GLEN RAUCH FUNDS, N-1A/A, 2001-01-10

GLEN RAUCH FUNDS
N-1A/A, 2001-01-10

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As filed with the Securities and Exchange Commission on January 10, 2001
File Nos. 333-47818 and 811-10175

SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

FORM N-1A

REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 [X]

Pre-Effective Amendment No. 1 [X]
---

Post-Effective Amendment No. [ ]

AND/OR

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

Amendment No. 1 [X]
---

GLEN RAUCH FUNDS
(Exact Name of Registrant as Specified in Charter)

44 Wall Street
New York, New York 10005
(Address of Principal Executive Offices) (Zip Code)

(212) 363 - 9760
(Registrant's Telephone Numbers, Including Area Code)

Glen R. Rauch
44 Wall Street
New York, New York 10005
(Name and Address of Agent for Service)

Copies to:

Peter O'Rourke, Esq. Chad E. Fickett, Esq.
Kramer Levin Naftalis & Frankel LLP Firstar Mutual Fund Services, LLC
919 Third Avenue 615 East Michigan Street
New York, New York 10022 Milwaukee, WI 53202

As soon as practicable after this Registration Statement is declared effective.
(Approximate Date of Proposed Public Offering)

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

[ ] immediately upon filing pursuant to paragraph (b).
[ ] on (date) pursuant to paragraph (b).
[ ] 60 days after filing pursuant to paragraph (a)(1).
[ ] on (date) pursuant to paragraph (a)(1).
[ ] 75 days after filing pursuant to paragraph (a)(2).
[ ] on (date) pursuant to paragraph (a)(2) of rule 485.

If appropriate check the following box:

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

The Registrant hereby amends this registration statement on such date
or dates as may be necessary to delay its effective date until the Registrant
shall file a further amendment which specifically states that this registration
statement shall thereafter become effective in accordance with Section 8(a) of
the Securities Act of 1933 or until the registration statement shall become
effective on such date as the commission, acting pursuant to said Section 8(a),
may determine.

SUBJECT TO COMPLETION, DATED JANUARY 10, 2001

THE INFORMATION IN THIS PROSPECTUS IS NOT COMPLETE AND MAY BE CHANGED. WE MAY
NOT SELL THESE SECURITIES UNTIL THE REGISTRATION STATEMENT FILED WITH THE
SECURITIES AND EXCHANGE COMMISSION IS EFFECTIVE. THIS PROSPECTUS IS NOT AN OFFER
TO SELL THESE SECURITIES AND IS NOT SOLICITING AN OFFER TO BUY THESE SECURITIES
IN ANY STATE WHERE THE OFFER OR SALE IS NOT PERMITTED.

BUY-WRITE FUND
A SERIES OF GLEN RAUCH FUNDS

PROSPECTUS

__________, 2000

MANAGED BY:

GLEN RAUCH SECURITIES, INC.

THE SECURITIES AND EXCHANGE COMMISSION HAS NOT APPROVED OR DISAPPROVED THESE
SECURITIES OR DETERMINED IF THIS PROSPECTUS IS TRUTHFUL OR COMPLETE. ANY
REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.

TABLE OF CONTENTS

Risk/Return Summary of the Fund...............................................3
Performance Summary...........................................................6
Fees and Expenses.............................................................6
Management of the Fund........................................................7
Distribution of Shares........................................................8
Pricing of Shares.............................................................9
How to Purchase Shares........................................................9
How to Sell Shares............................................................11
Retirement Plans..............................................................12
Distributions and Taxes.......................................................13
Shareholder Reports and Confirmations.........................................14
Financial Highlights..........................................................14

RISK/RETURN SUMMARY OF THE FUND
--------------------------------------------------------------------------------

INVESTMENT OBJECTIVE
The investment objective of the Buy-Write Fund (the "Fund") is the long-term
growth of your investment capital. Generating income is a secondary objective.

PRINCIPAL INVESTMENT STRATEGY
--------------------------------------------------------------------------------
COVERED CALL OPTIONS: GIVE BUYERS THE RIGHT TO PURCHASE SECURITIES HELD BY THE
FUND AT A SPECIFIED PRICE IN EXCHANGE FOR AN AGREED UPON SUM.
--------------------------------------------------------------------------------
To achieve the Fund's objective, Glen Rauch Securities, Inc. (the "Adviser")
uses a covered call writing strategy under normal market conditions. There are
two ways to write covered calls: (1) by simultaneously purchasing stock and
selling call options against the purchased stock, or (2) selling call options
against stock held by the Fund at the time of sale. The purchaser of a call
option pays a fee (or premium) for the right (not the obligation) to exercise
the option and buy the shares on or before a certain expiration date. The
purchaser may exercise his or her option at any time on or before the expiration
date at the agreed upon price (the "exercise price"). The Fund generates income
from the premiums received regardless of whether the purchaser exercises the
option. Please see "Writing Covered Call Options" below.

The Adviser intends to write covered calls on at least 90% of the stocks
purchased or held by the Fund. By collecting premiums on covered call options
sold against the stocks of these companies, the Fund minimizes its risk by
reducing potential loss to the Fund by the amount of the premium received during
periods of general market decline. The Fund will not write call options on
securities not owned by the Fund. The Fund expects to achieve a more moderate
level of capital growth in exchange for minimized risk.

When choosing stocks against which the Fund writes covered call options, the
Adviser will carefully select from common stocks of large- and medium
capitalization, well-managed and well-financed domestic or multi-national
companies highly-rated by nationally recognized ratings organizations. Although
the Fund intends to write covered call options on all stocks purchased or held,
the Adviser will be rigorous about selling shares of those companies that
under-perform the rest of the portfolio (i.e., declines by more than 10%) or
that may otherwise become unattractive for writing covered call options.

The Fund is expected to have a portfolio turnover rate in excess of 200%. High
rates of portfolio turnover entail certain costs, including increased taxable
income for the Fund's shareholders. In general, the higher the turnover, the
higher the overall brokerage commissions, dealer mark-ups and markdowns, and
other transaction costs incurred. This, in turn, may have the effect of reducing
the Fund's overall performance. The Adviser believes that while the additional
turnover increases transaction costs, the process of eliminating the weakest
stocks will enhance the overall performance of the Fund. Also, portfolio
turnover may expose shareholders to a higher current realization of capital
gains, which could cause you to pay higher taxes. However, the Adviser will
attempt to offset any gains with losses in under-performing securities in
efforts to minimize any adverse tax consequences to shareholders of the Fund.

TEMPORARY INVESTMENTS
In attempting to respond to adverse market, economic, political, or other
conditions, the Adviser may adopt temporary defensive positions that are
inconsistent with the Fund's principal investment strategies. During such times,
the Fund may temporarily invest up to 100% of its assets in cash or cash
equivalents, including money market instruments, Treasury bills and/or other
short-term obligations of the U. S. Government, its agencies or
instrumentalities. To the extent the Fund invests in these temporary
investments, the Fund may not achieve its investment objectives.

PRINCIPAL RISKS
Investing in the Fund involves certain risks that could cause you to lose money.
The following risks could affect the value of your investment:

STOCK MARKET RISKS: The Fund's major risks are those of investing in the stock
market. This means that the Fund may experience sudden, unpredictable declines
in value, as well as periods of poor performance. Because stock values go up and
down, the value of the Fund's shares may go down.

COVERED CALL WRITING RISKS: The Fund may experience the loss of opportunity on
stocks with written call options that reach their exercise price before the
expiration date because the Fund foregoes the opportunity to profit from an
increase in the market price of the underlying security above the exercise
price. Furthermore, stocks held or purchased by the Fund may become less
attractive for writing covered call options and the Fund may temporarily be
unable to meet its investment objective.

MEDIUM-CAPITALIZATION COMPANIES RISKS: The Fund may invest in the stocks of
medium-capitalization companies. Medium-capitalization companies often have
narrower markets and limited managerial and financial resources compared to
larger, more established companies. As a result, their performance can be more
volatile and they face greater risk of business reversals that could increase
the volatility of the Fund's portfolio.

PORTFOLIO TURNOVER RISKS: The Fund may experience higher than average portfolio
turnover which may cause increased brokerage commission costs. A high turnover
rate exposes you to a higher current realization of capital gains, and thus a
higher current tax liability, than may be associated with investments in other
investment companies that have lower turnover rates.

NON-DIVERSIFICATION RISKS: The Fund is a non-diversified Fund. As such, the Fund
has added risk because it may invest a greater percentage of assets in a more
limited number of issuers compared to other mutual funds.

AN INVESTMENT IN THE FUND IS NOT A BANK DEPOSIT AND IS NOT INSURED OR GUARANTEED
BY THE FEDERAL DEPOSIT INSURANCE CORPORATION OR ANY OTHER GOVERNMENT AGENCY.

WHO MAY WANT TO INVEST
This Fund may be appropriate for investors who:

|X| are looking for long-term capital appreciation;
|X| are willing to gain some downside protection in exchange for an equity
investment strategy that is more conservative than strategies that do
not employ covered call writing;
|X| are looking for a neutral to bullish investment strategy; or
|X| are looking for increased income.

This Fund may not be appropriate for investors who are not willing to take any
risk that they may experience share price fluctuations or lose money on their
investment.

WRITING COVERED CALL OPTIONS
The Fund writes (sells) call options on securities listed on a national
securities exchange and in the over-the-counter ("OTC") market. A call option is
a contract that provides the holder or buyer of the option the right (not the
obligation) to receive shares from the seller at a fixed price. All options
written by the Fund will be covered. A call option is covered if the Fund (a)
owns the underlying security that is subject to the call or (b) has an absolute
and immediate right to acquire that security without additional cash
consideration (or for additional cash consideration held in a segregated account
by its custodian bank) upon conversion or exchange of other securities held in
its portfolio.

The Fund may buy call options on securities it intends to buy in order to limit
the risk of a substantial increase in the market price of the security before
the purchase is effected. The Fund may also buy call options on securities held
in its portfolio and on which it has written call options. Prior to its
expiration, a call option may be sold in a closing sale transaction. Profit or
loss from the sale will depend on whether the amount received is more or less
than the premium paid for the call option plus any related transaction costs.

The principal reason for writing covered call options is an attempt to manage
price volatility or risk. In addition, the Fund will attempt to obtain, through
a receipt of premiums, a greater current return than would be realized on the
underlying securities alone. The Fund receives a premium from writing a covered
call option that they retain whether or not the option is exercised. By writing
a call option on a security (establishing a "covered call write"), the Fund
might become obligated to sell the underlying security for less than the current
market price upon exercise. By writing a covered call option, the Fund foregoes
the opportunity to profit from an increase in the market price of the underlying
security above the exercise price, except insofar as the premium represents an
enhancement of such a profit.

ESTABLISHING A COVERED CALL WRITE:
The Fund may enter into either of the following types of covered call writes:

|X| IN-THE-MONEY: The stock price is above the exercise price at the time
the covered call write is established. This situation generally offers
a lower return potential but greater downside protection than an
Out-of-the-Money write.
|X| OUT-OF-THE-MONEY: The stock price is below the exercise price at the
time the covered call write is established. This situation generally
offers a higher return potential but less downside protection than an
In-the-Money write.

SCENARIOS ON OR BEFORE THE EXPIRATION DATE:
There are two scenarios for the Fund regarding a covered call option on a stock
on or before the expiration date. They are:

|X| THE STOCK PRICE REMAINS UNDER THE EXERCISE PRICE: The option buyer will
most likely not exercise his or her option to purchase the stock. After
the expiration date of the option, the Fund will be free to write
another call option against the stock. This process will be repeated
until the option is exercised

|X| THE STOCK PRICE IS HIGHER THAN THE EXERCISE PRICE: The option buyer
will most likely exercise his or her option to purchase the stock at
the strike price. The buyer may exercise his or her option at any time
on or before the expiration date.

EFFECTING A "CLOSING PURCHASE TRANSACTION":
The Fund, as writer of an option, may want to take advantage of market declines
and/or advances by terminating its obligation. To employ this strategy, the Fund
may effect a "closing purchase transaction" by buying an option of the same
series as the option previously written. A closing purchase transaction will
ordinarily be effected to realize a profit on an outstanding option, to prevent
an underlying security from being called, to permit the sale of the underlying
security or to permit the writing of a new option containing different terms.
The effect of the purchase is that the clearing corporation will cancel the
Fund's position. However, a Fund may not effect a closing purchase transaction
after being notified of the exercise of an option. Likewise, the holder of an
option may liquidate its position by effecting a "closing sale transaction" by
selling an option of the same series as the option previously purchased. There
is no guarantee that either a closing purchase or a closing sale transaction may
be made at the time desired by the Fund.

Effecting a closing transaction in the case of a written call option allows the
Fund to write another call option on the underlying security with a different
exercise price, expiration date or both. Effecting a closing transaction also
allows the cash or proceeds from the sale of any securities subject to the
option to be used for other Fund investments. If the Fund wants to sell a
particular security from its portfolio on which it has written a call option, it
will effect a closing transaction prior to or at the same time as the sale of
the security.

PERFORMANCE SUMMARY
--------------------------------------------------------------------------------

Because the Fund has little operating history, there is no performance
information available for the Fund at this time. For additional information
refer to "Historical Investment Results of the Adviser's Private Accounts."

FEES AND EXPENSES
-------------------------------------------------------------------------------

As an investor, you may pay certain fees and expenses if you buy and hold shares
of the Fund. These fees are described in the tables below and further explained
in the example that follows.
--------------------------------------------------------------------------------
SHAREHOLDER FEES1
(fees paid directly from your investment)
-------------------------------------------------------------------- ----------
Maximum Sales Charge (Load) Imposed on Purchases (as a
percentage of offering price) None

Maximum Deferred Sales Charge (Load) None
(as percentage of offering price)

Maximum Sales Charge (Load) Imposed on Reinvested Dividends None

Redemption Fee 1.00%2

Exchange Fee None
--------------------------------------------------------------------- ----------

ANNUAL FUND OPERATING EXPENSES
(expenses that are deducted from Fund assets)
--------------------------------------------------------------------- ----------
Management Fees 1.00%
Distribution and Service (12b-1) Fees 1.00%
Other Expenses3 1.82%
-----
Total Annual Operating Expenses 3.82%
=====
--------------------------------------------------------------------- ----------
1 The Fund's transfer agent charges a $15 wire redemption fee.
2 The Fund charges a fee of 1.00% on redemptions of shares held for less than 1
year. This fee is paid to the Fund and is waived for Fund shareholders who are
private clients of the Adviser. See "How to Sell Shares."
3 These expenses, which include custodian, transfer agency and other customary
Fund expenses, are based on estimated amounts for the Fund's current fiscal
year.
--------------------------------------------------------------------------------

EXAMPLE

The example below is intended to help you compare the cost of investing in the
Fund with the cost of investing in other mutual funds. The example assumes that:

1. You invest $10,000 in the Fund for the time periods indicated and then
redeem all of your shares of the Fund at the end of those periods,
2. You reinvested all dividends and capital gain distributions,
3. Your investment has a 5% return each year, and
4. 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:

1 Year 3 Years
---------- ---------
$485 $1,267

MANAGEMENT OF THE FUND
--------------------------------------------------------------------------------
INVESTMENT ADVISER

Glen Rauch Securities, Inc. is the investment adviser for the Fund. The Adviser
is an SEC-registered full-service brokerage firm and member of the NASD since
March 1986. The Adviser's main office is at 44 Wall Street, New York, New York
10005. The Adviser provides investment management services for individuals and
institutional clients including pension and profit sharing plans and has in
excess of $1 billion in assets under management, which includes privately
managed accounts.

