers
- - Computer services and software
- - Communications
- - Consumer electronics
- - Cable television
- - Pharmaceuticals
- - Biotechnology
- - Medical devices
- - Semiconductors
- - Technical services
- - Robotics

THE FUND BASES INVESTMENT BUY AND SELL DECISIONS ON:

- - Intensive company-specific research, which includes on-site visits

- - Interviews with management, customers, competitors and suppliers

- - Review of analysis by brokerage houses, industry consultants, trade
publications and other sources

The Adviser believes that because advances in technology bring about growth and
innovations in nearly every other industry, technology companies offer increased
potential for long-term return.

The Fund may engage in short-term trading to try to achieve its investment
objective and is likely to have an annual portfolio turnover rate over 100%.

The Fund may sell stocks short to try to achieve its investment objective.

This Fund purchases restricted securities in private placement transactions.

Main Risks
- --------------------------------------------------------------------------------
Common stock prices rise and fall as market and economic conditions change. The
sectors of the stock market in which the Fund invests are particularly volatile.
The value of your Fund shares will fluctuate, and you could lose money.

Also, technology companies may be developing or changing. They may be subject to
greater business risks and more sensitive to changes in economic conditions than
larger, more established companies. Company earnings in this sector may
fluctuate more than those of other companies because of short product cycles
(technological obsolescence) and competitive pricing. Investors' enthusiasm for
technology stocks can also change dramatically. This all means technology stock
prices may rise and fall sharply.

Call toll-free 1-800-228-2121

<PAGE>

The Technology Fund may be the most volatile of all the Van Wagoner Funds
because it focuses on just one market sector. In general, this Fund is likely to
be significantly more volatile than the S&P 500/R Index.

Fund Performance
- --------------------------------------------------------------------------------

ANNUAL TOTAL RETURNS OF THE FUND Year Ended 12/31
- -------------------------------------------------

1998 85.10%
1999 223.76%

BEST QUARTER
1st Quarter 1999
58.56%
----------------

WORST QUARTER
3rd Quarter 1998
(9.85)%
----------------

AVERAGE ANNUAL TOTAL RETURN (as of 12/31/99)
- ----------------------------------------------------------------
SINCE INCEPTION
1 YEAR 12/31/97
VW Technology Fund 223.76% 144.80%
- ----------------------------------------------------------------
Nasdaq Industrial Index<F1> 72.22% 35.89%
- ----------------------------------------------------------------
The bar chart and table at left give some indication of the risks of investing
in the Technology Fund by showing how its performance can change from year to
year and how its average annual returns compare with those of a broad market
index. Please note that past performance does not necessarily indicate how the
Fund will perform in the future. The Fund's investments, including its
investments in privately placed securities and initial public offerings, are in
sectors of the stock market that since the beginning of the fourth quarter of
1998 have experienced far greater returns than the market as a whole. Investors
should not expect the Fund to consistently achieve these returns in the future.

<F1> The Nasdaq Industrial Index tracks the performance of domestic common
stocks traded on the regular Nasdaq market and which are classified as
industrial companies. As of December 31, 1999, this index included 2,537
companies, including agricultural, mining, construction, manufacturing
(electronic components), services and public administration enterprises.

http://WWW.VANWAGONER.COM

Van Wagoner TECHNOLOGY FUND

<PAGE>

Van Wagoner TECHNOLOGY FUND
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Fees and Expenses of the Fund
- --------------------------------------------------------------------------------

This table describes the fees and expenses you may pay if you buy and hold
shares of the Fund. Shareholder transaction expenses are direct expenses such as
fees and sales loads that you pay when buying or selling shares of some mutual
funds. There are no fees or sales loads charged to your account when you buy or
sell shares of the Van Wagoner Technology Fund. However, if you sell shares and
request your money by wire transfer, there is a $10 fee. There is also a $15 fee
for a redemption from an IRA account.

ANNUAL FUND OPERATING EXPENSES
- -------------------------------------------------------
(expenses that are deducted from Fund assets)

Management Fees 1.25%
- -------------------------------------------------------
Distribution (12b-1) Fees 0.25%
- -------------------------------------------------------
Other Fees 0.53%
- -------------------------------------------------------
Total Annual Fund Operating Expenses 2.03%

Expense Reimbursement (0.03)%
- -------------------------------------------------------
Net Expenses<F1> 2.00%
- -------------------------------------------------------

This example is intended to help you compare the cost of investing in the Van
Wagoner Technology Fund with the cost of investing in other mutual funds. The
example assumes that you invest $10,000 in the Fund 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
Fund's operating expenses remain the same. Although your actual costs may be
higher or lower, based on these assumptions your net costs would be:

- --------------------------------------------------------------------------------
1 Year: $198 3 Years: $623 5 Years: $1,073 10 Years: $2,323
- --------------------------------------------------------------------------------

Call toll-free 1-800-228-2121

<PAGE>

Van Wagoner POST-VENTURE FUND
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Investment Objective
- --------------------------------------------------------------------------------

CAPITAL APPRECIATION

Main Strategy
- --------------------------------------------------------------------------------
THE POST-VENTURE FUND INVESTS IN GROWTH COMPANIES OF ALL SIZES USUALLY IN THE
EARLY STAGES OF THEIR PUBLIC EXISTENCE. THE ADVISER LOOKS FOR COMPANIES THAT
EITHER HAVE RECENTLY BECOME PUBLICLY TRADED OR ARE TAKING A NEW DIRECTION, WITH
THE POTENTIAL FOR ABOVE-AVERAGE GROWTH IN MARKET VALUE.

THE FUND BASES INVESTMENT BUY AND SELL DECISIONS ON:

- - Intensive company-specific research, which includes on-site visits

- - Interviews with management, customers, competitors and suppliers
- - Review of analysis by brokerage houses, industry consultants, trade
publications and other sources

Most of these companies have received venture capital financing some time during
their development or as part of a reorganization, restructuring or
recapitalization. The Adviser looks for companies with strong management teams,
innovative products or services and a solid business plan.

The Fund may engage in short-term trading to try to achieve its investment
objective and is likely to have an annual portfolio turnover rate over 100%.

The Fund may sell stocks short to try to achieve its investment objective.
This Fund purchases restricted securities in private placement transactions.

Main Risks
- --------------------------------------------------------------------------------

The types of companies in which the Fund invests present additional risks.
Companies going through restructuring or reorganization have a greater risk of
being undervalued by the market. Also, post-venture-capital companies are
generally developing or making significant changes. They may be subject to
greater business risk and more sensitive to changes in economic conditions than
larger, more established companies. As a result, their prices may rise and fall
more sharply.

As a result of the Fund being likely to have an annual portfolio turnover rate
over 100%, the Fund will incur greater transaction costs for buying and selling

http://WWW.VANWAGONER.COM

Van Wagoner POST-VENTURE FUND

<PAGE>

Van Wagoner POST-VENTURE FUND
- --------------------------------------------------------------------------------

securities than it otherwise would. High portfolio turnover will result in
increased realized gains (or losses) to shareholders. Distributions to
shareholders of short-term capital gains are taxed as ordinary income under
federal income tax laws.

In general, this Fund is likely to be significantly more volatile than the S&P
500/R Index.

Fund Performance
- --------------------------------------------------------------------------------

ANNUAL TOTAL RETURNS OF THE FUND Year ended 12/31
- -------------------------------------------------

1997 (12.20)%
1998 37.59%
1999 237.22%

BEST QUARTER
1st Quarter 1999
55.30%
-----------------

WORST QUARTER
4th Quarter 1997
(24.76)%
----------------

AVERAGE ANNUAL TOTAL RETURN (as of 12/31/99)
- ----------------------------------------------------------------
SINCE INCEPTION
1 YEAR 12/31/96
VW Post-Venture Fund 237.22% 59.71%
- ----------------------------------------------------------------
Nasdaq Industrial Index<F1> 72.22% 26.84%
- ----------------------------------------------------------------

The bar chart and table at left give some indication of the risks of investing
in the Post-Venture Fund by showing how its performance can change from year to
year and how its average annual returns compare with those of a broad market
index. Please note that past performance does not necessarily indicate how the
Fund will perform in the future. The Fund's investments, including its
investments in privately placed securities and initial public offerings, are in
sectors of the stock market that since the beginning of the fourth quarter of
1998 have experienced far greater returns than the market as a whole. Investors
should not expect the Fund to consistently achieve these returns in the future.

Call toll-free 1-800-228-2121

<PAGE>

Fees and Expenses of the Fund
- --------------------------------------------------------------------------------

This table describes the fees and expenses you may pay if you buy and hold
shares of the Fund. Shareholder transaction expenses are direct expenses such as
fees and sales loads that you pay when buying or selling shares of some mutual
funds. There are no fees or sales loads charged to your account when you buy or
sell shares of the Van Wagoner Post-Venture Fund. However, if you sell shares
and request your money by wire transfer, there is a $10 fee. There is also a $15
fee for a redemption from an IRA account.

ANNUAL FUND OPERATING EXPENSES
- -------------------------------------------------------
(expenses that are deducted from Fund assets)

Management Fees 1.50%
- -------------------------------------------------------
Distribution (12b-1) Fees 0.25%
- -------------------------------------------------------
Other Fees 0.48%
- -------------------------------------------------------
Total Annual Fund Operating Expenses 2.23%

Expense Reimbursement (0.23)%
- -------------------------------------------------------
Net Expenses<F1> 2.00%
- -------------------------------------------------------

This example is intended to help you compare the cost of investing in the Van
Wagoner Post-Venture Fund with the cost of investing in other mutual funds. The
example assumes that you invest $10,000 in the Fund 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
Fund's operating expenses remain the same. Although your actual costs may be
higher or lower, based on these assumptions your net costs would be:

http://WWW.VANWAGONER.COM

Van Wagoner POST-VENTURE FUND

<PAGE>

Van Wagoner MICRO-CAP GROWTH FUND
- --------------------------------------------------------------------------------
(This Fund is currently closed to new investors.)

Investment Objective
- --------------------------------------------------------------------------------

CAPITAL APPRECIATION

Main Strategy
- --------------------------------------------------------------------------------
THE MICRO-CAP GROWTH FUND INVESTS PRIMARILY (AT LEAST 65% OF ITS TOTAL ASSETS)
IN VERY SMALL COMPANIES-THOSE WITH MARKET CAPITALIZATIONS UNDER $500 MILLION AT
TIME OF PURCHASE-THAT THE ADVISER BELIEVES HAVE THE POTENTIAL TO BE THE MARKET
LEADERS OF THE FUTURE.

THE FUND BASES INVESTMENT BUY AND SELL DECISIONS ON:

- - Intensive company-specific research, which includes on-site visits

- - Interviews with management, customers, competitors and suppliers

- - Review of analysis by brokerage houses, industry consultants, trade
publications and other sources

The Adviser looks for companies with strong management teams, and the ability to
grow significantly over the next several years. Most of these companies are not
followed by Wall Street at this early stage.

The Fund may engage in short-term trading to try to achieve its investment
objective and is likely to have an annual portfolio turnover rate of over 100%.

The Fund may sell stocks short to try to achieve its investment objective.

This Fund purchases restricted securities in private placement transactions.

Main Risks
- --------------------------------------------------------------------------------

The types of companies in which the Fund invests present additional risks. The
market may value companies according to size, or market capitalization, rather
than financial performance. When small-cap investing is out of favor, the Fund's
share prices may decline even though the companies the Fund holds have sound
fundamentals. Also, micro-cap companies may still be developing. They may lack
the management experience, financial resources, product diversity and
competitive strengths of larger companies, and may be traded at a lower volume.
They may also be subject to greater business risks and more sensitive to changes
in economic conditions than larger, more established companies. As a result,
their prices may rise and fall more sharply.

In general, this Fund is likely to be significantly more volatile than the S&P
500/R Index.

Call toll-free 1-800-228-2121

<PAGE>

Fund Performance
- --------------------------------------------------------------------------------

ANNUAL TOTAL RETURNS OF THE FUND Year Ended 12/31
- -------------------------------------------------

1996 24.50%
1997 (19.76)%
1998 13.11%
1999 207.88%

BEST QUARTER
4th Quarter 1999
47.04%
----------------

WORST QUARTER
4th Quarter 1997
(25.45)%
----------------

AVERAGE ANNUAL TOTAL RETURN (as of 12/31/99)
- ----------------------------------------------------------------
SINCE INCEPTION
1 YEAR 12/31/95
VW Micro-Cap Growth Fund 207.88% 36.57%
- ----------------------------------------------------------------
Russell 2000 Index<F1> 21.26% 13.92%
- ----------------------------------------------------------------

The bar chart and table at left give some indication of the risks of investing
in the Micro-Cap Growth Fund by showing how its performance can change from year
to year and how its average annual returns compare with those of a broad market
index. Please note that past performance does not necessarily indicate how the
Fund will perform in the future. The Fund's investments, including its
investments in privately placed securities and initial public offerings, are in
sectors of the stock market that since the beginning of the fourth quarter of
1998 have experienced far greater returns than the market as a whole. Investors
should not expect the Fund to consistently achieve these returns in the future.

<F1> The Russell 2000 is an index of the smallest 2,000 companies in the Russell
3000 Index, as ranked by total market capitalization. The Russell 2000
Index is widely regarded in the industry to accurately capture the universe
of small-cap stocks.

Fees and Expenses of the Fund
- --------------------------------------------------------------------------------

This table describes the fees and expenses you may pay if you buy and hold
shares of the Fund. Shareholder transaction expenses are direct expenses such as
fees and sales loads that you pay when buying or selling shares of some mutual
funds. There are no fees or sales loads charged to your account when you buy or
sell shares of the Van Wagoner Micro-Cap Growth Fund. However, if you sell
shares and request your money by wire transfer, there is a $10 fee. In addition,
there is a $15 fee for a redemption from an IRA account.

ANNUAL FUND OPERATING EXPENSES
- -------------------------------------------------------
(expenses that are deducted from Fund assets)

Management Fees 1.50%
- -------------------------------------------------------
Distribution (12b-1) Fees 0.20%
- -------------------------------------------------------
Other Fees 0.48%
- -------------------------------------------------------
Total Annual Fund Operating Expenses 2.18%

Expense Reimbursement (0.18)%
- -------------------------------------------------------
Net Expenses<F1> 2.00%
- -------------------------------------------------------

This example is intended to help you compare the cost of investing in the Van
Wagoner Micro-Cap Growth Fund with the cost of investing in other mutual funds.
The example assumes that you invest $10,000 in the Fund 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
Fund's operating expenses remain the same. Although your actual costs may be
higher or lower, based on these assumptions your net costs would be:

http://WWW.VANWAGONER.COM

Van Wagoner MICRO-CAP GROWTH FUND

<PAGE>

Van Wagoner EMERGING GROWTH FUND
- --------------------------------------------------------------------------------
(This Fund is currently closed to new investors.)

Investment Objective
- --------------------------------------------------------------------------------

CAPITAL APPRECIATION

Main Strategy
- --------------------------------------------------------------------------------

THE EMERGING GROWTH FUND INVESTS PRIMARILY IN COMMON STOCKS OF SMALL-CAP AND
MID-CAP GROWTH COMPANIES WITH THE POTENTIAL FOR ABOVE-AVERAGE, LONG-TERM GROWTH
BASED ON:

- - Innovative products or services

- - A unique strength in areas such as research, product development, and
marketing

- - Strong management teams

- - A strong financial position

THE FUND BASES INVESTMENT BUY AND SELL DECISIONS ON:

- - Intensive company-specific research, which includes on-site visits

- - Interviews with management, customers, competitors and suppliers

- - Review of analysis by brokerage houses, industry consultants, trade
publications and other sources

The Fund invests in companies of all sizes. The Fund prefers companies that are
beginning a growth stage to established growth companies.

The Fund may engage in short-term trading to try to achieve its investment
objective and is likely to have an annual portfolio turnover rate over 100%.

The Fund may sell stocks short to try to achieve its investment objective.

This Fund purchases restricted securities in private placement transactions.

Main Risks
- --------------------------------------------------------------------------------

The small-cap and mid-cap companies in which the Fund invests present additional
risks. The market may value companies according to size, or market
capitalization, rather than financial performance. When small-cap and mid-cap
stocks are out of favor, the Fund's share prices may decline even though the
companies it holds have sound fundamentals. Also, these companies may be in the
developmental stage or may be older companies undergoing significant changes.
They may be subject to greater business risks and more sensitive to changes in
economic conditions than larger, more established companies. As a result, their
prices may rise and fall more sharply.

In general, this Fund is likely to be significantly more volatile than the S&P
500/R Index.

Call toll-free 1-800-228-2121

<PAGE>

Fund Performance
- --------------------------------------------------------------------------------

ANNUAL TOTAL RETURNS OF THE FUND Year Ended 12/31
- -------------------------------------------------

1996 26.90%
1997 (20.02)%
1998 7.98%
1999 291.15%

BEST QUARTER
4th Quarter 1999
60.62%
----------------

WORST QUARTER
4th Quarter 1997
(25.75)%
----------------

AVERAGE ANNUAL TOTAL RETURN (as of 12/31/99)
- -----------------------------------------------------------------
SINCE INCEPTION
1 YEAR 12/31/95
VW Emerging Growth Fund 291.15% 43.89%
- ----------------------------------------------------------------
Nasdaq Industrial Index<F1> 72.22% 23.92%
- ----------------------------------------------------------------

The bar chart and table at left give some indication of the risks of investing
in the Emerging Growth Fund by showing how its performance can change from year
to year and how its average annual returns compare with those of a broad market
index. Please note that past performance does not necessarily indicate how the
Fund will perform in the future. The Fund's investments, including its
investments in privately placed securities and initial public offerings, are in
sectors of the stock market that since the beginning of the fourth quarter of
1998 have experienced far greater returns than the market as a whole. Investors
should not expect the Fund to consistently achieve these returns in the future.

Fees and Expenses of the Fund
- --------------------------------------------------------------------------------

This table describes the fees and expenses you may pay if you buy and hold
shares of the Fund. Shareholder transaction expenses are direct expenses such as
fees and sales loads that you pay when buying or selling shares of some mutual
funds. There are no fees or sales loads charged to your account when you buy or
sell shares of the Van Wagoner Emerging Growth Fund. However, if you sell shares
and request your money by wire transfer, there is a $10 fee. In addition, there
is a $15 fee for a redemption from an IRA account.

ANNUAL FUND OPERATING EXPENSES
- -------------------------------------------------------
(expenses that are deducted from Fund assets)

Management Fees 1.25%
- -------------------------------------------------------
Distribution (12b-1) Fees 0.19%
- -------------------------------------------------------
Other Fees 0.35%
- -------------------------------------------------------
Total Annual Fund Operating Expenses1 1.79%
- -------------------------------------------------------

This example is intended to help you compare the cost of investing in the Van
Wagoner Emerging Growth Fund with the cost of investing in other mutual funds.
The example assumes that you invest $10,000 in the Fund 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
Fund's operating expenses remain the same. Although your actual costs may be
higher or lower, based on these assumptions your net costs would be:

- --------------------------------------------------------------------------------
1 Year: $182 3 Years: $563 5 Years: $970 10 Years: $2,105
- --------------------------------------------------------------------------------

http://WWW.VANWAGONER.COM

Van Wagoner EMERGING GROWTH FUND

<PAGE>

Van Wagoner Funds OTHER POLICIES AND RISKS
- --------------------------------------------------------------------------------

While each of the five Van Wagoner Funds seeks capital appreciation and is an
aggressive growth fund, there are differences in Fund strategies, risks and
performance, as described in this Prospectus.

The Funds are designed for long-term investors who can accept frequent short-
term ups and downs in their investment's value.

MONEY MARKET INSTRUMENTS
In adverse markets, the Funds may take a temporary defensive position by
investing up to 100% of their assets in high quality, short-term money market
instruments. The Funds will not be able to achieve their investment objective of
capital appreciation to the extent they invest in money market instruments since
these securities earn interest but do not appreciate in value. The Funds may
also use money market instruments to have cash available to take advantage of
investment opportunities, to pay expenses and to meet anticipated redemption
requests.

HEDGING STRATEGIES
The Funds may use various hedging strategies, such as buying and selling options
on particular securities or stock indices, in an effort to reduce risk. Options
trading is a highly specialized activity that may entail increased investment
risk. Options trading may reduce return or increase volatility. If a Fund buys a
put or call option but doesn't exercise or close it before the option expires,
the Fund will lose the premium it paid plus commission costs.

INVESTMENT DECISION MAKING
The Adviser makes investment decisions based on company-specific research, which
includes:

- - On-site visits

- - Interviews with management, customers, competitors and suppliers

- - Review of analysis by brokerage houses, industry consultants, other trade
publications

The Adviser seeks out companies with both dedicated management teams and the
ability to create innovative products and services and thrive in rapidly growing
industries. If the Adviser has doubts as to a company's ability to execute its
business plan or its ability to meet earnings expectations, the Adviser will
reevaluate that holding and may reduce or liquidate the position. Continual
research is key to whether the Adviser increases, reduces or liquidates a
position.

FUND OBJECTIVES
The Board of Directors may change the Funds' investment objectives without
shareholder approval. You will receive advance notice of any such changes.
Call toll-free 1-800-228-2121

<PAGE>

Van Wagoner Funds MANAGEMENT
- --------------------------------------------------------------------------------

INVESTMENT ADVISER
The Funds are advised by Van Wagoner Capital Management, Inc., 345 California
Street, Suite 2450, San Francisco, CA 94104. The Adviser was organized October
24, 1995, and supervises and manages the Funds, overseeing administration and
making day-to-day investment decisions subject to policies set by the Board of
Directors.

Each Fund pays the Adviser an annual management fee equal to the following
percentages of daily net assets:

Mid-Cap Growth Fund 1.00%
- --------------------------------
Technology Fund 1.25%
- --------------------------------
Post-Venture Fund 1.50%
- --------------------------------
Micro-Cap Growth Fund 1.50%
- --------------------------------
Emerging Growth Fund 1.25%
- --------------------------------

PAST PERFORMANCE OF THE PORTFOLIO MANAGER
Garrett R. Van Wagoner, President and a director of the Adviser, is Van Wagoner
Capital Management's sole shareholder. He is the portfolio manager for each of
the Funds.

Mr. Van Wagoner has more than 23 years of experience as a securities analyst and
portfolio manager. From March 1993 to December 1995, he was portfolio manager of
the Govett Smaller Companies Fund, a portfolio of The Govett Funds, Inc. Before
that, he was senior vice president at Bessemer Trust, N.A., since 1982, where he
was responsible for its emerging growth stock investment program.

The table below shows how the Govett Smaller Companies Fund's average annual
returns for the year ended December 31, 1995, and for Mr. Van Wagoner's tenure
compared with Nasdaq Composite Index and S&P 500/R Index performance.

3/1/93 -
1 YEAR 12/31/95
- --------------------------------------------------------------
Govett Smaller Companies Fund<F1> 69.0% 54.7%
- --------------------------------------------------------------
Nasdaq Composite Index<F2> 39.9% 17.2%
- --------------------------------------------------------------
S&P 500/R Index<F3> 37.6% 15.4%
- --------------------------------------------------------------

<F1> Average annual total return reflects changes in share prices and
reinvestment of dividends and distributions and is net of Fund expenses.
The expense ratio of the Govett Smaller Companies Fund was capped at 1.95%
from March 1, 1993 to December 31, 1995. The performance stated is net of
actual fees and expenses including any sales loads.

<F2> The Nasdaq Composite Index is a market capitalization price only index that
tracks the performance of domestic common stocks traded on the regular
Nasdaq market as well as foreign common stocks and ADRs traded on the
National Market System.

<F3> The S&P 500/R Index is an unmanaged index of 500 selected stocks, most of
which are listed on the New York Stock Exchange. It's heavily weighted
toward large-cap stocks and represents about two-thirds of the total market
value of all domestic stocks.

This information shows Mr. Van Wagoner's performance in managing a portfolio
similar to the Emerging Growth Fund, using substantially similar investment
objectives, policies and strategies. Unlike the Emerging Growth Fund, which
isn't limited as to the capitalization of portfolio securities, the Govett
Smaller Companies Fund was required to invest at least 65% of its total assets
in companies with individual market capitalizations which would, at the time of
purchase, place them in the same size range as companies included in the Nasdaq
Composite Index, excluding its top 75 companies. However, the differences
between the two Funds do not affect their comparability. While serving as
portfolio manager for the Govett Smaller Companies Fund, Mr. Van Wagoner also
managed other accounts with investment objectives similar to the Emerging Growth
Fund but did not manage such accounts until June 1994. The Van Wagoner Emerging
Growth Fund is managed with substantially similar objectives, policies and
strategies as the Govett Smaller Companies Fund.

Of course, past performance doesn't guarantee future results. Investment returns
vary, as they are affected by market conditions and company-specific changes.
The past performance of the Govett Smaller Companies Fund is not indicative of
the past or future performance of the Emerging Growth Fund.

OTHER SERVICE PROVIDERS
Administrator and transfer agent: Sunstone Financial Group, Inc. provides
clerical, compliance, regulatory, Fund accounting, dividend disbursing, transfer
agency and other services.

http://WWW.VANWAGONER.COM

Van Wagoner Funds MANAGEMENT

<PAGE>

Van Wagoner Funds YOUR INVESTMENT
- --------------------------------------------------------------------------------

Here's what you need to know about opening and maintaining your account with Van
Wagoner Funds.

How Shares Are Priced
- --------------------------------------------------------------------------------

When you buy or sell (redeem) Fund shares, the Funds will price your transaction
at the next net asset value ("NAV") calculated after the Funds receive your
request in good order. See "Other Purchase, Redemption and Exchange Policies" on
page 23 for a definition of "good order." You pay no front-end sales charge,
commission or redemption fee (except for a $10 fee for redemptions made by wire
and a $15 fee for a redemption from an IRA account).

The Funds calculate NAV, the price of one share of a Fund, at the close of
regular trading (generally 4:00 p.m. Eastern time) each day the New York Stock
Exchange ("NYSE") is open. The NYSE is closed on weekends and national holidays.

If the transfer agent receives your buy or sell request in good order before the
close of regular trading on the NYSE, you will pay or receive that day's NAV. If
the transfer agent receives your buy or sell request in good order after the
close of regular trading on the NYSE, you will pay or receive the next day's
NAV. See "Other Purchase, Redemption and Exchange Policies" on page 23 for a
definition of "good order."

The Funds value securities other than debt instruments maturing within 60 days
at market prices. The Funds value debt securities maturing within 60 days at
amortized cost. If market prices aren't readily available for particular
securities, the Funds price these securities at their fair value as determined
by the Adviser under the Board of Directors' supervision.

Buying Shares
- --------------------------------------------------------------------------------

The Van Wagoner Emerging Growth Fund and Micro-Cap Growth Fund are currently
closed to new investors. Shareholders with existing Emerging Growth Fund and
Micro-Cap Growth Fund accounts will be able to open additional accounts and add
to accounts through the reinvestment of dividends and cash distributions, if
any, on any shares owned and through the purchase of additional shares.
Financial planners and registered investment advisers whose clients beneficially
own Emerging Growth Fund and Micro-Cap Growth Fund shares may continue to
purchase Fund shares.

Accounts may not be opened in the Emerging Growth Fund and Micro-Cap Growth Fund
by means of an exchange from another existing Van Wagoner Funds account.
Shareholders must maintain the minimum account value stated in the Prospectus or
imposed by their broker-dealer. For more details, please call 1-800-228-2121.

The Emerging Growth Fund and the Micro-Cap Growth Fund may resume sales to new
investors at some future date, but have no present intention to do so.

All the Van Wagoner Funds are no-load. You pay no sales charge to buy, sell or
exchange shares, but the Funds do charge a 0.25% 12b-1 fee. (There is a $10 fee
for redemptions made by wire and a $15 fee for a redemption from an IRA
account.)

Call toll-free 1-800-228-2121

<PAGE>

- --------------------------------------------------------------------------------
MINIMUM INVESTMENT INITIAL ADDITIONAL

Regular Accounts $1,000 $50
- ----------------------------------------------------------------
Automatic Investment Plan $500 $50
- ----------------------------------------------------------------
IRAs $500 $50
- ----------------------------------------------------------------
Gift to Minors $500 $50
- ----------------------------------------------------------------

The Funds may waive the minimum investment amount for qualified retirement
plans. Investors must pay for purchases in U.S. dollars, by checks drawn on U.S.
banks. The Funds won't accept cash, credit cards or third-party checks.

Accepting orders. You must properly complete the New Account Application to
establish telephone and exchange privileges. The Funds may return incomplete
Applications or checks.

Each Fund may reject any purchase order or refuse a telephone transaction if the
Fund believes it is advisable to do so. The Funds will reject applications that
do not have a U.S. address and a Social Security Number or a W-8BEN. The Funds
won't accept an account if you're investing for another person as attorney-in-
fact, or an account with "Power of Attorney" or "POA" in the New Account
Application's registration section.

Certificates. The Funds do not issue stock certificates. You'll receive a
statement confirming your purchase.

http://WWW.VANWAGONER.COM

Van Wagoner Funds YOUR INVESTMENT

<PAGE>

Van Wagoner Funds YOUR INVESTMENT
- --------------------------------------------------------------------------------

Opening an Account
- --------------------------------------------------------------------------------

BY MAIL
- - Complete a New Account Application (available online at www.vanwagoner.com or
by calling 1-800-228-2121). If you are opening an IRA, complete an IRA
Application.

- - Mail the completed Application with a check payable to VAN WAGONER FUNDS to:
Van Wagoner Funds, Inc.
P.O. Box 1628
Milwaukee, WI 53201-1628

- - For overnight or express mail, use this address:
Van Wagoner Funds, Inc.
207 E. Buffalo St., Suite 315
Milwaukee, WI 53202-5712

BY WIRE
- - Prior to the wire purchase you must call 1-800-228-2121 for an investor
account number. At the same time you must also complete a New Account
Application or an IRA Application if applicable.

- - The wire instructions are as follows:
UMB Bank, n.a.
A.B.A. #101000695
For credit to Van Wagoner Funds, Inc.
Account #9870610183
For further credit to:
{investor account number}
{name or account registration}
{Social Security or Taxpayer Identification Number}
{Name of Fund you intend to purchase}

- - As soon as possible after wiring money, send the Funds your ORIGINAL New
Account Application or IRA Application. THE FUNDS MUST RECEIVE A PROPERLY
COMPLETED AND EXECUTED APPLICATION TO ESTABLISH TELEPHONE AND EXCHANGE
PRIVILEGES FOR YOU. IF THE FUNDS DO NOT RECEIVE YOUR ORIGINAL APPLICATION,
THEY MAY DELAY PAYMENT OF REDEMPTION PROCEEDS AND WITHHOLD TAXES.

AUTOMATIC INVESTMENT PLAN
- - Complete the Automatic Investment Plan section on your New Account
Application, and open your account with at least $500.

- - Each month, quarter or year, the amount you specify ($50 or more) is
automatically withdrawn from your bank account to buy Fund shares. You can
choose to have withdrawals on the 5th, 10th, 15th, 20th, 25th and/or last day
of each month. You will receive QUARTERLY statements showing these purchases.

- - The Funds do not charge a service fee for the Plan, but if there's not enough
money in your bank account to cover the withdrawal, you'll be charged $20,
your purchase will be cancelled, and you'll be responsible for any resulting
loss to the Funds.

- - A REDEMPTION OF ALL FUNDS FROM YOUR ACCOUNT WILL NOT AUTOMATICALLY
DISCONTINUE THE PLAN. To terminate your Automatic Investment Plan, send the
Funds a written request at least five days before your next Plan withdrawal
date or call our Shareholder Services Department.

Call toll-free 1-800-228-2121

<PAGE>

Adding to an Account
- --------------------------------------------------------------------------------

BY MAIL
- - Send your check, plus an investment slip from a recent statement or a signed
note with the account's full name and number.

- - Use the addresses provided on page 18 under "Opening an Account - By Mail."

BY WIRE
- - Follow the wire instructions on page 18 under "Opening an Account - By Wire."
Be sure to include your account number and the name of the Fund to be
purchased.

- - Wired funds are considered received in good order on the day they reach the
Funds' bank account by the Funds' purchase cut-off time (3:00 p.m. Central
time) and all required information is provided in the wire instructions. If a
wire is incomplete, it may be returned. The wire instructions will determine
the terms of the purchase transaction.

BY ELECTRONIC FUNDS TRANSFER
- - The Funds require 15 calendar days to verify your bank information before
initiating this privilege. If your account is already open and you'd like to
establish electronic funds transfer privileges, call 1-800-228-2121.

- - Request the electronic transfer by phone or in writing, in amounts from $50
to $50,000 per day.

- - The Funds withdraw money from the bank account you designated when
establishing the privilege and invest it at the net asset value calculated
after they receive your transfer request in good order.

AUTOMATIC INVESTMENT PLAN
- - If your account is already open and you'd like to add the Automatic
Investment Plan, call 1-800-228-2121 for an Application. Plan investment
minimums apply. Adding this Plan to your account requires a signature
guarantee, described on page 23.

- - The Funds require 15 calendar days to verify your bank information before
initiating the Plan.

OTHER PURCHASE POLICIES
Purchases through third parties. If you buy shares from a broker-dealer,
financial institution or other provider, their policies and fees may differ from
those described here.

The Funds may accept requests to buy additional shares into a broker-dealer
street name account only from the broker-dealer.

The Funds may authorize service providers and their designees to accept purchase
orders on the Funds' behalf. The Funds consider such orders received when the
service provider accepts them, and price them at the next net asset value
calculated after receipt by the service provider.

The Funds have agreed to allow some service providers to enter purchase orders
for their customers by telephone, with payment to follow. The Funds price these
telephone orders at the next net asset value calculated after the service
provider receives them. The service provider is responsible for placing the
orders promptly and for ensuring the Funds receive payment within the agreed-
upon period. Otherwise, the provider could be liable for resulting fees or
losses.

