KELMOORE STRATEGIC TRUST, 485BPOS, 2000-06-28

KELMOORE STRATEGIC TRUST
485BPOS, 2000-06-28

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<PAGE> 1
As filed with the Securities and Exchange Commission on June 28, 2000

File No. 333-69365
File No. 811-9165

SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549

FORM N-1A

REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 [ X ]

Pre-Effective Amendment No. [ ]

Post-Effective Amendment No. 4 [ X ]

REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT OF 1940 [ X ]

Amendment No. 6 [ X ]

KELMOORE STRATEGIC TRUST
(Exact Name of Registrant as Specified on Charter)

2471 E. Bayshore Road, Suite 501
Palo Alto, California 94303
(Address of Principal Executive Offices)

(800) 486-3717
(Registrant's Telephone Number)

Matthew Kelmon, President
Kelmoore Strategic Trust
2471 E. Bayshore Road, Suite 501
Palo Alto, California 94303
(Name and Address of Agent for Service)

Copies to:

Kimberly J. Smith, Esq.
Sutherland, Asbill & Brennan LLP
1275 Pennsylvania Avenue, NW
Washington, DC 20004-2415

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

[ X ] immediately upon filing pursuant to paragraph (b) of Rule 485
[ ] on June 28, 2000 pursuant to paragraph (b) of Rule 485
[ ] 60 days after filing pursuant to paragraph (a)(1) of Rule 485
[ ] on (date) pursuant to paragraph (a)(1) of Rule 485
[ ] 75 days after filing pursuant to paragraph (a)(2) of Rule 485
[ ] on (date) pursuant to paragraph (a)(2) of Rule 485

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The Kelmoore Strategy(TM) Funds

[Graphic]

Prospectus

Kelmoore Strategy(TM) Fund
Kelmoore Strategy(TM) Eagle Fund

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

JUNE 28, 2000

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

<PAGE> 3
Contents

WHAT ARE THE FUNDS?
--------------------------------------------------------------------------------
KELMOORE STRATEGY(TM) FUND
--------------------------------------------------------------------------------
What is the Fund's Primary Goal?

What is the Fund's Main Strategy?

What are the Fund's Main Risks?

Who may want to invest in the Fund?

KELMOORE STRATEGY(TM) EAGLE FUND
--------------------------------------------------------------------------------
What is the Fund's Primary Goal?

What is the Fund's Main Strategy?

What are the Fund's Main Risks?

Who may want to invest in the Fund?

RISK/RETURN BAR CHART AND TABLE
--------------------------------------------------------------------------------
FEES AND EXPENSES OF THE FUNDS
--------------------------------------------------------------------------------
Shareholder Fees

Annual Fund Operating Expenses

Example

MAIN STRATEGY
--------------------------------------------------------------------------------

MAIN RISKS
--------------------------------------------------------------------------------
MANAGEMENT OF THE FUNDS
--------------------------------------------------------------------------------
Investment Adviser

Portfolio Manager

Principal Distributor

YOUR INVESTMENT
--------------------------------------------------------------------------------
How to Buy Shares

How to Sell Shares

TRANSACTION POLICIES
--------------------------------------------------------------------------------

SHAREHOLDER SERVICES

2
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--------------------------------------------------------------------------------
DISTRIBUTIONS AND TAXES
--------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS
--------------------------------------------------------------------------------
FOR MORE INFORMATION
--------------------------------------------------------------------------------
Shareholder Reports BACK COVER

Statement of Additional Information BACK COVER

3
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SUMMARY

WHAT ARE THE FUNDS?

Kelmoore Strategy(TM) Fund (formerly Kelmoore Strategy(TM)
Covered Option Fund) and Kelmoore Strategy(TM) Eagle Fund
(each a "Fund" and collectively the "Funds") are each
diversified series of Kelmoore Strategic Trust, an open-end
management investment company, commonly known as a mutual
fund.

KELMOORE STRATEGY(TM) FUND

WHAT IS THE KELMOORE STRATEGY(TM) FUND'S PRIMARY GOAL?

The Fund's primary goal is to maximize realized gains from
writing covered options on common stocks. As with any mutual
fund, there is no guarantee that the Fund will achieve its
goal.

WHAT IS THE KELMOORE STRATEGY(TM) FUND'S MAIN STRATEGY?

The main strategy of the Kelmoore Strategy(TM) Fund is to
purchase the common stocks of a limited number of large
companies which have strong financial fundamentals and to
continually sell or "write" related covered call options
against substantially all the shares of stock it owns. The
Fund will consist primarily of mid and large cap leaders in
Finance, Consumer Goods, Manufacturing, Resources and
Technology.

When the Fund purchases a stock, it simultaneously writes
covered call options on the stock. The options written by the
Fund are considered "covered" because the Fund owns the stock
against which the options are written. As a result, the
number of covered call options the Fund can write against any
particular stock is limited by the number of shares of that
stock the Fund holds.

To maximize options premiums generated, Kelmoore Investment
Company, Inc. (the "Adviser") writes as many covered call
options on the stocks the Fund owns as it can. The Adviser
writes options of a duration and exercise price which provide
the Fund with the highest expected return.

The Fund will typically hold no more than forty common
stocks, though this number may fluctuate at the discretion of
the Adviser. The issuers of stocks selected for investment by
the Fund will have a market capitalization in excess of $10
billion and will tend to have most of the following
characteristics:

4
<PAGE> 6
-- considered to be industry leaders
-- have strong financial fundamentals
-- are widely-held and have a high daily trading volume
-- are multi-national corporations
-- have relatively stable prices and dividends

WHAT ARE THE KELMOORE STRATEGY(TM) FUND'S MAIN RISKS?

As with any mutual fund, the value of the Fund's investments,
and therefore the value of the Fund's shares, will fluctuate.
If the net asset value of your shares declines below the
price you paid, you will lose money. The performance of the
Fund may also vary substantially from year to year. The
principal risks associated with an investment in the Fund
include:

Risks of investing in stocks:

-- stock market risk, or the risk that the price of the
securities owned by the Fund may fall due to changing
economic, political or market conditions
-- selection risk, or the risk that the stocks or sectors
selected by the Fund will underperform the stock market as
a whole or certain sectors of the stock market
-- risk of reduction in the amount of dividends a stock pays

Risks of writing covered call options:

-- risk of limiting gains on stocks in a rising market
-- risk of unanticipated exercise of the option
-- lack of liquid options market
-- decreases in option premiums

Other risks:

-- lack of liquidity in connection with purchases and sales
of portfolio securities

-- relatively higher cost of options trades

5
<PAGE> 7

-- forced liquidation of securities underlying the options
-- loss of part or all of your money invested in the Fund

WHO MAY WANT TO INVEST IN THE KELMOORE STRATEGY(TM) FUND?

Kelmoore Strategy(TM) Fund may be appropriate for you if you:

-- are seeking to maximize short-term capital gains in the
form of dividends and are willing to assume more risk to
increase the level of those gains
-- can accept the risks of investing in a portfolio of common
stocks and their related options
-- are seeking a disciplined and continual reinvestment of
premiums generated from writing options
-- can tolerate performance which can vary substantially from
year to year
-- are prepared to receive taxable distributions of
short-term capital gains
-- have a longer-term investment horizon

You should NOT invest in this Fund if you are seeking capital
appreciation or predictable levels of income or are investing
for a short period of time.

6
<PAGE> 8
WHAT IS THE KELMOORE STRATEGY(TM) EAGLE FUND'S PRIMARY GOAL?

The Fund's primary goal is to maximize realized gains from
writing covered options on common stocks. As with any mutual
fund, there is no guarantee that the Fund will achieve its
goal.

WHAT IS THE KELMOORE STRATEGY(TM) EAGLE FUND'S MAIN STRATEGY?

The main strategy of the Kelmoore Strategy(TM) Eagle Fund is
to purchase the common stocks of a limited number of
technology, communications and financial companies which have
strong financial fundamentals, and to continually sell or
"write" related covered call options against substantially
all of the shares of stock it owns. The Adviser generally
seeks over time to maintain a balance of the Fund's assets
invested among these three sectors. In addition, the Fund may
from time to time purchase a stock not in the market sectors
noted above if particularly attractive options may be sold
against the stock. The fund will consist primarily of mid and
large cap leaders in Technology and Communications.

To maximize options premiums generated, the Adviser writes as
many covered call options on the stocks the Fund owns as it
can. The Adviser writes options of a duration and exercise
price which provide the Fund with the highest expected
return.

The Fund will typically hold no more than thirty common
stocks, though this number may fluctuate at the discretion of
the Adviser. The issuers of stock selected for investment by
the Fund will have a market capitalization in excess of $500
million and will tend to have most of the following
characteristics:

-- considered to be leading edge technology companies
-- have a commanding marketing position
-- are widely-held and have high daily trading volume
-- have strong financial fundamentals
-- have a higher volatility than the stocks selected by the
Kelmoore Strategy(TM) Fund

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WHAT ARE THE KELMOORE STRATEGY(TM) EAGLE FUND'S MAIN RISKS?

Risks of investing in stocks :

-- enhanced stock market risk, or the risk that the price of
the securities owned by the Fund may fall due to changing
economic, political or market conditions
-- enhanced selection risk, or the risk that the stocks or
sectors selected by the Fund will substantially
underperform the stock market as a whole or certain
sectors of the stock market
-- financial risk, or the risk that the stock may file
bankruptcy proceedings or be acquired on unfavorable terms
to the stockholders
-- technology risk, or the risk that the new products,
systems or information will be developed and introduced to
the marketplace substantially reducing the value of the
stock
-- risk of reduction in the amount of dividends a stock pays

Risks of writing covered call options:

-- risk of limiting gains on stocks in a rising market
-- risk of unanticipated exercise of the option
-- lack of liquid options market
-- decreases in option premiums

Other risks:

-- lack of liquidity in connection with purchases and sales
of portfolio securities
-- relatively higher cost of options trades
-- forced liquidation of securities underlying the options
-- loss of part or all of your money invested in the Fund

8
<PAGE> 10

WHO MAY WANT TO INVEST IN THE KELMOORE STRATEGY(TM) EAGLE FUND?

Kelmoore Strategy(TM) Eagle Fund may be appropriate for you
if you:

-- are seeking to maximize short-term capital gains in the
form of dividends and are willing to assume more risk to
increase the level of those gains
-- can accept the risks of investing in a portfolio of common
stocks and their related options
-- are seeking a disciplined and continual reinvestment of
premiums generated from writing options
-- can tolerate performance which can vary substantially from
year to year
-- can accept wide variation in the value of the Fund's
shares which could cause a capital loss upon redemption of
shares

-- are prepared to receive taxable distributions of
short-term capital gains

-- have a longer-term investment horizon

You should NOT invest in this Fund if you are seeking capital
appreciation or predictable levels of income or are investing
for a short period of time.

RISK/RETURN BAR CHARTS AND TABLES

Although past performance of a fund is no guarantee of how it
will perform in the future, historical performance may give
you some indication of the risks of investing in a mutual
fund. Performance demonstrates how a mutual fund's returns
have varied over time. Kelmoore Strategy(TM) Eagle Fund is
recently organized and therefore has no performance history.
Kelmoore Strategy(TM) Fund commenced operations on May 3,
1999. Once a Fund has a performance history of at least one
calendar year, a Bar Chart and Performance Table for the Fund
will be included in the prospectus. Each Fund's annual
returns will also be compared to the returns of a benchmark
index.

FEES AND EXPENSES OF THE FUNDS

The tables below describe the fees and expenses that you may
pay if you buy and hold shares of a Fund.

<TABLE>
<CAPTION>
KELMOORE STRATEGY(TM) KELMOORE STRATEGY(TM)
FUND EAGLE FUND

SHAREHOLDER FEES (fees paid directly from your investment): Class A Class C Class A Class C
-------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Maximum Sales Charge (Load) imposed on Purchases
(as a percentage of offering price) 5.50%(1) None 5.50%(1) None
-------------------------------------------------------------------------------------------------------------------
Maximum Deferred Sales Charge (Load) None None None None
-------------------------------------------------------------------------------------------------------------------
Maximum Sales Charge (Load) imposed on Reinvested Dividends None None None None
-------------------------------------------------------------------------------------------------------------------
Redemption Fees (as a percentage of amount redeemed) * * * *
-------------------------------------------------------------------------------------------------------------------
ANNUAL FUND OPERATING EXPENSES
(expenses that are deducted from Fund assets):
-------------------------------------------------------------------------------------------------------------------
Management Fees 1.00% 1.00% 1.00% 1.00%
-------------------------------------------------------------------------------------------------------------------
Distribution and Service (12b-1) Fees 0.25% 1.00% 0.25% 1.00%
-------------------------------------------------------------------------------------------------------------------
Other Expenses 1.20% 1.20% 1.00%(2) 1.00%(2)
---------------------
</TABLE>

9
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<TABLE>
<S> <C> <C> <C> <C>
-------------------------------------------------------------------------------------------------------------------
Total Annual Fund Operating Expenses 2.45%(3) 3.20%(3) 2.25% 3.00%
-------------------------------------------------------------------------------------------------------------------
Fee Reduction and/or Expense Reimbursement (0.45)%(4) (0.45)%(4) NA NA
-------------------------------------------------------------------------------------------------------------------
Net Expenses 2.00% 2.75% NA NA
-------------------------------------------------------------------------------------------------------------------
</TABLE>

* If you redeem your shares by wire transfer, the Funds' transfer agent
charges a fee (currently $9.00) for each wire redemption. Purchases and
redemptions not made directly through the Funds' principal distributor
may be made through broker-dealers, financial advisors or other nominees
who may charge a commission or other transaction fee for their services.

(1) Reduced for purchases of $50,000 and over.

(2) "Other Expenses" are based on the estimated expenses that the Kelmoore
Strategy(TM) Eagle Fund expects to incur in its initial fiscal year.

(3) Gross fees and expenses that would have been incurred for the fiscal year
ended February 29, 2000 if the Adviser did not waive any fees and/or
reimburse expenses.

(4) The Adviser has contractually agreed to waive advisory fees and/or
reimburse expenses for the period ending June 28, 2001, so that the total
Annual Operating Expenses for this period will not exceed 2.00% for
Class A and 2.75% for Class C.

EXAMPLE

This example is designed so that you may compare the cost of
investing in a 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;
-- You redeem all of your shares at the end of the time
periods;
-- Your investment has a hypothetical 5% return each year;
-- All distributions are reinvested; and
-- The Fund's operating expenses remain the same.