The Adviser has been retained under an Investment Advisory Agreement with Glen
Rauch Funds to act as the Fund's investment adviser subject to the authority of
the Board of Trustees. (See "Management of the Trust--Trustees and Officers" in
the Fund's Statement of Additional Information.) Under the Investment Advisory
Agreement, the Adviser receives a monthly fee computed at an annual rate of
1.00% of average daily net assets. The Adviser furnishes the Fund with
investment advice and, in general, supervises the management of the Fund in
accordance with the Fund's investment objectives. The Adviser provides all
necessary administrative services, office space, equipment, clerical personnel
for servicing the investments of the Fund, investment advisory facilities, and
executive and supervisory personnel for managing the investments and effecting
the securities transactions of the Fund. In addition, the Adviser pays the
salaries and fees of all officers and trustees of Glen Rauch Funds who are
affiliated persons of the Adviser.

PORTFOLIO MANAGERS

|X| GLEN R. RAUCH is President of the Trust and the Adviser and serves as
co-portfolio manager to the Fund. Along with Ms. Betsy, Mr. Rauch is
responsible for the Fund's overall day-to-day management. Mr. Rauch has
been President and controlling shareholder of the Adviser since 1986. Prior
to forming the Adviser in 1986, Mr. Rauch was Senior Vice-President and
Partner at Gabrielle, Hueglin and Cashman, Inc., a securities brokerage
firm in New York. Mr. Rauch has nearly 28 years of experience on Wall
Street.

|X| CHERYL SPINELLA BETSY is the co-portfolio manager of the Fund. Along with
Mr. Rauch, Ms. Betsy is responsible for the Fund's day-to-day management.
Ms. Betsy has been with the Adviser since March 1997. Prior to joining the
Adviser, Ms. Betsy assisted in specialist/market making functions for
Spear, Leeds & Kellogg, LLC, a securities brokerage firm in New York. Ms.
Betsy holds a Bachelor of Science degree in Finance from Villanova
University and holds Series 7, 63, 4 and 55 licenses.

FUND ADMINISTRATION, FUND ACCOUNTING, TRANSFER AGENT, CUSTODY, AUDIT AND LEGAL
SERVICES
Firstar Mutual Fund Services, LLC serves as the Fund's administrator, transfer
agent and fund accountant. As such, Firstar Mutual Fund Services, LLC provides
all necessary record keeping services and share transfer services for the Fund.
Firstar Bank, N.A. serves as the Fund's custodian. PricewaterhouseCoopers LLP
serves as the independent public accountant for purposes of auditing the Fund.
Kramer Levin Naftalis & Frankel LLP serves as the Fund's legal counsel.

HISTORICAL INVESTMENT RESULTS OF THE ADVISER'S PRIVATE ACCOUNTS
The table below shows certain performance data provided by the Adviser relating
to investment results of a composite of all of the Adviser's private client
accounts (the "Accounts") managed using the same investment objective and
substantially similar investment strategies and techniques as those specified
for the Fund--the covered call strategy. The Accounts are not subject to the
same types of expenses to which the Fund is subject, nor to the diversification
requirements, specific tax restrictions and investment limitations imposed on
the Fund by the Investment Company Act of 1940, or the Internal Revenue Code, as
amended. The performance of the Accounts may have been adversely affected had
they been subject to the same expenses, restrictions and limitations as the
Fund. The Adviser believes that any adverse effect would not have been
significant. The results presented are not intended to predict or suggest the
return to be experienced by the Fund or the return one might achieve by
investing in the Fund. One should not rely on the following data as an
indication of future performance of the Adviser or of the Fund. If the higher
expense structure of the Fund were used on the Accounts, the performance of the
Accounts would have been lower than shown.

------------------------- ------------------- ------------- --------------------
Return as of 6/30/00 Total Account S & P 500 Dow Jones Composite
(net of fees)(1) Index (2) Average (3)
------------------------- ------------------- ------------- --------------------
1-YEAR 14.40% 7.22% 3.29%
3-YEAR 6.77% 19.62% 12.69%
SINCE INCEPTION* (2/1/96) 12.49% 22.61% 18.41%
------------------------- ------------------- ------------- --------------------
*This date indicates the first date the Adviser managed accounts using the
covered call strategy.

Please read the following important notes concerning the Accounts:

1 The results for the Accounts reflect either income and capital
appreciation or depreciation (total return). Dividends and other items
of income are accounted for on a cash basis. Returns are time weighted
and represent the dollar-weighted average of all the accounts managed
by the Adviser using a covered call strategy. Return figures are net of
applicable fees and expenses (other than separate custodian fees).

2 The S&P 500 Index consists of 500 stocks chosen by Standard and Poor's
for market size, liquidity and industry group representation. It is a
market-value weighted unmanaged index (stock price times number of
shares outstanding) with each stock's weight in the S&P 500 Index
proportionate to its market value.

3 The Dow Jones Composite Average encompasses 65 stocks combining the Dow
Industrials, Transportation, and Utility Averages. The Dow Jones
Industrial Average is an average of 30 actively traded widely-held,
blue chip stocks and is the oldest and most widely quoted of all market
indicators. The Dow Jones Transportation Average is an average of 20
stocks representative of the transportation industry and the Dow Jones
Utility Average consists of 15 geographically representative utility
companies.

SPECIAL NOTE CONCERNING ADVISER INVESTMENT RETURNS: You should note that the
Fund computes and discloses its average annual compounded rate of return using
the standard formula set forth in rules promulgated by the Securities and
Exchange Commission ("SEC"), which differs in certain respects from the methods
used to compute the returns for the Accounts noted above. The SEC total return
calculation method calls for the computation and disclosure of an average annual
compounded rate of return for one, three, five and ten year periods or shorter
periods from inception. The SEC formula provides a rate of return that equates a
hypothetical initial investment of $10,000 to an ending redeemable value. The
returns shown for the Accounts are reduced to reflect the deduction of Advisory
fees in accordance with the SEC calculation formula, which requires that returns
shown for a Fund be net of Advisory fees as well as all other applicable Fund
operating expenses. Performance was calculated on a trade date basis.

DISTRIBUTION OF SHARES
--------------------------------------------------------------------------------
DISTRIBUTOR
Quasar Distributors, LLC serves as distributor and principal underwriter for the
shares of the Fund pursuant to a Distribution Agreement. Quasar Distributors,
LLC is a member of the National Association of Securities Dealers, Inc. (NASD).

DISTRIBUTION SHAREHOLDER SERVICING PLAN
The Fund has adopted a Distribution Shareholder Servicing Plan pursuant to Rule
12b-1 of the 1940 Act to provide certain distribution and shareholder servicing
activities for the shareholders of the Fund. The maximum level of Rule 12b-1
fees paid by the Fund is 0.75% for 12b-1 expenses and 0.25% for shareholder
servicing per year of the Fund's average daily net asset value. As these fees
are paid out of the Fund's assets on an on-going basis, over time these fees
will increase the cost of your investment and may cost you more than paying
other types of sales charges.

PRICING OF SHARES
--------------------------------------------------------------------------------

Shares of the Fund are sold at their net asset value (NAV). The NAV for all
shares of the Fund is determined as of the close of regular trading on the New
York Stock Exchange ("NYSE") (normally 4:00 p.m., Eastern Time) on every
business day. The NAV for the Fund is calculated by dividing the sum of the
value of the securities held plus cash or other assets minus all liabilities by
the total number of shares outstanding of the Fund. The NYSE is closed on
weekends and most national holidays.

The Fund's investments are valued according to market value. When a market quote
is not readily available, the security's value is based on "fair value" as
determined by the Adviser under supervision of the Fund's Board of Trustees.

If your purchase order is in "good order" (see "How to Purchase Shares") and
delivered to the Fund's transfer agent before the close of the regular trading
session of the NYSE on any business day, your order will receive the share price
next determined for the Fund as of that day. If your order is received after the
close of the regular trading session of the NYSE, it will receive the price
determined on the next business day.

HOW TO PURCHASE SHARES
--------------------------------------------------------------------------------

To open an account, you must invest at least the minimum amount.

Minimum Investments To Open To Add to
Your Account Your Account
-------------- ---------------
All Accounts $2,000 $100

GOOD ORDER PURCHASE REQUESTS
When making a purchase request, make sure your request is in good order. "Good
order" means your purchase request includes:

|X| the NAME of the Fund
|X| the DOLLAR amount of shares to be purchased
|X| account application form or investment stub
|X| check payable to the "Glen Rauch Funds"

METHODS OF BUYING

THROUGH A You can purchase shares of the Fund through any
BROKER/DEALER broker/dealer organization that has been authorized by the
ORGANIZATION Fund. These broker/dealers are further authorized to
designate other intermediaries to receive purchase and
redemption orders on the Fund's behalf. A purchase order is
deemed received by the Fund when an authorized
broker/dealer, or, if applicable, a broker/dealer's
authorized designee, receives the request in good order.
Please keep in mind that your broker/dealer may charge
additional fees for its services.

BY MAIL You can purchase shares of the Fund directly from the Fund's
transfer agent, Firstar Mutual Fund Services, LLC. To open
an account, complete an account application form and send it
together with your check to the address below. To make
additional investments once you have opened your account,
send your check together with the detachable form that's
included with your Fund account statement or confirmation.
You may also send a letter stating the amount of your
investment with your name, the name of the Fund and your
account number together with a check to the address below.
Checks should be made payable to the "Buy-Write Fund."
No third party checks will be accepted. If your check is
returned for any reason, a $25 fee will be assessed against
your account.

REGULAR MAIL
------------
Glen Rauch Funds
Buy-Write Fund
c/o Firstar Mutual Fund Services, LLC
P.O. Box 701
Milwaukee, Wisconsin 53201-0701

OVERNIGHT DELIVERY
------------------
Glen Rauch Funds
Buy-Write Fund
c/o Firstar Mutual Fund Services, LLC
615 E. Michigan Street, Third Floor
Milwaukee, Wisconsin 53202

NOTE: THE FUND DOES NOT CONSIDER THE U.S. POSTAL SERVICE OR
OTHER INDEPENDENT DELIVERY SERVICES TO BE ITS AGENTS.

BY TELEPHONE To make additional investments by telephone, you
must check the appropriate box on your account application
form authorizing telephone purchases. If you have given
authorization for telephone transactions and your account
has been open for at least 15 days, call the Fund toll free
at 1-800 466-4633 and you will be allowed to move money from
your bank account to your Fund account upon request. Only
bank accounts held at domestic institutions that are
Automated Clearing House (ACH) members may be used for
telephone transactions. For security reasons, requests by
telephone will be recorded.

BY WIRE To open an account or to make additional investments by
wire, call 1-800 466-4633 to notify the Fund of the incoming
wire using the wiring instructions below:

Firstar Bank, N.A.
Milwaukee, WI 53202
ABA #: 042000013
Credit: Firstar Mutual Fund Services, LLC
Account #: 112-952-137
Further Credit: Glen Rauch Funds, Buy-Write Fund
(your name or the title on the account)
(your account #)

THROUGH AN Once your account has been opened, you may purchase shares
AUTOMATIC of the Fund through an Automatic Investment Plan ("AIP").
INVESTMENT You can have money automatically transferred from your
PLAN checking or savings account on a weekly, bi-weekly, monthly,
bi-monthly or quarterly basis. To beeligible for this plan,
your bank must be a domestic institution that is an ACH
member. The Fund may modify or terminate the AIP at any
time. The first AIP purchase will take place no earlier than
15 days after the transfer agent has received your request.

HOW TO SELL SHARES
--------------------------------------------------------------------------------

METHODS OF SELLING

THROUGH A If you purchased your shares through a broker/dealer or
BROKER/DEALER OR other financial organization, your redemption order should
FINANCIAL be placed through the same organization. Your broker or
CONSULTANT financial consultant is responsible for sending your
redemption order to the Fund's transfer agent on a timely
basis. Please keep in mind that your broker or financial
consultant may charge additional fees for its services.

BY MAIL If you purchased your shares directly from the Fund's
transfer agent, you should send your written redemption
request to the address below. Your request should contain
the Fund's name, your account number and the number of
shares or the dollar amount of shares to be redeemed. Be
sure to have all account holders sign the letter. Additional
documents are required for shareholders that are
corporations, partnerships, executors, trustees,
administrators, or guardians (i.e., corporate resolutions or
trust documents indicating proper authorization).

REGULAR MAIL
------------
Glen Rauch Funds
Buy-Write Fund
c/o Firstar Mutual Fund Services, LLC
P.O. Box 701
Milwaukee, Wisconsin 53201-0701

OVERNIGHT DELIVERY
------------------
Glen Rauch Funds
Buy-Write Fund
c/o Firstar Mutual Fund Services, LLC
615 E. Michigan Street, Third Floor
Milwaukee, Wisconsin 53202

The Fund's transfer agent may require a SIGNATURE GUARANTEE
for certain redemption requests such as redemption requests
for amounts in excess of $50,000 or redemption requests made
payable to a person or an address not on record with the
Fund. A signature guarantee assures that your signature is
genuine and protects you from unauthorized account
transfers. You may obtain signature guarantees from most
trust companies, commercial banks or other eligible
guarantor institutions. A NOTARY PUBLIC CANNOT GUARANTEE
SIGNATURES.

BY TELEPHONE If you are authorized to perform telephone transactions
(either through your account application form or by
subsequent arrangement in writing with the Fund) you
may redeem shares in any amount, but not less than $100, by
calling 1-800 466-4633. A signature guarantee is required of
all shareholders to change or add telephone redemption
privileges. For security reasons, requests by telephone may
be recorded.

BY WIRE To redeem shares by wire, call the Fund at 1-800
466-4633 and specify the amount of money you wish to be
wired. Your bank may charge a fee to receive wired funds.
The transfer agent charges a $15 outgoing wire fee.

