PAUZE FUNDS, 485APOS, 2001-01-16

PAUZE FUNDS
485APOS, 2001-01-16

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SECURITIES AND EXCHANGE COMMISSION
Washington, D. C. 20549
FORM N-1A

REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933

Pre-Effective Amendment No.

Post-Effective Amendment No. 18 X

(Check appropriate box or boxes)
and/or

REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT OF 1940

Post-Effective Amendment No. 18 X

PAUZE FUNDS - File Nos. 33-71562 and 811-8148
---------------------------------------------
(Exact Name of Registrant as Specified in Charter)

14340 Torrey Chase Blvd., Ste. 170, Houston, Texas 77014
--------------------------------------------------------
(Address of Principal Executive Offices) (Zip Code)

Registrant's Telephone Number, including Area Code: (281) 444-6012
--------------

Philip C. Pauze, President, Pauze Funds
14340 Torrey Chase Blvd. Ste. 170, Houston, Texas 77014
-------------------------------------------------------
(Name and Address of Agent for Service)

With Copy To:
Donald S. Mendelsohn, Brown, Cummins & Brown Co., L.P.A.
3500 Carew Tower, Cincinnati, Ohio 45202

Approximate Date of Proposed Public Offering:

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

/ / immediately upon filing pursuant to paragraph (b)
/ / on (date) pursuant to paragraph (b)
/ / 60 days after filing pursuant to paragraph (a)(1)
/ / on (date) pursuant to paragraph (a)(1)
/X/ 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>

PROSPECTUS

[LOGO]
PAUZE FUNDS(TM)
--------------------------------------------------------------------------------

PAUZE U.S. GOVERNMENT FUND(TM)
--------------------------------------------------------------------------------
PAUZE U.S. GOVERNMENT
LIMITED DURATION FUND(TM)

--------------------------------------------------------------------------------
PAUZE U.S. GOVERNMENT
INTERMEDIATE TERM BOND FUND(TM)
--------------------------------------------------------------------------------

PAUZE U.S. GOVERNMENT
SHORT TERM BOND FUND(TM)

--------------------------------------------------------------------------------
NO LOAD SHARES

For Information, Shareholder Services and Requests:

14340 Torrey Chase Blvd., Suite 170
Houston, Texas 77014
1-800-327-7170

[LOGO]

--------------------------------------------------------------------------------
AS WITH ALL MUTUAL FUNDS, THE SECURITIES AND EXCHANGE COMMISSION HAS NOT
DETERMINED THAT THE INFORMATION IN THIS PROSPECTUS IS ACCURATE OR COMPLETE, NOR
HAS IT APPROVED OR DISAPPROVED OF THE FUNDS' SHARES. IT IS A CRIMINAL OFFENSE TO
STATE OTHERWISE.

APRIL [ ], 2001

<PAGE>

TABLE OF CONTENTS

ABOUT THE FUNDS............................................................

HOW THE FUNDS HAVE PERFORMED...............................................

COSTS OF INVESTING IN THE FUNDS............................................

HOW TO PURCHASE SHARES.....................................................

HOW TO EXCHANGE SHARES.....................................................

HOW TO REDEEM SHARES.......................................................

MANAGEMENT OF THE FUNDS....................................................

SHAREHOLDER SERVICES.......................................................

HOW SHARES ARE VALUED......................................................

DISTRIBUTIONS AND TAXES....................................................

ADDITIONAL INFORMATION ABOUT INVESTMENT POLICIES AND RISKS.................

FINANCIAL HIGHLIGHTS.......................................................

<PAGE>

ABOUT THE FUNDS

INVESTMENT OBJECTIVE

Pauze Funds(TM)offers investors four fixed income funds: the Pauze U.S.
Government Fund, the Pauze U.S. Government Limited Duration Fund(TM), the Pauze
U.S. Government Intermediate Term Bond Fund(TM)and the Pauze U.S. Government
Short Term Bond Fund. The investment objective of each Fund is to provide
investors with a high total return (interest income plus or minus realized and
unrealized capital appreciation and depreciation) consistent with preservation
of capital and liquidity. Each Fund is designed to satisfy different needs, with
its own separate and distinct portfolio of U.S. government and/or government
agency securities within prescribed maturity ranges.