Returned checks/insufficient funds. The Funds will charge a $20 service fee
against your account for any check or electronic transfer returned unpaid. YOUR
PURCHASE WILL BE CANCELLED, AND YOU'LL BE RESPONSIBLE FOR ANY RESULTING LOSS TO
THE FUNDS.

Redemption requests shortly after purchase. Redemption payments may be delayed
up to 7 business days to make sure there are sufficient funds to cover the check
or electronic transfer you used to make the purchase. If you plan to exchange or
redeem shares shortly after purchase, you may want to make your purchase by
wire.

http://WWW.VANWAGONER.COM

Van Wagoner Funds OPENING AND ADDING TO AN ACCOUNT

<PAGE>

Van Wagoner Funds YOUR INVESTMENT
- --------------------------------------------------------------------------------

Selling Shares
- --------------------------------------------------------------------------------

You may sell, or redeem, your Fund shares anytime. The price you receive will be
the next net asset value calculated after the Funds receive your request in good
order. See "Other Purchase, Redemption and Exchange Policies" on page 23 for a
definition of "good order." Note that when you sell shares, you may realize a
capital gain or loss for federal income tax purposes.

There's no charge to redeem shares except if you:

- - redeem by wire ($10)

- - redeem from a retirement account ($15 to cover tax reporting as detailed in
your IRA Disclosure Statement & Custodial Account Agreement)

The Funds may withhold taxes on IRA redemptions to meet federal law
requirements.

The Funds reserve the right to redeem in kind-that is, in securities whose
market value equals the redemption amount.

BY MAIL
- - Send the Funds your unconditional written request with:

- the number of shares or the dollar amount to be redeemed

- the Fund's name

- the name(s) on the account registration

- the account number

If you are redeeming from an IRA, please tell us the proper tax withholding on
your redemption request. If you don't make your selection on the IRA
Application, we will automatically withhold 10% of your redemption proceeds.

- - Sign the request exactly as the account is registered. YOU'LL NEED A
SIGNATURE GUARANTEE IF:

- the amount to be redeemed is more than $50,000

- the proceeds are to be sent to someone other than the shareholders of
record or to somewhere other than the address of record

- the request is made within 30 days of an address change

See "Signature Guarantees," under "Other Purchase, Redemption and Exchange
Policies" on page 23.

- - Include any documentation required for corporate, partnership or fiduciary
accounts. Call 1-800-228-2121 for details.

- - Mail to:
Van Wagoner Funds, Inc.
P.O. Box 1628
Milwaukee, WI 53201-1628

- - For overnight or express mail, use this address:
Van Wagoner Funds, Inc.
207 E. Buffalo St., Suite 315
Milwaukee, WI 53202-5712

BY TELEPHONE
- - If you did not waive this privilege on your New Account Application, you may
call the Funds at 1-800-228-2121 to redeem share amounts of $500 to $50,000.
You must request redemptions exceeding $50,000 in writing with all signatures
guaranteed.

- - The Funds will mail proceeds to your address of record, or send by wire or
electronic funds transfer to the bank account listed in your records. The
Funds will deduct a $10 wire redemption fee from your proceeds. There is also
a $15 fee for redemptions from IRAs.

- - The Funds reserve the right to refuse a telephone redemption request if they
consider it advisable to do so and do not accept redemption requests via fax.

Call toll-free 1-800-228-2121

<PAGE>

OTHER REDEMPTION POLICIES
Payment. When you redeem shares, you'll receive payment as follows:

- - Mailed payments will be sent within 7 days of receiving redemption
instructions in good order.

- - Wire payments for redemptions requested by phone will usually be made on the
next business day.

- - Electronic funds transfers will ordinarily arrive at your bank 2 to 3 banking
days after transmission.

The Funds may delay payment for up to 7 business days after receiving a
redemption request, to allow checks or electronic transfer proceeds used to
purchase Fund shares to clear. The Funds may also suspend redemptions if the
NYSE closes or for other emergencies.

If the dollar amount you request to be redeemed is greater than your current
account value (as determined by the NAV on the redemption date), the Funds will
redeem your entire account balance.

When you redeem a partial balance from the Money Market Fund (see "Exchanging
Shares" on page 22 for details on that Fund), your proceeds will exclude accrued
and unpaid income through the redemption date. If you redeem your entire balance
from the Money Market Fund, it will pay separately the accrued income at the end
of the month.

Redeeming shares through third parties. A broker-dealer, financial institution
or other service provider may charge a fee to redeem your Fund shares. If the
service provider is the shareholder of record, the Funds may accept redemption
requests only from that provider.

The Funds may authorize service providers and their designees to accept
redemption requests on the Funds' behalf. The Funds consider these requests
received when the provider accepts them, and price them at the next net asset
value calculated.

Telephone redemptions. The Funds won't accept telephone redemption requests for
payment by check for 30 days following an address change. For thirty days
following an address change you must make redemption requests in writing, with
all signatures guaranteed.

During times of unusual market activity, you may find it difficult to redeem
shares by telephone or wire. If you are unable to contact the Funds by
telephone, you can mail or send, by overnight delivery, your redemption request.

Small accounts. If a redemption or exchange leaves your account below the $1,000
minimum, or you discontinue the Automatic Investment Plan before you reach the
minimum, the Funds may provide you a 60-day notice to add to your balance or
renew your Automatic Investment Plan. If you do not act within the 60-day
period, the Funds may close your account and send you the proceeds.

Systematic Withdrawal Plan. If your account balance is $10,000 or more, you can
request regular distributions of at least $50. Note that withdrawals may result
in a gain or loss for federal income tax purposes.

Call 1-800-228-2121 for a Systematic Withdrawal Plan Application. To change your
plan, send a request in writing, with a signature guarantee for each registered
holder of the account. You can stop your plan anytime without charge or penalty.
The Funds may change or eliminate the plan at any time with 60 days' notice.

http://WWW.VANWAGONER.COM

Van Wagoner Funds SELLING SHARES

<PAGE>
Van Wagoner Funds YOUR INVESTMENT
- --------------------------------------------------------------------------------

Exchanging Shares
- --------------------------------------------------------------------------------
You can exchange shares of one Van Wagoner Fund for those of any other Van
Wagoner Fund available for investment. Note that an exchange is an ordinary sale
and purchase for federal income tax purposes; you may realize a capital gain or
loss.

HOW IT WORKS
You can request an exchange in writing or by phone (if you haven't declined this
privilege). Shares from your existing account are redeemed at the next net asset
value calculated after the Funds receive your instructions in good order. The
proceeds are used to buy shares in another Van Wagoner Fund (also priced at the
next net asset value calculated after the Funds receive your instructions in
good order).

If you're opening a new account with an exchange, the transaction must meet
account minimums. If you're adding to an account, the exchange must be $500 or
more. New accounts will have the same registration and privileges as your
existing account unless you specify otherwise.

MONEY MARKET FUND

You can also exchange your Van Wagoner Funds shares for those of the Northern
U.S. Government Money Market Fund (the "Money Market Fund"). The minimum to open
such an account is $1,000; for additions, it's $50. Call 1-800-228-2121 for the
Money Market Fund Prospectus and read it carefully before investing.

When you exchange from a Fund into the Money Market Fund or make an additional
purchase, dividends begin to accrue on the Money Market shares so purchased the
day after the exchange or the additional purchase. When you exchange a partial
balance out of the Money Market Fund, your proceeds exclude accrued and unpaid
dividends through the exchange date. When you're exchanging your entire Money
Market Fund balance, the Money Market Fund will exchange accrued and unpaid
dividends when the Money Market Fund pays it, at the end of the month.

TELEPHONE EXCHANGES
Follow the instructions under "Selling Shares - By Telephone."

AUTOMATIC EXCHANGE PLAN
You may make automatic monthly exchanges from one Van Wagoner Fund to another or
from the Money Market Fund to a Van Wagoner Fund. The minimum transaction is
$50. Keep in mind that an exchange is an ordinary sale and purchase for federal
income tax purposes; you may realize a capital gain or loss.

Your account must meet minimum account requirements before you establish this
plan. To set up an Automatic Exchange Plan when you open your account, complete
that section of the New Account Application. To start the plan after your
account is open, call the Funds at 1-800-228-2121.

EXCHANGE RESTRICTIONS

The Van Wagoner Funds are for long-term investing, not short-term market
speculation. Excessive exchanges can hurt the Funds' performance and other
shareholders. A pattern of exchanges with a "market timer" strategy can be
especially disruptive. Therefore:

- - The Funds may suspend or terminate, without notice, the exchange privilege of
any investor who uses it excessively (e.g., more than 5 times a year).

- - The Funds may restrict or refuse exchanges if they receive or anticipate
receiving simultaneous orders affecting significant portions of a Fund's
assets.

Call toll-free 1-800-228-2121
<PAGE>

Other Purchase, Redemption and Exchange Policies
- --------------------------------------------------------------------------------

GOOD ORDER
The Funds must receive your request to buy, sell or exchange shares in good
order. The request must include:

- - The Fund's name and your account number

- - The number or dollar amount of shares you want to buy or sell

- - Signatures of all owners, exactly as registered on the account

- - Signature guarantees for the following:

- if the amount to be redeemed is more than $50,000

- if the proceeds are to be sent to someone other than the shareholders of
record or to somewhere other than the address of record

- - if the request is made within 30 days of an address change

- - Any documentation required for redemptions by corporations, estates, trusts
and other organizations

TELEPHONE TRANSACTIONS
Unless you waive telephone privileges on your New Account Application, you
automatically have the privilege to make telephone inquiries, exchanges and
redemptions. Once your account is established, you must make requests to change
these privileges in writing, signed by each registered holder of the account,
with all signatures guaranteed. A NOTARY PUBLIC IS NOT AN ACCEPTABLE GUARANTOR.

The Funds will take reasonable measures to prevent unauthorized telephone
transactions and will not be liable for such transactions. THE FUNDS RESERVE THE
RIGHT TO REFUSE A TELEPHONE TRANSACTION.

SIGNATURE GUARANTEES

Generally, whenever you change your account privileges, your bank information or
your account registration information, you need a signature guarantee for each
registered holder. These guarantee requirements help protect you from fraud. You
can have signatures guaranteed by a U.S. commercial bank or trust company, a
member of the National Association of Securities Dealers, Inc., or other
eligible institutions. A NOTARY PUBLIC IS NOT AN ACCEPTABLE GUARANTOR.

http://WWW.VANWAGONER.COM

Van Wagoner Funds OTHER PURCHASE, REDEMPTION AND EXCHANGE POLICIES

<PAGE>

Van Wagoner Funds YOUR INVESTMENT
- --------------------------------------------------------------------------------

Dividends, Distributions and Taxes
- --------------------------------------------------------------------------------

The Funds intend to pay dividends, from net investment income if any, and net
realized capital gains, if any, at least annually. The Funds will reinvest these
dividends and distributions unless you request otherwise.

Whether you receive dividends and distributions in cash or reinvest them,
they're generally subject to federal income tax as ordinary income or capital
gains, respectively. Each year the Funds will give you an annual statement about
the dividends and other distributions you've received or reinvested. Because
everyone's tax situation is unique, and state and local law may also affect you,
the Funds strongly suggest you consult your tax adviser.

If you don't give the Funds your Taxpayer Identification Number, federal law
requires withholding of 31% of any distribution and redemption proceeds.

12b-1 Fees
- --------------------------------------------------------------------------------

The Funds' plan under Rule 12b-1 allows each Fund to use up to 0.25% of its
average daily net assets to pay sales distribution and other fees for the sale
of its shares and for services provided to its investors. Because these fees are
paid out of a Fund's assets year after year, over time they will increase the
cost of your investment and may exceed other types of sales charges.

Call toll-free 1-800-228-2121

<PAGE>

Van Wagoner Funds SHAREHOLDER SERVICES
- --------------------------------------------------------------------------------

Automated Information
- --------------------------------------------------------------------------------

Use a touch-tone phone to access information about the Funds and your account 24
hours a day, 7 days a week. During regular business hours (7:00 a.m. to 7:00
p.m. Central time, Monday through Friday), you may also choose to speak with a
Shareholder Services Representative. Call 1-800-228-2121.

With automated shareholder services, you can:
- - Find out a Fund's closing price and how that price changed from the previous
day

- - Check your account balance

- - Review your last 5 transactions

- - Order duplicate forms and statements

Internet Access www.vanwagoner.com
- ----------------

Visit the Funds' Web site to review your account balances, transactions and
other information. Go to WWW.VANWAGONER.COM to select your password and initiate
this privilege.

Statements and Reports
- --------------------------------------------------------------------------------

As a shareholder you'll receive:

- - Confirmation statements. You'll receive a confirmation statement after each
transaction that affects your account balance or registration. Automatic
Investment Plan participants receive QUARTERLY confirmations of all automatic
transactions.

- - Account statements. All shareholders receive quarterly account statements.
You can order additional copies of statements for the current and preceding
year at no charge. Statements for earlier years cost $5 each. Call 1-800-228-
2121.

If you need to contact the Funds about your account, you can write to us at:
VAN WAGONER FUNDS, INC.
P.O. BOX 1628
MILWAUKEE, WI 53201-1628

For overnight or express mail:
VAN WAGONER FUNDS, INC.
207 E. BUFFALO ST., SUITE 315
MILWAUKEE, WI 53202-5712

- - Financial reports. Shareholders receive financial reports twice a year.
Annual reports include audited financial statements. To reduce expenses we'll
mail one copy of each report to each Taxpayer Identification Number even
though the investor may have more than one account with the Funds.

Automatic Plans
- --------------------------------------------------------------------------------
The Funds offer an Automatic Investment Plan, described under "Opening an
Account;" a Systematic Withdrawal Plan, described under "Selling Shares;" and an
Automatic Exchange Plan, described under "Exchanging Shares."

Retirement Plans
- --------------------------------------------------------------------------------
The Funds offer several retirement accounts and employer plans: IRA, Roth IRA,
SEP-IRA, SIMPLE IRA and 403(b)(7) accounts. In addition, the Funds can be used
as investment options for other types of retirement plans. For more information
call 1-800-228-2121.

http://WWW.VANWAGONER.COM

Van Wagoner Funds SHAREHOLDER SERVICES

<PAGE>

Van Wagoner Funds FINANCIAL HIGHLIGHTS
- --------------------------------------------------------------------------------

For a Fund Share Outstanding Throughout the Year Ending December 31
- --------------------------------------------------------------------------------

THE FINANCIAL HIGHLIGHTS TABLE IS INTENDED TO HELP YOU UNDERSTAND EACH FUND'S
FINANCIAL PERFORMANCE SINCE INCEPTION. SOME OF THE INFORMATION REFLECTS RESULTS
FOR ONE FUND SHARE. "TOTAL RETURN" IS THE RATE YOUR INVESTMENT WOULD HAVE EARNED
(OR LOST), ASSUMING YOU REINVESTED ALL DIVIDENDS AND DISTRIBUTIONS. THE
INFORMATION FOR THE YEAR ENDED DECEMBER 31, 1999 HAS BEEN AUDITED BY ERNST &
YOUNG LLP. THE INFORMATION FOR PERIODS PRIOR TO 1999 HAS BEEN AUDITED BY
PRICEWATERHOUSECOOPERS LLP. THE FUNDS' 1999 FINANCIAL STATEMENTS ARE INCLUDED IN
THE ANNUAL REPORT, WHICH IS AVAILABLE ON REQUEST.

MID-CAP GROWTH FUND TECHNOLOGY FUND POST-VENTURE FUND MICRO-CAP GROWTH FUND
1999 1998 1997 1996 1999 1998 1999 1998 1997 1999 1998 1997 1996
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Net Asset Value,
Beginning
of Year $12.43 $10.67 $12.39 $10.00 $18.51 $10.00 $12.08 $8.78 $10.00 $11.30 $9.99 $12.45 $10.00

INCOME (LOSS) FROM
INVESTMENT
OPERATIONS:

Net investment loss(0.13) (0.16) (0.22) (0.09) (0.16) (0.08) (0.12) (0.14) (0.15) (0.16) (0.16) (0.26) (0.09)

Net realized and
unrealized gains
(losses) on
investments 15.71 1.92 (1.50) 2.48<F1> 41.29 8.59 28.33 3.44 (1.07) 23.65 1.47 (2.20) 2.54<F1>
- ------------------------------------------------------------------------------------------------------------------------------------
Total from
investment
operations 15.58 1.76 (1.72) 2.39 41.13 8.51 28.21 3.30 (1.22) 23.49 1.31 (2.46) 2.45
- ------------------------------------------------------------------------------------------------------------------------------------

DISTRIBUTIONS:
Net realized gains (0.95) - - - (1.35) - (2.20) - - - - - -

Net Asset Value,
End of Year $27.06 $12.43 $10.67 $12.39 $58.29 $18.51 $38.09 $12.08 $8.78 $34.79 $11.30 $9.99 $12.45
====================================================================================================================================

Total Return 126.88% 16.49% (13.88)% 23.90% 223.76% 85.10% 237.22% 37.59% (12.20)% 207.88% 13.11% (19.76)% 24.50%

SUPPLEMENTAL
DATA AND RATIOS:

Net assets,
end of year
(000s) $141,916 $45,925 $73,837 $137,740 $401,444 $8,176 $391,224 $19,081 $20,468 $296,026 $46,113 $71,867 $140,698

Ratio of expenses
to average net
assets-net of
waivers and
reimbursements 1.85% 1.95% 1.80% 1.95% 1.95% 1.95% 1.95% 1.95% 1.95% 1.95% 1.95% 1.95% 1.95%

Ratio of net
investment loss
to average net
assets-net of
waivers and
reimbursements (0.88)% (1.15)% (1.42)% (1.16)% (1.05)% (0.88)% (1.06)% (1.39)% (1.39)% (1.13)% (1.30)% (1.72)% (1.04)%

Ratio of expenses
to average net
assets-before
waivers and
reimbursements 1.85% 2.12% 1.80% 2.05% 2.03% 5.80% 2.23% 2.90% 2.69% 2.18% 2.63% 2.32% 2.55%

Ratio of net
investment loss
to average net
assets-before
waivers and
reimbursements (0.88)% (1.32)% (1.42)% (1.26)% (1.13)% (4.73)% (1.34)% (2.34)% (2.13)% (1.36)% (1.98)% (2.09)% (1.64)%

Portfolio
turnover rate 589% 787% 304% 173% 275% 888% 328% 641% 317% 180% 367% 232% 153%

</TABLE>

<F1> The amount shown may not correlate with the aggregate gains and losses of
portfolio securities due to the timing of sales and redemptions of Fund
shares.

http://WWW.VANWAGONER.COM

Van Wagoner Funds FINANCIAL HIGHLIGHTS

<PAGE>

Van Wagoner Funds FINANCIAL HIGHLIGHTS
- -------------------------------------------------------------------------------

For a Fund Share Outstanding Throughout the Year Ending December 31
- -------------------------------------------------------------------------------

EMERGING GROWTH FUND
1999 1998 1997 1996

Net Asset Value, Beginning of Year $10.96 $10.15 $12.69 $10.00

INCOME (LOSS) FROM INVESTMENT OPERATIONS:
Net investment loss (0.22) (0.20) (0.25) (0.15)

Net realized and unrealized gains
(losses) on investments 32.12 1.01 (2.29) 2.84<F1>
- -------------------------------------------------------------------------------
Total from investment operations 31.90 0.81 (2.54) 2.69
- -------------------------------------------------------------------------------

DISTRIBUTIONS:
Net realized gains - - - -

Net Asset Value, End of Year $42.86 $10.96 $10.15 $12.69
===============================================================================

Total Return 291.15% 7.98% (20.02)% 26.90%

SUPPLEMENTAL DATA AND RATIOS:

Net assets, end of year (000s) $1,466,827 $189,372 $313,217 $638,159

Ratio of expenses to average
net assets-net of waivers
and reimbursements 1.79% 1.95% 1.88% 1.95%

Ratio of net investment loss to
average net assets-net of waivers
and reimbursements (1.30)% (1.55)% (1.68)% (1.49)%

Ratio of expenses to average
net assets-before waivers
and reimbursements 1.79% 2.10% 1.88% 1.98%

Ratio of net investment loss to
average net assets-before
waivers and reimbursements (1.30)% (1.70)% (1.68)% (1.52)%

Portfolio turnover rate 353% 668% 333% 159%

<F1> The amount shown may not correlate with the aggregate gains and losses of
portfolio securities due to the timing of sales and redemptions of Fund
shares.

Call toll-free 1-800-228-2121

<PAGE>

Van Wagoner Funds LEARN MORE
- -------------------------------------------------------------------------------

Where to Get More Information About the Funds
- -------------------------------------------------------------------------------

To find out more about Van Wagoner Funds, ask for a free copy of the following:

STATEMENT OF ADDITIONAL INFORMATION ("SAI")

The SAI gives more information about various aspects of the Funds. It's filed
with the Securities and Exchange Commission ("SEC") and is incorporated by
reference into the Prospectus, which means it's legally part of this Prospectus.

ANNUAL/SEMI-ANNUAL REPORT
These reports discuss Fund holdings. The Annual Report tells how market
conditions, economic trends and Fund investment strategies affected Fund
performance during the previous fiscal year.

To obtain this and other information or to inquire about the Funds:

BY TELEPHONE
Call 1-800-228-2121.

BY MAIL
Write to:
Van Wagoner Funds, Inc.
P.O. Box 1628
Milwaukee, WI 53201-1628
Overnight or Express Deliveries:
Van Wagoner Funds, Inc.
207 E. Buffalo St., Suite 315
Milwaukee, WI 53202-5712

ON THE INTERNET
View or download the Prospectus, New Account Application and other Fund
information at our Web site, WWW.VANWAGONER.COM, or at the SEC's Web site,
WWW.SEC.GOV.

You can review and copy information about the Van Wagoner Funds (including the
SAI) at the SEC's Public Reference Room in Washington, D.C. You can call 1-202-
942-8090 for information on the operations of the Public Reference Room. Reports
and other information about the Van Wagoner Funds are also available at the
SEC's Internet site at http://www.sec.gov and copies of this information may be
obtained, upon payment of a duplicating fee, by writing to the Public Reference
Section, Securities and Exchange Commission, Washington, D.C. 20549-6009 or by
electronic request to [email protected].

SEC FILE NUMBER: 811-9116

(LOGO) VAN WAGONER FUNDS
- -------------------------

VW-4020400

XXXXX

VAN WAGONER FUNDS
-----------------
Growth stock investing
Capital Appreciation Fund
Growth Fund

Prospectus
April 30, 2000

The Securities and Exchange Commission has not approved or disapproved these
securities or passed on the accuracy or adequacy of this prospectus. Any
representation to the contrary is a criminal offense.

CONTENTS
- --------

THE FUNDS
What you should know about each Fund's investment strategies, risks, performance
and expenses

Capital Appreciation Fund.......................................2
Growth Fund.....................................................5
Other Policies and Risks........................................7
Management......................................................8

YOUR INVESTMENT
How to open and maintain your Van Wagoner account

How Shares Are Priced...........................................9
Buying Shares...................................................9
Opening an Account.............................................10
Adding to an Account...........................................11
Other Purchase Policies........................................12
Selling Shares.................................................12
Other Redemption Policies......................................13
Exchanging Shares..............................................14
Other Purchase, Redemption and Exchange Policies...............15
Dividends, Distributions and Taxes.............................16
12b-1 Fees.....................................................16
Shareholder Services...........................................16
Automated Information..........................................16

LEARN MORE
Where to get more information about the Fund...........Back cover

<PAGE>

VAN WAGONER CAPITAL APPRECIATION FUND

INVESTMENT OBJECTIVE: Capital Appreciation.

MAIN STRATEGY

The Capital Appreciation Fund invests in the common stocks of companies with the
potential for above-average, long-term growth. The Adviser looks for companies
with:

- - Innovative products or services
- - Unique competitive strengths
- - Capable management
- - A strong balance sheet

The Fund bases investment buy and sell decisions on:

- - Intensive company-specific research, which includes on-site visits
- - Interviews with management, customers, competitors and suppliers
- - Review of analyses by brokerage houses, industry consultants, trade
publications and other sources

The Fund may engage in short-term trading to try to achieve its investment
objective and is likely to have an annual portfolio turnover rate over 100%.

The Fund may sell stocks short to try to achieve its investment objective.

The Fund purchases restricted securities in private placement transactions.

MAIN RISKS

Also, these companies may be in the developmental stage, or may be older
companies undergoing significant changes. They may be subject to greater
business risks and more sensitive to changes in economic conditions than larger,
more established companies. As a result, their prices may rise and fall more
sharply.

When the Fund holds restricted securities, it may have difficulty accurately
pricing them. The Fund may not be able to sell these securities at the prices
at which it has valued them for purposes of calculating its net asset value
without experiencing delays or additional costs, if at all.

The Fund's investment performance will suffer if a security that it has sold
short appreciates in value. The Fund's investment performance may also suffer
if it is required to close out a short position earlier than it intended. This
would occur if the securities lender required it to deliver the securities the
Fund borrowed at the commencement of the short sale and the Fund was unable to
borrow the securities from other securities lenders.

<PAGE>

In general, this Fund is likely to be significantly more volatile than the S&P
500/R Index.

FUND PERFORMANCE

The bar chart and table below give some indication of the risks of investing in
the Capital Appreciation Fund by showing how its performance can change from
year to year and how its average annual returns compare with those of a broad
market index. Please note that past performance does not necessarily indicate
how the Fund will perform in the future. The Fund's investments, including its
investments in privately placed securities and initial public offerings, are in
sectors of the stock market that since the beginning of the fourth quarter of
1998 have experienced far greater returns than the market as a whole. Investors
should not expect the Fund to consistently achieve these returns in the future.

Van Wagoner S&P
Capital Appreciation Fund 500 Index
- -----------------------------------------------------------------
12/31/97 $10,456 $13,336
12/31/98 $18,630 $17,147
12/31/99 $61,620 $20,756

Commencement date 12/31/96

Annual Total Return: 12/31/97 12/31/98 12/31/99
-------- -------- --------

Van Wagoner Capital 4.56% 78.18% 230.76%
Appreciation Fund

S&P 500/R Index<F1> 33.36% 28.58% 21.04%

Highest Quarterly Return: Date 3/31/99 total
return 75.57%

Lowest Quarterly Return: Date 12/31/97 total
return -22.15%

Life of
Average Annual Total Return --------
(as of 12/31/99): 1 year Fund
------ -------

Van Wagoner Capital 230.76% 83.33%
Appreciation Fund

S&P 500/R Index 21.04% 27.56%

<PAGE>

<F1> The S&P/R 500 Index is an unmanaged index of 500 selected stocks, most of
which are listed on the New York Stock Exchange. It's heavily weighted
toward large-cap stocks and represents about two-thirds of the total market
value of all domestic stocks.

FEES AND EXPENSES OF THE FUND

This table describes the fees and expenses you may pay if you buy and hold
shares of the Fund. Shareholder transaction expenses are direct expenses such
as fees and sales loads that you pay when buying or selling shares of some
mutual funds. There are no fees or sales loads charged to your account when you
buy or sell shares of the Van Wagoner Capital Appreciation Fund. However, if
you sell shares and request your money by wire transfer, there is a $10 fee.
There is also a $15 fee for a redemption from an IRA account.

ANNUAL FUND OPERATING EXPENSES (EXPENSES THAT ARE DEDUCTED FROM FUND ASSETS)

Management Fees 1.25%

Distribution (12b-1) Fees 0.00%

Other Fees 5.40%

Total Annual Fund Operating Expenses 6.65%

Expense Reimbursement (4.65)%

Net Expenses <F1> 2.00%

<F1> The Adviser has agreed to limit the total expense of each Fund (excluding
interest, taxes, brokerage and extraordinary expenses) to an annual rate of
1.95% of the Fund's average net assets until at least January 1, 2001.
After such date, the expense limitation may be revised at any time but not
to exceed the 2.00% limitation specified in the Investment Advisory
Agreement. For the fiscal year ended December 31, 1999, Other Fees and
Total Annual Fund Operating Expenses were 0.70% and 1.95%, respectively.

This example is intended to help you compare the cost of investing in the Van
Wagoner Capital Appreciation Fund with the cost of investing in other mutual
funds. The example assumes that you invest $10,000 in a Fund 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 Fund's operating expenses remain the same. Although your
actual costs may be higher or lower, based on these assumptions, your net costs
would be:

One Year $198
Three Years $623
Five Years $1,073
Ten Years $2,323

<PAGE>

VAN WAGONER GROWTH FUND

INVESTMENT OBJECTIVE: Capital Appreciation.

MAIN STRATEGY

The Growth Fund invests in common stocks of companies with the potential for
above-average, long-term growth. This Fund focuses on companies that are more
established than traditional emerging growth companies but whose potential may
be enhanced by:

- - New products or services
- - New or revitalized management
- - Changes in financial or other conditions
- - Other factors.

The Fund bases investment buy and sell decisions on:

The Fund may engage in short-term trading to try to achieve its investment
objective and is likely to have an annual portfolio turnover rate over 100%

The Fund may sell stocks short to try to achieve its investment objective.

The Fund purchases restricted securities in private placement transactions.

MAIN RISKS

Also, these companies may be developing or undergoing significant changes. They
may be subject to greater business risks and more sensitive to changes in
economic conditions than larger, more established companies. As a result, their
prices may rise and fall more sharply.

When the Fund holds restricted securities, it may be difficult to accurately
price them. The Fund may not be able to sell these securities at the prices at
which it has valued them for purposes of calculating its net asset value without
experiencing delays or additional costs, if at all.

The Fund's investment performance will suffer if a security that it has sold
short appreciates in value. The Fund's investment performance may also suffer
if it is required to close out a short position earlier than it intended. This
would occur if the securities lender required it to deliver the securities the
Fund borrowed at the commencement of the short sale and the Fund was unable to
borrow the securities from other securities lenders.

<PAGE>

In general, this Fund is likely to be significantly more volatile than the S&P
500/R Index.

FUND PERFORMANCE

The bar chart and table below give some indication of the risks of investing in
the Growth Fund by showing how its performance can change from year to year and
how its average annual returns compare with those of a broad market index.
Please note that past performance does not necessarily indicate how the Fund
will perform in the future. The Fund's investments, including its investments
in privately placed securities and initial public offerings, are in sectors of
the stock market that since the beginning of the fourth quarter of 1998 have
experienced far greater returns than the market as a whole. Investors should
not expect the Fund to consistently achieve these returns in the future.

VAN WAGONER S&P
GROWTH FUND 500 INDEX
- --------------------------------------------------
12/31/1997 $10,574 $13,336
12/31/1998 $18,278 $17,147
12/31/1999 $50,595 $20,756

Commencement date 12/31/96

Annual Total Return: 12/31/97 12/31/98 12/31/99
-------- -------- --------

Van Wagoner Growth Fund 5.74% 72.86% 176.81%

S&P 500/R Index<F1> 33.36% 28.58% 21.04%

Highest Quarterly Return: Date 3/31/99 Total
return 66.51%

Lowest Quarterly Return: Date 12/31/97 Total
return -19.47%

Life of
Average Annual Total Return --------
(as of 12/31/99): 1 year Fund
------- --------

Van Wagoner Growth Fund 176.81% 71.67%

S&P 500/R Index 21.04% 27.56%

<PAGE>

<F1> The S&P 500/R Index is an unmanaged index of 500 selected stocks, most of
which are listed on the New York Stock Exchange. It's heavily weighted
toward large-cap stocks and represents about two-thirds of the total market
value of all domestic stocks.

FEES AND EXPENSES OF THE FUND

This table describes the fees and expenses you may pay if you buy and hold
shares of the Fund. Shareholder transaction expenses are direct expenses such
as fees and sales loads that you pay when buying or selling shares of some
mutual funds. There are no fees or sales loads charged to your account when you
buy or sell shares of the Van Wagoner Growth Fund. However, if you sell shares
and request your money by wire transfer, there is a $10 fee. There is also a $15
fee for a redemption from an IRA account.

ANNUAL FUND OPERATING EXPENSES (EXPENSES THAT ARE DEDUCTED FROM FUND ASSETS)

Management Fees 1.00%

Distribution (12b-1) Fees 0.00%

Other Fees 6.01%

Total Annual Fund Operating Expenses 7.01%

Expense Reimbursement (5.01)%

Net Expenses <F1> 2.00%

<F1> The Adviser has agreed to limit the total expenses of each Fund (excluding
interest, taxes, brokerage and extraordinary expenses) to an annual rate of
1.95 % of the Fund's average net assets until at least January 1, 2001.
After such date, the expense limitation may be revised at any time but not
to exceed the 2.00% limitation specified in the Investment Advisory
Agreement. For the fiscal year ended December 31, 1999, Other Fees and
Total Annual Fund Operating Expenses were 0.95% and 1.95%, respectively.

This example is intended to help you compare the cost of investing in the Van
Wagoner Growth Fund with the cost of investing in other mutual funds. The
example assumes that you invest $10,000 in a Fund 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 Fund's
operating expenses remain the same. Although your actual costs may be higher or
lower, based on these assumptions, your net costs would be:

One Year $198
Three Years $623
Five Years $1,073
Ten Years $2,323

OTHER POLICIES AND RISKS
- ------------------------

While each of the Van Wagoner Funds seeks capital appreciation and is an
aggressive growth fund, there are differences in Fund strategies, risks and
performance, as described in this Prospectus. The Funds are designed for long-
term investors who can accept frequent short-term ups and downs in their
investment's value.

<PAGE>

MONEY MARKET INSTRUMENTS. In adverse markets, the Funds may take a defensive
position by investing up to 100% of their assets in high quality, short-term
money market instruments. The Funds will not be able to achieve their
investment objective of capital appreciation to the extent they invest in money
market instruments since these securities earn interest but do not appreciate in
value. The Funds may also use money market instruments to have cash available
to take advantage of investment opportunities, to pay expenses and to meet
anticipated redemption requests.

