REYNOLDS FUNDS INC, 485BPOS, 1998-01-29

REYNOLDS FUNDS INC
485BPOS, 1998-01-29

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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. 12 [X]
and/or

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

Amendment No. 14 [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)

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 30, 1998 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 How to Purchase Shares; Additional
Shareholder Services; Retirement
Plans

8. Redemption or Repurchase How to Redeem 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 AND PURCHASE APPLICATION
JANUARY 30, 1998

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 30, 1998

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 30, 1998,
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 22
ADDITIONAL SHAREHOLDER SERVICES 23
RETIREMENT PLANS 24
DIVIDENDS, DISTRIBUTIONS AND TAXES 26
SHAREHOLDER REPORTS 27
BROKERAGE TRANSACTIONS 27
GENERAL INFORMATION ABOUT THE
COMPANY AND THE FUNDS 27
PERFORMANCE INFORMATION 28
MANAGEMENT'S DISCUSSION OF
PERFORMANCE OF THE FUNDS 30

EXPENSE INFORMATION

REYNOLDS REYNOLDS REYNOLDS REYNOLDS
BLUE CHIP OPPORTUNITY U.S. GOVERNMENT MONEY MARKET
GROWTH FUND FUND BOND FUND FUND
------------ ------------ ---------------- --------------
<S> <C> <C> <C> <C>
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) 0.38% 0.50% 0.15%**<F2> 0.15%**<F2>
------ ------ ------- --------
Total Fund Operating Expenses
(after reimbursements) 1.38% 1.50% 0.90%**<F2> 0.65%**<F2>
====== ====== ======= =======

*<F1>A fee of $12.00 is charged for each wire redemption.
**<F2>Other Expenses and Total Fund Operating Expenses (without expense
reimbursements) for the fiscal year ended September 30, 1997, for the Bond Fund
would have been 1.58% and 2.33%, respectively, and for the Money Market Fund
would have been 1.52% and 2.02%, respectively.

</TABLE>

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:

<TABLE>
<CAPTION>
1 year 3 years 5 years 10 years
------ ------- ------- --------
<S> <C> <C> <C> <C>
Reynolds Blue Chip Growth Fund $14 $44 $76 $166

Reynolds Opportunity Fund $15 $47 $82 $179

Reynolds U.S. Government
Bond Fund $9 $29 $50 $111
Reynolds Money Market Fund $7 $21 $36 $81
</TABLE>

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, 1997. 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' audited financial statements and notes thereto, included in the Funds'
Annual Report to Shareholders which contains the auditor's report as to the
Financial Highlights. The Funds' audited financial statements, notes thereto
and auditor's report thereon contained in the Funds' Annual Report to
Shareholders are incorporated by reference into the Statement of Additional
Information. The Financial Highlights of each Fund set forth below have been
audited. 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,
-------------------------------------------------------------------------------------
1997 1996 1995 1994 1993 1992 1991 1990 1989 1988*<F3>
------ ------ ------ ------ ------- ------- ------ ------- ------ ------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
PER SHARE OPERATING
PERFORMANCE:
Net asset value, beginning
of period $22.69 $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 (0.01) (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 9.67 3.52 5.00 0.28 (0.79) 1.02 2.83 (0.65) 1.73 0.03
------ ------ ------ ------ ------- ------- ------ ------- ------ ------
Total from investment
operations 9.66 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 (0.35) (0.03) (0.17) -- -- -- -- (0.05) -- --
------ ------ ------ ------ ------- ------- ------ ------- ------ ------
Total from distributions (0.35) (0.05) (0.23) (0.13) (0.09) (0.09) (0.15) (0.20) (0.12) --
------ ------ ------ ------ ------- ------- ------ ------- ------ ------
Net asset value, end
of period $32.00 $22.69 $19.25 $14.46 $14.22 $14.98 $13.96 $11.14 $11.92 $10.06
======= ======= ====== ======= ====== ====== ====== ====== ====== =======

TOTAL INVESTMENT
RETURN 43.2% 18.1% 35.3% 2.6% (4.5%) 8.0% 26.9% (5.0%) 19.9% 4.6%**
RATIOS/SUPPLEMENTAL <F4>
DATA:
Net assets, end of period
(in 000's $) 62,294 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> 1.4% 1.5% 1.5% 1.5% 1.4% 1.5% 1.7% 2.1% 2.0% 2.0%**
Ratio of net investment <F4>
(loss) income to average
net assets****<F6> (0.1%) (0.1%) 0.1% 0.5% 0.8% 0.6% 1.2% 0.8% 2.7% 4.5%**
<F4>
Portfolio turnover rate 25.0% 21.5% 49.2% 43.3% 38.1% 0.2% 0.9% 66.2% 32.5% --
Average commission
rate paid*****<F7> $0.0728 $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>

YEARS ENDED SEPTEMBER 30,
---------------------------------------------
1997 1996 1995 1994 1993 1992*<F8>
------ ------ ------ ------ ------ ------
<S> <C> <C> <C> <C> <C> <C>
PER SHARE OPERATING
PERFORMANCE:
Net asset value, beginning of period $15.64 $14.17 $10.09 $9.78 $8.85 $10.00
Income from investment operations:
Net investment (loss) income (0.13) (0.06) (0.11) (0.09) (0.10) 0.00
Net realized and unrealized
gain (loss) on securities 3.98 1.53 4.19 0.40 1.03 (1.15)
------ ------ ------ ------ ------ ------
Total from investment operations 3.85 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 $19.49 $15.64 $14.17 $10.09 $9.78 $8.85
======= ====== ====== ====== ====== ======

TOTAL INVESTMENT RETURN 24.6% 10.4% 40.4% 3.2% 10.5% (16.8%)**<F9>
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period (in 000's $) 22,702 17,104 10,983 6,132 3,834 1,844
Ratio of expenses (after reimbursement)
to average net assets***<F10> 1.5% 1.5% 1.9% 2.0% 2.0% 2.0%**<F9>
Ratio of net investment (loss) income
to average net assets****<F11> (0.9%) (1.1%) (1.5%) (1.6%) (1.3%) 0.0%**<F9>
Portfolio turnover rate 60.2% 11.8% 38.4% 16.8% 67.6% 30.1%
Average commission rate paid*****<F12> $0.0791 $0.1269 -- -- -- --

*<F8>For the period from January 30, 1992 (commencement of operations) to
September 30, 1992.
**<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%**<F9>, 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%)**<F9>, respectively.
*****<F12>Disclosure required for fiscal years beginning after
September 1, 1995.

</TABLE>

REYNOLDS U.S. GOVERNMENT BOND FUND

YEARS ENDED SEPTEMBER 30,
----------------------------------------------
1997 1996 1995 1994 1993 1992*<F13>
------ ------ ------ ------ ------ ------
<S> <C> <C> <C> <C> <C> <C>
PER SHARE OPERATING
PERFORMANCE:
Net asset value, beginning of period $9.75 $9.85 $9.61 $10.76 $10.36 $10.00
Income from investment operations:
Net investment income 0.5322 0.5333 0.5350 0.5609 0.5498 0.2979
Net realized and unrealized
(loss) gain on investments 0.0100 (0.1000) 0.2491 (1.1432) 0.4001 0.3602
------ ------ ------ ------ ------ ------
Total from investment operations 0.5422 0.4333 0.7841 (0.5823) 0.9499 0.6581
Less distributions:
Dividends from net investment income (0.5322) (0.5333) (0.5441) (0.5607) (0.5499) (0.2981)
Distribution from net realized gains -- -- -- (0.0070) -- --
------ ------ ------ ------ ------ ------
Total from distributions (0.5322) (0.5333) (0.5441) (0.5677) (0.5499) (0.2981)
------ ------ ------ ------ ------ ------
Net asset value, end of period $9.76 $9.75 $9.85 $9.61 $10.76 $10.36
====== ====== ====== ====== ====== ======

TOTAL INVESTMENT RETURN 5.70% 4.49% 8.42% (5.54%) 9.48% 10.20%**<F14>
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period (in 000's $) 2,626 2,766 2,799 4,367 6,376 3,223
Ratio of expenses (after reimbursement)
to average net assets***<F15> 0.90% 0.90% 0.91% 0.86% 0.83% 0.75%**<F14>
Ratio of net investment income
to average net assets****<F16> 5.45% 5.43% 5.6% 5.4% 5.3% 5.0%**<F14>
Portfolio turnover rate 25.3% 28.6% 0.0% 19.6% 6.3% --

*<F13>For the period from January 30, 1992 (commencement of operations) to
September 30, 1992.
**<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 2.3%, 2.2%,
2.0%, 1.5% and 1.5% for the years ended September 30, 1997, 1996, 1995, 1994 and
1993, respectively, and 2.8%**<F14> 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, 1997, 1996,
1995, 1994 and 1993 and the period ended September 30, 1992 would have been
4.0%, 4.1%, 4.5%, 4.8%, 4.6% and 2.9%**<F14>, respectively.

</TABLE>

REYNOLDS MONEY MARKET FUND

YEARS ENDED SEPTEMBER 30,
--------------------------------------------------------
1997 1996 1995 1994 1993 1992 1991*<F17>
------ ------ ------ ------ ------ ------ ------
<S> <C> <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 $1.00
Income from investment operations:
Net investment income 0.0477 0.0477 0.0510 0.0304 0.0255 0.0364 0.0358
Less distributions:
Dividends from net investment income (0.0477) (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 $1.00
====== ====== ====== ====== ====== ====== ======

TOTAL INVESTMENT RETURN 4.9% 4.9% 5.2% 3.1% 2.6% 3.6% 5.5%**<F18>
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period (in 000's $) 3,032 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% 0.65% 0.63% 0.67% 0.64% 0.61%**<F18>
Ratio of net investment income to
average net assets****<F20> 4.77% 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 2.02%,
1.39%, 1.95%, 1.47%, 1.22% and 1.73% for the years ended September 30, 1997,
1996, 1995, 1994, 1993 and 1992, respectively, and 1.85%**<F18> for the period ended
September 30, 1991.
****<F20>If the Fund had paid all of its expenses, the ratio would have been 3.39%,
4.05%, 3.79%, 2.01%, 2.08% and 2.44% for the years ended September 30, 1997,
1996, 1995, 1994, 1993 and 1992, respectively, and 4.18%**<F18> for the period ended
September 30, 1991.

</TABLE>

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 $500 million (or $500,000,000) 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 IBCA, 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, 1997 in excess of
$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, 1997 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
"FINANCIAL HIGHLIGHTS."

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 l/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 which
should be 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 IN
ORDER TO PROVIDE INFORMATION FOR THE SETTING UP OF THE ACCOUNT, OBTAIN A
CONFIRMATION NUMBER AND TO ENSURE PROMPT AND ACCURATE HANDLING OF FUNDS. THE
FUNDS AND THEIR TRANSFER AGENT ARE NOT RESPONSIBLE FOR THE CONSEQUENCES OF
DELAYS RESULTING FROM THE BANKING OR FEDERAL RESERVE WIRE SYSTEM, OR FROM
INCOMPLETE WIRING INSTRUCTIONS. 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. Investors may purchase shares of the Funds
through programs of services offered or administered by broker-dealers,
financial institutions or other service providers ("Processing Intermediaries").
Such Processing Intermediaries may become shareholders of record and may use
procedures and impose restrictions in addition to or different from those
applicable to shareholders who invest directly in the Funds. Certain services of
the Funds may not be available or may be modified in connection with the
programs provided by Processing Intermediaries. The Funds may accept requests to
purchase additional shares into an account in which the Processing Intermediary
is the shareholder of record only from the Processing Intermediary. Processing
Intermediaries may charge fees or assess other charges for the services they
provide to their customers. Any such fee or charge is retained by the Processing
Intermediary and is not remitted to the Funds or the Adviser. Additionally, the
Adviser and/or the Fund may pay fees to Processing Intermediaries to compensate
them for the services they provide. Program materials provided by the Processing
Intermediary should be read in conjunction with the Prospectus before investing
in this manner. Shares of the Funds may be purchased through Processing
Intermediaries without regard to the Funds' minimum purchase requirements.

Certain Processing Intermediaries that have entered into agreements with the
Funds may enter purchase orders by telephone, with payment to follow the next
business day as specified in the agreement. The Funds may effect such purchase
orders at the net asset value next determined after receipt of the telephone
purchase order. It is the responsibility of the Processing Intermediary to place
the order with the Funds on a timely basis. If payment is not received within
the time period specified in the agreement, the Processing Intermediary could be
held liable for any resulting fees or losses.

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 the Funds 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 a 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 $12.00 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 a Fund by telephone and requests EFT, money
will be automatically moved from the investor's 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 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 Funds reserve the right to refuse a telephone redemption if they believe
it is advisable to do so. Procedures for redeeming shares of the Funds by
telephone may be modified or terminated by the Funds at any time. Neither the
Funds nor their 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 Funds 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 $12.00, 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 ACCOUNTS

Individual shareholders may establish their own tax-sheltered Individual
Retirement Accounts ("IRA"). Each of the Funds currently offers three types of
IRAs that can be adopted by executing the appropriate Internal Revenue Service
("IRS") Form.

Traditional IRA. In a Traditional IRA, amounts contributed to the IRA may be
tax deductible at the time of contribution depending on whether the shareholder
is an "active participant" in an employer-sponsored retirement plan and the
shareholder's income. Distributions from a Traditional IRA will be taxed at
distribution except to the extent that the distribution represents a return of
the shareholder's own contributions for which the shareholder did not claim (or
was not eligible to claim) a deduction. Distributions prior to age 59-1/2 may be
subject to an additional 10% tax applicable to certain premature distributions.
Distributions must commence by April 1 following the calendar year in which the
shareholder attains age 70-1/2. Failure to begin distributions by this date (or
distributions that do not equal certain minimum thresholds) may result in
adverse tax consequences.

Roth IRA. In a Roth IRA (sometimes known as American Dream IRA), amounts
contributed to the IRA are taxed at the time of contribution, but distributions
from the IRA are not subject to tax if the shareholder has held the IRA for
certain minimum periods of time (generally, until age 59-1/2). Shareholders
whose incomes exceed certain limits are ineligible to contribute to a Roth IRA.
Distributions that do not satisfy the requirements for tax-free withdrawal are
subject to income taxes (and possibly penalty taxes) to the extent that the
distribution exceeds the shareholder's contributions to the IRA. The minimum
distribution rules applicable to Traditional IRAs do not apply during the
lifetime of the shareholder. Following the death of the shareholder, certain
minimum distribution rules apply.

For Traditional and Roth IRAs, the maximum annual contribution generally is
equal to the lesser of $2,000 or 100% of the shareholder's compensation (earned
income). An individual may also contribute to a Traditional IRA or Roth IRA on
behalf of his or her spouse provided that the individual has sufficient
compensation (earned income). Contributions to a Traditional IRA reduce the
allowable contribution under a Roth IRA, and contributions to a Roth IRA reduce
the allowable contribution to a Traditional IRA.

Education IRA. In an Education IRA, contributions are made to an IRA
maintained on behalf of a beneficiary under age 18. The maximum annual
contribution is $500 per beneficiary. The contributions are not tax deductible
when made. However, if amounts are used for certain educational purposes,
neither the contributor nor the beneficiary of the IRA are taxed upon
distribution. The beneficiary is subject to income (and possibly penalty taxes)
on amounts withdrawn from an Education IRA that are not used for qualified
educational purposes. Shareholders whose income exceeds certain limits are
ineligible to contribute to an Education IRA.

Under current IRS regulations, an IRA applicant must be furnished a
disclosure statement containing information specified by the IRS. The applicant
generally has the right to revoke his account within seven days after receiving
the disclosure statement and obtain a full refund of his contributions. The
custodian may, in its discretion, hold the initial contribution uninvested until
the expiration of the seven-day revocation period. The custodian does not
anticipate that it will exercise its discretion but reserves the right to do so.

SIMPLIFIED EMPLOYEE PENSION PLAN

A Traditional IRA may also be used in conjunction with a Simplified Employee
Pension Plan ("SEP-IRA"). A SEP-IRA is established through execution of Form
5305-SEP together with a Traditional IRA established for each eligible employee.
Generally, a SEP-IRA allows an employer (including a self-employed individual)
to purchase shares with tax deductible contributions, which may not exceed
annually for any one participant 15% of compensation (disregarding for this
purpose compensation in excess of $160,000 per year). The $160,000 compensation
limit applies for 1998 and is adjusted periodically for cost of living
increases. A number of special rules apply to SEP Plans, including a requirement
that contributions generally be made on behalf of all employees of the employer
(including for this purpose a sole proprietorship or partnership) who satisfy
certain minimum participation requirements.

SIMPLE IRA

An IRA may also be used in connection with a SIMPLE Plan established by the
shareholder's employer (or by a self-employed individual). When this is done,
the IRA is known as a SIMPLE IRA, although it is similar to a Traditional IRA
with the exceptions described below. Under a SIMPLE Plan, the shareholder may
elect to have his or her employer make salary reduction contributions of up to
$6,000 per year to the SIMPLE IRA. The $6,000 limit applies for 1998 and is
adjusted periodically for cost of living increases. In addition, the employer
will contribute certain amounts to the shareholder's SIMPLE IRA, either as a
matching contribution to those participants who make salary reduction
contributions or as a non-elective contribution to all eligible participants
whether or not making salary reduction contributions. A number of special rules
apply to SIMPLE Plans, including (1) a SIMPLE Plan generally is available only
to employers with fewer than 100 employees; (2) contributions must be made on
behalf of all employees of the employer (other than bargaining unit employees)
who satisfy certain minimum participation requirements; (3) contributions are
made to a special SIMPLE IRA that is separate and apart from the other IRAs of
employees; (4) the distribution excise tax (if otherwise applicable) is
increased to 25% on withdrawals during the first two years of participation in a
SIMPLE IRA; and (5) amounts withdrawn during the first two years of
participation may be rolled over tax-free only into another SIMPLE IRA (and not
to a Traditional IRA or to a Roth IRA). A SIMPLE IRA is established by executing
Form 5304-SIMPLE together with an IRA established for each eligible employee.

403(b)(7) CUSTODIAL ACCOUNT

A 403(b)(7) Custodial Account is available for use in conjunction with the
403(b)(7) program established by certain educational organizations and other
organizations that are exempt from tax under 501(c)(3) of the Internal Revenue
Code as amended (the "Code"). Amounts contributed to the custodial account in
accordance with the employer's 403(b)(7) program will be invested on a tax-
deductible basis in shares of any Fund. Various contribution limits apply with
respect to 403(b)(7) arrangements.

DEFINED CONTRIBUTION RETIREMENT PLAN (401(k))

A prototype defined contribution plan is available for employers who wish to
purchase shares of any Fund with tax deductible contributions. The plan consists
of both profit sharing and money purchase pension components. The profit sharing
component includes a Section 401(k) cash or deferred arrangement for employers
who wish to allow eligible employees to elect to reduce their compensation and
have such amounts contributed to the plan. The limit on employee salary
reduction contributions is $10,000 annually (as adjusted for cost-of-living
increases) although lower limits may apply as a result of non-discrimination
requirements incorporated into the plan. The Company has received an opinion
letter from the IRS holding that the form of the prototype defined contribution
retirement plan is acceptable under Section 401 of the Code. The maximum annual
contribution that may be allocated to the account of any participant is
generally the lesser of $30,000 or 25% of compensation (earned income).
Compensation in excess of $160,000 (as periodically indexed for cost-of-living
increases) is disregarded for this purpose. The maximum amount that is
deductible by the employer depends upon whether the employer adopts both the
profit sharing and money purchase components of the plan, or only one component.

RETIREMENT PLAN FEES

Firstar Trust Company, Milwaukee, Wisconsin, serves as trustee or custodian
of the retirement plans. Firstar invests all cash contributions, dividends and
capital gains distributions in shares of the appropriate Fund. For such
services, the following fees are charged against the accounts of participants;
$12.50 annual maintenance fee per participant account ($25.00 maximum per tax
payer identification number); $15 for transferring to a successor trustee or
custodian; $15 for distribution(s) to a participant; and $15 for refunding any
contribution in excess of the deductible limit. Firstar Trust Company's fee
schedule may be changed upon written notice.

Requests for information and forms concerning the retirement plans should be
directed to the Company. Because a retirement program may involve commitments
covering future years, it is important that the investment objective of the
Funds be consistent with the participant's retirement objectives. Premature
withdrawal from a retirement plan will result in adverse tax consequences.
Consultation with a competent financial and tax adviser regarding the retirement
plans is recommended.

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 qualification requirements of Subchapter M, each Fund
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 annually so as to avoid 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 a Fund, whether
invested in additional shares of Common Stock or received in cash, will be
taxable to such Fund's shareholders except those shareholders that are not
subject to tax on their income. Shareholders will be notified annually as to the
federal tax status of dividends and distributions. 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. 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, 1997 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 declining inflation and interest rates.

COMPARISON OF CHANGE IN VALUE OF $10,000 INVESTMENT IN
REYNOLDS BLUE CHIP GROWTH FUND AND S&P 500 INDEX(1)<F21>

Reynolds Blue Chip
date Growth Fund S&P 500 Index
- ---- ------------------ -------------
8/12/88*<F20> $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
9/30/97 $35,210 $47,988

AVERAGE ANNUAL TOTAL RETURN
1-YEAR 43.2%
5-YEAR 17.5%
Since Inception 8/12/88 14.8%

*<F20>August 12, 1988 inception date.
Past performance is not predictive of future performance.

(1)<F21>The Standard & Poor's 500 Index consists of 500 selected common stocks,
most of which are listed on the New York Stock Exchange. The Standard & Poor's
Ratings Group designates the stocks to be included in the Index on a statistical
basis. A particular stock's weighting in the Index is based on its relative
total market value (i.e., its market price per share times the number of shares
outstanding). Stocks may be added or deleted from the Index from time to time.

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, 1997. 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
declining inflation and interest rates.

COMPARISON OF CHANGE IN VALUE OF $10,000 INVESTMENT IN
REYNOLDS OPPORTUNITY FUND AND S&P 500 INDEX(1)<F23>

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
9/30/97 $19,491 $26,436

AVERAGE ANNUAL TOTAL RETURN
1-YEAR 24.6%
Since Inception 1/30/92 12.5%

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

(1)<F23>The Standard & Poor's 500 Index consists of 500 selected common stocks,
most of which are listed on the New York Stock Exchange. The Standard & Poor's
Ratings Group designates the stocks to be included in the Index on a statistical
basis. A particular stock's weighting in the Index is based on its relative
total market value (i.e., its market price per share times the number of shares
outstanding). Stocks may be added or deleted from the Index from time to time.

REYNOLDS U.S. GOVERNMENT BOND FUND

Moderate economic growth accompanied by declining inflation and interest
rates were the main factors contributing to the Bond Fund's performance in the
fiscal year ended September 30, 1997. The Bond Fund's portfolio of U.S.
Government securities had a dollar weighted average maturity of 1.9 years on
September 30, 1997, 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(1)<F25>

Reynolds U.S. Government Lehman Government
date Bond Fund Bond Index
- ---- ------------------------ ----------------

1/30/92*<F24> $10,000 $10,000
9/30/92 10,688 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
9/30/97 13,211 15,029

AVERAGE ANNUAL TOTAL RETURN
1-YEAR 5.7%
Since Inception 1/30/92 5.0%

*<F24>inception date
Past perforamnce is not predictive of future performance.

(1)<F25>The Lehman Government Bond Index is made up of the Treasury Bond Index
(all public obligations at the U.S. Treasury, excluding flower bonds and
foreign-targeted issues) and the Agency Bond Index (all publicly issued debt of
U.S. Government agencies and quasi-federal corporations, and corporate debt
guaranteed by the U.S. Government). All issues have at least one year to
maturity and an outstanding par value of at least $100 million.

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
or 1-800-7REYNOLDS
1-414-765-4124

INDEPENDENT ACCOUNTANTS
PRICE WATERHOUSE LLP
100 East Wisconsin Avenue
Suite 1500
Milwaukee, Wisconsin 53202

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 REYNOLDS FUNDS-SPONSORED IRA, SEP
IRA, SIMPLE IRA, Defined Contribution (Keogh or Corporate Profit-Sharing And
Money-Purchase), 401(K) OR 403(B)(7) plans which require forms available
from the Reynolds Funds. For information please call 1-800-773-9665
(1-800-7REYNOLDS) or 414-765-4124.
- ------------------------------------------------------------------------------

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).
- ------

Please notify Firstar Trust Company at 1-800-773-9665 or 414-765-4124 prior to
sending the 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
any of the Reynolds Funds 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 $12.00 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 30, 1998

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 30, 1998. 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

<PAGE>

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 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19

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 30, 1998 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 30, 1998 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 55, 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 57, 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 67, 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 45, 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, 1997 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, 1997:

<TABLE>
<CAPTION>
COMPENSATION TABLE
Pension or
Retirement
Benefits Accrued Total
Aggregate As Part of Estimated Annual Compensation
Compensation Company Benefits Upon from Company Paid to
Name of Person From Company Expenses Retirement Directors

<S> <C> <C> <C> <C>
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
</TABLE>

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, 1997 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

Name and Address
of Beneficial Owner Number of Shares Percent of Class

Charles Schwab & Co., Inc. 259,503(1) 13.6%
Reinvest Account
101 Montgomery Street
San Francisco, CA 94104-4122

Officers and Directors
as a Group 76,935(2) 4.0%
(4 Persons)

Reynolds Opportunity Fund

Name and Address
of Beneficial Owner Number of Shares Percent of Class

Frederick L. Reynolds 223,631(2) 19.5%
Wood Island, Third Floor
80 East Sir Francis Drake Blvd.
Larkspur, CA 94939

Officers and Directors
as a Group 242,791(2) 21.2%
(4 Persons)

Reynolds U.S. Government Bond Fund

Name and Address
of Beneficial Owner Number of Shares Percent of Class

The Joel W. Renbaum, M.D., Inc. 69,007 25.3%
Profit-Sharing Trust
1145 Bush Street
San Francisco, CA 94109

Jean S. Chambers & 27,813 10.2%
Charles G. Stephenson, Trustees
Chambers Family Insurance Trust
U/A Dated 10/07/88
650 California Street, Floor 33
San Francisco, CA 94108-2702

William A. Gleason & 21,977 8.1%
Victor E. Rice, Trustees
FBO Forest Resources
Profit-Sharing Plan
200 Tamal Plaza #200
Corte Madera, CA 94925

Barbara R. Renbaum, Trustee 17,904 6.6%
Louis Posner Test Trust
U/A Dated 04/17/89
P.O. Box 1077
Ross, CA 94957-1077

Trustees, Albert O.J. Landucci 15,595 5.7%
DDS Inc. Profit Sharing Trust
476 West 25th Avenue
San Mateo, California 94403

Officers and Directors
as a Group 1,372 0.5%
(4 Persons)

Reynolds Money Market Fund

Name and Address
of Beneficial Owner Number of Shares Percent of Class

Hollis Bascom 424,362 14.4%
1558 San Remo Street
Livermore, CA 94550-6000

Lynn M. Sedway 182,564(3) 6.2%
Three Embarcadero Center #1150
San Francisco, CA 94111

Officers and Directors
as a Group 157,939 5.4%
(4 persons)

___________________

(1) All of such shares were owned by Charles Schwab & Co., Inc. of
record only.