WHEN REDEMPTION PROCEEDS ARE SENT TO YOU
Your shares will be redeemed at the NAV next determined after the Fund receives
your redemption request in good order. Your redemption request cannot be
processed on days the NYSE is closed.

All requests received in good order by the Fund before the close of the regular
trading session of the NYSE (normally 4:00 p.m. Eastern time) will normally be
wired to the bank you indicate or mailed on the following day to the address of
record. In no event will proceeds be wired or a check mailed more than 7
calendar days after the Fund receives your redemption request.

If you purchase shares using a check and soon after request a redemption, the
Fund will honor the redemption request, but will not mail the proceeds until
your purchase check has cleared (usually within 12 days).

REDEMPTION REQUESTS IN GOOD ORDER
When making a redemption request, make sure your request is in good order. "Good
order" means your letter of instruction includes:

|X| the NAME of the Fund
|X| the DOLLAR AMOUNT or the NUMBER of shares to be redeemed
|X| SIGNATURES of all registered shareholders exactly as the shares are
registered
|X| the ACCOUNT number

REDEMPTION FEE
If you redeem shares of the Fund after holding them for less than one year, the
Fund will charge a fee of 1.00% of the value of the shares redeemed. This fee is
paid to the Fund to cover the costs of maintaining accounts that are abnormally
active. This fee is waived for Fund shareholders who are private clients of the
Adviser.

GENERAL TRANSACTION POLICIES
The Fund reserves the right to:

|X| Vary or waive any minimum investment requirement.

|X| Refuse, change, discontinue, or temporarily suspend account services,
including purchase, exchange, or telephone redemption privileges, for any
reason.

|X| Reject any purchase or exchange request for any reason. Generally,
the Fund does this if the purchase or exchange is disruptive to
the efficient management of the Fund (due to the timing of the
investment or an investor's history of excessive trading).

|X| Delay paying redemption proceeds for up to seven days after receiving a
request, if an earlier payment could adversely affect the Fund.

RETIREMENT PLANS
-------------------------------------------------------------------------------

You may purchase shares of the Fund for your individual retirement accounts
including Traditional IRA, Rollover IRA, Roth IRA, Educational IRA, SEP IRA,
Simple IRA and 401(k) accounts. To obtain the appropriate disclosure
documentation and complete information on how to open a retirement account, call
1-800 466-4633.

DISTRIBUTIONS AND TAXES
--------------------------------------------------------------------------------

DIVIDENDS AND DISTRIBUTIONS
The Fund pays dividends from its net investment income and distributes any net
capital gains that it realizes. Dividends and distributions will generally be
paid once a year. They will be reinvested in the Fund unless you instruct the
Fund otherwise.

The Fund intends to qualify as a regulated investment company for federal income
tax purposes and intends to make additional distributions to the minimum extent
necessary to distribute the entire annual investment company taxable income of
the Fund, plus any net capital gains and to avoid imposition of the excise tax
imposed by the Internal Revenue Code of 1986, as amended.

Shareholders will be notified annually as to the federal tax status of
distributions and shareholders receiving distributions in the form of newly
issued shares will receive a report as to the NAV of the shares received.

TAXATION
As with any investment, your investment in the Fund could have tax consequences
for you.

TAXES ON DISTRIBUTIONS
Distributions that you receive from the Fund are subject to federal income tax,
and may also be subject to state or local taxes. For federal tax purposes, the
Fund's dividends and distributions of short-term capital gains are taxable to
you as ordinary income, while the Fund's distributions of long-term capital
gains are taxable to you generally as long-term capital gains. Whether the
Fund's distributions are short-term or long-term in nature depends on the length
of time the Fund holds its assets.

If you buy shares when the Fund has realized but not yet distributed income or
capital gains, you will be "buying a dividend" by paying the full price for the
shares and then receiving a portion of the price back in the form of a taxable
distribution.

By law the Funds must withhold 31% of your taxable distribution and redemption
proceeds if you do not provide your correct certified social security or
taxpayer identification number and certify that you are not subject to
withholding, or if the IRS instructs the Funds to do so.

TAXES ON TRANSACTIONS
Your redemptions may result in a capital gain or loss for federal income tax
purposes. A capital gain or loss on your investment in the Fund generally is the
difference between the cost of your shares and the price you receive when you
sell them.

Additional tax information may be found in the Statement of Additional
Information. Because everyone's tax situation is unique, always consult your tax
professional about federal, state and local tax consequences of an investment in
the Fund.

SHAREHOLDER REPORTS AND CONFIRMATIONS
--------------------------------------------------------------------------------

As a shareholder, you will be provided annual and semi-annual reports showing
the Fund's portfolio investments and financial information. You will also
receive confirmations of your purchases into, and redemptions out of, the Fund.
Account statements will be mailed to you on an annual basis.

FINANCIAL HIGHLIGHTS
-------------------------------------------------------------------------------

Because the Fund has recently commenced operations, there are no financial
highlights available at this time.

INVESTMENT ADVISER
GLEN RAUCH SECURITIES, INC.
NEW YORK, NEW YORK

INDEPENDENT ACCOUNTANT
PRICEWATERHOUSECOOPERS LLP
NEW YORK, NEW YORK

PRINCIPAL UNDERWRITER
QUASAR DISTRIBUTORS, LLC
MILWAUKEE, WISCONSIN

LEGAL COUNSEL
KRAMER LEVIN NAFTALIS & FRANKEL LLP
NEW YORK, NEW YORK

ADMINISTRATOR, TRANSFER AGENT,
AND FUND ACCOUNTANT
FIRSTAR MUTUAL FUND SERVICES, LLC
MILWAUKEE, WISCONSIN

CUSTODIAN
FIRSTAR BANK, N.A.
CINCINNATI, OHIO

WHERE TO FIND MORE INFORMATION:
You can find more information about the Buy-Write Fund in the following
documents:

STATEMENT OF ADDITIONAL INFORMATION DATED __________, 2000
The Statement of Additional Information for the Fund provides more details about
the Fund's policies and management. The Fund's Statement of Additional
Information is incorporated by reference into this Prospectus.

ANNUAL AND SEMI-ANNUAL REPORTS
After the Fund has been operating for the appropriate time, annual and
semi-annual reports will be made available. The Fund's annual and semi-annual
reports provide the most recent financial reports and portfolio listings. The
annual report contains a discussion of the market conditions and investment
strategies that affected the Fund's performance during the last fiscal year.

You can obtain a free copy of these documents, request other information, or
make general inquiries about the Fund by calling the Fund at 1-800 466-4633 or
by writing to:

GLEN RAUCH FUNDS
BUY-WRITE FUND
C/O FIRSTAR MUTUAL FUND SERVICES, LLC
P.O. BOX 701
MILWAUKEE, WI 53201-0701

You may write to the Securities and Exchange Commission ("SEC") Public Reference
Room at the regular mailing address or the e-mail address below and ask them to
mail you information about the Fund, including the SAI. They will charge you a
fee for this duplicating service. You can also visit the SEC Public Reference
Room and copy documents while you are there. For more information about the
operation of the Public Reference Room, call the SEC at the telephone number
below.

PUBLIC REFERENCE SECTION
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549-0102
[email protected]
1-202-942-8090

Reports and other information about the Fund are available on the EDGAR Database
on the SEC's Internet site at HTTP://WWW.SEC.GOV.

1940 Act File No. 811-10175

SUBJECT TO COMPLETION, DATED JANUARY 10, 2001

The information in this Statement of Additional Information is not complete and
may be changed. We may not sell these securities until the registration
statement filed with the Securities and Exchange Commission becomes effective.
This Statement of Additional Information is not an offer to sell these
securities and is not soliciting an offer to buy these securities in any state
where the offer or sale is not permitted.

STATEMENT OF ADDITIONAL INFORMATION

Dated ___, 2000

BUY-WRITE FUND
A Series of Glen Rauch Funds

This Statement of Additional Information ("SAI") relates to the Buy-Write Fund,
which is a series of Glen Rauch Funds, a registered open-end management
investment company, or mutual fund. This SAI is not a prospectus and is intended
to supplement the information provided to investors in the prospectus dated
________, 2000 (the "Prospectus") of the Buy-Write Fund (the "Fund"). Copies of
the Fund's Prospectus may be obtained by writing the Fund at Firstar Mutual Fund
Services, LLC, P.O. Box 701, Milwaukee, Wisconsin 53201-0701, or calling the
Fund at (800) 466-4633.

---------------------------------
TABLE OF CONTENTS
---------------------------------
PAGE

Organization of the Trust and the Fund.........................................3
Investments and Risks..........................................................3
Management of the Trust.......................................................11
Advisory Services.............................................................13
Distributor...................................................................14
Service Providers.............................................................15
Portfolio Transactions........................................................16
Determining Net Asset Value...................................................18
Buying Shares.................................................................19
Redeeming Shares..............................................................19
Tax Considerations............................................................20
Calculation of Performance Data...............................................26
Financial Statements..........................................................26

ORGANIZATION OF THE TRUST AND THE FUND

Glen Rauch Funds (the "Trust") is an open-end management investment company, or
mutual fund, organized as a Delaware business trust on October 10, 2000. The
Fund is the first of any number of series that may be formed by the Trust. The
Fund is a non-diversified series and has its own investment objectives and
policies. The Trust may start another series and offer shares of a new fund
under the Trust at any time.

The Trust is authorized to issue an unlimited number of interests (or shares).
Interests in the Fund are represented by shares of beneficial interest each with
a par value of $0.001. If the Trust should add additional series, shares of each
series would have equal voting rights and liquidation rights, and would be voted
in the aggregate and not by the series except in matters where a separate vote
is required by the Investment Company Act of 1940 (the "1940 Act") or when the
matter affects only the interest of a particular Fund. When matters are
submitted to shareholders for a vote, each shareholder is entitled to one vote
for each full share owned and fractional votes for fractional shares owned. The
Trust does not normally hold annual meetings of shareholders. The Trustees shall
promptly call and give notice of a meeting of shareholders for the purpose of
voting upon removal of any Trustee when requested to do so in writing by
shareholders holding 10% or more of the Trust's outstanding shares. The Trust
will comply with the provisions of Section 16(c) of the 1940 Act in order to
facilitate communications among shareholders.

Each share of the Fund represents an equal proportionate interest in the assets
and liabilities belonging to the Fund with each other share of the Fund and is
entitled to such dividends and distributions out of the income belonging to the
Fund as are declared by the Trustees. If the Trust adds additional series, the
shares would not have cumulative voting rights or any preemptive or conversion
rights, and the Trustees would have the authority from time to time to divide or
combine the shares of any Fund into a greater or lesser number of shares of that
Fund so long as the proportionate beneficial interests in the assets belonging
to that Fund and the rights of shares of any other Fund are in no way affected.
Additionally, in case of any liquidation of a Fund, the holders of shares of the
Fund being liquidated would be entitled to receive as a class a distribution out
of the assets, net of the liabilities, belonging to that Fund. Expenses
attributable to any Fund would be borne by that Fund. Any general expenses of
the Trust not readily identifiable as belonging to a particular Fund would be
allocated by or under the direction of the Trustees in such manner as the
Trustees allocate such expenses on the basis of relative net assets or number of
shareholders. No shareholder is liable to further calls or to assessment by the
Trust without his or her express consent.

The assets of the Fund received for the issue or sale of its shares, and all
income, earnings, profits and proceeds thereof, subject only to the rights of
creditors, shall constitute the underlying assets of the Fund. In the event of
the dissolution or liquidation of the Fund, the holders of shares of the Fund
are entitled to share pro rata in the net assets of the Fund available for
distribution to shareholders

INVESTMENTS AND RISKS

The following discussion supplements the description of the Fund's investment
strategy, risks and management policies set forth in the "Investment Objective,"
"Principal Investment Strategy" and "Principal Risks" sections of the
Prospectus. Unless otherwise noted, whenever an investment policy or limitation
states a maximum percentage of the Fund's assets that may be invested in any
security or other asset, or sets forth a policy regarding quality standards,
such standard or percentage limitation will be determined immediately after and
as a result of the Fund's acquisition of such security or other asset.
Accordingly, any subsequent change in values, net assets, or other circumstances
will not be considered when determining whether the investment complies with the
Fund's investment policies and limitations.

If a bankruptcy or other extraordinary event occurs concerning a particular
security the Fund owns, the Fund may receive stock, real estate, or other
investments that the Fund would not, or could not, buy. If this happens, the
Fund intends to sell such investments as soon as practicable while trying to
maximize the return to shareholders.

FUNDAMENTAL INVESTMENT LIMITATIONS

The Fund has adopted the following restrictions as fundamental policies. This
means they may only be changed if the change is approved by (i) more than 50% of
the Fund's outstanding shares or (ii) 67% or more of the Fund's shares present
at a shareholder meeting if more than 50% of the Fund's outstanding shares are
represented at the meeting in person or by proxy, whichever is less.

The Fund:

1. May not issue securities senior to the Fund's presently authorized
shares of beneficial interest, except that this restriction shall not be deemed
to prohibit the Fund from (a) making any permitted borrowings, loans, mortgages
or pledges, (b) entering into options or (c) making short sales of securities to
the extent permitted by the 1940 Act and any rule or order thereunder, or
Securities and Exchange Commission ("SEC") staff interpretations thereof.

2. May borrow money from banks or affiliated investment companies to
the extent permitted by the 1940 Act, or any exemptions therefrom which may be
granted by the SEC, to meet redemption requests, or for any additional
investment purpose beneficial to the Fund and then in an amount not exceeding 33
1/3% of the value of the Fund's total net assets (including the amount
borrowed).

3. May not act as an underwriter except to the extent the Fund may be
deemed to be an underwriter when disposing of securities it owns or when selling
its own shares.

4. May not purchase securities if as a result of such purchase more
than 25% of the Fund's total net assets would be invested in any one industry.
For purposes of this limitation, there is no limitation on the purchase of
securities issued or guaranteed by the U.S. Government, its agencies or
instrumentalities.

5. May not purchase or sell real estate and commodities, except that
the Fund may purchase or sell securities of real estate investment trusts, may
enter into futures contracts on securities, or any other financial instruments,
and may purchase and sell options on such futures contracts.

6. May not lend any security or make any other loan if, as a result,
more than 33 1/3% of the value of the Fund's total assets would be lent to other
parties, except to the extent permitted by the 1940 Act or any exemptions
therefrom which may be granted by the SEC.

7. May not pledge, mortgage, or hypothecate the Fund's assets, except
(a) to the extent necessary to secure permitted borrowing, (b) in connection
with the purchase of securities on a delayed-delivery basis or the sale of
securities on a delayed-delivery basis, and (c) in connection with options and
other financial instruments.