Although your actual costs may be higher or lower, based on
these assumptions your costs would be:

<TABLE>
<CAPTION>
KELMOORE STRATEGY(TM) FUND KELMOORE STRATEGY(TM)
EAGLE FUND
---------------------------------------------------------------------------
1 year 3 years 5 years 10 years 1 year 3 years
---------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Class A $203 $721 $1,265 $2,752 $766 $1,215
---------------------------------------------------------------------------
Class C $278 $944 $1,635 $3,473 $303 $1,577
---------------------------------------------------------------------------
</TABLE>

MAIN STRATEGY

To generate option premiums, the Funds each purchase the
common stocks of a limited number of companies and
simultaneously write covered call options on these stocks. As
the options are exercised or expire, and the proceeds or
underlying stock become available for reinvestment or cover,
the Funds repeat the process.

The fundamentals of selling covered call options are as
follows:

The Fund Sells the Option

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Selling a call option is selling to an option buyer the right
to purchase a specified number of shares of stock (100 shares
equals one option contract) from the Fund, at a specified
price (the "exercise price") on or before a specified date
(the "expiration date"). The call option is covered because
the Fund owns, and has segregated, the shares of stock on
which the option is based. This eliminates certain risks
associated with selling uncovered, or "naked" options.

The Fund Collects a Premium

For the right to purchase the underlying stock, the buyer of
a call option pays a fee or "premium" to the Fund. The
premium is paid at the time the option is purchased, and is
not refundable to the buyer, regardless of what happens to
the stock price.

If the Option is Exercised

The buyer of the option may elect to purchase the stock
(exercise, or "call" the option) at the exercise price at any
time before the option expires. The Fund is then obligated to
deliver the shares at that price. Options are normally
exercised on or before the expiration date if the market
price of the stock exceeds the exercise price of the option.
Generally, if the exercise price plus the option premium are
higher than the price the Fund originally paid to purchase
the stock, the Fund will realize a gain on the sale of the
stock; if the exercise price and premium are lower, the Fund
will realize a loss. By selling a covered call option, the
Fund foregoes the opportunity to benefit from an increase in
price of the underlying stock above the exercise price.

If the Option Expires

If the market price of the stock does not exceed the exercise
price, the call option will likely expire without being
exercised. The Fund keeps the premium and the stock. The Fund
then expects to sell new call options against those same
shares of stock. This process is repeated until: a) an option
is exercised, or b) the stock is sold because it no longer
meets the Adviser's investment criteria, a corporate event
such as a merger or reorganization has occurred, or proceeds
from the sale are used to fund redemptions.

Other Features

The call options written by each Fund are listed for trading
on one or more domestic securities exchanges and are issued
by the Options Clearing Corporation ("OCC"). If a dividend is
declared on stock underlying a covered call option written by
the Fund, the dividend is paid to the Fund and not the owner
of the call option.

For the Kelmoore Strategy(TM) Fund, to decrease the risks of
volatile or reduced premiums, the Adviser seeks to select
underlying common stocks of larger companies which have high
trading volumes and relatively stable prices and dividends.
To reduce stock selection risk, the companies the Adviser
selects generally are considered to be industry leaders and
to have strong financial fundamentals. In addition, to reduce
overall market risk, the Adviser normally invests across five
industry sectors.

For the Kelmoore Strategy(TM) Eagle Fund, the Adviser seeks
to select underlying common stocks of high growth companies
which have high trading volumes, increased volatility and a
greater price fluctuation than the stocks held by the
Kelmoore Strategy(TM) Fund. To reduce selection risk, the
Adviser selects stocks that are generally considered to be
industry leaders and have strong financial fundamentals. In
addition, to reduce overall market risk, the Adviser normally
invests across three industry sectors.

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To reduce transaction costs and to avoid realizing capital
gains or losses on portfolio stocks, the Adviser seeks, when
practical, to hold portfolio stocks and to enter into closing
purchase transactions before call options a Fund writes are
exercised. It may be impractical in certain circumstances to
effect such closing purchase transactions in a timely or
advantageous manner, for example, if the option is exercised
unexpectedly or if the market for the option is illiquid.

SECURED PUT OPTIONS

A Fund may also write secured put options either to earn
additional option premiums (anticipating that the price of
the underlying security will remain stable or rise during the
option period and the option will therefore not be exercised)
or to acquire the underlying security at a net cost below the
current value. Secured put option writing entails the Fund's
sale of a put option to a third party for a premium and the
Fund's concurrent deposit of liquid assets (cash or U.S.
government securities) into a segregated account equal to the
option's exercise price. A put option gives the buyer the
right to put (sell) the stock underlying the option to the
Fund at the exercise price at any time during a specified
time period.

The Funds will only write secured put options in
circumstances where the Fund desires to acquire the security
underlying the option at the exercise price specified in the
option. Put options written by a Fund are listed for trading
on one or more domestic securities exchanges and are issued
by the OCC.

When a Fund writes secured put options, it bears the risk of
loss if the value of the underlying stock declines below the
exercise price. If the option is exercised, the Fund could
incur a loss if it is required to purchase the stock
underlying the put option at a price significantly greater
than the current market price of the stock. While the Fund's
potential gain on a put option is limited to the interest
earned on the liquid assets securing the put option plus the
premium received from the purchaser of the put option, the
Fund risks a loss equal to the entire value of the stock.

TEMPORARY DEFENSIVE POSITION

A Fund may, from time to time, take a temporary defensive
position that is inconsistent with its principal investment
strategies in attempting to respond to adverse market,
economic, political or other conditions. When a Fund takes a
temporary defensive position, it may not achieve its stated
investment objective. A principal defensive investment
position would be the purchase of cash equivalents.

MAIN RISKS

INVESTING IN EQUITY SECURITIES

Investing in equity securities includes the risks inherent in
investing in stocks and the stock market generally. The value
of securities in which each Fund invests, and therefore each
Fund's net asset value, will fluctuate due to economic,
political and market conditions. As with any mutual fund
which invests in equity securities, there is also the risk
that the securities or sectors selected by a Fund will
underperform the stock market or certain sectors of the
market or that the amount of any dividends paid on the
securities will be reduced.

WRITING COVERED CALL OPTIONS

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When a Fund writes covered call options, it foregoes the
opportunity to benefit from an increase in the value of the
underlying stock above the exercise price, but continues to
bear the risk of a decline in the value of the underlying
stock. While the Fund receives a premium for writing the call
option, the price the Fund realizes from the sale of the
stock upon exercise of the option could be substantially
below its prevailing market price. The purchaser of the call
option may exercise the call at any time during the option
period (the time between when the call is written and when it
expires). Alternatively, if the value of the stock underlying
the call option is below the exercise price, the call is not
likely to be exercised, and the Fund could have an unrealized
loss on the stock, offset by the amount of the premium
received by the Fund when it wrote the option.

There is no assurance that a liquid market will be available
at all times for a Fund to write call options or to enter
into closing purchase transactions. In addition, the premiums
the Fund receives for writing call options may decrease as a
result of a number of factors, including a reduction in
interest rates generally, a decline in stock market volumes
or a decrease in the price volatility of the underlying
securities.

LACK OF LIQUIDITY

A Fund's investment strategy may result in a lack of
liquidity in connection with purchases and sales of portfolio
securities. Because the Adviser will seek generally to hold
the underlying stocks in a Fund's portfolio, the Fund may be
less likely to sell the existing stocks in its portfolio to
take advantage of new investment opportunities, and the cash
available to the Fund to purchase new stocks may consist
primarily of proceeds received from the sale of new Fund
shares.

TAX CONSEQUENCES

Each Fund expects to generate a high level of premiums.
Income from these premiums is typically in the form of
short-term capital gains and will usually be taxable as
ordinary income to the investor. Because a Fund will have no
control over the exercise of options, shareholder redemptions
and corporate events (such as mergers or reorganizations), it
may be forced to realize capital gains or losses at
inopportune times.

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MANAGEMENT OF THE FUNDS

INVESTMENT ADVISER

Kelmoore Investment Company, Inc. serves as the investment
adviser to each Fund and is responsible for the selection and
ongoing monitoring of the securities in the Fund's investment
portfolio and for the management of each Fund's business
affairs. The Adviser is a registered investment adviser and
broker-dealer. The Funds intend to place substantially all
transactions in both stock and options with the Adviser in
its capacity as a registered broker-dealer. The Adviser was
established in 1992 by Ralph M. Kelmon, Jr., who is the
principal shareholder. The Adviser offers investment advisory
and brokerage services to individual clients, trusts,
corporations, institutions and private investment funds using
the same investment strategy that the Funds employ. The
Adviser's principal address is 2471 East Bayshore Road, Suite
501, Palo Alto, California 94303.

Each Fund pays the Adviser a monthly investment advisory fee
at the annual rate of 1.00% of its average daily net assets.
The Adviser has contractually agreed to waive advisory fees
and reimburse certain expenses of the Kelmoore Strategy(TM)
Fund for the period ending June 28, 2001, so that the total
operating expenses for this period will not exceed 2.00% for
Class A and 2.75% for Class C. The Adviser has voluntarily
undertaken to waive all or a portion of its fee and to
reimburse certain expenses of the Kelmoore Strategy(TM) Eagle
Fund so that the total operating expenses of the Fund will
not exceed 2.25% for Class A shares and 3.00% for Class C
shares. The Adviser reserves the right to terminate this
undertaking at any time, at its sole discretion. Any waiver
or reimbursement by the Adviser is subject to reimbursement
by the Kelmoore Strategy(TM) Eagle Fund within the first
three years of the Fund's operations, to the extent such
reimbursement by the Fund would not cause total operating
expenses to exceed any current expense limitation.

PORTFOLIO MANAGER

The primary portfolio manager for each Fund is Matthew
Kelmon. Mr. Kelmon has been Vice President of Trading for the
Adviser from 1994 to present. Mr. Kelmon manages the
day-to-day trading activities of the Adviser and is
responsible for designing and implementing the in-house
software system (OPTRACKER(TM)) used in the investment
process. Mr. Kelmon has been responsible for the day-to-day
management and implementation of The Kelmoore Strategy(TM)
for private accounts and limited partnerships from 1994 to
present. Mr. Kelmon also heads up the equity selection
committee of the Adviser.

PRINCIPAL DISTRIBUTOR

It is anticipated that each Fund will place substantially all
of its transactions, both in stocks and options, with the
Adviser in its capacity as a broker-dealer. As the level of
option writing increases, the level of commissions paid by
the Fund to the Adviser increases. Because the Adviser
receives compensation based on the amount of transactions
completed, there is an incentive on the part of the Adviser
to effect as many transactions as possible. While the Fund
does not intend to trade the stocks in its portfolio
actively, it is in the interest of the Fund to write as many
options as possible, thereby maximizing the premiums it
receives. In practice, the number of options written at any
time will be limited to the value of the stocks and other
assets in the Fund's portfolio used to cover or secure those
options. Brokerage commissions are often greater in relation
to options premiums than in relation to the price of the
underlying stocks.

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YOUR INVESTMENT - HOW TO BUY SHARES

You can purchase shares of the Funds through broker-dealers,
directly through the Adviser, or through the Automatic
Investment Plan. Shares of the Funds are offered only to
residents of states in which the shares are registered or
qualified. No share certificates will be issued in connection
with the purchase of Fund shares.

<TABLE>
<CAPTION>
PURCHASE AMOUNTS
-------------------------------------------------------------
<S> <C>
Minimum initial investment: $1,000
Minimum additional investments: $50
</TABLE>

MULTIPLE CLASSES

Each Fund offers both Class A and Class C shares. Each class
of shares has a different distribution arrangement to provide
for different investment needs. This allows you to choose the
class of shares most suitable for you depending on the amount
and length of investment and other relevant factors. Sales
personnel may receive different compensation for selling each
class of shares.

CLASS A SHARES

Sales of Class A shares of each Fund include a front-end
sales charge (expressed as a percentage of the offering
price) as shown in the following table:

CLASS A SHARES -
FRONT-END SALES CHARGE
<TABLE>
<CAPTION>
--------------------------------------------------------------------------------------
Approximate Percentage
Percentage of Percentage of of Dealer
Amount of Single Transaction Offering Price Amount Invested Reallowance
--------------------------------------------------------------------------------------
<S> <C> <C> <C>
Less than $50,000 5.50% 5.82% 5.00%
--------------------------------------------------------------------------------------
$50,000 but less than $100,000 4.75% 4.99% 4.25%
--------------------------------------------------------------------------------------
$100,000 but less than $250,000 4.00% 4.17% 3.50%
--------------------------------------------------------------------------------------
$250,000 but less than $500,000 3.25% 3.36% 2.75%
--------------------------------------------------------------------------------------
$500,000 or more 2.50% 2.56% 2.00%
--------------------------------------------------------------------------------------
</TABLE>

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<PAGE> 17
Shares acquired as a result of reinvestment of distributions
will not be subject to any sales charge. Class A shares are
subject to a 12b-1 fee of 0.25%, which is lower than the
12b-1 fee for the Class C shares.

The distributor may pay a dealer concession to those selected
dealers who have entered into an agreement with the
distributor. The dealer's concession may be changed from time
to time. The distributor may from time to time offer
incentive compensation to dealers who sell shares of the
Funds subject to sales charges, allowing such dealers to
retain an additional portion of the sales charge. Currently,
dealers receive the concession set forth in the table above,
as well as the 0.25% distribution fee (12b-1). On some
occasions, such incentives will be conditioned upon the sale
of a specified minimum dollar amount of the shares of the
Funds during a specified period of time. A dealer who
receives all or substantially all of the sales charge may be
considered an "underwriter" under the Securities Act of 1933,
as amended. All such sales charges are paid to the securities
dealer involved in the trade, if any.

CLASS A SHARES- DISTRIBUTION PLAN

Each Fund has, on behalf of its Class A shares, adopted a
plan pursuant to Rule 12b-1 under the Investment Company Act
of 1940, as amended, that allows the Fund to pay distribution
and service fees for the sale and distribution of its shares
and for services provided to its shareholders. Because these
fees are paid out of each Fund's assets on an ongoing basis,
over time, these fees will increase the cost of your
investment and may cost more than paying other types of sales
charges.

The distribution plan for Class A shares permits each Fund to
reimburse the Fund's distributor, an annual fee not to exceed
0.25% of the average daily net assets of the Class A shares
of each Fund.