(2) Includes shares held in the Reynolds Capital Management 401(k) plan
and custodial accounts for minor children.

(3) Includes shares held in custodial accounts for minor children.

By virtue of its stock ownership, The Joel W. Renbaum, M.D., Inc.
Profit-Sharing Trust is deemed to control the Bond Fund. In combination
with the holders of more than 24.7% of the Bond Fund's outstanding shares,
The Joel W. Renbaum, M.D., Inc. Profit-Sharing Trust owns sufficient
shares of the Bond Fund to approve or disapprove all matters (other than
the election of directors of the Company or the approval of auditors)
brought before such Fund's shareholders. The Blue Chip Fund, the
Opportunity Fund, the Money Market Fund and the Company are not controlled
by any person, and the Company does not control any person.

INVESTMENT ADVISER AND ADMINISTRATOR

As set forth in the Prospectus under the caption "MANAGEMENT OF THE
FUNDS," the investment adviser to the Funds is Reynolds Capital Management
(Frederick L. Reynolds, sole proprietor) (the "Adviser"). Pursuant to
investment advisory agreements entered into between the respective Funds
and the Adviser (the "Advisory Agreements"), the Adviser furnishes
continuous investment advisory services to the Funds. During the fiscal
years ended September 30, 1997, 1996 and 1995, the Blue Chip Fund paid the
Adviser advisory fees of $487,874, $298,941 and $251,568, respectively.
During the fiscal years ended September 30, 1997, 1996 and 1995, the
Adviser waived 100% of the advisory fees of $15,683, $24,968, and $16,033,
respectively, otherwise payable by the Money Market Fund. During the
fiscal years ended September 30, 1997, 1996 and 1995 the Opportunity Fund
paid the Adviser advisory fees of $193,818, $137,069, and $80,078,
respectively. During the fiscal years ended September 30, 1997, 1996 and
1995, the Adviser waived 100% of the advisory fees of $19,701, $19,280 and
$22,543 otherwise payable by the Bond Fund during such years,
respectively.

The Funds pay all of their own expenses, including, without
limitation, the cost of preparing and printing their registration
statements required under the Securities Act of 1933 and the Investment
Company Act of 1940 and any amendments thereto, the expense of registering
their shares with the Securities and Exchange Commission and in the
various states, the printing and distribution costs of prospectuses mailed
to existing shareholders, reports to shareholders, reports to government
authorities and proxy statements, fees paid to directors who are not
interested persons of the Adviser, interest charges, taxes, legal
expenses, association membership dues, auditing services, insurance
premiums, brokerage commissions and expenses in connection with portfolio
transactions, fees and expenses of the custodian of the Funds' assets,
printing and mailing expenses and charges and expenses of dividend
disbursing agents, registrars and stock transfer agents.

The Adviser has undertaken to reimburse each Fund to the extent
that the aggregate annual operating expenses, including investment
advisory fees and administration fees but excluding interest, taxes,
brokerage commissions and other costs incurred in connection with the
purchase or sale of portfolio securities, and extraordinary items, exceed
that percentage of the average net assets of such Fund for such year, as
determined by valuations made as of the close of each business day of the
year, which is the most restrictive percentage provided by the state laws
of the various states in which the shares of such Fund are qualified for
sale or, if the states in which the shares of such Fund are qualified for
sale impose no such restrictions, 2%. As of the date hereof, no such
state law provision was applicable to any of the Funds. Each Fund
monitors its expense ratio on a monthly basis. If the accrued amount of
the expenses of a Fund exceeds the expense limitation, such Fund creates
an account receivable from the Adviser for the amount of such excess. In
such a situation the monthly payment of the Adviser's fee will be reduced
by the amount of such excess, subject to adjustment month by month during
the balance of such Fund's fiscal year if accrued expenses thereafter fall
below this limit. No expense reimbursement was required for the Blue Chip
Fund during the fiscal years ended September 30, 1997, September 30, 1996
or September 30, 1995. Notwithstanding the most restrictive applicable
expense limitation of state securities commissions described above, during
each of the fiscal years ended September 30, 1997, 1996 and 1995, the
Adviser voluntarily reimbursed the Money Market Fund for expenses in
excess of 0.65% of such Fund's average net assets. The Adviser reimbursed
the Money Market Fund $43,094, $36,875, and $38,567, respectively
(including the waiver of its advisory fee), for excess expenses during
each period. During the fiscal years ended September 30, 1997, 1996 and
1995, the Adviser reimbursed (including the waiver of its advisory fees)
the Bond Fund $37,573, $34,556 and $33,236, respectively, for excess
expenses during such periods.

The Advisory Agreement between the Adviser and each of the Blue
Chip Fund, the Opportunity Fund, the Money Market Fund and the Bond Fund
will remain in effect as long as its continuance is specifically approved
at least annually by (i) the Board of Directors of the Company, or by the
vote of a majority (as defined in the Investment Company Act of 1940) of
the outstanding shares of the applicable Fund, and (ii) by the vote of a
majority of the directors of the Company who are not parties to the
Advisory Agreements or interested persons of the Adviser, cast in person
at a meeting called for the purpose of voting on such approval. Each of
the Advisory Agreements provides that it may be terminated at any time
without the payment of any penalty, by the Board of Directors of the
Company or by vote of the majority of the shares of the applicable Fund,
on sixty (60) days' written notice to the Adviser, and by the Adviser on
the same notice to the applicable Fund, and that it shall be automatically
terminated if it is assigned.

As set forth in the Prospectus under the caption "MANAGEMENT OF THE
FUNDS," the administrator to each of the Funds is Fiduciary Management,
Inc. (the "Administrator"). The administration agreement entered into
between each of the Funds and the Administrator (the "Administration
Agreements") will remain in effect until terminated by either party. Each
of the Administration Agreements may be terminated at any time, without
the payment of any penalty, by the Board of Directors of the Company upon
the giving of ninety (90) days' written notice to the Administrator, or by
the Administrator upon the giving of ninety (90) days' written notice to
the applicable Fund. During the fiscal years ended September 30, 1997,
1996 and 1995, the Blue Chip Fund paid the Administrator $82,182, $59,223
and $50,313, respectively, pursuant to its Administration Agreement.
During the fiscal years ended September 30, 1997, 1996 and 1995, the Money
Market Fund paid the Administrator $4,632, $4,997, and $3,207,
respectively, pursuant to its Administration Agreement. During the fiscal
years ended September 30, 1997, 1996 and 1995, the Opportunity Fund paid
the Administrator $40,158, $27,414, and $17,363, respectively, and the
Bond Fund paid the Administrator $3,822, $2,571, and $3,006, respectively,
pursuant to their Administrative Agreements.

The Advisory Agreements and the Administration Agreements provide
that the Adviser and Administrator, as the case may be, shall not be
liable to any of the Funds or the Company's shareholders for anything
other than willful misfeasance, bad faith, gross negligence or reckless
disregard of its obligations or duties. The Advisory Agreements and the
Administration Agreements also provide that the Adviser and Administrator,
as the case may be, and their officers, directors and employees may engage
in other businesses, devote time and attention to any other business
whether of a similar or dissimilar nature, and render services to others.

DETERMINATION OF NET ASSET VALUE

As set forth in the Prospectus under the caption "DETERMINATION OF
NET ASSET VALUE," the net asset value of each Fund will be determined
(except as otherwise noted in the succeeding paragraph) as of the close of
regular trading (currently 4:00 P.M. Eastern time) on each day the New
York Stock Exchange is open for trading. The New York Stock Exchange is
open for trading Monday through Friday except New Year's Day, Martin
Luther King, Jr.'s Birthday, President's Day, Good Friday, Memorial Day,
Independence Day, Labor Day, Thanksgiving Day and Christmas Day.
Additionally, if any of the aforementioned holidays fall on a Saturday,
the New York Stock Exchange will not be open for trading on the preceding
Friday and when any such holiday falls on a Sunday, the New York Stock
Exchange will not be open for trading on the succeeding Monday, unless
unusual business conditions exist, such as the ending of a monthly or the
yearly accounting period.

Notwithstanding the preceding paragraph, 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 addition to the days on which the
New York Stock Exchange is not open for trading, the Federal Reserve is
closed on Martin Luther King, Jr. Day, Columbus Day and Veterans Day.

SYSTEMATIC WITHDRAWAL PLAN

A shareholder who owns shares of any Fund worth at least $10,000 at
the current net asset value may, by completing an application included as
part of the purchase application, create a Systematic Withdrawal Plan from
which a fixed sum will be paid to the shareholder at regular intervals.
To establish the Systematic Withdrawal Plan, the shareholder deposits
shares of the applicable Fund with the Company and appoints it as agent to
effect redemptions of shares of such Fund held in the account for the
purpose of making monthly or quarterly withdrawal payments of a fixed
amount to the shareholder out of the account.

The minimum amount of a withdrawal payment is $100. These payments
will be made from the proceeds of periodic redemption of shares in the
account at net asset value. Redemptions will be made monthly or quarterly
on any day a shareholder chooses. If that day is a weekend or holiday,
such redemption will be made on the next business day. Establishment of a
Systematic Withdrawal Plan constitutes an election by the shareholder to
reinvest in additional shares of the applicable Fund, at net asset value,
all income dividends and capital gains distributions payable by such Fund
on shares held in such account, and shares so acquired will be added to
such account. The shareholder may deposit additional Fund shares in his
account at any time.

Withdrawal payments cannot be considered as yield or income on the
shareholder's investment, since portions of each payment will normally
consist of a return of capital. Depending on the size or the frequency of
the disbursements requested, and the fluctuation in the value of the
applicable Fund's portfolio, redemptions for the purpose of making such
disbursements may reduce or even exhaust the shareholder's account.

The shareholder may vary the amount or frequency of withdrawal
payments, temporarily discontinue them, or change the designated payee or
payee's address, by notifying Firstar Trust Company in writing prior to
the fifteenth day of the month preceding the next payment.

ALLOCATION OF PORTFOLIO BROKERAGE

Decisions to buy and sell securities for the Funds are made by the
Adviser subject to review by the Company's Board of Directors. In placing
purchase and sale orders for portfolio securities for each Fund, 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, as described in this and the following paragraph. In
selecting brokers to effect portfolio transactions, the determination of
what is expected to result in best execution at the most favorable price
involves a number of largely judgmental considerations. Among these are
the Adviser's evaluation of the broker's efficiency in executing and
clearing transactions, block trading capability (including the broker's
willingness to position securities) and the broker's financial strength
and stability. The most favorable price to a Fund means the best net
price without regard to the mix between purchase or sale price and
commission, if any. Over-the-counter securities are generally purchased
and sold directly with principal market makers who retain the difference
in their cost in the security and its selling price. In some instances,
the Adviser feels that better prices are available from non-principal
market makers who are paid commissions directly. Each of the Funds
(except the Money Market Fund) may place portfolio orders with
broker-dealers who recommend the purchase of such Fund's 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.

In allocating brokerage business for the Funds, the Adviser also
takes into consideration the research, analytical, statistical and other
information and services provided by the broker, such as general economic
reports and information, reports or analyses of particular companies or
industry groups, market timing and technical information, and the
availability of the brokerage firm's analysts for consultation. While the
Adviser believes these services have substantial value, they are
considered supplemental to the Adviser's own efforts in the performance of
its duties under the Advisory Agreements. Other clients of the Adviser
may indirectly benefit from the availability of these services to the
Adviser, and the Funds may indirectly benefit from services available to
the Adviser as a result of transactions for other clients. The Advisory
Agreements provide that the Adviser may cause the Funds to pay a broker
which provides brokerage and research services to the Adviser a commission
for effecting a securities transaction in excess of the amount another
broker would have charged for effecting the transaction, if the Adviser
determines in good faith that such amount of commission is reasonable in
relation to the value of brokerage and research services provided by the
executing broker viewed in terms of either the particular transaction or
the Adviser's overall responsibilities with respect to the Funds and the
other accounts as to which he exercises investment discretion. Brokerage
commissions paid by the Blue Chip Fund during the fiscal years ended
September 30, 1997, 1996 and 1995, totaled $42,148 on transactions having
a total market value of $32,898,280, $25,230 on transactions having a
total market value of $12,520,178, and $42,032 on transactions having a
total market value of $23,256,751, respectively. During the fiscal years
ended September 30, 1997, 1996 and 1995, the Money Market Fund did not pay
any brokerage commissions. During the fiscal years ended September 30,
1997, 1996 and 1995, the Opportunity Fund paid brokerage commissions of
$26,330 on transactions having a total market value of $16,060,388,
$15,214 on transactions having a total market value of $4,701,608, and
$14,803 on transactions having a total market value of $5,082,765,
respectively. During the fiscal years ended September 30, 1997, 1996 and
1995, the Bond Fund did not pay any brokerage commissions. During the
fiscal year ended September 30, 1997, the Blue Chip Fund paid commissions
of $22,583 on transactions having a total market value of $14,702,486 to
brokers who provided research services to the Adviser, and the Opportunity
Fund paid commissions of $6,135 on transactions having a total market
value of $4,040,046 to brokers who provided research services to the
Adviser.

PERFORMANCE AND YIELD INFORMATION

For illustrative purposes only, the Blue Chip Fund may use the
names of companies in its advertising literature as examples of blue chip
companies. Such companies will only be mentioned if their securities
reflect the overall quality and other characteristics of the Blue Chip
Fund's portfolio and are held by such Fund as of the date of publication
of the advertising literature. However, due to the delay often associated
with the dissemination of advertising literature and to the possibility of
changing circumstances in the interim, these companies will not
necessarily reflect the portfolio composition of the Blue Chip Fund at any
time after such date of publication and the mention of their names will
not constitute a recommendation to purchase their stock.

Any total rate of return quotation for the Blue Chip Fund, the
Opportunity Fund or the Bond Fund will be for a period of three or more
months and will assume the reinvestment of all dividends and capital gains
distributions which were made by such Fund during that period. Any period
total rate of return quotation of the Blue Chip Fund, the Opportunity Fund
or the Bond Fund will be calculated by dividing the net change in value of
a hypothetical shareholder account established by an initial payment of
$1,000 at the beginning of the period by 1,000. The net change in the
value of a shareholder account is determined by subtracting $1,000 from
the product obtained by multiplying the net asset value per share at the
end of the period by the sum obtained by adding (A) the number of shares
purchased at the beginning of the period plus (B) the number of shares
purchased during the period with reinvested dividends and distributions.
Any average annual compounded total rate of return quotation of the Blue
Chip Fund, the Opportunity Fund or the Bond Fund will be calculated by
dividing the redeemable value at the end of the period (i.e., the product
referred to in the preceding sentence) by $1,000. A root equal to the
period, measured in years, in question is then determined and 1 is
subtracted from such root to determine the average annual compounded total
rate of return.

The foregoing computation may also be expressed by the following
formula:

n
P(1+T) = ERV

P = a hypothetical initial payment of $1,000

T = average annual total return

n = number of years

ERV = ending redeemable value of a hypothetical $1,000
payment made at the beginning of the stated periods at
the end of the stated periods.

The results below show the value of an assumed initial investment
in the Blue Chip Fund of $10,000 made on August 12, 1988 through December
31, 1997, assuming reinvestment of all dividends and distributions.

Value of
$10,000 Cumulative
December 31, Investment % Change

1988 $10,132 +1.3%
1989 12,227 +22.3
1990 12,237 +22.4
1991 16,626 +66.3
1992 16,645 +66.5
1993 15,775 +57.8
1994 15,685 +56.9
1995 20,840 +108.4
1996 26,722 +167.2
1997 35,134 +251.3

The results below show the value of an assumed initial investment
in the Opportunity Fund of $10,000 made on January 30, 1992 through
December 31, 1997, assuming reinvestment of all dividends and
distributions.

Value of
$10,000 Cumulative
December 31, Investment % Change

1992 $ 10,051 +0.5%
1993 10,061 +0.6
1994 10,231 +2.3
1995 13,942 +39.4
1996 15,912 +59.1
1997 18,232 +82.3

The foregoing performance results are based on historical earnings
and should not be considered as representative of the performance of the
Blue Chip Fund or the Opportunity Fund in the future. Such performance
results also reflect reimbursements made by the Adviser during the fiscal
year ended September 30, 1989 to keep the Blue Chip Fund's total fund
operating expenses at or below 2.0% and during the fiscal years ended
September 30, 1994 and 1993 and the period from January 30, 1992 to
September 30, 1992 to keep the Opportunity Fund's total fund operating
expenses at or below 2.0%. An investment in the Blue Chip Fund or the
Opportunity Fund will fluctuate in value and at redemption its value may
be more or less than the initial investment.

The Bond Fund may cite its yield in advertisements, sales
literature or information to shareholders. The Bond Fund's yield is based
on a 30-day period and is computed by dividing the net investment income
per share earned during the period by the net asset value per share on the
last day of the period, according to the following formula:

a-b 6
YIELD = 2[(---+1) -1]
cd

Where: a = dividends and interest earned during the period.

b = expenses accrued for the period (net of
reimbursements).

c = the average daily number of shares outstanding
during the period that were entitled to receive
dividends.

d = the net asset value per share on the last day of the
period.

The Bond Fund's yield for the thirty days ended September 30, 1997 was
5.02%. Yield fluctuations may reflect changes in the Bond Fund's net
income, and portfolio changes resulting from net purchases or net
redemptions of the Bond Fund's shares may affect the yield. Accordingly,
the Bond Fund's yield may vary from day to day, and the yield stated for a
particular past period is not necessarily representative of its future
yield. The Bond Fund's yield is not guaranteed and its principal is not
insured.

The Money Market Fund may quote a "Yield" or "Effective Yield" from
time to time. The Yield is an annualized yield based on the actual total
return for a seven-day period. The Effective Yield is an annualized yield
based on a compounding of the Yield. These yields are each computed by
first determining the "Net Change in Account Value" for a hypothetical
account having a share balance of one share at the beginning of a
seven-day period ("Beginning Account Value"), excluding capital changes.
The Net Change in Account Value will always equal the total dividends
declared with respect to the account.

The yields are then computed as follows:

Net Change in Account Value
Yield = ___________________________ x 365/7
Beginning Account Value

Effective Yield = (1 + Total Dividend for 7 days) 365/7 - 1

The Money Market Fund's Yield and Effective Yield for the seven-day
period ended September 30, 1997 were 4.89% and 5.01%, respectively. Yield
fluctuations may reflect changes in the Money Market Fund's net income.
Additionally, portfolio changes resulting from net purchases or net
redemptions of such Fund's shares may affect the yield. Accordingly, the
Money Market Fund's yield may vary from day to day, and the yield stated
for a particular past period is not necessarily representative of future
yield. Since the Money Market Fund uses the amortized cost method of net
asset value computation, it does not anticipate any change in yield
resulting from any unrealized gains or losses or unrealized appreciation
or depreciation not reflected in the yield computation, or change in net
asset value during the period used for computing yield. If any of these
conditions should occur, yield quotations would be suspended. The Money
Market Fund's yield is not guaranteed, and its principal is not insured.
However, the Money Market Fund uses its best efforts to maintain its net
asset value at $1.00 per share.

Yield information may be useful in reviewing the performance of the
Money Market Fund and for providing a basis for comparison with other
investment alternatives. However, since net investment income of the
Money Market Fund changes in response to fluctuations in interest rates
and such Fund's expenses, any given yield quotation should not be
considered representative of its yield for any future period. An investor
should also be aware that there are differences in investments other than
yield.

Furthermore, the Money Market Fund's yield will be affected if it
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 the Money Market Fund and such Fund's return are
not guaranteed.

CUSTODIAN

Firstar Trust Company, Mutual Fund Services, 3rd Floor, 615 East
Michigan Street, Milwaukee, Wisconsin 53202, acts as custodian for the
Funds. As such, Firstar Trust Company holds all securities and cash of
the Funds, delivers and receives payment for securities sold, receives and
pays for securities purchased, collects income from investments and
performs other duties, all as directed by officers of the Company.
Firstar Trust Company does not exercise any supervisory function over the
management of the Funds, the purchase and sale of securities or the
payment of distributions to shareholders. Firstar Trust Company also acts
as the Funds' transfer agents and dividend disbursing agents.

TAXES

As set forth in the Prospectus under the caption "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 Internal Revenue Code, as amended, (the
"Code").

Each of the Funds intends to distribute substantially all of its
net investment income and net capital gains each fiscal year. Dividends
from each Fund's net investment income, including short-term capital
gains, are taxable to shareholders as ordinary income, while distributions
from each Fund's net realized capital gains are taxable as long-term
capital gains regardless of the shareholder's holding period for the
shares. The Code provides for a three-tiered tax rate structure for long-
term capital gains dependent upon a Fund's holding period of the
underlying financial instrument or capital asset. Distributions from each
of the Funds are taxable to shareholders, whether received in cash or
additional shares of a Fund. A portion of the income distributions of the
Blue Chip Fund and Opportunity Fund (but not the Bond Fund or Money Market
Fund) may be eligible for the 70% dividends-received deduction for
domestic corporate shareholders.

Any dividend or capital gains distribution paid shortly after a
purchase of shares will have the effect of reducing the per share net
asset value of such shares by the amount of the dividend or distribution.
Furthermore, if the net asset value of the shares immediately after a
dividend or distribution is less than the cost of such shares to the
shareholder, the dividend or distribution will be taxable to the
shareholder even though it results in a return of capital to him.

Redemptions of shares will generally result in a capital gain or
loss for income tax purposes. Such capital gain or loss will be long term
or short term, depending upon the holding period. However, if a loss is
realized on shares held for six months or less, and the shareholder
received a capital gain distribution during that period, then such loss is
treated as a long-term capital loss to the extent of the capital gain
distribution received.

Each Fund may be required to withhold Federal income tax at a rate
of 31% ("backup withholding") from dividend payments and redemption
proceeds if a shareholder fails to furnish such Fund with his social
security number or other tax identification number and certify under
penalty of perjury that such number is correct and that he is not subject
to backup withholding due to the underreporting of income. The
certification form is included as part of the share purchase application
and should be completed when the account is opened.

SHAREHOLDER MEETINGS

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 Investment Company Act of 1940. The Company has adopted
the appropriate provisions in its Bylaws and may not, at its discretion,
hold an annual meeting of shareholders in any year in which the election
of directors is not required to be acted on by shareholders under the
Investment Company Act of 1940.

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

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

If the Secretary elects to follow the course specified in clause
(2) of the last sentence of the preceding paragraph, the Secretary, upon
the written request of such applicants, accompanied by a tender of the
material to be mailed and of the reasonable expenses of mailing, shall,
with reasonable promptness, mail such material to all shareholders of
record at their addresses as recorded on the books unless within five
business days after such tender the Secretary shall mail to such
applicants and file with the Securities and Exchange Commission, together
with a copy of the material to be mailed, a written statement signed by at
least a majority of the Board of Directors to the effect that in their
opinion either such material contains untrue statements of fact or omits
to state facts necessary to make the statements contained therein not
misleading, or would be in violation of applicable law, and specifying the
basis of such opinion.

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

INDEPENDENT ACCOUNTANTS

Price Waterhouse LLP, 100 East Wisconsin Avenue, Suite 1500,
Milwaukee, Wisconsin 53202, currently serves as the independent
accountants for the Company and has so served since the fiscal year ended
September 30, 1989.

DESCRIPTION OF SECURITIES RATINGS

As set forth in the Prospectus under the caption "INVESTMENT
OBJECTIVES AND POLICIES," the Blue Chip Fund, the Opportunity Fund and the
Bond Fund may invest in publicly-distributed debt securities assigned one
of the highest two (2) ratings of either Standard & Poor's Corporation
("Standard & Poor's") or Moody's Investors Service, Inc. ("Moody's").
Each of such Funds may also invest in commercial paper and commercial
paper master notes rated A-1 or better by Standard & Poor's or Prime-1 by
Moody's. As also set forth therein, the Money Market Fund may purchase
high-quality commercial paper issued by corporations rated (at the time of
purchase) 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"), 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 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 brief description of the ratings symbols
and their meanings follows.

Standard & Poor's Debt Ratings. A Standard & Poor's corporate debt
rating is a current assessment of the creditworthiness of an obligor with
respect to a specific obligation. This assessment may take into
consideration obligors such as guarantors, insurers of lessees.

The debt rating is not a recommendation to purchase, sell or hold a
security, inasmuch as it does not comment as to market price or
suitability for a particular investor.

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

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

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

II. Nature of and provisions of the obligation; and

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

AAA - Debt rated AAA has the highest rating assigned by
Standard & Poor's. Capacity to pay interest and
repay principal is extremely strong.

AA - Debt rated AA has a very strong capacity to pay
interest and repay principal and differs from the
higher rated issues only in small degree.

Moody's Bond Ratings.

Aaa - Bonds which are rated Aaa are judged to be the
best quality. They carry the smallest degree of
investment risk and are generally referred to as
"gilt edged." Interest payments are protected by
a large, or by an exceptionally stable, margin,
and principal is secure. While the various
protective elements are likely to change, such
changes as can be visualized are most unlikely to
impair the fundamentally strong position of such
issues.

Aa - Bonds which are rated Aa are judged to be of high
quality by all standards. Together with the Aaa
group they comprise what are generally known as
high-grade bonds. They are rated lower than the
best bonds because margins of protection may not
be as large as in Aaa securities or fluctuation of
protective elements may be of greater amplitude,
or there may be other elements present which make
the long-term risks appear somewhat larger than in
Aaa securities.

Moody's applies numerical modifiers 1,2 and 3 in each of the
foregoing generic rating classifications. The modifier 1 indicates that
the company ranks in the higher end of its generic rating category; the
modifier 2 indicates a mid-range ranking; and the modifier 3 indicates
that the company ranks in the lower end of its generic rating category.