PRINCIPAL STRATEGIES

The Funds' advisor uses extensive fundamental and technical analysis to
formulate interest rate forecasts. When the advisor believes that interest rates
will fall, it will lengthen the average duration of a Fund's portfolio
securities to earn greater capital appreciation. When the advisor believes that
interest rates will rise, it will shorten the average duration of a Fund's
portfolio securities to reduce capital depreciation and preserve capital.

The U.S. GOVERNMENT FUND invests exclusively in U. S. government debt
securities, repurchase agreements backed by the U.S. government, and futures and
options on U.S. government debt securities for hedging purposes only. U.S.
government debt securities may be issued by the U. S. government, or by an
agency of the U. S. government, and include zero coupon securities. The Fund
invests in debt securities of varying maturities, based upon the Fund's
advisor's perception of market conditions, with no stipulated average maturity
or duration.

The Fund's advisor seeks high total return by restructuring the average
duration of the Fund's portfolio securities to take advantage of anticipated
changes in interest rates.

The U.S. GOVERNMENT LIMITED DURATION FUND invests exclusively in U.S.
government debt securities and repurchase agreements backed by the U.S.
government. U.S. government debt securities may be issued by the U. S.
government, or by an agency of the U. S. government, and include zero coupon
securities. The Fund will limit its investment in zero coupon securities to 25%
of the Fund's total net assets. The Fund invests in debt securities of varying
maturities, based upon the Fund's advisor's perception of market conditions,
with no stipulated average maturity.

The Fund's advisor seeks high total return by restructuring the average
duration of the Fund's portfolio securities to take advantage of anticipated
changes in interest rates. Under normal circumstances, the Fund will maintain an
average duration of no more than ten years. [Average] duration is the
time-weighted average of the discounted cash flows thrown off by the bonds in
the Fund's portfolio where each weight is the actual time that the Fund would
have to wait to receive that cash flow.

1
<PAGE>

securities may be issued by the U. S. government or by an agency of the U. S.
government, and include zero coupon securities. The Fund's advisor will
restructure the average duration of the Fund's portfolio to take advantage of
anticipated changes in interest rates, but will maintain the weighted average
maturity of the Fund's portfolio between three and ten years.

The U.S. GOVERNMENT SHORT TERM BOND FUND invests exclusively in U.S.
government debt securities, repurchase agreements backed by the U.S. government,
and futures and options on U.S. government debt securities for hedging purposes
only. U.S. government debt securities may be issued by the U. S. government, or
by an agency of the U. S. government, and include zero coupon securities. The
Fund's advisor will restructure the average duration of the Fund's portfolio to
take advantage of anticipated changes in interest rates, but will maintain the
weighted average maturity of the Fund's portfolio between one and three years.

PRINCIPAL RISKS OF INVESTING IN THE FUNDS

INTEREST RATE RISK. The value of your investment may decrease when interest
rates rise. Because a portfolio with a longer duration is impacted by interest
rate changes more than one with a shorter duration, the share price of the U.S.
Government Fund will be more volatile than the U.S. Government Limited Duration
Fund, the share price of the U.S. Government Limited Duration Fund will be more
volatile than the U.S. Government Intermediate Term Bond Fund, and the share
price of the U.S. Government Intermediate Term Bond Fund will be more volatile
than the U.S. Government Short Term Bond Fund. Zero coupon securities tend to be
more sensitive to changes in interest rates than other types of U.S. government
securities. As a result, a rise or fall in interest rates will have a more
significant impact on the market value of these securities.

CREDIT RISK. The issuer of the fixed income security (U.S. government agencies)
may not be able to make interest and principal payments when due.

PREPAYMENT RISK. During periods of declining interest rates, prepayment of loans
underlying mortgage-backed and asset-backed securities usually accelerates.
Prepayment may shorten the effective maturities of these securities and a Fund
may have to reinvest at a lower interest rate.

GOVERNMENT RISK. It is possible that the U.S. government would not provide
financial support to its agencies or instrumentalities if it is not required to
do so by law. If a U.S. government agency or instrumentality in which the Fund
invests defaults and the U.S. government does not stand behind the obligation,
the Fund's share price or yield could fall.

The U. S. government's guarantee of ultimate payment of principal and
timely payment of interest of the U. S. government securities owned by a Fund
does not imply that the Fund's shares are guaranteed or that the price of the
Fund's shares will not fluctuate.