CLASS A SHARES - REDUCED SALES CHARGES

The sales charge for purchases of Class A shares of each Fund
may be reduced for a single purchaser through Rights of
Accumulation or a Letter of Intent, as described below. To
qualify for a reduced sales charge, you must notify your
dealer, PFPC Inc. or the Fund. Certain transactions in Class A
shares may be made at net asset value as described below.

RIGHTS OF ACCUMULATION

You may combine your shares and the shares of your spouse and
your children under the age of 21 in order to qualify for the
Rights of Accumulation. If you already hold Class A shares of
a Fund, a reduced sales charge based on the sales charge
schedule for Class A shares may apply to subsequent purchases.
The sales charge on each additional purchase is determined by
adding the current market value of the shares you currently
own to the amount being invested. The reduced sales charge is
applicable only to current purchases. It is your
responsibility to notify your dealer, PFPC Inc. or the Fund at
the time of subsequent purchases that the purchase is eligible
for the reduced sales charge under the Rights of Accumulation.

LETTER OF INTENT

You may qualify for a reduced sales charge immediately by
signing a non-binding Letter of Intent stating your intention
to invest during the next 13 months a specified amount which,
if made at one time, would qualify for a reduced sales charge.
The first investment cannot be made more than 90 days prior to
the date of the Letter of Intent. Any redemptions made during
the 13-month period will be subtracted from the amount of
purchases in determining

16
<PAGE> 18

whether the Letter of Intent has been satisfied. During the
term of the Letter of Intent, PFPC will hold shares
representing 5% of the indicated amount in escrow for payment
of a higher sales charge if the full amount indicated in the
Letter of Intent is not purchased. The escrowed shares will
be released when the full amount indicated has been
purchased. If the full amount indicated is not purchased
within the 13-month period, your escrowed shares will be
redeemed in an amount equal to the difference in the dollar
amount of sales charge actually paid and the amount of sales
charge you would have had to pay on your aggregate purchases
if the total of such purchases had been made at a single
time. It is your responsibility to notify your dealer, PFPC
Inc. or the Fund at the time the Letter of Intent is
submitted that there are prior purchases that may apply.

SALES AT NET ASSET VALUE

The Funds may sell Class A shares at net asset value (i.e.
without any initial sales charge) to certain categories of
investors, including: (1) investment advisory clients of the
Adviser or its affiliates; (2) officers and present or former
Trustees of the Trust; directors and full-time employees of
selected dealers or agents; the spouse, sibling, direct
ancestor or direct descendant (collectively "relatives") of
any such person; any trust, individual retirement account or
retirement plan account for the benefit of any such person or
relative; or the estate of any such person or relative; if
such shares are purchased for investment purposes (such shares
may not be resold except to the Fund); (3) the Adviser and its
affiliates and certain employee benefit plans for employees of
the Adviser; (4) employer sponsored qualified pension or
profit-sharing plans (including Section 401(k) plans),
custodial accounts maintained pursuant to Section 403 (b) (7)
retirement plans and individual retirement accounts (including
individual retirement accounts to which simplified employee
pension ("SEP") contributions are made), if such plans or
accounts are established or administered under programs
sponsored by administrators or other persons that have been
approved by the Adviser; (5) fee-based financial planners and
registered investment advisors who are purchasing on behalf of
their clients; (6) broker-dealers who have entered into
selling agreements with the Adviser for their own accounts;
and (7) participants in no-transaction-fee programs of brokers
that maintain an omnibus account with the Funds.

CLASS C SHARES

Class C shares of the Funds are not subject to a front-end
sales charge. Class C shares are subject to a 12b-1 fee of
1.00%, payable to the distributor. Because of the higher 12b-1
fees, Class C shares have higher expenses than Class A shares.
Currently, the 12b-1 fee is paid by the distributor to
selected dealers.

CLASS C SHARES - DISTRIBUTION PLAN

Each Fund has, on behalf of its Class C shares, adopted a plan
pursuant to Rule 12b-1 under the Investment Company Act of
1940, as amended, that allows the Fund to pay distribution and
service fees for the sale and distribution of its shares and
for services provided to its shareholders. Because these fees
are paid out of each Fund's assets on an ongoing basis, over
time, these fees will increase the cost of your investment and
may cost more than paying other types of sales charges.

The distribution plan for Class C shares permits each Fund to
reimburse the Fund's distributor an annual fee not to exceed
0.75% of the average daily net assets of each Fund's Class C
shares. In addition, the distribution plan for Class C shares
permits each Fund to reimburse the distributor for payments to
dealers or others, an annual service fee not to exceed 0.25%
of the average daily net assets of each Fund's Class C shares.

TO OPEN AN ACCOUNT

17
<PAGE> 19
BY MAIL
-- Complete the application.
-- Mail the application and your check to:
PFPC Inc.
211 South Gulph Road
P.O. Box 61503
King of Prussia, PA 19406
-- Please make your check payable to the appropriate Fund.
-- Please make sure your check is for at least $1,000.

BY WIRE
-- To make a same-day wire investment, call toll-free
(877) 328-9456 by 4:00 p.m. Eastern time. An account number
will be assigned to you.
-- Call your bank with instructions to transmit funds to:
Boston Safe Deposit & Trust (BSDT), ABA#011001234
Attn: PFPC Inc.
Account #018953
Credit: The name of the Fund
FBO: Name(s) of account registration and account number
-- Your bank may charge a wire fee.
-- Please make sure your wire is for at least $1,000.
-- Mail your completed application to PFPC at the address
under TO OPEN AN ACCOUNT - By Mail.

TO ADD TO AN ACCOUNT

BY MAIL

-- Fill out an investment slip from a previous confirmation and
write your account number on your check. Mail the slip and
your check to:
PFPC Inc.
211 South Gulph Road
P.O. Box 6176
King of Prussia, PA 19406
-- Please make your check payable to the appropriate Fund.
-- Please make sure your additional investment is for at least
$50.

BY WIRE

-- Call toll-free (877) 328-9456. The wire must be received by
4:00 p.m. Eastern time for same day processing.
-- Call your bank with instructions under TO OPEN AN ACCOUNT -
By Wire.
-- Your bank may charge a wire fee.
-- Please make sure your wire is for at least $50.

AUTOMATIC INVESTMENT PLAN

Once an account has been opened, you can make additional
purchases of shares of the Funds through an automatic
investment plan. The automatic investment plan provides a
convenient method to have monies deducted directly from your
bank account for investment in the Funds. You may authorize
the

18
<PAGE> 20
automatic withdrawal of funds from your bank account for any
amount. The Funds may alter, modify or terminate this plan
at any time. To begin participating in this plan, please
complete the Automatic Investment Plan section found on the
account application or contact the Funds at (877) 328-9456.

EXCHANGE PRIVILEGE

You may exchange shares of a particular class of a Fund only
for shares of the same class of another Fund. For example,
you can exchange Class A shares of the Kelmoore Strategy(TM)
Fund for Class A shares of the Kelmoore Strategy(TM) Eagle
Fund. Shares of the Fund selected for exchange must be
available for sale in your state of residence. You must meet
the minimum purchase requirements for the Fund you purchase
by exchange. For tax purposes, exchanges of shares involve a
sale of shares of the Fund you own and a purchase of the
shares of the other Fund, which may result in a capital gain
or loss.

PURCHASE PRICE

Class C shares of the Funds are sold at the net asset value
("NAV") next determined after receipt of the request in good
order. Class A shares of the Funds are sold at the offering
price which is the NAV next determined after the request is
received in good order plus a sales charge of up to 5.50%

RIGHTS RESERVED BY THE FUNDS

The Funds reserve the right to:
-- reject any purchase order
-- suspend the offering of shares
-- vary the initial and subsequent investment minimums
-- waive the minimum investment requirement for any investor

YOUR INVESTMENT - HOW TO SELL SHARES

You may "redeem", that is, sell your shares on any day the
New York Stock Exchange ("NYSE") is open, either directly
through the distributor or through your broker-dealer. The
price you receive will be the NAV next calculated after
receipt of the request in good order by PFPC.

BY MAIL

To redeem your shares by mail, write a letter of instruction
that includes:

-- The name of the Fund, your account number, the name(s) in
which the account is registered and the dollar value or
number of shares you wish to sell.

-- Include all signatures and any additional documents that
may be required.

-- Mail your request to:
PFPC Inc.
211 South Gulph Road
P.O. Box 61503
King of Prussia, PA 19406

-- A check will be mailed to the name(s) and address in which
the account is registered within seven days.

19
<PAGE> 21
BY TELEPHONE

Call toll-free (877) 328-9456. The proceeds will be paid to
the registered owner: (1) by mail at the address on the
account, or (2) by wire to the bank account designated on
the account application. To use the telephone redemption
privilege, you must have selected this service on your
original account application or submitted a subsequent
request in writing to add this service to your account. The
Funds and PFPC reserve the right to refuse any telephone
transaction when they are unable to confirm to their
satisfaction that a caller is the account owner or a person
preauthorized by the account owner. PFPC has established
security procedures to prevent unauthorized account access.
Neither the Funds nor any of its service contractors will be
liable for any loss or expense in acting upon telephone
instructions that are reasonably believed to be genuine. The
telephone transaction privilege may be suspended, limited,
modified or terminated at any time without prior notice by
the Funds or PFPC.

BY WIRE

In the case of redemption proceeds that are wired to a bank,
a Fund will transmit the payment only on days that
commercial banks are open for business and only to the bank
and account previously authorized on your application or
your signature-guaranteed letter of instruction. The Funds
and PFPC will not be responsible for any delays in wired
redemption proceeds due to heavy wire traffic over the
Federal Reserve System. The Funds reserve the right to
refuse a wire redemption if it is believed advisable to do
so. If you redeem your shares by wire transfer, PFPC charges
a fee (currently $9.00) for each wire redemption.

SYSTEMATIC WITHDRAWAL PLAN

Once you have established an account with $5,000 or more,
you may automatically receive funds from your account on a
monthly, quarterly or semi-annual basis (minimum withdrawal
of $100). Call toll-free (877) 328-9456 to request a form to
start the Systematic Withdrawal Plan.

SELLING RECENTLY PURCHASED SHARES

If you wish to sell shares that were recently purchased by
check, the Funds may delay mailing your redemption check for
up to 15 business days after your redemption request to
allow the purchase check to clear.

TRANSACTION POLICIES

TIMING OF PURCHASE OR SALE REQUESTS

All requests received in good order by PFPC before the close
of the NYSE, typically 4:00 p.m. Eastern time, will be
executed the same day, at that day's NAV. Orders received
after the close of the NYSE will be executed the following
day, at that day's NAV. All investments must be in U.S.
dollars. Purchase and redemption orders are executed only on
days when the NYSE is open for trading. If the NYSE closes
early, the deadlines for purchase and redemption orders will
be accelerated to the earlier closing time.

STOCK EXCHANGE CLOSINGS

20
<PAGE> 22
The NYSE is typically closed for trading on New Year's Day,
Martin Luther King, Jr. Day, Presidents' Day, Good Friday,
Memorial Day, Independence Day, Labor Day, Thanksgiving Day
and Christmas Day.

DETERMINATION OF NAV

The NAV for each Fund is calculated at the close of regular
trading hours of the NYSE, which is normally 4:00 p.m.
Eastern time. Each Fund calculates NAV by adding up the
total value of its investments and other assets, subtracting
liabilities, and then dividing that figure by the number of
its outstanding shares. Each Fund's investments are valued
based on market value, or where market quotations are not
readily available, on fair value as determined in good faith
by or at the direction of the Board of Trustees.

INVESTMENTS THROUGH NOMINEES

If you invest through a nominee, such as a broker-dealer or
financial advisor (rather than directly), transaction
procedures and fees may be different than those described
here. Nominees may charge transaction fees and set different
minimum investments or limitations on buying or selling
shares. It is the responsibility of the nominee to promptly
forward purchase or redemption orders and payments to the
Funds. You will not be charged any additional fees if you
purchase or redeem shares of the Funds directly through the
Funds' principal distributor, Kelmoore Investment Company,
Inc.

REDEMPTION POLICIES

Payment for redemption of Fund shares is usually made within
one business day, but not later than seven calendar days
after receipt of your redemption request, unless the check
used to purchase the shares has not yet cleared. The Trust
may suspend the right of redemption or postpone the date of
payment for more than seven days during any period when (1)
trading on the NYSE is restricted or the NYSE is closed for
other than customary weekends and holidays, (2) the
Securities and Exchange Commission ("SEC") has by order
permitted such suspension for the protection of the Funds'
shareholders, or (3) an emergency exists making disposal of
portfolio securities or valuation of net assets of the Funds
not reasonably practicable. The Funds will automatically
redeem shares if a purchase check is returned for
insufficient funds. The Funds reserve the right to reject
any third party check. The Funds reserve the right to make a
"redemption in kind" payment in portfolio securities rather
than cash if the amount you are redeeming is large enough to
affect a Fund's operations. Large redemptions are considered
to exceed $250,000 or 1% of each Fund's assets.

ACCOUNT MINIMUM

You must keep at least $1,000 worth of shares in your
account to keep the account open. If, after giving you
thirty days prior written notice, your account value is
still below $1,000 we may redeem your shares and send you a
check for the redemption proceeds.

SIGNATURE GUARANTEES

The Funds may require additional documentation, or signature
guarantees, on any redemption over $10,000 in value or for
the redemption of corporate, partnership or fiduciary
accounts, or for certain types of transfer requests or
account registration changes. A signature guarantee helps
protect against fraud. When the Funds require a signature
guarantee, a medallion signature must be provided. A
medallion signature guarantee may be obtained from a
domestic bank or trust company, broker, dealer,

21
<PAGE> 23

clearing agency, savings association, or other financial
institution which is participating in a medallion program
recognized by the Securities Transfer Association. The three
recognized medallion programs are Securities Transfer Agents
Medallion Program (STAMP), Stock Exchanges Medallion Program
(SEMP) and New York Stock Exchange, Inc, Medallion Signature
Program (NYSE MSP). Signature guarantees from financial
institutions which are not participating in one of these
programs will not be accepted. Please call the Fund's
shareholder servicing group toll-free at (877) 328-9456 for
further information on obtaining a signature guarantee.

OTHER DOCUMENTS

Additional documents may be required for purchases and
redemptions when shares are registered in the name of a
corporation, partnership, association, agent, fiduciary,
trust, estate or other organization. For further
information, please call the Funds' shareholder servicing
group toll-free at (877) 328-9456.