Duff & Phelps, Inc. Bond Ratings. D&P ratings concern only credit
quality (i.e., the likelihood of timely payment of principal and
interest). They are not affected by market conditions. All ratings are
regularly reviewed by the Credit Rating Committee at quarterly intervals,
or more frequently, if required.

Rating determination is a matter of judgment based on the
qualitative and quantitative factors, which vary according to the basic
economic and financial characteristics of the industry.

Ratings of fixed income securities maturing beyond one year are
expressed numerically in a range of 1 (highest-grade) to 17 (lowest-
grade). The first 10 ratings fall within the definition of investment-
grade securities, according to typical classifications of bank and
insurance supervisory authorities. Ratings 11 to 17 are used for issues
below investment-grade. Additional ratings up to level 20 will be added
as the need arises. Numerical ratings are grouped in seven categories,
with gradations within the categories.

D&P Generic
Rating Category Description

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

Fitch IBCA, Inc. Bond Ratings. The Fitch Bond Rating provides a
guide to investors in determining the investment risk attached to a
security. The rating represents its assessment of the issuer's ability to
meet the obligations of a specific debt issue. The rating takes into
consideration special features of the issuer, its relationship to other
obligations of the issuer, the record of the issuer and of any guarantor,
as well as the political and economic environment that might affect the
future financial strength of the issuer.

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

In assessing credit risk, Fitch relies on current information
furnished by the issuer and/or guarantor and other sources which it
considers reliable. Fitch does not perform an audit of the financial
statements used in assigning a rating.

Ratings may be changed, withdrawn, or suspended at any time to
reflect changes in the financial condition of the issuer, the status of
the issue relative to other debt of the issuer, or any other circumstances
that Fitch considers to have a material effect on the credit of the
obligor.

AAA rated bonds are considered to be investment-grade and of the
highest quality. The obligor has an extraordinary ability to
pay interest and repay principal, which is unlikely to be
affected by reasonably foreseeable events.

Standard & Poor's Commercial Paper Ratings. A Standard & Poor's
commercial paper rating is a current assessment of the likelihood of
timely payment of debt considered short-term in the relevant market.
Ratings are graded into several categories, ranging from A-1 for the
highest quality obligations to D for the lowest. These categories are as
follows:

A-1. This highest category indicates that the degree of safety
regarding timely payment is strong. Those issuers determined to possess
extremely strong safety characteristics are denoted with a plus sign (+)
designation.

A-2. Capacity for timely payment on issues with this designation is
satisfactory. However the relative degree of safety is not as high as for
issuers designated "A-1".

A-3. Issues carrying this designation have adequate capacity for
timely payment. They are, however, more vulnerable to the adverse effects
of changes in circumstances than obligations carrying a higher
designation.

Moody's Short-Term Debt Ratings. Moody's short-term debt ratings
are opinions of the ability of issuers to repay punctually senior debt
obligations which have an original maturity not exceeding one year.
Obligations relying upon support mechanisms such as letters-of-credit and
bonds of indemnity are excluded unless explicitly rated.

Moody's employs the following three designations, all judged to be
investment grade, to indicate the relative repayment ability of rated
issuers:

Prime-1. Issuers rated Prime-1 (or supporting institutions) have a
superior ability for repayment of senior short-term debt obligations.
Prime-1 repayment ability will often be evidenced by many of the following
characteristics:

- Leading market positions in well-established industries.

- High rates of return on funds employed.

- Conservative capitalization structure with moderate reliance
on debt and ample asset protection.

- Broad margins in earnings coverage of fixed financial charges
and high internal cash generation.

- Well-established access to a range of financial markets and
assured sources of alternate liquidity.

Prime-2. Issuers rated Prime-2 (or supporting institutions) have a
strong ability for repayment of senior short-term debt obligations. This
will normally be evidenced by many of the characteristics cited above but
to a lesser degree. Earnings trends and coverage ratios, while sound, may
be more subject to variation. Capitalization characteristics, while still
appropriate, may be more affected by external conditions. Ample alternate
liquidity is maintained.

Prime-3. Issuers rated Prime-3 (or supporting institutions) have
an acceptable ability for repayment of senior short-term obligations. The
effect of industry characteristics and market compositions may be more
pronounced. Variability in earnings and profitability may result in
changes in the level of debt protection measurements and may require
relatively high financial leverage. Adequate alternate liquidity is
maintained.

Duff & Phelps, Inc. Commercial Paper Ratings.

Category 1: Top Grade

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

Duff 1 Very high certainty of timely payment. Liquidity factors are
excellent and supported by strong fundamental protection
factors. Risk factors are minor.

Duff 1 minus High certainty of timely payment. Liquidity factors are
strong and supported by good fundamental protection
factors. Risk factors are very small.

Fitch IBCA, Inc. Commercial Paper Rating. Fitch Commercial Paper
Ratings are assigned at the request of an issuer to debt obligations with
an original maturity not in excess of 270 days. The ratings reflect
Fitch's current appraisal of the degree of assurance of timely payment of
such debt. Fitch is compensated for this service by an annual fee paid by
the issuer under a contractual agreement which specifies among other
things that ratings may be changed or withdrawn at any time if, in Fitch's
sole judgment, changing circumstances warrant such action.

Fitch-1 (Highest Grade) Commercial paper assigned this rating is
regarded as having the strongest degree of assurance for
timely payment.

Thompson Bankwatch (TBW) Short-Term Ratings. The TBW Short-Term
Ratings apply to commercial paper, other senior short-term obligations and
deposit obligations of the entities to which the rating has been assigned.

The TBW Short-Term Ratings apply only to unsecured instruments that
have a maturity of one year or less.

The TBW Short-Term Ratings specifically assess the likelihood of an
untimely payment of principal or interest.

TBW-1. The highest category; indicates a very high degree of
likelihood that principal and interest will be paid on a timely basis.

TBW-2. The second highest category; while the degree of safety
regarding timely repayment of principal and interest is strong, the
relative degree of safety is not as high as for issues rated "TBW-1".

FINANCIAL STATEMENTS

The following financial statements are incorporated by reference to
the Annual Report, dated September 30, 1997, of The Reynolds Funds (File
No. 811-5549), as filed with the Securities and Exchange Commission on
November 5, 1997.

Reynolds Funds, Inc. (Reynolds Blue Chip Growth Fund, Reynolds
Opportunity Fund, Reynolds U.S. Government Bond Fund and Reynolds Money
Market Fund)
Report of Independent Accountants
Statements of Net Assets
Statements of Operations
Statements of Changes in Net Assets
Financial Highlights
Notes to Financial Statements

PART C
OTHER INFORMATION

Item 24. Financial Statements and Exhibits

(a.) Financial Statements (Financial Highlights included in Part A and
all incorporated by reference to the Annual Report, dated
September 30, 1997 (File No. 811-5549), of Reynolds Funds, Inc.
(as filed with the Securities and Exchange Commission on November
5, 1997))

Reynolds Funds, Inc. (Reynolds Blue Chip Growth Fund, Reynolds
Opportunity Fund, Reynolds U.S. Government Bond Fund and Reynolds
Money Market Fund)

Report of Independent Accountants
Statements of Net Assets
Statements of Operations
Statements of Changes in Net Assets
Financial Highlights
Notes to Financial Statements

(b.) Exhibits

(1) Registrant's Articles of Incorporation, as amended and
supplemented.

(2) Registrant's Bylaws, as amended.

(3) None

(4) None

(5.1) Investment Advisory Agreement between Reynolds Blue Chip
Growth Fund and Reynolds Capital Management, as amended.

(5.2) Investment Advisory Agreement between Reynolds Money
Market Fund and Reynolds Capital Management.

(5.3) Investment Advisory Agreement between Reynolds Opportunity
Fund and Reynolds Capital Management.

(5.4) Investment Advisory Agreement between Reynolds U.S.
Government Bond Fund and Reynolds Capital Management.

(6) None

(7) None

(8.1) Custodian Agreement between Reynolds Blue Chip Growth Fund
and Firstar Trust Company (formerly First Wisconsin Trust
Company).

(8.2) Custodian Agreement between Reynolds Money Market Fund and
Firstar Trust Company (formerly First Wisconsin Trust
Company).

(8.3) Custodian Agreement between Reynolds Opportunity Fund and
Firstar Trust Company (formerly First Wisconsin Trust
Company).

(8.4) Custodian Agreement between Reynolds U.S. Government Bond
Fund and Firstar Trust Company (formerly First Wisconsin
Trust Company).

(9.1) Administration Agreement between Reynolds Blue Chip Growth
Fund and Fiduciary Management, Inc.

(9.2) Administration Agreement between Reynolds Money Market
Fund and Fiduciary Management, Inc.

(9.3) Administration Agreement between Reynolds Opportunity Fund
and Fiduciary Management, Inc.

(9.4) Administration Agreement between Reynolds U.S. Government
Bond Fund and Fiduciary Management, Inc.

(10) Opinion of Foley & Lardner, counsel for Registrant.

(11) Consent of Price Waterhouse LLP.

(12) None

(13.1) Subscription Agreement for shares of Reynolds Blue Chip
Growth Fund.

(14.1) Individual Retirement Custodial Accounts.

(14.2) Simplified Employee Pension Plan.

(14.3) Defined Contribution Retirement Plan.

(14.4) Model 403(b)(7) Plan.

(15) None

(16) Schedule for Computation of Performance Quotations;
Exhibit 16 to Post-Effective Amendment No. 10 to
Registrant's Registration Statement on Form N-1A is
incorporated by reference pursuant to Rule 411 under the
Securities Act of 1933.

(17) Financial Data Schedule

(18) None

Item 25. Persons Controlled by or under Common Control with Registrant

As of December 31, 1997, The Reynolds U.S. Government Bond Fund was
controlled by The Joel W. Renbaum, M.D., Inc. Profit-Sharing Trust, which
owned 25.3% of such Fund's voting securities.

None of The Reynolds Blue Chips Growth Fund, The Reynolds
Opportunity Fund, The Reynolds Money Market Fund or the Registrant is
controlled by any person. Registrant does not control any person.

Item 26. Number of Holders of Securities

Number of Record Holders
Title of Class as of December 31, 1997

Class A Common Stock, 1,512
$.01 par value (Reynolds
Blue Chip Growth Fund)

Class B Common Stock, 210
$.01 par value (Reynolds
Money Market Fund)

Class C Common Stock, 327
$.01 par value (Reynolds
Opportunity Fund)

Class D Common Stock, 55
$.01 par value (Reynolds
U.S. Government Bond Fund)

Item 27. Indemnification

Pursuant to the authority of the Maryland General Corporation Law,
particularly Section 2-418 thereof, Registrant's Board of Directors has
adopted the following Bylaw which is in full force and effect and has not
been modified or cancelled:

Article VI

GENERAL PROVISIONS

Section 7. Indemnification.

A. The corporation shall indemnify all of its corporate
representatives against expenses, including attorneys' fees, judgments,
fines and amounts paid in settlement actually and reasonably incurred by
them in connection with the defense of any action, suit or proceeding, or
threat or claim of such action, suit or proceeding, whether civil,
criminal, administrative, or legislative, no matter by whom brought, or in
any appeal in which they or any of them are made parties or a party by
reason of being or having been a corporate representative, if the
corporate representative acted in good faith and in a manner reasonably
believed to be in or not opposed to the best interests of the corporation
and with respect to any criminal proceeding, if he had no reasonable cause
to believe his conduct was unlawful provided that the corporation shall
not indemnify corporate representatives in relation to matters as to which
any such corporate representative shall be adjudged in such action, suit
or proceeding to be liable for gross negligence, willful misfeasance, bad
faith, reckless disregard of the duties and obligations involved in the
conduct of his office, or when indemnification is otherwise not permitted
by the Maryland General Corporation Law.

B. In the absence of an adjudication which expressly absolves the
corporate representative, or in the event of a settlement, each corporate
representative shall be indemnified hereunder only if there has been a
reasonable determination based on a review of the facts that
indemnification of the corporate representative is proper because he has
met the applicable standard of conduct set forth in paragraph A. Such
determination shall be made: (i) by the board of directors, by a majority
vote of a quorum which consists of directors who were not parties to the
action, suit or proceeding, or if such a quorum cannot be obtained, then
by a majority vote of a committee of the board consisting solely of two or
more directors, not, at the time, parties to the action, suit or
proceeding and who were duly designated to act in the matter by the full
board in which the designated directors who are parties to the action,
suit or proceeding may participate; or (ii) by special legal counsel
selected by the board of directors or a committee of the board by vote as
set forth in (i) of this paragraph, or, if the requisite quorum of the
full board cannot be obtained therefor and the committee cannot be
established, by a majority vote of the full board in which directors who
are parties to the action, suit or proceeding may participate.

C. The termination of any action, suit or proceeding by judgment,
order, settlement, conviction, or upon a plea of nolo contendere or its
equivalent, shall create a rebuttable presumption that the person was
guilty of willful misfeasance, bad faith, gross negligence or reckless
disregard to the duties and obligations involved in the conduct of his or
her office, and, with respect to any criminal action or proceeding, had
reasonable cause to believe that his or her conduct was unlawful.

D. Expenses, including attorneys' fees, incurred in the
preparation of and/or presentation of the defense of a civil or criminal
action, suit or proceeding may be paid by the corporation in advance of
the final disposition of such action, suit or proceeding as authorized in
the manner provided in Section 2-418(F) of the Maryland General
Corporation Law upon receipt of: (i) an undertaking by or on behalf of
the corporate representative to repay such amount unless it shall
ultimately be determined that he or she is entitled to be indemnified by
the corporation as authorized in this bylaw; and (ii) a written
affirmation by the corporate representative of the corporate
representative's good faith belief that the standard of conduct necessary
for indemnification by the corporation has been met.

E. The indemnification provided by this bylaw shall not be deemed
exclusive of any other rights to which those indemnified may be entitled
under these bylaws, any agreement, vote of stockholders or disinterested
directors or otherwise, both as to action in his or her official capacity
and as to action in another capacity while holding such office, and shall
continue as to a person who has ceased to be a director, officer, employee
or agent and shall inure to the benefit of the heirs, executors and
administrators of such a person subject to the limitations imposed from
time to time by the Investment Company Act of 1940, as amended.

F. This corporation shall have power to purchase and maintain
insurance on behalf of any corporate representative against any liability
asserted against him or her and incurred by him or her in such capacity or
arising out of his or her status as such, whether or not the corporation
would have the power to indemnify him or her against such liability under
this bylaw provided that no insurance may be purchased or maintained to
protect any corporate representative against liability for gross
negligence, willful misfeasance, bad faith or reckless disregard of the
duties and obligations involved in the conduct of his or her office.

G. "Corporate Representative" means an individual who is or was a
director, officer, agent or employee of the corporation or who serves or
served another corporation, partnership, joint venture, trust or other
enterprise in one of these capacities at the request of the corporation
and who, by reason of his or her position, is, was, or is threatened to be
made, a party to a proceeding described herein.

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

Item 28. Business and Other Connections of Investment Adviser

Information with respect to Mr. Reynolds is incorporated by
reference to pages 7 through 11 of the Statement of Additional Information
pursuant to Rule 411 under the Securities Act of 1933.

Item 29. Principal Underwriters

Registrant has no principal underwriters.

Item 30. Location of Accounts and Records

All accounts, books, or other documents required to be maintained
by Section 31(a) of the Investment Company Act of 1940 and the rules
promulgated thereunder are in the physical possession of either
Registrant's Treasurer, at Registrant's corporate offices, Wood Island,
Third Floor, 80 East Sir Francis Drake Blvd., Larkspur, California 94939,
or Fiduciary Management, Inc. at its offices at 222 East Mason Street,
Milwaukee, Wisconsin 53202.

Item 31. Management Services

All management-related service contracts entered into by Registrant
are discussed in Parts A and B of this Registration Statement.

Item 32. Undertakings

None.

SIGNATURES

Pursuant to the requirements of the Securities Act of 1933 and the
Investment Company Act of 1940, the Registrant certifies that it meets all
of the requirements for effectiveness of this Amended Registration
Statement pursuant to Rule 485(b) under the Securities Act of 1933 and has
duly caused this Amended Registration Statement to be signed on its behalf
by the undersigned, thereunto duly authorized in the City of Larkspur and
State of California on the 23rd day of January, 1998.

REYNOLDS FUNDS, INC.
(Registrant)

By: /s/ Frederick L. Reynolds
Frederick L. Reynolds, President

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

Name Title Date

/s/ Frederick L. Reynolds Principal Executive, January 23, 1998
Frederick L. Reynolds Financial and
Accounting Officer
and Director

/s/ Robert E. Snader Director January 23, 1998
Robert E. Snader

/s/ Robert E. Stauder Director January 23, 1998
Robert E. Stauder

<PAGE>
EXHIBIT INDEX

Exhibit No. Exhibit

(1) Registrant's Articles of
Incorporation, as amended
and supplemented

(2) Registrant's Bylaws, as amended

(3) None

(4) None

(5.1) Investment Advisory Agreement
between Reynolds Blue Chip
Growth Fund and Reynolds Capital
Management, as amended

(5.2) Investment Advisory Agreement
between Reynolds Money Market
Fund and Reynolds Capital
Management

(5.3) Investment Advisory Agreement
between Reynolds Opportunity
Fund and Reynolds Capital
Management

(5.4) Investment Advisory Agreement
between Reynolds U.S. Government
Bond Fund and Reynolds Capital
Management

(6) None

(7) None

(8.1) Custodian Agreement between Reynolds Blue Chip Growth
Fund and Firstar Trust Company (formerly First
Wisconsin Trust Company) ("Firstar")

(8.2) Custodian Agreement between Reynolds Money Market Fund
and Firstar

(8.3) Custodian Agreement between Reynolds Opportunity Fund
and Firstar

(8.4) Custodian Agreement between Reynolds U.S. Government
Bond Fund and Firstar

(9.1) Administration Agreement between
Reynolds Blue Chip Growth Fund
and Fiduciary Management, Inc.

(9.2) Administration Agreement between
Reynolds Money Market Fund and
Fiduciary Management, Inc.

(9.3) Administration Agreement between
Reynolds Opportunity Fund and
Fiduciary Management, Inc.

(9.4) Administration Agreement between
Reynolds U.S. Government Bond
Fund and Fiduciary Management, Inc.

(10) Opinion of Foley & Lardner
Counsel for Registrant

(11) Consent of Price Waterhouse LLP

(13.1) Subscription Agreement for shares
of Reynolds Blue Chip Growth Fund

(14.1) Individual Retirement Custodial Accounts

(14.2) Simplified Employee Pension Plan

(14.3) Defined Contribution Retirement Plan

(14.4) Model 403(b)(7) Plan

(15) None

(16) Schedule for Computation of
Performance Quotations*

(17) Financial Data Schedule

(18) None

* Incorporated by reference.

EXHIBIT 1

ARTICLES OF INCORPORATION

REYNOLDS FUNDS, INC.

(as amended)

The undersigned sole incorporator, being at least eighteen years
of age, hereby adopts the following Articles of Incorporation for the
purpose of forming a Maryland corporation under the general laws of the
State of Maryland:

ARTICLE I

The name of the corporation (hereinafter called "Corporation")
is:

REYNOLDS FUNDS, INC.

ARTICLE II

The period of existence shall be perpetual.

ARTICLE III

The purposes for which the Corporation is formed are to engage
in any lawful business for which corporations may be organized under the
Maryland General Corporation Law.

ARTICLE IV

A. The aggregate number of shares of capital stock which the
Corporation shall have authority to issue is Ten Million (10,000,000)
shares, all with a par value of One Cent ($0.01) per share, to be known
and designated as "Common Stock." The aggregate par value of the
authorized shares of the Corporation is One Hundred Thousand Dollars
($100,000). The Board of Directors of the Corporation may increase or
decrease the aggregate number of authorized shares of Common Stock
pursuant to Section 2-105 of the Maryland General Corporation Law or any
successor provision thereto. The Board of Directors of the Corporation
may classify or reclassify any unissued shares of Common Stock and may
designate or redesignate the name of any class of outstanding Common
Stock. The Board of Directors may fix the number of shares of Common
Stock in any such class and, except as specifically set forth in these
Articles of Incorporation, may set or change the preferences, conversion
or other rights, voting powers, restrictions, limitations as to dividends,
qualifications and terms or conditions of redemption of any class of
unissued shares of Common Stock.

B. Notwithstanding the authority granted to the Board of
Directors of the Corporation with respect to the designation,
classification and reclassification of the unissued shares of Common Stock
of the Corporation, each class of Common Stock shall have the following
preferences, conversion or other rights, voting powers, restrictions,
limitations as to dividends, qualifications and terms or conditions of
redemption:

1. Each holder of shares of Common Stock of the
Corporation, irrespective of the class, shall be entitled to one
(1) vote for each full share (and a fractional vote for each
fractional share) then standing in his or her name on the books
of the Corporation; provided, however, that shares of any class
of Common Stock owned, other than in a fiduciary capacity, by
the Corporation or by another corporation in which the
Corporation owns shares entitled to cast a majority of all the
votes entitled to be cast by all shares outstanding and entitled
to vote of such corporation, shall not be voted at any meeting
of stockholders. On any matter submitted to a vote of
stockholders all shares of the Corporation's Common Stock then
issued and outstanding and entitled to vote, irrespective of the
class, shall be voted in the aggregate and not by class, except
that: (a) when otherwise expressly provided by the Maryland
General Corporation Law, the Investment Company Act of 1940 and
the regulations thereunder, or other applicable law, shares
shall be voted by individual class; and (2) when the matter to
be acted upon does not affect any interest of a particular class
of the Corporation's Common Stock, then only shares of the
affected class shall be entitled to vote thereon. At all
elections of directors of the Corporation, each stockholder
shall be entitled to vote the shares owned of record by him for
as many persons as there are directors to be elected, but shall
not be entitled to exercise any right of cumulative voting.

2. All consideration received by the Corporation for the
issue or sale of shares of any class of the Corporation's Common
Stock, together with all assets in which such consideration is
invested and reinvested, income, earnings, profits and proceeds
thereof, including any proceeds derived from the sale, exchange
or liquidation thereof, and any such funds or payments derived
from any reinvestment of such proceeds in whatever form the same
may be, shall irrevocably belong to the class of the
Corporation's Common Stock with respect to which such assets,
payments or funds were received by the Corporation for all
purposes, subject only to the rights of creditors, and shall be
so handled upon the books of account of the Corporation. Such
consideration, assets, income, earnings, profits and proceeds
thereof, including any proceeds derived from the sale, exchange
or liquidation thereof, and any assets derived from any
reinvestment of such proceeds in whatever form, are herein
referred to as "assets belonging to" such class. Any assets,
income, earnings, profits and proceeds thereof, funds or
payments which are not readily attributable to any particular
class of the Corporation's Common Stock shall be allocable among
any one or more of the classes of the Corporation's Common Stock
in such manner and on such basis as the Board of Directors, in
its sole discretion, shall deem fair and equitable. The power
to make such allocations may be delegated by the Board of
Directors from time to time to one or more of the officers of
the Corporation.

3. The assets belonging to any class of the Corporation's
Common Stock shall be charged with the liabilities in respect of
such class of the Corporation's Common Stock, and shall also be
charged with the share of the general liabilities of the
Corporation allocated to such class determined as hereinafter
provided. The determination of the Board of Directors shall be
conclusive as to: (a) the amount of such liabilities, including
the amount of accrued expenses and reserves; (b) any allocation
of the same to a given class; and (c) whether the same are
allocable to one or more classes. The liabilities so allocated
to a class are herein referred to as "liabilities belonging to"
such class. Any liabilities which are not readily attributable
to any particular class of the Corporation's Common Stock shall
be allocable among any one or more of the classes of the
Corporation's Common Stock in such manner and on such basis as
the Board of Directors, in its sole discretion, shall deem fair
and equitable. The power to make such allocations may be
delegated by the Board of Directors from time to time to one or
more of the officers of the Corporation.

4. Shares of a class of the Corporation's Common Stock
shall be entitled to such dividends and distributions, in stock
or in cash or both, as may be declared from time to time by the
Board of Directors, acting in its sole discretion, with respect
to such class; provided, however, that dividends and
distributions on shares of a class of the Corporation's Common
Stock shall be paid only out of the lawfully available "assets
belonging to" such class as such phrase is defined in this
Article IV.

5. In the event of the liquidation or dissolution of the
Corporation, stockholders of a class of the Corporation's Common
Stock shall be entitled to receive, as a class, out of the
assets of the Corporation available for distribution to
stockholders, but other than general assets not belonging to any
particular class, the assets belonging to such class, and the
assets so distributable to the holders of any class of the
Corporation's Common Stock shall be distributed among such
holders in proportion to the number of shares of such class of
the Corporation's Common Stock held by them and recorded on the
books of the Corporation. In the event that there are any
general assets not belonging to any particular class of the
Corporation's Common Stock and available for distribution, such
distribution shall be made to the holders of all classes of the
Corporation's Common Stock in proportion to the net asset value
of the respective class of the Corporation's Common Stock
determined as set forth in the Bylaws of the Corporation.

6. Each share of each class of Common Stock of the
Corporation now or hereafter issued shall be subject to
redemption by the stockholders of the Corporation and, subject
to the suspension of such right or redemption as provided in the
Bylaws, each holder of shares of any class of Common Stock of
the Corporation, upon request to the Corporation accompanied by
surrender of the appropriate stock certificate or certificates,
if any, in proper form for transfer and after complying with any
other redemption procedures established by the Board of
Directors, shall be entitled to require the Corporation to
redeem all or any part of the shares of such class of Common
Stock standing in the name of such holder on the books of the
Corporation at the net asset value of such shares. In the event
that no certificates have been issued to the holder, the Board
of Directors may require the submission of a stock power with an
appropriate signature guarantee. All shares of any class of its
Common Stock redeemed by the Corporation shall be deemed to be
cancelled and restored to the status of authorized but unissued
shares. The method of computing the net asset value of shares
of each class of Common Stock of the Corporation for purposes of
the issuance and sale, or redemption, thereof, as well as the
time as of which such net asset value shall be computed, shall
be as set forth in the Bylaws. Payment of the net asset value
of each share of each class of Common Stock of the Corporation
surrendered to it for redemption shall be made by the
Corporation within seven (7) days after surrender of such stock
to the Corporation for such purpose, or within such other
reasonable period as may be determined from time to time by the
Board of Directors. The Board of Directors of the Corporation
may, upon reasonable notice to the stockholders of the
Corporation, impose a fee for the privilege of redeeming shares,
such fee to be not in excess of one percent (1.0%) of the
proceeds of any such redemption. The Board shall have
discretionary authority to rescind the imposition of any such
fee and to reimpose the redemption fee from time to time upon
reasonable notice. Any fee so imposed shall be uniform as to
all stockholders.