HEDGING STRATEGIES. The Funds may use various hedging strategies, such as buying
and selling options on particular securities or stock indices, in an effort to
reduce risk. Options trading is a highly specialized activity that may entail
increased investment risk. Options trading may reduce return or increase
volatility. If a Fund buys a put or call option but doesn't exercise or close
it before the option expires, the Fund will lose the premium it paid plus
commission costs.

INVESTMENT DECISION-MAKING. The Adviser makes investment decisions based on
company-specific research, which includes:
- - On-site visits
- - Interviews with management, customers, competitors and suppliers
- - Review of analysis by brokerage houses, industry consultants, trade
publications and other sources

The Adviser seeks out companies with both dedicated management teams and the
ability to create innovative products and services and thrive in rapidly growing
industries. If the Adviser has doubts as to a company's ability to execute its
business plan or meets its earnings expectations, the Adviser will reevaluate
that holding and that holding may reduce or liquidate the position. Continual
research of companies whose stock is held by the Funds is key to whether the
Adviser increases, reduces or liquidate a position.

FUND OBJECTIVES. The Board of Directors may change the Funds' investment
objectives without shareholder approval. You will receive advance notice of any
such changes.

MANAGEMENT
- ----------

INVESTMENT ADVISER

The Funds are advised by Van Wagoner Capital Management Inc., 345 California
Street, Suite 2450, San Francisco, CA 94104. The Adviser was organized October
24, 1995 and manages the Funds, overseeing administration and making day-to-day
investment decisions subject to policies set by the Board of Directors.

Each Fund pays the Adviser an annual management fee equal to the following
percentages of daily net assets:

Capital Appreciation Fund 1.25%
Growth Fund 1.00%

PORTFOLIO MANAGER

Garrett R. Van Wagoner, president and a director of the Adviser, is Van Wagoner
Capital Management's sole shareholder. He is the portfolio manager for each of
the Funds.

<PAGE>

OTHER SERVICE PROVIDERS

Administrator and transfer agent: Sunstone Financial Group, Inc., provides
clerical, compliance, regulatory, Fund accounting, dividend disbursing, transfer
agency and other services.

YOUR INVESTMENT
- ---------------
Here's what you need to know about opening and maintaining your account with Van
Wagoner Funds.

HOW SHARES ARE PRICED

When you buy or sell (redeem) Fund shares, the Funds will price your transaction
at the next net asset value ("NAV") calculated after the Funds receive your
request in good order. See "Other Purchase, Redemption and Exchange Policies"
on page 15 for a definition of "good order." You pay no front-end sales charge,
commission, or redemption fee (except for a $10 fee for redemptions made by wire
and a $15 fee for a redemption from an IRA account).

The Funds calculate NAV, the price of one share of a Fund at the close of
regular trading (generally 4 p.m. Eastern time) each day the New York Stock
Exchange (NYSE) is open. The NYSE is closed on weekends and national holidays.

HOW TO BUY, SELL AND EXCHANGE SHARES

BUYING SHARES

All the Van Wagoner Funds are no-load. You pay no sales charge to buy, sell or
exchange shares, but the Funds charge a 0.25% Rule 12b-1 fee. (There is a $10
fee for each redemption made by wire and a $15 fee for a redemption from an IRA
account.)

Minimum Investment.

Initial Additional
Regular accounts $1,000 $50
Automatic Investment Plan $500 $50
IRAs $500 $50
Gift to Minors $500 $50

The Funds may waive the minimum investment for qualified retirement plans.
Investors must pay for purchases in U.S. dollars, by checks drawn on U.S. banks.
The Funds won't accept cash, credit cards or third party checks.

<PAGE>

Accepting Orders. You must properly complete the New Account Application to
establish telephone and exchange privileges. The Funds may return incomplete
applications or checks.

Each Fund may reject any purchase order or refuse a telephone transaction if the
Fund believes it's advisable to do so. The Funds will reject applications that
do not have a U.S. address and a Social Security Number or a W-8BEN. The Funds
won't accept an account if you're investing for another person as attorney-in-
fact, or an account with "Power of Attorney" or "POA" in the New Account
Application's registration section.

Certificates. The Funds do not issue stock certificates. You'll receive a
statement confirming your purchase.

OPENING AN ACCOUNT
- ------------------

By Mail.
- - Complete a New Account Application (available online at www.vanwagoner.com or
by calling 1-800-228-2121).

- - Mail the completed application with a check payable to Van Wagoner Funds to:
Van Wagoner Funds, Inc.
P.O. Box 1628
Milwaukee, WI 53201-1628

- - For overnight or express mail, use this address:
Van Wagoner Funds, Inc.
207 E. Buffalo St., Suite 315
Milwaukee, WI 53202-5712

By Wire.
- - You must call 1-800-228-2121 for an investor account number. You must also
complete a New Account Application prior to the wire purchase.

- - The wire instructions are as follows:
UMB Bank, n.a.
A.B.A. #101000695
For credit to Van Wagoner Funds, Inc.
Account #9870610183
For further credit to:
(investor account number)
(name or account registration)
(Social Security or Taxpayer Identification Number)
(Name of Fund you intend to purchase)

<PAGE>

Automatic Investment Plan

- - Complete the Automatic Investment Plan section on your New Account
Application, and open your account with at least $500.

- - Each month, quarter or year the amount you specify ($50 or more) is
automatically withdrawn from your bank account to buy Fund shares. You can
choose to have withdrawals on the 5th, 10th, 15th, 20th, 25th or end of each
month. You will receive QUARTERLY statements showing these purchases.

- - The Funds do not charge a service fee for the plan, but if there's not enough
money in your bank account to cover the withdrawal, you'll be charged $20,
your purchase will be cancelled, and you'll be responsible for any resulting
loss to the Funds.

- - A REDEMPTION OF ALL FUNDS FROM YOUR ACCOUNT WILL NOT AUTOMATICALLY
DISCONTINUE THE PLAN. To terminate your Automatic Investment Plan, send the
Funds a written request at least five days before your next plan withdrawal
date or call our Shareholder Services Department.

ADDING TO AN ACCOUNT
- --------------------

By Mail.

- - Send your check, plus an investment slip from a recent statement or a signed
note with the account's full name and number.

- - Use the addresses provided on page 10 under "Opening an Account - By Mail.

By Wire.

- - Follow the instructions provided on page 10 under "Opening an Account - By
Wire. Be sure to include your account number and the name of the Fund to be
purchased.

- - Wired funds are considered received in good order on the day they reach the
Funds' bank account by the Funds' purchase cut-off time (3:00 p.m. Central
time) and all required information is provided in the wire instructions. If
a wire is incomplete, it may be returned. The wire instructions will
determine the terms of the purchase transaction.

By Electronic Funds Transfer.

- - The Funds require fifteen calendar days to verify your bank information
before initiating this privilege. If your account is already open and you'd
like to establish electronic funds transfer privileges, call 1-800-228-2121.

- - Request the electronic transfer by phone or in writing, in amounts from $50
to $50,000.

<PAGE>

Automatic Investment Plan

- - If your account is already open and you'd like to add the Automatic
Investment Plan, call 1-800-228-2121 for an application. Plan investment
minimums apply. Adding this plan to your account requires a signature
guarantee, described on page 21.

- - The Funds require fifteen calendar days to verify your bank information
before initiating the plan.

OTHER PURCHASE POLICIES

Purchases Through Third Parties. If you buy shares from a broker-dealer,
financial institution, or other provider, their policies and fees may differ
from those described here.

The Funds may accept requests to buy additional shares into a broker-dealer
street name account only from the broker-dealer.

Returned Checks/Insufficient Funds. The Funds will charge a $20 service fee
against your account for any check or electronic transfer returned unpaid. YOUR
PURCHASE WILL BE CANCELLED, AND YOU'LL BE RESPONSIBLE FOR ANY RESULTING LOSS TO
THE FUNDS.

Redemption Requests Shortly After Purchase. Redemption payment may be delayed up
to 7 business days to make sure there are sufficient funds to cover the check or
electronic transfer you used to make the purchase. If you plan to exchange or
redeem shares shortly after purchase, you may want to make your purchase by
wire.

Selling Shares. You may sell, or redeem, your Fund shares anytime. The price you
receive will be the next net asset value calculated after the funds receive your
request in good order. See "Other Purchase, Redemption and Exchange Policies"
on page 15 for a definition of "good order". Note that when you sell shares,
you may realize a capital gain or loss for federal tax purposes.

There's no charge to redeem shares except if you:
- - redeem by wire ($10)
- - redeem from a retirement account ($15 to cover tax reporting as detailed in
your IRA Disclosure Statement & Custodial Account Agreement). The Funds may
withhold taxes on IRA redemptions to meet federal law requirements.

The Funds reserve the right to redeem in kind-that is, in securities whose
market value equals the redemption amount.

<PAGE>

BY MAIL

- - Send the Funds your unconditional written request with:
- the number of shares or the dollar amount to be redeemed
- the Fund's name
- the name(s) on the account registration
- the account number

If you are redeeming from an IRA, please tell us the proper tax withholding on
your redemption request. If you don't, we will automatically withhold 10% of
your redemption proceeds.

- - Sign the request exactly as the account is registered. YOU'LL NEED A
SIGNATURE GUARANTEE IF:
- the amount to be redeemed is more than $50,000
- the proceeds are to be sent to someone other than the shareholders of
record or to somewhere other than the address of record
- the request is made within 30 days of an address change

See "Signature Guarantees," under "Other Purchase, Redemption and Exchange
Policies" on page 15.

- - Include any documentation required for corporate, partnership or fiduciary
accounts. Call 1-800-228-2121 for details.

- - Mail to:
Van Wagoner Funds, Inc.
P.O. Box 1628
Milwaukee, WI 53201-1628

- - For overnight or express mail, use this address:
Van Wagoner Funds, Inc.
207 E. Buffalo St., Suite 315
Milwaukee, WI 53202-5712

By Telephone

- - If you did not waive this privilege on your New Account Application, you may
call the Funds at 1-800-228-2121 to redeem share amounts of $500 to $50,000.
You must request redemptions exceeding $50,000 in writing with signatures
guaranteed.

- - The Funds reserve the right to refuse a telephone redemption request if they
consider it advisable to do so and do not accept redemption requests via fax.

OTHER REDEMPTION POLICIES

Payment. When you redeem shares, you'll receive payment as follows:
- - Mailed payments will be sent within 7 days of receiving redemption
instructions in good order.
- - Wire payments for redemptions requested by phone will usually be made on the
next business day.
- - Electronic funds transfers will ordinarily arrive at your bank 2 to 3 banking
days after transmission.

<PAGE>

If the dollar amount you request to be redeemed is greater than your current
account value (as determined by the NAV on the redemption date); the Funds will
redeem your entire account balance.

When you redeem a partial balance from the Money Market Fund (see "Exchanging
Shares" for details on that Fund), your proceeds will exclude accrued and unpaid
income through the redemption date. If you redeem your entire balance from the
Money Market Fund, it will pay separately the accrued interest at the end of the
month.

Redeeming Shares Through Third Parties. A broker-dealer, financial institution
or other service provider may charge a fee to redeem your Fund shares. If the
service provider is the shareholder of record, the Funds may accept redemption
requests only from that provider.

Telephone Redemptions. The Funds won't accept telephone redemption requests for
payment by check for 30 days following an address change. For thirty days
following an address change you must make redemption requests in writing, with
all signatures guaranteed.

During times of unusual market activity, you may find it difficult to redeem
shares by telephone or wire. If you are unable to contact the Funds by
telephone, you can mail, or send by overnight delivery, your redemption request.

Small Accounts. If a redemption or exchange leaves your account below the $1,000
minimum, or you discontinue the Automatic Investment Plan before you reach the
minimum, the Funds may provide you a 60-day notice to add to your balance or
renew your Automatic Investment Plan. If you do not act within the 60-day period
the Funds may close your account and send you the proceeds.

Call 1-800-228-2121 for a Systematic Withdrawal Plan application. To change your
plan, send a request in writing, with a signature guarantee for each registered
holder of the account. You can stop your plan anytime without charge or penalty.
The Funds may change or eliminate the plan anytime with 60 days' notice.

EXCHANGING SHARES

You can exchange shares of one Van Wagoner Fund for those of any other Van
Wagoner Fund available for investment. Note that an exchange is an ordinary sale
and purchase for federal income tax purposes; you may realize a capital gain or
loss.

How it Works. You can request an exchange in writing or by phone (if you haven't
declined this privilege). Shares from your existing account are redeemed at the
next net asset value calculated after the Funds receive your instructions in
good order. The proceeds are used to buy shares in another Van Wagoner Fund
(also priced at the next net asset value calculated after the Funds receive your
instructions in good order).

Money Market Fund . You can also exchange your Van Wagoner Funds shares for
those of the Northern U.S. Government Money Market Fund (the "Money Market
Fund"). The minimum to open such an account is $1,000; for additions, it's $50.
Call 1-800-228-2121 for the Money Market Fund prospectus and read it carefully
before investing.

<PAGE>

When you exchange from a Fund into the Money Market Fund or make an initial
purchase, dividends begin to accrue on the Money Market shares so purchased the
day after the exchange or the initial purchase. When you exchange a partial
balance out of the Money Market Fund, your proceeds exclude accrued and unpaid
dividends through the exchange date. When you're exchanging your entire Money
Market Fund balance, the Money Market Fund will exchange accrued and unpaid
dividends when the Money Market Fund pays it, at the end of the month.

Telephone Exchanges. Follow the instructions under "Selling shares - By
Telephone."

Automatic Exchange Plan. You may make automatic monthly exchanges from one Van
Wagoner Fund to another or from the Money Market Fund to a Van Wagoner Fund. The
minimum transaction is $50. Keep in mind that an exchange is an ordinary sale
and purchase for federal income tax purposes; you may realize a capital gain or
loss.

Exchange Restrictions. The Van Wagoner Funds are for long-term investing, not
short-term market speculation. Excessive trading can hurt the Funds' performance
and other shareholders. A pattern of trading with a "market timer" strategy can
be especially disruptive. Therefore,

- - The Funds may suspend or terminate, without notice, the exchange privilege of
any investor who uses it excessively (e.g. more than 5 times a year).

- - The Funds may restrict or refuse exchanges if they receive or anticipate
receiving simultaneous orders affecting significant portions of a Fund's
assets.

OTHER PURCHASE, REDEMPTION AND EXCHANGE POLICIES

- - Good Order. The Funds must receive your request to buy, sell or exchange
shares in good order. The request must include:
- - The Fund's name and your account number
- - The number or dollar amount of shares you want to buy or sell
- - Signatures of all owners, exactly as registered on the account
- - Signature guarantees for the following:
- the amount to be redeemed is more than $50,000
- the proceeds are to be sent to someone other than the shareholders of
record or to somewhere other than the address of record
- the request is made within 30 days of an address change

- - Any documentation required for redemptions by corporations, estates, trusts
and other organizations

Telephone Transactions. Unless you waive telephone privileges on your New
Account Application, you automatically have the privilege to make telephone
inquiries, exchanges and redemptions. Once your account is established, you must
make requests to change these privileges in writing, signed by each registered
holder of the account, with all signatures guaranteed. A NOTARY PUBLIC IS NOT AN
ACCEPTABLE GUARANTOR.

The Funds will take reasonable measures to prevent unauthorized telephone
transactions and will not be liable for such transactions. THE FUNDS RESERVE THE
RIGHT TO REFUSE A TELEPHONE TRANSACTION.

Signature Guarantees. Generally, whenever you change your account privileges,
your bank information, or your registration information, you need signature
guarantees for each registered holder. These guarantee requirements help protect
you from fraud. You can have signatures guaranteed by a U.S. commercial bank or
trust company, a member of the National Association of Securities Dealers, Inc.,
or other eligible institutions. A NOTARY PUBLIC IS NOT AN ACCEPTABLE GUARANTOR.

<PAGE>

DIVIDENDS, DISTRIBUTIONS AND TAXES

If you don't give the Funds your Taxpayer Identification Number, federal law
requires withholding of 31% of any distribution and redemption proceeds.

12B-1 FEES

The Funds' plan under Rule 12b-1 allows each Fund to use up to 0.25% of its
average daily net assets to pay sales distribution and other fees for the sale
of its shares and for services provided to its investors. Because these fees
are paid out of a Fund's assets year after year, over time they will increase
the cost of your investment and may exceed other types of sales charges.

SHAREHOLDER SERVICES

AUTOMATED INFORMATION. Use a touch-tone phone to access information about the
Funds and your account 24 hours a day, 7 days a week. During regular business
hours (7 a.m. to 7 p.m. Central time, Monday through Friday) you may also choose
to speak with a Shareholder Services Representative.

With automated shareholder services, you can:

- - Find out a Fund's closing price and how that price changed from the previous
day

- - Check your account balance

- - Review your last 5 transactions

- - Order duplicate forms and statements

INTERNET ACCESS. Visit the Funds' web site to review your account balances,
transactions and other information. Go to www.vanwagoner.com to select your
password and initiate this privilege.

<PAGE>

STATEMENTS AND REPORTS. As a shareholder you'll receive:

- - Confirmation Statements. You'll receive a confirmation statement after each
transaction that affects your account balance or registration. Automatic
Investment Plan participants receive QUARTERLY confirmations of all automatic
transactions.

- - Account Statements. All shareholders receive quarterly account statements.
You can order additional copies of previous statements for the current and
preceding year at no charge. Statements for earlier years cost $5 each. Call
1-800-228-2121.

If you need to contact the Funds about your account, you can call or write to us
at:

Van Wagoner Funds, Inc.
P.O. Box 1628
Milwaukee, WI 53201-1628

For overnight or express mail:
Van Wagoner Funds, Inc.
207 E. Buffalo St., Suite 315
Milwaukee, WI 53202-5712

- - Financial Reports. Shareholders receive financial reports twice a year.
Annual reports include audited financial statements. To reduce expenses,
we'll mail one copy of each report to each Taxpayer Identification Number
even though the investor may have more than one account with the Funds.

AUTOMATIC PLANS. The Funds offer an Automatic Investment Plan, described under
"Buying shares"; a Systematic Withdrawal Plan, described under "Selling shares";
and an Automatic Exchange Plan, described under "Exchanging shares."

RETIREMENT PLANS. The Funds offer several retirement accounts and employer
plans: IRA, Roth IRA, SEP-IRA, SIMPLE IRA, Keogh, 401(k) and 403(b)(7) accounts.

<PAGE>

FINANCIAL HIGHLIGHTS

The Financial Highlights table is intended to help you understand each Fund's
financial performance since inception. Some of the information reflects results
for one Fund share. "Total return" is the rate your investment would have earned
(or lost), assuming you reinvested all dividends and distributions. The
information for the year ended December 31, 1999 has been audited by Ernst &
Young LLP. The information for periods prior to 1999 has been audited by
PricewaterhouseCoopers LLP. The Funds' 1999 financial statements are included
in the annual report, which is available on request.

VAN WAGONER FUNDS, INC.
FINANCIAL HIGHLIGHTS
For a Fund share outstanding throughout each year.

Capital Appreciation Fund
----------------------------------

Year Ended Year Ended Year Ended
Dec. 31, Dec. 31, Dec. 31,
1999 1998 1997
---------- ---------- ----------

NET ASSET VALUE, BEGINNING OF YEAR $15.05 $9.08 $10.00

INCOME (LOSS) FROM INVESTMENT
OPERATIONS:

Net investment loss (0.16) (0.03) (0.11)
Net realized and unrealized gains on
investments 34.32 7.13 0.54
------ ------ ------

Total from investment operations 34.16 7.10 0.43
------ ------ ------

DISTRIBUTIONS:

Of net realized gains (22.99) (0.43) -
In excess of net realized gains (0.01) (0.70) (1.35)
------ ------ ------

Total distributions (23.00) (1.13) (1.35)
------ ------ ------

NET ASSET VALUE, END OF YEAR $26.21 $15.05 $9.08
====== ====== ======

TOTAL RETURN 230.76% 78.18% 4.56%

SUPPLEMENTAL DATA AND RATIOS:

Net assets, end of year (000s) $1,858 $871 $1,304

Ratio of expenses to average net
assets, net of waivers and
reimbursements 1.95% 1.95% 1.95%

Ratio of net investment loss to
average net assets, net of waivers
and reimbursements (0.68)% (0.21)% (1.36)%

Ratio of expenses to average net
assets, before waivers and
reimbursements 6.65% 17.13% 11.78%

Ratio of net investment loss to
average net assets, before waivers and
reimbursements (5.38)% (15.39)% (11.19)%

Portfolio turnover rate 270% 1,263% 625%

<PAGE>

VAN WAGONER FUNDS, INC.
FINANCIAL HIGHLIGHTS
For a Fund share outstanding throughout each year.

Growth Fund
----------------------------------

Year Ended Year Ended Year Ended
Dec. 31, Dec. 31, Dec. 31,
1999 1998 1997
---------- ---------- ----------

NET ASSET VALUE, BEGINNING OF YEAR $14.06 $9.58 $10.00

INCOME (LOSS) FROM INVESTMENT
OPERATIONS:

Net investment loss (0.18) (0.02) (0.12)
Net realized and unrealized gains
on investments 24.58 7.00 0.68
------ ------ ------

Total from investment operations 24.40 6.98 0.56
------ ------ ------

DISTRIBUTIONS:

Of net realized gains (15.63) (1.65) -
In excess of net realized gains (0.01) (0.85) (0.98)
------ ------ ------

Total distributions (15.64) (2.50) (0.98)
------ ------ ------

NET ASSET VALUE, END OF YEAR $22.82 $14.06 $9.58
====== ====== ======

TOTAL RETURN 176.81% 72.86% 5.74%

SUPPLEMENTAL DATA AND RATIOS:

Net assets, end of year (000s) $1,331 $798 $1,323

Ratio of expenses to average net
assets, net of waivers and
reimbursements 1.95% 1.95% 1.95%

Ratio of net investment loss to
average net assets, net of waivers and
reimbursements (0.70)% (0.18)% (1.40)%

Ratio of expenses to average net
assets, before waivers and
reimbursements 7.01% 16.58% 11.60%

Ratio of net investment loss to
average net assets, before waivers
and reimbursements (5.76)% (14.81)% (11.05)%

Portfolio turnover rate 244% 1,233% 593%

<PAGE>

Back cover
- ----------

LEARN MORE
- ----------

To find out more about Van Wagoner Funds, ask for a free copy of the following:

STATEMENT OF ADDITIONAL INFORMATION (SAI). The SAI gives more information about
various aspects of the Funds. It's filed with the Securities and Exchange
Commission (SEC) and is incorporated by reference into the Prospectus, which
means it's legally part of this prospectus.

ANNUAL/SEMI-ANNUAL REPORT. These reports discuss Fund holdings. The Annual
Report tells how market conditions, economic trends and Fund investment
strategies affected Fund performance during the last fiscal year.

TO OBTAIN THIS AND OTHER INFORMATION, OR INQUIRE, ABOUT THE FUNDS...

BY TELEPHONE
Call 1-800-228-2121.

BY MAIL
Write to: Van Wagoner Funds
P.O. Box 1628
Milwaukee, Wisconsin 53201-1628

ON THE INTERNET
View or download the prospectus, New Account Application, and other Fund
information at our web site, www.vanwagoner.com, or at the SEC's web site,
www.sec.gov.

You can review and copy information about the Van Wagoner Funds (including the
SAI) at the SEC's Public Reference Room in Washington, D.C. You can call 1-202-
942-8090 for information on the operations of the Public Reference Room Reports
and other information about the Van Wagoner Funds are also available at the
SEC's Internet site at http://www.sec.gov and copies of this information may be
obtained, upon payment of a duplicating fee, by writing to the Public Reference
Section, Securities and Exchange Commission, Washington, D.C. 20549-6009 or by
electronic request to [email protected].

SEC file number: 811-9116

XXXXX

VAN WAGONER FUNDS, INC.

STATEMENT OF ADDITIONAL INFORMATION

for the

Mid-Cap Growth Fund

Technology Fund

Post-Venture Fund

Micro-Cap Growth Fund

Emerging Growth Fund

This Statement of Additional Information dated April 30, 2000, is meant to
be read in conjunction with the Prospectus dated April 30, 2000, for the Mid-Cap
Growth Fund, Technology Fund, Post-Venture Fund, Micro-Cap Growth Fund and
Emerging Growth Fund (collectively referred to as the "Funds") and is
incorporated by reference in its entirety into the Prospectus. Because this
Statement of Additional Information is not itself a prospectus, no investment in
shares of these Funds should be made solely upon the information contained
herein. Copies of the Prospectus for the Funds may be obtained by calling 1-
800-228-2121 or by writing Van Wagoner Funds, Inc., P.O. Box 1628, Milwaukee,
Wisconsin 53201-1628. Capitalized terms used but not defined herein have the
same meanings as in the Prospectus.

The following financial statements are incorporated by reference to the
Annual Report, dated December 31, 1999, of Van Wagoner Funds, Inc. (File No.
811-9116) as filed with the Securities and Exchange Commission on February 28,
2000.

1. Schedules of Investments as of December 31, 1999
2. Statements of Assets and Liabilities as of December 31, 1999
3. Statements of Operations for the Year Ended December 31, 1999
4. Statements of Changes in Net Assets for the Years Ended December 31,
1998 and 1999
5. Financial Highlights
6. Notes to Financial Statements
7. Report of Independent Accountants

Shareholders may obtain a copy of the Annual Report, without charge, by
calling 1-800-228-2121.

<PAGE>

TABLE OF CONTENTS

Page
----

GENERAL INFORMATION AND FUND HISTORY,............................. 3
INVESTMENT STRATEGIES............................................. 3
INVESTMENT RESTRICTIONS........................................... 14
ADDITIONAL COMPANY INFORMATION.................................... 16
Directors and Officers...................................... 16
Control Persons and Principal Holders of Securities......... 18
INVESTMENT ADVISORY AND OTHER SERVICES
Investment Adviser.......................................... 19
Administrator and Transfer Agent............................ 21
Custodian................................................... 22
Legal Counsel .............................................. 22
Independent Accountants..................................... 22
DISTRIBUTION OF SHARES............................................ 23
PORTFOLIO TRANSACTIONS AND BROKERAGE.............................. 23
TAXES ............................................................ 25
CAPITAL STRUCTURE................................................. 27
SHAREHOLDER MEETINGS.............................................. 28
RETIREMENT PLANS.................................................. 29
PERFORMANCE INFORMATION........................................... 30
PURCHASE, EXCHANGE AND REDEMPTION OF SHARES;
DETERMINATION OF NET ASSET VALUE.................................. 32
OTHER INFORMATION................................................. 34
APPENDIX A (Description of Securities Ratings).................... A-1

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

No person has been authorized to give any information or to make any
representations not contained in this Statement of Additional Information or in
the Prospectus in connection with the offering made by the Prospectus and, if
given or made, such information or representations must not be relied upon as
having been authorized by the Funds. The Prospectus does not constitute an
offering by the Funds in any jurisdiction in which such offering may not
lawfully be made.

<PAGE>

GENERAL INFORMATION AND FUND HISTORY

Van Wagoner Funds, Inc. (collectively referred to as the "Funds" or
individually referred to as a "Fund") constitute a single corporation (the
"Company") that was organized as a Maryland corporation on October 18, 1995.
This Statement of Additional Information provides information on five of the
Funds. The Mid-Cap Growth Fund, Micro-Cap Growth Fund and Emerging Growth Fund,
commenced operations after the close of business on December 31, 1995. The
Post-Venture Fund commenced operations after the close of business on December
31, 1996 and the Technology Fund commenced operations after the close of
business on December 31, 1997. Prior to April 30, 2000, the Mid-Cap Growth Fund
was known as the "Mid-Cap Fund" and the Micro-Cap Growth Fund was known as the
"Micro-Cap Fund".

INVESTMENT STRATEGIES

Van Wagoner Funds, Inc. is an open-end, management investment company
presently offering seven diversified investment portfolios or Funds designed to
offer investors a range of equity-oriented investment opportunities. This
Statement of Additional Information provides information on five of the Funds.

The Funds' Prospectus describes their principal investment strategies and
risks. This section expands upon that discussion and also discusses non-
principal investment strategies and risks.

MONEY MARKET INSTRUMENTS. Each Fund may invest in a variety of money
market instruments for temporary defensive purposes, pending investment, to meet
anticipated redemption requests and/or to retain the flexibility to respond
promptly to changes in market and economic conditions.

Each of the Funds may invest in commercial paper and other cash equivalents
rated A-1 or A-2 by S&P or Prime-1 or Prime-2 by Moody's, commercial paper
master notes (which are demand instruments bearing interest at rates which are
fixed to known lending rates and automatically adjusted when such lending rates
change) of issuers whose commercial paper is rated A-1 or A-2 by S&P or Prime-1
or Prime-2 by Moody's, and unrated debt securities which are deemed by the
Adviser to be of comparable quality. Each of the Funds may also invest in
United States Treasury bills and notes, certificates of deposit of domestic
branches of U.S. banks and corporate bonds with remaining maturities of 13
months or less. For debt obligations other than commercial paper, these
securities are limited to those rated at least Aa by Moody's or AA by S&P, or
unrated but deemed by the Adviser to be of comparable quality.

Commercial paper represents short-term unsecured promissory notes issued in
bearer form by banks or bank holding companies, corporations and finance
companies. Certificates of deposit are generally negotiable certificates issued
against funds deposited in a commercial bank for a definite period of time and
earning a specified return. Bankers' acceptances are negotiable drafts or bills
of exchange, normally drawn by an importer or exporter to pay for specific
merchandise, which are "accepted" by a bank, meaning, in effect, that the bank
unconditionally agrees to pay the face value of the instrument on maturity.
Fixed time deposits are bank obligations payable at a

<PAGE>

stated maturity date and bearing interest at a fixed rate. Fixed time deposits
may be withdrawn on demand by the investor, but may be subject to early
withdrawal penalties that vary depending upon market conditions and the
remaining maturity of the obligation. There are no contractual restrictions on
the right to transfer a beneficial interest in a fixed time deposit to a third
party, although there is no market for such deposits. Bank notes and bankers'
acceptances rank junior to deposit liabilities of the bank and pari passu with
other senior, unsecured obligations of the bank. Bank notes are classified as
"other borrowings" on a bank's balance sheet, while deposit notes and
certificates of deposit are classified as deposits. Bank notes are not insured
by the Federal Deposit Insurance Corporation or any other insurer. Deposit
notes are insured by the Federal Deposit Insurance Corporation only to the
extent of $100,000 per depositor per bank.

Each Fund's investment in money market instruments for the foregoing
reasons may also include securities issued by other investment companies that
invest in high quality, short-term debt securities (i.e., money market
instruments). In addition to the advisory fees and other expenses a Fund bears
directly in connection with its own operations, as a shareholder of another
investment company, a Fund would bear its pro rata portion of the other
investment company's advisory fees and other expenses, and such fees and other
expenses will be borne indirectly by the Fund's shareholders.

REPURCHASE AGREEMENTS. Each Fund may agree to purchase portfolio
securities from financial institutions subject to the seller's agreement to
repurchase them at a mutually agreed upon date and price ("repurchase
agreements"). Although the securities subject to a repurchase agreement may
bear maturities exceeding one year, settlement for the repurchase agreement will
never be more than one year after a Fund's acquisition of the securities and
normally will be within a shorter period of time. Securities subject to
repurchase agreements are held either by the Funds' custodian or subcustodian
(if any), or in the Federal Reserve/Treasury Book-Entry System. The seller
under a repurchase agreement will be required to maintain the value of the
securities subject to the agreement in an amount exceeding the repurchase price
(including accrued interest). Repurchase agreements may be considered loans to
the seller, collateralized by the underlying securities. The risk to a Fund is
limited to the ability of the seller to pay the agreed upon sum on the
repurchase date; in the event of default, the repurchase agreement provides that
a Fund is entitled to sell the underlying collateral. If the value of the
collateral declines after the agreement is entered into, however, and if the
seller defaults under a repurchase agreement when the value of the underlying
collateral is less than the repurchase price, a Fund could incur a loss of both
principal and interest. The Adviser monitors the value of the collateral at the
time the agreement is entered into and at all times during the term of the
repurchase agreement in an effort to determine that the value of the collateral
always equals or exceeds the agreed upon repurchase price to be paid to a Fund.
If the seller were to be subject to a federal bankruptcy proceeding, the ability
of a Fund to liquidate the collateral could be delayed or impaired because of
certain provisions of the bankruptcy laws. Repurchase agreements will be
acquired in accordance with procedures established by the Company's Board of
Directors which are designed to evaluate the creditworthiness of the other
parties to the repurchase agreements.

United States Government Obligations. Each Fund may invest in Treasury
securities which differ only in their interest rates, maturities and times of
issuance. Treasury Bills have

<PAGE>

initial maturities of one year or less; Treasury Notes have initial maturities
of one to ten years; and Treasury Bonds generally have initial maturities of
greater than ten years.

ILLIQUID SECURITIES. Each Fund may invest up to 15% of its net assets in
illiquid securities (i.e., securities that cannot be disposed of within seven
days in the normal course of business at approximately the amount at which the
Fund has valued the securities). The Board of Directors or its delegate has the
ultimate authority to determine which securities are liquid or illiquid for
purposes of this limitation. Certain securities exempt from registration or
issued in transactions exempt from registration ("restricted securities") under
the Securities Act of 1933, as amended ("Securities Act") that may be resold
pursuant to Rule 144A or Regulation S under the Securities Act, may be
considered liquid. The Board has delegated to the Adviser the day-to-day
determination of the liquidity of a security, although it has retained oversight
and ultimate responsibility for such determinations. Although no definite
quality criteria are used, the Board has directed the Adviser to consider such
factors as (i) the nature of the market for a security (including the
institutional private or international resale market), (ii) the terms of these
securities or other instruments allowing for the disposition to a third party or
the issuer thereof (e.g., certain repurchase obligations and demand
instruments), (iii) the availability of market quotations (e.g., for securities
quoted in PORTAL system), and (iv) other permissible relevant factors. Certain
securities are deemed illiquid by the Securities and Exchange Commission (the
"SEC") including repurchase agreements maturing in greater than seven days and
options not listed on a securities exchange or not issued by the Options
Clearing Corporation. These securities will be treated as illiquid and subject
to the Funds' limitation on illiquid securities. Because an active market may
not exist for illiquid securities, the Funds may experience delays and
additional cost when trying to sell illiquid securities.