SHAREHOLDER SERVICES

TELEPHONE INFORMATION

YOUR ACCOUNT: If you have questions about your account,
including purchases, redemptions and distributions, call the
Funds' shareholder servicing group from Monday through
Friday, 9:00 a.m. to 7:00 p.m., Eastern time. Call toll-free
(877) 328-9456.

THE FUNDS: If you have questions about the Funds, call the
Funds Monday through Friday, 9:00 a.m. to 5:00 p.m., Pacific
time. Call toll-free (877) 328-9456.

ACCOUNT STATEMENTS

The Funds provide you with these helpful services and
information about your account:

-- a statement after every transaction;
-- quarterly account statements reflecting transactions made
during the quarter
-- an annual account statement reflecting all transactions for
the year;
-- tax information which will be mailed by January 31 of each
year, a copy of which will also be filed with the Internal
Revenue Service, if necessary; and
-- financial statements with a summary of portfolio composition
and performance will be mailed at least twice a year.

The Funds provide the above shareholder services without
charge, but may charge for special services such as requests
for historical transcripts of accounts.

INTEGRATED VOICE RESPONSE SYSTEM

You may obtain access to account information by calling
toll-free (877) 328-9456. The system provides share price
and price change information for each Fund and gives account
balances, information on the most recent transactions and
allows sales of shares.

RETIREMENT PLANS

Shares of the Funds are available for purchase through
individual retirement accounts ("IRAs") and other retirement
plans. An IRA application and further details about the
procedures to be followed by IRAs and other retirement plans
are available by calling toll-free (877) 328-9456.

22
<PAGE> 24
DISTRIBUTIONS AND TAXES

DISTRIBUTIONS

Each Fund passes along to your account your share of
investment earnings in the form of dividends and
distributions. Each Fund will distribute at least annually
any net realized long-term capital gains obtained through
investment transactions. Each Fund will pay monthly
distributions from net investment income and any net
realized short-term capital gain. Net investment income
consists of dividends and interest accrued on portfolio
investments less accrued expenses. Interest and dividend
payments will normally be distributed as income dividends on
a monthly basis.

Under limited circumstances, certain distributions from a
Fund may be treated as a return of capital. If your
distributions are reinvested, you are largely unaffected by
such returns of capital. If you received your distributions
in cash, a return of capital is equivalent to a partial
redemption of your investment.

Unless you elect otherwise, all dividends and distributions
paid by a Fund will be reinvested in additional shares of
the same Fund. They will be credited to your account in the
Fund at the same NAV on the applicable dividend payment
date. All distributions a Fund pays to you will be taxable
when paid, regardless of whether they are taken in cash or
reinvested in shares of the Fund. To change your dividend
election, you must notify PFPC in writing at least fifteen
days prior to the applicable dividend record date.

TAXES

Each Fund intends to qualify as a regulated investment
company. This status exempts each Fund from paying federal
income tax on the income or capital gains it distributes to
its shareholders.

Your investment in each Fund will be subject to the
following tax consequences:

-- Dividends from net investment income and distributions from
short-term capital gains are taxable as ordinary income

-- Distributions from long-term capital gains, if any, are
taxable as long-term capital gain

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

-- Certain dividends paid to you in January will be taxable as
if they had been paid the previous December

If you purchase shares shortly before a record date for a
dividend or distribution, a portion of your investment will
be returned as a taxable distribution.

The tax consequences of each Fund's distributions depend
upon the length of time the Fund holds its assets. Due to
the nature of each Fund's principal investment strategy,
each Fund anticipates that a majority of its distributions
will be in the form of ordinary income. Each Fund may at
times realize short-term capital gains on some portfolio
securities, while at the same time seeking to avoid
realizing losses on other securities held in the portfolio.
As a result, each Fund's shareholders may receive taxable
distributions from a net realized short-term capital gain at
times when the Fund has unrealized losses in its portfolio
which could have been used to offset such gain. Similarly,
each Fund may at times continue to pay taxable distributions
from a new realized short-term gain which could have been
retained by the Fund and offset by a capital loss
carryforward available to the Fund.

23
<PAGE> 25
Each Fund will generally realize short-term capital gain (or
loss) on a closing purchase transaction with respect to a
call or put previously written by the Fund if the premium,
plus commission costs, paid to purchase the call or put is
less (or greater) than the premium, less commission costs,
received on the sale of the call or put. A short-term
capital gain also will be realized if a call or put which a
Fund has written lapses unexercised, because the Fund would
retain the premium.

If a call option which a Fund has written on any equity
security is exercised, the Fund realizes a capital gain or
loss from the sale of the underlying security and the
proceeds from such sale are increased by the premium
originally received. If a put option which a Fund has
written on an equity security is exercised, the amount of
the premium originally received will reduce the cost of the
security which the Fund purchases upon exercise of the
option.

You must provide each Fund with your correct taxpayer
identification number and certify that you are not subject
to backup withholding. If you do not, the Funds will be
required to withhold 31% of your taxable distributions and
redemptions.

After the end of each calendar year, you will receive a
statement (Form 1099) of the federal income tax status of
each Fund's dividends and other distributions paid during
the year. You should keep all of your Fund statements for
accurate tax-accounting purposes.

You should consult your tax advisor concerning federal,
state and local taxation of Fund dividends and distributions
in your particular circumstances.

24
<PAGE> 26
FINANCIAL HIGHLIGHTS

The financial highlights table is intended to help you
understand Kelmoore Strategy(TM) Fund's financial
performance for the period of the Fund's operations.
Kelmoore Strategy(TM) Eagle had not commenced operations at
the date of this prospectus. Certain information reflects
financial results for a single Fund share. The total returns
in the table represent the rate that an investor would have
earned on an investment in the Fund (assuming reinvestment
of all dividends and distributions). This information has
been audited by PricewaterhouseCoopers LLP, whose report,
along with the Fund's financial statements, are included in
the annual report, which is available upon request.

THE KELMOORE STRATEGY(TM) FUND

FOR THE PERIODS ENDED FEBRUARY 29, 2000

The table below sets forth financial data for one share of capital stock
outstanding throughout the period presented.
<TABLE>
<CAPTION>

CLASS C* CLASS A**
----------- -----------
<S> <C> <C>
NET ASSET VALUE, BEGINNING OF PERIOD ..................... $ 10.00 9.43
----------- -----------

Income from investment operations:

Net investment loss ............................ (0.05) (#) (0.00)(#)
Net realized and unrealized gain on investments 0.59 0.44
----------- -----------
Total from investment operations ............. 0.54 0.44
----------- -----------

Less distributions from:

Net realized gains ............................. (1.74) (1.03)
----------- -----------

NET ASSET VALUE, END OF PERIOD ........................... $ 8.80 $ 8.84
=========== ===========

TOTAL RETURN ............................................. 5.54%(2) 4.55%(2,+)

RATIOS/SUPPLEMENTAL DATA

Net assets, end of period (in 000s) ............... $ 116,051 $ 15,490
Ratio of expenses to average net assets:
Before expense reimbursement ................. 3.20% 2.45%
After expense reimbursement .................. 3.00% 2.25%
Ratio of net investment loss to average net assets:

Before expense reimbursement ................. (1.82%)(1) (1.07%)(1)
After expense reimbursement .................. (1.62%)(1) (0.87%)(1)

Portfolio turnover rate ........................... 218.66% 218.66%
</TABLE>

* Class C commenced operations on May 3, 1999.
** Class A commenced operations on October 25, 1999.

(1) Annualized.
(2) Not Annualized.

(#) Per share numbers have been calculated using the monthly average share
method, which more appropriately represents the per share data for the
period.

(+) Total return calculation does not reflect sales load.

25
<PAGE> 27
FOR MORE INFORMATION

SHAREHOLDER REPORTS:

Additional information about each Fund's investments will be
available in the Funds' annual and semi-annual reports to
shareholders. In the annual report, a discussion of the
market conditions and investment strategies that
significantly affected the Fund's performance during its
last fiscal year will be included.

STATEMENT OF ADDITIONAL INFORMATION (SAI):

The SAI contains additional information about each of the
Funds. It is incorporated by reference into this prospectus.

To request a free copy of the current annual report,
semi-annual report or SAI, or to request other information
about the Funds, please write to the address below or call
our toll-free number:

Kelmoore Investment Company, Inc.
2471 E. Bayshore Road, Suite 501
Palo Alto, CA 94303
(877) 328-9456

Information about the Funds (including the SAI) may be
reviewed and copied at the SEC's Public Reference Room in
Washington, DC. Call (202) 942-8090 for information on the
operation of the Public Reference Room. You may also request
copies by mail by sending your request, after paying a
duplicating fee, to the SEC's Public Reference Room,
Washington, DC 20549-0102 or by electronic request at the
following e-mail address: [email protected]. You may also
visit the SEC's Internet site (www.sec.gov) to view reports
and other information about the Funds.

ADMINISTRATOR, TRANSFER AGENT AND COUNSEL
FUND ACCOUNTING AGENT Sutherland Asbill & Brennan LLP
PFPC Inc. 1275 Pennsylvania Avenue, NW
3200 Horizon Drive Washington, D.C. 20004-2415
King of Prussia, PA 19406
(877) 328-9456

CUSTODIAN INDEPENDENT ACCOUNTANTS
The Bank of New York PricewaterhouseCoopers LLP
48 Wall Street 333 Market Street
New York, NY 10286 San Francisco, CA 94105

KELMOORE STRATEGIC TRUST
2471 E. Bayshore Road, Suite 501
Palo Alto, CA 94303
(877) 328-9456

The Trust's SEC file no. is 811-9165

26
<PAGE> 28
STATEMENT OF ADDITIONAL INFORMATION

JUNE 28, 2000

KELMOORE STRATEGIC TRUST

KELMOORE STRATEGY(TM) FUND
KELMOORE STRATEGY(TM) EAGLE FUND

Principal Distributor:
Kelmoore investment Company, Inc.
2471 East Bayshore Road
Suite 501
Palo Alto, CA 94303
Toll-free (877) 328-9456

This Statement of Additional Information is not a Prospectus but should be read
in conjunction with the current Prospectus dated June 28, 2000, as amended or
supplemented from time to time, and is incorporated by reference in its entirety
into the Prospectus. The Funds' audited financial statements included in their
annual report to shareholders are incorporated by reference into this Statement
of Additional Information. A copy of the Funds' Prospectus and annual report can
be obtained without charge by contacting either the dealer through whom you
purchased shares or the Distributor at the telephone number or address above.

<PAGE> 29
TABLE OF CONTENTS

<TABLE>
<CAPTION>
PAGE
----
<S> <C>
The Kelmoore Strategic Trust...................................................

investment Strategies and Related Risks .......................................

investment Restrictions .......................................................

Portfolio Turnover.............................................................

Management of the Fund.........................................................

Trustees and Officers................................................

investment Adviser...................................................

Other Services.................................................................

Purchases and Redemptions .....................................................

Valuation......................................................................

Taxes..........................................................................

Brokerage .....................................................................

Shares of Beneficial Interest..................................................

Calculation of Performance ....................................................

Financial Statements ..........................................................
</TABLE>
<PAGE> 30
THE KELMOORE STRATEGIC TRUST

The Kelmoore Strategic Trust (the "Trust") is a Delaware business trust
organized on December 1, 1998 as an open-end management investment company. The
Trust employs Kelmoore investment Company, Inc. as its investment adviser (the
"Adviser") to its diversified series: the Kelmoore Strategy(TM) Fund (formerly
known as the Kelmoore Strategy(TM) Covered Option Fund), and the Kelmoore
Strategy(TM) Eagle Fund.

INVESTMENT STRATEGIES AND RELATED RISKS

The following describes certain attributes of particular types of securities in
which each of the Funds invests and supplements and should be read in
conjunction with sections of the Prospectus entitled "Summary", "Main Strategy",
"Other Strategies" and "Main Risks."

The writing and purchase of options is a highly specialized activity which
involves investment techniques and risks different from those associated with
ordinary portfolio securities transactions. The successful use of options
depends in part on the ability of the Adviser to predict future price
fluctuations.

Each Fund may write (sell) call and put options on any security in which it may
invest. These options will be listed on securities exchanges. Exchange-traded
options in the United States are issued by the Options Clearing Corporation (the
"OCC"), a clearing organization affiliated with the exchanges on which options
are listed. The OCC, in effect, gives its guarantee to every exchange-traded
option transaction.

Each Fund receives a premium for each option it writes. The premium received
will reflect, among other things, the current market price of the underlying
security, the relationship of the exercise price to the market price, the
historical price volatility of the underlying security, the option period,
supply and demand and interest rates.

All call and put options written by each Fund are covered (or secured). A
written call option is typically covered by maintaining the securities subject
to the option in a segregated account. A written call option may also be covered
by (i) maintaining cash or liquid securities in a segregated account with a
value at least equal to the respective Fund's obligation under the option, (ii)
entering into an offsetting forward commitment and/or (iii) purchasing an
offsetting option or any other option which, by virtue of its exercise price or
otherwise, reduces the respective Fund's net exposure on its written option
position.

Put options written by each Fund will be secured by (i) maintaining cash or
liquid securities in a segregated account with a value at least equal to the
respective Fund's obligation under the option, (ii) entering into an offsetting
forward commitment and/or (iii) purchasing an offsetting option or any other
option which, by virtue of its exercise price or otherwise, reduces the
respective Fund's net exposure on its written option position.

The obligation of an option writer is terminated upon the exercise of the
option, the option's expiration or by effecting a closing purchase transaction.

There is no assurance a liquid secondary market will exist for any particular
exchange-traded option or at any particular time. If a Fund is unable to effect
a closing purchase transaction with respect to options it has written, the
respective Fund will not be able to sell the underlying securities or dispose of
assets held in a segregated account until the options expire or are exercised.

Reasons for the absence of a liquid secondary market include the following: (i)
there may be insufficient trading interest in certain options; (ii) restrictions
may be imposed by an exchange on opening transactions or closing transactions or
both; (iii) trading halts, suspensions or other restrictions may be imposed with
respect to particular classes or series of options; (iv) unusual or unforeseen
circumstances may interrupt normal operations on an exchange; (v) the facilities
of an exchange or the OCC may not at all times be adequate to handle current
trading volume; or (vi) one or more exchanges could, for economic or other
reasons, decide or be compelled at some future date to discontinue the trading
<PAGE> 31
of options (or a particular class or series of options). If trading were
discontinued, the secondary market on that exchange (or in that class or series
of options) would cease to exist. However, outstanding options on that exchange
that had been issued by the OCC as a result of trades on that exchange would
normally continue to be exercisable or expire in accordance with their terms.