MANAGEMENT RISK. Each Fund's success at achieving its investment objective is
dependent upon the Fund's advisor correctly forecasting future changes in
interest rates. However, there is no assurance that the advisor will
successfully forecast interest rates and, if its forecasts are wrong, the Fund
may suffer a loss of principal or fail to fully participate in capital
appreciation and the Fund may not have a yield as high as it might have
otherwise.

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<PAGE>

PORTFOLIO TURNOVER RISK. Each Fund may at times actively and frequently trade
bonds and, as result, have a portfolio turnover rate that is higher than other
bond funds. Higher portfolio turnover would result in a Fund paying
above-average amounts of markups to dealers (which will lower the Fund's total
return) and could result in shareholders paying above-average amounts of taxes
on realized investment gain. Any short-term gain realized on securities will be
taxed to shareholders as ordinary income. These factors may negatively affect a
Fund's performance.

As with any mutual fund investment, each Fund's returns will vary and you
could lose money.

IS THIS FUND RIGHT FOR YOU?

The Funds may be a suitable investment for:

o long term investors seeking a fund with an income and capital preservation
strategy
o investors seeking to diversify their holdings with bonds and other fixed
income securities
o investors willing to accept price fluctuations in their investments.

HOW THE FUNDS HAVE PERFORMED

Except for the U.S. Government Fund, which is recently organized and has
less than one calendar year of operations, the following charts and tables show
the variability of each Fund's returns, which is one indicator of the risks of
investing in the Fund. The bar charts show changes in each Fund's returns from
year to year since the Fund's inception. The tables show how each Fund's average
annual total returns over time compare to those of a broad-based securities
market index. Of course, each Fund's past performance is not necessarily an
indication of its future performance.

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<PAGE>

Annual Total Returns as of December 31, of Each Year:

[updated bar charts - to be supplied]

[GRAPHIC OMITTED]

--------------------------------------------------------
Pauze U.S. Government Total Return Bond Fund
Annual Total Returns

1995 14.26%
1996 0.90%
1997 12.90%
1998 3.47%
1999 -4.20%
--------------------------------------------------------

[GRAPHIC OMITTED]

--------------------------------------------------------
Pauze U.S. Government Intermediate Term Bond Fund
Annual Total Returns

1997 4.77%
1998 4.69%
1999 -2.80%
--------------------------------------------------------

[GRAPHIC OMITTED]

--------------------------------------------------------
Pauze U.S. Government Short Term Bond Fund
Annual Total Returns

1997 2.71%
1998 5.11%
1999 0.46%
--------------------------------------------------------

4
<PAGE>

AVERAGE ANNUAL TOTAL RETURNS FOR THE PERIODS ENDING 12/31/2000:

[updated information to be supplied]

1 Year Since Inception

U.S. Government Limited Duration Fund1 [ ]% [ ]%*
Lehman Government Bond Index [ ]% [ ]%

U.S. Government Intermediate Term Bond Fund [ ]% [ ]%**
Lehman U.S. Treas. Intermediate Index [ ]% [ ]%

U.S. Government Short Term Bond Fund [ ]% [ ]%***
Lehman 1-3 Government Index [ ]% [ ]%

1Formerly the U.S. Government Total Return Bond Fund.

*January 10, 1994 **October 10, 1996 ***September 3, 1996

For the U.S. Government Limited Duration Fund (formerly the U.S. Government
Total Return Bond Fund), the highest return during the periods shown for a
calendar quarter was [ ]% in the [ ] quarter of [ ], and the lowest return was [
]% for the [ ] quarter of [ ].

For the U.S. Government Intermediate Term Bond Fund, the highest return
during the periods shown for a calendar quarter was [ ]% in the [ ] quarter of [
], and the lowest return was [ ]% for the [ ] quarter of [ ].

For the U.S. Government Short Term Bond Fund, the highest return during the
periods shown for a calendar quarter was [ ]% in the [ ] quarter of [ ], and the
lowest return was [ ]% for the [ ] quarter of [ ].

5
<PAGE>

COSTS OF INVESTING IN THE FUNDS

The following table describes the expenses and fees that you may pay if you
buy and hold shares of any of the Funds.

