REYNOLDS FUNDS INC, 485BPOS, 1997-01-31

REYNOLDS FUNDS INC
485BPOS, 1997-01-31

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Registration No. 33-21718

SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
__________________________________

FORM N-1A
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 [X]

Pre-Effective Amendment No. __ [_]

Post-Effective Amendment No. 11 [X]
and/or

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

Amendment No. 13 [X]
(Check appropriate box or boxes.)

REYNOLDS FUNDS, INC.
(Exact name of Registrant as Specified in Charter)

Wood Island, Third Floor
80 East Sir Francis Drake Blvd.
Larkspur, California 94939 94939
(Address of Principal Executive Offices) (Zip Code)

(415) 461-7860
(Registrant's Telephone Number, Including Area Code)

Frederick L. Reynolds Copy to:
Reynolds Capital Management Richard L. Teigen
Wood Island, Third Floor Foley & Lardner
80 East Sir Francis Drake Blvd. 777 East Wisconsin Avenue
Larkspur, California 94939 Milwaukee, Wisconsin 53202
(Name and Address of Agent for Service)

Registrant has registered an indefinite number or amount of its four
classes of common stock under the Securities Act of 1940, and filed its
required Rule 24f-2 Notices for the Registrant's fiscal year ended
September 30, 1996 on November 22, 1996.

Approximate Date of Proposed Public Offering: As soon as practicable
after the Registration Statement becomes effective.

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

[_] immediately upon filing pursuant to paragraph (b)

[X] on January 31, 1997 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.

<PAGE>
REYNOLDS BLUE CHIP GROWTH FUND, INC.
CROSS REFERENCE SHEET

(Pursuant to Rule 481 showing the location in the Prospectus and
the Statement of Additional Information of the responses to the items of
Parts A and B of Form N-1A.)

Caption or Subheading in Prospectus
Item No. on Form N-1A or Statement of Additional Information

Part A - INFORMATION REQUIRED IN PROSPECTUS

1. Cover Page Cover Page

2. Synopsis Expense Information

3. Condensed Financial Financial Highlights; Performance
Information Information

4. General Description Introduction; Investment Objectives
of Registrant and Policies

5. Management of the Management of the Funds; Brokerage
Fund Transactions; General Information
About the Company and the Funds

5A. Management's Discussion Management's Discussion of
of Fund Performance Performance of the Funds

6. Capital Stock and Dividends, Distributions and Taxes;
Other Securities General Information About the Company
and the Funds; Shareholder Reports

7. Purchase of Securities Determination of Net Asset Value;
Being Offered Purchase of Shares; Additional
Shareholder Services; Retirement
Plans

8. Redemption or Repurchase Redemption of Shares; Exchange
Privilege; Additional Shareholder
Services

9. Pending Legal Proceedings*

Part B - INFORMATION REQUIRED IN STATEMENT OF ADDITIONAL INFORMATION

10. Cover Page Cover Page

11. Table of Contents Table of Contents

12. General Information and *
History

13. Investment Objectives Investment Restrictions; Investment
and Policies Considerations; Performance and
Yield Information

14. Management of the Directors and Officers of the Company
Fund

15. Control Persons and Ownership of Management and Principal
Principal Holders Shareholders
of Securities

16. Investment Advisory Investment Adviser and Administrator;
and Other Services Custodian; Independent Accountants

17. Brokerage Allocation Allocation of Portfolio Brokerage
and Other Practices

18. Capital Stock and Included in Prospectus under "General
Other Securities Information About the Company and the
Funds"; Shareholder Meetings

19. Purchase, Redemption Included in Prospectus under
and Pricing of "Determination of Net Asset Value";
Securities Being "Additional Shareholder Services;
Offered "Retirement Plans" and Determination
of Net Asset Value, Systematic
Withdrawal Plan

20. Tax Status Taxes

21. Underwriters *

22. Calculation of Performance and Yield Information
Performance Data

23. Financial Statements Financial Statements

_____________
* Answer negative or inapplicable

<PAGE>

PROSPECTUS
JANUARY 31, 1997

REYNOLDS FUNDS
100% NO-LOAD MUTUAL FUNDS
REYNOLDS
BLUE CHIP GROWTH FUND
SEEKING LONG-TERM CAPITAL APPRECIATION,
WITH CURRENT INCOME A SECONDARY OBJECTIVE

REYNOLDS
OPPORTUNITY FUND
SEEKING LONG-TERM CAPITAL APPRECIATION

REYNOLDS
U.S. GOVERNMENT BOND FUND
SEEKING A HIGH LEVEL OF CURRENT INCOME

REYNOLDS
MONEY MARKET FUND
SEEKING A HIGH LEVEL OF CURRENT INCOME CONSISTENT WITH A STABLE NET ASSET VALUE

1-800-773-9665

PROSPECTUS JANUARY 31, 1997

REYNOLDS FUNDS
WOOD ISLAND, THIRD FLOOR
80 EAST SIR FRANCIS DRAKE BOULEVARD
LARKSPUR, CALIFORNIA 94939
1-415-461-7860

Reynolds Funds, Inc. (the "Company") is an open-end, diversified management
investment company consisting of four mutual funds, the Reynolds Blue Chip
Growth Fund (the "Blue Chip Fund"), the Reynolds Opportunity Fund (the
"Opportunity Fund"), the Reynolds U.S. Government Bond Fund (the "Bond Fund")
and the Reynolds Money Market Fund (the "Money Market Fund") (collectively the
"Reynolds Funds" or "Funds"), offering distinct investment choices.

REYNOLDS BLUE CHIP GROWTH FUND

The investment objective of the Blue Chip Fund is to produce long-term growth of
capital, with current income as a secondary objective, by investing in a
diversified portfolio of common stocks issued by well-established growth
companies commonly known as "blue chip" companies. This Fund is designed for
long-term investors who desire capital appreciation, with reasonable current
income potential.

REYNOLDS OPPORTUNITY FUND

The investment objective of the Opportunity Fund is to produce long-term growth
of capital by investing in a diversified portfolio of common stocks having above
average growth characteristics. This Fund is designed for long-term investors
who desire capital appreciation.

REYNOLDS U.S. GOVERNMENT BOND FUND

The investment objective of the Bond Fund is to provide a high level of current
income by investing in a diversified portfolio of securities issued or
guaranteed as to principal and interest by the U.S. Government, its agencies or
instrumentalities. This Fund is designed for long-term investors desiring a
combination of high income, safety and quality.

REYNOLDS MONEY MARKET FUND

The foregoing descriptions are designed to help investors choose the Fund that
best fits their investment objectives. An investor may wish to pursue more than
one objective by investing in more than one of the Reynolds Funds. No assurance
can be given that the respective investment objectives of the Funds will be
realized. THE FUNDS ARE 100% "NO-LOAD" FUNDS; THERE ARE NO SALES COMMISSIONS,
REDEMPTION CHARGES OR ONGOING MARKETING (RULE 12B-1) DISTRIBUTION FEES.

THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.

This Prospectus sets forth concisely the information about the Funds that
prospective investors should know before investing. Investors are advised to
read this Prospectus and retain it for future reference. This Prospectus does
not set forth all of the information included in the Registration Statement and
Exhibits thereto which the Company has filed with the Securities and Exchange
Commission. A Statement of Additional Information, dated January 31, 1997, which
is a part of such Registration Statement, is incorporated by reference in this
Prospectus. Copies of the Statement of Additional Information will be provided
without charge to each person to whom a Prospectus is delivered upon written or
oral request made by writing to the address, or calling the telephone number,
stated above. All such requests should be directed to the attention of the
Corporate Secretary.

REYNOLDS FUNDS

TABLE OF CONTENTS

PAGE

EXPENSE INFORMATION 1
FINANCIAL HIGHLIGHTS 2
INTRODUCTION 6
INVESTMENT OBJECTIVES AND POLICIES 6
MANAGEMENT OF THE FUNDS 14
DETERMINATION OF NET ASSET VALUE 15
PURCHASE APPLICATION Centerfold
HOW TO PURCHASE SHARES 16
HOW TO REDEEM SHARES 18
EXCHANGE PRIVILEGE 21
ADDITIONAL SHAREHOLDER SERVICES 22
RETIREMENT PLANS 24
DIVIDENDS, DISTRIBUTIONS AND TAXES 24
SHAREHOLDER REPORTS 25
BROKERAGE TRANSACTIONS 25
GENERAL INFORMATION ABOUT THE
COMPANY AND THE FUNDS 26
PERFORMANCE INFORMATION 26
MANAGEMENT'S DISCUSSION OF
PERFORMANCE OF THE FUNDS 28

EXPENSE INFORMATION

REYNOLDS REYNOLDS REYNOLDS REYNOLDS
BLUE CHIP OPPORTUNITY U.S. GOVERNMENT MONEY MARKET
GROWTH FUND FUND BOND FUND FUND
----------- -------- --------- -----------

SHAREHOLDER TRANSACTION EXPENSES
Maximum Sales Load Imposed on
Purchases or Reinvested
Dividends None None None None
Deferred Sales Load None None None None
Redemption Fee None*<F1> None*<F1> None*<F1> None*<F1>
Exchange Fee None None None None

ANNUAL FUND OPERATING EXPENSES
(AS A PERCENTAGE OF AVERAGE NET ASSETS)

Management Fees 1.00% 1.00% 0.75% 0.50%
12b-1 Fees None None None None
Other Expenses
(after reimbursements) 0.45% 0.52% 0.15%**<F2> 0.15%**<F2>
------ ------ ------- -------
Total Fund Operating Expenses
(after reimbursements) 1.45% 1.52% 0.90%**<F2> 0.65%**<F2>
======= ====== ======= =======

*<F1>A fee of $10.00 is charged for each wire redemption.
**<F2>Other Expenses and Total Fund Operating Expenses (without expense
reimbursements) for the fiscal year ended September 30, 1996, for the Bond Fund
would have been 1.49% and 2.24%, respectively, and for the Money Market Fund
would have been 0.89% and 1.39%, respectively.

EXAMPLE
You would pay the following expenses on a $1,000 investment, assuming (1) 5%
annual return and (2) redemption at the end of each time period:

1 year 3 years 5 years 10 years
------ ------- ------- --------

Reynolds Blue Chip Growth Fund $15 $46 $79 $174
Reynolds Opportunity Fund $15 $48 $83 $181
Reynolds U.S. Government
Bond Fund $9 $29 $50 $111
Reynolds Money Market Fund $7 $21 $36 $81

The purpose of the preceding table is to assist investors in understanding
the various costs that an investor in a particular Fund will bear, directly or
indirectly. They should not be considered to be a representation of past or
future expenses. Actual expenses may be greater or lesser than those shown. See
"Management of the Funds" for a more complete discussion of applicable
management fees. The Annual Fund Operating Expenses for each Fund are based on
actual expenses incurred for the year ended September 30, 1996. The example
assumes a 5% annual rate of return pursuant to requirements of the Securities
and Exchange Commission. This hypothetical rate of return is not intended to be
representative of past or future performance of any of the Funds.

FINANCIAL HIGHLIGHTS

(Selected Data for a share of each Fund outstanding throughout each period)

The Financial Highlights of the Funds should be read in conjunction with the
Funds' financial statements and notes thereto, included in the Funds' Annual
Report to Shareholders. Further information about the performance of the Funds
is also contained in the Funds' Annual Report to Shareholders, copies of which
may be obtained without charge upon request.

REYNOLDS BLUE CHIP GROWTH FUND

<TABLE>
<CAPTION>
YEARS ENDED SEPTEMBER 30,
-----------------------------------------------------------------------------
1996 1995 1994 1993 1992 1991 1990 1989 1988*<F3>
------- ------- ------- ------- ------- ------- ------- ------ -------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
PER SHARE OPERATING
PERFORMANCE:
Net asset value, beginning of period $19.25 $14.46 $14.22 $14.98 $13.96 $11.14 $11.92 $10.06 $10.00
Income from investment operations:
Net investment (loss) income (0.03) 0.02 0.09 0.12 0.09 0.14 0.07 0.25 0.03
Net realized and unrealized
gain (loss) on investments 3.52 5.00 0.28 (0.79) 1.02 2.83 (0.65) 1.73 0.03
------- ------- ------- ------- ------- ------- ------- ------ -------
Total from investment operations 3.49 5.02 0.37 (0.67) 1.11 2.97 (0.58) 1.98 0.06
Less distributions:
Dividends from net
investment income (0.02) (0.06) (0.13) (0.09) (0.09) (0.15) (0.15) (0.12) --
Distributions from
net realized gains (0.03) (0.17) -- -- -- -- (0.05) -- --
------- ------- ------- ------- ------- ------- ------- ------ -------
Total from distributions (0.05) (0.23) (0.13) (0.09) (0.09) (0.15) (0.20) (0.12) --
------- ------- ------- ------- ------- ------- ------- ------ -------
Net asset value, end of period $22.69 $19.25 $14.46 $14.22 $14.98 $13.96 $11.14 $11.92 $10.06
======= ======= ======= ======= ======= ======= ======= ======= =======
TOTAL INVESTMENT RETURN 18.1% 35.3% 2.6% (4.5%) 8.0% 26.9% (5.0%) 19.9% 4.6%**<F4>

RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period
(in 000's $) 30,807 29,357 24,771 38,929 40,580 27,735 10,009 5,260 366
Ratio of expenses
(after reimbursement)
to average net assets***<F5> 1.5% 1.5% 1.5% 1.4% 1.5% 1.7% 2.1% 2.0% 2.0%**<F4>
Ratio of net investment (loss)
income to average
net assets****<F6> (0.1%) 0.1% 0.5% 0.8% 0.6% 1.2% 0.8% 2.7% 4.5%**<F4>
Portfolio turnover rate 21.5% 49.2% 43.3% 38.1% 0.2% 0.9% 66.2% 32.5% --
Average commission
rate paid*****<F7> $0.1047 -- -- -- -- -- -- -- --

*<F3>For the period from August 10, 1988 (commencement of operations) to
September 30, 1988.
**<F4>Annualized.
***<F5>Computed after giving effect to adviser's expense limitation undertaking.
If the Fund had paid all of its expenses, the ratio would have been 2.7% for the
year ended September 30, 1989.
****<F6>If the Fund had paid all of its expenses, the ratio would have been 2.0%
for the year ended September 30, 1989.
*****<F7>Disclosure required for fiscal years beginning after September 1, 1995.
</TABLE>

REYNOLDS OPPORTUNITY FUND

<TABLE>
<CAPTION>
FOR THE
PERIOD FROM
FOR THE YEARS JANUARY 30, 1992*<F8>
ENDED SEPTEMBER 30, TO SEPTEMBER 30,
------------------------------------- ----------------
1996 1995 1994 1993 1992
------- ------- ------- ------- -------
<S> <C> <C> <C> <C> <C>
PER SHARE OPERATING
PERFORMANCE:
Net asset value, beginning of period $14.17 $10.09 $9.78 $8.85 $10.00
Income from investment operations:
Net investment (loss) income (0.06) (0.11) (0.09) (0.10) 0.00
Net realized and unrealized
gain (loss) on securities 1.53 4.19 0.40 1.03 (1.15)
------- ------- ------- ------- -------
Total from investment operations 1.47 4.08 0.31 0.93 (1.15)
Less distributions:
Dividend from net investment income -- -- -- 0.00 --
------- ------- ------- ------- -------
Net asset value, end of period $15.64 $14.17 $10.09 $9.78 $8.85
======= ======= ======= ======= =======