There can be no assurance that higher trading activity or order flow or other
unforeseen events might not, at times, render certain of the facilities of the
OCC or various exchanges inadequate. Such events have, in the past, resulted in
the institution by an exchange of special procedures, such as trading rotations,
restrictions on certain types of orders, or trading halts or suspensions, with
respect to one or more options, or may otherwise interfere with the timely
execution of customers' orders.

The writer of an option lacks the ability to control when an option will be
exercised. Although the Funds will generally only write options whose expiration
dates are between one and four months from the date the option is written, it is
not possible for the Funds to time the receipt of exercise notices. This
prevents the Funds from receiving income on a scheduled basis and may inhibit
the Funds from fully utilizing other investment opportunities.

The Options Clearing Corporation (the "OCC") sets option expiration dates and
exercise prices, which depend on the range of prices in the underlying stock's
recent trading history. Option periods usually range from 30 days to 120 days
but can have longer durations. Written options have predetermined exercise
prices set below, equal to or above the current market price of the underlying
stock. The premium a Fund receives for writing an option will reflect, among
other things, the current market price of the underlying security, the
relationship of the exercise price to the market price, the historical price
volatility of the underlying security, the option period, supply and demand and
interest rates. Each Fund's overall return will, in part, depend on the ability
of the Adviser to accurately predict price fluctuations in underlying securities
in addition to the effectiveness of the Adviser's strategy in terms of stock
selection. To assist the Adviser in selecting which options to write, the
Adviser utilizes an in-house computer program called "OPTRACKER(TM)".

The size of the premiums each Fund receives for writing options may be adversely
affected as new or existing institutions, including other investment companies,
engage in or increase their option writing activities.

Each securities exchange on which options trade has established limitations
governing the maximum number of puts and calls in each class (whether or not
covered or secured) which may be written by a single investor, or group of
investors, acting in concert (regardless of whether the options are written on
the same or different exchanges or are held or written in one or more accounts
or through one or more brokers). It is possible that the Funds and other clients
advised by the Adviser may constitute such a group. These position limits may
limit the number of options the Funds may write on a particular security. An
exchange may order the liquidation of positions found to be above such limits or
impose other sanctions.

Other Strategies

Each Fund may invest in the securities of other investment companies, including
money market mutual funds. In making such investments, the Fund seeks to acquire
interests in portfolios of securities that are more diversified or with more
specialized characteristics than in those that could be efficiently acquired
directly by the Fund. By investing in shares of other investment companies, the
Fund indirectly pays a portion of the operating expenses and brokerage costs of
such companies as well as its own operating expenses.

Repurchase Agreements. The Fund may enter into repurchase agreements with
approved banks and broker-dealers. In a repurchase agreement, the Fund purchases
securities with the understanding they will be repurchased by the seller at a
set price on a set date. This allows the Fund to keep its assets at work but
retain flexibility to pursue longer-term investments upon repurchase.

Repurchase agreements involve risks. For example, if a seller defaults, the Fund
will suffer a loss if the proceeds from the sale of the collateral is below the
repurchase price. If the seller becomes bankrupt, the Fund may be delayed or
incur additional costs in selling the collateral. To help minimize risk,
collateral must be held with the Fund's custodian at least equal

2
<PAGE> 32
to the repurchase price, including accrued interest.

Illiquid Securities. Each Fund may invest up to 15% of its net assets in
illiquid securities. Illiquid securities will generally include securities that
cannot readily be sold within seven days in the ordinary course of business at
approximately the price at which the respective Fund has valued the securities
(e.g., when trading in the security is suspended or repurchase agreements not
terminable within seven days).

Temporary Investments. To maintain cash for redemptions and distributions and
for temporary defensive purposes, each Fund may invest in money market mutual
funds and in investment grade short-term fixed income securities, including
short-term U.S. government securities, negotiable certificates of deposit,
commercial paper, banker's acceptances, and repurchase agreements.

Other Investments. Subject to prior disclosure to shareholders, the Trustees
may, in the future, authorize each of the Funds to invest in securities other
than those listed here and in the Prospectus, provided that such investment
would be consistent with the respective Fund's investment objective and that it
would not violate any fundamental investment policies or restrictions applicable
to the Fund.

INVESTMENT RESTRICTIONS

Fundamental Investment Restrictions. For each Fund the following investment
restrictions are considered fundamental, which means they may be changed only by
approval of the holders of a majority of the respective Fund's outstanding
shares, defined in the 1940 Act as the lesser of: (1) 67% or more of the Fund's
outstanding shares present at a meeting, if the holders of more than 50% of the
Fund's outstanding shares are present in person or represented by proxy, or (2)
more than 50% of such Fund's outstanding shares.

1. A Fund may not purchase securities that would cause more than 25% of
the value of its total assets at the time of such purchase to be
invested in the securities of one or more issuers conducting their
principal activities in the same industry. For purposes of this
limitation, U.S. government securities are not considered part of any
industry.

2. A Fund may not borrow money or issue senior securities, except to the
extent provided by the 1940 Act.

3. A Fund may not make loans to other persons, except loans of securities
not exceeding one-third of the Fund's total assets. For purposes of
this limitation, investments in debt obligations and transactions in
repurchase agreements shall not be treated as loans.

4. A Fund may not purchase, sell or invest in real estate, real estate
investment trust securities, real estate limited partnership interests,
or oil, gas or other mineral leases or exploration or development
programs, but a Fund may purchase and sell securities that are secured
by real estate and may purchase and sell securities issued by companies
that invest or deal in real estate.

5. A Fund may not invest in commodities or commodity futures contracts.

6. A Fund may not underwrite securities of other issuers, except insofar
as it may be deemed an underwriter under the Securities Act of 1933
when selling portfolio securities.

7. A Fund, with respect to 75% of its total assets, will not invest more
than 5% of its total assets in the securities of any single issuer, or
own more than 10% of the outstanding voting securities of any one
issuer, in each case other than (1) securities issued or guaranteed by
the U.S. Government, its agencies or instrumentalities or (2)
securities of other investment companies.

Non-Fundamental Investment Restrictions. For each Fund the following
restrictions are imposed by management of the Funds and may be modified by the
Trustees without shareholder approval.

1. A Fund may not borrow money, except that a Fund may borrow money from
banks for temporary or emergency purposes only, including the meeting
of redemption requests which might require the untimely disposition of
securities, and may use collateral for such borrowing. Such temporary
borrowing may not exceed 10% of the value of the total assets of a Fund
at the time of borrowing. In the event asset coverage for such
borrowings falls below 300%, a Fund will reduce, within three days, the
amount of its borrowing in order to provide for 300% asset

3
<PAGE> 33
coverage.

2. A Fund may not invest more than 15% of its net assets in illiquid
securities. A security is illiquid if it cannot be disposed of in seven
days at a price approximately equal to the price at which a Fund is
valuing the security. Repurchase agreements with deemed maturities in
excess of seven days are subject to this 15% limit.

3. A Fund may not invest in a company for the purpose of exercising
control or management of the company.

4. A Fund may not purchase securities on margin, except that a Fund may
obtain such short-term credits as are necessary for the clearance of
transactions and provided that margin payments in connection with
options will not constitute purchasing securities on margin.

5. A Fund may not invest its assets in securities of any other investment
company, except as permitted by the 1940 Act. Under the 1940 Act, a
Fund may acquire securities of other investment companies if,
immediately after such acquisition, the Fund does not own in the
aggregate (1) more than 3% of the total outstanding voting stock of
such other investment company, (2) more than 5% of the value of the
Fund's total assets of any one investment company, or (3) securities
issued by such other investment company and all other investment
companies having an aggregate value in excess of 10% of the value of
the Fund's total assets.

Shareholders should understand that all investments involve risks and there can
be no guarantee against loss resulting from an investment in a Fund. Unless
otherwise indicated, all percentage limitations governing the investments of the
Fund apply only at the time of the investment.

PORTFOLIO TURNOVER

The portfolio turnover rate for each Fund is calculated by dividing the lesser
of the 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 options written by the Fund which
expire in less than one year. A 100% annual turnover rate would occur if all of
the Fund's securities were replaced one time during a one-year period.

Under certain market conditions, the Funds' portfolio turnover rate is likely to
be higher than that of other mutual funds. This would be the case, for example,
if the Fund writes a substantial number of call options and the market prices of
the underlying securities appreciates, causing the options to be exercised. The
Funds may also engage in short-term trading (purchase and sale of a security in
a relatively brief period of time) in response to stock market conditions or
changes in economic trends and developments. It is anticipated that the
portfolio turnover for The Kelmoore Strategy(TM) Eagle Fund will not exceed
300% for the initial year. For the period since inception to February 29, 2000,
the portfolio turnover for The Kelmoore Strategy(TM) Fund, on an annualized
basis, was 218.66%.

High rates of portfolio turnover (100% or more) entail certain costs, including
increased taxable income for the Funds' shareholders. Also, the higher the
turnover, the higher the overall brokerage commissions, dealer mark-ups and
mark-downs, and other transaction costs incurred. The Adviser takes these costs
into account, since they affect the Fund's overall investment performance and
reduce shareholders' return.

MANAGEMENT OF THE FUNDS

Trustees and Officers. The operations of the Funds are conducted under the
direction of the Trustees. The Trustees establish the Funds' policies and
oversee the management of the Funds. The Trustees meet regularly to review the
activities of the officers, who are responsible for day-to-day operations of the
Funds.

The Trustees and officers of the Funds and their principal occupations during
the past five years are set forth below.

<TABLE>
<CAPTION>
POSITION WITH
NAME, ADDRESS AND AGE THE FUND PRINCIPAL OCCUPATION DURING THE PAST 5 YEARS
--------------------- -------- --------------------------------------------
<S> <C> <C>
*Matthew Kelmon, Age 30 President, Chief Vice President of Trading for the Adviser from 1994
2471 East Bayshore Road, Suite 501 Executive Officer and to present. Formerly, an Account Executive with
</TABLE>

4
<PAGE> 34
<TABLE>
<S> <C> <C>
Palo Alto, CA 94303 Trustee M.L. Stern & Co., Inc., a bond dealer, from
1993 to 1994.

*Richard D. Stanley, Age 66 Chairman and Trustee President of Naranja, Inc., an investment and
2471 East Bayshore Road, Suite 501 consulting corporation, from 1994 to present.
Palo Alto, CA 94303

*William H. Barnes, Age 66 Trustee President, Barnes, Stork & Associates, a
932-A Santa Cruz Avenue registered investment adviser, from 1975 to
Menlo Park, CA 94025 present. President and Director, Trinity Guardian
Foundation, a firm which manages assets
in support of local charities, from 1996 to
present. Director, Church of the Pioneers
Foundation, from 1985 to present.

Kenneth D. Treece, Age 54 Trustee Chief Executive Officer of SBMC Corp., a precision
2960 Copper Road sheet metal producer, from 1996 to present. From
Santa Clara, CA 95051 1988 to 1997, Chief Executive Officer of The
Gluers, a trade bindery.

Ignatius J. Panzica, Age 55 Trustee Self-employed; formerly, President and Chief
16280 Oak Glen Avenue Executive Officer of Custom Chrome, Inc., a
Morgan Hill, CA 95037 supplier of motorcar parts and accessories, from
1969 to 1997.

Stephen W. Player, Age 57 Trustee Attorney, Law Offices of Stephen W. Player, from
2600 El Camino Real, Suite 410 1994 to present.
Palo Alto, CA 94306

Lisa Ann McCarthy, Age 39 Trustee President, Crossing Main, a retail women's
5 Main Street clothing company, from 1992 to present.
Hingham, MA 02043

Jeffrey Ira, Age 44 Trustee Certified Public Accountant and Partner with C.G.
647 Veterans Boulevard Uhlonberg & Company, from 1984 to present. City
Redwood City, CA 94063 Councilman, Redwood City, CA from 1997 to present.

Tamara Beth Heiman, Age 29 Secretary and Executive Vice President and Director of Marketing
2471 East Bayshore Road, Suite 501 Treasurer of Kelmoore investment Company since March of
Palo Alto, CA 94303 1999. Vice President, investment Advisory
Services for Josephthal and Co., Inc, a NYSE firm,
from 1997 to 1999. Vice President, investment
Advisory Services, for First Allied Securities, a
national independent broker dealer from 1994 to
1999.
</TABLE>

*An asterisk indicates a Trustee who may be deemed to be an "interested person"
of the Trust (as that term is defined in the 1940 Act). Mr. Kelmon is considered
an "interested person" of the Trust due to his affiliation with the Adviser.
Messrs. Stanley and Barnes are considered "interested persons" of the Trust
because they own shares of the Adviser.

Members of the Audit Committee of the Trustees are Messrs. Ira, Panzica and
Treece. The Audit Committee members make recommendations to the Trustees
regarding the selection of auditors and confer with the auditors regarding the
scope and results of the audit.

Members of the Nominating Committee of the Trustees are Ms. McCarthy and Messrs.
Barnes and Player. The Nominating Committee of the Trustees is responsible for
the selection and nomination of disinterested Trustees.

Members of the Valuation Committee of the Trustees are Messrs. Kelmon, Stanley
and Treece. The Valuation Committee of the Trustees is responsible for fair
value pricing of the Fund's portfolio securities.

Each Trustee who is not an affiliated person of the Adviser, as defined in the
1940 Act, receives an annual retainer of $4,000 per year (payable in equal
installments at the end of each quarter), and reimbursement for expenses. The

5
<PAGE> 35
following table sets forth the compensation paid by the Trust to the
non-interested Trustees during the period since inception to February 29, 2000.

<TABLE>
<CAPTION>
AGGREGATE COMPENSATION TOTAL COMPENSATION FROM
NAME OF TRUSTEE FROM THE TRUST THE TRUST PAID TO TRUSTEE
--------------- ---------------------- -------------------------
<S> <C> <C>
Kenneth D. Treece $2,000 $2,000
Ignatius J. Panzica $2,000 $2,000
Stephen W. Player $2,000 $2,000
Lisa Ann McCarthy $2,000 $2,000
Jeffrey Ira $2,000 $2,000
</TABLE>

Trustees who are "interested persons" are not compensated by the Trust for their
services. The Trust does not have any retirement plan for the Trustees. As of
June 1, 2000 the Trustees and officers owned less than 1% of the shares of The
Kelmoore Strategy(TM) Fund while Kelmoore investment Company owned less than
1.47% of the shares of The Kelmoore Strategy(TM) Fund.

investment Adviser. The Trust has employed Kelmoore investment Company, Inc. as
its investment adviser. As of June 1, 2000, the Adviser managed approximately
$400 million of assets, consisting primarily assets of The Kelmoore Strategy(TM)
Fund and of discretionary brokerage accounts. Ralph M. Kelmon, Jr. is the Chief
Executive Officer and Chairman of the Board of Kelmoore investment Company, Inc.
Through his ownership and voting control of more than 25% of the outstanding
shares of the Adviser, Mr. Kelmon, is considered to control the Adviser. Mr.
Kelmon is the father of Matthew Kelmon, the President and primary portfolio
manager for the Funds.