SHAREHOLDER FEES (FEES PAID DIRECTLY FROM YOUR INVESTMENT)
Maximum Sales Charge (Load) Imposed on Purchases None
Maximum Deferred Sales Charge (Load) None
Account Closing Fee (does not apply to exchanges) $10
Exchange fee None

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

<TABLE>
<CAPTION>
U.S. Gov. U.S. Gov. U.S. Gov.
U.S. Gov. Limited Intermediate Short Term
Fund Duration Fund1 Term Bond Fund Bond Fund

[need estimate of other expenses]

<S> <C> <C> <C> <C>
Management Fees 0.60% 0.60% 0.50% 0.50%
Distribution (12b-1) Fees 0.25% 0.25% 0.25% 0.25%
Other Expenses [ ]%2 0.86% 1.33% 2.05%
Total Annual Fund
Operating Expenses [ ]% 1.71% 2.08% 2.80%
</TABLE>

1 Formerly the U.S. Government Total Return Bond Fund.
2 Other expenses are estimated for the U.S. Government Fund's first fiscal year.

EXAMPLE:
--------

The example below is intended to help you compare the cost of investing in
the Funds with the cost of investing in other mutual funds. The example uses the
same assumptions as other mutual fund prospectuses: a $10,000 initial investment
for the time periods indicated, 5% annual total return, reinvested dividends and
distributions, constant operating expenses, and sale of all shares at the end of
each time period. Although your actual expenses may be different, based on these
assumptions your costs would be:

U.S. GOV. U.S. GOV. U.S. GOV.
U.S. GOV. LIMITED INTERMEDIATE SHORT TERM
FUND DURATION FUND TERM FUND FUND

[need estimate of expenses]

1 YEAR $[ ] $184 $221 $293

3 YEARS $[ ] $549 $662 $878

5 YEARS $938 $1,129 $1,489

10 YEARS $2,029 $2,420 $3,138

6
<PAGE>

HOW TO PURCHASE SHARES

The minimum initial investment is $25,000 and minimum subsequent investment
is $50, $30 per month per account for persons enrolled in an automatic
investment plan.

BY MAIL: You may purchase shares of the Funds by completing and signing the
Account Application form which accompanies this Prospectus and mailing it, in
proper form, together with a check made payable to the appropriate Fund, to the
address listed below:

PAUZE FUNDS(TM)
c/o Firstar Bank
P.O. Box 641367
Cincinnati, Ohio 45264-1367

When making subsequent investments, enclose your check with the return
remittance portion of the confirmation of your previous investment or indicate
on your check or a separate piece of paper your name, address and account number
and mail to the address set forth above. Third party checks will not be
accepted, and the Fund reserves the right to refuse to accept second party
checks.

BY TELEPHONE: Once your account is open, you may make investments by
telephone by calling 1-800-327-7170. Payment for shares purchased by telephone
is due within three business days after the date of the transaction. Investments
by telephone are not available in any Fund retirement account administered by
the Funds' administrator or their agents.

If your telephone order to purchase shares is canceled due to nonpayment
(whether or not your check has been processed by the Funds), you will be
responsible for any loss incurred by the Fund because of such cancellation.

BY WIRE: You may make your initial or subsequent investments in the Funds
by wire transfer. To do so, call the Funds at 1-800-327-7170 for a confirmation
number and wiring instructions.

To assure proper receipt, please be sure your bank included the Fund name
and the account number that has been assigned to you. If you are opening a new
account, please complete the Account Application form and mail it to the address
indicated in "By Mail" above after completing your wire arrangement.

Wire purchases are completed when wired payment is received and the Fund
accepts the purchase. The Fund and the Fund's distributor are not responsible
for any delays that occur in wiring funds, including delays in processing by the
bank. Note: federal funds wire purchase orders will be accepted only when the
Fund and Custodian Bank are open for business.

There are no wire fees charged by the Funds for purchases of $1,000 or
more. A wire fee of up to $20 will be charged by the Funds on wire purchases of
less than $1,000. Your bank also may charge wire fees for this service.

BY AUTOMATIC INVESTMENT PLAN: Once your account is open, you may make
investments automatically by completing the automatic investment plan form
authorizing Pauze Funds(TM) to

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<PAGE>

draw on your bank account. You may automatically invest as little as $30 a
month, beginning within thirty (30) days after your account is opened. Ask your
bank whether it will honor debits through the Automated Clearing House ("ACH")
or, if necessary, preauthorized checks. You may change the date or amount of
your investment any time by written instruction received by Pauze Funds(TM) at
least fifteen business days before the change is to become effective.

ADDITIONAL INFORMATION ABOUT PURCHASES

All purchases of shares are subject to acceptance by the Funds and are not
binding until accepted. The Funds reserve the right to reject any application or
investment. Orders become effective as of 4:00 p.m., Eastern time, Monday
through Friday, exclusive of business holidays.