TOTAL INVESTMENT RETURN 10.4% 40.4% 3.2% 10.5% (16.8%)**<F9>

RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period (in 000's $) 17,104 10,983 6,132 3,834 1,844
Ratio of expenses (after reimbursement)
to average net assets***<F10> 1.5% 1.9% 2.0% 2.0% 2.0%**<F9>
Ratio of net investment (loss) income
to average net assets****<F11> (1.1%) (1.5%) (1.6%) (1.3%) 0.0%**<F9>
Portfolio turnover rate 11.8% 38.4% 16.8% 67.6% 30.1%
Average commission rate paid*****<F12> $0.1269 -- -- -- --

*<F8>Commencement of Operations.
**<F9>Annualized.
***<F10>Computed after giving effect to adviser's limitation undertaking. If
the Fund had paid all of its expenses, the ratio would have been, for the years
ended September 30, 1994 and 1993 and for the period ended September 30, 1992,
2.1%, 2.4% and 3.8%**, respectively.
****<F11>The ratio of net investment income prior to adviser's expense
limitation undertaking to average net assets for the years ended September 30,
1994 and 1993 and for the period ended September 30, 1992 would have been
(1.7%), (1.7%) and (1.8%)**, respectively.
*****<F12>Disclosure required for fiscal years beginning after
September 1, 1995.
</TABLE>

REYNOLDS U.S. GOVERNMENT BOND FUND

<TABLE>
<CAPTION>
FOR THE
PERIOD FROM
FOR THE YEARS JANUARY 30, 1992*<F13>
ENDED SEPTEMBER 30, TO SEPTEMBER 30,
------------------------------------- ----------------
1996 1995 1994 1993 1992
------- ------- ------- ------- -------
<S> <C> <C> <C> <C> <C>
PER SHARE OPERATING
PERFORMANCE:
Net asset value, beginning of period $9.85 $9.61 $10.76 $10.36 $10.00
Income from investment operations:
Net investment income 0.5333 0.5350 0.5609 0.5498 0.2979
Net realized and unrealized
(loss) gain on investments (0.1000) 0.2491 (1.1432) 0.4001 0.3602
------- ------- ------- ------- -------
Total from investment operations 0.4333 0.7841 (0.5823) 0.9499 0.6581
Less distributions:
Dividends from net investment income (0.5333) (0.5441) (0.5607) (0.5499) (0.2981)
Distribution from net realized gains -- -- (0.0070) -- --
------- ------- ------- ------- -------
Total from distributions (0.5333) (0.5441) (0.5677) (0.5499) (0.2981)
------- ------- ------- ------- -------
Net asset value, end of period $9.75 $9.85 $9.61 $10.76 $10.36
======= ======= ======= ======= ========

TOTAL INVESTMENT RETURN 4.49% 8.42% (5.54%) 9.48% 10.20%**<F14>
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period (in 000's $) 2,766 2,799 4,367 6,376 3,223
Ratio of expenses (after reimbursement)
to average net assets***<F15> 0.90% 0.91% 0.86% 0.83% 0.75%**<F14>
Ratio of net investment income
to average net assets****<F16> 5.43% 5.6% 5.4% 5.3% 5.0%**<F14>
Portfolio turnover rate 28.6% 0.0% 19.6% 6.3% --

*<F13>Commencement of Operations.
**<F14>Annualized.
***<F15>Computed after giving effect to adviser's expense limitation
undertaking. If the Fund had paid all of its expenses, the ratio would have
been 2.2%, 2.0%, 1.5% and 1.5% for the years ended September 30, 1996, 1995,
1994 and 1993, respectively, and 2.8%** for the period ended September 30, 1992.
****<F16>The ratio of net investment income prior to adviser's expense
limitation undertaking to average net assets for the years ended September 30,
1996, 1995, 1994 and 1993 and the period ended September 30, 1992 would have
been 4.1%, 4.5%, 4.8%, 4.6% and 2.9%**, respectively.

</TABLE>

REYNOLDS MONEY MARKET FUND

YEARS ENDED SEPTEMBER 30,
-----------------------------------------------
1996 1995 1994 1993 1992 1991*<F17>
------- ------- ------- ------- ------ -------
<S> <C> <C> <C> <C> <C> <C>
PER SHARE OPERATING
PERFORMANCE:
Net asset value, beginning of period $1.00 $1.00 $1.00 $1.00 $1.00 $1.00
Income from investment operations:
Net investment income 0.0477 0.0510 0.0304 0.0255 0.0364 0.0358
Less distributions:
Dividends from net investment income (0.0477) (0.0510) (0.0304) (0.0255) (0.0364) (0.0358)
-------- ------- ------- ------- ------ -------
Net asset value, end of period $1.00 $1.00 $1.00 $1.00 $1.00 $1.00
======== ======= ======= ======= ======= ======

TOTAL INVESTMENT RETURN 4.9% 5.2% 3.1% 2.6% 3.6% 5.5%**<F18>
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period (in 000's $) 3,980 3,743 3,192 6,798 6,166 3,617
Ratio of expenses (after reimbursement)
to average net assets***<F19> 0.65% 0.65% 0.63% 0.67% 0.64% 0.61%**<F18>
Ratio of net investment income to
average net assets****<F20> 4.78% 5.08% 2.84% 2.62% 3.53% 5.43%**<F18>

*<F17>For the period from January 30, 1991 (commencement of operations) to
September 30, 1991.
**<F18>Annualized.
***<F19>Computed after giving effect to adviser's expense limitation
undertaking. If the Fund had paid all of its expenses, the ratio would have
been 1.39%, 1.95%, 1.47%, 1.22% and 1.73% for the years ended September 30,
1996, 1995, 1994, 1993 and 1992, respectively, and 1.85%** for the period ended
September 30, 1991.
****<F20>If the Fund had paid all of its expenses, the ratio would have been
4.05%, 3.79%, 2.01%, 2.08% and 2.44% for the years ended September 30, 1996,
1995, 1994, 1993 and 1992, respectively, and 4.18%** for the period ended
September 30, 1991.

INTRODUCTION

The Company is a no-load, open-end, diversified management investment
company, better known as a mutual fund, registered under the Investment Company
Act of 1940 (the "Act"). It was incorporated under the laws of Maryland on April
28, 1988. The Company consists of a series of four funds: Reynolds Blue Chip
Growth Fund, Reynolds Opportunity Fund, Reynolds U.S. Government Bond Fund and
Reynolds Money Market Fund. Each of the Funds obtains its assets by continuously
selling its shares to individual and institutional investors. Proceeds from such
sales are invested by the particular Fund in securities of other issuers. In
this way, each Fund:

o Combines the resources of many investors, with each individual investor
having an interest in every one of the securities owned by such Fund;

o Provides each individual investor with diversification by investing in the
securities of many different issuers;

o Reduces transaction costs by buying and selling larger blocks of securities;
and

o Furnishes professional portfolio management to select and watch over its
investments. See "MANAGEMENT OF THE FUNDS" for a discussion of the Funds'
Adviser.

Each of the Funds which make up the Company will redeem any of its
outstanding shares on demand of the owner at their next determined net asset
value. Registration of the Company under the Act does not involve supervision of
the Company's management or policies by the Securities and Exchange Commission.

INVESTMENT OBJECTIVES AND POLICIES

REYNOLDS BLUE CHIP GROWTH FUND

The investment objective of the Blue Chip Fund is to produce long-term growth
of capital, with current income as a secondary objective, by investing in common
stocks of well-established growth companies commonly referred to as "blue chip"
companies. Reynolds Capital Management (the "Adviser") will, under normal
circumstances, maintain a diversified portfolio in which at least 65% of the
Blue Chip Fund's assets are invested in common stocks of blue chip companies.
Blue chip companies are defined as those companies which have a market
capitalization of at least $300,000,000 and are included in the Standard and
Poor's Daily Stock Price Index of 500 Common Stocks (the "S&P 500") or the Dow
Jones Industrial Average. Standard & Poor's Corporation ("Standard & Poor's")
selects stocks for inclusion in the S&P 500 based upon the following criteria:
size, as measured by aggregate market value; position within a given industry
classification; nature and extent of capitalization; trading volume; prospects
for the company in particular and/or industry as a whole; and responsiveness of
stock price to changes in industry affairs. The thirty industrial stocks used to
compute the Dow Jones Industrial Average are selected because they are
representative of the breadth of American industry. These companies are
important factors in their respective industries and their stocks are widely
held by individuals and institutional investors. Examples of blue chip companies
include Caterpillar Inc., The Coca-Cola Company, General Electric Co., Intel
Corp., Merck & Co., Inc., Microsoft Corp., Motorola, Inc., Procter & Gamble Co.,
Wal-Mart Stores, Inc. and Walt Disney Co. These companies are mentioned for
illustrative purposes only and do not necessarily reflect the present portfolio
composition of the Blue Chip Fund.

The blue chip companies in which the Blue Chip Fund will invest generally
exhibit superior fundamental characteristics, as determined by the Adviser,
which may include:

o a long history of profitability

o potential for above-average earnings growth

o leadership positions in its markets

o a superior and pragmatic growth strategy

o participation in expanding industries

o proprietary products, processes or services

o an experienced and tested management

o a strong balance sheet

o an above-average record of dividend consistency and growth

o a high return on equity

In determining that the above characteristics are present with respect to
specific investments, the Adviser will study the financial statements of the
issuing corporations and other companies in the same industry, the issuing
corporations' reports to shareholders and analysts, and general economic and
industry reports of brokers.

In seeking long-term growth of capital, the Adviser will generally purchase
stocks of those blue chip companies that it expects to have potential earnings
per share growth greater than the average company included in the S&P 500. The
Adviser believes that when a company's earnings grow faster than the economy in
general, the market will eventually recognize this successful long-term record
by valuing that company's stock at a higher price. In addition, the company
should be able to increase its dividend as its long-term earnings grow. The
Adviser will evaluate blue chip stocks as follows. Initially, the Adviser will
determine the strongest sectors (i.e., industry groups) of the market by
comparing the performance of various sectors to the general economic forecast.
The Adviser will then seek to identify those companies within the strongest
sectors with favorable earnings prospects and, finally, select the most
attractive values on the basis of such factors as price-earnings ratios.
Although sector emphasis will shift as the Adviser's outlook for earnings among
market sectors changes, the Blue Chip Fund will maintain representation in as
many industries as possible.

In addition to investing in blue chip stocks the Blue Chip Fund may invest up
to 35% of its assets in common stocks of issuers which are not blue chip
companies but which have proven records of profitability and strong earnings
momentum. Such companies are likely to be (1) leading companies in smaller
industries or (2) lesser known companies moving from a lower to a higher market
share position within their industry groups rather than the largest and best
known companies in such groups. The Blue Chip Fund may also invest not more than
15% of its total assets in U.S. dollar-denominated securities of foreign issuers
in the form of American Depository Receipts ("ADRs") that are regularly traded
on recognized U.S. exchanges or in the U.S. over-the-counter ("OTC") market.

No more than 35% of the Blue Chip Fund's portfolio will, under normal
circumstances, be invested in securities other than common stocks of blue chip
companies. However, when, in the opinion of the Adviser, market conditions
appear unfavorable, the Blue Chip Fund may seek to preserve capital by
temporarily shifting a high proportion of its assets to short-term debt
securities and money market instruments such as United States Treasury Bills,
certificates of deposit of U.S. banks, commercial paper and commercial paper
master notes (which are demand instruments without a fixed maturity bearing
interest at rates which are fixed to known lending rates and automatically
adjusted when such lending rates change) rated A-1 or better by Standard &
Poor's or Prime-1 by Moody's Investors Service, Inc. ("Moody's"). The Blue Chip
Fund may also invest in such instruments in amounts as the Adviser believes are
reasonable to satisfy anticipated redemption requests. In addition, the Blue
Chip Fund will invest in preferred stocks, U.S. Government securities and high-
quality publicly distributed corporate bonds and debentures when the Adviser
believes such securities offer opportunities for long-term growth of capital,
such as during periods of declining interest rates when the market value of such
securities generally rises. The Blue Chip Fund will limit its investment in non-
convertible bonds and debentures to those which have been assigned one of the
two highest ratings of either Standard & Poor's (AAA and AA) or Moody's (Aaa and
Aa). A description of the foregoing ratings is set forth in the Statement of
Additional Information. Finally the Blue Chip Fund may invest in securities
convertible into blue chip stocks.

The Blue Chip Fund may purchase stock index put options to hedge against a
loss in its stock portfolio caused by a general decline in the stock market. If
the index declines over the life of the option contract, the put option becomes
more valuable and the Blue Chip Fund will enter into a closing contract. The
realized gain would offset the presumed unrealized loss in the Blue Chip Fund's
portfolio. If the index rises over the life of the option contract, the option
will become worthless and expire unexercised. In such event the Blue Chip Fund's
loss on the option contract will be limited to the premium paid. The Blue Chip
Fund may purchase stock index call options in order to participate in an
anticipated increase in stock market prices (i.e., a "long" or "anticipatory"
hedge). An "anticipatory hedge" assumes the Blue Chip Fund will have a projected
source of incoming cash to commit to going to a "long" position. If the index
rises over the life of the option contract, the call option becomes more
valuable and the Blue Chip Fund will enter into a closing contract. The realized
gain would in effect allow the Blue Chip Fund to benefit from stock market
appreciation even though it may not have had sufficient cash to purchase the
underlying stocks. If the index declines over the life of the option contract,
the option will become worthless and expire unexercised and the Blue Chip Fund's
loss will be limited to the premium paid. The value of options purchased by the
Blue Chip Fund will not exceed 5% of the Blue Chip Fund's total assets.

In investing for long-term growth of capital, the Blue Chip Fund does not
intend to place emphasis on short-term trading profits. The sale of a particular
issuer's securities will be based upon factors such as a change in the national
political or economic climate, actual or potential deterioration of the issuer's
earning power, increases in the price of the security that are considered
excessive relative to the issuer's earning power, and investment opportunities
in other securities. The Blue Chip Fund anticipates that its annual portfolio
turnover rate will not exceed 100%. The annual portfolio turnover rate indicates
changes in the Blue Chip Fund's portfolio and is calculated by dividing the
lesser of purchases or sales of portfolio securities (excluding securities
having maturities at acquisition of one year or less) for the fiscal year by the
monthly average of the value of the portfolio securities (excluding securities
having maturities at acquisition of one year or less) owned by the Blue Chip
Fund during the fiscal year. The annual portfolio turnover rate may vary widely
from year to year depending upon market conditions and prospects. However, the
Blue Chip Fund intends to limit turnover so that realized short-term gains on
securities held for less than three months do not exceed 30% of adjusted gross
income in order to derive the benefits of favorable tax treatment available to
regulated investment companies under the Internal Revenue Code (the "Code").
Increased portfolio turnover necessarily results in correspondingly heavier
brokerage costs which the Blue Chip Fund must pay and increased realized gains
(or losses) to shareholders.

Risks are inherent in any investment. As a consequence, there can be no
assurance that the objective of the Blue Chip Fund will be realized. Nor can
there be any assurance that the Blue Chip Fund's portfolio will not decline in
value. Nevertheless, the Adviser believes that its investment philosophy is best
suited to deal with the continually changing conditions of the economy and
financial and securities markets. Although corporate earnings can be expected to
suffer during periods of recession, the Adviser believes that, in the long run,
the earnings of blue chip growth companies generally will not be adversely
affected by unfavorable economic conditions to the same extent as the earnings
of smaller companies. Additionally, blue chip stocks typically have a high
degree of liquidity, as they usually have a large number of publicly-held shares
and a high trading volume. During periods of market instability, blue chip
stocks should be less volatile than stocks with less liquidity. However, since
the major portion of the Blue Chip Fund's portfolio will generally consist of
common stocks, it may be expected that its net asset value will be subject to
greater fluctuation than a portfolio containing a substantial amount of fixed
income securities.