7. If, at any time when a request for transfer or
redemption of the shares of any class of Common Stock is
received by the Corporation or its agent, the value (computed as
set forth in the Bylaws) of the shares of such class in a
stockholder's account is less than Five Hundred Dollars
($500.00), after giving effect to such transfer or redemption,
the Corporation may cause the remaining shares of such class in
such stockholder's account to be redeemed in accordance with
such procedures as the Board of Directors shall adopt.

8. Each holder of shares of the Corporation's Common
Stock, irrespective of the class, may, upon request to the
Corporation accompanied by surrender of the appropriate stock
certificate or certificates, if any, in proper form for transfer
and after complying with any other conversion procedures
established by the Board of Directors, convert such shares into
shares of any other class of the Corporation's Common Stock on
the basis of their relative net asset values (determined in
accordance with the Bylaws of the Corporation) less a conversion
charge or discount determined by the Board of Directors. Any
fee so imposed shall be uniform as to all stockholders.

9. No holder of shares of any class of Common Stock of
the Corporation shall, as such holder, have any right to
purchase or subscribe for any shares of any class of the Common
Stock of the Corporation which it may issue or sell (whether out
of the number of shares authorized by these Articles of
Incorporation, or out of any shares of any class of Common Stock
of the Corporation acquired by it after the issue thereof, or
otherwise) other than such right, if any, as the Board of
Directors, in its discretion, may determine.

ARTICLE V

The number of directors constituting the Board of Directors
shall initially be three (3), and the names of the initial directors are
Frederick L. Reynolds, Robert E. Stauder and Lynn M. Sedway. Thereafter,
the number of directors shall be such number as is fixed from time to time
by the Bylaws.

ARTICLE VI

The Corporation reserves the right to enter into, from time to
time, investment advisory agreements providing for the management and
supervision of the investments of the Corporation, the furnishing of
advice to the Corporation with respect to the desirability of investing
in, purchasing or selling securities or other property and the furnishing
of clerical and administrative services to the Corporation. Such
agreement shall contain such other terms, provisions and conditions as the
Board of Directors of the Corporation may deem advisable and as are
permitted by the Investment Company Act of 1940.

The Corporation may designate custodians, transfer agents,
registrars and/or disbursing agents for the stock and assets of the
Corporation and employ and fix the powers, rights, duties,
responsibilities and compensation of each such custodian, transfer agent,
registrar and/or disbursing agent.

ARTICLE VII

The following provisions define, limit and regulate the powers
of the Corporation, the Board of Directors and the stockholders:

A. The Corporation may issue and sell shares of any class of
its own Common Stock in such amounts and on such terms and conditions, for
such purposes and for such amount or kind of consideration now or
hereafter permitted by the laws of the State of Maryland, the Bylaws and
these Articles of Incorporation, as its Board of Directors may determine;
provided, however, that the consideration per share to be received by the
Corporation upon the sale of any shares of any class of its Common Stock
shall not be less than the net asset value per share of such class of
Common Stock outstanding at the time as of which the computation of said
net asset value shall be made.

B. The Board of Directors may, in its sole and absolute
discretion, reject in whole or in part orders for the purchase of shares
of any class of Common Stock and may, in addition, require such orders to
be in such minimum amounts as it shall determine.

C. The holders of any fractional shares of any class Common
Stock shall be entitled to the payment of dividends on such fractional
shares, to receive the net asset value thereof upon redemption, to share
in the assets of the Corporation upon liquidation and to exercise voting
rights with respect thereto.

D. The Board of Directors shall have full power in accordance
with good accounting practice: (a) to determine what receipts of the
Corporation shall constitute income available for payment of dividends and
what receipts shall constitute principal and to make such allocation of
any particular receipt between principal and income as it may deem proper;
and (b) from time to time, in its discretion (i) to determine whether any
and all expenses and other outlays paid or incurred (including any and all
taxes, assessments or governmental charges which the Corporation may be
required to pay or hold under any present or future law of the United
States of America or of any other taxing authority therein) shall be
charged to or paid from principal or income or both, and (ii) to apportion
any and all of said expenses and outlays, including taxes, between
principal and income.

E. The Board of Directors shall have the power to determine
from time to time whether and to what extent and at what time and places
and under what conditions and regulations the books, accounts and
documents of the Corporation or any of them, shall be open to the
inspection of stockholders, except as otherwise provided by applicable
law; and except as so provided, no stockholder shall have any right to
inspect any book, account or document of the Corporation unless authorized
to do so by resolution of the Board of Directors.

ARTICLE VIII

The address of the principal office of the Corporation is Wood
Island, Third Floor, 80 East Sir Francis Drake Boulevard, Larkspur,
California 94939.

ARTICLE IX

The address of the initial registered office is c/o The
Corporation Trust Incorporated, 32 South Street, Baltimore, Maryland
21202.

ARTICLE X

The name of the initial registered agent at such address is The
Corporation Trust, Incorporated, a Maryland corporation.

ARTICLE XI

The name and address of the sole incorporator is:

Name Address

Frederick L. Reynolds c/o Reynolds Capital Management
Wood Island, Third Floor
80 East Sir Francis Drake Blvd.
Larkspur, CA 94939

IN WITNESS WHEREOF, the undersigned incorporator who executed
the foregoing, Articles of Incorporation hereby acknowledges the same to
be his act and further acknowledges that, to the best of his knowledge,
the matters and facts set forth therein are true in all material respects
under the penalties of perjury.

Dated this 21st day of April, 1988.

_______________________________________
Frederick L. Reynolds

<PAGE>

ARTICLES SUPPLEMENTARY
TO
ARTICLES OF INCORPORATION
OF
REYNOLDS BLUE CHIP GROWTH FUND, INC.

Pursuant to Section 2-208 of the Maryland General Corporation
Law (the "MGCL"), Reynolds Blue Chip Growth Fund, Inc., a Maryland
corporation having its principal office in Baltimore, Maryland (the
"Company"), does hereby certify to the State Department of Assessments and
Taxation of Maryland (the "Department") that:

FIRST: The Company is registered as an open-end investment
company under the Investment Company Act of 1940.

SECOND: Pursuant to Section 2-105(a)(9) of the MGCL and Article
IV of the Company's Articles of Incorporation, the Board of Directors of
the Company duly adopted on November 19, 1990 resolutions: (a)
reclassifying five million (5,000,000) shares of the Company's Common
Stock, $.01 par value per share, as "Class B Common Stock," of the par
value of $.01 per share; (b) redesignating five million (5,000,000) shares
of the Company's Common Stock, $.01 par value per share, including any and
all shares of Common Stock issued and outstanding as of the effective date
of these Articles Supplementary, as "Class A Common Stock," of the par
value of $.01 per share; and (c) authorizing and directing the filing of
these Articles Supplementary for record with the Department.

THIRD: The respective preferences, conversion and other rights,
voting powers, restrictions, limitations as to dividends, qualifications,
and terms and conditions of redemption of the Company's Class A Common
Stock, $.01 per value per share, and Class B Common Stock, $.01 par value
per share, are as set forth in Section B of Article IV of the Company's
Articles of Incorporation.

FOURTH: These Articles Supplementary shall become effective as
of the time they are accepted by the Department for record.

IN WITNESS WHEREOF, the Company has caused these presents to be
signed in its name and on its behalf by its President and attested by its
Secretary as of this 19th day of November, 1990.

REYNOLDS BLUE CHIP GROWTH
FUND, INC.
(the "Company")

By: _________________________________
Frederick L. Reynolds, President

Attest: ___________________________
Camille F. Wildes, Secretary

<PAGE>

ARTICLES SUPPLEMENTARY
TO
ARTICLES OF INCORPORATION
OF
REYNOLDS BLUE CHIP GROWTH FUND, INC.

Pursuant to Section 2-208.1 of the Maryland General Corporation
Law (the "MGCL"), Reynolds Blue Chip Growth Fund, Inc., a Maryland
corporation having its principal office in Baltimore, Maryland (the
"Company"), does hereby certify to the State Department of Assessments and
Taxation of Maryland (the "Department") that:

FIRST: The Company is registered as an open-end investment
company under the Investment Company Act of 1940.

SECOND: Pursuant to Section 2-105(c) of the MGCL and Article IV
of the Company's Articles of Incorporation, the Board of Directors of the
Company duly adopted on November 27, 1990 resolutions: (a) increasing the
total number of shares of Class A Common Stock, $.01 par value per share,
that the Company has authority to issue pursuant to Article IV of the
Company's Articles of Incorporation from five million (5,000,000) shares
to twenty million (20,000,000) shares; (b) increasing the total number of
shares of Class B Common Stock, $.01 par value per share, that the Company
has authority to issue pursuant to Article IV of the Company's Articles of
Incorporation from five million (5,000,000) shares to five hundred million
(500,000,000) shares; and (c) authorizing and directing the filing of
these Articles Supplementary for record with the Department.

THIRD: (a) The total number of shares of stock which the
Company was heretofore authorized to issue was ten million (10,000,000)
shares, consisting of (i) five million (5,000,000) shares of a class
designated as "Class A Common Stock," of the par value of $.01 per share,
and (ii) five million (5,000,000) shares of a class designated as "Class B
Common Stock," of the par value of $.01 per share. The aggregate par
value of all of the authorized shares of both classes of stock was one
hundred thousand dollars ($100,000).

(b) The total number of shares of stock which the Company shall
be authorized to issue upon the filing of these Articles Supplementary for
record with the Department is five hundred twenty million (520,000,000)
shares, consisting of (i) twenty million (20,000,000) shares of a class
designated as "Class A Common Stock," of the par value of $.01 per share,
and (ii) five hundred million (500,000,000) shares of a class designated
as "Class B Common Stock," of the par value of $.01 per share. The
aggregate par value of all of the authorized shares of both classes of
stock is five million two hundred thousand dollars ($5,200,000).

FOURTH: These Articles Supplementary shall become effective as
of the time they are accepted by the Department for record.

IN WITNESS WHEREOF, the Company has caused these presents to be
signed in its name and on its behalf by its President and attested by its
Secretary as of this 27th day of November, 1990.

REYNOLDS BLUE CHIP GROWTH
FUND, INC.
(the "Company")

By: _________________________________
Frederick L. Reynolds, President

Attest: ___________________________
Camille F. Wildes, Secretary

<PAGE>

ARTICLES SUPPLEMENTARY
TO
ARTICLES OF INCORPORATION
OF
REYNOLDS BLUE CHIP GROWTH FUND, INC.

FIRST: The Company is registered as an open-end investment
company under the Investment Company Act of 1940.

SECOND: Pursuant to Section 2-105(c) of the MGCL and Article IV
of the Company's Articles of Incorporation, the Board of Directors of the
Company duly adopted on October 4, 1991 resolutions: (a) increasing the
total number of shares of Class A Common Stock, $.01 par value per share,
that the Company has authority to issue pursuant to Article IV of the
Company's Articles of Incorporation from twenty million (20,000,000)
shares to sixty million (60,000,000) shares; and (b) authorizing and
directing the filing of these Articles Supplementary for record with the
Department.

THIRD: (a) The total number of shares of stock which the
Company was heretofore authorized to issue was five hundred twenty million
(520,000,000) shares, consisting of (i) twenty million (20,000,000) shares
of a class designated as "Class A Common Stock," of the par value of $.01
per share, and (ii) five hundred million (500,000,000) shares of a class
designated as "Class B Common Stock," of the par value of $.01 per share.
The aggregate par value of all of the authorized shares of both classes of
stock was five million two hundred thousand dollars ($5,200,000).

(b) The total number of shares of stock which the Company shall
be authorized to issue upon the filing of these Articles Supplementary for
record with the Department is five hundred sixty million (560,000,000)
shares, consisting of (i) sixty million (60,000,000) shares of a class
designated as "Class A Common Stock," of the par value of $.01 per share,
and (ii) five hundred million (500,000,000) shares of a class designated
as "Class B Common Stock," of the par value of $.01 per share. The
aggregate par value of all of the authorized shares of both classes of
stock is five million six hundred thousand dollars ($5,600,000).

FOURTH: These Articles Supplementary shall become effective as
of the time they are accepted by the Department for record.

IN WITNESS WHEREOF, the Company has caused these presents to be
signed in its name and on its behalf by its President and attested by its
Secretary as of this 18th day of November, 1991.

REYNOLDS BLUE CHIP GROWTH
FUND, INC.
(the "Company")

By: _________________________________
Frederick L. Reynolds, President

Attest: ___________________________
Camille F. Wildes, Secretary

<PAGE>

ARTICLES SUPPLEMENTARY
TO
ARTICLES OF INCORPORATION
OF
REYNOLDS BLUE CHIP GROWTH FUND, INC.

FIRST: The Company is registered as an investment company under
the Investment Company Act of 1940.

SECOND: Pursuant to Section 2-105(a)(9) of the MGCL and Article
IV of the Company's Articles of Incorporation, the Board of Directors of
the Company duly adopted on October 4, 1990 resolutions: (a)
reclassifying twenty million (20,000,000) shares of the Company's
authorized but unissued shares of Class A Common Stock, $.01 par value per
share, as "Class C Common Stock," of the par value of $.01 per share; (b)
reclassifying twenty million (20,000,000) shares of the Company's
authorized but unissued shares of Class A Common Stock, $.01 par value per
share, as "Class D Common Stock," of the par value of $.01 per share; and
(c) authorizing and directing the filing of these Articles Supplementary
for record with the Department.

THIRD: The respective preferences, conversion and other rights,
voting powers, restrictions, limitations as to dividends, qualifications,
and terms and conditions of redemption of the Company's Class C Common
Stock, $.01 par value per share, and Class D Common Stock, $.01 par value
per share, are as set forth in Section B of Article IV of the Company's
Articles of Incorporation.

FOURTH: These Articles Supplementary shall become effective as
of the time they are accepted by the Department for record.

IN WITNESS WHEREOF, the Company has caused these presents to be
signed in its name and on its behalf by its President and attested by its
Secretary as of this 21st day of November, 1991.

REYNOLDS BLUE CHIP GROWTH
FUND, INC.
(the "Company")

By: _________________________________
Frederick L. Reynolds, President

Attest: ___________________________
Camille F. Wildes, Secretary

EXHIBIT 2

BYLAWS

REYNOLDS BLUE CHIP GROWTH FUND, INC.
(as amended)

ARTICLE I

STOCKHOLDERS' MEETINGS

Section 1. Place of Meetings. All meetings of stockholders shall be
held at such location as the Board of Directors shall direct.

Section 2. Annual Meeting.

(a) The annual meeting of stockholders for the election of
directors and the transaction of such other business as may properly come
before it, if the annual meeting shall be held, shall be held during the
month of _________ of each year (or during such other month as the Board
of Directors shall determine), commencing in 1989, at such date and time
as shall be fixed by the Board of Directors and stated in the notice of
such meeting. Any business of the corporation may be transacted at the
annual meeting without being specifically designated in the notice, except
such business as is specifically required by statute to be stated in the
notice.

(b) The corporation shall not be required to hold an annual
meeting in any year in which none of the following is required to be acted
on by stockholders under the Investment Company Act of 1940:

(i) Election of directors;

(ii) Approval of the corporation's investment advisory contract;

(iii) Ratification of the selection of the corporation's
independent public accountants; and

(iv) Approval of the corporation's distribution agreement with
respect to any particular class of series.

Section 3. Special Meeting. Special meetings of the stockholders may
be called by the board of directors, the president, any vice president, or
the secretary, and shall be called by the secretary upon the written
request of the holders of shares entitled to not less than ten
percent (10%) of all the votes entitled to be cast at such meeting;
provided that such holders prepay the costs to the corporation of
preparing and mailing the notice of the meeting. The business transacted
at any special meeting of stockholders shall be limited to the purposes
stated in the notice.

Section 4. Notice of Meeting. Not less than ten (10) days nor more
than ninety (90) days before the date of every stockholders' meeting, the
secretary shall give to each stockholder entitled to vote at such meeting
and to each other stockholder entitled to notice of such meeting under
applicable law, written or printed notice stating the time and place of
the meeting, and in the case of a special meeting (or where required by
applicable law) the purpose or purposes for which the meeting is called,
either by mail, by presenting it to him personally or by leaving it at his
residence or usual place of business. If mailed, such notice shall be
deemed to be given when deposited in the United States mail addressed to
the stockholder at his post office address as it appears on the records of
the corporation, with postage thereon prepaid.

Section 5. Quorum. At any meeting of stockholders the presence in
person or by proxy of stockholders entitled to cast a majority of the
votes thereat shall constitute a quorum; but this section shall not affect
any requirement under statute or under the charter for the vote necessary
for the adoption of any measure. If at any meeting a quorum is not
present or represented, the chairman of the meeting or the holders of a
majority of the stock present or represented may adjourn the meeting from
time to time, without notice other than announcement at the meeting, until
a quorum is present or represented. At such adjourned meeting at which a
quorum is present or represented, any business may be transacted which
might have been transacted at the meeting as originally called.

Section 6. Stock Entitled to Vote. Each issued share of each class of
stock shall be entitled to vote at any meeting of stockholders except
shares owned, other than in a fiduciary capacity, by the corporation or by
another corporation in which the corporation owns shares entitled to cast
a majority of all the votes entitled to be cast by all shares outstanding
and entitled to vote of such corporation.

Section 7. Voting. Each outstanding share of each class of stock
entitled to vote at a meeting of stockholders shall be entitled to one
vote on each matter submitted to a vote. In all elections for directors
every stockholder shall have the right to vote the shares of each class
owned of record by him for as many persons as there are directors to be
elected, but shall not be entitled to exercise any right of cumulative
voting. A stockholder may vote the shares owned of record by him either
in person or by proxy executed in writing by the stockholder or by his
authorized attorney-in-fact. No proxy shall be valid after eleven (11)
months from its date unless otherwise provided in the proxy. At all
meetings of stockholders, unless the voting is conducted by inspectors,
all questions relating to the qualification of voters, the validity of
proxies and the acceptance or rejection of votes shall be decided by the
chairman of the meeting. A majority of the votes cast at a meeting of
stockholders, duly called and at which a quorum is present, shall be
sufficient to take or authorize any action which may properly come before
the meeting, unless a greater number is required by statute or by the
charter.

Section 8. Informal Action. Any action required or permitted to be
taken at any meeting of stockholders may be taken without a meeting, if a
consent in writing, setting forth such action, is signed by all the
stockholders entitled to vote on the subject matter thereof and such
consent is filed with the records of the corporation.

ARTICLE II

DIRECTORS

Section 1. Number. The number of directors of the corporation shall
be three (3). By vote of a majority of the entire board of directors, the
number of directors fixed by the charter or by these bylaws may be
increased or decreased from time to time to not more than fifteen nor less
than three, but the tenure of office of a director shall not be affected
by any decrease in the number of directors so made by the board.

Section 2. Election and Qualification. Until the first annual meeting
of stockholders and until successors are duly elected and qualify, the
board of directors shall consist of the persons named as such in the
charter. At the first annual meeting of stockholders, the stockholders
shall elect directors to hold office until their successors are elected
and qualify. A director need not be a stockholder of the corporation, but
must be eligible to serve as a director of a registered investment company
under the Investment Company Act of 1940. All but one (1) of the directors
may be interested persons of the investment adviser of the corporation, as
defined in the Investment Company Act of 1940, or officers or employees of
the corporation.

Section 3. Vacancies. Any vacancy on the board of directors occurring
between stockholders' meetings called for the purpose of electing
directors may be filled, if immediately after filling any such vacancy at
least two-thirds of the directors then holding office shall have been
elected to such office at an annual or special meeting of stockholders, in
the following manner: (i) for a vacancy occurring other than by reason of
an increase in directors, by a majority of the remaining members of the
board, although such majority is less than a quorum; and (ii) for a
vacancy occurring by reason of an increase in the number of directors, by
action of a majority of the entire board. A director elected by the board
to fill a vacancy shall be elected to hold office until the next annual
meeting of stockholders or until his successor is elected and qualifies.
If by reason of the death, disqualification or bona fide resignation of
any director or directors, there is no member of the board of directors
who is not an interested person of the investment adviser of the
corporation, as defined in the Investment Company Act of 1940, such
vacancy shall be filled within thirty (30) days if it may be filled by the
board, or within sixty (60) days if a vote of stockholders is required to
fill such vacancy; provided that such vacancy may be filled within such
longer period as the Securities and Exchange Commission may prescribe by
rules and regulations, upon its own motion or by order upon application.
In the event that at any time less than a majority of the directors were
elected by the stockholders, the board or proper officer shall forthwith
cause to be held as promptly as possible, and in any event within sixty
(60) days, a meeting of the stockholders for the purpose of electing
directors to fill any existing vacancies in the board, unless the
Securities and Exchange Commission shall by order extend such period.

Section 4. Powers. The business and affairs of the corporation shall
be managed under the direction of the board of directors, which may
exercise all of the powers of the corporation, except such as are by law
or by the charter or by these bylaws conferred upon or reserved to the
stockholders.

Section 5. Removal. At any meeting of stockholders, duly called and
at which a quorum is present, the stockholders may, by the affirmative
vote of the holders of a majority of the votes entitled to be cast
thereon, remove any director or directors from office and may elect a
successor or successors to fill any resulting vacancies for the unexpired
terms of removed directors.

Section 6. Place of Meetings. Meetings of the board of directors,
regular or special, may be held at any place in or out of the State of
Maryland as the board may from time to time determine or as may be
specified in the notice of meeting.

Section 7. First Meeting of Newly Elected Board. The first meeting of
each newly elected board of directors shall be held without notice
immediately after and at the same general place as the annual meeting of
the stockholders, for the purpose of organizing the board, electing
officers and transacting any other business that may properly come before
the meeting.

Section 8. Regular Meetings. Regular meetings of the board of
directors may be held without notice at such time and place as shall from
time to time be determined by the board.

Section 9. Special Meetings. Special meetings of the board of
directors may be called at any time either by the board, the president, a
vice president or a majority of the directors in writing with or without a
meeting. Notice of special meetings shall either be mailed by the
secretary to each director at least three (3) days before the meeting or
shall be given personally or telegraphed to each director at least one (1)
day before the meeting. Such notice shall set forth the time and place of
such meeting but need not, unless otherwise required by law, state the
purposes of the meeting.

Section 10. Quorum and Vote Required for Action. At all meetings of
the board of directors a majority of the entire board shall constitute a
quorum for the transaction of business, and the action of a majority of
the directors present at any meetings at which a quorum is present shall
be the action of the board of directors unless the concurrence of a
greater proportion is required for such action by statute, the articles of
incorporation or these bylaws. If at any meeting a quorum is not present,
a majority of the directors present may adjourn the meeting from time to
time, without notice other than announcement at the meeting, until a
quorum is present. Members of the board of directors or a committee of
the board may participate in a meeting by means of a conference telephone
or similar communications equipment if all persons participating in the
meeting can hear each other at the same time. Participation in a meeting
by these means constitutes presence in person at the meeting.

Section 11. Executive and Other Committees. The board of directors may
appoint from among its members an executive and other committees composed
of two (2) or more directors. The board may delegate to such committees in
the intervals between meetings of the board any of the powers of the board
to manage the business and affairs of the corporation, except the power
to: (i) declare dividends or distributions upon the stock of the
corporation; (ii) issue stock of the corporation; (iii) recommend to the
stockholders any action which requires stockholder approval; (iv) amend
the bylaws; (v) approve any merger or share exchange which does not
require stockholder approval; or (vi) take any action required by the
Investment Company Act of 1940 to be taken by the independent directors of
the corporation or by the full board of directors.

Section 12. Informal Action. Any action required or permitted to be
taken at any meeting of the board of directors may be taken without a
meeting, if a written consent to such action is signed by all members of
the board and such written consent is filed with the minutes of
proceedings of the board.

ARTICLE III

OFFICERS AND EMPLOYEES

Section 1. Election and Qualification. At the first meeting of each
newly elected board of directors there shall be elected a president, one
or more vice presidents, a secretary and a treasurer. The board may also
elect one or more assistant secretaries and assistant treasurers. No
officer need be a director. Any two or more offices, except the offices
of president and vice president, may be held by the same person but no
officer shall execute, acknowledge or verify any instrument in more than
one capacity, if such instrument is required by law, charter or these
bylaws to be executed, acknowledged or verified by two or more officers.
Each officer must be eligible to serve as an officer of a registered
investment company under the Investment Company Act of 1940. Nothing
herein shall preclude the employment of other employees or agents by the
corporation from time to time without action by the board.

Section 2. Term, Removal and Vacancies. The officers shall be elected
to serve until the next first meeting of a newly elected board of
directors and until their successors are elected and qualify. Any officer
may be removed by the board, with or without cause, whenever in its
judgment the best interests of the corporation will be served thereby, but
such removal shall be without prejudice to the contractual rights, if any,
of the person so removed. A vacancy in any office shall be filled by the
board for the unexpired term.

Section 3. Bonding. Each officer and employee of the corporation who
singly or jointly with others has access to securities or funds of the
corporation, either directly or through authority to draw upon such funds,
or to direct generally the disposition of such securities shall be bonded
against larceny and embezzlement by a reputable fidelity insurance company
authorized to do business in California and Wisconsin. Each such bond,
which may be in the form of an individual bond, a schedule or blanket bond
covering the corporation's officers and employees and the officers and
employees of the investment adviser to the corporation and other
corporations to which said investment adviser also acts as investment
adviser, shall be in such form and for such amount (determined at least
annually) as the board of directors shall determine in compliance with the
requirements of Section 17(g) of the Investment Company Act of 1940, as
amended from time to time, and the rules, regulations or orders of the
Securities and Exchange Commission thereunder.

Section 4. President. The president shall be the principal executive
officer of the corporation. He shall preside at all meetings of the
stockholders and directors, have general and active management of the
business of the corporation, see that all orders and resolutions of the
board of directors are carried into effect, and execute in the name of the
corporation all authorized instruments of the corporation, except where
the signing shall be expressly delegated by the board to some other
officer or agent of the corporation.