In addition to managing the Funds' investments consistent with their investment
objectives, policies and limitations, the Adviser makes recommendations with
respect to other aspects and affairs of the Fund. The Adviser also furnishes the
Funds with certain administrative services, office space and equipment. All
other expenses incurred in the operation of the Funds are borne by the Funds.
Under the investment Advisory Agreement, the Adviser will not be liable for any
error of judgment or mistake of fact or law or for any loss by the Funds in
connection with the performance of the investment Advisory Agreement, except a
loss from a breach of a fiduciary duty with respect to the receipt of
compensation for services or a loss resulting from willful misfeasance, bad
faith or gross negligence on its part in the performance of its duties or from
reckless disregard of its obligations or duties under the investment Advisory
Agreement.

For providing investment advisory and other services and assuming certain Fund
expenses, each Fund pays the Adviser a monthly fee at the annual rate of 1.00%
of the value of the Fund's average daily net assets. For the Kelmoore
Strategy(TM) Eagle Fund's initial fiscal year ended February 29, 2001, the
Adviser has voluntarily agreed to waive its fees and reimburse expenses so that
the Fund's annual operating expenses will not exceed 2.25% for Class A shares
and 3.00% for Class C shares. The Adviser may terminate this waiver at any time.
Any waiver or reimbursement by the Adviser is subject to reimbursement by the
Fund within the following three years, to the extent such reimbursement by the
Fund would not cause total operating expenses to exceed any current expense
limitation. Additionally, the Adviser has agreed to reimburse all expenses
incurred in connection with the organization of the Funds, subject to recoupment
described above. From May 3, 1999 through February 29, 2000, the Kelmoore
Strategy(TM) Fund has paid the Adviser $491,388 in advisory fees and has
reimbursed the Adviser $164,136 in expenses incurred in connection with the
organization of the Fund.

As part of the Trust's organization, the Kelmoore Strategy(TM) Fund issued
10,000 shares of beneficial interest at $10.00 per share in a private placement
to the Adviser.

The investment Advisory Agreement for the Kelmoore Strategy(TM) Fund was
approved by the Trustees, including a majority of the Trustees who are not
"interested persons" of the Trust, on March 22, 1999. The investment Advisory
Agreement for the Kelmoore Strategy(TM) Eagle Fund was approved by the Trustees,
including a majority of the Trustees who are not "interested persons" of the
Trust, on May 8, 2000. The investment Advisory Agreement, as

6
<PAGE> 36
it applies to each Fund, is for an initial term of two years and continues in
effect from year to year thereafter if such continuance is approved annually by
the Trustees or by a vote of a majority of the outstanding shares of the
respective Fund, and, in either case, by the vote of a majority of the Trustees
who are not parties to the investment Advisory Agreement or "interested persons"
of any party to the investment Advisory Agreement, voting in person at a meeting
called for the purpose of voting on such approval. The investment Advisory
Agreement may be terminated at any time without penalty by the Trustees, by vote
of a majority of the outstanding shares of the Funds or by the Adviser, upon
sixty days' written notice. The investment Advisory Agreement terminates
automatically if assigned.

Code of Ethics. To mitigate the possibility that the Funds will be adversely
affected by personal trading of employees, the Funds and the Adviser have
adopted Codes of Ethics under Rule 17j-1 of the 1940 Act. These Codes contain
policies restricting securities trading in personal trading accounts of Trustees
and others who normally come into possession of information on portfolio
transactions.

Expenses. Each of the Funds pay all expenses not assumed by the Adviser,
including, but not limited to: Trustees' expenses, audit fees, legal fees,
interest expenses, brokerage commissions, fees for registration and notification
of shares for sale with the SEC and various state securities commissions, taxes,
insurance premiums, fees of the Funds' administrator, transfer agent, fund
accounting agent or other service providers, and costs of obtaining quotations
for portfolio securities and the pricing of Fund shares.

Name. The word "Kelmoore" is used by the Trust with the Adviser's consent and
the Trust has a non-exclusive license to use the name "Kelmoore Strategy" and
the word "Kelmoore" in the name of any Fund. If the Adviser ceases to be the
investment adviser of the Funds, the Adviser may require the Trust and the Funds
to delete the word "Kelmoore" from their names and cease to otherwise use the
word "Kelmoore."

OTHER SERVICES

The Distributor. Kelmoore investment Company, Inc., 2471 East Bayshore Road,
Suite 501, Palo Alto, CA 94303 (the "Distributor") also acts as the primary and
exclusive distributor of the Funds' shares, which are offered on a continuous
basis. The Distributor serves as the principal distributor of the Funds' shares
pursuant to a Distribution Agreement with each of the Funds. The Distribution
Agreement is renewable annually provided its renewal is approved by a majority
of the Trustees who are not parties to the Distribution Agreement or interested
persons of parties to the Distribution Agreement and who have no direct or
indirect financial interest in the Distribution Agreement or any related
distribution plan. The Distribution Agreement may be terminated at any time,
without the payment of a penalty, on sixty days' written notice by the
Distributor, by the non-interested Trustees or by the vote of the holders of the
lesser of: (a) 67% of the Trust's shares present at a meeting if the holders of
more than 50% of the outstanding shares are present in person or by proxy, or
(b) more than 50% of the outstanding shares of the Trust. The Distribution
Agreement automatically terminates if it is assigned. The Distributor does not
receive any fee or other compensation under the Distribution Agreement other
than fees it receives in accordance with the Distribution Plan described below.
For the fiscal year ended February 29, 2000, such fees totaled $474,425, all of
which were paid to the Distributor for the services described above.

Shares of the Funds may also be sold by selected broker-dealers which have
entered into selling agency agreements with the Distributor. The Distributor
accepts orders for the purchase of the shares of the Funds which are continually
offered at net asset value next determined. The Distributor may pay extra
compensation to financial services firms selling large amounts of Fund shares.
This compensation is calculated as a percentage of Fund shares sold by the firm.

Distribution Plan. The Trust has adopted a distribution plan in accordance with
Rule 12b-1 under the 1940 Act for the Class A shares of the Funds (the "Class A
Plan") and the Class C shares of the Funds (the "Class C Plan", collectively,
the "Plans"). The Plans permit the Fund to pay the Distributor for its services
related to sales and distribution of shares and provision of ongoing services to
Fund shareholders.

Under the Class A Plan, each of the Funds shall reimburse the Distributor for
payments to dealers or others, a monthly fee not to exceed 0.25% per annum of
the average daily net assets of the respective Fund.

7
<PAGE> 37
Under the Class C Plan, (a) each of the Funds shall reimburse the Distributor a
monthly fee not to exceed 0.75% per annum of the average daily net assets of the
respective Fund; and (b) in addition to the amounts described in (a) above, each
Fund shall reimburse the Distributor for payments to dealers or others, a
monthly fee not to exceed 0.25% per annum of the average daily net assets of the
respective Fund, as a service fee.

The fees payable under the Class A Plan and section (a) of the Class C Plan
shall be used to reimburse the Distributor for any expenses primarily intended
to result in the sale of each Fund's shares, including, but not limited to:
payments the Distributor makes to broker-dealers or other financial institutions
and industry professionals for providing distribution assistance, payments made
for the preparation, printing and distribution of advertisements and sales
literature, and payments made for printing and distributing prospectuses and
shareholder reports to other than existing shareholders of the Funds.

The fees payable under section (b) of the Class C Plan, shall be used to
reimburse the Distributor for any expenses for personal service and/or the
maintenance of shareholder accounts, including, but not limited to: payments
made to broker-dealers of other financial institutions and industry
professionals for providing administrative support services to the holders of
the Funds' shares.

All such expenses covered by the Plans shall be deemed incurred whether paid
directly by the Distributor or by a third party to the extent reimbursed
therefor by the Distributor.

The Distributor provides the Trustees for their review, on a quarterly basis, a
written report of the amounts expended under the Plans.

The Plans are subject to annual approval by the Trustees. The Plans are
terminable at any time by vote of a majority of the non-interested Trustees or
by vote of a majority of the outstanding shares of each of the Funds. Pursuant
to the Plans, a new Trustee who is not an interested person (as defined in the
1940 Act) must be nominated by existing Trustees who are not interested persons.
Any change in the Plans that would materially increase the cost of a Plan to the
Funds require shareholder approval; otherwise, the Plans may be amended in a
material way by Trustees and the non-interested Trustees at a meeting called for
the purpose of voting on any amendment.

Although there is no obligation for the Funds to pay expenses incurred by the
Distributor in excess of payments made to the Distributor under the Plans, if a
Plan is terminated, the Trustees will consider how to treat such expenses. All
distribution expenses in excess of the fee rates provided for in the Plans may
be carried forward and resubmitted in a subsequent fiscal year provided that (i)
distribution expenses cannot be carried forward for more than three years
following initial submission; and (ii) the non-interested Trustees determine at
the time of initial submission that the distribution expenses are appropriate to
be reimbursed. Distribution expenses will be paid on a first-in, first-out
basis.

Because amounts paid pursuant to the Plans are paid to the Distributor, the
Distributor and its officers, directors and employees may be deemed to have a
financial interest in the operation of the Plans. None of the non-interested
Trustees has a financial interest in the operation of either Plan.

The Plans were adopted because of their anticipated benefit to the Fund. These
anticipated benefits include: increased promotion and distribution of the Fund's
shares, an enhancement in the Fund's ability to maintain accounts and improve
asset retention, increased stability of net assets for the Fund and greater
flexibility in achieving investment objectives.

For the fiscal year ended February 29, 2000, the Kelmoore Strategic Trust -
Class A shares paid fees under its Rule 12b-1 Plan consisting of payments of
approximately: $1,311 for compensation to brokers and $34,652 for Advertising.
For the fiscal year ended February 29, 2000, the Kelmoore Strategic Trust -
Class C shares paid fees under its Rule 12b-1 Plan consisting of payments of
approximately: $544,082 for compensation to brokers, $27,495 for printing and
mailing of prospectuses, $335,758 for advertising and $68,601 for compensation
for sales personnel.

Transfer Agent. PFPC Inc. ("PFPC"), located at 3200 Horizon Drive, King of
Prussia, PA 19406, provides transfer

8
<PAGE> 38

agency and dividend disbursing agent services for the Trust. As part of these
services, PFPC maintains records pertaining to the sale and redemption of Fund
shares and will distribute the Funds' cash dividends to shareholders. For the
period ended February 29, 2000, the Kelmoore Strategy(TM) Fund paid $84,099 to
PFPC for its services as Transfer Agent.

Administrative Services. PFPC also serves as the administrator for the Trust.
The services include the day-to-day administration of matters necessary to the
Funds' operations, maintenance of its records and books, preparation of reports,
and compliance monitoring of its activities. For the period ended February 29,
2000, the Kelmoore Strategy(TM) Fund paid $79,136 to PFPC for its services as
Administrator.

Accounting Services. PFPC also serves as the accounting agent for the Fund and
maintains the accounting books and records of the Fund, calculates the Funds'
net asset value in accordance with the provisions of the Fund's current
Prospectus and prepares for the Fund approval and use various government
reports, tax returns, and proxy materials. For the period ended February 29,
2000, the Kelmoore Strategy(TM) Fund paid $34,400 to PFPC for its services as
Accounting Agent.

Custodian and Custody Administrator. The Bank of New York, 48 Wall Street, New
York, New York 10286, is custodian of the Funds' assets pursuant to a custodian
agreement. Under the custodian agreement, The Bank of New York (i) maintains a
separate account or accounts in the name of the Funds (ii) holds and transfers
portfolio securities on account of the Funds, (iii) accepts receipts and make
disbursements of money on behalf of the Funds, (iv) collects and receives all
income and other payments and distributions on account of the Funds' securities
and (v) makes periodic reports to the Trustees concerning the Funds' operations.
PFPC will act as custody administrator and has agreed to pay the fees and
expenses of the custodian.

Independent Accountants. The accounting firm of PricewaterhouseCoopers LLP, 333
Market Street, San Francisco, CA 94105, has been designated as independent
accountants for the Trust. PricewaterhouseCoopers LLP performs annual audits of
the Funds and is periodically called upon to provide accounting and tax advice.

Legal Counsel. Sutherland, Asbill & Brennan LLP, 1275 Pennsylvania Ave, NW,
Washington, D.C. 20004-2415 serves as legal counsel for the Trust and the
Adviser and Distributor.

Year 2000. The Trust did not experience any significant malfunctions or errors
in the computer systems used by its service providers when the date changed from
1999 to 2000. Based on operations since January 1 2000, the Trust does not
expect any significant impact to its on-going business as a result of the "Year
2000 issue." However, it is possible that the full impact of the date change,
which was of concern due to computer programs that use two digits instead of
four digits to define years, has not been fully recognized. For example, it is
possible that Year 2000 or similar issues, such as leap year-related problems,
may affect the computer systems used by the Trust's service providers at month,
quarter or year end. The Trust believes that any such problems are likely to be
minor and correctable.

PURCHASES AND REDEMPTIONS

Redemptions in Kind. In accordance with its election pursuant to Rule 18f-1
under the 1940 Act, the Funds may limit redemptions in cash with respect to each
shareholder during any ninety-day period to the lesser of (i) $250,000 or (ii)
1% of the net asset value of the Fund at the beginning of such period. In the
case of requests for redemptions in excess of such amount, the Trustees reserve
the right to make payments in whole or in part in securities or other assets in
case of an emergency, or any time a cash distribution would impair the liquidity
of the Funds to the detriment of existing shareholders. If the recipient sold
such securities, a brokerage charge might be incurred.