REYNOLDS OPPORTUNITY FUND

The investment objective of the Opportunity Fund is to produce long-term
growth of capital by investing in a diversified portfolio of common stocks of
companies having above average growth characteristics. Securities are selected
for the Opportunity Fund on the basis of their potential for capital
appreciation; current income is not a significant consideration.

The Opportunity Fund generally invests in securities of growth companies
without regard to size that the Adviser believes to be well-managed and to have
attractive fundamental financial characteristics. Attractive fundamental
financial characteristics may include, among other factors, a low debt to equity
ratio, a return on equity above the market average, and consistent revenue and
earnings per share growth over the prior three to five years or current or
projected increasing earnings momentum. Such investments may be in equity
securities of well-known, established companies as well as smaller, less well-
known companies.

In selecting stocks for the Opportunity Fund, the Adviser employs a "bottom-
up" security analysis. "Bottom-up" security analysis refers to an analytical
approach to securities selection which first focuses on the company and company-
related matters. This is in contrast to a "top-down" analysis, which first
focuses on general economic conditions or a particular industry. The Adviser
believes that a "bottom-up" approach is more likely to identify undervalued
growth companies.

Securities of unseasoned companies, i.e., companies with less than three
years' continuous operations, may be acquired from time to time by the
Opportunity Fund when the Adviser believes such investments offer possibilities
of attractive capital appreciation. However, the Opportunity Fund will not
invest more than 5% of the value of its total assets in the securities of
unseasoned companies. Securities of such companies present risks considerably
greater than do securities of more established companies.

In seeking its investment objective, the Opportunity Fund may invest up to
25% of its total assets in ADRs that are regularly traded on recognized U.S.
exchanges or in the U.S. OTC market. See "Reynolds Blue Chip Growth Fund" above.
The Opportunity Fund will not purchase securities of foreign issuers on foreign
markets.

The Opportunity Fund may also acquire preferred stocks and obligations, such
as bonds, debentures and notes, that in the opinion of the Adviser present
opportunities for capital appreciation. In addition, the Opportunity Fund may
invest in securities convertible into common stock, such as certain bonds and
preferred stocks, and may invest up to 5% of its net assets in other types of
securities having common stock characteristics, such as rights and warrants to
purchase equity securities.

When, in the opinion of the Adviser, market conditions appear unfavorable,
the Opportunity Fund may seek to preserve capital by temporarily shifting a high
proportion of its assets to short-term debt securities and money market
instruments such as United States Treasury Bills, certificates of deposit of
U.S. Banks, commercial paper and commercial paper master notes rated A-l or
better by Standard & Poor's or Prime-l by Moody's. The Opportunity Fund may also
invest in such instruments in amounts as the Adviser believes are reasonable to
satisfy anticipated redemption requests. In addition, the Opportunity Fund will
invest in United States Government securities and high-quality publicly
distributed corporate bonds and debentures when the Adviser believes such
securities offer opportunities for long-term growth of capital, such as during
periods of declining interest rates when the market value of such securities
generally rises. The Opportunity Fund will limit its investment in non-
convertible bonds and debentures to those which have been assigned one of the
two highest ratings of either Standard & Poor's (AAA and AA) or Moody's (Aaa and
Aa). A description of the foregoing ratings is set forth in the Statement of
Additional Information.

The Opportunity Fund may purchase stock index put options to hedge against a
loss in its stock portfolio caused by a general decline in the stock market. In
addition, the Opportunity Fund may purchase stock index call options in order to
participate in an anticipated increase in stock market prices. For a complete
discussion of such options, see "Reynolds Blue Chip Growth Fund" above. The
value of options purchased by the Opportunity Fund will not exceed 5% of the
Opportunity Fund's total assets.

In investing for long-term growth of capital, the Opportunity Fund does not
intend to place emphasis on short-term trading profits. The sale of a particular
issuer's securities will be based upon factors such as a change in the national
political or economic climate, actual or potential deterioration of the issuer's
earning power, increases in the price of the security that are considered
excessive relative to the issuer's earning power, and investment opportunities
in other securities. The Opportunity Fund anticipates that its annual portfolio
turnover rate will not exceed 100%. The annual portfolio turnover rate indicates
changes in the Opportunity Fund's portfolio and is calculated by dividing the
lesser of purchases or sales of portfolio securities (excluding securities
having maturities at acquisition of one year or less) for the fiscal year by the
monthly average of the value of the portfolio securities (excluding securities
having maturities at acquisition of one year or less) owned by the Opportunity
Fund during the fiscal year. The annual portfolio turnover rate may vary widely
from year to year depending upon market conditions and prospects. However, the
Opportunity Fund intends to limit turnover so that realized short-term gains on
securities held for less than three months do not exceed 30% of adjusted gross
income in order to derive the benefits of favorable tax treatment available to
regulated investment companies under the Code. Increased portfolio turnover
necessarily results in correspondingly heavier brokerage costs which the
Opportunity Fund must pay and increased realized gains (or losses) to
shareholders.

Risks are inherent in any investment. For example, the smaller companies in
which the Opportunity Fund may invest may have limited product lines, markets,
or financial resources, or may be dependent upon a small management group. In
addition, their securities may be subject to more abrupt or erratic market
movements than those of larger, more established companies, both because their
securities typically are traded in lower volume and because such issuers
typically are subject to greater fluctuation in earnings and prospects. As a
consequence, there can be no assurance that the objective of the Opportunity
Fund will be realized. Nor can there be any assurance that such Fund's portfolio
will not decline in value. In view of the nature of the Opportunity Fund's
investment activities, investment in its shares may be suitable only for those
investors who are prepared to invest without concern for current income.

REYNOLDS U.S. GOVERNMENT BOND FUND

The investment objective of the Bond Fund is to provide a high level of
current income by investing in a diversified portfolio of securities issued or
guaranteed as to principal by the U.S. Government, its agencies or
instrumentalities (collectively, "U.S. Government Obligations"). It is the Bond
Fund's policy to invest at least 65% of the total value of its assets in U.S.
Government Obligations. Examples of the types of U.S. Government Obligations
that may be held by the Bond Fund include, in addition to U.S. Treasury Bonds,
Notes and Bills, the obligations of Federal Home Loan Banks, Federal Farm Credit
Banks, Federal Land Banks, the Federal Housing Administration, Farmers Home
Administration, Export-Import Bank of the United States, Small Business
Administration, Government National Mortgage Association, Federal National
Mortgage Association, General Services Administration, Student Loan Marketing
Association, Central Bank for Cooperatives, Federal Home Loan Mortgage
Corporation, Federal Intermediate Credit Banks and Maritime Administration.
Obligations of certain agencies and instrumentalities of the U.S. Government,
such as those of the Federal Housing Administration, Farmers Home
Administration, Export-Import Bank of the United States, Small Business
Administration and the Government National Mortgage Association, are supported
by the full faith and credit of the U.S. Treasury; others, such as the Federal
Home Loan Banks, Federal Intermediate Credit Banks and the Tennessee Valley
Authority, are supported by the right of the issuer to borrow from the U.S.
Treasury; others, such as those of the Federal National Mortgage Association,
are supported by the discretionary authority of the U.S. Government to purchase
the agency's obligations; still others, such as those of the Student Loan
Marketing Association, are supported only by the credit of the instrumentality.
While the U.S. Government currently provides financial support to such U.S.
Government-sponsored instrumentalities, no assurance can be given that it
always will do so. The U.S. Government, its agencies and instrumentalities do
not guarantee the market value of their securities, and consequently, the value
of such securities may fluctuate.

The Bond Fund may invest in zero coupon treasury securities which consist of
Treasury Notes and Bonds that have been stripped of their unmatured interest
coupons by the Federal Reserve Bank. A zero coupon treasury security pays no
interest to its holders during its life and its value to an investor consists of
the difference between its face value at the time of maturity and the price for
which it was acquired, which is generally an amount much less than its face
value. Zero coupon treasury securities are generally subject to greater
fluctuations in value in response to changing interest rates than debt
obligations that pay interest currently. In addition to zero coupon treasury
securities, the Bond Fund may invest in zero coupon bonds issued directly by
federal agencies and instrumentalities. Such issues of zero coupon bonds are
originated in the form of a zero coupon bond and are not created by stripping an
outstanding bond. Finally, the Bond Fund may invest in U.S. Government
Obligations that have been stripped of their unmatured interest coupons by
dealers. Dealers deposit such stripped U.S. Government Obligations with
custodians for safekeeping and then separately sell the principal and interest
payments generated by the security.

Among the U.S. Government Obligations in which the Bond Fund may invest are
securities representing an interest in mortgages or securities collateralized by
an interest in mortgages (collectively, "mortgage securities"). Interest and
principal payments (including prepayments) on the mortgages underlying mortgage
securities are passed-through to the holders of mortgage securities. As a result
of this pass-through of payments, mortgage securities are often subject to more
rapid prepayments of principal than their stated maturity would indicate.
Because the prepayment characteristics of the underlying mortgages vary, it is
not possible to predict accurately the realized yield or average life of a
particular issue of pass-through certificates. Prepayments are important because
of their effect on the yield and the price of the securities. During periods of
declining interest rates, such prepayments can be expected to accelerate and the
Bond Fund would be required to reinvest the proceeds at the lower interest rate
then available. In addition, prepayments of mortgages which underlie mortgage
securities purchased at a premium may not have been fully amortized at the time
the obligation is repaid. As a result of these principal payment features,
mortgage securities are generally more volatile investments than other U.S.
Government Obligations.

In addition, the Bond Fund may invest in high quality corporate obligations.
The Bond Fund will limit its investment in corporate bonds and debentures to
those which have been assigned one of the two highest ratings of either Standard
& Poor's (AAA and AA) or Moody's (Aaa and Aa). A description of the foregoing
ratings is set forth in the Statement of Additional Information.

The average maturity of the obligations held in the Bond Fund is currently
expected to be between one and ten years, but will vary depending on the
Adviser's forecast for interest rates. When the Adviser believes interest rates
will decline, the Bond Fund will emphasize longer-term maturities. Conversely,
when the Adviser believes interest rates will rise, the Bond Fund will shorten
maturities and/or maintain a larger than normal position in money market
instruments. Some factors which the Adviser considers important in determining
the interest rate outlook and, thus, the average maturity of the Fund are
current and expected: (l) economic forecasts; (2) Federal Reserve policies; (3)
inflation rates; (4) real rates of return (yields minus expected inflation); and
(5) shapes of the yield curve.

The money market instruments the Bond Fund may hold during periods in which
the Adviser expects rising interest rates include United States Treasury Bills,
certificates of deposit of U.S. Banks, commercial paper and commercial paper
master notes rated A-l or better by Standard & Poor's or Prime-l by Moody's. The
Bond Fund will also invest in such instruments in such amounts as the Adviser
believes are reasonable to satisfy anticipated redemption requests.

REYNOLDS MONEY MARKET FUND

The investment objective of the Money Market Fund is to provide a high level
of current income, consistent with liquidity, the preservation of capital and a
stable net asset value, by investing in a diversified portfolio of high-quality,
highly liquid money market instruments. In pursuing its investment objective,
the Money Market Fund will invest, during normal market conditions, all of its
assets in U.S. dollar-denominated debt obligations with remaining maturities of
thirteen months or less (as determined in accordance with the rules of the
Securities and Exchange Commission) and will maintain an average portfolio
maturity of no more than 90 days. The Money Market Fund may purchase a broad
range of government, bank and commercial obligations that are available in the
money markets. The following discussion illustrates the types of instruments in
which the Money Market Fund may invest:

The Money Market Fund may invest in U.S. Government Obligations. For a
complete discussion of such securities, see "Reynolds U.S. Government Bond Fund"
above.

The Money Market Fund may purchase bank obligations, such as certificates of
deposit, bankers' acceptances and time deposits (i.e., non-negotiable deposits
maintained in a banking institution for a specific period of time, not to exceed
7 days, at a stated interest rate), issued by banks with a short-term CD rating
in the highest category of at least two nationally recognized rating agencies
(or of one agency if only one agency has issued a rating) (the "required rating
agencies"). The required rating agencies may consist of Standard & Poor's,
Moody's, Duff & Phelps, Inc. ("D&P"), Fitch Investors Service, Inc. ("Fitch")
and Thompson Bankwatch ("TBW"). A description of the highest rating categories
of each of these rating agencies is set forth in the Statement of Additional
Information.

The bank obligations which the Money Market Fund may purchase include U.S.
dollar-denominated instruments issued or supported by the credit of U.S. or
foreign banks or savings institutions having total assets at the time of
purchase in excess of $1 billion. Investments by the Money Market Fund in the
obligations of foreign banks, U.S. branches of foreign banks and foreign
branches of domestic banks will not exceed 25% of the value of the Money Market
Fund's total assets at the time of investment. The Money Market Fund may also
make interest-bearing savings deposits in commercial and savings banks in
amounts not in excess of 5% of its total assets.

Instruments issued or supported by the credit of foreign banks or foreign
branches of domestic banks entail risks that are different from those of
investments in domestic obligations of U.S. banks. Such risks include future
political and economic developments, the possible imposition of foreign
withholding taxes on interest income payable on such instruments, the possible
establishment of exchange controls, the possible seizure or nationalization of
foreign deposits and the adoption of other foreign government restrictions which
might affect adversely the payment of principal and interest of such
instruments. In addition, foreign banks and foreign branches of U.S. banks are
subject to less stringent reserve requirements and to different accounting,
auditing, reporting and recordkeeping standards than those applicable to
domestic branches of U.S. banks.

The Money Market Fund may purchase high-quality commercial paper issued by
corporations rated (at the time of purchase) in the highest category by the
required rating agencies and high-quality corporate bonds with remaining
maturities of thirteen months or less which are rated (at the time of purchase)
in the highest category by the required rating agencies.

The Money Market Fund may purchase commercial paper master demand notes rated
in the highest category by the required rating agencies. Such notes are
unsecured instruments that permit the indebtedness thereunder to vary in
addition to providing for periodic adjustments in the interest rate. An active
secondary market usually will not exist with respect to commercial paper master
demand notes. The absence of a secondary market could make it difficult for the
Money Market Fund to dispose of such a note if the issuer defaulted on its
payment obligation, and the Money Market Fund would, for this or other reasons,
suffer a loss with respect to such instrument.

The Money Market Fund also may agree to purchase U.S. Government Obligations
or other debt securities rated in the highest category by the required rating
agencies from financial institutions, such as banks and broker-dealers, subject
to the seller's agreement to repurchase them at an agreed upon price usually not
more than 7 days after their purchase ("repurchase agreements"). The Money
Market Fund will enter into repurchase agreements only with financial
institutions determined to be creditworthy by the Adviser. During the term of
any repurchase agreement, the Adviser will continue to monitor the
creditworthiness of the seller, and the seller will be required to maintain the
value of the securities subject to the agreement at not less than the repurchase
price. Default or bankruptcy of the seller would, however, expose the Money
Market Fund to possible delay in connection with the disposition of the
underlying securities or loss to the extent that the proceeds from a sale of the
underlying securities were less than the repurchase price under the agreement.
Securities subject to repurchase agreements are held by the Money Market Fund's
custodian (or sub-custodian) or in the Federal Reserve/Treasury Book-Entry
System and, because of the seller's repurchase obligation, may have remaining
maturities of longer than one year.

GENERAL CONSIDERATIONS

Under certain circumstances, each of the Funds may (a) temporarily borrow
money from banks for emergency or extraordinary borrowings, (b) pledge its
assets to secure borrowings, (c) purchase securities of other investment
companies, (d) enter into repurchase agreements, and (e) purchase American
Depository Receipts (the Blue Chip Fund and Opportunity Fund only). A more
complete discussion of the circumstances in which each of the Funds may engage
in these activities is included in the Statement of Additional Information. The
investment objectives and, except as provided in the Statement of Additional
Information, other policies described under this caption are not fundamental
policies and may be changed without shareholder approval. Since each Fund's
investment objectives are not fundamental policies, they may be changed without
a vote of the applicable Fund's shareholders. Such changes may result in a Fund
having investment objectives different from the objectives which the shareholder
considered appropriate at the time of investment in such Fund.