Section 5. Vice Presidents. The vice president, or if there be more
than one, the vice presidents in the order determined by the board of
directors, shall, in the absence or disability of the president, perform
the duties and exercise the powers of the president, and shall have such
other duties and powers as the board may from time to time prescribe or
the president delegate.

Section 6. Secretary and Assistant Secretaries. The secretary shall
give notice of, attend and record the minutes of meetings of stockholders
and directors, keep the corporate seal and, when authorized by the board,
affix the same to any instrument requiring it, attesting to the same by
his signature, and shall have such further duties and powers as are
incident to his office or as the board may from time to time prescribe.
The assistant secretary, if any, or, if there be more than one, the
assistant secretaries in the order determined by the board, shall in the
absence or disability of the secretary, perform the duties and exercise
the powers of the secretary, and shall have such other duties and powers
as the board may from time to time prescribe or the secretary delegate.

Section 7. Treasurer and Assistant Treasurers. The treasurer shall be
the principal financial and accounting officer of the corporation. He
shall be responsible for the custody and supervision of the corporation's
books of account and subsidiary accounting records, and shall have such
further duties and powers as are incident to his office or as the board of
directors may from time to time prescribe. The assistant treasurer, if
any, or, if there be more than one, the assistant treasurers in the order
determined by the board, shall in the absence or disability of the
treasurer, perform all duties and exercise the powers of the treasurer,
and shall have such other duties and powers as the board may from time to
time prescribe or the treasurer delegate.

ARTICLE IV

RESTRICTIONS ON COMPENSATION
TRANSACTIONS AND INVESTMENTS

Section 1. Salary and Expenses. Directors and executive officers as
such shall not receive any salary for their services or reimbursement for
expenses from the corporation; provided that the corporation may pay fees
in such amounts and at such times as the board of directors shall
determine to directors who are not interested persons of the corporation
for attendance at meetings of the board of directors. Clerical employees
shall receive compensation for their services from the corporation in such
amounts as are determined by the board of directors.

Section 2. Compensation and Profit from Purchase and Sales. No
affiliated person of the corporation, as defined in the Investment Company
Act of 1940, or affiliated person of such person, shall, except as
permitted by Section 17(e) of the Act, or the rules, regulations or orders
of the Securities and Exchange Commission thereunder, (i) acting as agent,
accept from any source any compensation for the purchase or sale of any
property or securities to or for the corporation or any controlled company
of the corporation, as defined in such Act, or (ii) acting as a broker, in
connection with the sale of securities to or by the corporation or any
controlled company of the corporation, receive from any source a
commission, fee or other remuneration for effecting such transaction. The
investment adviser to the corporation shall not profit directly or
indirectly from sales of securities to or from the corporation.

Section 3. Transactions with Affiliated Person. No affiliated person
of the corporation, as defined in the Investment Company Act of 1940, or
affiliated person of such person shall knowingly (i) sell any security or
other property to the corporation or to any company controlled by the
corporation as defined in the Act, except shares of stock of the
corporation or securities of which such person is the issuer and which are
part of a general offering to the holders of a class of its securities,
(ii) purchase from the corporation or any such controlled company any
security or property except shares of stock of the corporation or
securities of which such person is the issuer, (iii) borrow money or other
property from the corporation or any such controlled company, or (iv)
acting as a principal effect any transaction in which the corporation or
controlled company is a joint or joint and several participant with such
person; provided, however, that this section shall not apply to any
transaction permitted by Sections 17(a), (b), (c), (d) or 21(b) of the
Investment Company Act of 1940 or the rules, regulations or orders of the
Securities and Exchange Commission thereunder, and shall not prohibit the
joint participation by the corporation and an affiliate in a fidelity bond
arrangement.

Section 4. Investment Adviser. The corporation shall employ only one
investment adviser, the employment of which shall be pursuant to a written
agreement in accordance with Section 15 of the Investment Company Act of
1940, as amended from time to time.

ARTICLE V

STOCK CERTIFICATES AND TRANSFER BOOKS

Section 1. Uncertificated Shares. In accordance with Section 2-210(c)
of the Maryland General Corporation Law, or any successor provision
thereto, any and all shares of capital stock of the corporation now or
hereafter authorized for issuance shall be uncertificated shares. At the
time of issue or transfer of such uncertificated shares, the corporation
shall, so long as required by Maryland law, send the acquiring stockholder
a written statement, in such form as the board of directors may approve
from time to time, containing the information otherwise required on stock
certificates by Section 2-211 of the Maryland General Corporation Law, or
any successor provision thereto, including without limitation: (1) the
name of the corporation; (2) the name of the acquiring stockholder and the
class and number of shares issued or transferred to such stockholder;
(3) a full statement or summary of the designations and any preferences,
conversion and other rights, voting powers, restrictions, limitations as
to dividends, qualifications and terms of each class of stock of the
corporation, or, alternatively, a statement that the corporation will
furnish such information to the stockholder on request and without charge;
and (4) with respect to any shares which are restricted or limited as to
transferability, a full statement of such restriction or limitation or a
statement that the corporation will furnish such information to the
stockholder on request and without charge.

Section 2. Stock Ledger. The corporation shall maintain at its office
in Larkspur, California, or at the office of its principal transfer agent,
if any, an original or duplicate stock ledger containing the names and
addresses of all stockholders and the number of shares of each class of
stock held by each stockholder.

Section 3. Registered Stockholders. The corporation shall be entitled
to recognize the exclusive right of a person registered on its books as
such, as the owner of shares for all purposes, and shall not be bound to
recognize any equitable or other claim to or interest in such shares on
the part of any other person, whether or not it shall have express or
other notice thereof, except as other provided by the laws of Maryland.

Section 4. Transfer Agent and Registrar. The corporation may maintain
one or more transfer offices or agencies, each in charge of a transfer
agent designated by the board of directors, where the shares of each class
of stock of the corporation shall be transferable. The corporation may
also maintain one or more registry offices, each in charge of a registrar
designated by the board, where the shares of such classes of stock shall
be registered.

Section 5. Fixing of Record Dates and Closing of Transfer Books. The
board of directors may fix, in advance, a date as the record date for the
purpose of determining stockholders entitled to notice of, or to vote at,
any meeting of stockholders, or stockholders entitled to receive payment
of any dividend or the allotment of any rights, or in order to make a
determination of stockholders for any other proper purpose. Such date, in
any case, shall be not more than ninety (90) days, and in case of a
meeting of stockholders not less than ten (10) days, prior to the date on
which the particular action requiring such determination of stockholders
is to be taken. In lieu of fixing a record date, the board may provide
that the stock transfer books shall be closed for a stated period but not
to exceed, in any case, twenty (20) days. If the stock transfer books are
closed or a record date is fixed for the purpose of determining
stockholders entitled to vote at a meeting of stockholders, such books
shall be closed for at least ten (10) days immediately preceding such
action.

ARTICLE VI

ACCOUNTS, REPORTS, CUSTODIAN AND INVESTMENT ADVISER

Section 1. Inspection of Books. The board of directors shall
determine from time to time whether, and, if allowed, when and under what
conditions and regulations the accounts and books of the corporation
(except such as may by statute be specifically open to inspection) or any
of them, shall be open to the inspection of the stockholders, and the
stockholders' rights in this respect are and shall be limited accordingly.

Section 2. Reliance on Records. Each director and officer shall, in
the performance of his duties, be fully protected in relying in good faith
on the books of account or reports made to the corporation by any of its
officials or by an independent public accountant.

Section 3. Preparation and Maintenance of Accounts, Records and
Statements. The president, a vice president or the treasurer shall
prepare or cause to be prepared annually, a full and correct statement of
the affairs of the corporation, including a balance sheet or statement of
financial condition and a financial statement of operations for the
preceding fiscal year, which shall be submitted at the annual meeting of
the stockholders and filed within twenty (20) days thereafter at the
principal office of the corporation in the State of California. The
proper officers of the corporation shall also prepare, maintain and
preserve or cause to be prepared, maintained and preserved the accounts,
books and other documents required by Section 2-111 of the Maryland
General Corporation Law and Section 31 of the Investment Company Act of
1940 and shall prepare and file or cause to be prepared and filed the
reports required by Section 30 of such Act. No financial statement shall
be filed with the Securities and Exchange Commission unless the officers
or employees who prepared or participated in the preparation of such
financial statement have been specifically designated for such purpose by
the board of directors.

Section 4. Auditors. No independent public accountant shall be
retained or employed by the corporation to examine, certify or report on
its financial statements for any fiscal year unless such selection: (i)
shall have been approved by a majority of the entire board of directors
within thirty (30) days before or after the beginning of such fiscal year
or before the annual ratification by the stockholders; (ii) shall have
been ratified by the stockholders, provided that any vacancy occurring
between such annual ratification due to the death or resignation of such
accountant may be filled by the board of directors; and (iii) shall
otherwise meet the requirements of Section 32 of the Investment Company
Act of 1940.

Section 5. Custodianship. All securities owned by the corporation and
all cash, including, without limiting the generality of the foregoing, the
proceeds from sales of securities owned by the corporation and from the
issuance of shares of the capital stock of the corporation, payments of
principal upon securities owned by the corporation, and distributions in
respect of securities owned by the corporation which at the time of
payment are represented by the distributing corporation to be capital
distributions, shall be held by a custodian or custodians which shall be a
bank, as that term is defined in the Investment Company Act of 1940,
having capital, surplus and undivided profits aggregating not less than
$2,000,000. The terms of custody of such securities and cash shall
include provisions to the effect that the custodian shall deliver
securities owned by the corporation only (a) upon sales of such securities
for the account of the corporation and receipt by the custodian of payment
therefor, (b) when such securities are called, redeemed or retired or
otherwise become payable, (c) for examination by any broker selling any
such securities in accordance with "street delivery" custom, (d) in
exchange for or upon conversion into other securities alone or other
securities and cash whether pursuant to any plan of merger, consolidation,
reorganization, recapitalization or readjustment, or otherwise, (e) upon
conversion of such securities pursuant to their terms into other
securities, (f) upon exercise of subscription, purchase or other similar
rights represented by such securities, (g) for the purpose of exchanging
interim receipts or temporary securities for definitive securities, (h)
for the purpose of redeeming in kind shares of the capital stock of the
corporation, or (i) for other proper corporate purposes. Such terms of
custody shall also include provisions to the effect that the custodian
shall hold the securities and funds of the corporation in a separate
account or accounts and shall have sole power to release and deliver any
such securities and draw upon any such account, any of the securities or
funds of the corporation only on receipt by such custodian of written
instruction from one or more persons authorized by the board of directors
to give such instructions on behalf of the corporation, and that the
custodian shall deliver cash of the corporation required by this Section 5
to be deposited with the custodian only upon the purchase of securities
for the portfolio of the corporation and the delivery of such securities
to the custodian, for the purchase or redemption of shares of the capital
stock of the corporation, for the payment of interest, dividends, taxes,
management or supervisory fees or operating expenses, for payments in
connection with the conversion, exchange or surrender of securities owned
by the corporation, or for other proper corporate purposes. Upon the
resignation or inability to serve of any such custodian the corporation
shall (a) use its best efforts to obtain a successor custodian, (b)
require the cash and securities of the corporation held by the custodian
to be delivered directly to the successor custodian, and (c) in the event
that no successor custodian can be found, submit to the stockholders of
the corporation, before permitting delivery of such cash and securities to
anyone other than a successor custodian, the question whether the
corporation shall be dissolved or shall function without a custodian;
provided, however, that nothing herein contained shall prevent the
termination of any agreement between the corporation and any such
custodian by the affirmative vote of the holders of a majority of all the
shares of the capital stock of the corporation at the time outstanding and
entitled to vote. Upon its resignation or inability to serve, the
custodian may deliver any assets of the corporation held by it to a
qualified bank or trust company selected by it, such assets to be held
subject to the terms of custody which governed such retiring custodian,
pending action by the corporation as set forth in this Section 5.

Section 6. Termination of Custodian Agreement. Any employment
agreement with a custodian shall be terminable on not more than sixty (60)
days' notice in writing by the board of directors or the custodian and
upon any such termination the custodian shall turn over only to the
succeeding custodian designated by the board of directors all funds,
securities and property and documents of the corporation in its
possession.

Section 7. Checks and Requisitions. Except as otherwise authorized by
the board of directors, all checks and drafts for the payment of money
shall be signed in the name of the corporation by a custodian, and all
requisitions or orders for the payment of money by a custodian or for the
issue of checks and drafts therefore, all promissory notes, all
assignments of stock or securities standing in the name of the
corporation, and all requisitions or orders for the assignment of stock or
securities standing in the name of a custodian or its nominee, or for the
execution of powers to transfer the same, shall be signed in the name of
the corporation by not less than two persons (who shall be among those
persons, not in excess of five, designated for this purpose by the board
of directors) at least one of which shall be an officer. Promissory
notes, checks or drafts payable to the corporation may be endorsed only to
the order of a custodian or its nominee by the treasurer or president or
by such other person or persons as shall be thereto authorized by the
board of directors.

Section 8. Investment Advisory Contract. Any investment advisory
contract in effect after the first annual meeting of stockholders of the
corporation, to which the corporation is or shall become a party, whereby,
subject to the control of the board of directors of the corporation, the
investment portfolio of the corporation shall be managed or supervised by
the other party to such contract, shall be effective and binding only upon
the affirmative vote of a majority of the outstanding voting securities of
the corporation (as defined in the Investment Company Act of 1940), and
the investment advisory contract currently in effect shall be submitted to
the stockholders of the corporation for ratification by the affirmative
vote of such majority. Any investment advisory contract to which the
corporation shall be a party whereby, subject to the control of the board
of directors of the corporation, the investment portfolio of the
corporation shall be managed or supervised by the other party to such
contract, shall provide, among other things, that such contract cannot be
assigned. Such investment advisory contract shall prohibit the other
party thereto from making short sales of shares of capital stock of the
corporation; and such investment advisory contract shall prohibit such
other party from purchasing shares otherwise than for investment, and
shall require such other party to advise the corporation of any sales of
shares of the capital stock of the corporation made by such person or
organization less than two months after the date of any purchase by him or
it of shares of the capital stock of the corporation. Unless any such
contract shall expressly otherwise provide, any provisions therein for the
termination thereof by action of the board of directors of the corporation
shall be construed to require that such termination can be accomplished
only upon the vote of a majority of the entire board.

ARTICLE VII

GENERAL PROVISIONS

Section 1. Offices. The registered office of the corporation in the
State of Maryland shall be in the City of Baltimore. The corporation
shall also have an office in Larkspur, California. The corporation may
also have offices at such other places within and without the State of
Maryland as the board of directors may from time to time determine. Except
as otherwise required by statute, the books and records of the corporation
may be kept outside the State of Maryland.

Section 2. Seal. The corporate seal shall have inscribed thereon the
name of the corporation, and the words "Corporate Seal" and "Maryland".
The seal may be used by causing it or a facsimile thereof to be impressed,
affixed, reproduced or otherwise.

Section 3. Fiscal Year. The fiscal year of the corporation shall be
fixed by the board of directors.

Section 4. Notice of Waiver of Notice. Whenever any notice of the
time, place or purpose of any meeting of stockholders or directors is
required to be given under the statute, the charter or these bylaws, a
waiver thereof in writing, signed by the person or persons entitled to
such notice and filed with the records of the meeting, either before or
after the holding thereof, or actual attendance at the meeting of
stockholders in person or by proxy or at the meeting of directors in
person, shall be deemed equivalent to the giving of such notice to such
person. No notice need be given to any person with whom communication is
made unlawful by any law of the United States or any rule, regulation,
proclamation or executive order issued by any such law.

Section 5. Voting of Stock. Unless otherwise ordered by the board of
directors, the president shall have full power and authority, in the name
and on behalf of the corporation, (i) to attend, act and vote at any
meeting of stockholders of any company in which the corporation may own
shares of stock of record, beneficially (as the proxy or attorney-in-fact
of the record holder) or of record and beneficially, and (ii) to give
voting directions to the record stockholder of any such stock beneficially
owned. At any such meeting, he shall possess and may exercise any and all
rights and powers incident to the ownership of such shares which, as the
holder or beneficial owner and proxy of the holder thereof, the
corporation might possess and exercise if personally present, and may
delegate such power and authority to any officer, agent or employee of the
corporation.

Section 6. Dividends. Dividends upon any class of stock of the
corporation, subject to the provisions of the charter, if any, may be
declared by the board of directors in any lawful manner. The source of
each dividend payment shall be disclosed to the stockholders receiving
such dividend, to the extent required by the laws of the State of Maryland
and by Section 19 of the Investment Company Act of 1940 and the rules and
regulations of the Securities and Exchange Commission thereunder.

Section 7. Indemnification.

D. Expenses, including attorneys' fees, incurred in the preparation
of and/or presentation of the defense of a civil or criminal action, suit
or proceeding may be paid by the corporation in advance of the final
disposition of such action, suit or proceeding as authorized in the manner
provided in Section 2-418(F) of the Maryland General Corporation Law upon
receipt of: (i) an undertaking by or on behalf of the corporate
representative to repay such amount unless it shall ultimately be
determined that he or she is entitled to be indemnified by the corporation
as authorized in this bylaw; and (ii) a written affirmation by the
corporate representative of the corporate representative's good faith
belief that the standard of conduct necessary for indemnification by the
corporation has been met.

Section 8. Amendments.

A. These bylaws may be altered, amended or repealed and new
bylaws may be adopted by the stockholders by affirmative vote of not less
than a majority of the shares of all classes of stock present or
represented at any annual or special meeting of the stockholders at which
a quorum is in attendance.

B. These bylaws may also be altered, amended or repealed and
new bylaws may be adopted by the Board of Directors by affirmative vote of
a majority of the number of directors present at any meeting at which a
quorum is in attendance; but no bylaw adopted by the stockholders shall be
amended or repealed by the Board of Directors if the bylaws so adopted so
provides.

C. Any action taken or authorized by the stockholders or by
the Board of Directors, which would be inconsistent with the bylaws then
in effect but is taken or authorized by affirmative vote of not less than
the number of shares or the number of directors required to amend the
bylaws so that the bylaws would be consistent with such action, shall be
given the same effect as though the bylaws had been temporarily amended or
suspended so far, but only so far, as was necessary to permit the specific
action so taken or authorized.

Section 9. Reports to Stockholders. The books of account of the
corporation shall be examined by an independent firm of public accountants
at the close of each annual fiscal period of the corporation and at such
other times, if any, as may be directed by the Board of Directors of the
corporation. A report to the stockholders based upon each such
examination shall be mailed to each stockholder of the corporation of
record on such date with respect to each report as may be determined by
the Board of Directors at his address as the same appears on the books of
the corporation. Each such report shall include the financial information
required to be transmitted to stockholders by rules or regulations of the
Securities and Exchange Commission under the Investment Company Act of
1940 and shall be in such form as the Board of Directors shall determine
pursuant to rules and regulations of the Securities and Exchange
Commission.

Section 10. Information to Accompany Dividends. At the time of the
payment by the corporation of any dividend to the holders of any class of
stock of the corporation, each stockholder to whom such dividend is paid
shall be notified of the account or accounts from which it is paid and the
amount thereof paid from each such account.

ARTICLE VIII

SALES, REDEMPTION AND
NET ASSET VALUE OF SHARES

Section 1. Sale of Shares. Shares of any class of Common Stock of the
corporation shall be sold by it for the net asset value per share of such
class of Common Stock outstanding at the time as of which the computation
of said net asset value shall be made as hereinafter provided in these
bylaws.

Section 2. Periodic Investment and Dividend Reinvestment Plans. The
corporation acting by and through the Board of Directors shall have the
right to adopt and to offer to the holders of each class of stock and to
the public a periodic investment plan and an automatic reinvestment of
dividend plan subject to the limitations and restrictions imposed thereon
and as set forth in the Investment Company Act of 1940 and any rule or
regulation adopted or issued thereunder.

Section 3. Shares Issued for Securities. In the case of shares of any
class of stock of the corporation issued in whole or in part in exchange
for securities, there may, at the discretion of the board of directors of
the corporation, be included in the value of said securities, for the
purpose of determining the number of shares of such class stock of the
corporation issuable in exchange therefor, the amount, if any, of
brokerage commissions (not exceeding an amount equal to the rates payable
in connection with the purchase of comparable securities on the New York
Stock Exchange) or other similar costs of acquisition of such securities
paid by the holder of said securities in acquiring the same.

Section 4. Redemption of Shares. Each share of each class of Common
Stock of the corporation now or hereafter issued shall be subject to
redemption, as provided in the Articles of Incorporation of the
corporation.

Section 5. Suspension of Right of Redemption. The Board of Directors
of the corporation may suspend the right of the holders of any class of
Common Stock of the corporation to require the corporation to redeem
shares of such class:

(1) for any period (a) during which the New York Stock
Exchange is closed other than customary weekend and holiday
closings, or (b) during which trading on the New York Stock
Exchange is restricted;

(2) for any period during which an emergency, as defined
by rules of the Securities and Exchange Commission or any
successor thereto, exists as a result of which (a) disposal by
the corporation of securities owned by it is not reasonably
practicable, or (b) it is not reasonably practicable for the
corporation fairly to determine the value of its net assets; or

(3) for such other periods as the Securities and Exchange
Commission or any successor thereto may by order permit for the
protection of security holders of the corporation.

Section 6. Computation of Net Asset Value. For purposes of these
bylaws, the following rules shall apply:

A. The net asset value of each share of each class of
Common Stock of the corporation shall be determined at such time
or times as may be disclosed in the then currently effective
Prospectus relating to such class of Common Stock of this
corporation. The Board of Directors may also, from time to time
by resolution, designate a time or times intermediate of the
opening and closing of trading on the New York Stock Exchange on
each day that said Exchange is open for trading as of which the
net asset value of each share of each class of Common Stock of
the corporation shall be determined or estimated.

Any determination or estimation of net asset value as
provided in this subparagraph A shall be effective at the time
as of which such determination or estimation is made.

The net asset value of each share of each class of Common
Stock of the corporation for purposes of the issue of such class
of Common stock shall be the net asset value which becomes
effective as provided in this Subparagraph A, next succeeding
receipt of the subscription to such share of such class Common
Stock. The net asset value of each share of each class of
Common Stock of the corporation tendered for redemption shall be
the net asset value which becomes effective as provided in this
Subparagraph A, next succeeding the tender of such share of such
class of Common stock for redemption.

B. The net asset value of each share of each class of
Common Stock of the corporation, as of the close of business on
any day, shall be the quotient obtained by dividing the value at
such close of the net assets belonging to such class (meaning
the assets belonging to such class and any other assets
allocated to such class less the liabilities belonging to such
class and any other liabilities allocated to such class
excluding capital and suplus) of the corporation by the total
number of shares of such class outstanding at such close.

(i) The assets belonging to any class of Common
Stock shall be that portion of the total assets of the
corporation as determined in accordance with the
provisions Article IV of the Articles of Incorporation of
the corporation. The assets of the corporation shall be
deemed to include (a) all cash on hand, on deposit, or on
call, (b) all bills and notes and accounts receivable,
(c) all shares of stock and subscription rights and other
securities owned or contracted for by the corporation,
other than its own common stock, (d) all stock and cash
dividends and cash distributions, to be received by the
corporation, and not yet received by it but declared to
stockholders of record on a date on or before the date as
of which the net asset value is being determined, (e) all
interest accrued on any interest-bearing securities owned
by the corporation, and (f) all other property of every
kind and nature including prepaid expenses; the value of
such assets to be determined as follows: In determining
the value of any assets of the corporation for the
purpose of obtaining the net asset value of each share of
a particular class of Common Stock, each security listed
on an exchange or quoted on the NASDAQ National Market
System will generally be valued on the basis of the
closing sale price thereof on the business day as of
which such value is being determined. If there be no
sale on such day, then the security shall be valued on
the basis of the closing bid price on such day. All
other securities for which over-the-counter market
quotations are readily available will generally be valued
on the basis of the last current bid price. When market
quotations are not readily available, or when restricted
securities are being valued, such securities are valued
at fair value as determined in good faith by the Board of
Directors. All other assets of the corporation shall be
valued at fair value as determined in good faith by the
Board of Directors, except that debt securities having
maturities of less than 60 days may be valued by the
amortized cost method.

(ii) The liabilities belonging to any class of
Common Stock shall be that portion of the total
liabilities of the corporation as determined in
accordance with the provisions Article IV of the Articles
of Incorporation of the corporation. The liabilities of
the corporation shall be deemed to include (a) all bills
and notes and accounts payable, (b) all administration
expenses payable and/or accrued (including investment
advisory fees), (c) all contractual obligations for the
payment of money or property including the amount of any
unpaid dividend declared upon the corporation's stock and
payable to stockholders of record on or before the day as
of which the value of the corporation's stock is being
determined, (d) all reserves, if any, authorized or
approved by the Board of Directors for taxes, including
reserves for taxes at current rates based on any
unrealized appreciation in the value of the assets of the
corporation, and (e) all other liabilities of the
corporation of whatever kind and nature except
liabilities represented by outstanding capital stock and
surplus of the corporation.

(iii) For the purposes hereof: (a) share of
each class of Common Stock subscribed for shall be deemed
to be outstanding as of the time of acceptance of any
subscription and the entry thereof on the books of the
corporation and the net price thereof shall be deemed to
be an asset belonging to such class; and (b) shares of
each class of Common Stock surrendered for redemption by
the corporation shall be deemed to be outstanding until
the time as of which the net asset value for purposes of
such redemption is determined or estimated.

C. The net asset value of each share of each class of
Common Stock of the corporation, as of any time other than the
close of business on any day, may be determined by applying to
the net asset value as of the close of business on the preceding
business day, computed as provided in Paragraph C of this
Section of these bylaws, such adjustments as are authorized by
or pursuant to the direction of the Board of Directors and
designed reasonably to reflect any material changes in the
market value of securities and other assets held and any other
material changes in the assets or liabilities of the corporation
and in the number of its outstanding shares which shall have
taken place since the close of business on such preceding
business day.

D. In addition to the foregoing, the Board of Directors
is empowered, in its absolute discretion, to establish other
bases or times, or both, for determining the net asset value of
each share of each class of the Common stock of the corporation.

Exhibit 5.1

INVESTMENT ADVISORY AGREEMENT
(as amended)

AGREEMENT made this 10th day of August, 1988, between REYNOLDS
BLUE CHIP GROWTH FUND, INC., a Maryland corporation (the "Fund"), and
REYNOLDS CAPITAL MANAGEMENT (the "Adviser").