INVESTMENT STRATEGIES, POLICIES AND RISKS

In addition to the principal investment strategies that are set forth under the
"Principal Investment Strategy" and the "Principal Risks" sections of the
Prospectus, the Fund has various additional investment strategies and policies.
The following strategies and policies may be changed by the Board of Trustees
without shareholder approval. In addition, you should be aware of the risks
described below. Except for the fundamental investment limitations listed above,
the Fund's investment strategies and policies are not fundamental and may be
changed with the approval of the Trust's Board of Trustees.

WRITING COVERED CALL OPTIONS. The Fund writes (sells) call options on securities
listed on a national securities exchange and in the over-the-counter ("OTC")
market. A call option is a contract that provides the holder or buyer of the
option the right (not the obligation) to receive shares from the seller at a
fixed price. Options on securities owned or purchased by the Fund are considered
"derivative securities." All options written by the Fund will be covered.

A call option written by the Fund is covered if the Fund (a) owns the underlying
security that is subject to the call or (b) has an absolute and immediate right
to acquire that security without additional cash consideration (or for
additional cash consideration held in a segregated account by its custodian
bank) upon conversion or exchange of other securities held in its portfolio. A
call option is also covered if the Fund holds a call on the same security and in
the same principal amount as the call written where the exercise price of the
call held is (a) equal to or less than the exercise price of the call written or
(b) greater than the exercise price of the call written if the difference is
held in cash in a segregated account with the Fund's custodian bank.

The premium paid by the buyer of an option will reflect, among other things, the
relationship of the exercise price to the market price (intrinsic value) and
volatility of the underlying security, the remaining term of the option, supply
and demand, and interest rates.

The Fund, as writer of an option, may have no control over when the underlying
securities must be sold because the Fund may be assigned an exercise notice at
any time prior to the termination of the obligation. Whether or not an option
expires unexercised, the Fund retains the amount of the premium. This amount
may, in the case of a covered call option, may offset a decline in the market
value of the underlying security during the option period. If a call option is
assigned, the Fund experiences a profit or loss from the sale of the underlying
security.

The Fund, as writer of an option, may want to take advantage of market declines
and/or advances by terminating its obligation. To employ this strategy, the Fund
may effect a "closing purchase transaction" by buying an option of the same
series as the option previously written. A closing purchase transaction will
ordinarily be effected to realize a profit on an outstanding option, to prevent
an underlying security from being called, to permit the sale of the underlying
security or to permit the writing of a new option containing different terms.
The effect of the purchase is that the clearing corporation will cancel the
Fund's position. However, a Fund may not effect a closing purchase transaction
after being notified of the exercise of an option. Likewise, the holder of an
option may liquidate its position by effecting a "closing sale transaction" by
selling an option of the same series as the option previously purchased. There
is no guarantee that either a closing purchase or a closing sale transaction may
be made at the time desired by the Fund.

The Fund will realize a profit from a closing transaction if the price of the
transaction is less than the premium received from writing the option or is more
than the premium paid to buy the option. Likewise, the Fund will realize a loss
from a closing transaction if the price of the transaction is more than the
premium received from writing the option or is less than the premium paid to buy
the option. Increases in the market price of a call option will generally
reflect increases in the market price of the underlying security. As a result,
any loss resulting from the repurchase of a call option is likely to be offset
in whole or in part by appreciation of the underlying security owned by the
Fund.

The principal reason for writing covered call options is an attempt to manage
price volatility or risk. In addition, the Fund will attempt to obtain, through
a receipt of premiums, a greater current return than would be realized on the
underlying securities alone. The Fund receives a premium from writing a covered
call option that they retain whether or not the option is exercised. By writing
a call option, the Fund might become obligated to sell the underlying security
for less than the current market price upon exercise. By writing a covered call
option on a security, the Fund foregoes the opportunity to profit from an
increase in the market price of the underlying security above the exercise
price, except insofar as the premium represents an enhancement of such a profit.

The Fund may write covered call options (and buy put and call options) that
trade in the OTC market to the same extent that it may engage in exchange-traded
options. Like exchange-traded options, OTC options give the holder the right to
buy, in the case of OTC call options, an underlying security from the writer at
a stated exercise price. However, OTC options differ from exchange-traded
options in certain material respects.

OTC options are arranged directly with dealers and not with a clearing
corporation. Thus, there is a risk of non-performance by the dealer. Because
there is no exchange, pricing is typically done based on information from market
makers. OTC options are available for a greater variety of securities and in a
wider range of expiration dates and exercise prices, however, than
exchange-traded options, and the writer of an OTC option is paid the premium in
advance by the dealer.

DERIVATIVE SECURITIES. The Fund's transactions in options involve certain risks.
These risks include, among others, the risk that the effectiveness of a
transaction depends on the degree that price movements in the underlying
securities. The Fund bears the risk that the prices of its portfolio securities
will not move in the same amount as the option it has purchased, or that there
may be a negative correlation that would result in a loss on both the underlying
securities and the derivative security.

In addition, adverse market movements could cause the Fund to lose up to its
full investment in a call option contract. There is also the risk of loss by the
Fund of margin deposits in the event of bankruptcy of a broker with whom the
Fund has an open position.

Positions in exchange-traded options may be closed out only on an exchange that
provides a secondary market. There can be no assurance that a liquid secondary
market will exist for any particular option at any specific time. Thus, it may
not be possible to close an option position. If the Fund is unable to close out
a position and if prices move adversely, the Fund will have to continue to make
daily cash payments to maintain its required margin. If the Fund does not have
sufficient cash to do this, it may have to sell portfolio securities at a
disadvantageous time. The Fund will enter into option positions only if there
appears to be a liquid secondary market for the such options.

Similarly, there can be no assurance that a continuous liquid secondary market
will exist for any particular OTC option at any specific time. When the Fund
writes an OTC option, it generally can close out that option prior to its
expiration only by entering into a closing purchase transaction with the dealer
to which the Fund originally wrote it.

PUT OPTIONS. The Fund may buy put options on securities in an attempt to protect
against a decline in the market value of the underlying security below the
exercise price less the premium paid for the option. The ability to buy put
options allows the Fund to protect the unrealized gain in an appreciated
security in its portfolio without actually selling the security. In addition,
the Fund continues to receive interest or dividend income on the security. The
Fund may sell a put option it has previously purchased prior to the sale of the
security underlying the option. The sale of the option will result in a net gain
or loss depending on whether the amount received on the sale is more or less
than the premium and other transaction costs paid for the put option. Any gain
or loss may be wholly or partially offset by a change in the value of the
underlying security that the Fund owns or has the right to acquire. The Fund
utilizes a put strategy as a means to hedge current positions in times of market
uncertainty.

EQUITY SECURITIES. The Fund invests primarily in equity securities. An equity
security, or stock, represents a proportionate share of the ownership of a
company; its value is based on the success of the company's business, any income
paid to stockholders, the value of its assets, and general market conditions.
Common stocks, preferred stocks and convertible securities are examples of
equity securities in which the fund principally invests.

Preferred stocks are stocks that often pay dividends at a specific rate and have
a preference over common stocks in dividend payments and liquidation of assets.
Some preferred stocks may be convertible into common stock. Convertible
securities are securities that may be converted into or exchanged for a specific
amount of common stock of the same or different issuer within a particular
period of time at a specified price or formula.

The Fund may invest in companies with medium-size capitalizations. To the extent
the Fund invests in the equity securities of medium-size companies, it will be
exposed to the risks associated with companies that have narrower markets for
their goods and/or services and more limited managerial and financial resources
than larger, more established companies. As a result, their performance can be
more volatile and they face greater risk of business failure, which could
increase the volatility of the Fund's portfolio.

AMERICAN DEPOSITORY RECEIPTS ("ADRS"). The Fund may invest in ADRs. ADRS are
dollar denominated receipts representing interests in the securities of a
foreign issuer, which securities may not necessarily be denominated in the same
currency as the securities into which they may be converted. ADRs are receipts
typically issued by United States banks and trust companies that evidence
ownership of underlying securities issued by a foreign corporation. ADRs may be
purchased through "sponsored" or "unsponsored" facilities. A sponsored facility
is established jointly by the issuer of the underlying security and a
depository, whereas a depository may establish an unsponsored facility without
participation by the issuer of the depository security. Holders of unsponsored
depository receipts generally bear all the costs of such facilities and the
depository of an unsponsored facility frequently is under no obligation to
distribute shareholder communications received from the issuer of the deposited
security or to pass through voting rights to the holders of such receipts of the
deposited securities. ADRs are not necessarily denominated in the same currency
as the underlying securities to which they may be connected. Generally, ADRs in
registered form are designed for use in the U.S. securities market and ADRs in
bearer form are designed for use outside the United States.

ILLIQUID INVESTMENTS. The Fund may invest not more than 5% of its net assets in
illiquid securities. Illiquid securities are generally securities that cannot be
sold within seven days in the normal course of business at approximately the
amount at which the Fund has valued them. The Fund does not presently intend to
invest in any illiquid securities.

INVESTMENTS IN OTHER INVESTMENT COMPANIES. The Fund may invest in the securities
of other investment companies to the extent that such an investment would be
consistent with the requirements of the 1940 Act. Investments in the securities
of other investment companies may involve duplication of advisory fees and
certain other expenses. By investing in another investment company, the Fund
becomes a shareholder of that investment company. As a result, Fund shareholders
indirectly will bear a Fund's proportionate share of the fees and expenses paid
by shareholders of the other investment company, in addition to the fees and
expenses Fund shareholders directly ear in connection with the Fund's own
operations.

SECURITIES LENDING. The Fund may lend securities from its portfolio to brokers,
dealers and financial institutions (but not individuals) in order to increase
the return on its portfolio. The value of the loaned securities may not exceed
one-third of the Fund's total net assets and loans of portfolio securities are
fully collateralized based on values that are marked-to-market daily. The Fund
will not enter into any portfolio security lending arrangement having a duration
of longer than one year. The principal risk of portfolio lending is potential
default or insolvency of the borrower. In either of these cases, the Fund could
experience delays in recovering securities or collateral or could lose all or
part of the value of the loaned securities. The Fund may pay reasonable
administrative and custodial fees in connection with loans of portfolio
securities and may pay a portion of the interest or fee earned thereon to the
borrower or a placing broker.

In determining whether or not to lend a security to a particular broker, dealer
or financial institution, the Adviser considers all relevant facts and
circumstances, including the size, creditworthiness and reputation of the
broker, dealer, or financial institution. Any loans of portfolio securities are
fully collateralized based on values that are marked to market daily. The Fund
does not enter into any portfolio security lending arrangement having a duration
of longer than one year. Any securities that the Fund may receive as collateral
will not become part of the Fund's investment portfolio at the time of the loan
and, in the event of a default by the borrower, the Fund will, if permitted by
law, dispose of such collateral except for such part thereof that is a security
in which the Fund is permitted to invest. During the time securities are on
loan, the borrower will pay the Fund any accrued income on those securities, and
the Fund may invest the cash collateral and earn income or receive an
agreed-upon fee from a borrower that has delivered cash-equivalent collateral.

WHEN-ISSUED PURCHASES AND DELAYED DELIVERY. The Fund may purchase or sell
particular securities with payment and delivery taking place at a later date.
The price or yield obtained in a transaction may be less favorable than the
price or yield available in the market when the securities delivery takes place.
When the Fund agrees to purchase securities on a when-issued or delayed delivery
basis, its custodian will set aside cash or liquid securities equal to the
amount of the commitment in a segregated account. Normally, the custodian will
set aside portfolio securities to satisfy a purchase commitment, and in such a
case the Fund may be required subsequently to place additional assets in the
segregated account in order to ensure that the value of the account remains
equal to the amount of the Fund's commitments. It may be expected that the
market value of the Fund's net assets will fluctuate to a greater degree when it
sets aside portfolio securities to cover such purchase commitments than when it
sets aside cash. When-issued transactions involve the risk that the price or
yield obtained in a transaction (and therefore the value of a security) may be
less favorable than the price or yield (and therefore the value of a security)
available in the market when the securities delivery takes place.

The Fund will make commitments to purchase securities on a when-issued basis or
to purchase or sell securities on a forward commitment basis only with the
intention of completing the transaction and actually purchasing or selling the
securities. If deemed advisable as a matter of investment strategy, however, the
Fund may dispose of or renegotiate a commitment after it is entered into, and
may sell securities it has committed to purchase before those securities are
delivered to the Fund on the settlement date. In these cases, the Fund may
realize a capital gain or loss.

When the Fund engages in when-issued and delayed delivery transactions, it
relies on the other party to consummate the trade. Failure of such party to do
so may result in the Fund incurring a loss or missing an opportunity to obtain a
price considered advantageous. The market value of the securities underlying a
when-issued purchase, and any subsequent fluctuations in their market value, are
taken into account when determining the net asset value of the Fund starting on
the day the Fund agrees to purchase the securities. The Fund does not earn
interest on the securities it has committed to purchase until they are paid for
and delivered on the settlement date.

SHORT SELLING. The Fund may, from time to time, make short sales. Short sales
are transactions where the Fund sells securities they do not own in anticipation
of a decline in the market value of the securities. The Fund must borrow the
security to deliver it to the buyer. The Fund is then obligated to replace the
security borrowed at the market price at the time of replacement. Until the
security is replaced, the Fund is required to pay the lender any dividends or
interest which accrue on the security during the loan period. To borrow the
security, the Fund also may be required to pay a premium, which would increase
the cost of the security sold. To the extent necessary to meet margin
requirements, the Broker will retain proceeds of the short sale until the short
position is closed out. The Adviser anticipates that the frequency of short
sales will vary substantially under different market conditions and the Fund
does not intend that any significant amount of its assets, as a matter of
practice, will be in short sales.

In addition to the short sales discussed above, the Fund may also make short
sales "against the box," a transaction in which the Fund enters into a short
sale of a security owned by the Fund. A broker holds the proceeds of the short
sale until the settlement date, at which time the Fund delivers the security to
close the short position. The Fund receives the net proceeds from the short
sale.

The Fund may also purchase call options to provide a hedge against an increase
in the price of a security sold short by the Fund. When a Fund purchases call
options, it has to pay a premium to the person writing the option and a
commission to the broker selling the option. If the options are exercised by the
Fund, the premium and the commission paid may be more than the amount of the
brokerage commission charged if the securities were to be purchased directly.

SHORT-TERM TRADING. From time to time, the Fund seeks to trade on a short-term
basis to take advantage of higher returns. Short-term trading involves taking
advantage of daily and intra-day price opportunities not available to investors
who seek to hold their investments long-term. To the extent that the Fund
engages in short-term trading to capture these opportunities, it may not meet
its investment objective.