Telephone Instructions. Neither the Funds nor PFPC will be liable for any loss
or expense in acting upon telephone instructions that are reasonably believed to
be genuine. In attempting to confirm that telephone instructions are genuine,
PFPC will use procedures that are considered reasonable. Shareholders assume the
risk to the full extent of their accounts that telephone requests may be
unauthorized. All telephone conversations with PFPC will be recorded.

9
<PAGE> 39
Systematic Withdrawal Plan. Shareholders who own $5,000 or more of a Fund's
shares, valued at the Fund's current net asset value, and who wish to receive
periodic payments from their account(s) may establish a Systematic Withdrawal
Plan by completing an application provided for this purpose. Participants in
this plan will receive monthly, quarterly, semi-annual or annual checks in the
amount designated. The minimum withdrawal amount is $100. This amount may be
changed at any time. Dividends and capital gains distributions on a Fund's share
in the Systematic Withdrawal Plan are automatically reinvested in additional
shares at net asset value. Payments are made from proceeds derived from the
redemption of Fund shares owned by the participant. The redemption of shares
will result in a gain or loss that is reportable by the participant on its
income tax return, if the participant is a taxable entity.

Redemptions required for payments may reduce or use up the participant's
investment, depending upon the size and frequency of withdrawal payments and
market fluctuations. Accordingly, Systematic Withdrawal Plan payments cannot be
considered as yield or income on the investment.

PFPC, as agent for the participant, may charge for services rendered to
participants. No such charge is currently assessed, but such a charge may be
instituted by PFPC upon written notice to participants. The plan may be
terminated at any time without penalty upon written notice by the participants,
the Funds, or PFPC.

VALUATION

The Funds' securities are valued based on market value or, where market
quotations are not readily available, based on fair value as determined in good
faith by or at the direction of the Trustees. Equity securities traded on an
exchange or on the NASDAQ National Market System (the "NASDAQ"), will be valued
at the last sale price on the exchange or system in which they are principally
traded on the valuation date. If there is no sale on the valuation date,
securities traded principally on a U.S. exchange or the NASDAQ will be valued at
the mean between the closing bid and asked prices or on a foreign exchange at
the most recent closing price. Equity securities which are traded in the
over-the-counter market only, but which are not included in the NASDAQ, will be
valued at the last sale price on the valuation day or, if no sale occurs, at the
mean between the last bid and asked prices. Exchange traded options will be
valued at the last sale price in the market where such options are principally
traded or, if no sale occurs, at the mean between the last bid and asked price.
Debt securities with a remaining maturity of sixty days or more will be valued
using a pricing service if such prices are believed to accurately represent
market value. Debt securities and money market instruments with a remaining
maturity of less than sixty days will be valued at amortized cost. Valuations
may be obtained from independent pricing services approved by the Trustees.

When a Fund writes a put or call option, it records the premium received as an
asset and equivalent liability, and thereafter adjusts the liability to the
market value of the option determined in accordance with the preceding
paragraph.

TAXES

Below is a discussion of certain U.S. federal income tax issues concerning the
Funds and the purchase, ownership, and disposition of Fund shares. This
discussion does not purport to deal with all aspects of federal income taxation
relevant to shareholders in light of their particular circumstances. This
discussion is based upon the Internal Revenue Code of 1986, as amended (the
"Code"), the regulations promulgated thereunder, and judicial and administrative
ruling authorities, all of which are subject to change, which change may be
retroactive. Prospective investors should consult their own tax advisers with
regard to the federal tax consequences of the purchase, ownership, or
disposition of Fund shares, as well as the tax consequences arising under the
laws of any state, foreign country, or other taxing jurisdiction.

Tax Status of the Fund. Each of the Funds intend to be taxed as a regulated
investment company under Subchapter M of the Code. Accordingly, each Fund must,
among other things, (a) derive in each taxable year at least 90% of its gross
income from dividends, interest, payments with respect to certain securities
loans, and gains from the sale or other disposition of stock, securities or
foreign currencies, or other income derived with respect to its business of
investing in such stock, securities or currencies; and (b) diversify its
holdings so that, at the end of each fiscal quarter, (i) at least 50% of the
value of the Fund's total assets is represented by cash and cash items, U.S.
Government securities, the securities of other regulated investment companies
and other securities, with such other securities limited, in respect of any one
issuer, to an amount not greater than 5% of the value of the Fund's total assets
and 10% of the outstanding voting securities of such issuer, and (ii) not more
than 25% of the value of its total assets is invested in the securities of any
one issuer (other than U.S. Government securities and the securities of other
regulated investment companies).

10
<PAGE> 40

If the Funds fail to qualify as a regulated investment company, the Funds will
be subject to U.S. federal income tax and distributions to its shareholders will
be taxed as ordinary dividend income to the extent of the Fund's earnings and
profits.

As a regulated investment company, each Fund generally is not subject to U.S.
federal income tax on income and gains that it distributes to shareholders, if
at least 90% of the Fund's investment company taxable income (which includes,
among other items, dividends, interest and the excess of any net short-term
capital gains over net long-term capital losses) for the taxable year is
distributed to shareholders. The Funds intend to distribute substantially all of
such income.

Amounts not distributed in accordance with certain requirement are subject to a
nondeductible 4% excise tax at the Fund level. To avoid the tax, each Fund must
distribute during each calendar year an amount equal to the sum of (1) at least
98% of its ordinary income (not taking into account any capital gains or losses)
for the calendar year, (2) at least 98% of its capital gains in excess of its
capital losses (adjusted for certain ordinary losses) for a one-year period
generally ending on October 31 of the calendar year, and (3) all ordinary income
and capital gains for previous years that were not distributed during such
years. The Fund intends to avoid application of the excise tax.

A distribution will be treated as paid on December 31 of a calendar year if it
is declared by the Fund in October, November or December of that year with a
record date in such a month and paid by the Fund during January of the following
year. Such distributions will be taxable to shareholders in the calendar year in
which the distributions are declared, rather than the calendar year in which the
distributions are received.

Options. When a Fund writes an option, there is no taxable event and an amount
equal to the premium received is recorded by the Fund as an asset and an
equivalent liability. The liability is thereafter valued to reflect the current
value of the option. If the option is not exercised and expires, or if the Fund
effects a closing purchase transaction, the Fund will realize a gain (or a loss
in the case of a closing purchase transaction where the cost exceeds the
original premium received) and the liability related to the option will be
extinguished. Any such gain or loss is a short-term capital gain or loss for
federal income tax purposes, except that any loss realized when the Fund closes
certain covered call options whose underlying security is trading above the
exercise price of the option will be long-term capital loss if the hypothetical
sale of the underlying security on the date of such transaction would have given
rise to a long-term capital gain. If a call option which the Fund has written on
any equity security is exercised, the Fund realizes a capital gain or loss
(long-term or short-term, depending on the holding period of the underlying
security) from the sale of the underlying security and the proceeds from such
sale are increased by the premium originally received. If a put option which the
Fund has written on an equity security is exercised, the amount of the premium
originally received will reduce the cost of the security which the Fund
purchases upon exercise of the option.

Distributions. Distributions of investment company taxable income are taxable
to a U.S. shareholder as ordinary income, whether paid in cash or shares.
Dividends paid by the Funds to a corporate shareholder, to the extent such
dividends are attributable to dividends received by the Funds from U.S.
corporations, may, subject to limitation, be eligible for the dividends received
deduction. However, the alternative minimum tax applicable to corporations may
reduce the value of the dividends received deduction.

The excess of net long-term capital gains over the short-term capital losses
realized and distributed by the Funds, whether paid in cash or reinvested in
Fund shares, will generally be taxable to shareholders as long-term gain,
regardless of how long a shareholder has held Fund shares. Net capital gains
from assets held for one year or less will be taxed as ordinary income.

Shareholders will be notified annually as to the U.S. federal tax status of
distributions, and shareholders receiving distributions in the form of newly
issued shares will receive a report as to the net asset value of the shares
received.

If the net asset value of shares is reduced below a shareholder's cost as a
result of a distribution by the Funds, such distribution generally will be
taxable even though it represents a return of invested capital. Investors should
be careful to consider the tax implications of buying shares of the Funds just
prior to a distribution. The price of shares purchased at this time will include
the amount of the forthcoming distribution, but the distribution will generally
be taxable to the shareholder.

Dispositions. Upon a redemption or sale of shares of the Funds, a shareholder
will realize a taxable gain or loss depending upon his or her basis in the
shares. A gain or loss will be treated as capital gain or loss if the shares are
capital assets in the shareholder's hands, and the rate of tax will depend upon
the shareholder's holding period for the shares. Any loss realized on a
redemption, sale or exchange will be disallowed to the extent the shares
disposed of are replaced (including through reinvestment of dividends) within a
period of 61 days, beginning 30 days before and ending

11
<PAGE> 41
30 days after the shares are disposed of. In such a case the basis of the shares
acquired will be adjusted to reflect the disallowed loss. If a shareholder holds
Fund shares for six months or less and during that period receives a
distribution taxable to the shareholder as long-term capital gain, any loss
realized on the sale of such shares during such six-month period would be a
long-term loss to the extent of such distribution.

Backup Withholding. The Funds generally will be required to withhold federal
income tax at a rate of 31% ("backup withholding") from dividends paid, capital
gain distributions, and redemption proceeds to shareholders if (1) the
shareholder fails to furnish the Funds with the shareholder's correct taxpayer
identification number or social security number, (2) the IRS notifies the
shareholder or the Funds that the shareholder has failed to report properly
certain interest and dividend income to the IRS and to respond to notices to
that effect, or (3) when required to do so, the shareholder fails to certify
that he or she is not subject to backup withholding. Any amounts withheld may be
credited against the shareholder's federal income tax liability.

Other Taxation. Distributions may be subject to additional state, local and
foreign taxes, depending on each shareholder's particular situation. Non-U.S.
shareholders may be subject to U.S. tax rules that differ significantly from
those summarized above, including the likelihood that ordinary income dividends
to them would be subject to withholding of U.S. tax at a rate of 30% (or a lower
treaty rate, if applicable).

BROKERAGE

Each of the Funds intends to place substantially all its securities
transactions, including transactions involving options, through the Adviser in
accordance with procedures set forth in Rule 17e-1 under the 1940 Act. These
procedures, which have been adopted by the Trustees, including a majority of the
non-interested Trustees, are reasonably designed to provide that any
commissions, fees or other compensation paid to the Adviser (or any affiliate)
are fair and reasonable when compared to commissions, fees and other
compensation received from other firms who engage in comparable transactions.
The Funds will not deal with the Adviser (or any affiliate) in any transaction
in which the Adviser (or any affiliate) acts as principal, except in accordance
with rules promulgated by the Securities and Exchange Commission. From inception
through February 29, 2000, the Kelmoore Strategy(TM) Fund paid $904,587 in
brokerage commissions to Kelmoore investment Company which constitutes 100% of
the commissions paid by the Fund.

The Adviser may utilize non-affiliated brokers, dealers or members of a
securities exchange to execute portfolio transactions on behalf of the Funds
and, like the Adviser, such firms may receive commissions for executing the
Funds' securities transactions. In effecting the purchase or sale of portfolio
securities from non-affiliated brokers, dealers or members of an exchange, the
Adviser will seek execution of trades either (1) at the most favorable and
competitive rate of commission charged by any broker, dealer or member of an
exchange, or (2) at a higher rate of commission charged, if reasonable in
relation to brokerage and research services provided to the Trust or the Adviser
by such member, broker or dealer. Such services may include, but are not limited
to, information as to the availability of securities for purchase or sale and
statistical or factual information or opinions pertaining to investments. The
Adviser may use brokerage and research services provided to it by brokers and
dealers in servicing all its clients.

The Adviser currently manages separate accounts that employ investment
strategies similar to those used by the Funds. At times, investment decisions
may be made to purchase or sell the same security for the Funds and one or more
of the other clients advised by the Adviser. When two or more of such clients
are simultaneously engaged in the purchase or sale of the same security, the
transactions will be allocated as to amount and price in a manner considered
equitable to each so that each receives, to the extent practicable, the average
price for such transaction. There may be circumstances in which such
simultaneous transactions would be disadvantageous to the Funds with respect to
price and availability of securities. In other cases, however, it is believed
that transactions would be advantageous to the Funds.

SHARES OF BENEFICIAL INTEREST

There are no conversion or preemptive rights in connection with any shares of
the Funds, nor are there cumulative voting rights. Each of the Funds' shares
have equal voting rights. As a shareholder, you receive one vote for each share
of the Fund you own and each fractional share you own shall be entitled to a
proportionate fractional vote. Each issued and outstanding share of a class of
the Funds are entitled to participate equally in dividends and distributions
declared and in the net assets of the Funds upon liquidation or dissolution
remaining after satisfaction of outstanding liabilities.

12
<PAGE> 42
Under Delaware law, shareholders will be liable for the obligations of the Fund
only to the extent of their investment in the Fund.

All issued and outstanding shares of the Funds will be fully paid and
non-assessable and will be redeemable at net asset value per share. The
interests of shareholders in the Fund will not be evidenced by a certificate or
certificates representing shares of the Funds.

The authorized capitalization of each of the Funds consist of an unlimited
number of shares having a par value of $0.001 per share. The Trustees have
authorized two series with two classes of shares issued currently. The Trustees
have authority, without necessity of a shareholder vote, to create any number of
new series or classes of shares.

Unless otherwise required by the 1940 Act, ordinarily it will not be necessary
for the Trust to hold annual meetings of shareholders. As a result, shareholders
may not consider each year the election of Trustees or the appointment of
auditors. However, the holders of at least 10% of the shares outstanding and
entitled to vote may require the Funds to hold a special meeting of shareholders
for purposes of removing a Trustee. Shareholders may remove a Trustee by the
affirmative vote of two-thirds of the Funds' outstanding shares. In addition,
the Trustees will call a meeting of shareholders for the purpose of electing
Trustees if, at any time, less than a majority of the Trustees then holding
office have been elected by shareholders. Special shareholder meetings may also
be called for certain purposes such as electing Trustees, changing fundamental
policies, or approving a management contract.

CALCULATION OF PERFORMANCE

From time to time, each Fund may advertise its yield and total return. THESE
FIGURES WILL BE BASED ON HISTORICAL EARNINGS AND ARE NOT INTENDED TO INDICATE
FUTURE PERFORMANCE. No representation can be made regarding future yields or
returns.

The yield of a Fund refers to the annualized income generated by an investment
in the Fund over a specified 30-day period. The "total return" or "average
annual total return" of a Fund reflects the change in the value of an investment
in a Fund over a stated period of time. Total returns and average annual returns
measure both the net investment income from and any realized or unrealized
appreciation or depreciation of a Fund's holdings for a stated period and assume
that the entire investment is redeemed at the end of each period and the
reinvestment of all dividends and capital gain distributions.