MANAGEMENT OF THE FUNDS

As a Maryland corporation, the business and affairs of the Company are
managed by its Board of Directors. Each of the Funds has entered into an
investment advisory agreement (the "Advisory Agreements") with the Adviser,
Reynolds Capital Management (Frederick L. Reynolds, sole proprietor), 80 East
Sir Francis Drake Boulevard, Larkspur, California 94939. Under such Advisory
Agreements the Adviser furnishes continuous investment advisory services to each
of the Funds. The Adviser does not advise any other mutual funds, but does act
as the investment adviser to individuals and institutional clients with
investment portfolios aggregating as of December 31, 1996 approximately
$100,000,000, including the Funds. The Adviser was organized in April, 1985. Mr.
Frederick L. Reynolds, the sole proprietor of the Adviser, had previously
managed portfolios of a registered investment company.

The Adviser supervises and manages the investment portfolio of each of the
Funds and, subject to such policies as the Board of Directors of the Company may
determine, directs the purchase or sale of investment securities in the day-to-
day management of the Funds. Under the Advisory Agreements, the Adviser, at its
own expense and without reimbursement from any of the Funds, furnishes office
space and all necessary office facilities, equipment and executive personnel for
managing the investments of each Fund, bears all sales and promotional expenses
of the Funds, other than expenses incurred in complying with laws regulating the
issue or sale of securities, and pays salaries and fees of all officers and
directors of the Company (except the fees paid to directors who are not
interested persons of the Adviser). For the foregoing, the Adviser receives from
the Blue Chip Fund a monthly fee of 1/12 of 1.0% (1.0% per annum) of such Fund's
daily net assets; from the Opportunity Fund a monthly fee of 1/12 of 1.0% (1.0%
per annum) of such Fund's daily net assets; from the Bond Fund a monthly fee of
1/12 of 0.75% (0.75% per annum) of such Fund's daily net assets; and from the
Money Market Fund a monthly fee of 1/12 of 0.5% (0.5% per annum) of such Fund's
daily net assets. The advisory fees paid by the Blue Chip Fund, the Opportunity
Fund, the Bond Fund and the Money Market Fund in the fiscal year ended September
30, 1996 were equal to 1.00%, 1.00%, 0.75% (0% after reimbursement) and 0.50%
(0% after reimbursement), respectively, of such Fund's average net assets. See
"PER SHARE INCOME AND CAPITAL CHANGES."

Frederick L. Reynolds, sole proprietor of the Adviser since he founded the
firm in 1985, is primarily responsible for the day-to-day management of each
Fund's portfolio. He has held this responsibility since each Fund commenced
operations. Mr. Reynolds also has served as Chairman, President, Treasurer and a
Director of the Company since it was organized in April, 1988.

Each of the Funds also has entered into an administration agreement (the
"Administration Agreements") with Fiduciary Management, Inc. (the
"Administrator"), 225 East Mason Street, Milwaukee, Wisconsin 53202. Under the
Administration Agreements the Administrator prepares and maintains the books,
accounts and other documents required by the Act, determines each Fund's net
asset value, responds to shareholder inquiries, prepares each Fund's financial
statements and tax returns, prepares certain reports and filings with the
Securities and Exchange Commission and with state Blue Sky authorities,
furnishes statistical and research data, clerical, accounting and bookkeeping
services and stationery and office supplies, keeps and maintains each Fund's
financial and accounting records and generally assists in all aspects of the
Funds' operations. The Administrator, at its own expense and without
reimbursement from any of the Funds, furnishes office space and all necessary
office facilities, equipment and executive personnel for performing the services
required to be performed by it under the Administration Agreements. For the
foregoing, the Administrator receives from the Blue Chip Fund and the
Opportunity Fund a monthly fee of 1/12 of 0.2% (0.2% per annum) on the first
$30,000,000 of the daily net assets of each of such Funds and 1/12 of 0.1% (0.1%
per annum) on the daily net assets of each of such Funds in excess of
$30,000,000; and from the Bond Fund and the Money Market Fund a monthly fee of
1/12 of 0.1% (0.1% per annum) on the daily net assets of each of such Funds.

DETERMINATION OF NET ASSET VALUE

The per share net asset value of each Fund is determined by dividing the
total value of such Fund's net assets (meaning its assets less its liabilities
excluding capital and surplus) by the total number of its shares outstanding at
that time. Except as otherwise noted below, each Fund's net asset value is
determined as of the close of regular trading (currently 4:00 p.m. Eastern time)
on the New York Stock Exchange on each day the New York Stock Exchange is open
for trading. This determination is applicable to all transactions in shares of
such Fund prior to that time and after the previous time as of which net asset
value was determined. Accordingly, purchase orders accepted or shares tendered
for redemption prior to the close of regular trading on a day the New York Stock
Exchange is open for trading will be valued as of the close of trading, and
purchase orders accepted or shares tendered for redemption after that time will
be valued as of the close of the next trading day. Notwithstanding the
foregoing, the net asset value of the Bond Fund and the Money Market Fund also
will not be determined on days when the Federal Reserve is closed.

In calculating the net asset value of the Blue Chip Fund, the Opportunity
Fund and the Bond Fund, portfolio securities traded on any national securities
exchange or quoted on the Nasdaq National Market System will ordinarily be
valued on the basis of the last sale price on the date of valuation, or in the
absence of any sales on that date, the most recent bid price. Other securities
will generally be valued at the most recent bid price if market quotations are
readily available. Any securities for which there are no readily available
market quotations and other assets will be valued at their fair value as
determined in good faith by the Company's Board of Directors, except that debt
securities having maturities of less than 60 days may be valued using the
amortized cost method.

Securities held by the Money Market Fund are valued at amortized cost. Under
this method of valuation, a security is initially valued at its acquisition
cost, and thereafter, a constant amortization of any discount or premium is
assumed each day regardless of the impact of fluctuating interest rates on the
market value of the security. While this method provides certainty in valuation,
it may result in periods during which value, as determined by amortized cost, is
higher or lower than the price the Money Market Fund would receive if it sold
the instrument. The Money Market Fund attempts to maintain its per share net
asset value at $1.00. Under most conditions, the Adviser believes this will be
possible. Calculations are made periodically to compare the value of the Money
Market Fund's portfolio at amortized cost to current market values. In the event
the per share net asset value (calculated by reference to market value) should
deviate from $1.00 by 1/2 of 1% or more, the Board of Directors will promptly
consider what action, if any, should be taken.

HOW TO PURCHASE SHARES

Shares of the Funds may be purchased directly from the Company. The price per
share of each Fund is its next determined per share net asset value after
receipt of an application in proper form. A purchase application is included in
the center of this Prospectus. Additional purchase applications may be obtained
from the Company. The Board of Directors of the Company has established $1,000
as the minimum initial purchase for each Fund ($100 for an initial purchase
through an employee benefit, profit sharing or retirement plan such as a 401(k)
Plan) and $100 as the minimum for any subsequent purchase (except for the
Automatic Investment Plan and through dividend reinvestment), which minimum
amounts are subject to change at any time. Shareholders of the Funds will be
advised at least 30 days in advance of any increases in such minimum amounts.

TO PURCHASE BY MAIL

Purchase applications should be mailed directly to Reynolds Funds, c/o
Firstar Trust Company, Mutual Fund Services, P.O. Box 701, Milwaukee, Wisconsin
53201-0701. The U.S. Postal Service is not an agent of the Funds. Therefore,
deposit in the mail does not constitute receipt by Firstar Trust Company or the
Funds. PLEASE DO NOT mail letters by overnight courier to the Post Office Box.
All applications must be accompanied by payment in the form of a check made
payable to the full name of the Fund whose shares are being purchased. All
purchases must be made in U.S. dollars and checks must be drawn on U.S. banks.
No cash will be accepted. Firstar Trust Company will charge a $20 fee against a
shareholder's account for any payment check returned to the custodian. The
shareholder will also be responsible for any losses suffered by any Fund as a
result. When a purchase is made by check (other than a cashiers or certified
check) and a redemption is made shortly thereafter, the Company may delay the
mailing of a redemption check until it is satisfied that the check has cleared.
(It will normally take up to 3 days to clear local personal or corporate checks
and up to 7 days to clear other personal and corporate checks.) To avoid
redemption delays, purchases may be made by cashiers or certified check or by
direct wire transfers. Note: Different forms are used for establishing Reynolds
Funds-sponsored Individual Retirement Accounts, defined contribution, 401(k) and
403(b)(7) plans. Please call Firstar Trust Company at 1-800-773-9665 or 1-414-
765-4124 to obtain such forms.

TO PURCHASE BY OVERNIGHT OR EXPRESS MAIL

Purchase applications also may be sent by overnight or express mail. Please
use the following address to insure proper delivery: Reynolds Funds, c/o Firstar
Trust Company, Mutual Fund Services, 3rd Floor, 615 E. Michigan Street,
Milwaukee, Wisconsin 53202. The U.S. Postal Service and other independent
delivery services are not agents of the Fund. Therefore, deposit of purchase
applications with such services does not constitute receipt by Firstar Trust
Company or the Funds.

TO PURCHASE BY WIRE

The establishment of a new account by wire transfer should be preceded by a
telephone call to Firstar Trust Company at 1-800-773-9665 or 1-414-765-4124 to
provide information for the setting up of the account. A completed purchase
application also must be sent to Reynolds Funds at the above address immediately
following the investment.

A purchase request for any of the Funds should be wired
through the Federal Reserve System as follows:

Firstar Bank Milwaukee, NA

777 East Wisconsin Avenue

Milwaukee, Wisconsin 53202

ABA Number 0750-00022

For credit to Firstar Trust Company

Account Number 112-952-137

For further credit to: --------------------------------------
(Insert full name of appropriate Fund)

Shareholder name: -------------------------------------------

Shareholder account number:----------------------------------

TO MAKE ADDITIONAL INVESTMENTS

Shareholders of any Fund may add to their account at any time by purchasing
shares by mail ($100 minimum) or by wire ($500 minimum) according to the
aforementioned wiring instructions. Shareholders should notify Firstar Trust
Company at 1-800-773-9665 or 1-414-765-4124 prior to sending their wire. The
remittance form which is attached to a shareholder's individual account
statement should, if possible, accompany any investment made through the mail.
Every purchase request must include a shareholder's account registration number
in order to assure that funds are credited properly.

AUTOMATIC INVESTMENT PLAN

The Company offers an Automatic Investment Plan whereby a shareholder may
automatically make purchases of shares of any Reynolds Fund on a regular,
convenient basis ($50 minimum per transaction). Under the Automatic Investment
Plan, a shareholder's designated bank or other financial institution debits a
preauthorized amount on the shareholder's account on any date specified by the
shareholder each month or calendar quarter and applies the amount to the
purchase of the appropriate Reynolds Fund shares. If such date is a weekend or
holiday, such purchase shall be made on the next business day. The Automatic
Investment Plan must be implemented with a financial institution that is a
member of the Automated Clearing House ("ACH"). No service fee is currently
charged by the Company for participating in the Automatic Investment Plan. A $20
fee will be imposed by the transfer agent if sufficient funds are not available
in the shareholder's account at the time of the automatic transaction. An
application to establish the Automatic Investment Plan is included as part of
the purchase application. Shareholders may change the date or amount of
investments at any time by writing to or calling Firstar Trust Company at 1-800-
773-9665. In the event an investor discontinues participation in the Automatic
Investment Plan, the Company reserves the right to redeem the investor's account
involuntarily, upon 60 days' notice, if the account's value is $500 or less.

GENERAL INFORMATION

As no-load mutual funds, the Funds impose no sales commissions and,
therefore, the entire amount of an investment in any Fund is used to purchase
shares of such Fund. All shares purchased will be credited to the shareholder's
account and confirmed by a statement mailed to the shareholder's address. The
Company does not issue stock certificates for shares purchased. Applications are
subject to acceptance by the Company and are not binding until so accepted. The
Funds do not, except as indicated in the following sentence, accept telephone
orders for the purchase of shares, and they reserve the right to reject
applications in whole or in part. The Funds may accept telephone orders from
broker-dealers who have been previously approved by the Funds. It is the
responsibility of such broker-dealers promptly to forward purchase or redemption
orders to the appropriate Fund. Although there is no sales charge levied
directly by any Fund, such broker-dealers may charge the investor a fee for
their services at either the time of purchase or the time of redemption. Such
charges may vary among broker-dealers but in all cases will be retained by the
broker-dealer and not remitted to the Funds or the Adviser.

HOW TO REDEEM SHARES

Investors who purchase shares directly from any Fund may redeem all or part
of their shares in accordance with any of the procedures described below.

REGULAR REDEMPTION

A shareholder may require the Company to redeem his shares of any Fund in
whole or part at any time during normal business hours. Redemption requests must
be made in writing and directed to Reynolds Funds, c/o Firstar Trust Company,
Mutual Fund Services, P.O. Box 701, Milwaukee, Wisconsin 53201-0701. The U.S.
Postal Service and other independent delivery services are not agents of the
Funds. Therefore, deposit of redemption requests in the mail or with such
delivery services does not constitute receipt by Firstar Trust Company or the
Funds. Please do not mail letters by overnight courier to the Post Office Box
address. Redemption requests sent by overnight or express mail should be
directed to Reynolds Funds, c/o Firstar Trust Company, Mutual Fund Services, 3rd
Floor, 615 E. Michigan Street, Milwaukee, Wisconsin 53202. If a redemption
request is inadvertently sent to the Company at its corporate address, it will
be forwarded to Firstar Trust Company, and the effective date of redemption will
be delayed until the request is received by Firstar Trust Company. Requests for
redemption by telephone or telegram cannot be honored by the Blue Chip Fund, the
Opportunity Fund or the Bond Fund, and requests which are subject to any special
conditions or which specify an effective date other than as provided herein
cannot be honored by any Fund.

Redemption requests should specify the name of the appropriate Fund, the
number of shares or dollar amount to be redeemed, shareholder's name, account
number, and the additional requirements listed below that apply to the
particular account.

TYPE OF REGISTRATION REQUIREMENTS
- -------------------- ------------

Individual, Joint Ten- Redemption request signed
ants, Sole Proprietor, by all person(s) required to Custodial
(Uniform sign for the account, exact-
Gift to Minors Act), ly as it is registered.
General Partners

Corporations, Redemption request and a
Associations corporate resolution,
signed by person(s)
required to sign for the
account, accompanied
by signature guarantee(s).

Trusts Redemption request signed
by the Trustee(s) with a
signature guarantee. (If the
Trustee's name is not
registered on the account,
a copy of the trust docu-
ment certified within the
last sixty (60) days is also
required.)

Redemption requests from shareholders in an Individual Retirement Account
must include instructions regarding federal income tax withholding. Unless
otherwise indicated, these redemptions, as well as redemptions of other
retirement plans not involving a direct rollover to an eligible plan, will be
subject to federal income tax withholding. If a shareholder is not included in
any of the above registration categories (e.g., executors, administrators,
conservators or guardians), the shareholder should call the transfer agent,
Firstar Trust Company, at 1-800-773-9665 or 1-414-765-4124 for further
instructions.