WARRANTS AND RIGHTS. The Fund may invest in warrants. Warrants are basically
options to purchase common stock at a specific price (usually a premium above
the market value of the optioned common stock at issuance) valid for a specific
period of time. Warrants may have a life ranging from less than a year to twenty
years or may be perpetual. However, most warrants have expiration dates after
which they are worthless. In addition, if the market price of the common stock
does not exceed the warrant's exercise price during the life of the warrant, the
warrant will expire as worthless. Warrants have no voting rights, pay no
dividends, and have no rights with respect to assets of the corporation issuing
them. The percentage increase or decrease in the market price of the warrant may
tend to be greater than the percentage increase or decrease in the market price
of the optioned common stock. Warrants acquired in units or attached to
securities may be deemed to be without value for purposes of this policy. The
Fund may also invest in rights. Rights are basically privileges granted to
existing shareholders of a corporation to subscribe to shares of new issues of
common stock before such stock is offered to the public. Rights are normally
short-term, freely transferable and they entitle the holder to buy the new
common stock below the offered public price.

NON-DIVERSIFIED FUND. The Fund is non-diversified under the 1940 Act, which
means that there is no restriction under the 1940 Act on how much the Fund may
invest in the securities of any one issuer. However, to qualify for tax
treatment as a regulated investment company under the Internal Revenue Code
("Code"), the Fund intends to comply, as of the end of each taxable quarter,
with certain diversification requirements imposed by the Code. Pursuant to these
requirements, the Fund will, among other things, limit its investments in the
securities of any one issuer (other than U. S. Government securities or
securities of other regulated investment companies) to no more than 25% of the
value of the Fund's total assets. In addition, the Fund, with respect to 50% of
its total assets, will limit its investments in the securities of any issuer to
5% of its total assets, and will not purchase more than 10% of the outstanding
voting securities of any one issuer.

In applying the Fund's fundamental policy concerning concentration that is
described above, it is a matter of non-fundamental policy that investments in
certain categories of companies will not be considered to be investments in a
particular industry. For example: (i) financial service companies will be
classified according to the end users of their services, for example, automobile
finance, bank finance and diversified finance will each be considered a separate
industry; (ii) technology companies will be divided according to their products
and services, for example, hardware, software, information services and
outsourcing, or telecommunications will each be a separate industry; (iii)
asset-backed securities will be classified according to the underlying assets
securing such securities; and (iv) utility companies will be divided according
to their services, for example, gas, gas transmission, electric and telephone
will each be considered a separate industry.

TEMPORARY INVESTMENTS. When the Fund's Adviser believes market or economic
conditions are unfavorable for investors, the Adviser may invest up to 100% of
the Fund's net assets in a temporary defensive manner or hold a substantial
portion of its net assets in cash, cash equivalents, or other high quality
short-term investments. Unfavorable market or economic conditions may include
excessive volatility or a prolonged general decline in the securities markets,
the securities in which the Fund normally invests, or the U.S. economy.
Temporary defensive investments generally may include U.S. government
securities, Treasury Bills or other short-term obligations, certificates of
deposit, demand notes, and other money market equivalents. The Adviser also may
invest in these types of securities or hold cash while looking for suitable
investment opportunities or to maintain liquidity.

U.S. Government obligations include securities issued or guaranteed as to
principal and interest by the U.S. Government, its agencies or
instrumentalities. U.S. Treasury obligations differ mainly in the length of
their maturity. Treasury bills, the most frequently issued marketable
government securities, have a maturity of up to one year and are issued on a
discount basis. U.S. Government obligations also include securities issued or
guaranteed by federal agencies or instrumentalities, including
government-sponsored enterprises.

Payment of principal and interest on U.S. Government obligations may be backed
by the full faith and credit of the United States or may be backed solely by the
issuing or guaranteeing agency or instrumentality itself. In the latter case,
the investor must look principally to the agency or instrumentality issuing or
guaranteeing the obligation for ultimate repayment, which agency or
instrumentality may be privately owned. There can be no assurance that the U.S.
Government would provide financial support to its agencies or instrumentalities
(including government-sponsored enterprises) where it is not obligated to do so.
In addition, U.S. Government obligations are subject to fluctuations in market
value due to fluctuations in market interest rates. As a general matter, the
value of debt instruments, including U.S. Government obligations, declines when
market interest rates increase and rises when market interest rates decrease.
Certain types of U.S. Government obligations are subject to fluctuations in
yield or value due to their structure or contract terms.

MANAGEMENT OF THE TRUST

TRUSTEES AND OFFICERS

The Trust's Board of Trustees supervises and manages the affairs of the Fund. In
accordance with Delaware's Business Trust Act, a trustee of the Trust is
responsible for performing his or her duties in good faith, in a manner such
trustee reasonably believes to be in the best interests of the Trust and with
the care that an ordinarily prudent person in a like position would use under
similar circumstances. The Trust is not required to hold annual shareholder
meetings.

The names, business addresses and ages of the trustees and officers of the Trust
together with information as to their principal business occupations during at
least the past five years are shown below. Each Trustee who is an "interested
person" of the Fund, as defined in the 1940 Act, is indicated by an asterisk.

<TABLE>
<CAPTION>
------------------------------------ -------------------- -----------------------------------------------------------------
NAME, AGE, ADDRESS POSITIONS WITH THE PRINCIPAL OCCUPATION DURING PAST 5 YEARS
TRUST
------------------------------------ -------------------- -----------------------------------------------------------------
<S> <C> <C> <C>
*Glen R. Rauch (50) President, Trustee President and Controlling Manager of the Adviser (1986 -
44 Wall Street, 16th Floor and Chairperson of present); Senior Vice President and Partner, Gabrielle,
New York, NY 10005 the Board Hueglin and Cashman, Inc., a New York brokerage firm (Sept.
1980 - Dec. 1985); Municipal Bond Salesman, Stover Glass
and Company, a New York brokerage firm, (1973 - July,
1980).
------------------------------------ -------------------- -----------------------------------------------------------------
Anthony Caporrino (59) Trustee Managing Partner and Certified Public Accountant, Grodsky,
445 Northern Boulevard Caporrino & Kaufman, CPAs, P.C. (1995 - present).
Great Neck, NY 11021
------------------------------------ -------------------- -----------------------------------------------------------------
Yale Paprin (47) Trustee President, Yale Realty Services Corp. (1990 - present).
501 Washington Avenue
Pleasantville, NY 10570
------------------------------------ -------------------- -----------------------------------------------------------------
</TABLE>

*This Trustee is an "interested person" of the Fund, as defined in the 1940
Act. Mr. Rauch serves as the President of the Adviser to the Fund.

TRUSTEE COMPENSATION. For their service as Trustees, the independent trustees
receive $2,000 per Trustee meeting, as well as reimbursement for expenses
incurred in connection with attendance at Board meetings. Interested trustees do
not receive any compensation for their service as Trustees. The members of the
Trust's Board of Trustees receive the following compensation:

PENSION OR
AGGREGATE RETIREMENT BENEFITS ESTIMATED ANNUAL TOTAL COMPENSATION
COMPENSATION FROM ACCRUED AS PART OF BENEFITS UPON FROM TRUST PAID TO
NAME OF PERSON/POSITION THE TRUST1 FUND EXPENSES RETIREMENT TRUSTEES
------------------------ --------------------- --------------------- ------------------ -----------------------
<S> <C> <C> <C> <C>
Glen R. Rauch, None None None None
President and
Chairperson
------------------------ --------------------- --------------------- ------------------ -----------------------
Anthony Caporrino, None None None None
Trustee
------------------------ --------------------- --------------------- ------------------ -----------------------
Yale Paprin, None None None None
Trustee
------------------------ --------------------- --------------------- ------------------ -----------------------
</TABLE>

(1) These represent estimates for the current fiscal year ending June 30, 2001.

CONTROL PERSONS, PRINCIPAL HOLDERS OF SECURITIES AND MANAGEMENT OWNERSHIP. A
principal shareholder is any person who owns of record or beneficially 5% or
more of the outstanding shares of the Fund. As of _____, 2000, the Adviser owned
of record 100% of the shares of the Fund. Accordingly, as of _____, 2000, the
Adviser owned a controlling interest in the Fund. A control person is one who
owns beneficially or through controlled companies more than 25% of the voting
securities of a company or acknowledges the existence of control.

MANAGEMENT OWNERSHIP
As of ________, 2000, for organizational purpose, Glen Rauch Securities, Inc.,
investment adviser to the Fund, owned 100% of the outstanding shares of the
Fund.

ADVISORY SERVICES

INVESTMENT ADVISER
Glen Rauch Securities, Inc. (the "Adviser"), a New York company, is the
investment adviser to the Fund pursuant to an investment advisory agreement with
the Trust dated as of December 12th, 2000 (the "Advisory Agreement"). The
Adviser is a corporation organized under the laws of the state of New York and
its principal place of business is 44 Wall Street, New York, New York, 10005.
For more information about the Adviser, see "Investment Adviser" in the
Prospectus. The Adviser is under the control of Glen R. Rauch, President and
controlling member of the Adviser. Glen R. Rauch is also the President and
Chairperson of the Board of Trustees of the Fund.

Under the Advisory Agreement between the Trust and the Adviser and subject to
the control of the Board of Trustees, the Adviser manages the day-to-day
operations of the Fund, including overseeing the purchases and sales of Fund
securities consistent with the Fund's investment objectives and policies. In
addition, the Adviser is responsible for overseeing the administration of the
Fund's daily business affairs such as providing accurate accounting records,
computing accrued income and expenses of the Fund, computing the daily net asset
value of the Fund, assuring proper dividend disbursements, proper financial
information to investors, notices of all shareholders' meetings and providing
sufficient office space, storage, telephone services and personnel to accomplish
these responsibilities. The Board of Trustees of the Fund approved the Advisory
Agreement, by unanimous vote, on December 12, 2000 in the manner required by the
1940 Act.

The Advisory Agreement provides that the Adviser will not be liable to the Fund
for any error of judgment or mistake of law, or for any loss suffered by the
Fund or its shareholders in connection with matters to which the Advisory
Agreement relates, except for willful misfeasance, bad faith, gross negligence
or reckless disregard of its obligations and duties under the Advisory
Agreement.

In exchange for its services, the Adviser is entitled to receive an annual
management fee from the Fund, calculated daily and payable monthly, equal to
1.00% of the average daily net assets of the Fund. No sales charges or
commissions are payable in connection with the sale of the Fund's shares. The
expenses incurred in the sale of Fund shares, including advertising and
promotion, are included among the organizational expenses which will be paid by
the Adviser. From the inception of the Fund to the date hereof, the Adviser has
been paid a total of $0.

The Fund is responsible for paying all its expenses other than those assumed by
the Adviser incurred in the operation of the Fund and any public offering of the
Fund's shares, including, among others, any interest, taxes, brokerage fees and
commissions, or fees of the trustees who are not employees of the Adviser, or
any of their affiliates, expenses of trustees and shareholders' meetings,
including the cost of printing and mailing proxies, expenses of insurance
premiums for fidelity and other coverage, expenses of redemption of Fund shares,
expenses of issue and sale of Fund shares, expenses of printing and mailing
stock certificates representing shares of the Fund, association membership dues,
advertising promotional expenses in connection with the distribution of the Fund
shares, including paying for prospectuses for new shareholders, charges of
custodian, transfer agent, dividend disbursing agent, accounting services agent,
investor servicing agent, and bookkeeping, auditing, and legal expenses. The
Fund will also pay the fees and bear the expense of registering and maintaining
the registration of the Fund and its shares with the Commission and registering
or qualifying its shares under state or other securities laws and the expense of
preparing and mailing prospectuses and reports to shareholders.

The Advisory Agreement will continue in effect from year to year if such
continuance is approved in the manner required by the 1940 Act (i.e., (a) by a
vote of a majority of the Board of Trustees or of the outstanding voting
securities of the Fund and (b) by a vote of a majority of the Trustees who are
not parties to the Advisory Agreement, as applicable, or interested persons of
any such party), and if the Adviser shall not have notified the Fund at least 60
days prior to the anniversary date of the previous continuance that it does not
desire such continuance. The Advisory Agreement may be terminated by the Fund,
without penalty, on 60 days' written notice to the Adviser and will terminate
automatically in the event of its assignment, as applicable.

CODE OF ETHICS
The Trust and the Adviser have adopted Codes of Ethics that govern the conduct
of employees of the Trust and Adviser who may have access to information about
the Fund's securities transactions. The Codes recognize that such persons owe a
fiduciary duty to the Fund's shareholders and must place the interests of
shareholders ahead of their own interests. Among other things, the Codes require
pre-clearance of personal securities transactions; certain blackout periods for
personal trading of securities which may be considered for purchase or sale by
the Fund or other clients of the Adviser; annual and quarterly reporting of
personal securities holdings; and limitations on personal trading of initial
public offerings. Violations of the Codes are subject to review by the Trustees
and could result in severe penalties.

DISTRIBUTOR
Quasar Distributors, LLC serves as the principal underwriter (the "Distributor")
and the general distributor of the shares of the Fund pursuant to a distribution
agreement among the Trust, the Adviser and the Distributor dated as
of December 12th, 2000 (the "Distribution Agreement"). The Distributor is
registered as a broker-dealer under the Securities Exchange Act of 1934 and each
state's securities laws and is a member of the NASD. The offering of the Fund's
shares is continuous. The Distribution Agreement was approved by the Board of
Trustees on December 12, 2000 in the manner required by the 1940 Act. See
"Management of the Fund--Trustees and Officers."

DISTRIBUTION AND SHAREHOLDER SERVICING PLAN
The Fund has adopted a Distribution and Shareholder Servicing Plan (the "Plan")
pursuant to Rule 12b-1 under the 1940 Act. The Plan authorizes payments by the
Fund in connection with the distribution of Fund shares at an annual rate of
1.00% of the Fund's average daily net asset value (0.75% for 12b-1 expenses and
0.25% for shareholder servicing activities). Payments may be made by the Fund
under the Plan for the purpose of financing any activity primarily intended to
result in the sale of shares of the Fund, as determined by the Board of
Trustees. Such activities typically include advertising; compensation for sales
and sales marketing activities of financial service agents and others, such as
dealers or distributors; shareholder account servicing; production and
dissemination of prospectuses and sales and marketing materials; and capital or
other expenses of associated equipment, rent, salaries, bonuses, interest and
other overhead. To the extent any activity is one which the Fund may finance
without the Plan, the Fund may also make payments to finance such activity
outside of the Plan and not subject to its limitations. Payments under the Plan
are based upon a percentage of average daily net assets attributable to the
shares of the Fund regardless of the amounts actually paid or expenses actually
incurred by the Distributor; however, in no event, may such payments exceed the
maximum allowable fee. It is, therefore, possible that the Distributor may
realize a profit in a particular year as a result of these payments. The Plan
increases the Fund's expenses from what they would otherwise be and the
Adviser's financial advisers may receive a higher percentage of the 12b-1 fee
paid by the Funds than of a 12b-1 fee paid by a non-affiliated mutual fund.