Restricted securities may be sold in privately negotiated or other exempt
transactions, qualified non-U.S. transactions, such as under Regulation S, or in
a public offering with respect to which a registration statement is in effect
under the Securities Act. Where registration is required, a Fund may be
obligated to pay all or part of the registration expenses and a considerable
time may elapse between the decision to sell and the sale date. If, during such
period, adverse market conditions were to develop, a Fund might obtain a less
favorable price than prevailed when it decided to sell. Restricted securities
will be priced at fair value as determined in good faith by the Board.

If through the appreciation of illiquid securities or the depreciation of
liquid securities, a Fund should be in a position where more than 15% of the
value of its net assets are invested in illiquid assets, including restricted
securities which are not readily marketable, the Fund will take such steps as it
deems advisable, if any, to reduce the percentage of such securities to 15% or
less of the value of its net assets.

HEDGING STRATEGIES. The Funds may engage in hedging activities. They may
utilize a variety of financial instruments, including options, in an attempt to
reduce the investment risks of the Funds.

Hedging instruments on securities generally are used to hedge against price
movements in one or more particular securities positions that a Fund owns or
intends to acquire. Hedging

<PAGE>

instruments on stock indices, in contrast, generally are used to hedge against
price movements in broad equity market sectors in which a Fund has invested or
expects to invest. The use of hedging instruments is subject to applicable
regulations of the SEC, the several options exchanges upon which they are traded
and various state regulatory authorities.

Options. General. Each Fund may purchase and write (i.e. sell) put and
call options. Such options may relate to particular securities or stock
indices, and may or may not be listed on a domestic or foreign securities
exchange and may or may not be issued by the Options Clearing Corporation.
Options trading is a highly specialized activity that entails greater than
ordinary investment risk. Options may be more volatile than the underlying
instruments, and therefore, on a percentage basis, an investment in options may
be subject to greater fluctuation than an investment in the underlying
instruments themselves.

A call option for a particular security gives the purchaser of the option
the right to buy, and the writer (seller) the obligation to sell, the underlying
security at the stated exercise price at any time prior to the expiration of the
option, regardless of the market price of the security. The premium paid to the
writer is in consideration for undertaking the obligation under the option
contract. A put option for a particular security gives the purchaser the right
to sell the security at the stated exercise price at any time prior to the
expiration date of the option, regardless of the market price of the security.

Stock index options are put options and call options on various stock
indexes. In most respects, they are identical to listed options on common
stocks. The primary difference between stock options and index options occurs
when index options are exercised. In the case of stock options, the underlying
security, common stock, is delivered. However, upon the exercise of an index
option, settlement does not occur by delivery of the securities comprising the
index. The option holder who exercises the index option receives an amount of
cash if the closing level of the stock index upon which the option is based is
greater than, in the case of a call, or less than, in the case of a put, the
exercise price of the option. This amount of cash is equal to the difference
between the closing price of the stock index and the exercise price of the
option expressed in dollars times a specified multiple. A stock index
fluctuates with changes in the market value of the stocks included in the index.
For example, some stock index options are based on a broad market index, such as
the Standard & Poor's 500 Index or the Value Line Composite Index or a narrower
market index, such as the Standard & Poor's 100. Indexes may also be based on
an industry or market segment, such as the AMEX Oil and Gas Index or the
Computer and Business Equipment Index. Options on stock indexes are currently
traded on the following exchanges: the Chicago Board Options Exchange, the New
York Stock Exchange, the American Stock Exchange, the Pacific Stock Exchange,
and the Philadelphia Stock Exchange.

A Fund's obligation to sell an instrument subject to a call option written
by it, or to purchase an instrument subject to a put option written by it, may
be terminated prior to the expiration date of the option by the Fund's execution
of a closing purchase transaction, which is effected by purchasing on an
exchange an option of the same series (i.e., same underlying instrument,
exercise price and expiration date) as the option previously written. A closing
purchase transaction will ordinarily be effected to realize a profit on an
outstanding option, to prevent an underlying instrument from being called, to
permit the sale of the underlying

<PAGE>

instrument or to permit the writing of a new option containing different terms
on such underlying instrument. The cost of such a liquidation purchase plus
transactions costs may be greater than the premium received upon the original
option, in which event the Fund will have incurred a loss in the transaction.
There is no assurance that a liquid secondary market will exist for any
particular option. An option writer, unable to effect a closing purchase
transaction, will not be able to sell the underlying instrument or liquidate the
assets held in a segregated account, as described below, until the option
expires or the optioned instrument is delivered upon exercise with the result
that the writer in such circumstances will be subject to the risk of market
decline or appreciation in the instrument during such period.

If an option purchased by a Fund expires unexercised, the Fund realizes a
loss equal to the premium paid. If a Fund enters into a closing sale
transaction on an option purchased by it, the Fund will realize a gain if the
premium received by the Fund on the closing transaction is more than the premium
paid to purchase the option, or a loss if it is less. If an option written by a
Fund expires on the stipulated expiration date or if a Fund enters into a
closing purchase transaction, it will realize a gain (or loss if the cost of a
closing purchase transaction exceeds the net premium received when the option is
sold). If a call option written by a Fund is exercised, the proceeds of the
sale of the underlying instrument will be increased by the net premium received
when the option was written and the Fund will realize a gain or loss on the sale
of the underlying instrument. If a put option written by a Fund is exercised,
the Fund's basis in the underlying instrument will be reduced by the net premium
received when the option was written.

Federal Tax Treatment of Options. Certain option transactions have special
tax results for the Funds. Expiration of a call option written by a Fund will
result in short-term capital gain. If the call option is exercised, the Fund
will realize a gain or loss from the sale of the security covering the call
option and, in determining such gain or loss, the option premium will be
included in the proceeds of the sale.

If a Fund writes options other than "qualified covered call options," as
defined in Section 1092 of the Internal Revenue Code of 1986, as amended (the
"Code"), or purchases puts, any losses on such options transactions, to the
extent they do not exceed the unrealized gains on the securities covering the
options, may be subject to deferral until the securities covering the options
have been sold.

In the case of transactions involving "nonequity options," as defined in
and subject to the rules of Code Section 1256, the Funds will treat any gain or
loss arising from the lapse, closing out or exercise of such positions as 60%
long-term and 40% short-term capital gain or loss as required by Section 1256 of
the Code. In addition, such positions must be marked-to-market as of the last
business day of the year, and gain or loss must be recognized for federal income
tax purposes in accordance with the 60%/40% rule discussed above even though the
position has not been terminated. A "nonequity option" subject to the rules of
Code Section 1256 includes options involving stock indexes such as the Standard
& Poor's 500 and 100 indexes.

<PAGE>

to achieve its objectives. In addition, a liquid secondary market for
particular options, whether traded over-the-counter or on an exchange, may be
absent for reasons which include the following: there may be insufficient
trading interest in certain options; restrictions may be imposed by an exchange
on opening transactions or closing transactions or both; trading halts,
suspensions or other restrictions may be imposed with respect to particular
classes or series of options or underlying securities or currencies; unusual or
unforeseen circumstances may interrupt normal operations on an exchange; the
facilities of an exchange or the Options Clearing Corporation may not at all
times be adequate to handle current trading value; or one or more exchanges
could, for economic or other reasons, decide or be compelled at some future date
to discontinue the trading of options (or a particular class or series of
options), in which event the secondary market on that exchange (or in that class
or series of options) would cease to exist, although outstanding options that
had been issued by the Options Clearing Corporation as a result of trades on
that exchange would continue to be exercisable in accordance with their terms.

Successful use by the Funds of options on stock indexes will be subject to
the ability of the Adviser to correctly predict movements in the directions of
the stock market. This requires different skills and techniques than predicting
changes in the prices of individual securities. In addition, a Fund's ability
to effectively hedge all or a portion of the securities in its portfolio, in
anticipation of or during a market decline, through transactions in put options
on stock indexes, depends on the degree to which price movements in the
underlying index correlate with the price movements of the securities held by a
Fund. Inasmuch as a Fund's securities will not duplicate the components of an
index, the correlation will not be perfect. Consequently, each Fund will bear
the risk that the prices of its securities being hedged will not move in the
same amount as the prices of its put options on the stock indexes. It is also
possible that there may be a negative correlation between the index and a Fund's
securities which would result in a loss on both such securities and the options
on stock indexes acquired by the Fund.

The hours of trading for options may not conform to the hours during which
the underlying securities are traded. To the extent that the options markets
close before the markets for the underlying securities, significant price and
rate movements can take place in the underlying markets that cannot be reflected
in the options markets. The purchase of options is a highly specialized
activity which involves investment techniques and risks different from those
associated with ordinary portfolio securities transactions. The purchase of
stock index options involves the risk that the premium and transaction costs
paid by a Fund in purchasing an option will be lost as a result of unanticipated
movements in prices of the securities comprising the stock index on which the
option is based.

There is no assurance that a liquid secondary market on an options exchange
will exist for any particular option, or at any particular time, and for some
options no secondary market on an exchange or elsewhere may exist. If a Fund is
unable to close out a call option on securities that it has written before the
option is exercised, the Fund may be required to purchase the optioned
securities in order to satisfy its obligation under the option to deliver such
securities. If a Fund is unable to effect a closing sale transaction with
respect to options on securities that it has purchased, it would have to
exercise the option in order to realize any profit and would incur transaction
costs upon the purchase and sale of the underlying securities.

<PAGE>

Cover for Options Positions. Transactions using options (other than
options that a Fund has purchased) expose a Fund to an obligation to another
party. A Fund will not enter into any such transactions unless it owns either
(1) an offsetting ("covered") position in securities or other options or (2)
cash or liquid securities with a value sufficient at all times to cover its
potential obligations not covered as provided in (1) above. Each Fund will
comply with SEC guidelines regarding cover for these instruments and, if the
guidelines so require, maintain cash or liquid securities with its Custodian in
the prescribed amount. Under current SEC guidelines, the Funds will maintain
assets with its Custodian to cover transactions in which the Funds write or sell
options.

Assets used as cover cannot be sold while the position in the corresponding
option is open, unless they are replaced with similar assets. As a result, the
commitment of a large portion of a Fund's assets to cover option obligations
could impede portfolio management or the Fund's ability to meet redemption
requests or other current obligations.

SHORT SALES. Each Fund may seek to hedge investments or realize additional
gains through short sales. Short sales are transactions in which a Fund sells a
security it does not own in anticipation of a decline in the market value of
that security. To complete such a transaction, the Fund must borrow the
security to make delivery to the buyer. The Fund is then obligated to replace
the security borrowed by purchasing it at the market price at the time of
replacement. The price at such time may be more or less than the price at which
the security was sold by the Fund. Until the security is replaced, the Fund is
required to repay the lender any dividends or interest which accrue during the
period of the loan. To borrow the security, the Fund also may be required to
pay a premium, which would increase the cost of the security sold. The net
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 Fund also will incur transaction costs in effecting short sales.

A Fund will incur a loss as a result of a 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 Fund will realize a gain if the price
of 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 the
premium, dividends or interest the Fund may be required to pay, if any, in
connection with a short sale.

The Funds may each make short sales "against the box," i.e., when a
security identical to or convertible or exchangeable into one owned by the Fund
is borrowed and sold short.

Whenever a Fund engages in short sales, it maintains cash or liquid
securities in an amount that, when combined with the amount of collateral
deposited with the broker in connection with the short sale, equals the current
market value of the security sold short. The assets so maintained are marked to
market daily.

INVESTMENT COMPANIES. Each Fund currently intends to limit its investments
in securities issued by other investment companies so that, as determined
immediately after a purchase of such securities is made, either : (a) not more
than 5% of the value of the Fund's total assets will be invested in the
securities of any one investment company; (b) not more than 10% of

<PAGE>

its total assets will be invested in the aggregate in securities of investment
companies as a group; and (c) not more than 3% of the outstanding voting stock
of any one investment company will be owned by the Fund or by the Company as a
whole.

WARRANTS. The Funds may purchase warrants and similar rights, which are
privileges issued by corporations enabling the owners to subscribe to and
purchase a specified number of shares of the corporation at a specified price
during a specific period of time. A Fund will make such investments only if the
underlying equity securities are deemed appropriate by the Adviser for inclusion
in a Fund's portfolio. The purchase of warrants involves the risk that a Fund
could lose the purchase price of a warrant if the right to subscribe to
additional shares is not exercised prior to the warrant's expiration. Also, the
purchase of warrants involves the risk that the effective price paid for the
warrant added to the subscription price of the related security may exceed the
value of the subscribed security's market price such as when there is no
movement in the level of the underlying security. A Fund will not invest more
than 5% of its total assets, taken at market value, in warrants, or more than 2%
of its total assets, taken at market value, in warrants not listed on the New
York or American Stock Exchanges or a major foreign exchange. Warrants attached
to other securities acquired by a Fund are not subject to this restriction.

CONVERTIBLE SECURITIES. Each Fund may invest in convertible securities.
A convertible security may be converted either at a stated price or rate within
a specified period of time into a specified number of shares of common stock.
By investing in convertible securities, a Fund seeks the opportunity, through
the conversion feature, to participate in a portion of the capital appreciation
of the common stock into which the securities are convertible, while earning
higher current income than is available from the common stock. Convertible
securities entitle the holder to receive interest paid or accrued on debt or the
dividend paid on preferred stock until the convertible securities mature or are
redeemed, converted or exchanged. Prior to conversion, convertible securities
have characteristics similar to ordinary debt securities or preferred stocks in
that they normally provide a stable stream of income with generally higher
yields than those of common stock of the same or similar issuers. Convertible
securities rank senior to common stock in a corporation's capital structure and
therefore generally entail less risk of loss of principal than the corporation's
common stock.

In selecting convertible securities for the Funds, the Adviser will
consider among other factors, its evaluation of the creditworthiness of the
issuers of the securities; the interest or dividend income generated by the
securities; the potential for capital appreciation of the securities and the
underlying common stocks; the prices of the securities relative to other
comparable securities and to the underlying common stocks; whether the
securities are entitled to the benefits of sinking funds or other protective
conditions; diversification of a Fund's portfolio as to issuers; and whether the
securities are rated by a rating agency and, if so, the ratings assigned.

The value of convertible securities is a function of their investment value
(determined by yield in comparison with the yields of other securities of
comparable maturity and quality that do not have a conversion privilege) and
their conversion value (their worth, at market value, if converted into the
underlying common stock). The investment value of convertible securities is
influenced by changes in interest rates, with investment value declining as
interest rates increase and increasing as interest rates decline, and by the
credit standing of the issuer and other factors.

<PAGE>

The conversion value of convertible securities is determined by the market price
of the underlying common stock. If the conversion value is low relative to the
investment value, the price of the convertible securities is governed
principally by their investment value. To the extent the market price of the
underlying common stock approaches or exceeds the conversion price, the price of
the convertible securities will be increasingly influenced by their conversion
value. In addition, convertible securities generally sell at a premium over
their conversion value determined by the extent to which investors place value
on the right to acquire the underlying common stock while holding fixed income
securities.

Capital appreciation for a Fund may result from an improvement in the
credit standing of an issuer whose securities are held in the Fund or from a
general lowering of interest rates, or a combination of both. Conversely, a
reduction in the credit standing of an issuer whose securities are held by a
Fund or a general increase in interest rates may be expected to result in
capital depreciation to the Fund.

Typically, the convertible debt securities in which the Funds will invest
will be of a quality less than investment grade (so-called "junk bonds"). The
Funds will, however, limit their investment in non-investment grade convertible
debt securities to no more than 5% of the respective net assets at the time of
purchase and will not acquire convertible debt securities rated below B by
Moody's or S&P, or unrated securities deemed by the Adviser to be of comparable
quality. Junk bonds, while generally offering higher yields than investment
grade securities with similar maturities, involve greater risks, including the
possibility of default or bankruptcy. They are regarded as predominantly
speculative with respect to the issuer's capacity to pay interest and repay
principal. The special risk considerations in connection with investments in
these securities are discussed below. Refer to Appendix A of this Statement of
Additional Information for a discussion of securities ratings.

Effect on Interest Rates and Economic Changes. The junk bond market is
relatively new and its growth has paralleled a long economic expansion. As a
result, it is not clear how this market may withstand a prolonged recession or
economic downturn. Such an economic downturn could severely disrupt the market
for and adversely affect the value of such securities.

All interest-bearing securities typically experience appreciation when
interest rates decline and depreciation when interest rates rise. The market
values of junk bond securities tend to reflect individual corporate developments
to a greater extent than do higher rated securities, which react primarily to
fluctuations in the general level of interest rates. Junk bond securities also
tend to be more sensitive to economic conditions than are higher-rated
categories. During an economic downturn or a sustained period of rising
interest rates, highly leveraged issuers of junk bond securities may experience
financial stress and may not have sufficient revenues to meet their payment
obligations. The risk of loss due to default by an issuer of these securities
is significantly greater than issuers of higher-rated securities because such
securities are generally unsecured and are often subordinated to other
creditors. Further, if the issuer of a junk bond security defaulted, a Fund
might incur additional expenses to seek recovery. Periods of economic
uncertainty and changes would also generally result in increased volatility in
the market prices of these securities and thus in a Fund's net asset value.

<PAGE>

As previously stated, the value of a junk bond security will generally
decrease in a rising interest rate market, and accordingly so will a Fund's net
asset value. If a Fund experiences unexpected net redemptions in such a market,
it may be forced to liquidate a portion of its portfolio securities without
regard to their investment merits. Due to the limited liquidity of junk bond
securities, a Fund may be forced to liquidate these securities at a substantial
discount. Any such liquidation would reduce a Fund's asset base over which
expenses could be allocated and could result in a reduced rate of return for the
Fund.

Payment Expectations. Junk bond securities typically contain redemption,
call or prepayment provisions which permit the issuer of such securities
containing such provisions to redeem the securities at its discretion. During
periods of falling interest rates, issuers of these securities are likely to
redeem or prepay the securities and refinance them with debt securities with a
lower interest rate. To the extent an issuer is able to refinance the
securities, or otherwise redeem them, a Fund may have to replace the securities
with a lower yielding security, which could result in a lower return for the
Fund.

Credit Ratings. Credit ratings issued by credit-rating agencies evaluate
the safety of principal and interest payments of rated securities. They do not,
however, evaluate the market value risk of junk bond securities and, therefore
may not fully reflect the true risks of an investment. In addition, credit
rating agencies may or may not make timely changes in a rating to reflect
changes in the economy or in the condition of the issuer that affect the market
value of the security. Consequently, credit ratings are used only as a
preliminary indicator of investment quality. Investments in junk bond
securities will be more dependent on the Adviser's credit analysis than would be
the case with investments in investment grade debt securities. The Adviser
employs its own credit research and analysis, which includes a study of existing
debt, capital structure, ability to service debt and to pay dividends, the
issuer's sensitivity to economic conditions, its operating history and the
current trend of earnings. The Adviser continually monitors each Fund's
investments and carefully evaluates whether to dispose of or to retain junk bond
securities whose credit ratings or credit quality may have changed.

Liquidity and Valuation. A Fund may have difficulty disposing of certain
junk bond securities because there may be a thin trading market for such
securities. Because not all dealers maintain markets in all junk bond
securities there is no established retail secondary market for many of these
securities. The Funds anticipate that such securities could be sold only to a
limited number of dealers or institutional investors. To the extent a secondary
trading market does exist, it is generally not as liquid as the secondary market
for higher-rated securities. The lack of a liquid secondary market may have an
adverse impact on the market price of the security. The lack of a liquid
secondary market for certain securities may also make it more difficult for a
Fund to obtain accurate market quotations for purposes of valuing the Fund.
Market quotations are generally available on many junk bond issues only from a
limited number of dealers and may not necessarily represent firm bids of such
dealers or prices for actual sales.

During periods of thin trading, the spread between bid and asked prices is
likely to increase significantly. In addition, adverse publicity and investor
perceptions, whether or not based on fundamental analysis, may decrease the
values and liquidity of junk bond securities, especially in a thinly traded
market.

<PAGE>

In general, investments in non-investment grade convertible securities are
subject to a significant risk of a change in the credit rating or financial
condition of the issuing entity. Investments in convertible securities of
medium or lower quality are also likely to be subject to greater market
fluctuations and to greater risk of loss of income and principal due to default
than investments of higher-rated fixed income securities. Such lower-rated
securities generally tend to reflect short-term corporate and market
developments to a greater extent than higher-rated securities, which react more
to fluctuations in the general level of interest rates. A Fund will generally
reduce risk to the investor by diversification, credit analysis and attention to
current developments in trends of both the economy and financial markets.
However, while diversification reduces the effect on a Fund of any single
investment, it does not reduce the overall risk of investing in lower-rated
securities.

FOREIGN SECURITIES. Each Fund may invest without limitation in securities
of foreign issuers which are publicly traded in the United States, either
directly or through sponsored and unsponsored American Depositary Receipts
("ADRs"). ADRs typically are issued by a U.S. bank or trust company and
evidence ownership of underlying securities issued by a foreign corporation.
Unsponsored ADRs differ from sponsored ADRs in that the establishment of
unsponsored ADRs are not approved by the issuer of the underlying securities.
As a result, available information concerning the issuer may not be as current
or reliable as the information for sponsored ADRs, and the price of unsponsored
ADRs may be more volatile.

Investments in foreign securities involve special risks and costs and
opportunities which are in addition to those inherent in domestic investments.
Political, economic or social instability of the issuer or the country of issue,
the possibility of expropriation or confiscatory taxation, limitations on the
removal of assets or diplomatic developments, and the possibility of adverse
changes in investment or exchange control regulations are among the inherent
risks. Foreign companies are not subject to the regulatory requirements of U.S.
companies and, as such, there may be less publicly available information about
such companies. Moreover, foreign companies are not subject to uniform
accounting, auditing and financial reporting standards and requirements
comparable to those applicable to U.S. companies. Dividends and interest
payable on a Fund's foreign portfolio securities may be subject to foreign
withholding taxes. To the extent such taxes are not offset by credits or
deductions allowed to investors under U.S. federal income tax law, such taxes
may reduce the net return to shareholders. Because of these and other factors,
securities of foreign companies acquired by the Funds may be subject to greater
fluctuation than securities of domestic companies.

CALCULATION OF PORTFOLIO TURNOVER RATE. The portfolio turnover rate for
the Funds is calculated by dividing the lesser of purchases or sales of
portfolio investments for the reporting period by the monthly average value of
the portfolio investments owned during the reporting period. The calculation
excludes all securities, including options, whose maturities or expiration dates
at the time of acquisition are one year or less. Portfolio turnover may vary
greatly from year to year as well as within a particular year, and may be
affected by cash requirements for redemption of shares. The Funds may engage in
short-term trading to try to achieve their investment objective and they are
likely to have an annual portfolio turnover rate over 100%. The Funds are not
restricted by policy with regard to portfolio turnover and will make changes in
their

<PAGE>
investment portfolios from time to time as business and economic conditions as
well as market prices may dictate. The current portfolio turnover rates for the
Funds are set forth in the prospectus.

INVESTMENT RESTRICTIONS

Consistent with each Fund's investment objective, each Fund has adopted
certain investment restrictions. Unless otherwise noted, whenever an investment
restriction states a maximum percentage of a Fund's assets that may be invested
in any security or other asset, such percentage restriction will be determined
immediately after and as a result of a Fund's acquisition of such security or
other asset. Accordingly, any subsequent change in values, net assets, or other
circumstances will not be considered when determining whether the investment
complies with a Fund's investment limitations except with respect to a Fund's
restrictions on borrowings as set forth in restriction 7 below.

A Fund's fundamental restrictions cannot be changed without the approval of
the holders of the lesser of: (i) 67% of the Fund's shares present or
represented at a shareholders meeting at which the holders of more than 50% of
such shares are present or represented; or (ii) more than 50% of the outstanding
shares of the Fund.

The following are the Funds' fundamental investment restrictions.

Each Fund may not:

1. Issue senior securities, except as permitted under the Investment
Company Act of 1940 (the "Investment Company Act"); provided, however, a Fund
may engage in transactions involving options, futures and options on futures
contracts.

2. Lend money or securities (except by purchasing debt securities or
entering into repurchase agreements or lending portfolio securities).

3. With respect to seventy-five percent (75%) of its total assets,
purchase (a) the securities of any issuer (except securities of the U.S.
government or any agency or instrumentality thereof), if such purchase would
cause more than five percent (5%) of the value of the Fund's total assets to be
invested in securities of any one issuer or (b) more than ten percent (10%) of
the outstanding voting securities of any one issuer.

4. Purchase the securities of any issuer if, as a result, 25% or more of
the value of its total assets, determined at the time an investment is made,
exclusive of U.S. government securities, are in securities issued by companies
primarily engaged in the same industry.

5. Act as an underwriter or distributor of securities other than shares
of the Funds except to the extent that a Fund's participation as part of a group
in bidding or by bidding alone, for the purchase of permissible investments
directly from an issuer or selling shareholders for the Fund's own portfolio may
be deemed to be an underwriting, and except to the extent that a Fund

<PAGE>

may be deemed an underwriter under the Securities Act, by virtue of disposing of
portfolio securities.

6. Purchase or sell real estate (but this shall not prevent the Fund
from investing in securities that are backed by real estate or issued by
companies that invest or deal in real estate or in participation interests in
pools of real estate mortgage loans exclusive of investments in real estate
limited partnerships).

7. Borrow money, except that a Fund may borrow money from a bank for
temporary or emergency purposes (not for leveraging) in an amount not exceeding
33 1/3% of the value of its total assets (including the amount borrowed) less
liabilities (other than borrowings). Any borrowings that exceed 33 1/3% of the
Fund's total assets by reason of a decline in net asset value will be reduced
within three days to the extent necessary to comply with the 33 1/3% limitation.
Transactions involving options, futures and options on futures, will not be
deemed to be borrowings if properly covered by a segregated account where
appropriate.

8. Purchase or sell physical commodities or commodities contracts unless
acquired as a result of ownership of securities or other instruments (but this
shall not prevent the Fund from engaging in transactions involving foreign
currencies, futures contracts, options on futures contracts or options, or from
investing in securities or other instruments backed by physical commodities).

The following investment restrictions are not fundamental, and may be
changed without shareholder approval.

Each Fund may not:

1. Purchase warrants, valued at the lower of cost or market, in excess
of 5% of a Fund's net assets. Included in that amount, but not to exceed 2% of
net assets, are warrants whose underlying securities are not traded on principal
domestic or foreign exchanges. Warrants acquired by the Fund in units or
attached to securities are not subject to these restrictions.

2. Purchase securities of other investment companies except to the
extent permitted by the Investment Company Act and the rules and regulations
thereunder.
3. Make investments for the purpose of exercising control or management
of any company except that a Fund may vote portfolio securities in the Fund's
discretion.

4. Acquire illiquid securities if, as a result of such investments, more
than fifteen percent (15%) of the Fund's net assets (taken at market value at
the time of each investment) would be invested in illiquid securities.
"Illiquid securities" means securities that cannot be disposed of within seven
days in the normal course of business at approximately the amount at which the
Fund has valued the securities.

5. Purchase securities on margin (except to obtain such short-term
credits as are necessary for the clearance of purchases and sales of securities)
or participate in a joint trading

<PAGE>

account; provided, however, the Fund may (i) purchase or sell futures contracts,
(ii) make initial and variation margin payments in connection with purchases or
sales of futures contracts or options on futures contracts, (iii) write or
invest in put or call options on securities and indexes, and (iv) engage in
foreign currency transactions. (The "bunching" of orders for the sale or
purchase of marketable portfolio securities with other accounts under the
management of the Adviser to save brokerage costs or average prices among them
is not deemed to result in a securities trading account.)

6. Borrow money except for temporary bank borrowings (not in excess of
five percent (5%) of the value of its total assets) for emergency or
extraordinary purposes, or engage in reverse repurchase agreements, or pledge
any of its assets except to secure borrowings and only to an extent not greater
than ten percent (10%) of the value of the Fund's net assets; provided, however,
a Fund may engage in transactions involving options. Each Fund will not
purchase any security while borrowings represent more than 5% of its total
assets are outstanding.

7. Purchase any interest in any oil, gas or any other mineral
exploration or development program, including any oil, gas or mineral leases.

In determining industry classification with respect to the Funds, the
Adviser intends to use the industry classification titles in the Standard
Industrial Classification Manual.

A guarantee of a security is not deemed to be a security issued by
the guarantor when the value of all securities issued and guaranteed by the
guarantor, and owned by a Fund, does not exceed 10% of the value of the Fund's
total assets.

ADDITIONAL COMPANY INFORMATION

Directors and Officers. As a Maryland corporation, the business and
affairs of the Company are managed by its officers under the direction of its
Board of Directors. Information regarding the Board of Directors and officers
of the Funds, including their principal business occupations during at least the
last five years, is set forth below. Each director who is an "interested
person," as defined in the 1940 Act, is indicated by an asterisk. Except where
otherwise indicated, each of the individuals below has served in his or her
present capacity with the Company since November 1995. The address of each of
the officers and directors is c/o Van Wagoner Funds, 345 California Street,
Suite 2450, San Francisco, California, 94104.

*Garrett R. Van Wagoner, President, Treasurer, Secretary and Director

Mr. Van Wagoner is the President, Treasurer, Secretary, Director and sole
shareholder of the Adviser, and has served in such capacities since the
organization of the Adviser in October 1995. He was the portfolio manager of
the Govett Smaller Companies Fund, a portfolio of The Govett Funds, Inc., from
March 1993 until December 31, 1995. Prior thereto, he was Senior Vice

<PAGE>

President at Bessemer Trust, N.A., since 1982, where he was responsible for its
emerging growth stock investment program. Age 44.

Larry P. Arnold, Director

Larry P. Arnold, Private investor since 1993. Founder and Managing
General Partner of Wessels Arnold & Henderson (n/k/a Dain Rauscher Wessels) from
June 1986 to January 1993. Senior Vice President of Piper Jaffray & Hopwood
from 1979 to March 1986. Age 57.

Robert S. Colman, Director

Partner since February 1991 of Colman Furlong & Co. and since 1996 the
founder of Colman Partners LLC, both private merchant banking firms. Since
2000, member of MacAulay Investment Partners LLC, an investment management firm.
Mr. Colman is a Director of First Health Group Corp. Age 58.

Peter R. Kris, Vice President

Mr. Kris is Vice President of the Company and has served in such capacity
since February 1996. He was a Vice President of Govett and Company Limited from
May 1992 until February 1996. Age 34.

The Director of the Company who is an officer of the Adviser receives no
remuneration from the Funds. In 2000, each of the other Directors will be paid
a fee of $3,000 for each meeting attended. This fee will be paid equally by
each of the Van Wagoner Funds. In addition, each Director is reimbursed for the
expenses of attending meetings. The table below sets forth the compensation of
the Directors for the fiscal year ended December 31, 1999.

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

* Mr. Van Wagoner is the only director who is an "interested person" of
the Funds (as defined in the Investment Company Act).

COMPENSATION TABLE

Aggregate Compensation Total Compensation from
Name of Person from Company Company Paid to Directors
- -------------- ----------------------- -------------------------

Garrett R. Van Wagoner $0 $0

Larry P. Arnold $7,500 $7,500

Robert S. Colman $7,500 $7,500

<PAGE>

The Company and the Adviser have adopted a code of ethics pursuant to Rule
17j-1 under the Investment Company Act. This code of ethics generally prohibits
personnel subject thereto from investing in securities that may be purchased or
held by the Funds. The code of ethics permits personnel subject thereto to
invest in entities that are permitted to co-invest with the Funds pursuant to an
SEC exemptive order.

Control Persons and Principal Holders of Securities. As of March 31,
2000, the Funds were aware that the following persons or entities owned a
controlling interest (ownership of greater than 25%) or owned of record 5% or
more of the outstanding shares of each of the Funds.

VAN WAGONER MID-CAP GROWTH FUND

Charles Schwab & Co., Inc.<F1>, 101 Montgomery Street, San Francisco, CA 94104,
28%; National Financial Services Corp.<F1>, 200 Liberty Street, One World
Financial Center, New York, NY 10281-1003, 19%.

VAN WAGONER TECHNOLOGY FUND

Charles Schwab & Co., Inc.<F1>, 101 Montgomery Street, San Francisco, CA 94104,
32%; National Financial Services Corp.<F1>, 200 Liberty Street, One World
Financial Center, New York, NY 10281-1003, 22%.

VAN WAGONER POST-VENTURE FUND

Charles Schwab & Co., Inc.<F1>, 101 Montgomery Street, San Francisco, CA 94104,
27%; National Financial Services Corp.<F1>, 200 Liberty Street, One World
Financial Center, New York, NY 10281-1003, 27%; National Investor Services
Corp., 55 Water Street, New York, NY 10041, 6%.

VAN WAGONER MICRO-CAP GROWTH FUND

Charles Schwab & Co., Inc.<F1>, 101 Montgomery Street, San Francisco, CA 94104,
27%; National Financial Services Corp. <F1>, 200 Liberty Street, One World
Financial Center, New York, NY 10281-1003, 23%; National Investor Services
Corp., 55 Water Street, New York, NY 10041, 10%.