Signatures need not be guaranteed unless otherwise indicated above, the
redemption request exceeds $25,000, or the proceeds of the redemption are
requested to be sent by wire transfer, to a person other than the registered
holder or holders of the shares to be redeemed, or to be mailed to other than
the address of record, in which cases each signature on the redemption request
must be guaranteed by a commercial bank or trust company in the United States, a
member firm of the New York Stock Exchange or other eligible guarantor
institution. Redemptions will not be effective or complete until all of the
foregoing conditions, including receipt of all required documentation by Firstar
Trust Company in its capacity as transfer agent, have been satisfied.

TELEPHONE REDEMPTION

Shareholders may redeem shares of only the Money Market Fund by telephone. To
redeem shares by telephone, an investor must check the appropriate box on the
purchase application. Once this feature has been requested, shares may be
redeemed by phoning Firstar Trust Company at 1-800-773-9665 or 1-414-765-4124
and giving the account name, account number and amount of redemption. Proceeds
redeemed by telephone will be mailed, wired or sent via Electronic Funds
Transfer ("EFT") only to an investor's address or bank of record as shown on the
records of the transfer agent. (Transfers via EFT generally take up to 3
business days to reach the investor's bank account.) Telephone redemptions must
be in amounts of $1,000 or more.

If an investor redeems shares of the Money Market Fund by telephone and
requests wire payment, payment of the redemption proceeds will normally be made
in federal funds on the next business day. As stated above, the transfer agent
will wire redemption proceeds only to the bank and account designated on the
purchase application or in written instructions subsequently received by the
transfer agent, and only if the investor's bank is a commercial bank located
within the United States. The transfer agent currently charges a $10.00 fee for
each payment made by wire of redemption proceeds, which will be deducted from
the shareholder's account.

If an investor redeems shares of the Money Market Fund by telephone and
requests EFT, money will be automatically moved from the investor's Money Market
Fund account to the investor's bank account according to the bank and account
designated on the purchase application or in written instructions subsequently
received by the transfer agent. Transfers via EFT generally take up to 3
business days to reach your bank account. There is not a charge for a payment
made via EFT.

In order to arrange for telephone redemptions after a Money Market Fund
account has been opened or to change the bank, account or address designated to
receive redemption proceeds, a written request must be sent to Firstar Trust
Company at the address listed above under "Regular Redemption." The request must
be signed by each shareholder of the account with the signatures guaranteed as
described above. Further documentation may be requested from corporations,
executors, administrators, trustees and guardians.

The Money Market Fund reserves the right to refuse a telephone redemption if
it believes it is advisable to do so. Procedures for redeeming shares of the
Money Market Fund by telephone may be modified or terminated by the Fund at any
time. Neither the Money Market Fund nor its transfer agent will be liable for
following instructions for telephone redemption transactions that they
reasonably believe to be genuine, provided reasonable procedures are used to
confirm the genuineness of the telephone instructions, but may be liable for
unauthorized transactions if they fail to follow such procedures. These
procedures include requiring some form of personal identification prior to
acting upon the telephone instructions and recording all telephone calls.

During periods of substantial economic or market change, telephone
redemptions may be difficult to implement. If an investor is unable to contact
the transfer agent by telephone, shares of the Money Market Fund may also be
redeemed by delivering the redemption request to the transfer agent in person or
by mail as described above under "Regular Redemption."

CHECKWRITING

An investor may request on the purchase application that the Money Market
Fund provide redemption checks drawn on the Money Market Fund. Checks may be in
amounts of $500 or more. There is no charge for this privilege. The shares
redeemed by check will continue earning dividends until the check clears. Checks
will not be returned. Checks are supplied free of charge and additional checks
will be sent to the shareholder upon request. In order to establish this
checkwriting option after an account has been opened, the shareholder must send
a written request to the Reynolds Money Market Fund. This request must be signed
by each shareholder whose name appears on the account. Shareholders may place
stop payment requests on checks by calling the Money Market Fund at 1-800-773-
9665. A $20 fee will be charged for each stop payment request. If there are
insufficient shares in the shareholder's account to cover the amount of the
redemption by check, the check will be returned marked "insufficient funds," and
a fee of $20 will be charged to the shareholder's account. Because dividends on
the Money Market Fund accrue daily, checks may not be used to close an account,
as a small balance is likely to result. The checkwriting option is not available
to shareholders of the Blue Chip Fund, the Opportunity Fund or the Bond Fund.

OTHER REDEMPTION INFORMATION

The redemption price per share for each Fund is the next determined net asset
value per share for such Fund after receipt by Firstar Trust Company in its
capacity as transfer agent of the written request in proper form with all
required documentation. The amount received will depend on the market value of
the investments in the appropriate Fund's portfolio at the time of determination
of net asset value, and may be more or less than the cost of the shares
redeemed. Proceeds for shares redeemed will be mailed, wired or forwarded via
EFT to the holder typically within one or two days, but no later than the
seventh day after receipt of the redemption request in proper form and of all
required documentation except as indicated in "HOW TO PURCHASE SHARES" for
certain redemptions of shares purchased by check. Wire transfers may be arranged
through Firstar Trust Company, which will assess a nominal wiring charge
(currently $10.00, but subject to change without notice) directly against the
investor's account. Redemptions via EFT generally will take up to 3 business days
to reach the investor's bank account.

The Company reserves the right to redeem the shares held in any account if at
the time of any transfer or redemption of shares in the account, the value of
the remaining shares in the account falls below $500. Shareholders of any Fund
will be notified in writing when the value of the account is less than the
minimum and allowed at least 60 days to make an additional investment in such
Fund. The receipt of proceeds from the redemption of shares held in an
Individual Retirement Account will constitute a taxable distribution of benefits
from the IRA unless a qualifying rollover contribution is made. Involuntary
redemptions will not be made because the value of shares in an account falls
below $500 solely because of a decline in such Fund's net asset value.

The right to redeem shares of any Fund will be suspended for any period
during which the New York Stock Exchange is closed because of financial
conditions or any other extraordinary reason and may be suspended for any period
during which (a) trading on the New York Stock Exchange is restricted pursuant
to rules and regulations of the Securities and Exchange Commission, (b) the
Securities and Exchange Commission has by order permitted such suspension or (c)
an emergency, as defined by rules and regulations of the Securities and Exchange
Commission, exists as a result of which it is not reasonably practicable for the
Company to dispose of such Fund's securities or fairly to determine the value of
its net assets.

EXCHANGE PRIVILEGE

The Company generally permits shareholders to exchange shares of one of the
Reynolds Funds for shares of any other. A written request to exchange shares of
one Reynolds Fund for shares of another may be made at no cost to the
shareholder. Signatures required are the same as previously explained under "HOW
TO REDEEM SHARES." A shareholder wishing to use the telephone exchange
privilege must check the appropriate box on the purchase application. The
telephone exchange option may also be added to an existing account by submitting
the request in writing to Reynolds Funds, c/o Firstar Trust Company, Mutual Fund
Services, 3rd Floor, P.O. Box 701, Milwaukee, Wisconsin 53201-0701. Exchange
requests should be directed to Firstar Trust Company at 1-800-773-9665 or 1-414-
765-4124. In order to request an exchange by telephone, an investor must give
the account name, account number and the amount or number of shares to be
exchanged.

Procedures for telephone exchanges may be modified or terminated at any time
by the Company or its transfer agent. Neither the Company nor its transfer agent
will be liable for following instructions for telephone exchanges that they
reasonably believe to be genuine, provided reasonable procedures are used to
confirm the genuineness of the telephone instructions, but may be liable for
unauthorized transactions if they fail to follow such procedures. These
procedures include requiring some form of personal identification prior to
acting upon the telephone instructions and recording all telephone calls.
During periods of significant economic or market change, telephone exchanges may
be difficult to implement. If an investor is unable to contact Firstar Trust
Company by telephone, an investor may also deliver the exchange request by mail
at the address listed above.

There is currently no limitation on the number of exchanges a shareholder may
make. However, shares subject to an exchange must have a current value of at
least $1,000. Furthermore, in establishing a new account in another Reynolds
Fund through this privilege, the exchanged shares must have a value at least
equal to the minimum investment required by the Fund into which the exchange is
being made. A completed purchase application also must be sent to Reynolds Funds
at the above address immediately after establishing a new account through this
privilege.

The exchange privilege is available only in states where the exchange may be
legally made. Exchange requests may be subject to other limitations, including
those relating to frequency, that may be established from time to time to ensure
that the exchanges do not disadvantage any Fund or its shareholders.
Shareholders will be notified at least 60 days in advance of any changes in such
limitations and may obtain the terms of any such limitations by writing to
Reynolds Funds, c/o Firstar Trust Company, Mutual Fund Services, 3rd Floor, P.O.
Box 701, Milwaukee, Wisconsin 53201-0701. No exchange fee is currently imposed
by the Company on exchanges; however, the Company reserves the right to impose
a service charge in the future.

An exchange involves a redemption of all or a portion of the shares in one
Fund and the investment of the redemption proceeds in shares of another Fund and
is subject to any applicable adjustments in connection with such redemption and
investment. The redemption will be made at the per share net asset value of the
shares to be redeemed next determined after the exchange request is received as
described above. The shares of the Fund to be acquired will be purchased
(subject to any applicable adjustment) at the per share net asset value of those
shares next determined coincident with or after the time of redemption.

Investors may find the exchange privilege useful if their investment
objectives should change after they invest in the Reynolds Funds. For federal
income tax purposes, an exchange of shares (except an exchange from the Money
Market Fund to another Reynolds Fund) is a taxable event and, accordingly, a
capital gain or loss may be realized by an investor. Before making an exchange
request, an investor should consult a tax or other financial adviser to
determine the tax consequences of a particular exchange.

ADDITIONAL SHAREHOLDER SERVICES

DIVIDEND REINVESTMENT PLAN

Shareholders of any Fund may elect to have all income dividends and capital
gains distributions reinvested or paid in cash, or to have income
dividends reinvested and capital gains distributions paid in cash or
capital gains distributions reinvested and income dividends paid in cash.
Shareholders having dividends and/or capital gains distributions
paid in cash may choose to have such amounts mailed or
forwarded via EFT. Transfers via EFT generally will take up to
3 business days to reach the shareholder's bank account. See the purchase
application included in the center of this Prospectus for further information.
If the shareholder does not specify an election, all income dividends and
capital gains distributions will automatically be reinvested in full and
fractional shares of the appropriate Fund, calculated to the nearest 1,000th of
a share. With respect to the Blue Chip Fund and the Opportunity Fund, shares are
purchased at the net asset value in effect on the business day after the
dividend record date and are credited to the shareholder's account on such date.
With respect to the Bond Fund and the Money Market Fund, shares are purchased at
the net asset value in effect on the dividend payment date and are credited to
the shareholder's account on such date. As in the case of normal purchases,
stock certificates will not be issued. Shareholders will be advised of the
number of shares purchased and the price following each reinvestment. An
election to reinvest or receive dividends and/or distributions in cash will
apply to all shares of a Fund registered in the same name, including those
previously purchased. See "DIVIDENDS, DISTRIBUTIONS AND TAXES" for tax
consequence.

A shareholder may change an election at any time by notifying the appropriate
Fund in writing or, subject to certain limited exceptions, by calling Firstar
Trust Company at 1-800-773-9665. If such a notice is received between a dividend
declaration date and payment date, it will become effective on the day following
the payment date. The Funds may modify or terminate the dividend reinvestment
program at any time on 30 days' notice to participants.

SYSTEMATIC WITHDRAWAL PLAN

To accommodate the current cash needs of investors, the Funds offer a
Systematic Withdrawal Plan, pursuant to which a shareholder who owns shares of
any Fund worth at least $10,000 at current net asset value may provide that a
fixed sum will be distributed to him at regular intervals. In electing to
participate in the Systematic Withdrawal Plan, investors should realize that
within any given period the appreciation of their investment in a particular
Fund may not be as great as the amount withdrawn. A shareholder may vary the
amount or frequency of withdrawal payments or temporarily discontinue them by
notifying Firstar Trust Company in writing or by telephone at 1-800-773-9665 or
1-414-765-4124. A more complete discussion of the Systematic Withdrawal Plan is
included in the Funds' Statement of Additional Information. The Systematic
Withdrawal Plan does not apply to shares of any Fund held in Individual
Retirement Accounts or defined contribution retirement plans. An application for
participation in the Systematic Withdrawal Plan is included as part of the
purchase application.

SYSTEMATIC EXCHANGE PLAN

The Company offers a Systematic Exchange Plan whereby a shareholder may
automatically exchange shares (in increments of $100 or more) of one Reynolds
Fund into another on any day, either monthly or quarterly, the shareholder
chooses. If that day is a weekend or holiday, such exchange will be made on the
next business day. An application to establish the Systematic Exchange Plan is
included as part of the purchase application. In order to participate, a
shareholder must meet the minimum initial investment requirement for the
receiving Fund. No service fee is currently charged by the Company for
participating in the Systematic Exchange Plan; however, the Company reserves the
right to impose a service charge in the future.

The Systematic Exchange Plan is available only in states where the desired
exchanges may be legally made. For federal income tax purposes, each exchange of
shares (except an exchange from the Money Market Fund to another Reynolds Fund)
is a taxable event and, accordingly, a capital gain or loss may be realized by
an investor. Before participating in the Systematic Exchange Plan, an investor
should consult a tax or other financial adviser to determine the tax
consequences of participation.

RETIREMENT PLANS

Each of the Funds offers the following retirement plans that may be funded
with purchases of shares of such Fund and may allow investors to shelter some of
their income from taxes:

INDIVIDUAL RETIREMENT ACCOUNT ("IRA"). Individuals who receive compensation or
earned income, even if they are active participants in a qualified retirement
plan (or certain similar retirement plans), may establish their own tax-
sheltered Individual Retirement Account ("IRA"). Each of the Funds offers a
prototype IRA plan which may be adopted by individuals. There is currently no
charge for establishing an account although there is an annual maintenance fee.

Earnings on amounts held in an IRA are not taxed until withdrawal. The amount
of deduction, if any, allowed for IRA contributions is limited for individuals
who are active participants in an employer maintained retirement plan and whose
incomes exceed specific limits.

SIMPLIFIED EMPLOYEE PENSION PLAN ("SEP/IRA"). Each of the Funds also offers a
prototype simplified employee pension (SEP) plan for employers, including self-
employed individuals, who wish to purchase shares of any Fund with tax-
deductible contributions not exceeding annually for any one participant the
lesser of $30,000 or 15% of earned income. Under the SEP plan, employer
contributions are made directly to the IRA accounts of eligible participants.

DEFINED CONTRIBUTION RETIREMENT PLAN (KEOGH OR CORPORATE PROFIT-SHARING AND
MONEY-PURCHASE PLANS). A prototype defined contribution retirement plan is
available for employers, including self-employed individuals, who wish to
purchase shares of any Fund with tax-deductible contributions not exceeding
annually for any one participant the lesser of $30,000 or 25% of earned income.

CASH OR DEFERRED 401(K) PLAN. A prototype cash or deferred 401(k) plan is
available for employers who wish to allow employees to elect to reduce their
compensation and have such amounts contributed to the plan, not to exceed $9,500
annually (as adjusted for cost-of-living increases).

MODEL 403(B)(7) PLAN. A model 403(b)(7) plan is available for employees of
certain charitable, educational and governmental entities.

A description of applicable service fees and certain limitations on
contributions and withdrawals, as well as application forms, are available from
the Funds upon request. The IRA documents contain a disclosure statement which
the Internal Revenue Service requires to be furnished to individuals who are
considering adopting an IRA. Because a retirement program involves commitments
covering future years, it is important that the investment objective of the
appropriate Fund be consistent with the participant's retirement objectives.
Premature withdrawals from a retirement plan will result in adverse tax
consequences.