Administration of the Plan is regulated by Rule 12b-1 under the 1940 Act, which
requires that the Board of Trustees receive and review at least quarterly
reports concerning the nature and qualification of expenses which are made, that
the Board of Trustees, including a majority of the disinterested Trustees,
approve all agreements implementing the Plan and that the Plan may be continued
from year-to-year only if the Board of Trustees, including a majority of the
disinterested Trustees, concludes at least annually that continuation of the
Plan is likely to benefit shareholders.

SERVICE PROVIDERS
The Trust entered into a series of agreements whereby certain parties will
provide various services to the Fund.

Firstar Mutual Fund Services, LLC ("Firstar") will provide accounting and
administrative services and shareholder servicing to the Fund as transfer agent
and dividend disbursing agent. Firstar's address is 615 E. Michigan Street,
Milwaukee, Wisconsin 53202. The services to be provided under the Transfer Agent
Servicing Agreement, dated as of December 12, 2000, include processing purchase
and redemption transactions, establishing and maintaining shareholder accounts
and records, disbursing dividends declared by the Fund, day-to-day
administration of matters related to the corporate existence of the Fund (other
than rendering investment advice), maintenance of its records and preparation,
mailing and filing of reports, assistance in monitoring the total number of
Shares sold in each State for "Blue Sky" purposes and assistance in the
preparation of the Fund's registration statement under federal and state
securities laws. As compensation for these services, the Fund pays Firstar
reasonable out-of-pocket expenses plus fees based on the average net assets of
the Fund.

Firstar Bank, N.A., an affiliate of Firstar, is the custodian of the assets of
the Fund (the "Custodian") pursuant to a custody agreement between the Custodian
and the Trust dated as of December 12, 2000 ("Custody Agreement"), whereby the
Custodian provides for fees on a transactional basis plus out-of-pocket
expenses. The Custodian's address is 425 Walnut Street, Cincinnati, Ohio 45202.

Pursuant to a Fund Administration Servicing Agreement and a Fund Accounting
Servicing Agreement dated as of December 12, 2000, each between Firstar and the
Trust, Firstar also performs certain administrative and tax reporting functions
for the Fund, including preparation and filing federal and state tax returns,
preparing and filing securities registration compliance filings with various
states compiling data for and preparing notices to the Commission, preparing
financial statements for the Annual and Semi-Annual Reports to the Commission
and current investors, monitoring the Fund's expense accruals and performing
securities valuations and, from time to time, monitoring the Fund's compliance
with the Fund's investment objective and restrictions. Pursuant to the Fund
Administration Servicing Agreement, Firstar is entitled to receive from the Fund
a fee, computed daily and payable monthly, based on the Fund's average net
assets at an annual rate of .07% of the first $200 million, .06% of the next
$500 million, and .04% of the remaining balance, subject to an annual minimum of
$40,000.

Kramer Levin Naftalis & Frankel LLP acts as legal counsel to the Fund.
PricewaterhouseCoopers LLP is the independent accountant of the Trust.

PORTFOLIO TRANSACTIONS
Subject to the general supervision of the Board of Trustees, the Adviser is
responsible for, makes decisions with respect to, and places orders for all
purchases and sales of portfolio securities for the Fund.

The portfolio turnover rate for the Fund is calculated by dividing the lesser of
purchases or sales of portfolio securities for the reporting period by the
monthly average value of the portfolio securities owned during the reporting
period. The calculation excludes all securities, whose maturities or expiration
dates at the time of acquisition are one year or less. Portfolio turnover may
vary greatly from year to year as well as within a particular year, and may be
affected by cash requirements for redemption of shares and by requirements which
enable the Fund to receive favorable tax treatment. Portfolio turnover will not
be a limiting factor in making portfolio decisions, and the Fund may engage in
short-term trading to achieve its investment objective. Portfolio turnover is
anticipated to be as high as in excess of 200% for the Fund.

Transactions on U.S. stock exchanges involve the payment of negotiated brokerage
commissions. On exchanges on which commissions are negotiated, the cost of
transactions may vary among different brokers.

Transactions in the over-the-counter market are generally principal transactions
with dealers and the costs of such transactions involve dealer spreads rather
than brokerage commissions. With respect to over-the-counter transactions, the
Adviser will normally deal directly with dealers who make a market in the
securities involved except in those circumstances where better prices and
execution are available elsewhere or as described below.

The Fund may participate, if and when practicable, in bidding for the purchase
of portfolio securities directly from an issuer in order to take advantage of
the lower purchase price available to members of a bidding group. The Fund will
engage in this practice, however, only when the Adviser, in its sole discretion,
believes such practice to be in the Fund's interests.

The Advisory Agreement between the Trust and the Adviser provides that, in
executing portfolio transactions and selecting brokers or dealers, the Adviser
will seek to execute portfolio transactions at prices which, under the
circumstances, result in total costs or proceeds being the most favorable to the
Fund. When allocating transactions to broker-dealers, the Adviser is authorized
to consider, in determining whether a particular broker-dealer will provide best
execution, all factors it deems relevant, including the breadth of the market in
the security, the price of the security, the financial condition and execution
capability of the broker or dealer, research services provided to the Adviser,
and the reasonableness of the commission, if any, both for the specific
transaction and on a continuing basis, and thus need not pay the lowest spread
or commission available if the Adviser determines in good faith that the amount
of commission is reasonable in relation to the value of the brokerage and
research services provided by the broker-dealer, viewed either in terms of the
particular transaction or the Adviser's overall responsibilities as to the
accounts as to which it exercises investment discretion. If, on the foregoing
basis, the transaction in question could be allocated to two or more
broker-dealers, the Adviser is authorized in making such allocation, to
consider, (a) whether a broker-dealer has provided research services, as further
discussed below; and (b) whether a broker-dealer has sold Fund shares or the
shares of any other investment company or companies having the Adviser as its
adviser or having the same Adviser, administrator or principal underwriter as
the Fund. Such research may be in written form or through direct contact with
individuals and may include quotations on portfolio securities and information
on particular issuers and industries, as well as on market, economic or
institutional activities, and may also include comparison of the performance of
the Fund to the performance of various indices and investments for which
reliable performance data is available and similar information prepared by
recognized mutual fund statistical services. The Fund recognizes that no dollar
value can be placed on such research services or on execution services, that
such research services may or may not be useful to the Fund or other accounts of
the Adviser, and that such research received by such other accounts may or may
not be useful to the Fund.

Supplementary research information so received is in addition to, and not in
lieu of, services required to be performed by the Adviser and does not reduce
the advisory fees payable to it by the Fund. The Board of Trustees will
periodically review the commissions paid by the Fund to consider whether the
commissions paid over representative periods of time appear to be reasonable in
relation to the benefits inuring to the Fund. Research services furnished by
firms through which the Fund effects its securities transactions may be used by
the Adviser in servicing all of its accounts; not all of such services may be
used by the Adviser in connection with the Fund. It is possible that certain of
the supplementary research or other services received will primarily benefit one
or more other accounts for which investment discretion is exercised. Conversely,
the Fund may be the primary beneficiary of the research or services received as
a result of portfolio transactions effected for such other account.

Investment decisions for the Fund are made independently from those for other
accounts advised or managed by its Adviser. Such other accounts may also invest
in the same securities as the Fund. When a purchase or sale of the same security
is made at substantially the same time on behalf of the Fund and another
account, the transaction will be averaged as to price and available investments
allocated as to amount, in a manner which the Advisor believes to be equitable
to the Fund and such other account. In some instances, this investment procedure
may adversely affect the price paid or received by the Fund or the size of the
position obtained or sold by the Fund. To the extent permitted by law, the
Adviser may aggregate the securities to be sold or purchased for the Fund with
those to be sold or purchased for other accounts in executing transactions.

Any portfolio transaction may be executed through broker-dealers who are
affiliated with the Fund or the Adviser if, in the Adviser's judgment, the use
of such affiliated brokers is likely to result in price and execution at least
as favorable as those of other qualified brokers, and if, in the transaction,
the affiliated broker-dealer charges a commission rate consistent with those
charged by the affiliated broker-dealer to comparable unaffiliated customers in
similar transactions. All transactions with affiliated broker-dealers will
comply with Rule 17e-1 under the 1940 Act.

Since the inception of the Fund, the Fund paid no brokerage commissions to a
broker that is affiliated with the Fund, its Adviser, or the Distributor.

The Adviser will cause the Fund to deal directly with the selling or purchasing
principal or market maker without incurring brokerage commissions unless the
Adviser determines that a better price or execution may be obtained by paying
such commissions. Purchases from underwriters include a commission or concession
paid by the issuer to the underwriter and principal transactions placed through
broker-dealers include a spread between the bid and asked prices.

Under the 1940 Act, the Fund may not purchase portfolio securities from any
underwriting syndicate of which the Distributor, as principal, is a member
except under certain limited circumstances set forth in Rule 10f-3 thereunder.
These conditions relate, among other things, to the reasonableness of the
broker-dealer spread, the amount of securities that may be purchased from any
one issuer, and the amount of the Fund's assets that may be invested in a
particular issue. The rule also requires that any purchase made subject to its
provisions be reviewed at least quarterly by the Fund's Board of Trustees,
including a majority of the Fund's Board of Trustees who are not interested
persons of the Fund as defined by the 1940 Act.

The Board of Trustees will review quarterly the Adviser's performance of its
responsibilities in connection with the placement of portfolio transactions on
behalf of the Fund. Such review is conducted for the purpose of determining if
the markups and commissions, if any, paid by the Fund are reasonable in relation
to the benefits received by the Fund taking into account the competitive
practices in the industry.

DETERMINING NET ASSET VALUE
The net asset value of the Fund will be determined as of the close of trading
(normally 4:00 p.m. Eastern time) on each day the New York Stock Exchange
("NYSE") is open for trading. The NYSE is open for trading Monday through Friday
except New Year's Day, Martin Luther King, Jr. Day, Presidents' Day, Good
Friday, Memorial Day, Independence Day, Labor Day, Thanksgiving Day, and
Christmas Day. Additionally, if any of the aforementioned holidays falls on a
Saturday, the NYSE will not be open for trading on the succeeding Monday, unless
unusual business conditions exist, such as the ending of a monthly or the yearly
accounting period.

Securities which are traded on a recognized securities exchange are valued at
the last sale price on the securities exchange on which such securities are
primarily traded or at last sale price on the national securities market. Call
options are valued at the last sales price on the valuation date if the last
sales price is between the closing bid and asked prices. Otherwise, call options
are valued at the mean of the closing bid and asked prices. Debt securities
(other than short-term instruments) are valued at prices furnished by a national
pricing service, subject to review by the Adviser and determination of the
appropriate price whenever a furnished price is significantly different from the
previous day's furnished price. Any securities for which market quotations are
not readily available are valued at their fair value as determined in good faith
by the Board of Trustees.

To the extent the Fund obtains securities for which market quotations are not
readily available, those securities are valued on the basis of information
furnished by a pricing service or services, approved by the Fund's Board of
Trustees (the "Board"), which furnishes the Adviser with valuations based in
each case upon information concerning market transactions and quotations from
recognized securities broker-dealers. The methods used by such pricing service
and the valuations so established are reviewed regularly by officers of the Fund
under the general supervision of the Board. The use of such service by the Fund
is the method selected by the Board for obtaining a fair determination of the
value of securities for which quotations are not readily available.

If market quotations or information furnished by a pricing service is not
available for a security or if the value of a security has been materially
affected by events occurring after the close of the exchange or market on which
the security is principally traded (for example, a foreign exchange or market),
that security may be valued by another method that the Board believes accurately
reflects fair value. A securities valuation may differ depending on the method
used for determining value.

BUYING SHARES
As described in the prospectus, shares of the Fund may be purchased by check, by
wire transfer of funds through a bank or through one or more brokers authorized
by the Fund to receive purchase orders. The minimum initial investment is $2,000
on regular accounts and IRAs. Investments may be made in any amount in excess of
these amounts. To add to any existing accounts, the Fund requires a minimum
investment of $100.

No stock certificates will be issued for the purchase of Fund shares. Instead,
an account will be established for each investor and all shares purchased or
received, including those obtained through reinvestment of distributions, will
be registered on the books of the Fund and credited to such account. The Fund
has the right to limit the amount of purchases and to refuse to sell shares to
any person.

REDEEMING SHARES
Redemption proceeds are normally wired or mailed on the next business day
following receipt of wired or telephoned instructions, but in no event later
than seven days following receipt of such requests. Redemptions may be suspended
or payment dates postponed more than seven days when:

(a) the NYSE is closed (other than weekends or holidays),
(b) when trading on the NYSE is restricted during any period when an emergency
exists as a result of which (i) disposal of the Fund's investments is not
reasonably practicable, or (ii) it is not reasonably practicable for the
Fund to determine the value of the Fund's net assets, or
(c) for such other periods as the SEC may by order permit for the protection
of the Fund's shareholders.

If you designate a savings and loan association as the bank to receive your
telephone redemption proceeds, please note that if the savings and loan
association is not a participant in the Federal Reserve System, redemption
proceeds must be wired to a commercial bank which is a correspondent of the
savings and loan association. You should discuss wire procedures and costs with
their savings and loan association before completing the telephone redemption
authorization on the account application form.

If you redeem shares of the Fund after holding them for less than one year, the
Fund will charge a fee of 1.00% of the value of the shares redeemed. This fee is
paid to the Fund to cover the costs of maintaining accounts that are abnormally
active. This fee is waived for Fund shareholders who are private clients of the
Adviser.

REDEMPTION IN KIND
The Fund does not intend to redeem shares in any form except cash. The Fund,
however, has filed a notice of election under Rule 18f-1 of the 1940 Act that
allows the Fund to redeem in-kind redemption requests of a certain amount.
Specifically, if the amount you are redeeming is over the lesser of $250,000 or
1% of the Fund's net asset value, the Fund has the right to redeem your shares
by giving you the amount that exceeds $250,000 or 1% of the Fund's net asset
value in securities instead of cash.

TAX CONSIDERATIONS
The following is a summary of certain tax considerations generally affecting the
Fund and its shareholders. No attempt is made to present a detailed explanation
of the tax treatment of the Fund or its shareholders, and the discussions here
are not intended as substitutes for careful tax planning.