W I T N E S S E T H :

WHEREAS, the Fund is in the process of registering with the
Securities and Exchange Commission as an open-end management investment
company under the Investment Company Act of 1940 (the "Act");

WHEREAS, upon so registering with the Securities and Exchange
Commission, the Fund will be a registered investment company; and

WHEREAS, the Fund desires to retain the Adviser, which is an
investment adviser registered under the Investment Advisers Act of 1940
and which is engaged principally in the business of rendering investment
supervisory services within the meaning of Section 202(a)(13) of the
Investment Advisers Act of 1940, as its investment adviser.

NOW, THEREFORE, the Fund and the Adviser do mutually promise and
agree as follows:

1. Employment. The Fund hereby employs the Adviser to manage
the investment and reinvestment of the assets of the Fund for the period
and on the terms set forth in this Agreement. The Adviser hereby accepts
such employment for the compensation herein provided and agrees during
such period to render the services and to assume the obligations herein
set forth.

2. Authority of the Adviser. The Adviser shall supervise and
manage the investment portfolio of the Fund, and, subject to such policies
as the board of directors of the Fund may determine, direct the purchase
and sale of investment securities in the day to day management of the
Fund. The Adviser shall for all purposes herein be deemed to be an
independent contractor and shall, unless otherwise expressly provided or
authorized, have no authority to act for or represent the Fund in any way
or otherwise be deemed an agent of the Fund. However, one or more
shareholders, officers, directors or employees of the Adviser may serve as
directors and/or officers of the Fund, but without compensation or
reimbursement of expenses for such services from the Fund. Nothing herein
contained shall be deemed to require the Fund to take any action contrary
to its Articles of Incorporation or any applicable statute or regulation,
or to relieve or deprive the board of directors of the Fund of its
responsibility for and control of the affairs of the Fund.

3. Expenses. The Adviser, at its own expense and without
reimbursement from the Fund, shall furnish office space, and all necessary
office facilities, equipment and executive personnel for managing the
investments of the Fund. The Adviser shall not be required to pay any
expenses of the Fund except as provided herein if the total expenses borne
by the Fund, including the Adviser's fee and the fees paid to the Fund's
Administrator but excluding all federal, state and local taxes, interest,
brokerage commissions and extraordinary items, in any year exceed that
percentage of the average net asset value of the Fund for such year, as
determined by valuations made as of the close of each business day, which
is the most restrictive percentage provided by the state laws of the
various states in which the Fund's common stock is qualified for sale or,
if the states in which the Fund's common stock is qualified for sale
impose no such restrictions, 2%. The expenses of the Fund's operations
borne by the Fund include by way of illustration and not limitation,
directors fees paid to those directors who are not officers of the Fund,
the costs of preparing and printing its registration statements required
under the Securities Act of 1933 and the Act (and amendments thereto), the
expense of registering its shares with the Securities and Exchange
Commission and in the various states, the printing and distribution cost
of prospectuses mailed to existing shareholders, the cost of stock
certificates, director and officer liability insurance, reports to
shareholders, reports to government authorities and proxy statements,
interest charges, taxes, legal expenses, salaries of administrative and
clerical personnel, association membership dues, auditing and accounting
services, insurance premiums, brokerage and other expenses connected with
the execution of portfolio securities transactions, fees and expenses of
the custodian of the Fund's assets, expenses of calculating the net asset
value and repurchasing and redeeming shares, printing and mailing
expenses, charges and expenses of dividend disbursing agents, registrars
and stock transfer agents and the cost of keeping all necessary
shareholder records and accounts.

The Fund shall monitor its expense ratio on a monthly basis. If
the accrued amount of the expenses of the Fund exceeds the expense
limitation established herein, the Fund shall create an account receivable
from the Adviser in the amount of such excess. In such a situation the
monthly payment of the Adviser's fee will be reduced by the amount of such
excess, subject to adjustment month by month during the balance of the
Fund's fiscal year if accrued expenses thereafter fall below the expense
limitation.

4. Compensation of the Adviser. For the services to be
rendered by the Adviser hereunder, the Fund shall pay to the Adviser an
advisory fee, paid monthly, based on the average net assets of the Fund,
as determined by valuations made as of the close of each business day of
the month. The advisory fee shall be 1/12 of 1% of such net assets . For
any month in which this Agreement is not in effect for the entire month,
such fee shall be reduced proportionately on the basis of the number of
calendar days during which it is in effect and the fee computed upon the
average net assets of the business days during which it is so in effect.

5. Ownership of Shares of the Fund. The Adviser shall not
take an ownership position in the Fund, and shall not permit any of its
shareholders, officers, directors or employees to take a long or short
position in the shares of the Fund, except for the purchase of shares of
the Fund for investment purposes at the same price as that available to
the public at the time of purchase or in connection with the initial
capitalization of the Fund.

6. Exclusivity. The services of the Adviser to the Fund
hereunder are not to be deemed exclusive and the Adviser shall be free to
furnish similar services to others as long as the services hereunder are
not impaired thereby. Although the Adviser has agreed to permit the Fund
to use the name "Reynolds", if it so desires, it is understood and agreed
that the Adviser reserves the right to use and permit other persons, firms
or corporations, including investment companies, to use such name. During
the period that this Agreement is in effect, the Adviser shall be the
Fund's sole investment adviser.

7. Liability. In the absence of willful misfeasance, bad
faith, gross negligence or reckless disregard of obligations or duties
hereunder on the part of the Adviser, the Adviser shall not be subject to
liability to the Fund or to any shareholder of the Fund for any act or
omission in the course of, or connected with, rendering services
hereunder, or for any losses that may be sustained in the purchase,
holding or sale of any security.

8. Brokerage Commissions. The Adviser may cause the Fund to
pay a broker-dealer which provides brokerage and research services, as
such services are defined in Section 28(e) of the Securities Exchange Act
of 1934 (the "Exchange Act"), to the Adviser a commission for effecting a
securities transaction in excess of the amount another broker-dealer would
have charged for effecting such transaction, if the Adviser determines in
good faith that such amount of commission is reasonable in relation to the
value of brokerage and research services provided by the executing
broker-dealer viewed in terms of either that particular transaction or his
overall responsibilities with respect to the accounts as to which he
exercises investment discretion (as defined in Section 3(a)(35) of the
Exchange Act).

9. Amendments. This Agreement may be amended by the mutual
consent of the parties; provided, however, that in no event may it be
amended without the approval of the board of directors of the Fund in the
manner required by the Act, and by the vote of the majority of the
outstanding voting securities of the Fund, as defined in the Act.

10. Termination. This Agreement may be terminated at any time,
without the payment of any penalty, by the board of directors of the Fund
or by a vote of the majority of the outstanding voting securities of the
Fund, as defined in the Act, upon giving sixty (60) days' written notice
to the Adviser. This Agreement may be terminated by the Adviser at any
time upon the giving of sixty (60) days' written notice to the Fund. This
Agreement shall terminate automatically in the event of its assignment (as
defined in Section 2(a)(4) of the Act). Subject to prior termination as
hereinbefore provided, this Agreement shall continue in effect for two (2)
years from the date hereof and indefinitely thereafter, but only so long
as the continuance after such two (2) year period is specifically approved
annually by (i) the board of directors of the Fund or by the vote of the
majority of the outstanding voting securities of the Fund, as defined in
the Act, and (ii) the board of directors of the Fund in the manner
required by the Act, provided that any such approval may be made effective
not more than sixty (60) days thereafter.

IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be executed on the day first above written.

REYNOLDS CAPITAL MANAGEMENT
(the "Adviser")

By: _________________________________
Frederick L. Reynolds, Sole
Proprietor

REYNOLDS BLUE CHIP GROWTH
FUND, INC.
(the "Fund")

By: __________________________ By: _______________________________
Secretary President

EXHIBIT 5.2

INVESTMENT ADVISORY AGREEMENT

AGREEMENT made this 30th day of January, 1991, between REYNOLDS
BLUE CHIP GROWTH FUND, INC., a Maryland corporation (the "Company"), and
REYNOLDS CAPITAL MANAGEMENT (the "Adviser").

W I T N E S S E T H :

WHEREAS, the Company is registered with the Securities and
Exchange Commission under the Investment Company Act of 1940 (the "Act")
as an open-end management investment company comprising a series of two
mutual funds, the Reynolds Blue Chip Growth Fund and the Reynolds Money
Market Fund; and

WHEREAS, the Company desires to retain the Adviser, which is an
investment adviser registered under the Investment Advisers Act of 1940
and which is engaged principally in the business of rendering investment
supervisory services within the meaning of Section 202(a)(13) of the
Investment Advisers Act of 1940, as the investment adviser for the
Reynolds Money Market Fund.

NOW, THEREFORE, the Company and the Adviser do mutually promise
and agree as follows:

1. Employment. The Company hereby employs the Adviser to
manage the investment and reinvestment of the assets of the Reynolds Money
Market Fund for the period and on the terms set forth in this Agreement.
The Adviser hereby accepts such employment for the compensation herein
provided and agrees during such period to render the services and to
assume the obligations herein set forth.

2. Authority of the Adviser. The Adviser shall supervise and
manage the investment portfolio of the Reynolds Money Market Fund, and,
subject to such policies as the board of directors of the Company may
determine, direct the purchase and sale of investment securities in the
day to day management of the Reynolds Money Market Fund. The Adviser
shall for all purposes herein be deemed to be an independent contractor
and shall, unless otherwise expressly provided or authorized, have no
authority to act for or represent the Company in any way or otherwise be
deemed an agent of the Company. However, one or more shareholders,
officers, directors or employees of the Adviser may serve as directors
and/or officers of the Company, but without compensation or reimbursement
of expenses for such services from the Company. Nothing herein contained
shall be deemed to require the Company to take any action contrary to its
Articles of Incorporation or any applicable statute or regulation, or to
relieve or deprive the board of directors of the Company of its
responsibility for and control of the affairs of the Company.

3. Expenses. The Adviser, at its own expense and without
reimbursement from the Company, shall furnish office space, and all
necessary office facilities, equipment and executive personnel for
managing the investments of the Reynolds Money Market Fund. The Adviser
shall not be required to pay any expenses of the Reynolds Money Market
Fund except as provided herein if the total expenses borne by the Reynolds
Money Market Fund, including the Adviser's fee and the fees paid to the
Reynolds Money Market Fund's Administrator but excluding all federal,
state and local taxes, interest, brokerage commissions and extraordinary
items, in any year exceed that percentage of the average net asset value
of the Reynolds Money Market Fund for such year, as determined by
valuations made as of the close of each business day, which is the most
restrictive percentage provided by the state laws of the various states in
which the Reynolds Money Market Fund's shares are qualified for sale or,
if the states in which the Reynolds Money Market Fund's shares are
qualified for sale impose no such restrictions, 2%. The expenses of the
Reynolds Money Market Fund's operations borne by the Reynolds Money Market
Fund include by way of illustration and not limitation, directors fees
paid to those directors who are not officers of the Reynolds Money Market
Fund, the costs of preparing and printing registration statements required
under the Securities Act of 1933 and the Act (and amendments thereto), the
expense of registering its shares with the Securities and Exchange
Commission and in the various states, the printing and distribution cost
of prospectuses mailed to existing shareholders, the cost of stock
certificates (if any), director and officer liability insurance, reports
to shareholders, reports to government authorities and proxy statements,
interest charges, taxes, legal expenses, salaries of administrative and
clerical personnel, association membership dues, auditing and accounting
services, insurance premiums, brokerage and other expenses connected with
the execution of portfolio securities transactions, fees and expenses of
the custodian of the Reynolds Money Market Fund's assets, expenses of
calculating the net asset value and repurchasing and redeeming shares,
printing and mailing expenses, charges and expenses of dividend disbursing
agents, registrars and stock transfer agents and the cost of keeping all
necessary shareholder records and accounts.

The Reynolds Money Market Fund shall monitor its expense ratio
on a monthly basis. If the accrued amount of the expenses of the Reynolds
Money Market Fund exceeds the expense limitation established herein, the
Reynolds Money Market Fund shall create an account receivable from the
Adviser in the amount of such excess. In such a situation the monthly
payment of the Adviser's fee will be reduced by the amount of such excess,
subject to adjustment month by month during the balance of the Reynolds
Money Market Fund's fiscal year if accrued expenses thereafter fall below
the expense limitation.

4. Compensation of the Adviser. For the services to be
rendered by the Adviser hereunder, the Company through the Reynolds Money
Market Fund shall pay to the Adviser an advisory fee, paid monthly, based
on the average net asset value of the Reynolds Money Market Fund, as
determined by valuations made as of the close of each business day of the
month. The advisory fee shall be 1/12 of 0.50% of such net asset value.
For any month in which this Agreement is not in effect for the entire
month, such fee shall be reduced proportionately on the basis of the
number of calendar days during which it is in effect and the fee computed
upon the average net asset value of the business days during which it is
so in effect.

5. Ownership of Shares of the Reynolds Money Market Fund. The
Adviser shall not take an ownership position in the Reynolds Money Market
Fund, and shall not permit any of its shareholders, officers, directors or
employees to take a long or short position in the shares of the Reynolds
Money Market Fund, except for the purchase of shares of the Reynolds Money
Market Fund for investment purposes at the same price as that available to
the public at the time of purchase or in connection with the initial
capitalization of the Company.

6. Exclusivity. The services of the Adviser to the Reynolds
Money Market Fund hereunder are not to be deemed exclusive and the Adviser
shall be free to furnish similar services to others as long as the
services hereunder are not impaired thereby. Although the Adviser has
agreed to permit the Company to use the name "Reynolds", if it so desires,
it is understood and agreed that the Adviser reserves the right to use and
permit other persons, firms or corporations, including investment
companies, to use such name. During the period that this Agreement is in
effect, the Adviser shall be the Reynolds Money Market Fund's sole
investment adviser.

7. Liability. In the absence of willful misfeasance, bad
faith, gross negligence or reckless disregard of obligations or duties
hereunder on the part of the Adviser, the Adviser shall not be subject to
liability to the Reynolds Money Market Fund or to any shareholder of the
Reynolds Money Market Fund for any act or omission in the course of, or
connected with, rendering services hereunder, or for any losses that may
be sustained in the purchase, holding or sale of any security.

8. Brokerage Commissions. The Adviser may cause the Reynolds
Money Market Fund to pay a broker-dealer which provides brokerage and
research services, as such services are defined in Section 28(e) of the
Securities Exchange Act of 1934 (the "Exchange Act"), to the Adviser a
commission for effecting a securities transaction in excess of the amount
another broker-dealer would have charged for effecting such transaction,
if the Adviser determines in good faith that such amount of commission is
reasonable in relation to the value of brokerage and research services
provided by the executing broker-dealer viewed in terms of either that
particular transaction or his overall responsibilities with respect to the
accounts as to which he exercises investment discretion (as defined in
Section 3(a)(35) of the Exchange Act).

9. Amendments. This Agreement may be amended by the mutual
consent of the parties; provided, however, that in no event may it be
amended without the approval of the board of directors of the Company in
the manner required by the Act, and by the vote of the majority of the
outstanding voting securities of the Reynolds Money Market Fund, as
defined in the Act.

10. Termination. This Agreement may be terminated at any time,
without the payment of any penalty, by the board of directors of the
Company or by a vote of the majority of the outstanding voting securities
of the Reynolds Money Market Fund, as defined in the Act, upon giving
sixty (60) days' written notice to the Adviser. This Agreement may be
terminated by the Adviser at any time upon the giving of sixty (60) days'
written notice to the Company. This Agreement shall terminate
automatically in the event of its assignment (as defined in
Section 2(a)(4) of the Act). Subject to prior termination as hereinbefore
provided, this Agreement shall continue in effect for an initial period
beginning as of the date hereof and ending January 15, 1992 and
indefinitely thereafter, but only so long as the continuance after such
initial period is specifically approved annually by (i) the board of
directors of the Company or by the vote of the majority of the outstanding
voting securities of the Reynolds Money Market Fund, as defined in the
Act, and (ii) the board of directors of the Company in the manner required
by the Act, provided that any such approval may be made effective not more
than sixty (60) days thereafter.

IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be executed on the day first above written.

REYNOLDS CAPITAL MANAGEMENT
(the "Adviser")

By: _________________________________
Frederick L. Reynolds, Sole
Proprietor

REYNOLDS BLUE CHIP GROWTH
FUND, INC.
(the "Company")

By: __________________________ By: _______________________________
Secretary President

EXHIBIT 5.3

INVESTMENT ADVISORY AGREEMENT

AGREEMENT made this 12th day of December, 1991, between REYNOLDS
FUNDS, INC., a Maryland corporation (the "Company"), and REYNOLDS CAPITAL
MANAGEMENT (the "Adviser").

W I T N E S S E T H :

WHEREAS, the Company is registered with the Securities and
Exchange Commission under the Investment Company Act of 1940 (the "Act")
as an open-end management investment company comprising a series of four
mutual funds, the Reynolds Blue Chip Growth Fund, the Reynolds Opportunity
Fund, the Reynolds U.S. Government Bond Fund and the Reynolds Money Market
Fund; and

NOW, THEREFORE, the Company and the Adviser do mutually promise
and agree as follows:

1. Employment. The Company hereby employs the Adviser to
manage the investment and reinvestment of the assets of the Reynolds
Opportunity Fund for the period and on the terms set forth in this
Agreement. The Adviser hereby accepts such employment for the
compensation herein provided and agrees during such period to render the
services and to assume the obligations herein set forth.

2. Authority of the Adviser. The Adviser shall supervise and
manage the investment portfolio of the Reynolds Opportunity Fund, and,
subject to such policies as the board of directors of the Company may
determine, direct the purchase and sale of investment securities in the
day to day management of the Reynolds Opportunity Fund. The Adviser shall
for all purposes herein be deemed to be an independent contractor and
shall, unless otherwise expressly provided or authorized, have no
authority to act for or represent the Company in any way or otherwise be
deemed an agent of the Company. However, one or more shareholders,
officers, directors or employees of the Adviser may serve as directors
and/or officers of the Company, but without compensation or reimbursement
of expenses for such services from the Company. Nothing herein contained
shall be deemed to require the Company to take any action contrary to its
Articles of Incorporation, as amended or supplemented, or any applicable
statute or regulation, or to relieve or deprive the board of directors of
the Company of its responsibility for and control of the affairs of the
Company.

3. Expenses. The Adviser, at its own expense and without
reimbursement from the Company, shall furnish office space, and all
necessary office facilities, equipment and executive personnel for
managing the investments of the Reynolds Opportunity Fund. The Adviser
shall not be required to pay any expenses of the Reynolds Opportunity Fund
except as provided herein if the total expenses borne by the Reynolds
Opportunity Fund, including the Adviser's fee and the fees paid to the
Reynolds Opportunity Fund's Administrator but excluding all federal, state
and local taxes, interest, brokerage commissions and extraordinary items,
in any year exceed that percentage of the average net asset value of the
Reynolds Opportunity Fund for such year, as determined by valuations made
as of the close of each business day, which is the most restrictive
percentage provided by the state laws of the various states in which the
Reynolds Opportunity Fund's shares are qualified for sale or, if the
states in which the Reynolds Opportunity Fund's shares are qualified for
sale impose no such restrictions, 2%. The expenses of the Reynolds
Opportunity Fund's operations borne by the Reynolds Opportunity Fund
include by way of illustration and not limitation, directors fees paid to
those directors who are not officers of the Company, the costs of
preparing and printing registration statements required under the
Securities Act of 1933 and the Act (and amendments thereto), the expense
of registering its shares with the Securities and Exchange Commission and
in the various states, the printing and distribution cost of prospectuses
mailed to existing shareholders, the cost of stock certificates (if any),
director and officer liability insurance, reports to shareholders, reports
to government authorities and proxy statements, interest charges, taxes,
legal expenses, salaries of administrative and clerical personnel,
association membership dues, auditing and accounting services, insurance
premiums, brokerage and other expenses connected with the execution of
portfolio securities transactions, fees and expenses of the custodian of
the Reynolds Opportunity Fund's assets, expenses of calculating the net
asset value and repurchasing and redeeming shares, printing and mailing
expenses, charges and expenses of dividend disbursing agents, registrars
and stock transfer agents and the cost of keeping all necessary
shareholder records and accounts.

The Reynolds Opportunity Fund shall monitor its expense ratio on
a monthly basis. If the accrued amount of the expenses of the Reynolds
Opportunity Fund exceeds the expense limitation established herein, the
Reynolds Opportunity Fund shall create an account receivable from the
Adviser in the amount of such excess. In such a situation the monthly
payment of the Adviser's fee will be reduced by the amount of such excess,
subject to adjustment month by month during the balance of the Reynolds
Opportunity Fund's fiscal year if accrued expenses thereafter fall below
the expense limitation.

4. Compensation of the Adviser. For the services to be
rendered by the Adviser hereunder, the Company through the Reynolds
Opportunity Fund shall pay to the Adviser an advisory fee, paid monthly,
based on the average net asset value of the Reynolds Opportunity Fund, as
determined by valuations made as of the close of each business day of the
month. The advisory fee shall be 1/12 of 1.00% of such net asset value .
For any month in which this Agreement is not in effect for the entire
month, such fee shall be reduced proportionately on the basis of the
number of calendar days during which it is in effect and the fee computed
upon the average net asset value of the business days during which it is
so in effect.

5. Ownership of Shares of the Reynolds Opportunity Fund. The
Adviser shall not take an ownership position in the Reynolds Opportunity
Fund, and shall not permit any of its shareholders, officers, directors or
employees to take a long or short position in the shares of the Reynolds
Opportunity Fund, except for the purchase of shares of the Reynolds
Opportunity Fund for investment purposes at the same price as that
available to the public at the time of purchase or in connection with the
initial capitalization of the Company.

6. Exclusivity. The services of the Adviser to the Reynolds
Opportunity Fund hereunder are not to be deemed exclusive and the Adviser
shall be free to furnish similar services to others as long as the
services hereunder are not impaired thereby. Although the Adviser has
agreed to permit the Company to use the name "Reynolds", if it so desires,
it is understood and agreed that the Adviser reserves the right to use and
permit other persons, firms or corporations, including investment
companies, to use such name. During the period that this Agreement is in
effect, the Adviser shall be the Reynolds Opportunity Fund's sole
investment adviser.

7. Liability. In the absence of willful misfeasance, bad
faith, gross negligence or reckless disregard of obligations or duties
hereunder on the part of the Adviser, the Adviser shall not be subject to
liability to the Reynolds Opportunity Fund or to any shareholder of the
Reynolds Opportunity Fund for any act or omission in the course of, or
connected with, rendering services hereunder, or for any losses that may
be sustained in the purchase, holding or sale of any security.

8. Brokerage Commissions. The Adviser may cause the Reynolds
Opportunity Fund to pay a broker-dealer which provides brokerage and
research services, as such services are defined in Section 28(e) of the
Securities Exchange Act of 1934 (the "Exchange Act"), to the Adviser a
commission for effecting a securities transaction in excess of the amount
another broker-dealer would have charged for effecting such transaction,
if the Adviser determines in good faith that such amount of commission is
reasonable in relation to the value of brokerage and research services
provided by the executing broker-dealer viewed in terms of either that
particular transaction or his overall responsibilities with respect to the
accounts as to which he exercises investment discretion (as defined in
Section 3(a)(35) of the Exchange Act).

9. Amendments. This Agreement may be amended by the mutual
consent of the parties; provided, however, that in no event may it be
amended without the approval of the board of directors of the Company in
the manner required by the Act, and by the vote of the majority of the
outstanding voting securities of the Reynolds Opportunity Fund, as defined
in the Act.

10. Termination. This Agreement may be terminated at any time,
without the payment of any penalty, by the board of directors of the
Company or by a vote of the majority of the outstanding voting securities
of the Reynolds Opportunity Fund, as defined in the Act, upon giving
sixty (60) days' written notice to the Adviser. This Agreement may be
terminated by the Adviser at any time upon the giving of sixty (60) days'
written notice to the Company. This Agreement shall terminate
automatically in the event of its assignment (as defined in
Section 2(a)(4) of the Act). Subject to prior termination as hereinbefore
provided, this Agreement shall continue in effect for an initial period
beginning as of the date hereof and ending December 12, 1993 and
indefinitely thereafter, but only so long as the continuance after such
initial period is specifically approved annually by (i) the board of
directors of the Company or by the vote of the majority of the outstanding
voting securities of the Reynolds Opportunity Fund, as defined in the Act,
and (ii) the board of directors of the Company in the manner required by
the Act, provided that any such approval may be made effective not more
than sixty (60) days thereafter.

IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be executed on the day first above written.

REYNOLDS CAPITAL MANAGEMENT
(the "Adviser")

By: _________________________________
Frederick L. Reynolds, Sole
Proprietor

REYNOLDS FUNDS, INC.
(the "Company")

By: ___________________________ By: _________________________________
Secretary President

EXHIBIT 5.4

INVESTMENT ADVISORY AGREEMENT

AGREEMENT made this 12th day of December, 1991, between REYNOLDS
FUNDS, INC., a Maryland corporation (the "Company"), and REYNOLDS CAPITAL
MANAGEMENT (the "Adviser").

W I T N E S S E T H :

WHEREAS, the Company is registered with the Securities and
Exchange Commission under the Investment Company Act of 1940 (the "Act")
as an open-end management investment company comprising a series of four
mutual funds, the Reynolds Blue Chip Growth Fund, the Reynolds Opportunity
Fund, the Reynolds U.S. Government Bond Fund and the Reynolds Money Market
Fund; and

NOW, THEREFORE, the Company and the Adviser do mutually promise
and agree as follows:

1. Employment. The Company hereby employs the Adviser to
manage the investment and reinvestment of the assets of the Reynolds
U.S. Government Bond Fund for the period and on the terms set forth in
this Agreement. The Adviser hereby accepts such employment for the
compensation herein provided and agrees during such period to render the
services and to assume the obligations herein set forth.