The yield of a Fund will be computed by annualizing net investment income per
share for a recent 30-day period and dividing that amount by a share's maximum
offering price (reduced by any undeclared earned income expected to be paid
shortly as a dividend) on the last trading day of that period. Net investment
income will reflect amortization of any market value premium or discount of
fixed income securities (except for obligations backed by mortgages or other
assets) and may include recognition of a pro rata portion of the stated dividend
rate of dividend paying portfolio securities. The yield of a Fund will vary from
time to time depending upon market conditions, the composition of the Fund's
portfolio and operating expenses of the Trust allocated to the Fund. These
factors and possible differences in the methods used in calculating yield should
be considered when comparing a Fund's yield to yields published for other
investment companies and other investment vehicles. Yield should also be
considered relative to changes in the value of a Fund's shares and to the
relative risks associated with the investment objective and policies of such
Fund.

Calculation of Total Return:
Each quotation of average annual total return will be computed by finding the
average annual compounded rate of return over that period which would equate the
value of an initial amount of $1,000 invested in a Fund equal to the ending
redeemable value, according to the following formula:

P(T + 1)(n) = ERV

Where: P = a hypothetical initial payment of $1,000, T = average annual total
return, n = number of years, and ERV = ending redeemable value of a hypothetical
$1,000 payment at the beginning of the period at the end of the period for which
average annual total return is being calculated assuming a complete redemption.
The calculation of average

13
<PAGE> 43
annual total return assumes the deduction of the maximum sales charge, if any,
from the initial investment of $1,000, assumes the reinvestment of all dividends
and distributions at the price stated in the then effective Prospectus on the
reinvestment dates during the period and includes all recurring fees that are
charged to all shareholder accounts assuming such Fund's average account size.

A Fund, may also advertise aggregate total return in addition to average annual
total return. Aggregate total return is a measure of the change in value of an
investment in a Fund over the relevant period and is calculated similarly to
average annual total return except that the result is not annualized.

For the following periods ended February 29, 2000, the average annual total
returns for the Funds were as follows:

<TABLE>
<CAPTION>
FUND Since
1 Year 5 Year Inception
------ ------ ---------
<S> <C> <C> <C>
Kelmoore Strategy(TM) Fund Class A* N/A N/A 4.55%(1)
Kelmoore Strategy(TM) Fund Class C** N/A N/A 5.54%
Kelmoore Strategy(TM) Eagle Fund Class A(2) N/A N/A N/A
Kelmoore Strategy(TM) Eagle Fund Class C(2) N/A N/A N/A
</TABLE>

* The Kelmoore Strategy(TM) Fund Class A commenced operations on October
26, 1999.

** The Kelmoore Strategy(TM) Fund Class C commenced operations on May 3,
1999.

(1) Total Return Calculation does not reflect sales load.

(2) The Kelmoore Strategy(TM) Eagle Fund had not commenced operations on the
date of this SAI.

The performance figures above reflect voluntary fee waivers and expense
reimbursements. Absent such fee waivers and expense reimbursements, the yield
and total returns of the Funds would have been lower.

At any time in the future, yields and total return may be higher or lower than
past yields and total return and there can be no assurance that any historical
results will continue. Investors in the Funds are specifically advised that
share prices, expressed as the net asset values per share, will vary just as
yields and total return will vary.

Comparing Performance. The performance of a Fund may periodically be compared
with that of other mutual funds or broad groups of comparable mutual funds
tracked by mutual fund rating services (such as Lipper Analytical Services,
Inc.) and financial and business publications and periodicals. In addition, a
Fund's performance may be compared with unmanaged indices of various investments
for which reliable performance data is available. These may assume investment of
dividends but generally do not reflect deductions for administrative and
management costs. The performance of a Fund may also be compared in various
publications to averages, performance rankings or other information prepared by
recognized mutual fund statistical services. A Fund may quote Morningstar, Inc.,
a service that ranks mutual funds on the basis of risk-adjusted performance, or
Ibbotson Associates of Chicago, Illinois, which provides historical returns of
the capital markets in the United States. A Fund may use the long-term
performance of these capital markets to demonstrate general long-term risk
versus reward scenarios and could include the value of a hypothetical investment
in any of the capital markets.

A Fund may also quote financial and business publications and periodicals, such
as SMART MONEY, as they relate to Trust management, investment philosophy, and
investment techniques. A Fund may also quote from time to time various measures
of volatility and benchmark correlations in advertising and may compare these
measures with those of other mutual funds. Measures of volatility attempt to
compare historical share price fluctuations or total returns to a benchmark
while measures of benchmark correlation indicate how valid a comparative
benchmark might be. Measures of volatility and correlation are calculated using
averages of historical data and cannot be calculated precisely.

FINANCIAL STATEMENTS

14
<PAGE> 44
Reports to Shareholders. The audited financial statements and notes thereto for
the Kelmoore Strategy(TM) Fund, contained in the Annual Report to Shareholders
dated February 29, 2000, are incorporated by reference into this Statement of
Additional Information and have been audited by PricewaterhouseCoopers LLC whose
report also appears in the Annual Report and is also incorporated by reference
herein. No other parts of the Annual Report are incorporated by reference
herein.

15
<PAGE> 45
KELMOORE STRATEGIC TRUST
PART C - OTHER INFORMATION

Item 23. EXHIBITS:

(a)(1) Certificate of Trust dated December 1, 1998 -- Incorporated by
reference to the Initial Registration Statement as filed with
the SEC on December 21, 1998.

(a)(2) Agreement and Declaration of Trust as amended March 22, 1999
-- Incorporated by reference to Pre-Effective Amendment No. 2
to the Registration Statement as filed with the SEC on April
6, 1999.

(b) By-Laws as amended March 22, 1999 -- Incorporated by reference
to Pre-Effective Amendment No. 2 to the Registration
Statement as filed with the SEC on April 6, 1999.

(d)(1) investment Advisory Agreement dated March 22, 1999 --
Incorporated by reference to Pre-Effective Amendment No. 2 to
the Registration Statement as filed with the SEC on April 6,
1999.

(d)(2) Schedule I of the investment Advisory Agreement as amended
May 8, 2000 --- filed herewith.

(e)(1) Distribution Agreement dated March 22, 1999 -- Incorporated by
reference to Pre-Effective Amendment No. 2 to the
Registration Statement as filed with the SEC on April 6, 1999.

(e)(2) Schedule A of Distribution Agreement as amended May 8, 2000 -
filed herewith.

(f) Bonus or Profit Sharing Contracts -- none.

(g)(1) Custodian Agreement dated March 22, 1999 -- Incorporated by
reference to Pre-Effective Amendment No. 2 to the
Registration Statement as filed with the SEC on April 6, 1999.

(g)(2) Appendix B of the Custodian Agreement as amended April 24,
2000 - filed herewith.

(h)(1) Services Agreement dated May 3, 1999 -- Incorporated by
reference to Post-Effective Amendment No. 1 to the
Registration Statement as filed with the SEC on August 25,
1999.
<PAGE> 46

(h)(2) Schedule A of the Services Agreement as amended May 8, 2000 -
filed herewith.

(i)(1) Legal Opinion dated March 30, 1999 -- Incorporated by
reference to Pre-Effective Amendment No. 2 to the Registration
Statement as filed with the SEC on April 6, 1999.

(i)(2) Legal Opinion dated June 26, 2000 - filed herewith.

(i)(3) Consent of Sutherland Asbill & Brennan LLP - filed herewith.

(j) Consent of Independent Accountants -- filed herewith.

(k) Omitted Financial Statements - not applicable.

(l) Initial Capital Agreements dated March 25, 1999-- Incorporated
by reference to Pre-Effective Amendment No. 2 to the
Registration Statement as filed with the SEC on April 6, 1999.

(m)(1) Rule 12b-1 Plan of Distribution and Service Plan for Class C
Shares dated October 24, 1999, as amended May 8, 2000 - filed
herewith.

(m)(2) Rule 12b-1 Plan of Distribution Plan for Class A Shares dated
October 24, 1999 as amended May 8, 2000 - filed herewith.

(n) Rule 18f-3 Plan dated October 24, 1999 -- Incorporated by
reference to Post-Effective Amendment No. 2 to the
Registration Statement as filed with the SEC on October 22,
1999.

(o)(1) Powers of Attorney -- Incorporated by reference to Pre-
Effective Amendment No. 2 to the Registration Statement as
filed with the SEC on April 6, 1999.

(o)(2) Power of Attorney of Norman H. Moore, Jr. -- Incorporated by
reference to Post-Effective Amendment No. 1 to the
Registration Statement as filed with the SEC on August 25,
1999.

(o)(3) Power of Attorney of Tamara Beth Heiman -- Incorporated by
reference to Post-Effective Amendment No. 2 to the
Registration Statement as filed with the SEC on October 22,
1999.
<PAGE> 47

(p) Code of Ethics of the Trust, Adviser and Distributor dated
February 18, 2000 - Incorporated by reference to
Post-Effective Amendment No. 3 to the Registration Statement
as filed with the SEC on April 14, 2000.

Item 24. Persons Controlled by or under Common Control with Registrant.
Not Applicable

Item 25. Indemnification.
The Agreement and Declaration of Trust (Article IV, Section 3)
of the Trust provides that, in the event a Trustee, officer,
employee or agent of the Trust is sued for his or her
activities concerning the Trust, the Trust will indemnify that
person to the fullest extent permitted by law except if that
person has been found by a court or body before which the
proceeding was brought to have acted with willful misfeasance,
bad faith, gross negligence or reckless disregard of the
duties involved in the conduct of his or her office or not to
have acted in good faith in the reasonable belief that his
action was in the best interest of the Trust.

The Registrant has purchased Errors and Omissions insurance
with Directors and Officers liability coverage.

Item 26. Business and Other Connections of the investment Adviser.

Kelmoore investment Company, Inc. (the "Adviser"), is
primarily engaged in the brokerage and investment advisory
business. The Trust is the only registered investment company
to which the Adviser serves as investment adviser. Information
as to the officers and directors of the Adviser is included in
its Form ADV filed February 19, 2000 with the Securities and
Exchange Commission (Registration Number 801-53123) and is
incorporated herein by reference.

Item 27. Principal Underwriters.

(a) The Adviser also serves as distributor of the shares of the
Funds. The Adviser currently acts as principal underwriter for
Kelmoore Covered Writing Fund, K2 LP, a California Limited
Partnership.

(b) The following table sets forth information concerning each
director and officer of the Adviser.

Name and Principal Positions and Offices Positions and Offices
Business Address* with Underwriter with Registrant

Ralph M. Kelmon, Jr. Chairman of the Board, None
Chief Executive Officer,
and Treasurer
<PAGE> 48
Michael Romanchak Director and President None

David R. Moore Director None

A. Duncan King Director None

Norman H. Moore Vice President- None
Administration: Corporate
Secretary and Chief
Compliance Officer

Norman H. Moore, Jr. Director None

Matthew Kelmon Vice President of Trading President and
Trustee

Thomas W. Killilea Director None

Richard J. Deagazio Director None

Edward J. Devereaux Director and Chief None
Operating Officer

Richard D. Stanley None Chairman and
Trustee

Tamara Beth Heiman Executive Vice President Secretary and
and Director of Marketing Treasurer

Shawn Young Chief Financial Officer Chief Financial
Officer

* All addresses are 2471 East Bayshore Road, Suite 501, Palo Alto, CA 94303
unless otherwise indicated.

Item 28. Location of Accounts and Records.

The accounts, books, or other documents required to be
maintained by Section 31(a) of the 1940 Act and the Rules 17
CFR 270.31a-1 to 31a-3 promulgated thereunder, are maintained
by the Adviser, 2471 East Bayshore Road, Suite 501, Palo Alto,
California 94303; by the Trust's Administrator, Transfer
Agent, and Fund Accounting Agent, PFPC, 3200 Horizon Drive,
P.O. Box 61503, King of Prussia, PA 19406-0903; and by the
Trust's Custodian, The Bank of New York, 48 Wall Street, New
York, New York 10286.
<PAGE> 49
Item 29. Management Services. Not Applicable.

Item 30. Undertakings. Not Applicable.
<PAGE> 50
SIGNATURES

Pursuant to the requirements of the Securities Act of 1933, as amended, and the
investment Company Act of 1940, as amended, the Registrant certifies that it
meets the eligibility requirements of Rule 485(b) under the Securities Act of
1933, as amended and has duly caused this amendment to the Registration
Statement on Form N-1A to be signed on its behalf by the undersigned, thereunto
duly authorized, in the City of Palo Alto and the State of California on this
28th day of June, 2000.

KELMOORE STRATEGIC TRUST
(Registrant)

/s/ Matthew Kelmon
------------------------------------
By: Matthew Kelmon, President*

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

<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
--------- ----- ----
<S> <C> <C>
Matthew Kelmon* President, Principal June 28, 2000
Executive Officer
and Trustee

Tamara Beth Heiman* Secretary, Treasurer June 28, 2000

Shawn Young Chief Financial Officer June 28, 2000

William H. Barnes* Trustee June 28, 2000

Richard D. Stanley* Trustee June 28, 2000

Jeffrey Ira* Trustee June 28, 2000

Kenneth D. Treece* Trustee June 28, 2000

Lisa Ann McCarthy* Trustee June 28, 2000

Ignatius J. Panzica* Trustee June 28, 2000

Stephen W. Player* Trustee June 28, 2000
</TABLE>

By: /s/ Sandra Adams
-------------------------------
*Sandra L. Adams,
as Attorney-in-Fact
pursuant to Powers of Attorney

<PAGE> 51
KELMOORE STRATEGIC TRUST

EXHIBIT INDEX TO PART "C"
OF
REGISTRATION STATEMENT

ITEM NO. DESCRIPTION

(d)(2) Schedule I of the Investment Advisory Agreement

(e)(2) Schedule A of the Distribution Agreement

(g)(2) Appendix B of the Custodian Agreement

(h)(2) Schedule A of the Services Agreement

(i)(2) Legal Opinion dated June 26, 2000

(i)(3) Consent of Sutherland Asbill & Brennan LLP

(j) Consent of Independent Accountants

(m)(1) Rule 12b-1 Plan of Distribution for Class C Shares

(m)(2) Rule 12b-1 Plan of Distribution for Class A Shares