Fees and charges associated with purchasing shares of the Funds are set
forth in the Funds' prospectus. However, investors may purchase and sell shares
through registered broker-dealers who may charge additional fees for their
services.

If checks are returned unpaid due to insufficient funds, stop payment or
other reasons, the Fund will charge $20 and you will be responsible for any loss
incurred by the Fund with respect to canceling the purchase. To recover any such
loss or charge, the Funds reserve the right, without further notice, to redeem
shares already owned by any purchaser whose order is canceled and such a
purchaser may be prohibited from placing further orders unless investments are
accompanied by full payment by wire or cashier's check.

Investments paid for by checks drawn on foreign banks may be deferred until
such checks have cleared the normal collection process. In such instances, any
amounts charged to the Fund for collection procedures will be deducted from the
amount invested.

DISTRIBUTION (12B-1) FEES

Each Fund has adopted a plan under Rule 12b-1 that allows the Fund to pay
distribution and other fees for the sale and distribution of its shares. Each
plan provides that the applicable Fund will pay a 12b-1 fee at an annual rate of
0.25% of the Fund's average net assets to the advisor for its distribution
related services and expenses. Under the plans, the advisor bears all
distribution expenses of the Funds in excess of the 12b-1 fees. The fees
received by the advisor for any class of shares during any year may be more or
less than its costs for distribution related services provided to the class of
shares. Because the distribution fees are paid out of each Fund's assets on an
on-going basis, over time these fees will increase the cost of your investment
and may cost you more than paying other types of sales charges.

HOW TO EXCHANGE SHARES

You may exchange some or all of your shares for shares of the same class of
any other of the Pauze Funds(TM), which are properly registered for sale in your
state. An exchange involves the simultaneous redemption (sale) of shares of one
Fund and purchase of shares of another Fund at the respective closing net asset
value and is a taxable transaction.

BY TELEPHONE: You may direct Pauze Funds(TM) to exchange your shares by
calling toll free 1-800-327-7170. In connection with such exchanges, neither the
Funds nor the transfer agent will be

8
<PAGE>

responsible for acting upon any instructions reasonably believed by them to be
genuine. The shareholder, as a result of this policy, will bear the risk of
loss. The Funds and/or the transfer agent will, however, employ reasonable
procedures to confirm that instructions communicated by telephone are genuine
(including requiring some form of personal identification, providing written
confirmation, and tape recording conversations); and if the Funds and/or the
transfer agent do not employ reasonable procedures, they may be liable for
losses due to unauthorized or fraudulent transactions.

BY MAIL: You may direct Pauze Funds(TM) in writing to exchange your shares.
The request must be signed exactly as the name appears on the registration.
(Before writing, read "Additional Information about Exchanges.")

ADDITIONAL INFORMATION ABOUT EXCHANGES

(1) All exchanges are subject to the minimum investment requirements and
any other applicable terms set forth in the prospectus for the Fund whose shares
are being acquired.

(2) There is presently no charge for exchanges. However, the Funds may
impose a $5 charge, which would be paid to the transfer agent, for each exchange
transaction out of any fund account, to cover administrative costs associated
with handling these exchanges. Shareholders will be notified before the Funds
impose an exchange fee.

(3) As with any other redemption, if the shares were purchased by check the
Funds may hold redemption proceeds until the purchase check has cleared. This
may take up to seven days. In such event, the purchase side of the exchange
transaction will also be delayed. You will be notified immediately if a Fund is
exercising this right.

(4) Shares may not be exchanged unless you have furnished Pauze Funds(TM)
with your tax identification number, certified as prescribed by the Internal
Revenue Code and Regulations, and the exchange is to an account with like
registration and tax identification number.

(5) The exchange privilege may be modified or terminated at any time.

HOW TO REDEEM SHARES

If your redemption request is received prior to close of trading on the New
York Stock Exchange (4:00 p.m. Eastern time), your redemption will be priced the
same day. Any redemption request received after that time will be priced the
next day.

BY MAIL: Your request must include:
a) original signatures of each registered owner exactly as the shares are
registered;
b) the fund name and the account number;
c) the number of shares or dollar amount to be redeemed; and
d) any additional documents that may be required for redemption by
corporations, partnerships, trusts or other entities.