DIVIDENDS, DISTRIBUTIONS AND TAXES

Each of the Funds will endeavor to qualify annually for and elect tax
treatment applicable to a regulated investment company under Subchapter M of the
Code. Pursuant to the requirements of the Code, each of the Funds intends
normally to distribute substantially all of its net investment income and net
realized capital gains, if any, less any available capital loss carryover, to
its shareholders at least annually. Capital gains, if any, on either the Bond
Fund or the Money Market Fund also may be paid with the daily dividend. These
distributions will be made in such a manner as to avoid each Fund paying income
tax on its net investment income and net realized capital gains or being subject
to a federal excise tax on undistributed net investment income and net realized
capital gains. For federal income tax purposes, distributions by the Funds,
whether invested in additional shares of the Funds or received in cash, will be
taxable to the Funds' shareholders except those shareholders that are not
subject to tax on their income.

The daily net investment income of both the Bond Fund and the Money Market
Fund is declared as a dividend each day to shareholders of record. Shares
purchased in either the Bond Fund or the Money Market Fund will begin earning
dividends the first business day following the day the purchase becomes
effective. Redeemed shares will participate in the dividend declared on the day
of redemption. If all shares in an account are redeemed, dividends credited to
the account since the beginning of the dividend period through the date of
redemption will be paid with the redemption proceeds. If less than all such
shares are redeemed, all dividends accrued but unpaid on those shares will be
distributed on the next payment date. For the purpose of calculating dividends
in either the Bond Fund or Money Market Fund, net income consists of income
accrued on portfolio assets, less accrued expenses. Income earned on weekends,
holidays and other days on which the net asset value is not calculated will be
declared as a dividend in advance on the preceding business day.

Shareholders will be notified annually as to the federal tax status of
dividends and distributions. For federal income tax purposes, a shareholder's
cost for his shares is his basis and on redemption his gain or loss is the
difference between such basis and the redemption price. Distributions and
redemptions may also be taxed under state and local tax laws which may differ
from the Code.
SHAREHOLDER REPORTS

Shareholders of each Fund will be provided at least semiannually with a
report showing such Fund's portfolio and other information. After the close of
the Company's fiscal year, which ends September 30, each Fund will provide its
shareholders with an annual report containing audited financial statements. An
individual account statement will be sent to shareholders by Firstar Trust
Company after each purchase, including reinvestment of dividends, or redemption
of shares of any Fund. Each shareholder will also receive an annual statement
after the end of the calendar year listing all transactions in shares of the
Funds during such year.

Shareholder who have questions about their respective accounts should call
Firstar Trust Company at 1-800-773-9665 or 1-414-765-4124. Investors who have
general questions about the Funds or desire additional information should write
to Reynolds Funds, Wood Island, Third Floor, 80 East Sir Francis Drake
Boulevard, Larkspur, California 94939, Attention: Corporate Secretary, or call
1-415-461-7860.

BROKERAGE TRANSACTIONS

The Advisory Agreements authorize the Adviser to select the brokers or
dealers that will execute the purchases and sales of the Funds' portfolio
securities. In placing purchase and sale orders for the Funds, it is the policy
of the Adviser to seek the best execution of orders at the most favorable price
in light of the overall quality of brokerage and research services provided.

The Advisory Agreements permit the Adviser to pay a broker which provides
brokerage and research services to the Adviser a commission for effecting
securities transactions in excess of the amount another broker would have
charged for executing the transaction, provided the Adviser believes this to be
in the best interests of the applicable Fund. Although the Funds do not intend
to market their shares through intermediary broker-dealers, the Blue Chip Fund,
the Opportunity Fund and the Bond Fund may place portfolio orders with broker-
dealers who recommend the purchase of their shares to clients, if the Adviser
believes the commissions and transaction quality are comparable to that
available from other brokers, and may allocate portfolio brokerage on that
basis.

GENERAL INFORMATION ABOUT THE
COMPANY AND THE FUNDS

DESCRIPTION OF SHARES AND VOTING RIGHTS

The Company's authorized capital consists of 20,000,000 Reynolds Blue Chip
Growth Fund shares, 20,000,000 Reynolds Opportunity Fund shares, 20,000,000
Reynolds U.S. Government Bond Fund shares and 500,000,000 Reynolds Money Market
Fund shares. Each share outstanding entitles the holder to one vote. Generally
shares are voted in the aggregate and not by each Fund, except where class
voting by each Fund is required by Maryland law or the Act (e.g. change in
investment policy or approval of an investment advisory agreement).

The shares of each Fund have the same preferences, limitations and rights,
except that all consideration received from the sale of shares of each Fund,
together with all income, earnings, profits and proceeds thereof, belong to that
Fund and are charged with the liabilities in respect of that Fund and of that
Fund's share of the general liabilities of the Company in the proportion that
the total net assets of the Fund bears to the total net assets of all the Funds.
The net asset value per share of each Fund is based on the assets belonging to
that Fund less the liabilities charged to that Fund, and dividends are paid on
shares of each Fund only out of lawfully available assets belonging to that
Fund. In the event of liquidation or dissolution of the Company, the
shareholders of each Fund will be entitled, out of the assets of the Company
available for distribution, to the assets belonging to such Fund.

There are no conversion or sinking fund provisions applicable to the shares
of any Fund, and the holders have no preemptive rights and may not cumulate
their votes in the election of directors. Consequently the holders of more than
50% of the Company's shares voting for the election of directors can elect the
entire Board of Directors, and in such event, the holders of the remaining
shares voting for the election of directors will not be able to elect any person
or persons to the Board of Directors. The Maryland General Corporation Law
permits registered investment companies, such as the Company, to operate without
an annual meeting of shareholders under specified circumstances if an annual
meeting is not required by the Act. The Company has adopted the appropriate
provisions in its Bylaws and does not anticipate holding an annual meeting in
any year in which the election of directors is not required to be acted on by
shareholders under the Act. The Company also has adopted provisions in its
Bylaws for the removal of directors by its shareholders.

The shares of each Fund are redeemable and are transferable. All shares
issued and sold by the Company will be fully paid and nonassessable. Fractional
shares of each Fund entitle the holder to the same rights as whole shares of
such Fund.

The Company will not issue certificates evidencing the Funds' shares. Each
shareholder's account will be credited with the number of shares purchased,
relieving such shareholder of responsibility for safekeeping of certificates and
the need to deliver them upon redemption. Written confirmations are issued for
all purchases of shares of the Funds.

CUSTODIAN AND TRANSFER AND DIVIDEND DISBURSING AGENT

Firstar Trust Company, 615 East Michigan Street, Milwaukee, Wisconsin 53202,
is the custodian for all securities and cash of the Funds and serves as the
Company's transfer and dividend disbursing agent.

PERFORMANCE INFORMATION

Each of the Funds (except the Money Market Fund) may provide from time to
time in advertisements, reports to shareholders and other communications with
shareholders its average annual compounded rate of return. An average annual
compounded rate of return refers to the rate of return which, if applied to an
initial investment at the beginning of a stated period and compounded over the
period, would result in the redeemable value of the investment at the end of the
stated period assuming reinvestment of all dividends and distributions and
reflecting the effect of all recurring fees. An investor's principal in any of
such Funds and such Fund's return are not guaranteed and will fluctuate
according to market conditions.

The Bond Fund and the Money Market Fund may provide yield data from time to
time in advertisements, reports to shareholders and other communications with
shareholders. The yield of the Bond Fund is determined by dividing such Fund's
net investment income for a 30-day (or one month) period by the average number
of Bond Fund shares outstanding during the period, and expressing the result as
a percentage of the Fund's share price on the last day of the 30-day (or one
month) period. This percentage is then annualized. Capital gains and losses are
not included in the yield calculation.

The Money Market Fund may quote its current and effective yields. The
"current yield" of the Money Market Fund refers to the income generated by an
investment in the Money Market Fund over a seven-day period. This income is then
"annualized." That is, the amount of income generated by the investment during
that week is assumed to be generated each week over a 52-week period and is
shown as a percentage of the investment. The "effective yield" is calculated
similarly but, when annualized, the income earned by an investment in the Money
Market Fund is assumed to be reinvested. The "effective yield" will be slightly
higher than the "current yield" because of the compounding effect of this
assumed reinvestment.

The yield of either the Bond Fund or the Money Market Fund will be affected
if such Fund experiences a net inflow of new money which is invested at interest
rates different from those being earned on its then-current investments. An
investor's principal in either the Bond Fund or the Money Market Fund and such
Fund's return are not guaranteed. Yield information may be useful in reviewing
the performance of both the Bond Fund and the Money Market Fund and for
providing a basis for comparison with other investment alternatives. However,
since net investment income of each of such Funds changes in response to
fluctuations in interest rates and such Fund's expenses, any given yield
quotation should not be considered representative of the applicable Fund's yield
for any future period. An investor should also be aware that there are
differences in investment other than yield.

Each of the Funds (except the Money Market Fund) may compare its performance
to other mutual funds with similar investment objectives and to the industry as
a whole, as reported by Lipper Analytical Services, Inc., Money, Forbes,
Business Week and Barron's magazines and The Wall Street Journal. (Lipper
Analytical Services, Inc. is an independent rating service that ranks over 1,000
mutual funds based upon total return performance.) Each of such Funds may also
compare its performance to the Dow Jones Industrial Average, Nasdaq Composite
Index, Nasdaq Industrials Index, Value Line Composite Index, the Standard &
Poor's 500 Stock Index and the Consumer Price Index. Such comparisons may be
made in advertisements, shareholder reports or other communications to
shareholders.

The Money Market Fund may compare its performance to the following income
producing alternatives: (i) money market funds (based on yields cited by
Donoghue's Money Fund Report and Lipper Analytical Services, Inc.); (ii) various
bank products (based on average rates of bank and thrift institution
certificates of deposit, money market deposit accounts and N.O.W. accounts as
reported by the Bank Rate Monitor); and (iii) United States Treasury Bills or
Notes. There are differences between these income producing alternatives and the
Money Market Fund other than their yields. Money market deposit accounts and
N.O.W. accounts are offered by banks and thrift institutions. Although their
yields will fluctuate, principal will not fluctuate and is insured by the
Federal Deposit Insurance Corporation. N.O.W. accounts generally offer unlimited
checking (no minimum per check) and money market deposit accounts generally
limit the number of checks that may be written. Bank passbook savings accounts
normally offer a fixed rate of interest and their principal and interest are
also guaranteed and insured. Bank certificates of deposit offer fixed or
variable rates for a set term. Principal and fixed rates are guaranteed and
insured. There is no fluctuation in principal value. Withdrawal of these
deposits prior to maturity will normally be subject to penalty.

MANAGEMENT'S DISCUSSION OF PERFORMANCE OF THE FUNDS

REYNOLDS BLUE CHIP GROWTH FUND

The Blue Chip Fund's performance was positively affected in the fiscal year
ended September 30, 1996 by the strong earnings growth of many of the stocks in
its portfolio and by the market leadership of high quality growth companies. The
Blue Chip Fund was also positively affected by the continuing economic recovery
and by stable inflation and interest rates.

COMPARISON OF CHANGE IN VALUE OF $10,000 INVESTMENT IN
REYNOLDS BLUE CHIP GROWTH FUND AND S&P 500 INDEX

date Reynolds Blue Chip Growth Fund S&P 500 Index
8/12/88*<F21> $10,000 $10,000
9/30/88 $10,060 $10,610
9/30/89 $12,062 $14,079
9/30/90 $11,459 $12,770
9/30/91 $14,541 $16,780
9/30/92 $15,705 $18,642
9/30/93 $14,998 $21,066
9/30/94 $15,388 $21,824
9/30/95 $20,820 $28,328
9/30/96 $24,588 $34,107

AVERAGE ANNUAL TOTAL RETURN
1-YEAR 18.1%
5-YEAR 11.1%
Since Inception 8/12/88 11.7%

*<F21>August 12, 1988 inception date.
Past performance is not predictive of future performance.

REYNOLDS OPPORTUNITY FUND

The Opportunity Fund's performance was positively affected by the strong
earnings growth of many of the stocks in its portfolio in its fiscal year ended
September 30, 1996. The Opportunity Fund was also positively affected by the
market leadership of high quality growth companies. In addition, the Opportunity
Fund was positively affected by the continuing economic recovery and by stable
inflation and interest rates.

COMPARISON OF CHANGE IN VALUE OF $10,000 INVESTMENT IN
REYNOLDS OPPORTUNITY FUND AND S&P 500 INDEX

date Reynolds Opportunity Fund S&P 500 Index
1/30/92*<F22> $10,000 $10,000
9/30/92 $8,850 $10,270
9/30/93 $9,779 $11,605
9/30/94 $10,092 $12,023
9/30/95 $14,169 $15,606
9/30/96 $15,643 $18,789

AVERAGE ANNUAL TOTAL RETURN
1-YEAR 10.4%
Since Inception 1/20/92 10.1%

*<F22>inception date
Past performance is not predictive of future performance.

REYNOLDS U.S. GOVERNMENT BOND FUND

Moderate economic growth accompanied by stable inflation and interest rates
were the main factors contributing to the Bond Fund's performance in the fiscal
year ended September 30, 1996. The Bond Fund's portfolio of U.S. Government
securities had a dollar weighted average maturity of 1.9 years on September 30,
1996, which was toward the shorter end of the 1-10 year average maturity stated
in the Prospectus as the Bond Fund's expected average maturity.

COMPARISON OF CHANGE IN VALUE OF $10,000 INVESTMENT IN
REYNOLDS U.S. GOVERNMENT BOND FUND AND LEHMAN GOVERNMENT BOND INDEX

date Reynolds U.S. Government Bond Fund Lehman Government Bond Index
1/30/92*<F23> $10,000 $10,000
9/30/92 $10,668 $10,890
9/30/93 $11,679 $12,088
9/30/94 $11,032 $11,604
9/30/95 $11,961 $13,183
9/30/96 $12,498 $13,763

AVERAGE ANNUAL TOTAL RETURN
1-YEAR 4.5%
Since Inception 1/30/92 4.9%

*<F23>inception date
Past performance is not predictive of future performance.

REYNOLDS FUNDS
Wood Island, Third Floor
80 East Sir Francis Drake Boulevard
Larkspur, California 94939
1-415-461-7860

BOARD OF DIRECTORS
FREDERICK L. REYNOLDS
ROBERT E. SNADER
ROBERT E. STAUDER

INVESTMENT ADVISER
REYNOLDS CAPITAL MANAGEMENT
Wood Island, Third Floor
80 East Sir Francis Drake Boulevard
Larkspur, California 94939

ADMINISTRATOR
FIDUCIARY MANAGEMENT, INC.
225 East Mason Street
Milwaukee, Wisconsin 53202

CUSTODIAN, TRANSFER AGENT
AND DIVIDEND DISBURSING AGENT
FIRSTAR TRUST COMPANY
615 East Michigan Street
Milwaukee, Wisconsin 53202
1-800-773-9665
1-800-7REYNOLDS
1-414-765-4124

INDEPENDENT ACCOUNTANTS
PRICE WATERHOUSE LLP
3100 Multifoods Tower
33 South Sixth Street
Minneapolis, Minnesota 55402

LEGAL COUNSEL
FOLEY & LARDNER
777 East Wisconsin Avenue
Milwaukee, Wisconsin 53202

REYNOLDS FUNDS

PURCHASE APPLICATION

- --- This is a follow-up application to an investment by wire transfer.
Mail completed application to:
Reynolds Funds
c/o Firstar Trust Company
Mutual Fund Services
P.O. Box 701
Milwaukee, WI 53201-0701

Overnight Express Mail to:
Reynolds Funds
c/o Firstar Trust Company
Mutual Fund Services, 3rd Floor
615 E. Michigan Street
Milwaukee, WI 53202

Use this form for individual, custodial, trust, profit sharing or pension plan
accounts. DO NOT USE THIS FORM FOR THE REYNOLDS FUNDS-SPONSORED IRA, SEP
IRA, DEFINED CONTRIBUTION (KEOGH OR CORPORATE PROFIT-SHARING AND
MONEY-PURCHASE), 301(K) OR 403(B)(7) PLANS WHICH REQUIRE FORMS AVAILABLE
FROM THE REYNOLDS FUNDS. For information please call 1-800-773-9665 or
1-800-7REYNOLDS.[/R]
- ------------------------------------------------------------------------------

A. INVESTMENT

The minimum initial investment is $1,000 for shares in any of the Reynolds
Funds. Minimum additions to any Fund are $100 (except $50 for the Automatic
Investment Plan).