VAN WAGONER EMERGING GROWTH FUND

Charles Schwab & Co., Inc.<F1>, 101 Montgomery Street, San Francisco, CA 94104,
27%; National Financial Services Corp.<F1>, 200 Liberty Street, One World
Financial Center, New York, NY 10281-1003, 20%; National Investor Services
Corp., 55 Water Street, New York, NY 10041, 7%.

As of March 31, 2000, the directors and officers as a group owned _% of the
outstanding shares of the Technology Fund and less than 1% of the outstanding
shares of the Mid-Cap Growth Fund, Post-Venture Fund, Micro-Cap Growth Fund and
Emerging Growth Fund.

<F1>Shareholders of record, not beneficial owners.

<PAGE>

INVESTMENT ADVISORY AND OTHER SERVICES

Investment Adviser. The investment adviser to the Funds is Van Wagoner
Capital Management, Inc. (the "Adviser"). Mr. Van Wagoner is the founder and
President of the Adviser and owns all of the outstanding common stock of the
Adviser. As such, he controls the Adviser. Pursuant to Investment Advisory
Agreements entered into between the Company on behalf of each of the Funds and
the Adviser (the "Investment Advisory Agreements"), the Adviser provides
continuous investment advisory services to the Funds. The Adviser also provides
the Funds with office space, equipment and personnel necessary to operate and
administer the Funds' business and to supervise the provision of services by
third parties. The Investment Advisory Agreements for the Mid-Cap Growth,
Micro-Cap Growth and Emerging Growth Funds are dated as of December 31, 1995.
The Investment Advisory Agreement for the Post-Venture Fund is dated as of
August 7, 1996. The Investment Advisory Agreement for the Technology Fund is
dated as of December 31, 1997. The Investment Advisory Agreements have an
initial term of two years and thereafter are required to be approved annually by
the Board of Directors of the Company or by vote of a majority of the respective
Fund's outstanding voting securities (as defined in the 1940 Act). Each annual
renewal must also be approved by the vote of a majority of the respective Fund's
directors who are not parties to the Investment Advisory Agreement or interested
persons of any such party, cast in person at a meeting called for the purpose of
voting on such approval. The Investment Advisory Agreements for the Mid-Cap
Growth, Micro-Cap Growth and Emerging Growth Funds were approved by the vote of
a majority of the Directors who are not parties to the respective Investment
Advisory Agreement or interested persons of any such party on December 8, 1995,
and by the initial shareholder of the Emerging Growth, Micro-Cap Growth and Mid-
Cap Growth Funds on December 8, 1995. The Investment Advisory Agreement for the
Post-Venture Fund was approved by the vote of a majority of the Directors who
are not parties to the Investment Advisory Agreement or interested persons of
any such party on August 7, 1996, and by the initial shareholder of the Post-
Venture Fund on August 7, 1996. The Investment Advisory Agreement for the
Technology Fund was approved by the vote of a majority of the Directors who are
not parties to the Investment Advisory Agreement or interested persons of any
such party on November 20, 1997, and by the initial shareholder of the
Technology Fund on November 20, 1997. The Investment Advisory Agreements are
terminable without penalty with respect to a Fund, on 60 days' written notice by
the Directors, by vote of a majority of a Fund's outstanding voting securities,
or by the Adviser, and will terminate automatically in the event of its
assignment.

As compensation for its services, each Fund pays to the Adviser a monthly
advisory fee at the annual rate specified in the Prospectus. From time to time,
the Adviser may voluntarily waive all or a portion of its fee for one or more
Funds. The organizational expenses of the Mid-Cap Growth, Micro-Cap Growth and
Emerging Growth Funds were advanced by the Adviser and will be reimbursed by
each Fund over a period of not more than 60 months.

<PAGE>

qualifying for sale in the various states, the printing and distribution costs
of prospectuses mailed to existing investors, reports to investors, reports to
government authorities and proxy statements, fees paid to directors who are not
interested persons of the Adviser, interest charges, taxes, legal expenses,
association membership dues, auditing services, insurance premiums, brokerage
commissions and expenses in connection with portfolio transactions, fees and
expenses of the custodian of the Fund's assets, printing and mailing expenses
and charges and expenses of dividend disbursing agents, accounting services
agents, registrars and stock transfer agents.

The Adviser has voluntarily agreed to reimburse each Fund to the extent
aggregate annual operating expenses (excluding interest, dividends on securities
sold short, taxes, brokerage commissions and other costs incurred in connection
with the purchase or sale of portfolio securities and extraordinary items)
exceed 1.95% of the average daily net assets of each Fund, until January 1,
2001. The Adviser may voluntarily continue to waive all or a portion of the
advisory fees otherwise payable by the Funds. Such a waiver may be terminated
at any time at the Adviser's discretion. Reimbursement of expenses in excess of
the applicable limitation will be made on a monthly basis and will be paid to
each Fund by reducing the Adviser's fee, subject to later adjustment, month by
month, for the remainder of each Fund's fiscal year. The Adviser may from time
to time voluntarily absorb expenses for one or more Funds in addition to the
reimbursement of expenses in excess of the foregoing. In addition to the
voluntary reimbursements, each Investment Advisory Agreement requires the
Adviser to reimburse each Fund to the extent aggregate annual operating
expenses, as described above, exceed 2.00% of the average daily net assets of
the Fund.

Each Investment Advisory Agreement provides that the Adviser shall not be
liable to the respective Fund or its shareholders for any error of judgment or
mistake of law or for anything other than willful misfeasance, bad faith, gross
negligence or reckless disregard of its obligations or duties. The Investment
Advisory Agreements also provide that nothing therein shall limit the freedom of
the Adviser and its affiliates to render investment supervisory and corporate
administrative services to other investment companies, to act as investment
adviser or investment counselor to other persons, firms or corporations, or to
engage in other business activities.

For the fiscal years ended December 31, 1997, 1998 and 1999 the Adviser
accrued the following management fees and waived a portion of its management
fees and made additional reimbursements in the following amounts<F1>:

1997 1998 1999
---- ---- ----
Mid-Cap Growth Fund
Gross Management Fees $1,068,243 $517,445 $798,841
Waived Management Fees - $90,188 -
Technology Fund
Gross Management Fees - $50,993 $1,330,853
Waived Management Fees - $156,888 $87,017
Post-Venture Fund -
Gross Management Fees $387,026 $244,996 $1,799,122
Waived Management Fees $190,694 $154,934 $337,499

<PAGE>

Micro-Cap Growth Fund
Gross Management Fees $1,628,215 $770,904 $1,820,266
Waived Management Fees $397,422 $350,235 $277,027
Emerging Growth Fund
Gross Management Fees $5,815,171 $2,728,083 $7,134,487
Waived Management Fees - $318,072 -

<F1>The Technology Fund commenced operations after the close of business on
December 31, 1997.

Administrator and Transfer Agent. Sunstone Financial Group, Inc.
("Sunstone") provides various administrative and fund accounting services to the
Funds which include but are not limited to the following: calculating daily net
asset values for each Fund; overseeing the Funds' Custodian; preparing and
filing all federal and state tax returns and required tax filings (other than
those to be made by the Funds' Custodian); overseeing the Funds' insurance
relationships; participating in the preparation of the Funds' registration
statement; preparing notice and renewal filings pursuant to state securities
laws; compiling data for and preparing notices to the SEC; preparing financial
statements for the annual and semi-annual reports to the SEC and current
investors; monitoring the Funds' expenses; monitoring the Funds' status as a
regulated investment company under Subchapter M of the Code; monitoring
compliance with the Funds' investment policies and restrictions and generally
assisting in the Funds' administrative operations. Sunstone, at its own
expense, and without reimbursement from the Funds, furnishes office space and
all necessary office facilities, equipment, supplies and clerical and executive
personnel for performing the services required to be performed by it under the
Administration and Fund Accounting Agreement. The Administration and Fund
Accounting Agreement will remain in effect as long as its continuance is
specifically approved at least annually by the Board of Directors of the Company
and the Administrator. The Administration and Fund Accounting Agreement may be
terminated on not less than 90 days' notice, without the payment of any penalty,
by the Board of Directors of the Company or by the Administrator. Under the
Administration and Fund Accounting Agreement, the Administrator is not liable
for any loss suffered by the Funds or their shareholders in connection with the
performance of the Administration and Fund Accounting Agreement, except a loss
resulting from willful misfeasance, bad faith or negligence on the part of the
Administrator in the performance of its duties. The Administration and Fund
Accounting Agreement also provides that the Administrator may provide similar
services to others including other investment companies. For the foregoing,
Sunstone receives a fee on the value of each Fund computed daily and payable
monthly, at the annual rate of eighteen one-hundredths of one percent (0.18%) on
the first $50 million of the average daily net assets, and decreasing as assets
reach certain levels, subject to an annual minimum fee of $61,667, plus out-of-
pocket expenses.

For the fiscal years ended December 31, 1997, 1998 and 1999 Sunstone was
paid the following fees for administrative services<F1>:

1997 1998 1999
---- ---- ----
Mid-Cap Growth Fund $146,137 $91,812 $121,271

<PAGE>

Technology Fund - $61,667 $145,864
Post-Venture Fund $61,667 $61,667 $153,279
Micro-Cap Growth Fund $147,075 $91,441 $154,183
Emerging Growth Fund $289,564 $207,536 $321,228

<F1>The Technology Fund commenced operations after the close of business on
December 31, 1997.

Sunstone also acts as the Funds' Transfer Agent. As Transfer Agent,
Sunstone keeps records of the shareholder accounts and transactions. Each Fund
pays Sunstone a Transfer Agent fee based on the number of shareholder accounts ,
subject to an annual minimum annual fee, plus out-of-pocket

Custodian. UMB Bank, n.a. serves as the Custodian for the Funds. Under
the terms of the Custodial Agreement, UMB Bank, n.a. is responsible for the
receipt and delivery of each Fund's securities and cash. UMB Bank, n.a. does
not exercise any supervisory functions over the management of the Funds or the
purchase and sale of securities.

Legal Counsel. Foley & Lardner, with offices at 777 East Wisconsin Avenue,
Milwaukee, Wisconsin 53202, serves as counsel to the Funds.

Independent Auditors. Ernst & Young LLP are the independent auditors for
the Funds. They are responsible for performing an audit of each Fund's year-end
financial statements as well as providing accounting and tax advice to the
management of the Funds.

DISTRIBUTION OF SHARES
The Funds have adopted a Service and Distribution Plan (the "Plan")
pursuant to Rule 12b-1 under the Investment Company Act. The Plan authorizes
payments by the Funds in connection with the distribution of their shares at an
annual rate, as determined from time to time by the Board of Directors, of up to
0.25% of a Fund's average daily net assets. Payments may be made by each Fund
under the Plan for the purpose of financing any activity primarily intended to
result in the sales of shares of the Fund as determined by the Board of
Directors. Such activities include advertising, compensation for sales and
sales marketing activities of financial institutions and others, such as dealers
or other distributors, shareholder account servicing, production and
dissemination of prospectuses and sales and marketing materials, and capital or
other expenses of associated equipment, rent, salaries, bonuses, interest and
other overhead. To the extent any activity is one which a Fund may finance
without a Plan, the Fund may also make payments to finance such activity outside
of the Plan and not be subject to its limitations.

<PAGE>

thereto (the "Rule 12b-1 Directors") or by a vote of a majority of the
outstanding shares of Common Stock. Messrs. Arnold and Colman are currently the
Rule 12b-1 Directors. Any change in the Plan that would materially increase the
distribution expenses of the Funds provided for in the Plan requires approval of
the shareholders and the Board of Directors, including the Rule 12b-1 Directors.

While the Plan is in effect, the selection and nomination of directors who
are not interested persons of the Funds will be committed to the discretion of
the directors of the Funds who are not interested persons of the Funds. The
Board of Directors must review the amount and purposes of expenditures pursuant
to the Plan quarterly as reported to it by the officers of the Company. Unless
otherwise terminated, the Plan will continue in effect for as long as its
continuance is specifically approved at least annually by the Board of
Directors, including the Rule 12b-1 Directors.

For the fiscal year ended December 31, 1999, the Funds paid a total of
$2,108,625 in 12b-1 fees. Of this total, $1,156,360 was spent on payments to
brokers or dealers, $470,645 was spent on printing and mailing prospectuses to
other than current shareholders, and the balance of $481,620 was spent on
expenses associated with trade shows, web site development and other
miscellaneous expenses. Except for payments to brokers or dealers, the
distribution activities under the Plan were applicable to all of the Funds.
Accordingly, the Funds allocated the cost of distribution activities (other than
payments to brokers or dealers) in accordance with relative net assets.

PORTFOLIO TRANSACTIONS AND BROKERAGE

The Adviser is responsible for decisions to buy and sell securities for
each Fund, for the placement of its portfolio business and the negotiation of
the commissions to be paid on such transactions, subject to the supervision of
the Company's Board of Directors. It is the policy of the Adviser to seek the
best execution at the best security price available with respect to each
transaction, in light of the overall quality of brokerage and research services
provided to the Adviser.

The Adviser will place orders pursuant to its investment determination for
the Funds either directly with the issuer or with any broker or dealer. In
executing portfolio transactions and selecting brokers or dealers, the Adviser
will use its best effort to seek on behalf of a Fund the best overall terms
available. In selecting brokers and assessing the best overall terms available
for any transaction, the Adviser shall consider all factors that it deems
relevant, including the breadth of the market in the security, the price of the
security, the financial condition and execution capability of the broker or
dealer, and reasonableness of the commission, if any, both for the specific
transaction and on a continuing basis. The most favorable price to a Fund means
the best net price without regard to the mix between purchase or sale price and
commission, if any. Over-the-counter securities are generally purchased or sold
directly with principal market makers who retain the difference in their cost in
the security and its selling price (i.e., "markups" when the market maker sells
a security and "markdowns" when the market maker purchases a security). In some
instances, the Adviser may determine that better prices are available from non-
principal market makers who are paid commissions directly.

<PAGE>

In evaluating the best overall terms available, and in selecting the
broker-dealer to execute a particular transaction, the Adviser may also consider
the brokerage and research services (as those terms are defined in Section 28(e)
of the Securities Exchange Act of 1934) provided to the Funds and/or other
accounts over which the Adviser or an affiliate of the Adviser exercises
investment discretion. While the Adviser believes these services have
substantial value, they are considered supplemental to its own efforts in the
performance of its duties. Other clients of the Adviser may indirectly benefit
from the availability of these services to the Adviser, and the Funds may
indirectly benefit from services available to the Adviser as a result of
transactions for other clients. The Adviser is authorized to pay to a broker or
dealer who provides such brokerage and research services a commission for
executing a portfolio transaction for a Fund which is in excess of the amount of
commission another broker or dealer would have charged for effecting that
transaction if, but only if, the Adviser determines in good faith that such
commission was reasonable in relation to the value of the brokerage and research
services provided by such broker or dealer viewed in terms of that particular
transaction or in terms of the overall responsibilities the Adviser has to the
Funds. In no instance, however, will portfolio securities be purchased from or
sold to the Adviser, or any affiliated person of either the Company or the
Adviser, acting as principal in the transaction, except to the extent permitted
by the Securities and Exchange Commission through rules, regulations, decisions
and no-action letters.

The Adviser may retain advisory clients in addition to the Funds and place
portfolio transactions for these accounts. Research services furnished by firms
through which the Funds effect their securities transactions may be used by the
Adviser in servicing all of its accounts; not all of such services may be used
by the Adviser in connection with the Funds. In the opinion of the Adviser, it
will not be possible to separately measure the benefits from research services
to each of the accounts (including the Funds) to be managed by the Adviser.
Because the volume and nature of the trading activities of the accounts will not
be uniform, the amount of commissions in excess of those charged by another
broker paid by each account for brokerage and research services will vary.
However, such costs to the Funds will not, in the opinion of the Adviser, be
disproportionate to the benefits to be received by the Funds on a continuing
basis.

The Adviser intends to seek to allocate portfolio transactions equitably
among its accounts whenever concurrent decisions are made to purchase or sell
securities by a Fund and another advisory account. In some cases, this
procedure could have an adverse effect on the price or the amount of securities
available to a Fund. In making such allocations between a Fund and other
advisory accounts, if any, the main factors to be considered by the Adviser will
be the respective investment objectives, the relative size of portfolio holdings
of the same or comparable securities, the availability of cash for investment,
the size of investment commitments generally held, and the opinions of the
persons responsible for recommending the investment.
During the fiscal years ended December 31, 1997, 1998 and 1999, the Funds
paid the following brokerage commissions<F1>:

1997 1998 1999
---- ---- ----

Mid-Cap Growth Fund 376,219 496,197 $397,596

<PAGE>

Technology Fund - 41,853 $268,994
Post-Venture Fund 62,747 116,288 $354,053
Micro-Cap Growth Fund 302,640 297,620 $358,885
Emerging Growth Fund $1,849,021 $1,858,918 $2,239,970

<F1>The Technology Fund commenced operations after the close of business on
December 31, 1997.

During the fiscal year ended December 31, 1999, the Mid-Cap Growth Fund,
Technology Fund, Post-Venture Fund, Micro-Cap Growth Fund and Emerging Growth
Fund paid commissions of $155,367, $131,962, $157,068, $149,898 and $832,278,
respectively, on transactions of $199,077,896, $127,923,174, $145,557,462,
$94,438,177 and $814,870,122, respectively, to brokers who provided research
services to the Adviser.

TAXES

General

Each Fund intends to qualify for treatment as a regulated investment
company ("RIC") under Subchapter M of the Code, and to do so, each Fund must
distribute to its shareholders for each taxable year at least 90% of its
investment company taxable income (consisting generally of net investment
income, net short-term capital gain and net gains from certain foreign currency
transactions) ("Distribution Requirement") and must meet several additional
requirements. With respect to each Fund, these requirements include the
following: (1) the Fund must derive at least 90% of its gross income each
taxable year from dividends, interest, payments with respect to securities
loans, and gains from the sale or other disposition of stock or securities or
foreign currencies, or other income (including but not limited to gains from
options, futures or forward contracts) derived with respect to its business of
investing in such stock, securities or those currencies ("Income Requirement");
(2) at the close of each quarter of the Fund's taxable year, at least 50% of the
value of its total assets must be represented by cash and cash items, U.S.
government securities, securities of other RICs, and other securities, with
these other securities limited, with respect to any one issuer, to an amount
that does not exceed 5% of the value of the Fund's total assets and that does
not represent more than 10% of the issuer's outstanding voting securities; and
(3) at the close of each quarter of the Fund's taxable year, not more than 25%
of the value of its total assets may be invested in securities (other than U.S.
government securities or the securities of other RICs) of any one issuer.
Additional rules apply for related corporations.

If a Fund fails to qualify for treatment as a RIC in any fiscal year, it
will be treated as a corporation for federal income tax purposes. As such, the
Fund would be required to pay income taxes on its net investment income and net
realized capital gains, if any, at the rates generally applicable to
corporations. Shareholders of a Fund that did not qualify for treatment as a
RIC would not be liable for income tax on the Fund's net investment income or
net realized capital gains in their individual capacities. Distributions to
shareholders, whether from the Fund's net investment income or net realized
capital gains, would be treated as taxable dividends to the extent of current or
accumulated earnings and profits of the Fund.

Dividends and other distributions declared by a Fund in, and payable to
shareholders of record as of a date in, October, November or December of any
year will be deemed to have been paid by the Fund and received by the
shareholders on December 31 of that year if the distributions are paid by the
Fund during January of the following calendar year. Accordingly, those
distributions will be taxed to shareholders for the year in which that December
31 falls.

A portion of the dividends from a Fund's investment company taxable income
(whether paid in cash or reinvested in additional Fund shares) may be eligible
for the dividends-received deduction allowed to corporations. The eligible
portion may not exceed the aggregate dividends received by a Fund from U.S.
corporations, with certain exceptions. However, dividends received by a
corporate shareholder and deducted by it pursuant to the dividends-received
deduction are potentially subject to the corporate alternative minimum tax.

As of December 31, 1999, the Emerging Growth and Micro-Cap Funds had
federal income tax capital loss carryforwards of $44,603,535 and $23,862,439,
respectively. The entire federal income tax loss carryforward for each of these
Funds expires between 2004 and 2006.

If shares of a Fund are sold at a loss after being held for six months or
less, the loss will be treated as long-term, instead of short-term, capital loss
to the extent of any capital gain distributions received on those shares.
Investors also should be aware that if shares are purchased shortly before the
record date for any distribution, the shareholder will pay full price for the
shares and receive some portion of the price back as a taxable dividend or
capital gain distribution.

Each Fund will be subject to a nondeductible 4% excise tax to the extent
it fails to distribute, by the end of any calendar year, substantially all of
its ordinary income for that year and capital gain net income for the one-year
period ending on October 31 of that year, plus certain other amounts. Each Fund
intends to declare and distribute dividends during each year sufficient to
prevent imposition of the excise tax.

Non U.S. Shareholders

In general, distributions of net investment income by a Fund to a
shareholder who, as to the United States, is a nonresident alien individual,
nonresident alien fiduciary of a trust or estate, foreign corporation, or
foreign partnership ("foreign shareholder") will be subject to U.S. withholding
tax at a rate of 30% (or lower treaty rate if IRS Form W-8 is properly filed).

The foregoing is a general and abbreviated summary of certain U.S. federal
income tax considerations affecting such Fund and its shareholders. Investors
are urged to consult their own tax advisers for more detailed information and
for information regarding any foreign, state and local taxes applicable to
distributions received from a Fund.

CAPITAL STRUCTURE

<PAGE>

stock is divisible into an unlimited number of "series", each of which is a
separate Fund. Each share of a Fund represents an equal proportionate interest
in that Fund. Each share of the Funds has equal voting, dividend, distribution
and liquidation rights.

The Board of Directors may classify or reclassify any unissued series of
shares of the Funds and may designate or redesignate the name of any outstanding
series of shares of the Funds. As a general matter, shares are voted in the
aggregate and not by series, except where series voting would be required by
Maryland law or the Investment Company Act (e.g., a change in investment policy
or approval of an investment advisory agreement). All consideration received
from the sale of shares of any series of the Funds' shares, together with all
income, earnings, profits and proceeds thereof, would belong to that series and
would be charged with the liabilities in respect of that series and of that
series' share of the general liabilities of the Funds in the proportion that the
total net assets of the series bear to the total net assets of all series of the
Funds' shares. The net asset value of a share of any series would be based on
the assets belonging to that series less the liabilities charged to that series,
and dividends could be paid on shares of any series of Common Stock only out of
lawfully available assets belonging to that series. In the event of liquidation
or dissolution of the Funds, the holders of each series would be entitled, out
of the assets of the Funds available for distribution, to the assets belonging
to that series.

Shares of the Funds have no preemptive rights and only such conversion or
exchange rights as the Board may grant in its discretion. When issued for
payment as described in the Prospectus, the Company's shares will be fully paid
and non-assessable.

Shareholders are entitled to one vote for each full share held, and
fractional votes for fractional shares held, and will vote in the aggregate and
not by class or series except as otherwise required by the 1940 Act or the
Maryland General Corporation Law. Shareholders may not cumulate their votes in
the election of directors. Consequently the holders of more than 50% of the
shares of the common stock voting for the election of directors can elect the
entire Board of Directors and in such event, the holders of the remaining shares
voting for the election of directors will not be able to elect any person or
persons to the Board of Directors.

Rule 18f-2 under the 1940 Act provides that any matter required to be
submitted to the holders of the outstanding voting securities of an investment
company such as the Funds shall not be deemed to have been effectively acted
upon unless approved by a majority of the outstanding shares of each fund
affected by the matter. A Fund is affected by a matter unless it is clear that
the interests of each Fund in the matter are substantially identical or that the
matter does not affect any interest of the Funds. Under Rule 18f-2 the approval
of an investment advisory agreement or 12b-1 distribution plan or any change in
a fundamental investment policy would be effectively acted upon with respect to
a Fund only if approved by a majority of the outstanding shares of such Fund.
However, the rule also provides that the ratification of independent public
accountants, the approval of principal underwriting contracts and the election
of directors may be effectively acted upon by shareholders of the Company voting
without regard to particular Funds.

<PAGE>

total number of shares of the Funds outstanding (or of a class or series of the
Funds, as applicable) will be effective, except to the extent otherwise required
by the 1940 Act and rules thereunder. In addition, the Articles of
Incorporation provide that, to the extent consistent with the General
Corporation Law of Maryland and other applicable law, the By-Laws may provide
for authorization to be given by the affirmative vote of the holders of less
than a majority of the total number of shares of the Funds outstanding (or of a
class or series).

SHAREHOLDER MEETINGS

The Maryland Statutes permit registered investment companies, such as the
Funds, to operate without an annual meeting of shareholders under specified
circumstances if an annual meeting is not required by the 1940 Act. The Company
has adopted the appropriate provisions in its By-Laws and may, at its
discretion, not hold an annual meeting in any year in which the election of
directors is not required to be acted on by shareholders under the 1940 Act.

The Company's By-Laws also contain procedures for the removal of directors
by its shareholders. At any meeting of shareholders, duly called and at which a
quorum is present, the shareholders may, by the affirmative vote of the holders
of a majority of the votes entitled to be cast thereon, remove any director or
directors from office and may elect a successor or successors to fill any
resulting vacancies for the unexpired terms of removed directors.

Upon the written request of the holders of shares entitled to not less
than ten percent (10%) of all the votes entitled to be cast at such meeting, the
Secretary of the Fund shall promptly call a special meeting of shareholders for
the purpose of voting upon the question of removal of any director. Whenever
ten or more shareholders of record who have been such for at least six months
preceding the date of application, and who hold in the aggregate either shares
having a net asset value of at least $25,000 or at least one percent (1%) of the
total outstanding shares, whichever is less, shall apply to the Company's
Secretary in writing, stating that they wish to communicate with other
shareholders with a view to obtaining signatures to submit a request for a
meeting as described above and accompanied by a form of communication and
request which they wish to transmit, the Secretary shall within five business
days after such application either: (1) afford to such applicants access to a
list of the names and addresses of all shareholders as recorded on the books of
the Funds; or (2) inform such applicants as to the approximate number of
shareholders of record and the approximate cost of mailing to them the proposed
communication and form of request.

If the Secretary elects to follow the course specified in clause (2) of
the last sentence of the preceding paragraph, the Secretary, upon the written
request of such applicants, accompanied by a tender of the material to be mailed
and of the reasonable expenses of mailing, shall, with reasonable promptness,
mail such material to all shareholders of record at their addresses as recorded
on the books unless within five business days after such tender the Secretary
shall mail to such applicants and file with the SEC, together with a copy of the
material to be mailed, a written statement signed by at least a majority of the
Board of Directors to the effect that in their opinion either such material
contains untrue statements of fact or omits to state facts necessary to make the

<PAGE>

statements contained therein not misleading, or would be in violation of
applicable law, and specifying the basis of such opinion.

After opportunity for hearing upon the objections specified in the written
statement so filed, the SEC may, and if demanded by the Board of Directors or by
such applicants shall, enter an order either sustaining one or more of such
objections or refusing to sustain any of them. If the SEC shall enter an order
refusing to sustain any of such objections, or if, after the entry of an order
sustaining one or more of such objections, the SEC shall find, after notice and
opportunity for hearing, that all objections so sustained have been met, and
shall enter an order so declaring, the Secretary shall mail copies of such
material of all shareholders with reasonable promptness after the entry of such
order and the renewal of such tender.

RETIREMENT PLANS

The Funds offer several retirement account options to shareholders.
Qualifying shareholders may establish the following tax deferred retirement
accounts: traditional and SEP IRA, Roth IRA and SIMPLE IRA. The Funds also
offer a Section 403(b)(7) arrangement for employers of certain tax exempt or
educational organizations. The shareholder's employer must establish a plan
before the shareholder opens a SEP, SIMPLE or 403(b)(7) account.

A description of accounts currently offered, applicable service fees and
certain limitations on account contributions and withdrawals, as well as
application forms, are available from the transfer agent upon request at 1-800-
228-2121. The IRA documents contain a disclosure statement which the Internal
Revenue Service requires to be furnished to individuals who are adopting the
IRA. Because a retirement program involves commitments covering future years,
it is important that the investment objective of the Funds be consistent with
the participant's retirement objectives. Premature withdrawals from a
retirement plan will result in adverse tax consequences. Consultation with a
competent financial and tax adviser regarding the foregoing retirement plans is
recommended.

PERFORMANCE INFORMATION

From time to time, the Funds may advertise their "average annual total
return" over various periods of time. An average annual total return refers to
the rate of return which, if applied to an initial investment at the beginning
of a stated period and compounded over the period, would result in the
redeemable value of the investment at the end of the stated period assuming
reinvestment of all dividends and distributions and reflecting the effect of all
recurring fees. A shareholder's investment in a Fund and its return are not
guaranteed and will fluctuate according to market conditions. When considering
"average" annual total return figures for periods longer than one year,
shareholders should note that a Fund's annual total return for any one year in
the period might have been greater or less than the average for the entire
period. Each Fund also may use "aggregate" total return figures for various
periods, representing the cumulative change in value of an investment in a Fund
for a specific period (again reflecting changes in a Fund's share price and
assuming reinvestment of dividends and distributions). To facilitate the

<PAGE>

comparability of historical performance data from one mutual fund to another,
the SEC has developed guidelines for the calculation of average annual total
return.

The average annual total return for a Fund for a specific period is found
by first taking a hypothetical $10,000 investment ("initial investment") in the
Fund's shares on the first day of the period and computing the "redeemable
value" of that investment at the end of the period. The redeemable value is
then divided by the initial investment, and this quotient is taken to the Nth
root (N representing the number of years in the period) and 1 is subtracted from
the result, which is then expressed as a percentage. The calculation assumes
that all income and capital gains dividends paid by the Fund have been
reinvested at net asset value on the reinvestment dates during the period. This
calculation can be expressed as follows:

P(1 + T)N = ERV

Where: T= average annual total return.

ERV = ending redeemable value at the end of the period covered by the
computation of a hypothetical $10,000 payment made at the
beginning of the period.

P = hypothetical initial payment of $10,000.

N = period covered by the computation, expressed in terms of years.

Total return performance for a specific period is calculated by first
taking an investment ("initial investment") in a Fund's shares on the first day
of the period and computing the "ending value" of that investment at the end of
the period. The total return percentage is then determined by subtracting the
initial investment from the ending value and dividing the remainder by the
initial investment and expressing the result as a percentage. The calculation
assumes that all income and capital gains dividends paid by the Fund have been
reinvested at net asset value on the reinvestment dates during the period.
Total return may also be shown as the increased dollar value of the investment
over the period or as a cumulative total return which represents the change in
value of an investment over a stated period and may be quoted as a percentage or
as a dollar amount.

The calculations of average annual total return and aggregate total return
assume the reinvestment of all dividends and capital gain distributions on the
reinvestment dates during the period. The ending redeemable value is determined
by assuming complete redemption of the hypothetical investment and the deduction
of all nonrecurring charges at the end of the period covered by the
computations.

The Funds' performance figures will be based upon historical results and
will not necessarily be indicative of future performance. The Funds' returns
and net asset value will fluctuate and the net asset value of shares when sold
may be more or less than their original cost. Any additional fees charged by a
dealer or other financial services firm would reduce the returns described in
this section.

<PAGE>

The total return for the fiscal year ended December 31, 1999 for each of
the Mid-Cap Growth Fund, Technology Fund, Post-Venture Fund, Micro-Cap Growth
Fund and Emerging Growth Fund was 126.88%, 223.76%, 237.22%, 207.88% and
291.15%, respectively. The average annual total return from inception through
December 31, 1999 for each of the Mid-Cap Growth Fund, Technology Fund, Post-
Venture Fund, Micro-Cap Growth Fund and Emerging Growth Fund was 29.59%,
144.80%, 59.71%, 36.57% and 43.89%, respectively. The Mid-Cap Growth Fund, the
Micro-Cap Growth Fund and the Emerging Growth Fund commenced operations after
the close of business on December 31, 1995. The Post-Venture Fund commenced
operations after the close of business on December 31, 1996. The Technology
Fund commenced operations after the close of business on December 31, 1997.
Such performance results reflect reimbursements made by the Adviser during each
of the fiscal years to keep the ratio of net expenses to average net assets of
each Fund at or below 1.95%. Performance quotations of a Fund represent its
past performance and should not be considered as representative of future
results. The investment return and principal value of an investment in a Fund
will fluctuate so that an investor's shares, when redeemed, may be worth more or
less than their original cost.

From time to time, in marketing and other literature, the Funds'
performance may be compared to the performance of other mutual funds in general
or to the performance of particular types of mutual funds with similar
investment goals, as tracked by independent organizations. Among these
organizations, Lipper Analytical Services, Inc. ("Lipper"), a widely used
independent research firm which ranks mutual funds by overall performance,
investment objective and assets, may be cited. Lipper performance figures are
based on changes in net asset value, with all income and capital gains dividends
reinvested. Such calculations do not include the effect of any sales charges
imposed by other funds. The Funds will be compared to Lipper's appropriate fund
category, that is, by fund objective and portfolio holdings.

The Funds' performance may also be compared to the performance of other
mutual funds by Morningstar, Inc., which ranks funds on the basis of historical
risk and total return. Morningstar's rankings range from five stars (highest)
to one star (lowest) and represent Morningstar's assessment of the historical
risk level and total return of a fund as a weighted average for 3, 5, and 10
year periods. Rankings are not absolute or necessarily predictive of future
performance.

Evaluations of Fund performance made by independent sources may also be
used in advertisements concerning the Funds, including reprints of or selections
from, editorials or articles about the Funds. Sources for Fund performance and
articles about the Funds may include publications such as Money, Forbes,
Kiplinger's, Financial World, Business Week, U.S. News and World Report, the
Wall Street Journal, Barron's and a variety of investment newsletters.