Send your written request for redemption to: PAUZE FUNDS(TM)
C/O CHAMPION FUND SERVICES
14340 TORREY CHASE BLVD., SUITE 170
HOUSTON, TEXAS 77014

9
<PAGE>

BY TELEPHONE: You may request redemption by telephone. If you do not wish
to allow telephone redemptions by any person on the account, you should decline
that option on the account application.

This feature can only be used on non-institutional accounts if:
a) the redemption proceeds are to be mailed to the address of record or
wired to the pre-authorized bank account;
b) there has been no change of address of record on the account within
the preceding 30 days;
c) the person requesting the redemption can provide proper
identification; and
d) the proceeds of the redemption do not exceed $15,000.

In connection with telephone redemptions, neither the Funds nor the
transfer agent will be responsible for acting upon any instructions reasonably
believed by them to be genuine. The Funds and/or the transfer agent will,
however, employ reasonable procedures to confirm that instructions communicated
by telephone are genuine (including requiring some form of personal
identification, providing written confirmations, and tape recording
conversations); and if the Funds or the transfer agent do not employ reasonable
procedures, they may be liable for losses due to unauthorized or fraudulent
transactions.

SPECIAL REDEMPTION ARRANGEMENTS

Special arrangements may be made by institutional investors, or on behalf
of accounts established by brokers, advisers, banks or similar institutions, to
have redemption proceeds transferred by wire to pre-established accounts upon
telephone instructions. For further information call the Funds at
1-800-327-7170.

SIGNATURE GUARANTEE

Redemptions in excess of $50,000 currently require a signature guarantee. A
signature guarantee is required for all redemptions, regardless of the amount
involved, when proceeds are to be paid to someone other than the registered
owner of the shares to be redeemed, or if proceeds are to be mailed to an
address other than the registered address of record. A signature guarantee
verifies the authenticity of your signature and the guarantor must be an
eligible guarantor. In order to be eligible, the guarantor must be a participant
in a STAMP program (a Securities Transfer Agents Medallion Program). You may
call the Funds at 1-800-327-7170 to determine whether the guarantor is eligible.

REDEMPTION PROCEEDS MAY BE SENT TO YOU:

BY MAIL: If your redemption check is mailed, it is usually mailed within 48
hours of receipt of the redemption request; however, the Funds may hold
redemption proceeds for up to seven days. If the shares to be redeemed were
purchased by check, the redemption proceeds will not be mailed until the
purchase check has cleared, which may take up to seven days from the purchase
date. You

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<PAGE>

may avoid this requirement by investing by bank wire (federal funds). Please
notify the Fund promptly in writing of any change of address.

BY WIRE: You may authorize the Funds to transmit redemption proceeds by
wire provided you send written instructions with a signature guarantee at the
time of redemption. Proceeds from your redemption will usually be transmitted on
the first business day following the redemption. However, the Funds may hold
redemption proceeds for up to seven days. If the shares to be redeemed were
purchased by check, the redemption proceeds will not be wired until the purchase
check has cleared, which may take up to seven days from the purchase date. A
wire fee of up to $20 will be charged by the Funds, which is deducted from
redemption proceeds.

ADDITIONAL INFORMATION ABOUT REDEMPTIONS

(1) The redemption price may be more or less than your cost, depending on
the net asset value of the Fund's portfolio next determined after your request
is received.

(2) A request to redeem shares in an IRA or similar retirement account must
be accompanied by an IRS Form W4-P and must state a reason for withdrawal as
specified by the IRS. Proceeds from the redemption of shares from a retirement
account may be subject to withholding tax.

(3) Each Fund may redeem existing accounts and refuse a potential account
the privilege of having an account in the Fund if the Fund reasonably determines
that the failure to do so would have a material adverse consequence to the Fund
and its shareholders.

(4) Excessive short term trading has an adverse impact on effective
portfolio management as well as upon Fund expenses. The Funds may refuse
investments from shareholders who engage in short term trading, including
exchanges into a Fund.

ACCOUNT CLOSING FEE

In order to reduce Fund expenses, an account closing fee of $10 will be
assessed to shareholders who redeem all shares in their Fund account and direct
that redemption proceeds be directed to them by mail or wire. The charge is
payable directly to the transfer agent which, in turn, will reduce its charges
to the Fund by an equal amount. The account closing fee does not apply to
exchanges between Funds.