Wiring instructions: Firstar Bank Milwaukee, NA, 777 E Wisconsin Ave.,
Milwaukee, WI 53202,
ABA: 075000022, For credit to Firstar Trust Co., Account # 112-952-137,
For further credit (insert full name of Fund) (shareholders name) & (account
number).

Notify Firstar Trust Company at 1-800-773-9665 prior to sending wire.

PAYMANT by --- Check --- Wire AMOUNT
- --- (037) Reynolds Blue Chip Fund $--------------

- --- (035) Reynolds Opportunity Fund $--------------

- --- (036) Reynolds US Government Bond Fund $--------------

- --- (038) Reynolds Money Market Fund $--------------

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

B. REGISTRATION

1. --- Individual

1.----------------- ---- ------------------------------ ---------------
FIRST NAME M.I. LAST NAME SOCIAL SECURITY #

1. --- Joint Owner*<F24> (Cannot be a minor)

1.----------------- ---- ----------------------------- ---------------
FIRST NAME M.I. LAST NAME SOCIAL SECURITY #

*<F24>Registration will be Joint Tenancy with Rights of Survivorship (JTWROS),
unless otherwise specified.
2. --- Gift to Minor

2.-------------------------------------------- ---- -----------------------
CUSTODIAN'S FIRST NAME (only one permitted) M.I. LAST NAME

2.-------------------------------------------- --- -----------------------
MINOR'S FIRST NAME (only one permitted) M.I. LAST NAME

- ------------------------- ----------------------------- ------------------
MINOR'S SOCIAL SECURITY # MINOR'S BIRTH DATE (Mo/Dy/Yr) STATE OF RESIDENCE

3. --- Trust, Estate or Guardianship**<F25>

3.----------------------------------------------------------------------------
NAME OF TRUSTEE(S) (if to be included in registration)**<F25>

- --- Corporate***<F26> (including Corporate Pension Plans)

3.----------------------------------------------------------------------------
NAME OF TRUST**<F25> / CORPORATION***<F26> / PARTNERSHIP

- --- Partnership**<F25>

- ---------------------------------- -----------------------------------------
SOCIAL SECURITY # / TAX ID # DATE OF AGREEMENT (Mo/Dy/Yr)

- --- Other Entity**<F25>

**<F25>Additional documentation and certification may be requested
***<F26>Corporate Resolution is required

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

C. ADDRESS
Mailing Address

- -------------------------------------------------------- -------------------
STREET APT / SUITE

- ------------------------------------------ --------------- ---------------
CITY STATE ZIP

- --------------------------------------- ------------------------------------
DAYTIME PHONE # EVENING PHONE #

- --- Duplicate Confirmation (if desired) to:

- ------------------------------- ----- -----------------------------------
FIRST NAME M.I. LAST NAME

- -------------------------------------------------------- -------------------
STREET APT / SUITE

- ------------------------------------------ --------------- ---------------
CITY STATE ZIP

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

D. TELEPHONE OPTIONS

--- TELEPHONE EXCHANGES. Allows exchanges between identically registered
accounts in Funds of the Reynolds Funds family. A $1,000 minimum applies to
exchanges. Please refer to the Prospectus for additional details, conditions
and limitations pertaining to the telephone exchange privilege.

--- TELEPHONE REDEMPTION. Permits the redemption of a minimum of $1,000 from
the Reynolds Money Market Fund only.

--- The proceeds will be mailed to the address in Section C.
--- The proceeds of any redemption may be wired to your bank (complete
bank information below). A wire fee of $10.00 will be charged.
--- The proceeds of any redemption may be transferred via Electronic Funds
Transfer ("EFT"). This transfer may take up to 3 business days to reach your
bank (please complete bank information below).

- ------------------------------------------------------------------------------
NAMES(S) ON BANK ACCOUNT

- ---------------------------------------------- ------------------------------
BANK NAME ACCOUNT NUMBER

- ------------------------------------------------------------------------------
BANK ADDRESS
An unsigned voided check (for checking accounts) or a savings account deposit
slip is required with your application.Your signed application must be received
at least 15 business days prior to the initial redemption transaction.

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

E. DISTRIBUTION OPTIONS

Capital gains & dividends will be reinvested if no option is selected.

--- Capital Gains & --- Capital Gains &
Dividends Reinvested Dividends in Cash

--- Capital Gains in Cash & --- Capital Gains Reinvested &
Dividends Reinvested Dividends in Cash

If the distribution is to be paid in cash, specify payment method below:
--- Send check to mailing address in Section C.
--- Automatic deposit to my bank account via EFT. This transfer may take up
to 3 business days to reach your bank account (please complete bank
information below).

- ------------------------------------------------------------------------------
NAMES(S) ON BANK ACCOUNT

- ---------------------------------------------- -----------------------------
BANK NAME ACCOUNT NUMBER

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

F. SYSTEMATIC EXCHANGES
I authorize the exchange of shares/dollars from my account established by
this application as follows. The account registration on the account being
exchanged into is/will be identical to that listed in Section B of
application. In addition, the minimum investment requirement for the
receiving Fund must have been met.
Reynolds Fund (exchange FROM)-------------------Account #---------------------
Reynolds Fund (exchange TO) -------------------Account #---------------------

- --- I would like to have monthly exchanges between the accounts Or
- --- I would like the following months that I have circled below for my exchange
to take place:

Jan. Feb. Mar. Apr. May June July Aug. Sept. Oct. Nov. Dec.

Start date (month & year)---------------------------------------
- --- Please indicate the following day of exchange --------------(if not
indicated then the 25th of each month will be selected)
- --- Exchange shares in the amount of $------------------------(minimum $100)

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

G. SYSTEMATIC WITHDRAWALS
I would like to withdraw from Reynolds Fund name------------------------------
Account Number----------------------- $---------- ($100 minimum) as follows:
- --- I would like to have payments made to me on or about the ------- day of each
month, Or
- --- I would like to have payments made to me on or about the ------- day of the
months that I have circled below:

Jan. Feb. Mar. Apr. May June July Aug. Sept. Oct. Nov. Dec.

- --- To have payments automatically deposited to your bank account, complete bank
account information below and attach a copy of a voided check or savings deposit
slip. (A check will be mailed to the address from section C if this selection is
not marked).

- ------------------------------------------------------------------------------
NAMES(S) ON BANK ACCOUNT

- ---------------------------------------------- -----------------------------
BANK NAME ACCOUNT NUMBER

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

H. AUTOMATIC INVESTMENT PLAN

Your signed Application must be received at least 15 business days prior to
initial transaction. Attach an unsigned, voided check (for checking
accounts) or a savings account deposit slip and complete this form. I would
like to establish an Automatic Investment Plan for the Reynolds Funds as
described in the Prospectus. Based on these instructions, Firstar Trust
Company as Transfer Agent for the Reynolds Funds, will automatically transfer
money directly from my checking, NOW or savings account to purchase shares in
the Reynolds Fund of my choice. I understand if the automatic purchase
cannot be made due to insufficient funds, stop payment or any other reason, a
$20 fee will be assessed.

Please indicate the day of debit from bank account ---------------(if not
indicated then the 25th of the month will be selected)
Start Date (month & year) ------------------ --- Monthly --- Quarterly
- --- Annually
Reynolds Fund name ------------------------- Account Number---------------
Indicate amount to be withdrawn from my bank account $------------ (minimum $50)

- ------------------------------------------------------------------------------
NAMES(S) ON BANK ACCOUNT

- ---------------------------------------------- -----------------------------
BANK NAME ACCOUNT NUMBER

- ------------------------------------------------------------------------------
BANK ADDRESS

- ------------------------------------- --------------------------------------
SIGNATURE OF BANK ACCOUNT OWNER SIGNATURE OF JOINT OWNER (if any)
An unsigned voided check (for checking accounts) or a savings account deposit
slip is required with your application.

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

I. CHECKWRITING
- --- Yes, I would like to establish free check redemption privileges for the
Reynolds Money Market Fund. For further explanation about checkwriting please
refer to page 20 of the Prospectus.

By signing Section J below, I/we authorize Firstar to honor checks drawn by
me on my Reynolds Money Market Fund account and to effect a redemption of
sufficient shares in my account to cover payment of such checks. I
understand that (1) this privilege may be terminated at any time by the
Reynolds Money Market Fund or by Firstar Bank and neither shall incur any
liability for loss expense or cost to me for honoring such checks, or for
effecting redemptions to pay such checks, or for returning checks which have
not been accepted; (2) checks drawn on a joint account will require the
signature of one registered owner; (3) share purchases by check will not be
redeemed by checkwriting until the Reynolds Money Market Fund is satisfied
that the check has cleared (see page 17 of the Prospectus).
- ------------------------------------------------------------------------------

J. SIGNATURE AND CERTIFICATION REQUIRED BY THE INTERNAL REVENUE SERVICE
Neither the Fund nor its transfer agent will be responsible for the
authenticity of transaction instructions received by telephone, provided that
reasonable security procedures have been followed.

By selecting the options in Section (G or H), I hereby authorize the Fund to
initiate debits/credits to my account at the bank indicated and for the bank
to debit/credit the same to such account through the Automated Clearing House
("ACH") system.

UNDER THE PENALTY OF PERJURY, I CERTIFY THAT (1) THE SOCIAL SECURITY NUMBER
OR TAXPAYER IDENTIFICATION NUMBER SHOWN ON THIS FORM IS MY CORRECT TAXPAYER
IDENTIFICATION NUMBER, AND (2) I AM NOT SUBJECT TO BACKUP WITHHOLDING EITHER
AS A RESULT OF A FAILURE TO REPORT ALL INTEREST OR DIVIDENDS, OR THE IRS HAS
NOTIFIED ME THAT I AM NO LONGER SUBJECT TO BACKUP WITHHOLDING. THE IRSDOES
NOT REQUIRE YOUR CONSENT TO ANY PROVISION OF THIS DOCUMENT OTHER THAN THE
CERTIFICATIONS REQUIRED TO AVOID BACKUP WITHHOLDING.

- ----------------------- ----------------------------------------------------
DATE (Mo/Dy/Yr) SIGNATURE OF OWNER*
<F27>
- ----------------------- ----------------------------------------------------
DATE (Mo/Dy/Yr) SIGNATURE OF JOINT OWNER, if any

*<F27>If shares are to be registered in (1) joint names, both persons should
sign, (2) a custodian for a minor, the custodian should sign, (3) a trust, the
trustee(s) should sign, or (4) a corporation or other entity, an officer should
sign and print name and title on space provided below.

- ------------------------------------------------------------------------------
PRINT NAME AND TITLE OF OFFICER SIGNING FOR A CORPORATION OR OTHER ENTITY.

<PAGE>

STATEMENT OF ADDITIONAL INFORMATION January 31, 1997

REYNOLDS FUNDS

This Statement of Additional Information is not a prospectus and
should be read in conjunction with the Prospectus of the Reynolds Funds,
dated January 31, 1997. Requests for copies of the Prospectus should be
made in writing to Reynolds Funds, Inc., Wood Island, Third Floor, 80 East
Sir Francis Drake Boulevard, Larkspur, California 94939, Attention:
Corporate Secretary, or by calling (415) 461-7860. The name of Reynolds
Funds, Inc. was changed from Reynolds Blue Chip Growth Fund, Inc. on
December 13, 1991.

REYNOLDS FUNDS, INC.
Wood Island, Third Floor
80 East Sir Francis Drake Blvd.
Larkspur, California 94939

REYNOLDS FUNDS

Table of Contents

Page No.

INVESTMENT RESTRICTIONS . . . . . . . . . . . . . . . . . . . . . . . 1

INVESTMENT CONSIDERATIONS . . . . . . . . . . . . . . . . . . . . . . . 4

DIRECTORS AND OFFICERS OF THE COMPANY . . . . . . . . . . . . . . . . . 7

OWNERSHIP OF MANAGEMENT AND PRINCIPAL SHAREHOLDERS . . . . . . . . . 9

INVESTMENT ADVISER AND ADMINISTRATOR . . . . . . . . . . . . . . . . 11

DETERMINATION OF NET ASSET VALUE . . . . . . . . . . . . . . . . . . 13

SYSTEMATIC WITHDRAWAL PLAN . . . . . . . . . . . . . . . . . . . . . 14

ALLOCATION OF PORTFOLIO BROKERAGE . . . . . . . . . . . . . . . . . . 14

PERFORMANCE AND YIELD INFORMATION . . . . . . . . . . . . . . . . . . 16

CUSTODIAN . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20

TAXES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20

SHAREHOLDER MEETINGS . . . . . . . . . . . . . . . . . . . . . . . . 21

INDEPENDENT ACCOUNTANTS . . . . . . . . . . . . . . . . . . . . . . . 22

DESCRIPTION OF SECURITIES RATINGS . . . . . . . . . . . . . . . . . . 22

FINANCIAL STATEMENTS . . . . . . . . . . . . . . . . . . . . . . . . 28

No person has been authorized to give any information or to make
any representations other than those contained in this Statement of
Additional Information and the Prospectus dated January 31, 1997 and, if
given or made, such information or representations may not be relied upon
as having been authorized by Reynolds Funds, Inc.

The Statement of Additional Information does not constitute an
offer to sell securities.

INVESTMENT RESTRICTIONS

As set forth in the Prospectus dated January 31, 1997 of Reynolds
Funds, Inc. (the "Company") under the caption "INVESTMENT OBJECTIVES AND
POLICIES," the investment objective of the Reynolds Blue Chip Growth Fund
(the "Blue Chip Fund") is to produce long-term growth of capital, with
current income as a secondary objective, by investing in a diversified
portfolio of common stocks issued by well-established growth companies
commonly known as "blue chip" companies; the investment objective of the
Reynolds Opportunity Fund (the "Opportunity Fund") is to produce long-term
growth of capital by investing in a diversified portfolio of common stocks
having above average growth characteristics; the investment objective of
the Reynolds U.S. Government Bond Fund (the "Bond Fund") is to provide a
high level of current income by investing in a diversified portfolio of
securities issued or guaranteed as to principal and interest by the U.S.
Government, its agencies or instrumentalities; and the investment
objective of the Reynolds Money Market Fund (the "Money Market Fund") is
to provide a high level of current income, consistent with liquidity, the
preservation of capital and a stable net asset value, by investing in a
diversified portfolio of high-quality, highly liquid money market
instruments. (The Blue Chip Fund, the Opportunity Fund, the Bond Fund and
the Money Market Fund are sometimes hereinafter referred to as the
"Funds.") Consistent with these investment objectives, each of the Funds
has adopted the following investment restrictions which are matters of
fundamental policy. Each Fund's fundamental investment policies cannot be
changed without approval of the holders of the lesser of: (i) 67% of that
Fund's shares present or represented at a shareholders' meeting at which
the holders of more than 50% of such shares are present or represented; or
(ii) more than 50% of the outstanding shares of that Fund.