The Funds may compare their performance to a wide variety of indices and
measures of inflation including the Standard & Poor's Index of 500 Stocks, the
Nasdaq Over-the-Counter Composite Index, the Nasdaq Industrial Index, the
Russell 2000 Index, the S&P Mid Cap 400 Index and the Morgan Stanley High
Technology 35 Index. There are differences and similarities between the
investments that the Funds may purchase for their respective portfolios and the
investments measured by these indices.

<PAGE>

Occasionally statistics may be used to specify a Fund's volatility or
risk. Measures of volatility or risk are generally used to compare a Fund's net
asset value or performance relative to a market index. One measure of
volatility is beta. Beta is the volatility of a fund relative to the total
market as represented by the Standard & Poor's 500R Stock Index. A beta of more
than 1.00 indicates volatility greater than the market, and a beta of less than
1.00 indicates volatility less than the market. Another measure of volatility
or risk is standard deviation. Standard deviation is used to measure
variability of net asset value or total return around an average, over a
specified period of time. The premise is that greater volatility connotes
greater risk undertaken in achieving performance.

Marketing and other Company literature may include a description of the
potential risks and rewards associated with an investment in the Funds. The
description may include a "risk/return spectrum" which compares a Fund to other
Van Wagoner Funds or broad categories of funds, such as money market, bond or
equity funds, in terms of potential risks and returns. Risk/return spectrums
also may depict funds that invest in both domestic and foreign securities or a
combination of bond and equity securities. Money market funds are designed to
maintain a constant $1.00 share price and have a fluctuating yield. Share
price, yield and total return of a bond fund will fluctuate. The share price
and return of an equity fund also will fluctuate. The description may also
compare a Fund to bank products, such as certificates of deposit. Unlike mutual
funds, certificates of deposit are insured up to $100,000 by the U.S. government
and offer a fixed rate of return.

PURCHASE, EXCHANGE AND REDEMPTION OF SHARES;
DETERMINATION OF NET ASSET VALUE

As set forth in the Prospectus, the net asset value of the Funds will be
determined as of the close of trading on each day the New York Stock Exchange is
open for trading. The New York Stock Exchange is open for trading Monday
through Friday except New Year's Day, Dr. Martin Luther King, Jr. Day,
Presidents' Day, Good Friday, Memorial Day, Independence Day, Labor Day,
Thanksgiving Day, and Christmas Day. Additionally, if any of the aforementioned
holidays fall on a Saturday, the New York Stock Exchange will not be open for
trading on the preceding Friday, and when any such holiday falls on a Sunday,
the New York Stock Exchange will not be open for trading on the following Monday
unless unusual business conditions exist, such as the ending of a monthly or the
yearly accounting period.

<PAGE>

revision by the Funds' Adviser. Any modification of the price of a debt
security furnished by a pricing service is made pursuant to procedures adopted
by the Company's Board of Directors. Debt instruments maturing within 60 days
are valued by the amortized cost method. Any securities for which market
quotations are not readily available are valued at their fair value as
determined in good faith by the Adviser under the supervision of the Company's
Board of Directors.

To illustrate the method of computing the offering price of shares of the
Funds, the offering price on December 31, 1999 was as follows:

<TABLE>
<CAPTION>
Mid-Cap Post- Micro-Cap Emerging
Growth Technology Venture Growth Growth
------- ---------- ------- --------- ----------

<S> <C> <C> <C> <C> <C>
Net Assets $141,916,263 $401,443,615 $391,223,795 $296,025,695 $1,466,827,021
divided by
Shares Outstanding 5,243,622 6,887,071 10,272,212 8,508,712 34,220,003
equals
Net Asset Value Per Share $27.06 $58.29 $38.09 $34.79 $42.86
(Offering & Redemption Price)

</TABLE>

Shares of the Funds may be exchanged for shares of the Northern U.S.
Government Money Market Fund as provided in the Prospectus. Sunstone Financial,
Group, Inc. the Funds' transfer agent, receives a service fee from the Northern
U.S. Government Money Market Fund at the annual rate of 0.25 of 1% of the
average daily net asset value of the shares of the Funds exchanged into the
Northern U.S. Government Money Market Fund.

OTHER INFORMATION

It is possible that conditions may exist in the future which would, in the
opinion of the Board of Directors, make it undesirable for a Fund to pay
redemptions in cash. In such cases the Board may authorize payment to be made
in portfolio securities of a Fund. However, the Funds have obligated themselves
under the 1940 Act to redeem for cash all shares presented for redemption by any
one shareholder up to $250,000 (or 1% of a Fund's net assets if that is less) in
any 90-day period. Securities delivered in payment of redemptions are valued at
the same value assigned to them in computing the net asset value per share.
Shareholders receiving such securities generally will incur brokerage costs when
selling such securities.

<PAGE>

receive satisfactory assurances that it will have good and marketable title to
the securities received by it; that the securities be in proper form for
transfer to the Fund; and that adequate information be provided concerning the
basis and other tax matters relating to the securities.

The Prospectus and this Statement of Additional Information do not contain
all the information included in the Registration Statement filed with the
Commission under the Securities Act with respect to the securities offered by
the Funds' Prospectus. Certain portions of the Registration Statement have been
omitted from the Prospectus and this Statement of Additional Information,
pursuant to the rules and regulations of the Commission. The Registration
Statement including the exhibits filed therewith may be examined at the office
of the Commission in Washington, D.C.

Statements contained in the Prospectus or in this Statement of Additional
Information as to the contents of any contract or other documents referred to
are not necessarily complete, and in each instance reference is made to the copy
of such contract or other document filed as an exhibit to the Registration
Statement of which the Prospectus and this Statement of Additional Information
form a part, each such statement being qualified in all respects by such
reference.

<PAGE>

APPENDIX A

Commercial Paper Ratings
- ------------------------

A Standard & Poor's commercial paper rating is a current assessment of the
likelihood of timely payment of debt having an original maturity of no more than
365 days. The following summarizes the rating categories used by Standard &
Poor's for commercial paper in which the Funds may invest:

"A-1" - Issue's degree of safety regarding timely payment is strong. Those
issues determined to possess extremely strong safety characteristics are denoted
"A-1+."

"A-2" - Issue's capacity for timely payment is satisfactory. However, the
relative degree of safety is not as high as for issues designated "A-1."

Moody's commercial paper ratings are opinions of the ability of issuers to
repay punctually promissory obligations not having an original maturity in
excess of 9 months. The following summarizes the rating categories used by
Moody's for commercial paper in which the Funds may invest:

"Prime-1" - Issuer or related supporting institutions are considered to have
a superior capacity for repayment of short-term promissory obligations. Prime-1
repayment capacity will normally be evidenced by the following capacities:
leading market positions in well-established industries; high rates of return on
funds employed; conservative capitalization structures with moderate reliance on
debt and ample asset protection; broad margins in earning coverage of fixed
financial charges and high internal cash generation; and well-established access
to a range of financial markets and assured sources of alternate liquidity.

"Prime-2" - Issuer or related supporting institutions are considered to 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 alternative liquidity is
maintained.

The three rating categories of Duff & Phelps for investment grade commercial
paper are "Duff 1," "Duff 2" and "Duff 3." Duff & Phelps employs three
designations, "Duff 1+," "Duff 1" and "Duff 1-," within the highest rating
category. The following summarizes the rating categories used by Duff & Phelps
for commercial paper in which the Funds may invest:

"Duff 1+" - Debt possesses highest certainty of timely payment. Short-term
liquidity, including internal operating factors and/or access to alternative
sources of funds, is outstanding, and safety is just below risk-free U.S.
Treasury short-term obligations.

<PAGE>

"Duff 1" - Debt possesses very high certainty of timely payment. Liquidity
factors are excellent and supported by good fundamental protection factors.
Risk factors are minor.

"Duff 1-" - Debt possesses high certainty of timely payment. Liquidity
factors are strong and supported by good fundamental protection factors. Risk
factors are very small.

"Duff 2" - Debt possesses good certainty of timely payment. Liquidity
factors and company fundamentals are sound. Although ongoing funding need may
enlarge total financing requirements, access to capital markets is good.

Fitch short-term ratings apply to debt obligations that are payable on
demand or have original maturities of up to three years. The highest rating
category of Fitch for short-term obligations is "F-1." Fitch employs two
designations, "F-1+" and "F-1," within the highest category. The following
summarizes the rating categories used by Fitch for short-term obligations in
which the Funds may invest:

"F-1+" - Securities possess exceptionally strong credit quality. Issues
assigned this rating are regarded as having the strongest degree of assurance
for timely payment.

"F-1" - Securities possess very strong credit quality. Issues assigned this
rating reflect an assurance of timely payment only slightly less in degree than
issues rated "F-1+."

Fitch may also use the symbol "LOC" with its short-term ratings to indicate that
the rating is based upon a letter of credit issued by a commercial bank.

Thomson BankWatch short-term ratings assess the likelihood of an untimely or
incomplete payment of principal or interest of unsubordinated instruments having
a maturity of one year or less which are issued by a bank holding company or an
entity within the holding company structure. The following summarizes the
ratings used by Thomson BankWatch in which the Funds may invest:

"TBW-1" - This designation represents Thomson BankWatch's highest rating
category and indicates a very high degree of likelihood that principal and
interest will be paid on a timely basis.

"TBW-2" - This designation indicates that while the degree of safety
regarding timely payment of principal and interest is strong, the relative
degree of safety is not as high as for issues rated "TBW-1."

<PAGE>

IBCA assesses the investment quality of unsecured debt with an original
maturity of less than one year which is issued by bank holding companies and
their principal bank subsidiaries. The following summarizes the rating
categories used by IBCA for short-term debt ratings in which the Funds may
invest:

"A1" - Obligations are supported by the highest capacity for timely
repayment. Where issues possess a particularly strong credit feature, a rating
of A1+ is assigned.

"A2" - Obligations are supported by a good capacity for timely repayment.

Corporate Long-Term Debt Ratings
- --------------------------------

STANDARD & POOR'S DEBT RATINGS

A Standard & Poor's corporate or municipal debt rating is a current
assessment of the creditworthiness of an obligor with respect to a specific
obligation. This assessment may take into consideration obligors such as
guarantors, insurers, or lessees. The debt rating is not a recommendation to
purchase, sell, or hold a security, inasmuch as it does not comment as to market
price or suitability for a particular investor.

The ratings are based on current information furnished by the issuer or
obtained by S&P from other sources it considers reliable. S&P does not perform
an audit in connection with any rating and may, on occasion, rely on unaudited
financial information. The ratings may be changed, suspended, or withdrawn as a
result of changes in, or unavailability of, such information, or for other
circumstances.

The ratings are based, in varying degrees, on the following considerations:

1. Likelihood of default - capacity and willingness of the obligor as
to the timely payment of interest and repayment of principal in
accordance with the terms of the obligation.

2. Nature of and provisions of the obligation.

3. Protection afforded by, and relative position of, the obligation in
the event of bankruptcy, reorganization, or other arrangement under
the laws of bankruptcy and other laws affecting creditors' rights.

<PAGE>

INVESTMENT GRADE

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 highest 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.

SPECULATIVE GRADE

Debt rated 'BB', 'B', 'CCC', 'CC' and 'C' is regarded as having
predominantly speculative characteristics with respect to capacity to pay
interest and repay principal. 'BB' indicates the least degree of speculation and
'C' the highest. While such debt will likely have some quality and protective
characteristics, these are outweighed by large uncertainties or major risk
exposures to adverse conditions.

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.

<PAGE>

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

C - Debt rated '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.

CI - The rating 'CI' is reserved for income bonds on which no interest is
being paid.

D - Debt rated 'D' is in payment default. The 'D' rating category is used
when interest payments or principal payments are not made on the date due even
if the applicable grace period has not expired, unless S&P believes that such
payments will be made during such period. The 'D' rating also will be used upon
the filing of a bankruptcy petition if debt service payments are jeopardized.

MOODY'S LONG-TERM DEBT RATINGS

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 risk 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 some time 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 rated 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.

<PAGE>

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 INVESTORS SERVICE, INC. BOND RATINGS

Fitch investment grade bond ratings provide a guide to investors in
deterring the credit risk associated with a particular security. The ratings
represent Fitch's assessment of the issuer's ability to meet the obligations of
a specific debt issue or class of debt in a timely manner.

The rating takes into consideration special features of the issue, its
relationship to other obligations of the issuer, the current and prospective
financial condition and operating performance of the issuer and any guarantor,
as well as the economic and political environment that might affect the issuer's
future financial strength and credit quality.

Fitch ratings do not reflect any credit enhancement that may be provided by
insurance policies or financial guaranties unless otherwise indicated.

Bonds that have the same rating are of similar but not necessarily identical
credit quality since the rating categories do not fully reflect small
differences in the degrees of credit risk.

Fitch ratings are not recommendations to buy, sell, or hold any security.
Ratings do not comment on the adequacy of market price, the suitability of any
security for a particular investor, or the tax-exempt nature of taxability of
payments made in respect of any security.

Fitch ratings are based on information obtained from issuers, other
obligors, underwriters, their experts, and other sources Fitch believes to be
reliable. Fitch does not audit or verify the truth or accuracy of such
information. Ratings may be changed, suspended, or withdrawn as a result of
changes in, or the unavailability of, information or for other reasons.

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.

<PAGE>

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 the 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.

Fitch speculative grade bond ratings provide a guide to investors in
determining the credit risk associated with a particular security. The ratings
('BB to 'C') represent Fitch's assessment of the likelihood of timely payment of
principal and interest in accordance with the terms of obligation for bond
issues not in default. For defaulted bonds, the rating ('DDD' to 'D') is an
assessment of the ultimate recovery value through reorganization or liquidation.

Bonds that have the same rating are of similar but not necessarily
identical credit quality since the rating categories cannot fully reflect the
differences in the degrees of credit risk. Moreover, the character of the risk
factor varies from industry to industry and between corporate, health care and
municipal obligations.

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.

<PAGE>

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 in imminent default in payment of interest or principal.

DDD, DD
and D Bonds are in default on interest and/or principal payments. Such
bonds are extremely speculative and should be valued on the basis of
their ultimate recovery value in liquidation or reorganization of the
obligor.

DUFF & PHELPS, INC. LONG-TERM DEBT RATINGS

These ratings represent a summary opinion of the issuer's long-term
fundamental quality. Rating determination is based on qualitative and
quantitative factors which may vary according to the basic economic and
financial characteristics of each industry and each issuer. Important
considerations are vulnerability to economic cycles as well as risks related to
such factors as competition, government action, regulation, technological
obsolescence, demand shifts, cost structure, and management depth and expertise.
The projected viability of the obligor at the trough of the cycle is a critical
determination.

Each rating also takes into account the legal form of the security (e.g.,
first mortgage bonds, subordinated debt, preferred stock, etc.). The extent of
rating dispersion among the various classes of securities is determined by
several factors including relative weightings of the different security classes
in the capital structure, the overall credit strength of the issuer, and the
nature of covenant protection. Review of indenture restrictions is important to
the analysis of a company's operating and financial constraints.

<PAGE>

The Credit Rating Committee formally reviews all ratings once per quarter
(more frequently, if necessary). Ratings of 'BBB-' and higher fall within the
definition of investment grade securities, as defined by bank and insurance
supervisory authorities.

RATING SCALE DEFINITION
- ------------------------------------------------------------------------------

AAA Highest credit quality. The risk factors are
negligible, being only slightly more than for risk-
free U.S. Treasury debt.

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

AA+ High credit quality. Protection factors are strong.
AA Risk is modest, but may vary slightly from time to
AA- time because of economic conditions.

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

A+ Protection factors are average but adequate. However,
A risk factors are more variable and greater in periods
A- of economic uncertainty.

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

BBB+ Below average protection factors but still considered

BBB sufficient for prudent investment. Considerable
BBB- variability in risk during economic cycles.

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

BB+ Below investment grade but deemed likely to meet
BB obligations when due. Present or prospective
BB- financial protection factors fluctuate according to
industry conditions or company fortunes. Overall
quality may move up or down frequently within this
category.

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

B+ Below investment grade and possessing risk that
B obligations will not be met when due. Financial
B- protection factors will fluctuate widely according to
economic cycles.

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

CCC Well below investment grade securities. Considerable
uncertainty exists as to timely payment of principal,
interest or preferred dividends. Protection factors
are narrow and risk can be substantial with
unfavorable economic/industry conditions, and/or with
unfavorable company developments.

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

<PAGE>

- ------------------------------------------------------------------------------
- ------------------------------------------------------------------------------
DD Default debt obligations. Issuer failed to meet
scheduled principal and/or interest payments.
DP Preferred stock with dividend arrearages.
- ------------------------------------------------------------------------------

XXXXX

VAN WAGONER FUNDS, INC.

STATEMENT OF ADDITIONAL INFORMATION

for the

Capital Appreciation Fund

Growth Fund

This Statement of Additional Information dated April 30, 2000 is meant to be
read in conjunction with the Prospectus dated April 30, 2000 for the Capital
Appreciation Fund and Growth Fund (collectively referred to as the "Funds") and
is incorporated by reference in its entirety into the Prospectus. Because this
Statement of Additional Information is not itself a prospectus, no investment in
shares of these Funds should be made solely upon the information contained
herein. Copies of the Prospectus for the Funds may be obtained by calling
1-800-228-2121 or by writing Van Wagoner Funds, Inc., P.O. Box 1628, Milwaukee,
Wisconsin 53201-1628. Capitalized terms used but not defined herein have the
same meanings as in the Prospectus.

The following financial statements are incorporated by reference to the
Annual Report, dated December 31, 1999 of Van Wagoner Funds, Inc. (File No. 811-
9116) as filed with the Securities and Exchange Commission on February 29, 2000.

Shareholders may obtain a copy of the Annual Report, without charge, by
calling 1-800-228-2121.

<PAGE>

TABLE OF CONTENTS

Page
----

GENERAL INFORMATION AND FUND HISTORY..................................3
INVESTMENT STRATEGIES.................................................3
INVESTMENT RESTRICTIONS..............................................14
ADDITIONAL COMPANY INFORMATION.......................................16
Directors and Officers ............................................16
Control Persons and Principal Holders of Securities ...............18
INVESTMENT ADVISORY AND OTHER SERVICES...............................18
Investment Adviser ................................................18
Administrator and Transfer Agent ..................................20
Custodian .........................................................21
Legal Counsel ....................................................21
Independent Accountants ...........................................21
DISTRIBUTION OF SHARES...............................................21
PORTFOLIO TRANSACTIONS AND BROKERAGE.................................22
TAXES ...............................................................23
CAPITAL STRUCTURE....................................................25
SHAREHOLDER MEETINGS.................................................26
RETIREMENT PLANS.....................................................27
PERFORMANCE INFORMATION..............................................28
PURCHASE, EXCHANGE AND REDEMPTION OF SHARES;
DETERMINATION OF NET ASSET VALUE.....................................31
OTHER INFORMATION....................................................32
APPENDIX A (Description of Securities Ratings)......................A-1

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

<PAGE>

GENERAL INFORMATION AND FUND HISTORY

The Van Wagoner Funds (collectively referred to as the "Funds" or
individually referred to as a "Fund") constitute a single corporation (the
"Company") that was organized as a Maryland corporation on October 18, 1995.
This Statement of Additional Information provides information on two of the
Funds. The Capital Appreciation Fund and the Growth Fund commenced operations
after the close of business on December 31, 1996.

INVESTMENT OBJECTIVES AND STRATEGIES

The Funds' Prospectus describes their principle investment strategies and
risks. This section expands upon that discussion and also discusses non-
principle investment strategies and risks.

MONEY MARKET INSTRUMENTS. Each Fund may invest in a variety of money market
instruments for temporary defensive purposes, pending investment, to meet
anticipated redemption requests and/or to retain the flexibility to respond
promptly to changes in market and economic conditions.

<PAGE>

obligation. There are no contractual restrictions on the right to transfer a
beneficial interest in a fixed time deposit to a third party, although there is
no market for such deposits. Bank notes and bankers' acceptances rank junior to
deposit liabilities of the bank and pari passu with other senior, unsecured
obligations of the bank. Bank notes are classified as "other borrowings" on a
bank's balance sheet, while deposit notes and certificates of deposit are
classified as deposits. Bank notes are not insured by the Federal Deposit
Insurance Corporation or any other insurer. Deposit notes are insured by the
Federal Deposit Insurance Corporation only to the extent of $100,000 per
depositor per bank.

Each Fund's investment in money market instruments for the foregoing reasons
may also include securities issued by other investment companies that invest in
high quality, short-term debt securities (i.e., money market instruments). In
addition to the advisory fees and other expenses a Fund bears directly in
connection with its own operations, as a shareholder of another investment
company, a Fund would bear its pro rata portion of the other investment
company's advisory fees and other expenses, and such fees and other expenses
will be borne indirectly by the Fund's shareholders.

REPURCHASE AGREEMENTS. Each Fund may agree to purchase portfolio securities
from financial institutions subject to the seller's agreement to repurchase them
at a mutually agreed upon date and price ("repurchase agreements"). Although
the securities subject to a repurchase agreement may bear maturities exceeding
one year, settlement for the repurchase agreement will never be more than one
year after a Fund's acquisition of the securities and normally will be within a
shorter period of time. Securities subject to repurchase agreements are held
either by the Funds' custodian or subcustodian (if any), or in the Federal
Reserve/Treasury Book-Entry System. The seller under a repurchase agreement
will be required to maintain the value of the securities subject to the
agreement in an amount exceeding the repurchase price (including accrued
interest). Repurchase agreements may be considered loans to the seller,
collateralized by the underlying securities. The risk to a Fund is limited to
the ability of the seller to pay the agreed upon sum on the repurchase date; in
the event of default, the repurchase agreement provides that a Fund is entitled
to sell the underlying collateral. If the value of the collateral declines
after the agreement is entered into, however, and if the seller defaults under a
repurchase agreement when the value of the underlying collateral is less than
the repurchase price, a Fund could incur a loss of both principal and interest.
The Adviser monitors the value of the collateral at the time the agreement is
entered into and at all times during the term of the repurchase agreement in an
effort to determine that the value of the collateral always equals or exceeds
the agreed upon repurchase price to be paid to a Fund. If the seller were to be
subject to a federal bankruptcy proceeding, the ability of a Fund to liquidate
the collateral could be delayed or impaired because of certain provisions of the
bankruptcy laws. Repurchase agreements will be acquired in accordance with
procedures established by the Company's Board of Directors which are designed to
evaluate the creditworthiness of the other parties to the repurchase agreements.

UNITED STATES GOVERNMENT OBLIGATIONS. Each Fund may invest in Treasury
securities which differ only in their interest rates, maturities and times of
issuance. Treasury Bills have initial maturities of one year or less; Treasury
Notes have initial maturities of one to ten years; and Treasury Bonds generally
have initial maturities of greater than ten years.

<PAGE>

HEDGING STRATEGIES. The Funds may engage in hedging activities. They may
utilize a variety of financial instruments, including options, in an attempt to
reduce the investment risks of the Funds.

Hedging instruments on securities generally are used to hedge against price
movements in one or more particular securities positions that a Fund owns or
intends to acquire. Hedging instruments on stock indices, in contrast,
generally are used to hedge against price movements in broad equity market
sectors in which a Fund has invested or expects to invest. The use of

<PAGE>

hedging instruments is subject to applicable regulations of the SEC, the several
options exchanges upon which they are traded and various state regulatory
authorities.

Options. General. Each Fund may purchase and write (i.e. sell) put and call
options. Such options may relate to particular securities or stock indices, and
may or may not be listed on a domestic or foreign securities exchange and may or
may not be issued by the Options Clearing Corporation. Options trading is a
highly specialized activity that entails greater than ordinary investment risk.
Options may be more volatile than the underlying instruments, and therefore, on
a percentage basis, an investment in options may be subject to greater
fluctuation than an investment in the underlying instruments themselves.

A call option for a particular security gives the purchaser of the option the
right to buy, and the writer (seller) the obligation to sell, the underlying
security at the stated exercise price at any time prior to the expiration of the
option, regardless of the market price of the security. The premium paid to the
writer is in consideration for undertaking the obligation under the option
contract. A put option for a particular security gives the purchaser the right
to sell the security at the stated exercise price at any time prior to the
expiration date of the option, regardless of the market price of the security.

A Fund's obligation to sell an instrument subject to a call option written by
it, or to purchase an instrument subject to a put option written by it, may be
terminated prior to the expiration date of the option by the Fund's execution of
a closing purchase transaction, which is effected by purchasing on an exchange
an option of the same series (i.e., same underlying instrument, exercise price
and expiration date) as the option previously written. A closing purchase
transaction will ordinarily be effected to realize a profit on an outstanding
option, to prevent an underlying instrument from being called, to permit the
sale of the underlying instrument or to permit the writing of a new option
containing different terms on such underlying instrument. The cost of such a
liquidation purchase plus transactions costs may be greater than

<PAGE>

the premium received upon the original option, in which event the Fund will have
incurred a loss in the transaction. There is no assurance that a liquid
secondary market will exist for any particular option. An option writer, unable
to effect a closing purchase transaction, will not be able to sell the
underlying instrument or liquidate the assets held in a segregated account, as
described below, until the option expires or the optioned instrument is
delivered upon exercise with the result that the writer in such circumstances
will be subject to the risk of market decline or appreciation in the instrument
during such period.

In the case of transactions involving "nonequity options," as defined in and
subject to the rules of Code Section 1256, the Funds will treat any gain or loss
arising from the lapse, closing out or exercise of such positions as 60% long-
term and 40% short-term capital gain or loss as required by Section 1256 of the
Code. In addition, such positions must be marked-to-market as of the last
business day of the year, and gain or loss must be recognized for federal income
tax purposes in accordance with the 60%/40% rule discussed above even though the
position has not been terminated. A "nonequity option" subject to the rules of
Code Section 1256 includes options involving stock indexes such as the Standard
& Poor's 500 and 100 indexes.

Certain Risks Regarding Options. There are several risks associated with
transactions in options. For example, there are significant differences between
the securities and options markets that could result in an imperfect correlation
between these markets, causing a given transaction not to achieve its
objectives. In addition, a liquid secondary market for particular options,
whether traded over-the-counter or on an exchange, may be absent for reasons
which

<PAGE>

include the following: there may be insufficient trading interest in certain
options; restrictions may be imposed by an exchange on opening transactions or
closing transactions or both; trading halts, suspensions or other restrictions
may be imposed with respect to particular classes or series of options or
underlying securities or currencies; unusual or unforeseen circumstances may
interrupt normal operations on an exchange; the facilities of an exchange or the
Options Clearing Corporation may not at all times be adequate to handle current
trading value; or one or more exchanges could, for economic or other reasons,
decide or be compelled at some future date to discontinue the trading of options
(or a particular class or series of options), in which event the secondary
market on that exchange (or in that class or series of options) would cease to
exist, although outstanding options that had been issued by the Options Clearing
Corporation as a result of trades on that exchange would continue to be
exercisable in accordance with their terms.

Cover for Options Positions. Transactions using options (other than options
that a Fund has purchased) expose a Fund to an obligation to another party. A
Fund will not enter into any

<PAGE>

such transactions unless it owns either (1) an offsetting ("covered") position
in securities or other options or (2) cash or liquid securities with a value
sufficient at all times to cover its potential obligations not covered as
provided in (1) above. Each Fund will comply with SEC guidelines regarding
cover for these instruments and, if the guidelines so require, maintain cash or
liquid securities with its Custodian in the prescribed amount. Under current
SEC guidelines, the Funds will maintain assets with its Custodian to cover
transactions in which the Funds write or sell options.

The Funds may each make short sales "against the box," i.e., when a security
identical to or convertible or exchangeable into one owned by the Fund is
borrowed and sold short.

<PAGE>

companies as a group; and (c) not more than 3% of the outstanding voting stock
of any one investment company will be owned by the Fund or by the Company as a
whole.

CONVERTIBLE SECURITIES. Each Fund may invest in convertible securities. A
convertible security may be converted either at a stated price or rate within a
specified period of time into a specified number of shares of common stock. By
investing in convertible securities, a Fund seeks the opportunity, through the
conversion feature, to participate in a portion of the capital appreciation of
the common stock into which the securities are convertible, while earning higher
current income than is available from the common stock. Convertible securities
entitle the holder to receive interest paid or accrued on debt or the dividend
paid on preferred stock until the convertible securities mature or are redeemed,
converted or exchanged. Prior to conversion, convertible securities have
characteristics similar to ordinary debt securities or preferred stocks in that
they normally provide a stable stream of income with generally higher yields
than those of common stock of the same or similar issuers. Convertible
securities rank senior to common stock in a corporation's capital structure and
therefore generally entail less risk of loss of principal than the corporation's
common stock.

In selecting convertible securities for the Funds, the Adviser will consider
among other factors, its evaluation of the creditworthiness of the issuers of
the securities; the interest or dividend income generated by the securities; the
potential for capital appreciation of the securities and the underlying common
stocks; the prices of the securities relative to other comparable securities and
to the underlying common stocks; whether the securities are entitled to the
benefits of sinking funds or other protective conditions; diversification of a
Fund's portfolio as to issuers; and whether the securities are rated by a rating
agency and, if so, the ratings assigned.

<PAGE>

Capital appreciation for a Fund may result from an improvement in the credit
standing of an issuer whose securities are held in the Fund or from a general
lowering of interest rates, or a combination of both. Conversely, a reduction
in the credit standing of an issuer whose securities are held by a Fund or a
general increase in interest rates may be expected to result in capital
depreciation to the Fund.

<PAGE>

Credit Ratings. Credit ratings issued by credit-rating agencies evaluate the
safety of principal and interest payments of rated securities. They do not,
however, evaluate the market value risk of junk bond securities and, therefore
may not fully reflect the true risks of an investment. In addition, credit
rating agencies may or may not make timely changes in a rating to reflect
changes in the economy or in the condition of the issuer that affect the market
value of the security. Consequently, credit ratings are used only as a
preliminary indicator of investment quality. Investments in junk bond
securities will be more dependent on the Adviser's credit analysis than would be
the case with investments in investment grade debt securities. The Adviser
employs its own credit research and analysis, which includes a study of existing
debt, capital structure, ability to service debt and to pay dividends, the
issuer's sensitivity to economic conditions, its operating history and the
current trend of earnings. The Adviser continually monitors each Fund's
investments and carefully evaluates whether to dispose of or to retain junk bond
securities whose credit ratings or credit quality may have changed.

<PAGE>

FOREIGN SECURITIES. Each Fund may invest without limitation in securities of
foreign issuers which are publicly traded in the United States, either directly
or through sponsored and unsponsored American Depositary Receipts ("ADRs").
ADRs typically are issued by a U.S. bank or trust company and evidence ownership
of underlying securities issued by a foreign corporation. Unsponsored ADRs
differ from sponsored ADRs in that the establishment of unsponsored ADRs are not
approved by the issuer of the underlying securities. As a result, available
information concerning the issuer may not be as current or reliable as the
information for sponsored ADRs, and the price of unsponsored ADRs may be more
volatile.

CALCULATION OF PORTFOLIO TURNOVER RATE. The portfolio turnover rate for the
Funds is calculated by dividing the lesser of purchases or sales of portfolio
investments for the reporting period by the monthly average value of the
portfolio investments owned during the reporting period. The calculation
excludes all securities, including options, whose maturities or expiration dates
at the time of acquisition are one year or less. Portfolio turnover may vary
greatly from year to year as well as within a particular year, and may be
affected by cash requirements for redemption of shares. The portfolio turnover
rate for each of the Funds was higher in 1998 than 1997 due to market
conditions. The Funds are not restricted by policy with regard to portfolio
turnover and will make changes in their investment portfolios from time to time
as business and economic conditions as well as market prices may dictate. The
current portfolio turnover rates

<PAGE>

for the Funds are set forth in the prospectus. The portfolio turnover rate for
the Funds was higher in 1998 than either the preceding or following year due to
more volatile market conditions in that year.

INVESTMENT RESTRICTIONS

The following are the Funds' fundamental investment restrictions.

Each Fund may not:

1. Issue senior securities, except as permitted under the Investment Company
Act of 1940 (the "Investment Company Act"); provided, however, a Fund may engage
in transactions involving options, futures and options on futures contracts.

2. Lend money or securities (except by purchasing debt securities or
entering into repurchase agreements or lending portfolio securities).

3. With respect to seventy-five percent (75%) of its total assets, purchase
(a) the securities of any issuer (except securities of the U.S. government or
any agency or instrumentality thereof), if such purchase would cause more than
five percent (5%) of the value of the Fund's total assets to be invested in
securities of any one issuer or (b) more than ten percent (10%) of the
outstanding voting securities of any one issuer.

4. Purchase the securities of any issuer if, as a result, 25% or more of the
value of its total assets, determined at the time an investment is made,
exclusive of U.S. government securities, are in securities issued by companies
primarily engaged in the same industry.

5. Act as an underwriter or distributor of securities other than shares of
the Funds except to the extent that a Fund's participation as part of a group in
bidding or by bidding alone, for the purchase of permissible investments
directly from an issuer or selling shareholders for the Fund's own portfolio may
be deemed to be an underwriting, and except to the extent that a Fund

<PAGE>

may be deemed an underwriter under the Securities Act, by virtue of disposing
of portfolio securities.

6. Purchase or sell real estate (but this shall not prevent the Fund from
investing in securities that are backed by real estate or issued by companies
that invest or deal in real estate or in participation interests in pools of
real estate mortgage loans exclusive of investments in real estate limited
partnerships).

7. money, except that a Fund may borrow money from a bank for temporary or
emergency purposes (not for leveraging) in an amount not exceeding 33 1/3% of
the value of its total assets (including the amount borrowed) less liabilities
(other than borrowings). Any borrowings that exceed 33 1/3% of the Fund's total
assets by reason of a decline in net asset value will be reduced within three
days to the extent necessary to comply with the 33 1/3% limitation.
Transactions involving options, futures and options on futures, will not be
deemed to be borrowings if properly covered by a segregated account where
appropriate.