The purpose of the charge is to allocate to redeeming shareholders a more
equitable portion of the transfer agent's fee, including the cost of tax
reporting, which is based upon the number of shareholder accounts. When a
shareholder closes an account, the Fund must continue to carry the account on
its books, maintain the account records and complete year-end tax reporting.
With no assets, the account cannot pay its own expenses and imposes an unfair
burden on remaining shareholders.

SMALL ACCOUNTS

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<PAGE>

will reduce its charges to the Fund by an equal amount. The purpose of the
charge is to allocate the cost of maintaining shareholder accounts more
equitably among shareholders.

Active automatic investment plan, UGMA/UTMA, and retirement plan accounts
administered by the Funds' administrator or its agents or affiliates will not be
subject to the small account charge.

In order to reduce expenses, each Fund may redeem all of the shares in any
shareholder account, other than an active automatic investment plan, UGMA/UTMA
and retirement plan account, if, for a period of more than three months, the
account has a net value of $500 or less and the reduction in value is not due to
market action. If the Fund elects to close such accounts, it will notify
shareholders whose accounts are below the minimum of its intention to do so, and
will provide those shareholders with an opportunity to increase their accounts
by investing a sufficient amount to bring their accounts up to the minimum
amount within ninety (90) days of the notice. No account closing fee will be
charged to investors whose accounts are closed under the mandatory redemption
provision.

MANAGEMENT OF THE FUNDS

Pauze Swanson & Associates Investment Advisors, Inc., d/b/a Pauze Swanson
Capital Management Co.(TM), 14340 Torrey Chase Blvd., Suite 170, Houston, Texas
77014, the Funds' advisor, is a Texas corporation which was registered with the
Securities and Exchange Commission as an investment advisor in December 1993.
Mr. Philip C. Pauze, President and controlling shareholder of the advisor, is
primarily responsible for the day-to-day management of the U.S. Government
Limited Duration Fund's and the U.S. Government Short Term Fund's portfolios. He
has managed the U.S. Government Limited Duration Fund since commencement of
operations in January 1994 and the U.S. Government Short Term Fund since January
1998.

Mr. Pauze has specialized in managing portfolios of U.S. government
securities for trusts, small institutions, and retirement plans since 1985. Mr.
Philip Pauze assisted the California Funeral Directors Association in
establishing the California Master Trust (the "CMT") and has been its financial
consultant since inception. CMT's investment performance has been highly rated
by independent evaluators. In addition to the CMT, Mr. Philip Pauze serves as
the financial consultant to the government bond portfolio of the Pennsylvania
Funeral Trust, and to the California and Pennsylvania Funeral Directors
Association's Retirement Plans.

Since October 1998, Mr. Stephen P. Pauze, a Vice President of the advisor,
has been responsible for the day-to-day management of the U.S. Government
Intermediate Term Fund's portfolio. Mr. Stephen Pauze has been responsible for
the day-to-day management of the U.S. Government Fund's portfolio since
commencement of operations in April 2001. Stephen Pauze has a degree in
Financial Planning and served as broker-dealer wholesaler and an account
executive for the advisor in the Mid-Central and Southeast Regions of the United
States from June 1997 to October 1998. From April 1996 to June 1997, Mr. Stephen
Pauze was a supervisor at Roadway Express, Inc.

12
<PAGE>

For these services, the advisor received fees for the fiscal year ended April
30, 2000, as a percentage of net assets, as follows: U.S. Government Limited
Duration Fund, 0.60%; U.S. Government Intermediate Term Fund, 0.50%; and U.S.
Government Short Term Fund, 0.50%. The U.S. Government Fund is authorized to pay
the advisor a fee equal to 0.60% of its average daily net assets up to $100
million, 0.50% of its average daily net assets from $100,000,001 to $250
million, 0.45% of its average daily net assets from $250,000,001 to $500
million, and 0.40% of its average daily net assets in excess of $500 million.

SHAREHOLDER SERVICES

Each Fund has available a number of plans and services to meet the special
needs of certain investors. Plans available include, but are not limited to:

(1) payroll deduction plans, including military allotments;
(2) custodial accounts for minors;
(3) a flexible, systematic withdrawal plan; and
(4) various retirement plans such as IRA, 403(b)(7), 401(k) and
employer-adopted defined benefit and defined contribution plans.

There is an annual charge for each retirement plan fund account with
respect to which a service provider acts as custodian. If this charge is not
paid separately prior to the last business day of a calendar year or prior to a
total redemption, it will be deducted from the shareholder's account.