2. Authority of the Adviser. The Adviser shall supervise and
manage the investment portfolio of the Reynolds U.S. Government Bond Fund,
and, subject to such policies as the board of directors of the Company may
determine, direct the purchase and sale of investment securities in the
day to day management of the Reynolds U.S. Government Bond Fund. The
Adviser shall for all purposes herein be deemed to be an independent
contractor and shall, unless otherwise expressly provided or authorized,
have no authority to act for or represent the Company in any way or
otherwise be deemed an agent of the Company. However, one or more
shareholders, officers, directors or employees of the Adviser may serve as
directors and/or officers of the Company, but without compensation or
reimbursement of expenses for such services from the Company. Nothing
herein contained shall be deemed to require the Company to take any action
contrary to its Articles of Incorporation, as amended or supplemented, or
any applicable statute or regulation, or to relieve or deprive the board
of directors of the Company of its responsibility for and control of the
affairs of the Company.

3. Expenses. The Adviser, at its own expense and without
reimbursement from the Company, shall furnish office space, and all
necessary office facilities, equipment and executive personnel for
managing the investments of the Reynolds U.S. Government Bond Fund. The
Adviser shall not be required to pay any expenses of the Reynolds
U.S. Government Bond Fund except as provided herein if the total expenses
borne by the Reynolds U.S. Government Bond Fund, including the Adviser's
fee and the fees paid to the Reynolds U.S. Government Bond Fund's
Administrator but excluding all federal, state and local taxes, interest,
brokerage commissions and extraordinary items, in any year exceed that
percentage of the average net asset value of the Reynolds U.S. Government
Bond Fund for such year, as determined by valuations made as of the close
of each business day, which is the most restrictive percentage provided by
the state laws of the various states in which the Reynolds U.S. Government
Bond Fund's shares are qualified for sale or, if the states in which the
Reynolds U.S. Government Bond Fund's shares are qualified for sale impose
no such restrictions, 2%. The expenses of the Reynolds U.S. Government
Bond Fund's operations borne by the Reynolds U.S. Government Bond Fund
include by way of illustration and not limitation, directors fees paid to
those directors who are not officers of the Company, the costs of
preparing and printing registration statements required under the
Securities Act of 1933 and the Act (and amendments thereto), the expense
of registering its shares with the Securities and Exchange Commission and
in the various states, the printing and distribution cost of prospectuses
mailed to existing shareholders, the cost of stock certificates (if any),
director and officer liability insurance, reports to shareholders, reports
to government authorities and proxy statements, interest charges, taxes,
legal expenses, salaries of administrative and clerical personnel,
association membership dues, auditing and accounting services, insurance
premiums, brokerage and other expenses connected with the execution of
portfolio securities transactions, fees and expenses of the custodian of
the Reynolds U.S. Government Bond Fund's assets, expenses of calculating
the net asset value and repurchasing and redeeming shares, printing and
mailing expenses, charges and expenses of dividend disbursing agents,
registrars and stock transfer agents and the cost of keeping all necessary
shareholder records and accounts.

The Reynolds U.S. Government Bond Fund shall monitor its expense
ratio on a monthly basis. If the accrued amount of the expenses of the
Reynolds U.S. Government Bond Fund exceeds the expense limitation
established herein, the Reynolds U.S. Government Bond Fund shall create an
account receivable from the Adviser in the amount of such excess. In such
a situation the monthly payment of the Adviser's fee will be reduced by
the amount of such excess, subject to adjustment month by month during the
balance of the Reynolds U.S. Government Bond Fund's fiscal year if accrued
expenses thereafter fall below the expense limitation.

4. Compensation of the Adviser. For the services to be
rendered by the Adviser hereunder, the Company through the Reynolds
U.S. Government Bond Fund shall pay to the Adviser an advisory fee, paid
monthly, based on the average net asset value of the Reynolds
U.S. Government Bond Fund, as determined by valuations made as of the
close of each business day of the month. The advisory fee shall be 1/12
of 0.75% of such net asset value. For any month in which this Agreement
is not in effect for the entire month, such fee shall be reduced
proportionately on the basis of the number of calendar days during which
it is in effect and the fee computed upon the average net asset value of
the business days during which it is so in effect.

5. Ownership of Shares of the Reynolds U.S. Government Bond
Fund. The Adviser shall not take an ownership position in the Reynolds
U.S. Government Bond Fund, and shall not permit any of its shareholders,
officers, directors or employees to take a long or short position in the
shares of the Reynolds U.S. Government Bond Fund, except for the purchase
of shares of the Reynolds U.S. Government Bond Fund for investment
purposes at the same price as that available to the public at the time of
purchase or in connection with the initial capitalization of the Company.

6. Exclusivity. The services of the Adviser to the Reynolds
U.S. Government Bond Fund hereunder are not to be deemed exclusive and the
Adviser shall be free to furnish similar services to others as long as the
services hereunder are not impaired thereby. Although the Adviser has
agreed to permit the Company to use the name "Reynolds", if it so desires,
it is understood and agreed that the Adviser reserves the right to use and
permit other persons, firms or corporations, including investment
companies, to use such name. During the period that this Agreement is in
effect, the Adviser shall be the Reynolds U.S. Government Bond Fund's sole
investment adviser.

7. Liability. In the absence of willful misfeasance, bad
faith, gross negligence or reckless disregard of obligations or duties
hereunder on the part of the Adviser, the Adviser shall not be subject to
liability to the Reynolds U.S. Government Bond Fund or to any shareholder
of the Reynolds U.S. Government Bond Fund for any act or omission in the
course of, or connected with, rendering services hereunder, or for any
losses that may be sustained in the purchase, holding or sale of any
security.

8. Brokerage Commissions. The Adviser may cause the Reynolds
U.S. Government Bond Fund to pay a broker-dealer which provides brokerage
and research services, as such services are defined in Section 28(e) of
the Securities Exchange Act of 1934 (the "Exchange Act"), to the Adviser a
commission for effecting a securities transaction in excess of the amount
another broker-dealer would have charged for effecting such transaction,
if the Adviser determines in good faith that such amount of commission is
reasonable in relation to the value of brokerage and research services
provided by the executing broker-dealer viewed in terms of either that
particular transaction or his overall responsibilities with respect to the
accounts as to which he exercises investment discretion (as defined in
Section 3(a)(35) of the Exchange Act).

9. Amendments. This Agreement may be amended by the mutual
consent of the parties; provided, however, that in no event may it be
amended without the approval of the board of directors of the Company in
the manner required by the Act, and by the vote of the majority of the
outstanding voting securities of the Reynolds U.S. Government Bond Fund,
as defined in the Act.

10. Termination. This Agreement may be terminated at any time,
without the payment of any penalty, by the board of directors of the
Company or by a vote of the majority of the outstanding voting securities
of the Reynolds U.S. Government Bond Fund, as defined in the Act, upon
giving sixty (60) days' written notice to the Adviser. This Agreement may
be terminated by the Adviser at any time upon the giving of sixty (60)
days' written notice to the Company. This Agreement shall terminate
automatically in the event of its assignment (as defined in
Section 2(a)(4) of the Act). Subject to prior termination as hereinbefore
provided, this Agreement shall continue in effect for an initial period
beginning as of the date hereof and ending December 12, 1993 and
indefinitely thereafter, but only so long as the continuance after such
initial period is specifically approved annually by (i) the board of
directors of the Company or by the vote of the majority of the outstanding
voting securities of the Reynolds U.S. Government Bond Fund, as defined in
the Act, and (ii) the board of directors of the Company in the manner
required by the Act, provided that any such approval may be made effective
not more than sixty (60) days thereafter.

IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be executed on the day first above written.

REYNOLDS CAPITAL MANAGEMENT
(the "Adviser")

By: _________________________________
Frederick L. Reynolds, Sole
Proprietor

REYNOLDS FUNDS, INC.
(the "Company")

By: ___________________________ By: _________________________________
Secretary President

EXHIBIT 8.1

CUSTODIAN AGREEMENT

THIS AGREEMENT made on ____________, 1988, between REYNOLDS BLUE
CHIP GROWTH FUND, INC., a Maryland Corporation (hereinafter called the
"Fund"), and FIRST WISCONSIN TRUST COMPANY, a corporation organized under
the laws of the State of Wisconsin (hereinafter called "Custodian"),

W I T N E S S E T H :

WHEREAS, the Fund desires that its securities and cash shall be
hereafter held and administered by Custodian pursuant to the terms of this
Agreement;

NOW, THEREFORE, in consideration of the mutual agreements herein
made, the Fund and Custodian agree as follows:

1. Definitions

The word "securities" as used herein include stocks, shares,
bonds, debentures, notes, mortgages, or other obligations and any
certificates, receipts, warrants or other instruments representing rights
to receive, purchase or subscribe for the same, or evidencing or
representing any other rights or interests therein, or in any property or
assets.

The words "officers' certificate" shall mean a request or
direction or certification in writing signed in the name of the Fund by
any two of the President, a Vice President, the Secretary and the
Treasurer of the Fund, or any other persons duly authorized to sign by the
Board of Directors of the Fund.

2. Names, Titles and Signatures of Fund's Officers

An officer of the Fund will certify to Custodian the names and
signatures of those persons authorized to sign the officers' certificates
described in Section 1 hereof, and the names of the members of the Board
of Directors, together with any changes which may occur from time to time.

3. Receipt and Disbursement of Money

A. Custodian shall open and maintain a separate account or
accounts in the name of the Fund, subject only to draft or order by
Custodian acting pursuant to the terms of this Agreement. Custodian shall
hold in such account or accounts, subject to the provisions hereof, all
cash received by it from or for the account of the Fund. Custodian shall
make payments of cash to, or for the account of, the Fund from such cash
only (a) for the purchase of securities for the portfolio of the Fund upon
the delivery of such securities to Custodian, registered in the name of
the Fund or of the nominee of Custodian referred to in Section 7 or in
proper form for transfer, (b) for the purchase or redemption of shares of
the common stock of the Fund upon delivery thereof to Custodian, (c) for
the payment of interest, dividends, taxes, investment adviser's fees or
operating expenses (including, without limitation thereto, fees for legal,
accounting, auditing and custodian services and expenses for printing and
postage), (d) for payments in connection with the conversion, exchange or
surrender of securities owned or subscribed to by the Fund held by or to
be delivered to Custodian, or (e) for other proper corporate purposes
certified by resolution of the Board of Directors of the Fund. Before
making any such payment Custodian shall receive (and may rely upon) an
officers' certificate requesting such payment and stating that it is for a
purpose permitted under the terms of items (a), (b), (c) or (d) of this
Subsection A, and also, in respect of item (e), upon receipt of an
officers' certificate specifying the amount of such payment, setting forth
the purpose for which such payment is to be made, declaring such purpose
to be a proper corporate purpose, and naming the person or persons to whom
such payment is to be made; provided, however, that an officers'
certificate need not precede the disbursement of cash for the purpose of
purchasing a money market instrument if the President, a Vice President,
the Secretary or the Treasurer of the Fund issues appropriate oral
instructions to Custodian and an appropriate officers' certificate is
received by Custodian within two business days thereafter.

B. Custodian is hereby authorized to endorse and collect all
checks, drafts or other orders for the payment of money received by
Custodian for the account of the Fund.

4. Receipt of Securities

Custodian shall hold in a separate account, and physically
segregated at all times from those of any other person, firms or
corporations, pursuant to the provisions hereof, all securities received
by it from or for the account of the Fund. All such securities are to be
held or disposed of by Custodian for, and subject at all times to the
instructions of, the Fund pursuant to the terms of this Agreement. The
Custodian shall have no power or authority to assign, hypothecate, pledge
or otherwise dispose of any such securities and investments, except
pursuant to the direction of the Fund and only for the account of the Fund
as set forth in Section 5 of this Agreement.

5. Transfer, Exchange, Redelivery, etc. of Securities

Custodian shall have sole power to release or delivery any
securities of the Fund held by it pursuant to this Agreement. Custodian
agrees to transfer, exchange or deliver securities held by it hereunder
only (a) for sales of such securities for the account of the Fund upon
receipt by Custodian of payment therefore, (b) when such securities are
called, redeemed or retired or otherwise become payable, (c) for
examination by any broker selling any such securities in accordance with
"street delivery" custom, (d) in exchange for, or upon conversion into,
other securities alone or other securities and cash whether pursuant to
any plan of merger, consolidation, reorganization, recapitalization or
readjustment, or otherwise, (e) upon conversion of such securities
pursuant to their terms into other securities, (f) upon exercise of
subscription, purchase or other similar rights represented by such
securities, (g) for the purpose of exchanging interim receipts or
temporary securities for definitive securities, (h) for the purpose of
redeeming in kind shares of common stock of the Fund upon delivery thereof
to Custodian, or (i) for other proper corporate purposes. As to any
deliveries made by Custodian pursuant to items (a), (b), (d), (e), (f),
and (g), securities or cash receivable in exchange therefore shall be
deliverable to Custodian. Before making any such transfer, exchange or
delivery, Custodian shall receive (and may rely upon) an officers'
certificate requesting such transfer, exchange or delivery, and stating
that it is for a purpose permitted under the terms of items (a), (b), (c),
(d), (e), (f), (g) or (h) of this Section 5 and also, in respect of
item (i), upon receipt of an officers' certificate specifying the
securities to be delivered, setting forth the purpose for which such
delivery is to be made, declaring such purpose to be a proper corporate
purpose, and naming the person or persons to whom delivery of such
securities shall be made; provided, however, that an officers' certificate
need not precede any such transfer, exchange or delivery of a money market
instrument if the President, a Vice President, the Secretary or the
Treasurer of the Fund issues appropriate oral instructions to Custodian
and an appropriate officers' certificate is received by Custodian within
two business days thereafter.

6. Custodian's Acts Without Instructions

Unless and until Custodian receives an officers' certificate to
the contrary, Custodian shall: (a) present for payment all coupons and
other income items held by it for the account of the Fund which call for
payment upon presentation and hold the cash received by it upon such
payment for the account of the Fund; (b) collect interest and cash
dividends received, with notice to the Fund, for the account of the Fund;
(c) hold for the account of the Fund hereunder all stock dividends, rights
and similar securities issued with respect to any securities held by it
hereunder; and (d) execute as agent on behalf of the Fund all necessary
ownership certificates required by the Internal Revenue Code or the Income
Tax Regulations of the United States Treasury Department or under the laws
of any state now or hereafter in effect, inserting the Fund's name on such
certificates as the owner of the securities covered thereby, to the extent
it may lawfully do so.

7. Registration of Securities

Except as otherwise directed by an officers' certificate
Custodian shall register all securities, except such as are in bearer
form, in the name of a registered nominee of Custodian as defined in the
Internal Revenue Code and any Regulations of the Treasury Department
issued hereunder or in any provision of any subsequent Federal tax law
exempting such transaction from liability for stock transfer taxes, and
shall execute and deliver all such certificates in connection therewith as
may be required by such laws or regulations or under the laws of any
state. Custodian shall use its best efforts to the end that the specific
securities held by it hereunder shall be at all times identifiable in its
records.

The Fund shall from time to time furnish to Custodian
appropriate instruments to enable Custodian to hold or deliver in proper
form for transfer, or to register in the name of its registered nominee,
any securities which it may hold for the account of the Fund and which may
from time to time be registered in the name of the Fund.

8. Voting and Other Action

Neither Custodian nor any nominee of Custodian shall vote any of
the securities held hereunder by or for the account of the Fund, except in
accordance with the instructions contained in an officers' certificate.
Custodian shall deliver, or cause to be executed and delivered, to the
Corporation all notices, proxies and proxy soliciting materials with
relation to such securities, such proxies to be executed by the registered
holder of such securities (if registered otherwise than in the name of the
Fund), but without indicating the manner in which such proxies are to be
voted.

9. Transfer Tax and Other Disbursements

The Fund shall pay or reimburse Custodian from time to time for
any transfer taxes payable upon transfers of securities made hereunder,
and for all other necessary and proper disbursements and expenses made or
incurred by Custodian in the performance of this Agreement.

Custodian shall execute and deliver such certificates in
connection with securities delivered to it or by it under this Agreement
as may be required under the provisions of the Internal Revenue Code and
any Regulations of the Treasury Department issued thereunder, or under the
laws of any state, to exempt from taxation any exemptable transfers and/or
deliveries of any such securities.

10. Concerning Custodian

Custodian shall be paid as compensation for its services
pursuant to this Agreement such compensation as may from time to time be
agreed upon in writing between the two parties. Until modified in writing
such compensation shall be as set forth in Exhibit A attached hereto.

Custodian shall not be liable for any action taken in good faith
upon any certificate herein described or certified copy of any resolution
of the Board of Directors, and may rely on the genuineness of any such
document which it may in good faith believe to have been validly executed.

The Fund agrees to indemnify and hold harmless Custodian and its
nominee from all taxes, charges, expenses, assessments, claims and
liabilities (including counsel fees) incurred or assessed against it or by
its nominee in connection with the performance of this Agreement, except
such as may arise from its or its nominee's own negligent action,
negligent failure to act or willful misconduct. Custodian is authorized
to charge any account of the Fund for such items. In the event of any
advance of cash for any purpose made by Custodian resulting from orders or
instructions of the Fund, or in the event that Custodian or its nominee
shall incur or be assessed any taxes, charges, expenses, assessments,
claims or liabilities in connection with the performance of this
Agreement, except such as may arise from its or its nominee's own
negligent action, negligent failure to act or willful misconduct, any
property at any time held for the account of the Fund shall be security
therefore.

11. Reports by Custodian

Custodian shall furnish the Fund weekly with a statement
summarizing all transactions and entries for the account of Fund.
Custodian shall furnish the Fund at the end of every month with a list of
the portfolio securities showing the aggregate cost of each issue.
Custodian shall furnish the Fund, at the close of each quarter of the
Fund's fiscal year, with a list showing the cost of the securities held by
it for the Fund hereunder, adjusted for all commitments confirmed by the
Fund as of such close, certified by a duly authorized officer of
Custodian. The books and records of Custodian pertaining to its actions
under this Agreement shall be open to inspection and audit at reasonable
times by officers of, and of auditors employed by, the Fund.

12. Termination or Assignment

This Agreement may be terminated by the Fund, or by Custodian,
on sixty days' notice, given in writing and sent by registered mail to
Custodian at P.O. Box 2054, Milwaukee, Wisconsin 53201, or to the Fund at
Wood Island, Third Floor, 80 East Sir Francis Drake Boulevard, Larkspur,
California 94939, as the case may be. Upon any termination of this
Agreement, pending appointment of a successor to Custodian or a vote of
the shareholders of the Fund to dissolve or to function without a
custodian of its cash, securities and other property, Custodian shall not
deliver cash, securities or other property of the Fund to the Fund, but
may deliver them to a bank or trust company in the City of Milwaukee of
its own selection, having an aggregate capital, surplus and undivided
profits, as shown by its last published report of not less than Two
Million Dollars ($2,000,000) as a Custodian for the Fund to be held under
terms similar to those of this Agreement; provided, however, that
Custodian shall not be required to make any such delivery or payment until
full payment shall have been made by the Fund of all liabilities
constituting a charge on or against the properties then held by Custodian
or on or against Custodian, and until full payment shall have been made to
Custodian of all its fees, compensation, costs and expenses, subject to
the provisions of Section 10 of this Agreement.

This Agreement may not be assigned by Custodian without the
consent of the Fund, authorized or approved by a resolution of its Board
of Directors.

13. Deposits of Securities in Securities Depositories

No provision of this Agreement shall be deemed to prevent the
use by Custodian of a central securities clearing agency or securities
depository; provided, however, that Custodian and the central securities
clearing agency or securities depository meet all applicable federal and
state laws and regulations and the Board of Directors of the Fund approves
by resolution the use of such central securities clearing agency or
securities depository.

14. Records

To the extent that Custodian in any capacity prepares or
maintains any records required to be maintained and preserved by the Fund
pursuant to the provisions of the Investment Company Act of 1940, as
amended, or the rules and regulations promulgated thereunder, Custodian
agrees to make any such records available to the Fund upon request and to
preserve such records for the periods prescribed in Rule 31a-2 under the
Investment Company Act of 1940, as amended.

IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be executed and their respective corporate seals to be
affixed hereto as of the date first above-written by their respective
officers thereunto duly authorized.

Executed in several counterparts, each of which is an original.

Attest: FIRST WISCONSIN TRUST COMPANY

_________________________________ By _________________________________
ASSISTANT SECRETARY VICE PRESIDENT

Attest: REYNOLDS BLUE CHIP GROWTH
FUND, INC.

_________________________________ By _________________________________

EXHIBIT 8.2

CUSTODIAN AGREEMENT

THIS AGREEMENT made on February 2, 1991, between REYNOLDS MONEY
MARKET FUND, a Maryland Corporation (hereinafter called the "Fund"), and
FIRST WISCONSIN TRUST COMPANY, a corporation organized under the laws of
the State of Wisconsin (hereinafter called "Custodian"),

W I T N E S S E T H :

WHEREAS, the Fund desires that its securities and cash shall be
hereafter held and administered by Custodian pursuant to the terms of this
Agreement;

NOW, THEREFORE, in consideration of the mutual agreements herein
made, the Fund and Custodian agree as follows:

1. Definitions

The word "securities" as used herein includes stocks, shares,
bonds, debentures, notes, mortgages, or other obligations, and any
certificates, receipts, warrants or other instruments representing rights
to receive, purchase or subscribe for the same, or evidencing or
representing any other rights or interests therein, or in any property or
assets.

The word "Board" shall mean Board of Directors of Reynolds Money
Market Fund.

2. Names, Titles and Signatures of the Fund's Officers

3. Receipt and Disbursement of Money

Before making any such payment, Custodian shall receive (and may
rely upon) an officers' certificate requesting such payment and stating
that it is for a purpose permitted under the terms of items (a), (b), (c)
or (d) of this Subsection A, and also, in respect of item (e), upon
receipt of an officers' certificate specifying the amount of such payment,
setting forth the purpose for which such payment is to be made, declaring
such purpose to be a proper corporate purpose, and naming the person or
persons to whom such payment is to be made, provided, however, that an
officers' certificate need not precede the disbursement of cash for the
purpose of purchasing a money market instrument if the President, a Vice
President, the Secretary or the Treasurer of the Fund issues appropriate
oral or facsimile instructions to Custodian and an appropriate officers'
certificate is received by Custodian within two business days thereafter.

B. Custodian is hereby authorized to endorse and collect all
checks, drafts or other orders for the payment of money received by
Custodian for the account of the Fund.

C. Custodian shall, upon receipt of proper instructions, make
federal funds available to the Fund as of specified times agreed upon from
time to time by the Fund and the Custodian in the amount of checks
received in payment for shares of the Fund which are deposited into the
Fund's account.

4. Segregated Accounts

Upon receipt of proper instructions, the Custodian shall
establish and maintain a segregated account(s) for and on behalf of the
portfolio, into which account(s) may be transferred cash and/or
securities.

5. Transfer, Exchange, Redelivery, etc. of Securities

Custodian shall have sole power to release or deliver any
securities of the Fund held by it pursuant to this Agreement. Custodian
agrees to transfer, exchange or deliver securities held by it hereunder
only: (a) for sales of such securities for the account of the Fund upon
receipt by Custodian of payment therefore; (b) when such securities are
called, redeemed or retired or otherwise become payable; (c) for
examination by any broker selling any such securities in accordance with
"street delivery" custom; (d) in exchange for, or upon conversion into,
other securities alone or other securities and cash whether pursuant to
any plan of merger, consolidation, reorganization, recapitalization or
readjustment, or otherwise; (e) upon conversion of such securities
pursuant to their terms into other securities; (f) upon exercise of
subscription, purchase or other similar rights represented by such
securities; (g) for the purpose of exchanging interim receipts or
temporary securities for definitive securities; (h) for the purpose of
redeeming in kind shares of common stock of the Fund upon delivery thereof
to Custodian; or (i) for other proper corporate purposes.

As to any deliveries made by Custodian pursuant to items (a),
(b), (d), (e), (f), and (g), securities or cash receivable in exchange
therefore shall be deliverable to Custodian.

Before making any such transfer, exchange or delivery, Custodian
shall receive (and may rely upon) an officers' certificate requesting such
transfer, exchange or delivery, and stating that it is for a purpose
permitted under the terms of items (a), (b), (c), (d), (e), (f), (g) or
(h) of this Section 5 and also, in respect of item (i), upon receipt of an
officers' certificate specifying the securities to be delivered, setting
forth the purpose for which such delivery is to be made, declaring such
purpose to be a proper corporate purpose, and naming the person or persons
to whom delivery of such securities shall be made; provided, however, that
an officers' certificate need not precede any such transfer, exchange or
delivery of a money market instrument, or any other security with same or
next-day settlement, if the President, a Vice President, the Secretary or
the Treasurer of the Fund issues appropriate oral or facsimile
instructions to Custodian and an appropriate officers' certificate is
received by Custodian within two business days thereafter.

6. Custodian's Acts Without Instructions

Unless and until Custodian receives an officers' certificate to
the contrary, Custodian shall: (a) present for payment all coupons and
other income items held by it for the account of the Fund, which call for
payment upon presentation and hold the cash received by it upon such
payment for the account of the Fund; (b) collect interest and cash
dividends received, with notice to the Fund, for the account of the Fund;
(c) hold for the account of the Fund hereunder all stock dividends, rights
and similar securities issued with respect to any securities held by it
hereunder; and (d) execute as agent on behalf of the Fund, all necessary
ownership certificates required by the Internal Revenue Code or the Income
Tax Regulations of the United States Treasury Department or under the laws
of any state now or hereafter in effect, inserting the Fund's name on such
certificates as the owner of the securities covered thereby, to the extent
it may lawfully do so.

7. Registration of Securities

Except as otherwise directed by an officers' certificate,
Custodian shall register all securities, except such as are in bearer
form, in the name of a registered nominee of Custodian as defined in the
Internal Revenue Code and any Regulations of the Treasury Department
issued hereunder or in any provision of any subsequent federal tax law
exempting such transaction from liability for stock transfer taxes, and
shall execute and deliver all such certificates in connection therewith as
may be required by such laws or regulations or under the laws of any
state. Custodian shall use its best efforts to the end that the specific
securities held by it hereunder shall be at all times identifiable in its
records.

8. Voting and Other Action

9. Transfer Tax and Other Disbursements

10. Concerning Custodian

Custodian shall be paid as compensation for its services
pursuant to this Agreement such compensation as may from time to time be
agreed upon in writing between the two parties. Until modified in
writing, such compensation shall be as set forth in Exhibit A attached
hereto.

Custodian shall not be liable for any action taken in good faith
upon any certificate herein described or certified copy of any resolution
of the Board, and may rely on the genuineness of any such document which
it may in good faith believe to have been validly executed.