The following investment restrictions are not fundamental, and may be changed
without shareholder approval.

Each Fund may not:

1. Purchase warrants, valued at the lower of cost or market, in excess of 5%
of a Fund's net assets. Included in that amount, but not to exceed 2% of net
assets, are warrants whose underlying securities are not traded on principal
domestic or foreign exchanges. Warrants acquired by the Fund in units or
attached to securities are not subject to these restrictions.

2. Purchase securities of other investment companies except to the extent
permitted by the Investment Company Act and the rules and regulations
thereunder.

3. Make investments for the purpose of exercising control or management of
any company except that a Fund may vote portfolio securities in the Fund's
discretion.

4. Acquire illiquid securities if, as a result of such investments, more
than fifteen percent (15%) of the Fund's net assets (taken at market value at
the time of each investment) would be invested in illiquid securities. "Illiquid
securities" means securities that cannot be disposed of within seven days in the
normal course of business at approximately the amount at which the Fund has
valued the securities.

5. Purchase securities on margin (except to obtain such short-term credits
as are necessary for the clearance of purchases and sales of securities) or
participate in a joint trading

<PAGE>

6. Borrow money except for temporary bank borrowings (not in excess of five
percent (5%) of the value of its total assets) for emergency or extraordinary
purposes, or engage in reverse repurchase agreements, or pledge any of its
assets except to secure borrowings and only to an extent not greater than ten
percent (10%) of the value of the Fund's net assets; provided, however, a Fund
may engage in transactions involving options. Each Fund will not purchase any
security while borrowings representing more than 5% of its total assets are
outstanding.

7. Purchase any interest in any oil, gas or any other mineral exploration or
development program, including any oil, gas or mineral leases.

In determining industry classification with respect to the Funds, the Adviser
intends to use the industry classification titles in the Standard Industrial
Classification Manual.

A guarantee of a security is not deemed to be a security issued by the
guarantor when the value of all securities issued and guaranteed by the
guarantor, and owned by a Fund, does not exceed 10% of the value of the Fund's
total assets.

ADDITIONAL COMPANY INFORMATION

Directors and Officers. As a Maryland corporation, the business and affairs
of the Company are managed by its officers under the direction of its Board of
Directors. Information regarding the Board of Directors and officers of the
Funds, including their principal business occupations during at least the last
five years, is set forth below. Each director who is an "interested person," as
defined in the 1940 Act, is indicated by an asterisk. Except where otherwise
indicated, each of the individuals below has served in his or her present
capacity with the Company since November 1995. The address of each of the
officers and directors is c/o Van Wagoner Funds, 345 California Street, Suite
2450, San Francisco, California, 94104.

<F1>Garrett R. Van Wagoner, President, Treasurer, Secretary and Director

<PAGE>

Larry P. Arnold, Director

Larry P. Arnold, Private investor since 1993. Founder and Managing General
Partner of Wessels Arnold & Henderson (n/k/a Dain Rauscher Wessels) from June
1986 to January 1993. Senior Vice President of Piper Jaffray & Hopwood from
1979 to March 1986. Age 57.

Robert S. Colman, Director

Peter R. Kris, Vice President

Mr. Kris is Vice President of the Company and has served in such capacity
since February 1996. He was a Vice President of Govett and Company Limited from
May 1992 until February 1996. Age 34.

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

<F1> Mr. Van Wagoner is the only director who is an "interested person" of
the Funds (as defined in the Investment Company Act).

COMPENSATION TABLE

Total Compensation
Aggregate Compensation from Company Paid to
Name of Person from Company Directors
- -------------- ---------------------- --------------------

Garrett R. Van $0 $0
Wagoner

Larry P. Arnold $7,500 $7,500

Robert S. Colman $7,500 $7,500

<PAGE>

ethics permits personnel subject thereto to invest in entities that are
permitted to co-invest with the Funds pursuant to an SEC exemptive order.

Control Persons and Principal Holders of Securities. As of March 31, 2000
the Funds were aware that the following persons or entities owned a controlling
interest (ownership of greater than 25%) or were owners of record 5% or more of
the outstanding shares of each of the Funds.

VAN WAGONER CAPITAL APPRECIATION FUND

Garrett R. Van Wagoner, 345 California Street, Suite 2450, San Francisco,
California, 94104, 93%.

VAN WAGONER GROWTH FUND

Garrett R. Van Wagoner, 345 California Street, Suite 2450, San Francisco,
California, 94104, 97%.

As of March 31, 2000, the directors and officers as a group owned 94.89% of the
outstanding shares of the Capital Appreciation Fund and 97% of the outstanding
shares of the Growth Fund.

INVESTMENT ADVISORY AND OTHER SERVICES

<PAGE>

Each Fund pays all of its own expenses, including without limitation, the
cost of preparing and printing its registration statement required under the
Securities Act and the Investment Company Act and any amendments thereto, the
expense of registering its shares with the SEC and qualifying for sale in the
various states, the printing and distribution costs of prospectuses mailed to
existing investors, reports to investors, reports to government authorities and
proxy statements, fees paid to directors who are not interested persons of the
Adviser, interest charges, taxes, legal expenses, association membership dues,
auditing services, insurance premiums, brokerage commissions and expenses in
connection with portfolio transactions, fees and expenses of the custodian of
the Fund's assets, printing and mailing expenses and charges and expenses of
dividend disbursing agents, accounting services agents, registrars and stock
transfer agents.

The Adviser voluntarily agreed to reimburse each Fund to the extent aggregate
annual operating expenses (excluding interest, dividends on securities sold
short, taxes, brokerage commissions and other costs incurred in connection with
the purchase or sale of portfolio securities and extraordinary items) exceeded
1.95% of the average daily net assets of each Fund, until January 1, 2001. The
Adviser may voluntarily continue to waive all or a portion of the advisory fees
otherwise payable by the Funds. Such a waiver may be terminated at any time in
the Adviser's discretion. Reimbursement of expenses in excess of the applicable
limitation will be made on a monthly basis and will be paid to each Fund by
reducing the Adviser's fee, subject to later adjustment, month by month, for the
remainder of each Fund's fiscal year. The Adviser may from time to time
voluntarily absorb expenses for one or more Funds in addition to the
reimbursement of expenses in excess of the foregoing. In addition to the
voluntary reimbursements, each Investment Advisory Agreement requires the
Adviser to reimburse each Fund to the extent aggregate annual operating
expenses, as described above, exceed 2.00% of the average daily net assets of
the Fund.

For the fiscal years ended December 31, 1997, 1998 and 1999, the Adviser
accrued the following management fees, waived a portion of its management fees
and additional reimbursements were made in the following amounts:

1997 1998 1999
---- ---- ----

Capital Appreciation Fund
Gross Management Fees $14,327 $8,958 $21,414
Waived Management Fees
and Additional
Reimbursements $112,705 $108,789 $80,423
Growth Fund
Gross Management Fees $11,376 $7,337 $15,095
Waived Management Fees
and Additional
Reimbursements $109,775 $107,285 $76,154

Administrator and Transfer Agent. Sunstone Financial Group, Inc.
("Sunstone") provides various administrative and fund accounting services to the
Funds which include, but are not limited to the following: calculating daily net
asset values for each Fund; overseeing the Funds' Custodian; preparing and
filing all federal and state tax filings (other than those to be made by the
Funds' Custodian); overseeing the Funds' insurance relationships; participating
in the preparation of the Funds' registration statement; preparing notice and
renewal filings pursuant to state securities laws; compiling data for and
preparing notices to the SEC; preparing financial statements for the annual and
semi-annual reports to the SEC and current investors; monitoring the Funds'
expenses; monitoring the Funds' status as a regulated investment company under
Subchapter M of the Code; monitoring compliance with the Funds' investment
policies and restrictions and generally assisting the Funds' administrative
operations. Sunstone, at its own expense, and without reimbursement from the
Funds, furnishes office space and all necessary office facilities, equipment,
supplies and clerical and executive personnel for performing the services
required to be performed by it under the Administration and Fund Accounting
Agreement. The Administration and Fund Accounting Agreement will remain in
effect as long as its continuance is specifically approved at least annually by
the Board of Directors of the Company and the Administrator. The Administration
and Fund Accounting Agreement may be terminated on not less than 90 days'
notice, without the payment of any penalty, by the Board of Directors of the
Company or by the Administrator. Under the Administration and Fund Accounting
Agreement, the Administrator is not liable for any loss suffered by the Funds or
their shareholders in connection with the performance of the Administration and
Fund Accounting Agreement, except a loss resulting from willful misfeasance, bad
faith or negligence on the part of the Administrator in the performance of its
duties. The Administration and Fund Accounting Agreement also provides that the
Administrator may provide similar services to others including other investment
companies. For the foregoing, Sunstone receives a fee on the value of the each
Fund computed daily and payable monthly, at the annual rate of eighteen one-
hundredths of one percent (0.18%) on the first $50 million of the average daily
net assets, and decreasing as assets reach certain levels, subject to an annual
minimum fee of $45,000, plus out-of-pocket expenses.

For the fiscal years ended December 31, 1997, 1998 and 1999, Sunstone was
paid the following fees for administrative services:

1997 1998 1999
---- ---- ----

Capital Appreciation Fund $61,667 $61,667 $61,667
Growth Fund $61,667 $61,667 $61,667

<PAGE>

Sunstone also acts as the Funds' Transfer Agent. As Transfer Agent, Sunstone
keeps records of the shareholder accounts and transactions. Each Fund pays
Sunstone a Transfer Agent fee based on the number of shareholder accounts,
subject to a minimum annual fee.

Custodian. UMB Bank, n.a. serves as the Custodian for the Funds. Under the
terms of the agreement, UMB Bank, n.a. is responsible for the receipt and
delivery of each Fund's securities and cash. UMB Bank, n.a. does not exercise
any supervisory functions over the management of the Funds or the purchase and
sale of securities.

Legal Counsel. Foley & Lardner, with offices at 777 East Wisconsin Avenue,
Milwaukee, Wisconsin 53202, serves as counsel to the Funds.

DISTRIBUTION OF SHARES

The Funds have adopted a Service and Distribution Plan (the "Plan") pursuant
to Rule 12b-1 under the Investment Company Act. The Plan authorizes payments by
the Funds in connection with the distribution of their shares at an annual rate,
as determined from time to time by the Board of Directors, of up to 0.25% of a
Fund's average daily net assets. Payments may be made by each Fund under the
Plan for the purpose of financing any activity primarily intended to result in
the sales of shares of the Fund as determined by the Board of Directors. Such
activities include advertising, compensation for sales and sales marketing
activities of financial institutions and others, such as dealers or other
distributors, shareholder account servicing, production and dissemination of
prospectuses and sales and marketing materials, and capital or other expenses of
associated equipment, rent, salaries, bonuses, interest and other overhead. To
the extent any activity is one which a Fund may finance without a Plan, the Fund
may also make payments to finance such activity outside of the Plan and not be
subject to its limitations.

The Plan was adopted in anticipation that the Funds will benefit from the
Plan through increased sales of shares of each Fund, thereby reducing each
Fund's expense ratio and providing an asset size that allows the Adviser greater
flexibility in management. The Plan may be terminated at any time by a vote of
the directors of the Funds who are not interested persons of the Funds and who
have no direct or indirect financial interest in the Plan or any agreement
related thereto (the "Rule 12b-1 Directors") or by a vote of a majority of the
outstanding shares of Common Stock. Messrs. Arnold and Colman are currently the
Rule 12b-1 Directors. Any change in the Plan that would materially increase the
distribution expenses of the Funds provided for in the Plan requires approval of
the shareholders and the Board of Directors, including the Rule 12b-1 Directors.

<PAGE>

PORTFOLIO TRANSACTIONS AND BROKERAGE

The Adviser is responsible for decisions to buy and sell securities for each
Fund, for the placement of its portfolio business and the negotiation of the
commissions to be paid on such transactions, subject to the supervision of the
Company's Board of Directors. It is the policy of the Adviser to seek the best
execution at the best security price available with respect to each transaction,
in light of the overall quality of brokerage and research services provided to
the Adviser.

In evaluating the best overall terms available, and in selecting the broker-
dealer to execute a particular transaction, the Adviser may also consider the
brokerage and research services (as those terms are defined in Section 28(e) of
the Securities Exchange Act of 1934) provided to the Funds and/or other accounts
over which the Adviser or an affiliate of the Adviser exercises investment
discretion. While the Adviser believes these services have substantial value,
they are considered supplemental to its own efforts in the performance of its
duties. Other clients of the Adviser may indirectly benefit from the
availability of these services to the Adviser, and the Funds may indirectly
benefit from services available to the Adviser as a result of transactions for
other clients. The Adviser is authorized to pay to a broker or dealer who
provides such brokerage and research services a commission for executing a
portfolio transaction for a Fund which is in excess of the amount of commission
another broker or dealer would have charged for effecting that transaction if,
but only if, the Adviser determines in good faith that such commission was
reasonable in relation to the value of the brokerage and research services

<PAGE>

provided by such broker or dealer viewed in terms of that particular transaction
or in terms of the overall responsibilities the Adviser has to the Funds. In no
instance, however, will portfolio securities be purchased from or sold to the
Adviser, or any affiliated person of either the Company or the Adviser, acting
as principal in the transaction, except to the extent permitted by the
Securities and Exchange Commission through rules, regulations, decisions and no-
action letters.

During the fiscal years ended December 31, 1997, 1998 and 1999, the Funds
paid the following brokerage commissions:

1997 1998 1999
---- ---- ----

Capital Appreciation Fund $8,564 $9,326 $4,569
Growth Fund $7,990 $9,127 $3,920

During the fiscal year ended December 31, 1999, the Capital Appreciation Fund
and the Growth Fund paid commissions of $2,359 and $1,864, respectively, on
transactions of $2,038,017 and $1,608,399, respectively, to brokers who provided
research services to the Adviser.

TAXES

<PAGE>

General

Each Fund intends to qualify for treatment as a regulated investment company
("RIC") under Subchapter M of the Code, and to do so, each Fund must distribute
to its shareholders for each taxable year at least 90% of its investment company
taxable income (consisting generally of net investment income, net short-term
capital gain and net gains from certain foreign currency transactions)
("Distribution Requirement") and must meet several additional requirements.
With respect to each Fund, these requirements include the following: (1) the
Fund must derive at least 90% of its gross income each taxable year from
dividends, interest, payments with respect to securities loans, and gains from
the sale or other disposition of stock or securities or foreign currencies, or
other income (including but not limited to gains from options, futures or
forward contracts) derived with respect to its business of investing in such
stock, securities or those currencies ("Income Requirement"); (2) at the close
of each quarter of the Fund's taxable year, at least 50% of the value of its
total assets must be represented by cash and cash items, U.S. government
securities, securities of other RICs, and other securities, with these other
securities limited, with respect to any one issuer, to an amount that does not
exceed 5% of the value of the Fund's total assets and that does not represent
more than 10% of the issuer's outstanding voting securities; and (3) at the
close of each quarter of the Fund's taxable year, not more than 25% of the value
of its total assets may be invested in securities (other than U.S. government
securities or the securities of other RICs) of any one issuer. Additional rules
apply for related corporations.

If a Fund fails to qualify for treatment as a RIC in any fiscal year, it will
be treated as a corporation for federal income tax purposes. As such, the Fund
would be required to pay income taxes on its net investment income and net
realized capital gains, if any, at the rates generally applicable to
corporations. Shareholders of a Fund that did not qualify for treatment as a
RIC would not be liable for income tax on the Fund's net investment income or
net realized capital gains in their individual capacities. Distributions to
shareholders, whether from the Fund's net investment income or net realized
capital gains, would be treated as taxable dividends to the extent of current or
accumulated earnings and profits of the Fund.

If shares of a Fund are sold at a loss after being held for six months or
less, the loss will be treated as long-term, instead of short-term, capital loss
to the extent of any capital gain

<PAGE>

distributions received on those shares. Investors also should be aware that if
shares are purchased shortly before the record date for any distribution, the
shareholder will pay full price for the shares and receive some portion of the
price back as a taxable dividend or capital gain distribution.

Each Fund will be subject to a nondeductible 4% excise tax to the extent it
fails to distribute, by the end of any calendar year, substantially all of its
ordinary income for that year and capital gain net income for the one-year
period ending on October 31 of that year, plus certain other amounts. Each Fund
intends to declare and distribute dividends during each year sufficient to
prevent imposition of the excise tax.

Non U.S. Shareholders

In general, distributions of net investment income by a Fund to a shareholder
who, as to the United States, is a nonresident alien individual, nonresident
alien fiduciary of a trust or estate, foreign corporation, or foreign
partnership ("foreign shareholder") will be subject to U.S. withholding tax at a
rate of 30% (or lower treaty rate if IRS Form W-8 is properly filed).

CAPITAL STRUCTURE

The Company is an open-end management investment company organized as a
Maryland corporation on October 18, 1995. The Company's Charter authorizes the
Board of Directors to issue up to 1,000,000,000 shares of common stock, par
value $0.0001 per share. The common stock is divisible into an unlimited number
of "series", each of which is a separate Fund. Each share of a Fund represents
an equal proportionate interest in that Fund. Each share of the Funds has equal
voting, dividend, distribution and liquidation rights.

The Board of Directors may classify or reclassify any unissued series of
shares of the Funds and may designate or redesignate the name of any outstanding
series of shares of the Funds. As a general matter, shares are voted in the
aggregate and not by series, except where series voting would be required by
Maryland law or the Investment Company Act (e.g., a change in investment policy
or approval of an investment advisory agreement). All consideration received
from the sale of shares of any series of the Funds' shares, together with all
income, earnings, profits and proceeds thereof, would belong to that series and
would be charged with the liabilities in respect of that series and of that
series' shares of the general liabilities of the Funds in the proportion that
the total net assets of the series bear to the total net assets of all series of
the Funds' shares. The net asset value of a share of any series would be based
on the assets belonging to that series less the liabilities charged to that
series, and dividends could be paid on shares of any series of Common Stock only
out of lawfully available assets belonging to that series. In the event of
liquidation or dissolution of the Funds, the holders of each series would be

<PAGE>

entitled, out of the assets of the Funds available for distribution, to the
assets belonging to that series.

Shareholders are entitled to one vote for each full share held, and
fractional votes for fractional shares held, and will vote in the aggregate and
not by class or series except as otherwise required by the 1940 Act or the
Maryland General Corporation Law. Shareholders may not cumulate their votes in
the election of directors. Consequently, the holders of more than 50% of the
shares of the common stock voting for the election of directors can elect the
entire Board of Directors and in such event, the holders of the remaining shares
voting for the election of directors will not be able to elect any person or
persons to the Board of Directors.

Notwithstanding any provision of the Maryland General Corporation Law
requiring for any purpose the concurrence of a proportion greater than a
majority of all votes entitled to be cast at a meeting at which a quorum is
present, the affirmative vote of the holders of a majority of the total number
of shares of the Funds outstanding (or of a class or series of the Funds, as
applicable) will be effective, except to the extent otherwise required by the
1940 Act and rules thereunder. In addition, the Articles of Incorporation
provide that, to the extent consistent with the General Corporation Law of
Maryland and other applicable law, the By-Laws may provide for authorization to
be given by the affirmative vote of the holders of less than a majority of the
total number of shares of the Funds outstanding (or of a class or series).

SHAREHOLDER MEETINGS

<PAGE>

The Company's By-Laws also contain procedures for the removal of directors by
its shareholders. At any meeting of shareholders, duly called and at which a
quorum is present, the shareholders may, by the affirmative vote of the holders
of a majority of the votes entitled to be cast thereon, remove any director or
directors from office and may elect a successor or successors to fill any
resulting vacancies for the unexpired terms of removed directors.

Upon the written request of the holders of shares entitled to not less than
ten percent (10%) of all the votes entitled to be cast at such meeting, the
Secretary of the Fund shall promptly call a special meeting of shareholders for
the purpose of voting upon the question of removal of any director. Whenever
ten or more shareholders of record who have been such for at least six months
preceding the date of application, and who hold in the aggregate either shares
having a net asset value of at least $25,000 or at least one percent (1%) of the
total outstanding shares, whichever is less, shall apply to the Company's
Secretary in writing, stating that they wish to communicate with other
shareholders with a view to obtaining signatures to submit a request for a
meeting as described above and accompanied by a form of communication and
request which they wish to transmit, the Secretary shall within five business
days after such application either: (1) afford to such applicants access to a
list of the names and addresses of all shareholders as recorded on the books of
the Funds; or (2) inform such applicants as to the approximate number of
shareholders of record and the approximate cost of mailing to them the proposed
communication and form of request.

If the Secretary elects to follow the course specified in clause (2) of the
last sentence of the preceding paragraph, the Secretary, upon the written
request of such applicants, accompanied by a tender of the material to be mailed
and of the reasonable expenses of mailing, shall, with reasonable promptness,
mail such material to all shareholders of record at their addresses as recorded
on the books unless within five business days after such tender the Secretary
shall mail to such applicants and file with the SEC, together with a copy of the
material to be mailed, a written statement signed by at least a majority of the
Board of Directors to the effect that in their opinion either such material
contains untrue statements of fact or omits to state facts necessary to make the
statements contained therein not misleading, or would be in violation of
applicable law, and specifying the basis of such opinion.

RETIREMENT PLANS

<PAGE>

PERFORMANCE INFORMATION

The average annual total return for a Fund for a specific period is found by
first taking a hypothetical $10,000 investment ("initial investment") in the
Fund's shares on the first day of the period and computing the "redeemable
value" of that investment at the end of the period. The redeemable value is
then divided by the initial investment, and this quotient is taken to the Nth
root (N representing the number of years in the period) and 1 is subtracted from
the result, which is then expressed as a percentage. The calculation assumes
that all income and capital gains dividends paid by the Fund have been
reinvested at net asset value on the reinvestment dates during the period. This
calculation can be expressed as follows:

N
P(1 + T) = ERV

Where: T= average annual total return.

<PAGE>

ERV = ending redeemable value at the end of the period covered by
the computation of a hypothetical $10,000 payment made at
the beginning of the period.

P = hypothetical initial payment of $10,000.

N = period covered by the computation, expressed in terms of
years.

Total return performance for a specific period is calculated by first taking
an investment ("initial investment") in a Fund's shares on the first day of the
period and computing the "ending value" of that investment at the end of the
period. The total return percentage is then determined by subtracting the
initial investment from the ending value and dividing the remainder by the
initial investment and expressing the result as a percentage. The calculation
assumes that all income and capital gains dividends paid by the Fund have been
reinvested at net asset value on the reinvestment dates during the period.
Total return may also be shown as the increased dollar value of the investment
over the period or as a cumulative total return which represents the change in
value of an investment over a stated period and may be quoted as a percentage or
as a dollar amount.

The Funds' performance figures will be based upon historical results and will
not necessarily be indicative of future performance. The Funds' returns and net
asset value will fluctuate and the net asset value of shares when sold may be
more or less than their original cost. Any additional fees charged by a dealer
or other financial services firm would reduce the returns described in this
section.

The total return for the fiscal year ended December 31, 1999 for the Capital
Appreciation Fund and Growth Fund was 230.76% and 176.81%, respectively. The
average annual return from inception through December 31, 1999 for the Capital
Appreciation Fund and the Growth Fund was 83.33% and 71.67%, respectively. The
Fund commenced operations after the close of business on December 31, 1996.
Such performance results reflect reimbursements made by the Adviser during the
fiscal year ended December 31, 1999 to keep the ratio of net expenses to average
net assets of each Fund at or below 1.95%. Performance quotations of a Fund
represent its past performance and should not be considered as representative of
future results. The investment return and principal value of an investment in a
Fund will fluctuate so that an investor's shares, when redeemed, may be worth
more or less than their original cost.

<PAGE>

independent research firm which ranks mutual funds by overall performance,
investment objective and assets, may be cited. Lipper performance figures are
based on changes in net asset value, with all income and capital gains dividends
reinvested. Such calculations do not include the effect of any sales charges
imposed by other funds. The Funds will be compared to Lipper's appropriate fund
category, that is, by fund objective and portfolio holdings.

The Funds' performance may also be compared to the performance of other
mutual funds by Morningstar, Inc., which ranks funds on the basis of historical
risk and total return. Morningstar's rankings range from five stars (highest)
to one star (lowest) and represent Morningstar's assessment of the historical
risk level and total return of a fund as a weighted average for 3, 5, and 10
year periods. Ranking are not absolute or necessarily predictive of future
performance.

Evaluations of Fund performance made by independent sources may also be used
in advertisements concerning the Funds, including reprints of or selections
from, editorials or articles about the Funds. Sources for Fund performance and
articles about the Funds may include publications such as Money, Forbes,
Kiplinger's, Financial World, Business Week, U.S. News and World Report, the
Wall Street Journal, Barron's and a variety of investment newsletters.

The Funds may compare their performance to a wide variety of indices and
measures of inflation including the Standard & Poor's Index of 500 Stocks and
the Nasdaq Over-the-Counter Composite Index. There are differences and
similarities between the investments that the Funds may purchase for their
respective portfolios and the investments measured by these indices.

Occasionally statistics may be used to specify a Fund's volatility or risk.
Measures of volatility or risk are generally used to compare a Fund's net asset
value or performance relative to a market index. One measure of volatility is
beta. Beta is the volatility of a fund relative to the total market as
represented by the Standard & Poor's 500 Stock Index. A beta of more than 1.00
indicates volatility greater than the market, and a beta of less than 1.00
indicates volatility less than the market. Another measure of volatility or
risk is standard deviation. Standard deviation is used to measure variability
of net asset value or total return around an average, over a specified period of
time. The premise is that greater volatility connotes greater risk undertaken
in achieving performance.

<PAGE>

PURCHASE, EXCHANGE AND REDEMPTION OF SHARES;
DETERMINATION OF NET ASSET VALUE

As set forth in the Prospectus, the net asset value of the Funds will be
determined as of the close of trading on each day the New York Stock Exchange is
open for trading. The New York Stock Exchange is open for trading Monday
through Friday except New Year's Day, Dr. Martin Luther King, Jr. Day,
Presidents' Day, Good Friday, Memorial Day, Independence Day, Labor Day,
Thanksgiving Day, and Christmas Day. Additionally, if any of the aforementioned
holidays falls on a Saturday, the New York Stock Exchange will not be open for
trading on the preceding Friday, and when any such holiday falls on a Sunday,
the New York Stock Exchange will not be open for trading on the following Monday
unless unusual business conditions exist, such as the ending of a monthly or the
yearly accounting period.

In connection with the determination of the Funds' net asset values,
securities (including securities sold short) which are traded on a recognized
stock exchange are valued at the last sale price on the securities exchange on
which such securities are primarily traded. Securities (including securities
sold short) traded on only over-the-counter markets are valued on the basis of
closing over-the-counter trade prices. Securities for which there were no
transactions are valued at the closing bid prices. Securities sold short for
which there were no transactions are valued at the closing asked prices.
Options written or purchased by the Funds are valued at the last sales price if
such last sales price is between the current bid and asked prices. Otherwise,
options are valued at the mean between the current bid and asked prices. Debt
securities (other than short-term instruments) are valued at prices furnished by
a pricing service, subject to review and possible revision by the Funds'
Adviser. Any modification of the price of a debt security furnished by a
pricing service is made pursuant to procedures adopted by the Company's Board of
Directors. Debt instruments maturing within 60 days are valued by the amortized
cost method. Any securities for which market quotations are not readily
available are valued at their fair value as determined in good faith by the
Adviser under the supervision of the Company's Board of Directors.

To illustrate the method of computing the offering price of shares of the
Funds, the offering price on December 31, 1999 was as follows:

Capital
Appreciation Growth
------------ ------

Net Assets
divided by $1,858,417 $1,331,222
Shares Outstanding
equals 70,893 58,323
Net Asset Value Per Share
(Offering & Redemption Price) $26.21 $22.82

<PAGE>

Shares of the Funds may be exchanged for shares of the Northern U.S.
Government Money Market Fund as provided in the Prospectus. Sunstone Financial
Group, Inc. receives a service fee from the Northern U.S. Government Money
Market Fund at the annual rate of 0.25 of 1% of the average daily net asset
value of the shares of the Fund exchanged into the Northern U.S. Government
Money Market Fund.

OTHER INFORMATION

It is possible that conditions may exist in the future which would, in the
opinion of the Board of Directors, make it undesirable for a Fund to pay for
redemptions in cash. In such cases the Board may authorize payment to be made
in portfolio securities of a Fund. However, the Funds have obligated themselves
under the 1940 Act to redeem for cash all shares presented for redemption by any
one shareholder up to $250,000 (or 1% of a Fund's net assets if that is less) in
any 90-day period. Securities delivered in payment of redemptions are valued at
the same value assigned to them in computing the net asset value per share.
Shareholders receiving such securities generally will incur brokerage costs when
selling such securities.

Payment for shares of a Fund may, in the discretion of the Adviser, be made
in the form of securities that are permissible investments for the Fund as
described in the Prospectus. For further information about this form of
payment, contact the Transfer Agent. In connection with an in-kind securities
payment, the Funds will require, among other things, that the securities be
valued on the day of purchase in accordance with the pricing methods used by the
Fund and that the Fund receive satisfactory assurances that it will have good
and marketable title to the securities received by it; that the securities be in
proper form for transfer to the Fund; and that adequate information be provided
concerning the basis and other tax matters relating to the securities.

<PAGE>

APPENDIX A

Commercial Paper Ratings
- ------------------------

"A-1" - Issue's degree of safety regarding timely payment is strong. Those
issues determined to possess extremely strong safety characteristics are denoted
"A-1+."

"A-2" - Issue's capacity for timely payment is satisfactory. However, the
relative degree of safety is not as high as for issues designated "A-1."

<PAGE>

"Duff 1" - Debt possesses very high certainty of timely payment. Liquidity
factors are excellent and supported by good fundamental protection factors.
Risk factors are minor.

"Duff 1-" - Debt possesses high certainty of timely payment. Liquidity
factors are strong and supported by good fundamental protection factors. Risk
factors are very small.

"F-1+" - Securities possess exceptionally strong credit quality. Issues
assigned this rating are regarded as having the strongest degree of assurance
for timely payment.

"F-1" - Securities possess very strong credit quality. Issues assigned this
rating reflect an assurance of timely payment only slightly less in degree than
issues rated "F-1+."

Fitch may also use the symbol "LOC" with its short-term ratings to indicate that
the rating is based upon a letter of credit issued by a commercial bank.

"TBW-1" - This designation represents Thomson BankWatch's highest rating
category and indicates a very high degree of likelihood that principal and
interest will be paid on a timely basis.

<PAGE>

"A1" - Obligations are supported by the highest capacity for timely
repayment. Where issues possess a particularly strong credit feature, a rating
of A1+ is assigned.

"A2" - Obligations are supported by a good capacity for timely repayment.

Corporate Long-Term Debt Ratings
- --------------------------------

STANDARD & POOR'S DEBT RATINGS

The ratings are based, in varying degrees, on the following considerations:

1. Likelihood of default - capacity and willingness of the obligor as
to the timely payment of interest and repayment of principal in
accordance with the terms of the obligation.

2. Nature of and provisions of the obligation.

<PAGE>

INVESTMENT GRADE

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 highest rated issues only in small degree.

SPECULATIVE GRADE

<PAGE>

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

CI - The rating 'CI' is reserved for income bonds on which no interest is
being paid.

MOODY'S LONG-TERM DEBT RATINGS

<PAGE>

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.

FITCH INVESTORS SERVICE, INC. BOND RATINGS

Fitch ratings do not reflect any credit enhancement that may be provided by
insurance policies or financial guaranties unless otherwise indicated.

Bonds that have the same rating are of similar but not necessarily identical
credit quality since the rating categories do not fully reflect small
differences in the degrees of credit risk.

<PAGE>

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 in imminent default in payment of interest or principal.

DUFF & PHELPS, INC. LONG-TERM DEBT RATINGS

<PAGE>

RATING SCALE DEFINITION
- ------------------------------------------------------------------------------

AAA Highest credit quality. The risk factors are
negligible, being only slightly more than for risk-
free U.S. Treasury debt.

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

AA+ High credit quality. Protection factors are strong.
AA Risk is modest, but may vary slightly from time to
AA- time because of economic conditions.

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

A+ Protection factors are average but adequate. However,
A risk factors are more variable and greater in periods
A- of economic uncertainty.

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

BBB+ Below average protection factors but still considered

BBB sufficient for prudent investment. Considerable
BBB- variability in risk during economic cycles.

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

B+ Below investment grade and possessing risk that
B obligations will not be met when due. Financial
B- protection factors will fluctuate widely according to
economic cycles.