QUALIFICATION AS A REGULATED INVESTMENT COMPANY
The Fund intends to file the requisite election and to satisfy all other
requirements necessary to be characterized as a regulated investment company
("RIC") under Subchapter M of the Code. As a RIC, the Fund will not be subject
to federal income tax on the portion of its net investment income (i.e., its
investment company taxable income, as that term is defined in the Code, without
regard to the deduction for dividends paid ) and net capital gain (i.e., the
excess of net long-term capital gain over net short-term capital loss) that it
distributes to shareholders, provided that it distributes at least 90% of its
net investment income for the taxable year (the "Distribution Requirement"), and
satisfies certain other requirements of the Code that are described below. In
addition to satisfying the Distribution Requirement for each taxable year, a RIC
must derive at least 90% of its gross income from dividends, interest, certain
payments with respect to securities loans, gains from the sale or other
disposition of stock or securities or foreign currencies, to the extent such
currency gains are directly related to the RIC's principal business of investing
in stock or securities, and other income, including but not limited to gains
from options, futures or forward contracts, derived with respect to its business
of investing in such stock, securities or currencies (the "Income Requirement").

In addition, at the close of each quarter of the Fund's taxable year, (a) at
least 50% of the market value of the Fund's assets must be represented by cash,
securities of other regulated investment companies, United States government
securities and other securities, with such other securities limited, in respect
of any one issuer (as contemplated by the Code), to an amount not greater than
5% of the Fund's assets and not greater than 10% of the outstanding voting
securities of such issuer and (b) not more than 25% of the value of its assets
may be invested in the securities, other than United States government
securities or securities of other regulated investment companies, of any one
issuer (as contemplated by the Code) or any two or more issuers that the Fund
controls and which are determined to be engaged in the same or similar trades or
businesses or related trades or businesses.

Although the Fund intends to satisfy or continue to satisfy all the foregoing
requirements, there is no assurance that the Fund will be able to do so. The
investment by the Fund primarily in options and futures positions entails some
risk that the Fund might fail to satisfy the Diversification Requirements. There
is some uncertainty regarding the valuation of such positions for purposes of
those requirements; accordingly, it is possible that the method of valuation
used by the Fund, pursuant to which the Fund would be treated as satisfying the
Diversification Requirements, would not be accepted in an audit by the Internal
Revenue Service, which might apply a different method resulting in
disqualification of one o more of those Funds.

If, in any taxable year, the Fund fails to qualify as a RIC under the Code or
fails to meet the distribution requirement, it would be taxed in the same manner
as a corporation and distributions to its shareholders would not be deductible
by the Fund in computing its taxable income. In addition, in the event of a
failure to qualify, the Fund's distributions, to the extent derived from the
Fund's current or accumulated earnings and profits, would constitute dividends
eligible for the corporate dividends-received deduction, which are taxable to
shareholders as ordinary income, even though those distributions might
otherwise, at least in part, have been treated in the shareholders' hands as
capital gain. If the Fund fails to qualify as a RIC in any year, it must pay out
its earnings and profits accumulated in that year in order to qualify again as a
RIC.

In general, gain or loss recognized by the Fund on the disposition of an asset
will be a capital gain or loss. In addition, gain will be recognized as a result
of certain constructive sales, including short sales "against the box." However,
gain recognized on the disposition of a debt obligation purchased by the Fund at
a market discount (generally, at a price less than its principal amount) will be
treated as ordinary income to the extent of the portion of the market discount
which accrued during the period of time the Fund held the debt obligation. In
addition, under the rules of Code section 988, gain or loss recognized on the
disposition of a debt obligation denominated in a foreign currency or an option
with respect thereto, and gain or loss recognized on the disposition of a
foreign currency forward contract, futures contract, option or similar financial
instrument, or of foreign currency itself, except for regulated futures
contracts or non-equity options subject to Code section 1256 (unless the Fund
elects otherwise), will generally be treated as ordinary income or loss to the
extent attributable to changes in foreign currency exchange rates.

In general, for purposes of determining whether capital gain or loss recognized
by the Fund on the disposition of an asset is long-term or short-term, the
holding period of the asset may be affect if (1) the asset is used to close a
"short sale" (which includes for certain purposes the acquisition of a put
option) or is substantially identical to another asset so used, (2) the asset is
otherwise held by the Fund as part of a "straddle" (which term generally
excludes a situation where the asset is stock and the Fund grants a qualified
covered call option (which, among other things, must not be deep-in-the-money)
with respect thereto) or (3) the asset is stock and the Fund grants an
in-the-money qualified covered call option with respect thereto. In addition,
the Fund may be required to defer the recognition of a loss on the disposition
of an asset held as part of a straddle to the extent of any unrecognized gain on
the offsetting position. Any gain recognized by the Fund on the lapse of, or any
gain or loss recognized by the Fund from a closing transaction with respect to,
an option written by the Fund will be treated as a short-term capital gain or
loss.

Further, the Code also treats as ordinary income a portion of the capital gain
attributable to a transaction where substantially all of the expected return is
attributable to the time value of a Fund's net investment in the transaction
and: (1) the transaction consists of the acquisition of property by the Fund and
a contemporaneous contract to sell substantially identical property in the
future; (2) the transaction is a straddle within the meaning of section 1092 of
the Code; (3) the transaction is one that was marketed or sold to the Fund on
the basis that it would have the economic characteristics of a loan but the
interest-like return would be taxed as capital gain; or (4) the transaction is
described as a conversion transaction in the Treasury Regulations. The amount of
the gain recharacterized generally will not exceed the amount of the interest
that would have accrued on the net investment for the relevant period at a yield
equal to 120% of the federal long-term, mid-term, or sort-term rate, depending
upon the type of instrument at issue, reduced by an amount equal to: (1) prior
inclusions of ordinary income items from the conversion transaction and (2) the
capital interest on acquisition indebtedness under Code section 263(g). Built-in
losses will be preserved where the Fund has a built-in loss with respect to
property that becomes a part of a conversion transaction. No authority exists
that indicates that the converted character of the income will be passed through
to the Fund's shareholders.

Certain transactions that may be engaged in by the Fund (such as regulated
futures contracts, certain foreign currency contracts, and options on stock
indexes and futures contracts) will be subject to special tax treatment as
"Section 1256 contracts." Section 1256 contracts are treated as if they are sold
for their fair market value on the last business day of the taxable year, even
though a taxpayer's obligations (or rights) under such contracts have not
terminated (by delivery, exercise, entering into a closing transaction or
otherwise) as of such date. Any gain or loss recognized as a consequence of the
year-end deemed disposition of Section 1256 contracts is taken into account for
that year together with any other gain or loss that was previously recognized
upon the termination of Section 1256 contracts during the year. Any capital gain
or loss for the taxable year with respect to Section 1256 contracts (including
any capital gain or loss arising as a consequence of the year-end deemed sale of
such contracts) is generally treated as 60% long-term capital gain or loss and
40% short-term capital gain or loss. The Fund, however, may elect not to have
this special tax treatment apply to Section 1256 contracts that are part of a
"mixed straddle" with other investments of the Fund that are not Section 1256
Contracts.

EXCISE TAX ON REGULATED INVESTMENT COMPANIES
A 4% non-deductible excise tax is imposed on a RIC that fails to distribute in
each calendar year an amount equal to 98% of ordinary taxable income for the
calendar year and 98% of capital gain net income for the one-year period ended
on October 31 of such calendar year. At the election of a RIC having a taxable
year ending November 30 or December 31, the required capital gain net income
distribution may be accomplished by the close of the taxable year in lieu of
October 31 of the calendar year. The balance of such income must be distributed
during the next calendar year. For the foregoing purposes, a RIC is treated as
having distributed any amount on which it is subject to income tax for any
taxable year ending in such calendar year.

The Fund intends to make sufficient distributions or deemed distributions of its
ordinary taxable income and capital gain net income prior to the end of each
calendar year to avoid liability for the excise tax. However, investors should
note that the Fund might in certain circumstances be required to liquidate
portfolio investments to make sufficient distributions to avoid excise tax
liability.

FUND DISTRIBUTIONS
The Fund anticipates distributing substantially all of its net investment income
for each taxable year. Such distributions will be taxable to shareholders as
ordinary income and treated as dividends for federal income tax purposes, but
they will qualify for the 70% dividends-received deduction for corporations only
to the extent discussed below.

The Fund may either retain or distribute to shareholders its net capital gain
for each taxable year. The Fund currently intends to distribute any such
amounts. If net capital gain is distributed and designated as a capital gain
dividend, it will be taxable to shareholders as long-term capital gain,
regardless of the length of time the shareholder has held his shares or whether
such gain was recognized by the Fund prior to the date on which the shareholder
acquired his shares.

Under current legislation, the maximum rate of tax on long-term capital gains of
individuals is 20% for long-term capital gains with respect to capital assets
held for more than 12 months. Additionally, beginning after December 31, 2000,
the maximum tax rate for capital assets with a holding period beginning after
that date and held for more than five years will be 18%.

Conversely, if the Fund elects to retain its net capital gain, the Fund will be
taxed thereon, except to the extent of any available capital loss carryovers, at
the 35% corporate tax rate. If the Fund elects to retain its net capital gain,
it is expected that the Fund also will elect to have shareholders of record on
the last day of its taxable year treated as if each received a distribution of
his pro rata share of such gain, with the result that each shareholder will be
required to report his pro rata share of such gain on his tax return as
long-term capital gain, will receive a refundable tax credit for his pro rata
share of tax paid by the Fund on the gain, and will increase the tax basis for
his shares by an amount equal to the deemed distribution less the tax credit.

Ordinary income dividends paid by the Fund with respect to a taxable year will
qualify for the 70% dividends-received deduction generally available to
corporations to the extent of the amount of qualifying dividends received by the
Fund from domestic corporations for the taxable year. A dividend received by the
Fund will not be treated as a qualifying dividend (a) if it has been received
with respect to any share of stock that the Fund has held for less than 46 days
(91 days in the case of certain preferred stock) during the 90 day period
beginning on the date which is 45 days before the date on which such share
becomes ex-dividend with respect to such dividend (during the 180 day period
beginning 90 days before such date in the case of certain preferred stock) under
Sections 246(c) of the Code; (b) to the extent that the Fund is under an
obligation (pursuant to a short sale or otherwise) to make related payments with
respect to positions in substantially similar or related property; or (c) to the
extent the stock on which the dividend is paid is treated as debt-financed under
Section 246A of the Code. Moreover, the dividends-received deduction for a
corporate shareholder may be disallowed or reduced if the corporate shareholder
fails to satisfy the foregoing requirements with respect to its shares of the
Fund. In the case where the Fund invests all of its assets and the Fund
satisfies the holding period rules pursuant to Section 246(c) of the Code, a
corporate shareholder which satisfies the foregoing requirements with respect to
its shares of the Fund should receive the dividends-received deduction.

For purposes of the corporate alternate minimum tax ("AMT"), the corporate
dividends-received deduction is not itself an item of tax preference that must
be added back to taxable income or is otherwise disallowed in determining a
corporation's AMT. However, corporate shareholders of the Fund will generally be
required to take the full amount of any dividend received from the Fund into
account, without a dividends-received deduction, in determining their adjusted
current earnings.

Distributions by the Fund that do not constitute ordinary income dividends, or
capital gain dividends will be treated as a return of capital to the extent of,
and in reduction of, the shareholder's tax basis in his or her shares; any
excess will be treated as gain from the sale of his or her shares, as discussed
below.

Distributions by the Fund will be treated in the manner described above
regardless of whether such distributions are paid in cash or reinvested in
additional shares of the Fund. Shareholders receiving a distribution in the form
of additional shares will be treated as receiving a distribution in an amount
equal to the amount of cash they could have received had they elected to receive
the distribution in cash. In addition, if the net asset value at the time a
shareholder purchases shares of the Fund reflects undistributed net investment
income or recognized capital gain net income, or unrealized appreciation in the
value of the assets of the Fund, distributions of such amounts will be taxable
to the shareholder in the manner described above, although such distributions
economically constitute a return of capital to the shareholder.

Ordinarily, shareholders are required to take distributions by the Fund into
account in the year in which the distributions are made. However, dividends
declared in October, November or December of any year and payable to
shareholders of record on a specified date in such a month will be deemed to
have been received by the shareholders, and made by the Fund, on December 31 of
such calendar year if such dividends are actually paid in January of the
following year. Shareholders will be advised annually as to the federal income
tax consequences of distributions made or deemed made during the year. In
addition, if the Fund declares a dividend prior to the time prescribed by law
for the filing of its return for a taxable year and distributes the amount of
such dividend to its shareholders in the 12-month period following the close of
the taxable year, but not later than the date of the first regular dividend
payment made after such declaration, the dividend so declared and distributed
shall, upon election by the Fund, be considered as having been paid during the
taxable year, provided that the Fund makes required elections and provides
proper notices.

The Fund will be required in certain cases to withhold and remit to the United
States Treasury 31% of ordinary income dividends and capital gain dividends, and
the proceeds of redemption of shares, paid to any shareholder (a) who has
provided either an incorrect tax identification number or no number at all, (b)
who is subject to backup withholding by the IRS for failure to report the
receipt of interest or dividend income properly, or (c) who has failed to
certify to the Fund that it is not subject to backup withholding or that it is a
corporation or other exempt recipient.

SALE OR REDEMPTION OF SHARES
A shareholder will recognize gain or loss on the sale or redemption of shares of
a Fund in an amount equal to the difference between the proceeds of the sale or
redemption and the shareholder's adjusted tax basis in the shares. All or a
portion of any loss so recognized may be disallowed if the shareholder purchases
other shares of the Fund within 30 days before or after the sale or redemption.
In general, any gain or loss arising from, or treated as, arising from the sale
or redemption of shares of a Fund will be considered capital gain or loss. The
character of the gain or loss as long-term or short-term capital gain or loss
will depend on the shareholder's holding period of the shares sold or redeemed.

FOREIGN SHAREHOLDERS
Taxation of a shareholder who, as to the United States, is a nonresident alien
individual, foreign trust or estate, foreign corporation, or foreign partnership
("Foreign Shareholder"), depends on whether the income from the Fund is
"effectively connected" with a United States trade or business carried on by
such shareholder.

If the income from the Fund is not effectively connected with a United States
trade or business carried on by a Foreign Shareholder, dividends paid to a
Foreign Shareholder from net investment income will be subject to United States
withholding tax at the rate of 30% (or lower treaty rate) upon the gross amount
of the dividend. Such a Foreign Shareholder would generally be exempt from
United States federal income tax on gains realized on the sale of shares of the
Fund and capital gain dividends and amounts retained by the Fund that are
designated as undistributed capital gains.

If the income from the Fund is effectively connected with a United States trade
or business carried on by a Foreign Shareholder, then ordinary income dividends,
capital gain dividends, and any gains realized upon the sale of shares of the
Fund will be subject to United States federal income tax at the rates applicable
to United States citizens or domestic corporations.

In the case of foreign noncorporate shareholders, the Fund may be required to
withhold United States federal income tax at a rate of 31% on distributions that
are otherwise exempt from withholding tax (or taxable at a reduced treaty rate)
unless such shareholders furnish the Fund with proper notification of their
foreign status.