11. Subcustodians

Custodian is hereby authorized to engage another bank or trust
company as a Subcustodian for all or any part of the Fund's assets, so
long as any such bank or trust company is a bank or trust company
organized under the laws of any state of the United States, having an
aggregate capital, surplus and undivided profit, as shown by its last
published report, of not less than Two Million Dollars ($2,000,000) and
provided further that, if the Custodian utilizes the services of a
Subcustodian, the Custodian shall remain fully liable and responsible for
any losses caused to the Fund by the Subcustodian as fully as if the
Custodian was directly responsible for any such losses under the terms of
the Custodian Agreement.

Notwithstanding anything contained herein, if the Fund requires
the Custodian to engage specific Subcustodians for the safekeeping and/or
clearing of assets, the Fund agrees to indemnify and hold harmless
Custodian from all claims, expenses and liabilities incurred or assessed
against it in connection with the use of such Subcustodian in regard to
the Fund's assets, except as may arise from its own negligent action,
negligent failure to act or willful misconduct.

12. Reports by Custodian

Custodian shall furnish the Fund periodically as agreed upon
with a statement summarizing all transactions and entries for the account
of Fund. Custodian shall furnish to the Fund, at the end of every month,
a list of the portfolio securities showing the aggregate cost of each
issue. The books and records of Custodian pertaining to its actions under
this Agreement shall be open to inspection and audit at reasonable times
by officers of, and of auditors employed by, the Fund.

13. Termination or Assignment

This Agreement may be terminated by the Fund, or by Custodian,
on ninety (90) days notice, given in writing and sent by registered mail
to Custodian at P.O. Box 2054, Milwaukee, Wisconsin 53201, or to the Fund
at Wood Island, Third Floor, 80 E. Sir Francis Drake Blvd., Larkspur,
CA 94939, as the case may be. Upon any termination of this Agreement,
pending appointment of a successor to Custodian or a vote of the
shareholders of the Fund to dissolve or to function without a custodian of
its cash, securities and other property, Custodian shall not deliver cash,
securities or other property of the Fund to the Fund, but may deliver them
to a bank or trust company of its own selection, having an aggregate
capital, surplus and undivided profits, as shown by its last published
report of not less than Two Million Dollars ($2,000,000) as a Custodian
for the Fund to be held under terms similar to those of this Agreement,
provided, however, that Custodian shall not be required to make any such
delivery or payment until full payment shall have been made by the Fund of
all liabilities constituting a charge on or against the properties then
held by Custodian or on or against Custodian, and until full payment shall
have been made to Custodian of all its fees, compensation, costs and
expenses, subject to the provisions of Section 10 of this Agreement.

This Agreement may not be assigned by Custodian without the
consent of the Fund, authorized or approved by a resolution of its Board
of Directors.

14. Deposits of Securities in Securities Depositories

No provision of this Agreement shall be deemed to prevent the
use by Custodian of a central securities clearing agency or securities
depository, provided, however, that Custodian and the central securities
clearing agency or securities depository meet all applicable federal and
state laws and regulations, and the Board of Directors of the Fund
approves by resolution the use of such central securities clearing agency
or securities depository.

15. Records

Executed in several counterparts, each of which is an original.

Attest: FIRST WISCONSIN TRUST COMPANY

_______________________________ By _________________________________
ASSISTANT SECRETARY VICE PRESIDENT

Attest: REYNOLDS MONEY MARKET FUND

________________________________ By _________________________________

EXHIBIT 8.3

CUSTODIAN AGREEMENT

THIS AGREEMENT made on January 29, 1992, between REYNOLDS
OPPORTUNITY FUND, a Maryland Corp. (hereinafter called the "Fund"), and
FIRST WISCONSIN TRUST COMPANY, a corporation organized under the laws of
the State of Wisconsin (hereinafter called "Custodian"),

W I T N E S S E T H :

WHEREAS, the Fund desires that its securities and cash shall be
hereafter held and administered by Custodian pursuant to the terms of this
Agreement;

NOW, THEREFORE, in consideration of the mutual agreements herein
made, the Fund and Custodian agree as follows:

1. Definitions

The word "securities" as used herein includes stocks, shares,
bonds, debentures, notes, mortgages or other obligations, and any
certificates, receipts, warrants or other instruments representing rights
to receive, purchase or subscribe for the same, or evidencing or
representing any other rights or interests therein, or in any property or
assets.

The word "Board" shall mean Board of Directors of Reynolds
Opportunity Fund.

2. Names, Titles and Signatures of the Fund's Officers

3. Receipt and Disbursement of Money

Before making any such payment, Custodian shall receive (and may
rely upon) an officers' certificate requesting such payment and stating
that it is for a purpose permitted under the terms of items (a), (b), (c)
or (d) of this Subsection A, and also, in respect of item (e), upon
receipt of an officers' certificate specifying the amount of such payment,
setting forth the purpose for which such payment is to be made, declaring
such purpose to be a proper corporate purpose, and naming the person or
persons to whom such payment is to be made, provided, however, that an
officers' certificate need not precede the disbursement of cash for the
purpose of purchasing a money market instrument, or any other security
with same or next-day settlement, if the President, a Vice President, the
Secretary or the Treasurer of the Fund issues appropriate oral or
facsimile instructions to Custodian and an appropriate officers'
certificate is received by Custodian within two business days thereafter.

B. Custodian is hereby authorized to endorse and collect all
checks, drafts or other orders for the payment of money received by
Custodian for the account of the Fund.

4. Segregated Accounts

5. Transfer, Exchange, Redelivery, etc. of Securities

As to any deliveries made by Custodian pursuant to items (a),
(b), (d), (e), (f), and (g), securities or cash receivable in exchange
therefore shall be deliverable to Custodian.

6. Custodian's Acts Without Instructions

Unless and until Custodian receives an officers' certificate to
the contrary, Custodian shall: (a) present for payment all coupons and
other income items held by it for the account of the Fund, which call for
payment upon presentation and hold the cash received by it upon such
payment for the account of the Fund; (b) collect interest and cash
dividends received, with notice to the Fund, for the account of the Fund;
(c) hold for the account of the Fund hereunder all stock dividends, rights
and similar securities issued with respect to any securities held by it
hereunder; and (d) execute as agent on behalf of the Fund, all necessary
ownership certificates required by the Internal Revenue Code or the Income
Tax Regulations of the United States Treasury Department or under the laws
of any state now or hereafter in effect, inserting the Fund's name on such
certificates as the owner of the securities covered thereby, to the extent
it may lawfully do so.

7. Registration of Securities

8. Voting and Other Action

9. Transfer Tax and Other Disbursements

10. Concerning Custodian

Custodian shall be paid as compensation for its services
pursuant to this Agreement such compensation as may from time to time be
agreed upon in writing between the two parties. Until modified in
writing, such compensation shall be as set forth in Exhibit A attached
hereto.

11. Subcustodians

12. Reports by Custodian

13. Termination or Assignment

This Agreement may not be assigned by Custodian without the
consent of the Fund, authorized or approved by a resolution of its Board
of Directors.

14. Deposits of Securities in Securities Depositories

15. Records

Executed in several counterparts, each of which is an original.

Attest: FIRST WISCONSIN TRUST COMPANY

________________________________ By _________________________________
ASSISTANT SECRETARY VICE PRESIDENT

Attest: REYNOLDS OPPORTUNITY FUND

________________________________ By _________________________________

EXHIBIT 8.4

CUSTODIAN AGREEMENT

THIS AGREEMENT made on January 29, 1992, between REYNOLDS
U.S. GOVERNMENT BOND FUND, a Maryland Corp. (hereinafter called the
"Fund"), and FIRST WISCONSIN TRUST COMPANY, a corporation organized under
the laws of the State of Wisconsin (hereinafter called "Custodian"),

W I T N E S S E T H :

WHEREAS, the Fund desires that its securities and cash shall be
hereafter held and administered by Custodian pursuant to the terms of this
Agreement;

NOW, THEREFORE, in consideration of the mutual agreements herein
made, the Fund and Custodian agree as follows:

1. Definitions

The word "Board" shall mean Board of Directors of Reynolds
U.S. Government Bond Fund.

2. Names, Titles and Signatures of the Fund's Officers

3. Receipt and Disbursement of Money

Before making any such payment, Custodian shall receive (and may
rely upon) an officers' certificate requesting such payment and stating
that it is for a purpose permitted under the terms of items (a), (b), (c)
or (d) of this Subsection A, and also, in respect of item (e), upon
receipt of an officers' certificate specifying the amount of such payment,
setting forth the purpose for which such payment is to be made, declaring
such purpose to be a proper corporate purpose, and naming the person or
persons to whom such payment is to be made, provided, however, that an
officers' certificate need not precede the disbursement of cash for the
purpose of purchasing a money market instrument, or any other security
with same or next-day settlement, if the President, a Vice President, the
Secretary or the Treasurer of the Fund issues appropriate oral or
facsimile instructions to Custodian and an appropriate officers'
certificate is received by Custodian within two business days thereafter.

B. Custodian is hereby authorized to endorse and collect all
checks, drafts or other orders for the payment of money received by
Custodian for the account of the Fund.

4. Segregated Accounts

5. Transfer, Exchange, Redelivery, etc. of Securities

As to any deliveries made by Custodian pursuant to items (a),
(b), (d), (e), (f), and (g), securities or cash receivable in exchange
therefore shall be deliverable to Custodian.

6. Custodian's Acts Without Instructions

Unless and until Custodian receives an officers' certificate to
the contrary, Custodian shall: (a) present for payment all coupons and
other income items held by it for the account of the Fund, which call for
payment upon presentation and hold the cash received by it upon such
payment for the account of the Fund; (b) collect interest and cash
dividends received, with notice to the Fund, for the account of the Fund;
(c) hold for the account of the Fund hereunder all stock dividends, rights
and similar securities issued with respect to any securities held by it
hereunder; and (d) execute as agent on behalf of the Fund, all necessary
ownership certificates required by the Internal Revenue Code or the Income
Tax Regulations of the United States Treasury Department or under the laws
of any state now or hereafter in effect, inserting the Fund's name on such
certificates as the owner of the securities covered thereby, to the extent
it may lawfully do so.

7. Registration of Securities

8. Voting and Other Action

9. Transfer Tax and Other Disbursements

10. Concerning Custodian

Custodian shall be paid as compensation for its services
pursuant to this Agreement such compensation as may from time to time be
agreed upon in writing between the two parties. Until modified in
writing, such compensation shall be as set forth in Exhibit A attached
hereto.

11. Subcustodians

12. Reports by Custodian

13. Termination or Assignment

This Agreement may not be assigned by Custodian without the
consent of the Fund, authorized or approved by a resolution of its Board
of Directors.

14. Deposits of Securities in Securities Depositories

15. Records

Executed in several counterparts, each of which is an original.

Attest: FIRST WISCONSIN TRUST COMPANY

________________________________ By _________________________________
ASSISTANT SECRETARY VICE PRESIDENT

Attest: REYNOLDS U.S. GOVERNMENT BOND
FUND

________________________________ By _________________________________

EXHIBIT 9.1

ADMINISTRATION AGREEMENT

AGREEMENT made this ____ day of _________, 1988, between
REYNOLDS BLUE CHIP GROWTH FUND, INC., a Maryland corporation (the "Fund"),
and FIDUCIARY MANAGEMENT, INC., a Wisconsin corporation (the
"Administrator").

W I T N E S S E T H :

WHEREAS, the Fund is in the process of registering with the
Securities and Exchange Commission as an open-end management investment
company under the Investment Company Act of 1940 (the "Act");

WHEREAS, upon so registering with the Securities and Exchange
Commission, the Fund will be a registered investment company; and

WHEREAS, the Fund desires to retain the Administrator to perform
the following management-related services for the Fund and the
Administrator desires to perform such services for the Fund.

NOW, THEREFORE, the Fund and the Administrator do mutually
promise and agree as follows:

1. Employment. The Fund hereby employs the Administrator to
be its Administrator for the period and on the terms set forth in this
Agreement. The Administrator hereby accepts such employment for the
compensation herein provided and agrees during such period to render the
services and to assume the obligations herein set forth.

2. Authority and Duties of the Administrator. The
Administrator shall perform the following management-related services for
the Fund:

(a) Prepare and maintain the books, accounts and other
documents specified in Rule 31a-1, under the Act in accordance
with the requirements of Rule 31a-1 and Rule 31a-2 under the
Act;

(b) Determine the Fund's net asset value in accordance
with the provisions of the Fund's Articles of Incorporation and
its Registration Statement;

(d) Prepare the financial statements contained in reports
to stockholders of the Fund;

(e) Prepare for execution by the Fund and file all of the
Fund's federal and state tax returns;

(f) Prepare reports to and filings with the Securities and
Exchange Commission (other than the Fund's Registration
Statement on Form N-1A);

(g) Prepare reports to and filings with state Blue Sky
authorities;

(h) Furnish statistical and research data, clerical,
accounting and bookkeeping services and stationery and office
supplies; and

(i) Keep and maintain the Fund's financial accounts and
records, and generally assist in all aspects of the Fund's
operations to the extent agreed to by the Administrator and the
Fund.

The Administrator shall not act, and shall not be required to
act, as an investment adviser to the Fund and shall not have any authority
to supervise the investment or reinvestment of the cash, securities or
other property comprising the Fund's assets or to determine what
securities or other property may be purchased or sold by the Fund. The
Administrator shall for all purposes herein be deemed to be an independent
contractor and shall, unless otherwise expressly provided or authorized,
have no authority to act for or represent the Fund in any way or otherwise
be deemed an agent of the Fund.

3. Expenses. The Administrator, at its own expense and
without reimbursement from the Fund, shall furnish office space, and all
necessary office facilities, equipment and executive personnel for
performing the services required to be performed by it under the
Agreement. The Administrator shall not be required to pay any expenses of
the Fund. The expenses of the Fund's operations borne by the Fund include
by way of illustration and not limitation, directors fees paid to those
directors who are not interested persons of the Fund, as defined in the
Act, the professional costs of preparing and the costs of printing its
registration statements required under the Securities Act of 1933 and the
Act (and amendments thereto), and the expense of registering its shares
with the Securities and Exchange Commission and in the various states, the
printing and distribution cost of prospectuses mailed to existing
shareholders, the cost of stock certificates, director and officer
liability insurance, the printing and distribution costs of reports to
stockholders, reports to government authorities and proxy statements,
interest charges, taxes, legal expenses, association membership dues,
auditing services, insurance premiums, brokerage and other expenses
connected with the execution of portfolio securities transactions, fees
and expenses of the custodian of the Fund's assets, printing and mailing
expenses and charges and expenses of dividend disbursing agents,
registrars and stock transfer agents.

4. Compensation of the Administrator. For the services to be
rendered by the Administrator hereunder, the Fund shall pay to the
Administrator an administration fee, paid monthly, based on the average
net asset value of the Fund, as determined by valuations made as of the
close of each business day of the month. The administration fee shall be
1/12 of 0.2% of such net asset value up to and including $30,000,000, and
1/12 of 0.1% of the average net asset value of the Fund in excess of
$30,000,000. For any month in which this Agreement is not in effect for
the entire month, such fee shall be reduced proportionately on the basis
of the number of calendar days during which it is in effect and the fee
computed upon the average net asset value of the business days during
which it is so in effect.

5. Exclusivity. The services of the Administrator to the Fund
hereunder are not to be deemed exclusive and the Administrator shall be
free to furnish similar services to others as long as the services
hereunder are not impaired thereby. During the period that this Agreement
is in effect, the Administrator shall be the Fund's sole administrator.

6. Liability. In the absence of willful misfeasance, bad
faith, gross negligence or reckless disregard of obligations or duties
hereunder on the part of the Administrator, the Administrator shall not be
subject to liability to the Fund or to any shareholder of the Fund for any
act or omission in the course of, or connected with, rendering services
hereunder, or for any losses that may be sustained in the purchase,
holding or sale of any security.

7. Amendments and Termination. This Agreement may be amended
by the mutual consent of the parties. This Agreement may be terminated at
any time, without the payment of any penalty, by the board of directors of
the Fund upon the giving of ninety (90) days' written notice to the
Administrator. This Agreement may be terminated by the Administrator at
any time upon the giving of ninety (90) days' written notice to the Fund.
Upon termination of the Agreement the Administrator shall deliver to the
Fund all books, accounts and other documents then maintained by it
pursuant to Section 2 hereof.

IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be executed on the day first above written.

FIDUCIARY MANAGEMENT, INC.
(the "Administrator")

By: ___________________________ By: _________________________________
Secretary President

REYNOLDS BLUE CHIP GROWTH
FUND, INC.
(the "Fund")

By: ___________________________ By: _________________________________
Secretary President

EXHIBIT 9.2

ADMINISTRATION AGREEMENT

AGREEMENT made this 30th day of January, 1991, between REYNOLDS
BLUE CHIP GROWTH FUND, INC., a Maryland corporation (the "Company"), and
FIDUCIARY MANAGEMENT, INC., a Wisconsin corporation (the "Administrator").

W I T N E S S E T H :

WHEREAS, the Company desires to retain the Administrator to
perform the following management-related services for the Reynolds Money
Market Fund (the "Fund") and the Administrator desires to perform such
services for the Fund.

NOW, THEREFORE, the Company and the Administrator do mutually
promise and agree as follows:

1. Employment. The Company hereby employs the Administrator
to be the Fund's Administrator for the period and on the terms set forth
in this Agreement. The Administrator hereby accepts such employment for
the compensation herein provided and agrees during such period to render
the services and to assume the obligations herein set forth.

2. Authority and Duties of the Administrator. The
Administrator shall perform the following management-related services for
the Fund:

(a) Prepare and maintain the books, accounts and other
documents specified in Rule 31a-1, under the Act in accordance
with the requirements of Rule 31a-1 and Rule 31a-2 under the
Act;

(b) Determine the Fund's net asset value in accordance
with the provisions of the Company's Articles of Incorporation
and its Registration Statement;

(d) Prepare the financial statements contained in reports
to stockholders of the Fund;

(e) Prepare for execution by the Fund and file all of the
Fund's federal and state tax returns;

(f) Prepare reports to and filings with the Securities and
Exchange Commission (other than the Fund's Registration
Statement on Form N-1A);

(g) Prepare reports to and filings with state Blue Sky
authorities;

(h) Furnish statistical and research data, clerical,
accounting and bookkeeping services and stationery and office
supplies; and

(i) Keep and maintain the Fund's financial accounts and
records, and generally assist in all aspects of the Fund's
operations to the extent agreed to by the Administrator and the
Company.

3. Expenses. The Administrator, at its own expense and
without reimbursement from the Company, shall furnish office space, and
all necessary office facilities, equipment and executive personnel for
performing the services required to be performed by it under the
Agreement. The Administrator shall not be required to pay any expenses of
the Fund. The expenses of the Fund's operations borne by the Fund include
by way of illustration and not limitation, directors fees paid to those
directors who are not interested persons of the Company, as defined in the
Act, the professional costs of preparing and the costs of printing
registration statements required under the Securities Act of 1933 and the
Act (and amendments thereto), and the expense of registering its shares
with the Securities and Exchange Commission and in the various states, the
printing and distribution cost of prospectuses mailed to existing
shareholders, the cost of stock certificates (if any), director and
officer liability insurance, the printing and distribution costs of
reports to stockholders, reports to government authorities and proxy
statements, interest charges, taxes, legal expenses, association
membership dues, auditing services, insurance premiums, brokerage and
other expenses connected with the execution of portfolio securities
transactions, fees and expenses of the custodian of the Fund's assets,
printing and mailing expenses and charges and expenses of dividend
disbursing agents, registrars and stock transfer agents.

4. Compensation of the Administrator. For the services to be
rendered by the Administrator hereunder, the Company through the Fund
shall pay to the Administrator an administration fee, paid monthly, based
on the average net asset value of the Fund, as determined by valuations
made as of the close of each business day of the month. The
administration fee shall be 1/12 of 0.1% of such net asset value. For any
month in which this Agreement is not in effect for the entire month, such
fee shall be reduced proportionately on the basis of the number of
calendar days during which it is in effect and the fee computed upon the
average net asset value of the business days during which it is so in
effect.

7. Amendments and Termination. This Agreement may be amended
by the mutual consent of the parties. This Agreement may be terminated at
any time, without the payment of any penalty, by the board of directors of
the Company upon the giving of ninety (90) days' written notice to the
Administrator. This Agreement may be terminated by the Administrator at
any time upon the giving of ninety (90) days' written notice to the
Company. Upon termination of the Agreement the Administrator shall
deliver to the Company all books, accounts and other documents then
maintained by it pursuant to Section 2 hereof.

IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be executed on the day first above written.

FIDUCIARY MANAGEMENT, INC.
(the "Administrator")

By: ___________________________ By: _________________________________
Secretary President

REYNOLDS BLUE CHIP GROWTH
FUND, INC.
(the "Company")

By: ____________________________ By: _________________________________
Secretary President

Exhibit 9.3

ADMINISTRATION AGREEMENT

Agreement made this ____ day of January, 1992, between Reynolds
Funds, Inc., a Maryland corporation (the "Company"), and Fiduciary
Management, Inc., a Wisconsin corporation (the "Administrator").

W I T N E S S E T H:

WHEREAS, the Company is registered with the Securities and
Exchange Commission under the Investment Company Act of 1940 (the "Act")
as an open-end management investment company comprising a series of four
mutual funds, the Reynolds Blue Chip Growth Fund, the Reynolds Opportunity
Fund, the Reynolds U.S. Government Bond Fund and the Reynolds Money Market
Fund; and

WHEREAS, the Company desires to retain the Administrator to
perform the following management-related services for the Reynolds
Opportunity Fund (the "Fund") and the Administrator desires to perform
such services for the Fund.

NOW, THEREFORE, the Company and the Administrator do mutually
promise and agree as follows:

2. Authority and Duties of the Administrator. The
Administrator shall perform the following management-related services for
the Fund:

(a) Prepare and maintain the books, accounts and other
documents specified in Rule 31a-1, under the Act in accordance with
the requirements of Rule 31a-1 and Rule 31a-2 under the Act;

(b) Determine the Fund's net asset value in accordance with the
provisions of the Company's Articles of Incorporation and its
Registration Statement;

(d) Prepare the financial statements contained in reports to
stockholders of the Fund;

(e) Prepare for execution by the Fund and file all of the
Fund's federal and state tax returns;

(f) Prepare reports to and filings with the Securities and
Exchange Commission (other than the Company's Registration Statement
on Form N-1A);

(g) Prepare reports to and filings with state Blue Sky
authorities;

(h) Furnish statistical and research data, clerical, accounting
and bookkeeping services and stationery and office supplies; and

(i) Keep and maintain the Fund's financial accounts and
records, and generally assist in all aspects of the Fund's operations
to the extent agreed to by the Administrator and the Company.

The Administrator shall not act, and shall not be required to
act, as an investment adviser to the Fund and shall not have any authority
to supervise the investment or reinvestment of the cash, securities or
other property comprising the Fund's assets or to determine what
securities or other property may be purchased or sold by the Fund. The
Administrator shall for all purposes herein be deemed to be an independent
contractor and shall, unless otherwise expressly provided or authorized,
have no authority to act for or represent the Company in any way or
otherwise be deemed an agent of the Company.

3. Expenses. The Administrator, at its own expense and
without reimbursement from the Company, shall furnish office space, and
all necessary office facilities, equipment and executive personnel for
performing the services required to be performed by it under the
Agreement. The Administrator shall not be required to pay any expenses of
the Fund. The expenses of the Fund's operations borne by the Fund include
by way of illustration and not limitation, directors fees paid to those
directors who are not interested persons of the Company, as defined in the
Act, the professional costs of preparing and the costs of printing
registration statements required under the Securities Act of 1933 and the
Act (and amendments thereto), the expense of registering its shares with
the Securities and Exchange Commission and in the various states, the
printing and distribution cost of prospectuses mailed to existing
shareholders, the cost of stock certificates (if any), director and
officer liability insurance, the printing and distribution costs of
reports to stockholders, reports to government authorities and proxy
statements, interest charges, taxes, legal expenses, association
membership dues, auditing services, insurance premiums, brokerage and
other expenses connected with the execution of portfolio securities
transactions, fees and expenses of the custodian of the Fund's assets,
printing and mailing expenses and charges and expenses of dividend
disbursing agents, registrars and stock transfer agents.

4. Compensation of the Administrator. For the services to be
rendered by the Administrator hereunder, the Company through the Fund
shall pay to the Administrator an administration fee, paid monthly, based
on the average net asset value of the Fund, as determined by valuations
made as of the close of each business day of the month. The
administration fee shall be 1/12 of 0.2% of such net asset value up to and
including $30,000,000 and 1/12 of 0.1% of the average net asset value of
the Fund in excess of $30,000,000. For any month in which this Agreement
is not in effect for the entire month, such fee shall be reduced
proportionately on the basis of the number of calendar days during which
it is in effect and the fee computed upon the average net asset value of
the business days during which it is so in effect.

7. Amendments and Termination. This Agreement may be amended
by the mutual consent of the parties. This Agreement may be terminated at
any time, without the payment of any penalty, by the board of directors of
the Company upon the giving of ninety (90) days' written notice to the
Administrator. This Agreement may be terminated by the Administrator at
any time upon the giving of ninety (90) days' written notice to the
Company. Upon termination of the Agreement the Administrator shall
deliver to the Company all books, accounts and other documents then
maintained by it pursuant to Section 2 hereof.

IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be executed on the day first above written.

FIDUCIARY MANAGEMENT, INC.
(the "Administrator")

By: ________________________ By: __________________________
Secretary President

REYNOLDS FUNDS, INC.
(the "Company")

By: ________________________ By: __________________________
Secretary President

Exhibit 9.4

ADMINISTRATION AGREEMENT

Agreement made this ____ day of January, 1992, between Reynolds
Funds, Inc., a Maryland corporation (the "Company"), and Fiduciary
Management, Inc., a Wisconsin corporation (the "Administrator").

W I T N E S S E T H:

WHEREAS, the Company is registered with the Securities and
Exchange Commission under the Investment Company Act of 1940 (the "Act")
as an open-end management investment company comprising a series of four
mutual funds, the Reynolds Blue Chip Growth Fund, the Reynolds Opportunity
Fund, the Reynolds U.S. Government Bond Fund and the Reynolds Money Market
Fund; and

WHEREAS, the Company desires to retain the Administrator to
perform the following management-related services for the Reynolds U.S.
Government Bond Fund (the "Fund") and the Administrator desires to perform
such services for the Fund.