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

<PAGE>

XXXXX

PART C

OTHER INFORMATION

ITEM 23. EXHIBITS
--------

a-1 Registrant's Articles of Incorporation (including all
amendments through December 31, 1999). (Incorporated by
reference to Exhibit a of Post-Effective Amendment No. 7 to
Registrant's Registration Statement on Form N-1A)

a-2 Articles of Amendment to Articles of Incorporation dated April
19, 2000.

b. Registrant's By-Laws. (Incorporated by reference to Exhibit 2
of Pre-Effective Amendment No. 1 to Registrant's Registration
Statement on Form N-1A)

c. None.

d-1 Investment Advisory Agreements by and between Registrant on
behalf of the Emerging Growth Fund, Micro-Cap Fund (now Micro-
Cap Growth Fund) and Mid-Cap Fund (now Mid-Cap Growth Fund)
and Van Wagoner Capital Management, Inc. (Incorporated by
reference to Exhibit 5 of Pre-Effective Amendment No. 1 to
Registrant's Registration Statement on Form N-1A)

d-2 Form of Investment Advisory Agreements by and between
Registrant on behalf of the Capital Appreciation, Growth and
Post-Venture Funds and Van Wagoner Capital Management, Inc.
(Incorporated by reference to Exhibit 5.2 of Post-Effective
Amendment No.1 to Registrant's Registration Statement on Form
N-1A)

d-3 Form of Investment Advisory Agreement by and between
Registrant on behalf of the Technology Fund and Van Wagoner
Capital Management, Inc. (Incorporated by reference to Exhibit
5.3 of Post-Effective Amendment No. 5 to Registrant's
Registration Statement on Form N-1A)

e. None.

f. None.

g-1 Custody Agreement by and between Registrant and UMB Bank, n.a.
(Incorporated by reference to Exhibit 8.1 of Pre-Effective
Amendment No. 1 to Registrant's Registration Statement on Form
N-1A)

<PAGE>

g-2 Amended and Restated Appendix B to the Custody Agreement by
and between Registrant and UMB Bank, n.a. (Incorporated by
reference to Exhibit 8.2 of Post-Effective Amendment No. 5 to
Registrant's Registration Statement on Form N-1A)

h-1 Administration and Fund Accounting Agreement by and between
Registrant and Sunstone Financial Group, Inc. (Incorporated by
reference to Exhibit 9.1 of Pre-Effective Amendment No. 1 to
Registrant's Registration Statement on Form N-1A)

h-2 Transfer Agency Agreement by and between Registrant and
Sunstone Financial Group, Inc. (Incorporated by reference to
Exhibit 9.2 of Pre-Effective Amendment No. 1 to Registrant's
Registration Statement on Form N-1A)

h-3 Amended and Restated Schedules A and B to the Administration
and Fund Accounting Agreement by and between Registrant and
Sunstone Financial Group, Inc. (Incorporated by reference to
Exhibit 9.3 of Post-Effective Amendment No. 2 to Registrant's
Registration Statement on Form N-1A)

h-4 Amended and Restated Schedules A and C to the Transfer Agency
Agreement by and between Registrant and Sunstone Financial
Group, Inc. (Incorporated by reference to Exhibit 9.4 of Post-
Effective Amendment No.2 to Registrant's Registration
Statement on Form N-1A)

h-5 Amended and Restated Schedules A and B to the Administration
and Fund Accounting Agreement by and between Registrant and
Sunstone Financial Group, Inc. (Incorporated by reference to
Exhbit 9.5 of Post-Effective Amendment No. 5 to Registrant's
Registration Statement on Form N-1A)

h-6 Transfer Agency Agreement by and between Registrant and
Sunstone Investor Services, LLC. (Incorporated by reference to
Exhibit 9.6 of Post-Effective Amendment No. 5 to Registrant's
Registration Statement on Form N-1A)

h-7 Amended and Restated Schedules A and C to the Transfer Agency
Agreement by and between Registrant and Sunstone Investor
Services, LLC. (Incorporated by reference to Exhibit 9.7 of
Post-Effective Amendment No. 5 to Registrant's Registration
Statement on Form N-1A)

i. Opinion of Foley & Lardner, counsel for Registrant.

j. Consent of Independent Accountants.

k. None.

<PAGE>

l-1 Subscription Agreement. (Incorporated by reference to Exhibit
13.1 of Pre-Effective Amendment No. 1 to Registrant's
Registration Statement on Form N-1A)

l-2 Organizational Expenses Agreement. (Incorporated by reference
to Exhibit 13.2 of Pre-Effective Amendment No. 1 to
Registrant's Registration Statement on Form N-1A)

m. Registrant's Service and Distribution Plan pursuant to Rule
12b-1 under the Investment Company Act of 1940. (Incorporated
by reference to Exhibit 15 of Pre-Effective Amendment No. 1 to
Registrant's Registration Statement on Form N-1A)

n. None.

p. Code of Ethics of Registrant and Van Wagoner Capital
Management, Inc.

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

Registrant neither controls any person nor is under common control with
any other person.

ITEM 25. INDEMNIFICATION.
---------------

Pursuant to the authority of the Maryland General Corporation Law,
particularly Section 2-418 thereof, Registrant's Board of Directors has adopted
the following bylaw which is in full force and effect and has not been modified
or cancelled:

ARTICLE VII

GENERAL PROVISIONS

Section 7. Indemnification.
---------------

A. The Corporation shall indemnify all of its corporate representatives
against expenses, including attorneys fees, judgments, fines and amounts paid in
settlement actually and reasonably incurred by them in connection with the
defense of any action, suit or proceeding, or threat or claim of such action,
suit or proceeding, whether civil, criminal, administrative, or legislative, no
matter by whom brought, or in any appeal in which they or any of them are made
parties or a party by reason of being or having been a corporate representative,
if the corporate representative acted in good faith and in a manner reasonably
believed to be in or not opposed to the best interests of the corporation and
with respect to any criminal proceeding, if he had no reasonable cause to
believe his conduct was unlawful provided that the corporation shall not
indemnify corporate representatives in relation to matters as to which any such
corporate representative shall be adjudged in such action, suit or

<PAGE>

proceeding to be liable for gross negligence, willful misfeasance, bad faith,
reckless disregard of the duties and obligations involved in the conduct of his
office, or when indemnification is otherwise not permitted by the Maryland
General Corporation Law.

B. In the absence of an adjudication which expressly absolves the
corporate representative, or in the event of a settlement, each corporate
representative shall be indemnified hereunder only if there has been a
reasonable determination based on a review of the facts that indemnification of
the corporate representative is proper because he has met the applicable
standard of conduct set forth in paragraph A. Such determination shall be made:
(i) by the board of directors, by a majority vote of a quorum which consists of
directors who are not parties to the action, suit or proceeding, or if such a
quorum cannot be obtained, then by a majority vote of a committee of the board
consisting solely of two or more directors, not, at the time, parties to the
action, suit or proceeding and who were duly designated to act in the matter by
the full board in which the designated directors who are parties to the action,
suit or proceeding may participate; or (ii) by special legal counsel selected by
the board of directors or a committee of the board by vote as set forth in (i)
of this paragraph, or, if the requisite quorum of the full board cannot be
obtained therefor and the committee cannot be established, by a majority vote of
the full board in which directors who are parties to the action, suit or
proceeding may participate.

C. The termination of any action, suit or proceeding by judgement,
order, settlement, conviction, or upon a plea of nolo contendere or its
equivalent, shall create a rebuttable presumption that the person was guilty of
willful misfeasance, bad faith, gross negligence or reckless disregard to the
duties and obligations involved in the conduct of his or her office, and, with
respect to any criminal action or proceeding, had reasonable cause to believe
that his or her conduct was unlawful.

D. Expenses, including attorneys' fees, incurred in the preparation of
and/or presentation of the defense of a civil or criminal action, suit or
proceeding may be paid by the corporation in advance of the final disposition of
such action, suit or proceeding as authorized in the manner provided in Section
2-418(F) of the Maryland General Corporation Law upon receipt of: (i) an
undertaking by or on behalf of the corporate representative to repay such amount
unless it shall ultimately be determined that he or she is entitled to be
indemnified by the corporation as authorized in this bylaw; and (ii) a written
affirmation by the corporate representative of the corporate representative's
good faith belief that the standard of conduct necessary for indemnification by
the corporation has been met.

E. The indemnification provided by this bylaw shall not be deemed
exclusive of any other rights to which those indemnified may be entitled under
these bylaws, any agreement, vote of stockholders or disinterested directors or
otherwise, both as to action in his or her official capacity and as to action in
another capacity while holding such office, and shall continue as to a person
who has ceased to be a director, officer, employee or agent and shall inure to
the benefit of the heirs, executors and administrators of such a person subject
to the limitations imposed from time to time by the Investment Company Act of
1940, as amended.

F. This corporation shall have the power to purchase and maintain
insurance on behalf of any corporate representative against any liability
asserted against him or her and incurred by his or her in such capacity or
arising out of his or her status as such, whether or not the corporation would
have

<PAGE>

the power to indemnify his or her against such liability under this bylaw
provided that no insurance may be purchased or maintained to protect any
corporate representative against liability for gross negligence, willful
misfeasance, bad faith or reckless disregard of the duties and obligations
involved in the conduct of his or her office.

G. "Corporate Representative" means an individual who is or was a
director, officer, agent or employee of the corporation or who serves or served
another corporation, partnership, joint venture, trust or other enterprise in
one of these capacities at the request of the corporation and who, by reason of
his or her position, is, was, or is threatened to be made, a party to a
proceeding described herein.

Insofar as indemnification for liability arising under the Securities Act
of 1933 (the "Act") may be permitted to directors, officers and controlling
persons of the Registrant pursuant to the foregoing provisions, or otherwise,
Registrant has been advised that in the opinion of the Securities and Exchange
Commission such indemnification is against public policy as expressed in the Act
and is, therefore, unenforceable. In the event that a claim for indemnification
against such liabilities (other than the payment by the Registrant of expenses
incurred or paid by a director, officer or controlling person of the Registrant
in a successful defense of any action, suit or proceeding) is asserted by such
director, officer or controlling person in connection with the securities being
registered, Registrant will, unless in the opinion of its counsel the matter has
been settled by controlling precedent, submit to a court of appropriate
jurisdiction the question whether such indemnification by it is against public
policy as expressed in the Act and will be governed by the final adjudication of
such issue.

ITEM 26. BUSINESS AND OTHER CONNECTIONS OF INVESTMENT ADVISER.
----------------------------------------------------

The Adviser was organized in October 1995 for the purpose of providing
investment advisory services for the Registrant and other investment advisory
clients. The Adviser is not, nor has it been, engaged in any other business
since its inception. Certain information regarding the director and officer of
the Adviser including any business, profession, vocation or employment in which
such person is or has been at any time during the past two fiscal years engaged
for his or her own account or in the capacity of director, officer, employee,
partner or trustee, is set forth under "MANAGEMENT OF THE FUND" in the
Prospectus and under "ADDITIONAL COMPANY INFORMATION" in the Statement of
Additional Information and is incorporated herein by reference.

ITEM 27. PRINCIPAL UNDERWRITERS
----------------------

Not Applicable.

ITEM 28. LOCATION OF ACCOUNTS AND RECORDS.
--------------------------------

All accounts, books or other documents required to be maintained by
Section 31(a) of the Investment Company Act of 1940 and the rules promulgated
thereunder are in the possession of the Registrant, at Registrant's corporate
offices, except (1) records held and maintained by UMB Bank, n.a. relating to
its functions as custodian and (2) records held and maintained by Sunstone
Financial Group,

<PAGE>

Inc., 207 East Buffalo Street, Suite 400, Milwaukee, Wisconsin, 53202, relating
to its functions as administrator, fund accountant and transfer agent.

ITEM 29. MANAGEMENT SERVICES.
--------------------

All management-related service contracts entered into by Registrant are
discussed in Parts A and B of this Registration Statement.

ITEM 30. UNDERTAKINGS.
------------

Registrant undertakes to provide its Annual Report upon request without
charge to any recipient of a Prospectus.

<PAGE>

SIGNATURES

Pursuant to the requirements of the Securities Act of 1933 and the
Investment Company Act of 1940, the Registrant certifies that it meets all of
the requirements for effectiveness of this registration statement under Rule
485(b) under the Securities Act and has duly caused this Amended Registration
Statement on Form N-1A to be signed on its behalf by the undersigned, thereunto
duly authorized, in the City of San Francisco, State of California, on the 24th

day of April, 2000.

VAN WAGONER FUNDS, INC.
(Registrant)

By: /s/Garrett R. Van Wagoner
----------------------------
Garrett R. Van Wagoner
President

Pursuant to the requirements of the Securities Act of 1933, this Amended
Registration Statement on Form N-1A has been signed below by the following
persons in the capacities and on the dates indicated.

Name Title Date
- ---- ----- -----

/s/Garrett R. Van Wagoner President; Director April 24, 2000
- ------------------------- (principal executive
Garrett R. Van Wagoner
officer and principal
financial and accounting
officer)

/s/Larry Arnold Director April 24, 2000
- ---------------
Larry Arnold

Director April 24, 2000
/s/Robert S. Colman
- --------------------
Robert S. Colman

ARTICLES OF AMENDMENT
TO ARTICLES OF INCORPORATION OF
VAN WAGONER FUNDS, INC.

The undersigned officer of Van Wagoner Funds, Inc., a corporation duly
organized and existing under the Maryland General Corporation Law (the
"Corporation"), does hereby certify:

FIRST: That the name of the Corporation is Van Wagoner Funds, Inc.

SECOND: That Article IV of the Corporation's Articles of
Incorporation is hereby amended to change the designation of the Class A Common
Stock to "Micro-Cap Growth Fund" and to change the designation of the Class C
Common Stock to "Mid-Cap Growth Fund."

THIRD: That the amendment to the Corporation's Articles of
Incorporation (the "Amendment") was approved by a majority of the entire Board
of Directors of the Corporation.

FOURTH: That the Amendment is limited to a change expressly permitted
by Section 2-605 of the Maryland General Corporation Law to be made without
action by the stockholders of the Corporation.

IN WITNESS WHEREOF, the undersigned officer of the Corporation who
executed the foregoing Articles of Amendment hereby acknowledges the same to be
his act and further acknowledges that, to the best of his knowledge, information
and belief, the matters set forth herein are true in all material respects under
the penalties for perjury.

Dated this 19th day of April, 2000.

VAN WAGONER FUNDS, INC.

By:/s/Peter Kris
----------------------------
Peter Kris, Vice President

Attest: /s/Garrett R. Van Wagoner
----------------------------------
Garrett R. Van Wagoner, Secretary

FOLEY & LARDNER

ATTORNEYS AT LAW

CHICAGO SACRAMENTO
DENVER FIRSTAR CENTER SAN DIEGO
JACKSONVILLE 777 EAST WISCONSIN AVENUE SAN FRANCISCO
LOS ANGELES MILWAUKEE, WISCONSIN 53202-5367 TALLAHASSEE
MADISON TELEPHONE (414) 271-2400 TAMPA
MILWAUKEE FACSIMILE (414) 297-4900 WASHINGTON, D.C.
ORLANDO WEST PALM BEACH

April 18, 2000

Van Wagoner Funds, Inc.
345 California Street
Suite 2450
San Francisco, CA 94104

Ladies & Gentlemen:

We have acted as counsel for you in connection with the preparation of
an Amended Registration Statement on Form N-1A relating to the sale by you of an
indefinite amount of Van Wagoner Funds, Inc. Common Stock (such Common Stock
being hereinafter referred to as the "Stock") in the manner set forth in the
Amended Registration Statement to which reference is made. In this connection
we have examined: (a) the Amended Registration Statement on Form N-1A; (b) your
Articles of Incorporation and Bylaws, as amended to date; (c) corporate
proceedings relative to the authorization for issuance of the Stock; and (d)
such other proceedings, documents and records as we have deemed necessary to
enable us to render this opinion.

Based upon the foregoing, we are of the opinion that the shares of
Stock when sold as contemplated in the Amended Registration Statement will be
legally issued, fully paid and nonassessable

We hereby consent to the use of this opinion as an exhibit to the
Amended Registration Statement on Form N-1A. In giving this consent, we do not
admit that we are experts within the meaning of Section 11 of the Securities Act
of 1933, as amended, or within the category of persons whose consent is required
by Section 7 of said Act.

Very truly yours,

Foley & Lardner

AUDITORS'S CONSENT

CONSENT OF INDEPENDENT ACCOUNTANTS
----------------------------------

We hereby consent to the reference to us under the heading "Financial
Highlights" in this Registration Statement on Form N-1A.

PricewaterhouseCoopers LLP

Milwaukee, Wisconsin
April 25, 2000

AUDITOR'S CONSENT

CONSENT OF INDEPENDENT AUDITORS

We consent to the reference to our firm under the captions "Financial
Highlights", "Financial Statements", and "Independent Auditors" and to the use
of our reports dated February 11, 2000 in the Registration Statement (Form N-1A)
of Van Wagoner Funds and its incorporation by reference in the Form N-1A of Van
Wagoner Funds, filed with the Securities and Exchange Commission in the Post-
Effective Amendment No. 8 to the Registration Statement under the Securities Act
of 1933 (File No. 33-98358) and in this Amendment No. 9 to the Registration
Statement under the Investment Company Act of 1940 (File No. 811-9116).

/s/ERNST & YOUNG LLP

Chicago, Illinois
April 24, 2000

VAN WAGONER FUNDS, INC.

AND

VAN WAGONER CAPITAL MANAGEMENT, INC.

CODE OF ETHICS

Amended effective as of November 16, 1999

I. DEFINITIONS
-----------

A. "Access person" means any director, officer or advisory person of the
Fund or of the Adviser.

B. "Act" means the Investment Company Act of 1940, as amended.

C. "Adviser" means Van Wagoner Capital Management, Inc.

D. "Advisory person" means: (i) any employee of the Fund or Adviser or of
any company in a control relationship to the Fund or Adviser, who, in
connection with his or her regular functions or duties, makes,
participates in, or obtains information regarding the purchase or sale
of Covered Securities by the Fund, or whose functions relate to the
making of any recommendations with respect to such purchases or sales;
and (ii) any natural person in a control relationship to the Fund or
Adviser who obtains information concerning recommendations made to the
Fund with regard to the purchase or sale of Covered Securities by the
Fund.

E. A Covered Security is "being considered for purchase or sale" when a
recommendation to purchase or sell the Covered Security has been made
and communicated and, with respect to the person making the
recommendation, when such person seriously considers making such a
recommendation.

F. "Beneficial ownership" shall be interpreted in the same manner as it
would be under Rule 16a-1(a)(2) under the Securities Exchange Act of
1934 in determining whether a person is the beneficial owner of a
security for purposes as such Act and the rules and regulations
promulgated thereunder.

G. "Compliance Officer" means the President of the Fund or such other
person or entity designated by the Board of Directors of the Fund to
serve in such capacity and perform the services described herein.

H. "Control" has the same meaning as that set forth in Section 2(a)(9) of
the Act.

<PAGE>

I. "Covered Security" means a security as defined in Section 2(a)(36) of
the Act, except that it does not include:

(i) Direct obligations of the Government of the United
States;

(ii) Bankers' acceptances, bank certificates of deposit,
commercial paper and high quality short-term debt
instruments, including repurchase agreements; and

(iii) Shares issued by open-end registered investment
companies.

J. "Disinterested director" means a director of the Fund who is not an
"interested person" of the Fund within the meaning of Section 2(a)(19)
of the Act and the rules and regulations promulgated thereunder.

K. "Fund" means Van Wagoner Funds, Inc.

L. "Initial Public Offering" means an offering of securities registered
under the Securities Act of 1933, the issuer of which, immediately
before the registration, was not subject to the reporting requirements
of Section 13 or 15(d) of the Securities Exchange Act of 1934.

M. "Investment personnel" means: (i) any employee of the Fund or Adviser
or of any company in a control relationship to the Fund or Adviser
who, in connection with his or her regular functions or duties, makes
or participates in making recommendations regarding the purchase or
sale of securities by the Fund; and (ii) any natural person who
controls the Fund or Adviser and who obtains information concerning
recommendations made to the Fund regarding the purchase or sale of
securities by the Fund.

N. A "Limited Offering" means an offering that is exempt from
registration under the Securities Act of 1933 pursuant to Section 4(2)
or Section 4(6) thereof or pursuant to Rule 504, Rule 505 or Rule 506
thereunder.

O. "Purchase or sale of a Covered Security" includes, among other things,
the writing of an option to purchase or sell a Covered Security.

II. APPROVAL OF CODE OF ETHICS
---------------------------

A. The Board of Directors of the Fund, including a majority of the
Disinterested directors, shall approve this Code of Ethics and any
material changes thereto. Prior to approving this Code of Ethics
and any material changes thereto, the Board of Directors must
determine that this Code of Ethics contains provisions reasonably
necessary to prevent access persons from violating Rule 17j-1(b) of
the Act and shall receive a certification from the Adviser that it
has adopted

<PAGE>

such procedures as are reasonably necessary to prevent access persons
of the Adviser from violating this Code of Ethics.

B. No less frequently than annually, the officers of the Fund and the
officers of the Adviser shall furnish a report to the Board of
Directors of the Fund:

1. Describing issues arising under the Code of Ethics since the last
report to the Board of Directors, including, but not limited to,
information about material violations of the Code of Ethics and
sanctions imposed in response to such material violations. Such
report shall also include a list of access persons under the Code
of Ethics.

2. Certifying that the Fund and Adviser have adopted such procedures
as are reasonably necessary to prevent access persons from
violating the Code of Ethics.

C. This Code of Ethics, the certifications required by Sections II.A. and
II.B.(2), and the reports required by Sections II.B.(1) and Section V.
shall be maintained by the Fund's Administrator.

III. EXEMPTED TRANSACTIONS
----------------------

The prohibitions of Section IV of this Code of Ethics shall not apply to:

(a) Purchases or sales effected in any account over which the access
person has no direct or indirect influence or control.

(b) Purchases or sales of Covered Securities which are not eligible
for purchase or sale by any Fund; provided, however, that the
prohibitions of Section IV.B of this Code of Ethics shall apply
to such purchases and sales.

(d) Purchases which are part of an automatic dividend reinvestment
plan.

(e) Purchases effected upon the exercise of rights issued by an
issuer pro rata to all holders of a class of its securities, to
the extent such rights were acquired from such issuer, and sales
of such rights so acquired.

(f) Purchases or sales which receive the prior approval of the Board
of Directors of the Fund because they are only remotely
potentially harmful to the Fund because they would be very
unlikely to affect a highly institutional market, or because they
clearly are not related economically to the securities to be
purchased, sold or held by the Fund.

<PAGE>

IV. PROHIBITED ACTIVITIES
---------------------

A. Except in a transaction exempted by Section III of this Code, no
access person shall purchase or sell, directly or indirectly, any
Covered Security in which he has, or by reason of such transaction
acquires, any direct or indirect beneficial ownership and which to
his actual knowledge at the time of such purchase or sale is being
considered for purchase or sale by the Fund or is being purchased
or sold by the Fund.

B. Except in a transaction exempted by Section III of this Code of
Ethics, no access person (other than a Disinterested director) may
purchase, directly or indirectly, any Covered Security in which he
has, or by reason of such transaction acquires, any direct or indirect
beneficial ownership (other than securities issued by entities that
are permitted to co-invest with the Funds pursuant to an SEC exemptive
order and securities purchased by such entities). Investment
Personnel may purchase securities issued by entities that are
permitted to co-invest with the Funds pursuant to an SEC exemptive
order notwithstanding the fact that such securities may be issued in a
Limited Offering and such entities may purchase securities in Limited
Offerings or Initial Public Offerings.

C. Except in a transaction exempted by Section III of this Code of
Ethics, no access person (other than a Disinterested director) shall
sell, directly or indirectly, any Covered Security in which he has any
direct or indirect beneficial ownership (other than securities issued
by entities that are permitted to co-invest with the Funds pursuant to
an SEC exemptive order and securities sold by such entities) without
first obtaining the prior written approval of the Compliance Officer.

D. Except for service which began prior to December 31, 1995, no access
person shall serve on the board of directors of publicly traded
companies absent prior authorization of the Board of Directors of the
Fund. The Board of Directors of the Fund may so authorize such board
service only if it determines that such board service is consistent
with the interests of the Fund and its shareholders.

V. REPORTING AND COMPLIANCE PROCEDURES
-----------------------------------

A. Except as provided in Section V.B. of this Code of Ethics, every
access person shall report to the Fund the information described in
Section V.C., Section V.D. and Section V.E. of this Code of Ethics.
All reports shall be filed with the Compliance Officer.

B. 1. A Disinterested director of the Fund need not make a report
pursuant to Section V.C. and V.E. of this Code of Ethics and need
only report a transaction in a Covered Security pursuant to
Section V.D. of this Code of Ethics if such Disinterested
director, at the time of such transaction, knew or, in the
ordinary course of fulfilling his official duties as a director
of the Fund, should have known that, during the 15-day period

<PAGE>

immediately preceding the date of the transaction by the
director, such Covered Security was purchased or sold by the Fund
or was being considered by the Fund or the Adviser for purchase
or sale by the Fund.

2. An access person need not make a report with respect to
transactions effected for, and Covered Securities held in, any
account over which the person has no direct or indirect influence
or control.

3. An access person need not make a quarterly transaction report
pursuant to Section V.D. of this Code of Ethics if the report
would duplicate information contained in broker trade
confirmations or account statements received by the Fund's
Compliance Officer with respect to the access person in the time
period required by Section V.D., provided that all of the
information required by Section V.D. is contained in the broker
trade confirmations or account statements or in the records of
the Fund. Every access person, except Disinterested directors,
shall direct their brokers to supply to the Fund's Compliance
Officer, on a timely basis, duplicate copies of confirmations
of all personal securities transactions and of all account
statements reflecting all personal securities transactions for
all securities accounts.

C. Every access person shall, no later than ten (10) days after the
person becomes an access person, file an initial holdings report
containing the following information:

1. The title, number of shares and principal amount of each Covered
Security in which the access person had any direct or indirect
beneficial ownership when the person becomes an access person;

2. The name of any broker, dealer or bank with whom the access
person maintained an account in which any securities were held
for the direct or indirect benefit of the access person; and

3. The date that the report is submitted by the access person.

D. Every access person shall, no later than ten (10) days after the end
of a calendar quarter, file a quarterly transaction report containing
the following information:

1. With respect to any transaction during the quarter in a Covered
Security in which the access person had any direct or indirect
beneficial ownership:

(a) The date of the transaction, the title and the number of
shares, and the principal amount of each security involved;

<PAGE>

(b) The nature of the transaction (i.e., purchase, sale or any
other type of acquisition or disposition);

(d) The name of the broker, dealer or bank with or through whom
the transaction was effected; and

(e) The date that the report is submitted by the access person.

2. With respect to any account established by the access person in
which any securities were held during the quarter for the direct
or indirect benefit of the access person:

(a) The name of the broker, dealer or bank with whom the access
person established the account;

(b) The date the account was established; and

E. Every access person shall, no later than January 30 each year, file an
annual holdings report containing the following information as of the
preceding December 31:

1. The title, number of shares and principal amount of each Covered
Security in which the access person had any direct or indirect
beneficial ownership;

2. The name of any broker, dealer or bank with whom the access
person maintains an account in which any securities are held for
the direct or indirect benefit of the access person; and

3. The date that the report is submitted by the access person.

F. Any report filed pursuant to Section V.C., Section V.D. or Section
V.E. of this Code of Ethics may contain a statement that the report
shall not be construed as an admission by the person making such
report that he has any direct or indirect beneficial ownership in the
security to which the report relates.

G. The Fund's Compliance Officer shall review all reports filed pursuant
to Section V.C., Section V.D. or Section V.E. of this Code of Ethics.
The Fund's Compliance Officer shall identify all access persons who
are required to file reports pursuant to this Section V of this Code
of Ethics and must inform such access persons of their reporting
obligation.

<PAGE>

H. Each year access persons shall certify to the Fund that (i) they have
read and understand this Code of Ethics and recognize that they are
subject thereto, and (ii) they have complied with the requirements of
this Code of Ethics and that they have disclosed or reported all
personal securities transactions required to be disclosed or reported
pursuant to the requirements of this Code of Ethics.

I. Compliance with this Code of Ethics does not relieve access persons of
their obligations under any other code of ethics.

J. It is the policy of the Fund and the Adviser that no director, officer
or employee may trade, either personally or on behalf of others, on
material nonpublic information or communicate material non-public
information in violation of the law. Attached to this Code of Ethics
as Appendix A is a detailed discussion of such Insider Trading
Policies and Procedures.

VI. SANCTIONS
---------

Upon discovering a violation of this Code of Ethics, the Board of Directors of
the Fund or the Adviser, as applicable, may impose such sanctions as it deems
appropriate.

<PAGE>

INSIDER TRADING POLICY AND PROCEDURES

I. SCOPE OF POLICY STATEMENT.
--------------------------

This Policy Statement is drafted broadly; it will be applied and
interpreted in a similar manner. This Policy Statement applies to securities
trading and information handling by all employees of the Company and the
Adviser.

The law of insider trading is unsettled; an individual legitimately may be
uncertain about the application of the Policy Statement in a particular
circumstance. Often, a single question can forestall disciplinary action or
complex legal problems. You should direct any questions relating to the Policy
Statement to the designated compliance officer of the Adviser (the "Compliance
Officer"). You must also notify the Compliance Officer if you have any reason
to believe that a violation of the Policy Statement has occurred or is about to
occur.

II. POLICY STATEMENT ON INSIDER TRADING.
------------------------------------

Each director, officer and employee or of an affiliate is prohibited
from trading, either personally or on behalf of others, on material nonpublic
information or communicating material nonpublic information to others in
violation of the law. This conduct is frequently referred to as "insider
trading." This policy applies to every officer, director and employee or of an
affiliate, and extends to activities within and outside their duties. Every
such person must read and retain this Policy Statement. Any questions regarding
this Policy Statement should be referred to the Compliance Officer, and every
such person must notify the Compliance Officer immediately if they have any
reason to believe that a violation of the Policy Statement has occurred or is
about to occur.

The term "insider trading" is not defined in the federal securities laws,
but generally is used to refer to the use of material nonpublic information to
trade in securities (whether or not one is an "insider") or to communications of
material nonpublic information to others. While the law concerning insider
trading is not static, it is generally understood that the law prohibits:

(a) trading by an insider, while in possession of material nonpublic
information, or

(b) trading by a non-insider, while in possession of material nonpublic
information, where the information either was disclosed to the non-insider in
violation of an insider's duty to keep it confidential or was misappropriated,
or

<PAGE>

III. GENERAL CONCEPTS
----------------

A. WHO IS AN INSIDER? The concept of "insider" is broad. It includes
officers, directors, trustees and employees of a company. In
addition, a person can be a "temporary insider" if he or she enters
into a special confidential relationship in the conduct of a
company's affairs and as a result is given access to information
solely for the company's purposes. A temporary insider can include,
among others, a company's attorneys, accountants, consultants, bank
lending officers, and the employees of such organizations. In
addition, the Adviser or the Company may become a temporary insider
of any company for which it performs services. According to the
Supreme Court, the company must expect the outsider to keep the
disclosed nonpublic information confidential and the relationship
must at least imply such a duty before the outsider will be
considered an insider.

B. WHAT IS MATERIAL INFORMATION? Trading on inside information is not
a basis for liability unless the information is material. "Material
information" generally is defined as information for which there is
a substantial likelihood that a reasonable investor would consider
it important in making his or her investment decisions, or
information that is reasonably certain to have a substantial effect
on the price of a company's securities. Information that officers,
directors and employees should consider material includes, but is
not limited to: dividend changes, earnings estimates, changes in
previously released earnings estimates, significant merger or
acquisition proposals or agreements, major litigation, liquidation
problems, and extraordinary management developments.

Material information also may relate to the market for a company's
securities. Information about a significant order to purchase or
sell securities may, in some contexts, be deemed material.
Similarly, prepublication information regarding reports in the
financial press also may be deemed material.

Similarly, prepublication information regarding reports in the
financial press also me be deemed material. For example, the
Supreme Court upheld the criminal convictions of insider trading
defendants who capitalized on prepublication information about the
Wall Street Journal's Heard on the Street column.

<PAGE>

It is conceivable that similar advance reports of securities to be
bought or sold by a large, influential institutional investor, such
as an investment company client, may be deemed material to an
investment in those portfolio securities. Advance knowledge of
important proposed government regulation, for example, could also be
deemed material information regarding companies in the regulated
industry.

C. WHAT IS NONPUBLIC INFORMATION? Information is nonpublic until it
has been disseminated broadly to investors in the market place.
Tangible evidence of such dissemination is the best indication that
the information is public. For example, information is public after
it has become available to the general public through a public
filing with the SEC or some other governmental agency, the Dow Jones
"tape" or the Wall Street Journal or some other publication of
general circulation, and after sufficient time has passed so that
the information has been disseminated widely.

D. PENALTIES FOR INSIDER TRADING? Penalties for trading on or
communicating material nonpublic information are severe, both for
individuals involved in such unlawful conduct and their employers.
A person can be subject to some or all of the penalties below even
if he or she does not personally benefit from the violation.
Penalties include:

- civil injunctions
- treble damages
- disgorgement of profits
- jail sentences
- fines for the person who committed the violation of up to three
times the profit gained or loss avoided, whether or not the person
actually benefited, and
- fines for the employer or other controlling person of up to the
greater of $1,000,000 or three times the amount of the profit
gained or loss avoided.

In addition, any violation of this policy statement can be expected
to result in serious sanctions by the Adviser or the Company,
including dismissal of the persons involved.

<PAGE>

IV. IDENTIFYING INSIDE INFORMATION.
-------------------------------

Before any person covered by this policy executes any trade for him or
herself or on the behalf of others, including investment company clients, in the
securities of a company about which the employee may have potential inside
information, the following questions should be considered:

- Is the information material? Is this information that an investor
would consider important in making his or her investment decisions?
Is this information that would substantially affect the market price
of the securities if generally disclosed?

- Is the information nonpublic? How was the information obtained? To
whom has this information been provided? Has the information been
disseminated broadly to investors in the marketplace by being
published in Reuters, The Wall Street Journal or other publications
of general circulation? Is it on file with the Securities and
Exchange Commission?

If, after consideration of the above, it is found that the information is
material and nonpublic, or if there are questions as to whether the information
is material and nonpublic, the following steps should be taken:

- Report the matter immediately to the Compliance Officer.

- The securities should not be purchased or sold by the officer,
director or employee or on behalf of others.

- The information should not be communicated inside or outside the
Company or the Adviser, other than to the Compliance Officer.

After the issue has been reviewed, the officer, director or employee
will be instructed by either the President or the Compliance Officer
as to whether to continue the prohibitions against trading and
communication, or allowing the trade and communication of the
information.

V. EMPLOYEE CONFIRMATION
---------------------

All employees will be required to read this Policy Statement and agree to
its conditions. All employees will be required to confirm their understanding
and acknowledgment of the Code of Ethics, including this Policy Statement, on an
annual basis.