1. None of the Funds will concentrate 25% or more of its total
assets in any one industry. This restriction does not apply: (a) for the
Blue Chip Fund and the Money Market Fund only, to obligations issued and
guaranteed by the United States Government or its agencies; (b) for the
Opportunity Fund and the Bond Fund only, to obligations issued and
guaranteed by the United States Government, its agencies or
instrumentalities; and (c) for the Money Market Fund only, to obligations
issued by domestic branches of U.S. banks.

2. Each of the Funds will diversify its assets in different
issuers and will not invest more than 5% of its assets in any one issuer
(except that up to 25% of the value of each Fund's total assets may be
invested without regard to this limitation). This restriction does not
apply: (a) for the Blue Chip Fund and the Money Market Fund only, to
obligations issued or guaranteed by the United States Government or its
agencies; and (b) for the Opportunity Fund and the Bond Fund only, to
obligations issued or guaranteed by the United States Government, its
agencies or instrumentalities.

3. None of the Funds will make investments for the purpose of
exercising control or management of any company. As a result, none of the
Funds will invest in securities of any single issuer if, as a result of
such investment, such Fund would own more than 10% of the outstanding
voting securities of such issuer.

4. None of the Funds will borrow money, except for temporary bank
borrowings (not in excess of 20% of the value of such Fund's net assets
taken at acquisition cost or market value, whichever is lower) for
extraordinary or emergency purposes, and none of the Funds will pledge any
of its assets except to secure borrowings and only to an extent not
greater than 10% of the value of such Fund's net assets taken at
acquisition cost or market value, whichever is lower. None of the Funds
will purchase securities while it has any outstanding borrowings.

5. None of the Funds will lend money (except by purchasing
publicly-distributed debt securities or entering into repurchase
agreements, provided that repurchase agreements will not exceed 5% of
either the Blue Chip Fund's or the Opportunity Fund's net assets and
repurchase agreements maturing in more than seven days plus all other
illiquid securities will not exceed 10% of any Fund's total assets) or
will lend its portfolio securities. The Funds will only invest in
repurchase agreements which are fully collateralized and will monitor, on
a continuous basis, the value of the underlying securities to ensure that
the value always equals or exceeds the repurchase price. In addition, the
Company's Board of Directors will monitor, on a continuous basis, the
creditworthiness of the issuing broker, dealer or bank.

6. None of the Funds will purchase securities on margin, purchase
warrants, participate in a joint-trading account, sell securities short,
or write or purchase put or call options; provided, however, that (a) the
Blue Chip Fund's or Opportunity Fund's purchase of stock index options may
account for up to 5% of the applicable Fund's assets, and each of such
Funds may enter into closing transactions; and (b) the Opportunity Fund
may invest up to 5% of its assets in rights and warrants to purchase
equity securities.

7. None of the Funds will act as an underwriter or distributor of
securities other than shares of the Company (except to the extent that any
Fund may be deemed to be an underwriter within the meaning of the
Securities Act of 1933, as amended, in the disposition of restricted
securities).

8. None of the Funds will purchase any interest in any oil, gas
or any other mineral exploration or development program.

9. None of the Funds will purchase or sell real estate or real
estate mortgage loans.

10. None of the Funds will purchase or sell commodities or
commodities contracts, including futures contracts.

11. The Money Market Fund will not purchase common stocks,
preferred stocks, warrants or other equity securities.

Each of the Funds has adopted several other investment restrictions
which are not fundamental policies and which may be changed by the
Company's Board of Directors without shareholder approval. These
additional restrictions are as follows:

1. None of the Funds will invest more than 5% of such Fund's
total assets in securities of issuers which have a record of less than
three (3) years of continuous operation, including the operation of any
predecessor business of a company which came into existence as a result of
a merger, consolidation, reorganization or purchase of substantially all
of the assets of such predecessor business.

2. None of the Funds will purchase securities of foreign issuers
on foreign markets; however, the Blue Chip Fund may invest not more than
15% of its total assets, and the Opportunity Fund may invest not more than
25% of its total assets, in securities of foreign issuers in the form of
American Depository Receipts ("ADRs") and the Money Market Fund may invest
not more than 25% of its total assets in dollar-denominated obligations of
foreign banks and foreign branches of domestic banks.

3. None of the Funds will purchase securities of other investment
companies except (a) as part of a plan of merger, consolidation or
reorganization approved by the shareholders of such Fund or (b) securities
of registered closed-end investment companies on the open market where no
commission or profit results, other than the usual and customary broker's
commission, and where no more than 5% of the value of such Fund's total
assets would be invested in such securities. All assets of any Fund
invested in securities of registered closed-end investment companies will
be included in the daily net assets of such Fund for purposes of
calculating the monthly advisory fee payable to the Adviser. In such
event, shareholders of the applicable Fund will in effect pay two advisory
fees on the assets invested in closed-end investment companies.

4. None of the Funds will acquire or retain any security issued
by a company, an officer or director of which is an officer or director of
the Company or an officer, director or other affiliated person of the
Funds' investment adviser.

5. None of the Funds will acquire or retain any security issued
by a company if any of the directors or officers of the Company or
directors, officers or other affiliated persons of the Funds' investment
adviser beneficially own more than 1/2% of such company's securities and
all of the above persons owning more than 1/2% own together more than 5%
of its securities.

6. Neither the Bond Fund nor the Opportunity Fund will invest
more than 2% of its net assets in warrants not listed on either the New
York Stock Exchange or the American Stock Exchange.

The aforementioned percentage restrictions on investment or
utilization of assets refer to the percentage at the time an investment is
made. If these restrictions are adhered to at the time an investment is
made, and such percentage subsequently changes as a result of changing
market values or some similar event, no violation of the Funds'
fundamental restrictions will be deemed to have occurred. Any changes in
the Funds' investment restrictions made by the Board of Directors of the
Company will be communicated to shareholders of the appropriate Fund(s)
prior to their implementation.

INVESTMENT CONSIDERATIONS

As set forth above under the caption "INVESTMENT RESTRICTIONS,"
none of the Funds (subject to certain exceptions) may concentrate 25% or
more of its total assets in any one industry. The Company will use the
industry classifications of The Value Line Investment Survey ("Value
Line") for purposes of determining whether a Fund has concentrated its
investments in a particular industry.

As set forth above under the caption "INVESTMENT RESTRICTIONS," the
Money Market Fund may concentrate more than 25% of its total assets in
obligations issued by domestic branches of U.S. banks. Domestic
commercial banks organized under Federal law are supervised and examined
by the Comptroller of the Currency and are required to be members of the
Federal Reserve System and to be insured by the Federal Deposit Insurance
Corporation (the "FDIC"). Domestic banks organized under state law are
supervised and examined by state banking authorities but are members of
the Federal Reserve System only if they elect to join. In addition, state
banks whose certificates of deposit ("CDs") may be purchased by the Money
Market Fund are insured by the FDIC (although such insurance may not be of
material benefit to the Money Market Fund, depending upon the principal
amount of the CDs of each bank held by such Fund) and are subject to
Federal examination and to a substantial body of Federal law and
regulation. As a result of Federal and state laws and regulations,
domestic branches of domestic banks, among other things, are generally
required to maintain specified levels of reserves, and are subject to
other supervision and regulation designed to promote financial soundness.

As set forth above under the caption "INVESTMENT RESTRICTIONS," the
Blue Chip Fund and the Opportunity Fund have the limited ability to
purchase stock index options and American Depository Receipts ("ADRs").
An option on a stock index gives the holder (buyer) the right to receive
an amount of cash equal to the product obtained by multiplying the amount
by which the closing price of the stock exceeds, in the case of a call
option, or is less than, in the case of a put option, the exercise price
of the option expressed in dollars times a specified multiple. A stock
index fluctuates with changes in the market values of the stocks included
in the index. For example, some stock index options are based on a broad
market index such as the S&P 500 or the Value Line Composite Index, or a
narrower market index such as the S&P 100. Indexes may also be based on
an industry or market segment such as the AMEX Oil and Gas Index or the
Computer and Business Equipment Index. Options on stock indexes are
currently traded on the following exchanges: The Chicago Board Options
Exchange, New York Stock Exchange, American Stock Exchange, Pacific Stock
Exchange and the Philadelphia Stock Exchange.

Put options may be purchased by either the Blue Chip Fund or the
Opportunity Fund in order to hedge against an anticipated decline in stock
market prices that might adversely affect the value of such Fund's
portfolio securities. Call options may be purchased by either the Blue
Chip Fund or the Opportunity Fund in order to participate in an
anticipated increase in stock market prices. Each of the Blue Chip Fund
and the Opportunity Fund will sell put and call options only to close out
positions in put and call options, as the case may be, which such Fund has
purchased.

The ability of either the Blue Chip Fund or the Opportunity Fund
effectively to hedge all or a portion of the securities in its portfolio
in anticipation of or during a market decline through transactions in put
options on stock indexes depends on the degree to which price movements in
the underlying index correlate with the price movements in such Fund's
portfolio securities. Inasmuch as the portfolio securities of either the
Blue Chip Fund or the Opportunity Fund will not duplicate the components
of an index, the correlation will not be perfect. Consequently, the
applicable Fund will bear the risk that the prices of its portfolio
securities being hedged will not move in the same amount as the prices of
such Fund's put options on the stock indexes. It is also possible that
there may be a negative correlation between the index and such Fund's
portfolio securities which would result in a loss on both such portfolio
securities and the options on stock indexes acquired by such Fund.

All options purchased by either the Blue Chip Fund or the
Opportunity Fund will be listed and traded on an exchange. However, there
is no assurance that a liquid secondary market on an options exchange will
exist for any particular option, or at any particular time, and for some
options no secondary market may exist. If either the Blue Chip Fund or
the Opportunity Fund is unable to effect a closing sale transaction with
respect to options that it has purchased, it would have to exercise the
options in order to realize any profit.

The hours of trading for options may not conform to the hours
during which the underlying securities are traded. To the extent that the
options markets close before the markets for the underlying securities,
significant price and rate movements can take place in the underlying
markets that cannot be reflected in the options markets. The purchase of
options is a highly specialized activity which involves investment
techniques and risks different from those associated with ordinary
portfolio securities transactions. The purchase of stock index options
involves the risk that the premium and transaction costs paid by either
the Blue Chip Fund or the Opportunity Fund in purchasing an option will be
lost as a result of unanticipated movements (i.e., upward for a put option
and downward for a call option) in prices of the securities comprising the
stock index on which the option is based. In the event of such
unanticipated movements in prices, the applicable Fund would be better off
if it had not hedged.

The premium paid by the Blue Chip Fund or the Opportunity Fund when
purchasing an option will be recorded as an asset in such Fund's statement
of assets and liabilities. This asset will be adjusted daily to the
option's current market value, which will be the latest sale price at the
time at which the net asset value per share of such Fund is computed, or
in the absence of such sale, the latest bid price. The asset will be
extinguished upon expiration of the option, the selling of an identical
option in a closing transaction or upon the exercise of the option.

ADRs are receipts issued by an American bank or trust company
evidencing ownership of underlying securities issued by a foreign issuer.
ADRs may be listed on a national securities exchange or may trade in the
over-the-counter market. ADR prices are denominated in United States
dollars; the underlying security may be denominated in a foreign currency.
The underlying security may be subject to foreign government taxes which
would reduce the yield on such securities. Investments in such securities
also involve certain inherent risks, such as political or economic
instability of the issuer or the country of issue, the difficulty of
predicting international trade patterns and the possibility of imposition
of exchange controls. Such securities may also be subject to greater
fluctuations in price than securities of domestic corporations. In
addition, there may be less publicly available information about a foreign
company than about a domestic company. Foreign companies generally are
not subject to uniform accounting, auditing and financial reporting
standards comparable to those applicable to domestic companies. With
respect to certain foreign countries, there is a possibility of
expropriation or confiscatory taxation, or diplomatic developments which
could affect investment in those countries.

As set forth above under the caption "INVESTMENT RESTRICTIONS," the
Opportunity Fund also has the limited ability to purchase rights and
warrants to purchase equity securities. Investments in rights and
warrants are pure speculation in that they have no voting rights, pay no
dividends and have no rights with respect to the assets of the corporation
issuing them. Rights and warrants basically are options to purchase
equity securities at a specific price valid for a specific period of time.
They do not represent ownership of the securities, but only the right to
buy them. Rights and warrants differ from call options in that rights and
warrants are issued by the issuer of the security which may be purchased
on their exercise, whereas call options may be written or issued by
anyone. The prices of rights (if traded independently) and warrants do
not necessarily move parallel to the prices of the underlying securities.

DIRECTORS AND OFFICERS OF THE COMPANY

The name, address, principal occupation(s) during the past five (5)
years and other information with respect to each of the directors and
officers of the Company are as follows:

FREDERICK L. REYNOLDS*

Wood Island, Third Floor
80 East Sir Francis Drake Boulevard
Larkspur, California 94939
(CHAIRMAN, PRESIDENT, TREASURER AND A DIRECTOR OF THE COMPANY)

Mr. Reynolds, age 54, is the sole proprietor of Reynolds Capital
Management, an investment advisory firm organized in April, 1985.

____________
* Mr. Reynolds is the only director who is an "interested person" of the
Company as that term is defined in the Investment Company Act of 1940.
Messrs. Snader and Stauder are not "interested persons" of the Company.

ROBERT E. SNADER

475 Gate Five Road
Sausalito, California 94965
(A DIRECTOR OF THE COMPANY)

Mr. Snader, age 56, has been the President of R.E. Snader &
Associates, a distributor of professional, industrial and broadcast video
and computer/video equipment, since May 1975.

ROBERT E. STAUDER

5 Marsh Drive
Mill Valley, California 94941
(A DIRECTOR OF THE COMPANY)

Mr. Stauder, age 66, is retired. He was a principal of Robinson
Mills + Williams, an architectural and interior design firm, from 1991
until 1996. Prior to joining that firm, Mr. Stauder was associated with
Hellmuth Obata & Kassabaum, Inc., an architectural and engineering firm,
for over thirty years. Mr. Stauder served as Vice Chairman of Hellmuth
Obata & Kassabaum, Inc. from 1986 to 1991. Prior to assuming that
position, he was a Senior Vice President of that firm from 1968 to 1986.
He was also a member of the Board of Directors of that firm from 1981 to
1991. Mr. Stauder is a past member of the Board of Directors of
Architects and Engineers Insurance Company, a risk retention insurance
company.

CAMILLE F. WILDES

225 East Mason Street
Milwaukee, Wisconsin 53202
(SECRETARY OF THE COMPANY)

Ms. Wildes, age 44, is a Vice President of Fiduciary Management,
Inc., the Funds' Administrator, and has been employed by such firm in
various capacities since December, 1982.

The Company's standard method of compensating directors is to pay
each director who is not an interested person of the Company a fee of $550
for each meeting of the Board of Directors attended. During the fiscal
year ended September 30, 1996 the Company paid a total of $4,400 in
directors' fees to such directors.

The table below sets forth the compensation paid by the Fund to
each of the directors of the Fund during the fiscal year ended September
30, 1996:

COMPENSATION TABLE

Pension or
Retirement Total
Benefits Estimated Compensa-
Aggregate Accrued Annual tion from
Compensa- As Part of Benefits Company
tion From Company Upon Paid to
Name of Person Company Expenses Retirement Directors

Frederick L. Reynolds $0 $0 $0 $0
Robert E. Snader $2,200 $0 $0 $2,200
Robert E. Stauder $2,200 $0 $0 $2,200

OWNERSHIP OF MANAGEMENT AND PRINCIPAL SHAREHOLDERS

Set forth below are the names and addresses of all holders of each
Fund's shares who as of December 31, 1996 beneficially owned more than 5%
of such Fund's then outstanding shares, as well as the number of shares of
such Fund beneficially owned by all officers and directors of the Company
as a group.

Reynolds Blue Chip Growth Fund