The tax consequences to a Foreign Shareholder entitled to claim the benefits of
an applicable tax treaty might be different from those described herein. Foreign
Shareholders are urged to consult their own tax advisers with respect to the
particular tax consequences to them of an investment in the Fund, including the
applicability of foreign taxes.

STATE AND LOCAL TAX MATTERS
Depending on the residence of the shareholder for tax purposes, distributions
may also be subject to state and local taxes or withholding taxes. Most states
provide that a RIC may pass through without restriction to its shareholders
state and local income tax exemptions available to direct owners of certain
types of United States government securities, such as United States Treasury
obligations. Thus, for residents of these states, distributions derived from the
Fund's investment in certain types of United States government securities should
be free from state and local income taxes to the extent that the interest income
from such investments would have been exempt from state and local income taxes
if such securities had been held directly by the respective shareholders
themselves. Certain states, however, do not allow a RIC to pass through to its
shareholders the state and local income tax exemptions available to direct
owners of certain types of United States government securities unless the RIC
holds at least a required amount of United States government securities.
Accordingly, for residents of these states, distributions derived from the
Fund's investment in certain types of United States government securities may
not be entitled to the exemptions from state and local income taxes that would
be available if the shareholders had purchased United States government
securities directly.

Shareholders' dividends attributable to the Fund's income from repurchase
agreements generally are subject to state and local income taxes, although
states and regulations vary in their treatment of such income. The exemption
from state and local income taxes does not preclude states from asserting other
taxes on the ownership of United States government securities. To the extent
that the Fund invests to a substantial degree in United States government
securities that are subject to favorable state and local tax treatment,
shareholders of the Fund will be notified as to the extent to which
distributions from the Fund are attributable to interest on such securities.
Rules of state and local taxation of ordinary income dividends and capital gain
dividends from regulated investment companies may differ from the rules for
federal income taxation in other respects.

Because everyone's tax situation is unique, you are urged to consult your tax
adviser as to the consequences of these and other state, local, as well as
federal tax rules before investing in the Fund.

EFFECT OF FUTURE LEGISLATION
The foregoing general discussion of federal income tax consequences is based on
the Code and the Treasury Regulations promulgated thereunder as in effect on the
date of this Prospectus. Future legislative or administrative changes or court
decisions may significantly change the conclusions expressed herein, and any
such changes or decisions may have a retroactive effect with respect to the
transactions contemplated herein.

CALCULATION OF PERFORMANCE DATA

The Fund may publish certain performance figures in advertisements from time to
time. These performance figures may include average annual total return figures.

AVERAGE ANNUAL TOTAL RETURN

Average annual total return reflects the hypothetical annually compounded return
that would have produced the same cumulative total return if the Fund's
performance had been constant over the entire period, and is computed according
to the following formula:

P(1+T)n = ERV

Where: P = a hypothetical initial payment of $1,000.
T = average annual total return.
n = number of years in the base period.
ERV = ending redeemable value of the hypothetical $1,000
payment made at the beginning of the base period (reduced
by the maximum sales charge) assuming reinvestment of all
dividends and distributions.

All performance figures are based on historical results and are not intended to
indicate future performance.

FINANCIAL STATEMENTS

BUY-WRITE FUND

Statement of Assets and Liabilities
January 5, 2001

ASSETS

Cash $100,000

----------

Total Assets 100,000
----------

LIABILITIES

----------
Total Liabilities 0
----------

NET ASSETS $100,000
==========

Shares of beneficial interest outstanding, $.001 par value;
unlimited number of shares authorized 10,000
==========

Net asset value per share (net assets/shares outstanding) $10.00
==========

See accompanying notes to the financial statements

GLEN RAUCH FUNDS (the "Trust")

BUY-WRITE FUND (the "Fund")

NOTES TO THE FINANCIAL STATEMENT

January 5, 2001

1 ORGANIZATION

The Trust is an open-end management investment company, or mutual fund,
organized as a Delaware business trust on October 10, 2000. The Fund is
a non-diversified mutual fund series of the Trust. The goal of the Fund
is long-term capital growth. The Trust has had no operations other than
those relating to organizational matters and the sale of 10,000 shares
of its common stock to its original shareholder, Glen Rauch Securities,
Inc., the investment adviser, for cash in the amount of $100,000.

2 SIGNIFICANT ACCOUNTING POLICIES

(A) ORGANIZATION COSTS

Costs incurred by the Fund in connection with the organization,
registration and the initial public offering of shares, estimated to be
approximately $80,000, are being assumed by the investment adviser,
Glen Rauch Securities, Inc.

(B) FEDERAL INCOME TAXES

The Fund intends to comply with the requirements of the Internal
Revenue Code necessary to qualify as a regulated investment company and
to make the requisite distributions of income and capital gains to its
shareholders sufficient to relieve it from all or substantially all
Federal income taxes.

The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates
and assumptions that affect the reported amounts of assets and
liabilities and disclosure of contingent assets and liabilities at the
date of the financial statements and the reported amounts of revenues
and expenses during the reporting period. Actual results could differ
from those estimates.

3 INVESTMENT ADVISER

The Trust, which consists solely of the Fund, has an agreement with the
investment adviser, with whom certain officers and Trustees of the
Trust are affiliated, to furnish investment advisory services to the
Fund. Under the terms of this agreement, the investment adviser will
receive a fee, accrued daily and payable monthly at the annual rate of
1.00% of the Fund's average daily net assets.

4 DISTRIBUTION PLAN

The Fund has adopted a Distribution and Shareholder Servicing Plan,
pursuant to Rule 12b-1, which allows the Fund to pay distribution fees
for the sale and distribution of it shares. The maximum level of
distribution expenses is 1.00% per year of the Fund's average daily
net assets.

Report of Independent Accountants

To the Board of Trustees and Shareholder of Buy-Write Fund

In our opinion, the accompanying statement of assets and liabilities presents
fairly, in all material respects, the financial position of Buy-Write Fund, a
series of Glen Rauch Funds, (the "Fund") at January 5, 2001, in conformity with
accounting principles generally accepted in the United States of America. This
financial statement is the responsibility of the Fund's management; our
responsibility is to express an opinion on this financial statement based on our
audit. We conducted our audit of this financial statement in accordance with
auditing standards generally accepted in the United States of America, which
require that we plan and perform the audit to obtain reasonable assurance about
whether the financial statement is free of material misstatement. An audit
includes examining, on a test basis, evidence supporting the amounts and
disclosures in the financial statement, assessing the accounting principles used
and significant estimates made by management, and evaluating the overall
financial statement presentation. We believe that our audit provides a
reasonable basis for our opinion.

/s/ PricewaterhouseCoopers LLP
New York, New York
January 10, 2001

GLEN RAUCH FUNDS
PART C
OTHER INFORMATION

Item 23. EXHIBITS.

(a) Declaration of Trust

(i) Certificate of Trust*
(ii) Agreement and Declaration of Trust-- Filed Herewith.

(b) Bylaws-- Filed Herewith.

(c) Instruments Defining Rights of Security Holders-- Incorporated by
reference to the Agreement and Declaration of Trust.

(d) Investment Advisory Agreement-- Filed Herewith.

(e) Underwriting Agreement-- Filed Herewith.

(f) Bonus or Profit Sharing Contracts-- Not applicable.

(g) Custody Agreement-- Filed Herewith.

(h) Other Material Contracts

(i) Fund Administration Servicing Agreement-- Filed Herewith.
(ii) Transfer Agent Servicing Agreement-- Filed Herewith.
(iii) Fund Accounting Servicing Agreement-- Filed Herewith.
(iv) Fulfillment Servicing Agreement-- Filed Herewith.
(v) Power of Attorney-- Filed Herewith.

(i) Opinion and Consent of Counsel-- Filed Herewith.

(j) Consent of Independent Public Accountants-- Filed Herewith.

(k) Omitted Financial Statements-- Not applicable.

(l) Agreement Relating to Initial Capital-- Filed Herewith.

(m) Rule 12b-1 Plan-- Filed Herewith.

(n) Rule 18f-3 Plan-- Not Applicable.

(o) Reserved.

(p) Code of Ethics

(i) Adviser and Registrant-- Filed Herewith.

* Previously filed and incorporated by reference to Registrant's initial filing
of the Registration Statement on October 12, 2000.

Item 24. Persons Controlled by or Under Common Control with Registrant.

No person is directly or indirectly controlled by or under common
control with the Registrant.

Item 25. Indemnification.

Reference is made to Article X of the Registrant's Declaration of
Trust.

Pursuant to Rule 484 under the Securities Act of 1933, as amended, the
Registrant furnishes the following undertaking: "Insofar as indemnification for
liability arising under the Securities Act of 1933 (the "Act") may be permitted
to trustees, officers and controlling persons of the Registrant pursuant to the
foregoing provisions, or otherwise, the Registrant has been advised that, in the
opinion of the Securities and Exchange Commission such indemnification is
against public policy as expressed in the Act and is, therefore, unenforceable.
In the event that a claim for indemnification against such liabilities (other
than the payment by the Registrant of expenses incurred or paid by a director,
officer or controlling person of the Registrant in the successful defense of any
action, suit or proceeding) is asserted by such director, officer or controlling
person in connection with the securities being registered, the Registrant will,
unless in the opinion of its counsel the matter has been settled by controlling
precedent, submit to a court of appropriate jurisdiction the question whether
such indemnification by it is against public policy as expressed in the Act and
will be governed by the final adjudication of such issue."

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

Glen Rauch Securities, Inc. serves as the investment adviser for the
Registrant. The business and other connections of Glen Rauch Securities, Inc.
are set forth in the Uniform Application for Investment Adviser Registration
("Form ADV") of Glen Rauch Securities, Inc. as filed with the SEC and
incorporated by reference herein.

Item 27. Principal Underwriter.

(a) Quasar Distributors, LLC, 615 East Michigan Street, Milwaukee,
Wisconsin, 53202, the Distributor for shares of the Registrant,
will also act as principal underwriter for other open-end
investment companies not yet under registration as of the date of
filing.

(b) To the best of Registrant's knowledge, the directors and
executive officers Quasar Distributors, LLC are as follows:

NAME AND PRINCIPAL POSITION AND OFFICES WITH POSITIONS AND OFFICES WITH
BUSINESS ADDRESS GLEN RAUCH SECURITIES, INC. REGISTRANT
------------------------ ---------------------------- --------------------------
James R. Schoenike President, Board Member None

------------------------ ---------------------------- --------------------------
Donna J. Berth Treasurer None
------------------------ ---------------------------- --------------------------
James J. Barresi Secretary None
------------------------ ---------------------------- --------------------------
Joe Redwine Board Member None
------------------------ ---------------------------- --------------------------
Bob Kern Board Member None
------------------------ ---------------------------- --------------------------
Paul Rock Board Member None
------------------------ ---------------------------- --------------------------
Jennie Carlson Board Member None
------------------------ ---------------------------- --------------------------

The address of each of the foregoing is 615 East Michigan Street, Milwaukee,
Wisconsin, 53202.

Item 28. Location of Accounts and Records.

The books and records required to be maintained by Section 31(a) of
the Investment Company Act of 1940 are maintained in the following locations:

RECORDS RELATING TO: ARE LOCATED AT:
------------------- ---------------

Registrant's Fund Accountant, Firstar Mutual Fund Services, LLC
Fund Administrator, Fulfillment Servicing 615 East Michigan Street
Agent and Transfer Agent Milwaukee, WI 53202

Registrant's Investment Adviser Glen Rauch Securities, Inc.
44 Wall Street, 16th Floor
New York, NY 10005

Registrant's Custodian Firstar Bank, N.A.
425 Walnut Street
Cincinnati, OH 54202

Item 29. Management Services Not Discussed in Parts A and B.

Not applicable.

Item 30. Undertakings.

The Registrant hereby undertakes to furnish each person to whom a
Prospectus for one or more of the series of the Registrant is delivered with a
copy of the relevant latest annual report to shareholders, upon request and
without charge.

SIGNATURES

Pursuant to the requirements of the Securities Act of 1933 and the
Investment Company Act of 1940, the Registrant certifies that it has duly caused
this Registration Statement to be signed below on its behalf by the undersigned,
duly authorized, in the City of New York and the State of New York on the 10th
day of December, 2000.

GLEN RAUCH FUNDS

BY: /S/ GLEN R. RAUCH
-----------------------
Glen R. Rauch
President

Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed below on December 10th, 2000 by the
following persons in the capacities indicated.

SIGNATURE TITLE

/S/ GLEN R. RAUCH President, Trustee and Chairperson
------------------
Glen R. Rauch

/S/ CHERYL SPINELLA BETSY* Trustee, Treasurer and Secretary
--------------------------
Cheryl Spinella Betsy

/S/ PETER J. O'ROURKE* Trustee
----------------------
Peter J. O'Rourke

/S/ YALE PAPRIN* Trustee
----------------
Yale Paprin

/S/ ANTHONY CAPORRINO* Trustee
----------------------
ANTHONY CAPORRINO
-----------------

*BY /S/ GLEN R. RAUCH
---------------------
Glen R. Rauch
Attorney-in-Fact pursuant to
Power of Attorney filed herewith

EXHIBIT INDEX

EXHIBIT STATUS

Registrant's Certificate of Trust *

Registrant's Agreement and Declaration of Trust Filed Herewith

Registrant's Bylaws Filed Herewith

Investment Advisory Agreement between Glen Rauch Securities,
Inc. and the Registrant on behalf of the Buy-Write Fund Filed Herewith

Distribution Agreement between Quasar Distributors, LLC
and the Registrant on behalf of the Buy-Write Fund Filed Herewith

Custodian Agreement between Registrant and Firstar Bank, N.A. Filed Herewith

Fund Administration Servicing Agreement between Registrant
and Firstar Mutual Funds Services, LLC Filed Herewith

Fund Transfer Agent Servicing Agreement between Registrant
and Firstar Mutual Funds Services, LLC Filed Herewith

Fund Accounting Servicing Agreement between Registrant and
Firstar Mutual Fund Services, LLC Filed Herewith

Fulfillment Servicing Agreement among Registrant,
Glen Rauch Securities, Inc. and Firstar Mutual Fund
Services, LLC Filed Herewith

Power of Attorney Filed Herewith

Opinion and Consent of Kramer Levin Naftalis & Frankel LLP Filed Herewith

Consent of PricewaterhouseCoopers LLP Filed Herewith

Agreement Relating to Initial Capital Filed Herewith

Rule 12b-1 Distribution and Shareholder Servicing Plan
adopted by Registrant on behalf of the Buy-Write Fund Filed Herwith

Code of Ethics for Registrant and Glen Rauch Securities, Inc. Filed Herewith

* Previously filed and incorporated by reference.