Application forms and brochures describing these plans and services can be
obtained by calling 1-800-327-7170.

HOW SHARES ARE VALUED

The price of your shares is based on the applicable Fund's net asset value
per share (NAV). The NAV is calculated at the close of trading (normally 4:00
p.m. Eastern time) on each day the New York Stock Exchange is open for business
(the Stock Exchange is closed on weekends, federal holidays and Good Friday).
The NAV is calculated by dividing the value of the Fund's total assets
(including interest and dividends accrued but not yet received) minus
liabilities (including accrued expenses) by the total number of shares
outstanding.

Each Fund's assets are generally valued at their market value. If market
prices are not available, or if an event occurs after the close of the trading
market that materially affects the values, assets may be valued at their fair
value.

Requests to purchase, exchange and sell shares are processed at the NAV
next calculated after we receive your order in proper form.

DISTRIBUTIONS AND TAXES

As a shareholder of a Fund, you are entitled to your share of the Fund's
distributed net income and any net gains realized on its investments. Dividend
and capital gains distributions will have tax consequences you should know
about.

13
<PAGE>

DIVIDEND AND CAPITAL GAIN DISTRIBUTIONS

Each Fund intends to distribute substantially all of its net investment
income as DIVIDENDS to its shareholders at the end of each month. Short-term
capital gains are distributed at the end of the calendar year and are included
in net investment income. Each Fund realizes long-term capital gains whenever it
sells securities held for more than one year for a higher price than it paid for
them. Each Fund intends to distribute substantially all of its net realized
long-term capital gains, if any, at the end of the calendar year as CAPITAL GAIN
DISTRIBUTIONS. Each Fund expects that its distributions will consist primarily
of dividends.

Before they are distributed, net long-term capital gains are included in
the value of each share. After they are distributed, the value of each share
drops by the per-share amount of the distribution. If you reinvest the
distribution, the total value of your account will not change.

REINVESTMENTS

Dividends and capital gain distributions are automatically reinvested in
additional shares in the same class of the applicable Fund, unless:

o you request the Fund in writing or by phone to pay dividend and/or capital
gain distributions to you in cash, or

o you direct the Fund to invest your distributions in any publicly available
Pauze Fund(TM) for which you have previously opened an account.

If your distribution check is returned as undeliverable, or not cashed
after 180 days, we will reinvest the check into your account at the then-current
net asset value and make future distributions in the form of additional shares.

TAXES

Distributions are subject to federal income tax and also may be subject to
state and local taxes. Each January, you will receive a tax statement showing
the kinds and total amount of all distributions you received during the previous
year. You must report distributions on your tax returns, even if they are
reinvested in additional shares.

Under federal law, the income derived from obligations issued by the U.S.
government and certain of its agencies and instrumentalities is exempt from
state income taxes. All states that tax personal income permit mutual funds to
pass through this tax exemption to shareholders provided applicable
diversification/threshold limits and reporting requirements are satisfied.

Buying a dividend creates a liability. This means buying shares shortly
before a net investment income or a capital gain distribution. You pay the full
pre-distribution price for the shares, then receive a portion of your investment
back as a distribution, which is taxable.

Redemptions and exchanges subject you to a tax on any capital gain. If you
sell shares for more than their cost, the difference is a capital gain. Your
gain may be either short term (for shares held for one year or less) or long
term (for shares held for more than one year).

14
<PAGE>

IMPORTANT: This is a brief summary of certain federal tax rules that apply
to the Fund. Tax matters are highly individual and complex, and you should
consult a qualified tax advisor about your personal situation.

ADDITIONAL INFORMATION ABOUT INVESTMENT POLICIES AND RISKS

PRINCIPAL STRATEGIES

United States Treasury securities are backed by the full faith and credit
of the U.S. government. These securities differ only in their interest rates,
maturities, timing of interest payments and times of issuance. Treasury bills
have initial maturities of one year or less, do not make semi-annual interest
payments and are purchased or sold at a discount from their face value; Treasury
notes have initial maturities of one to ten years and pay interest semiannually;
and Treasury bonds generally have initial maturities of greater than ten years
and pay interest semi-annually.

Among the bonds that may be purchased are GNMA Certificates (popularly
called "Ginnie Maes"). Ginnie Maes are backed by the full faith and credit of
the U.S. government. Ginnie Maes are mortgage-backed securities representing
part ownership of a pool of mortgage loans which are insured by the Federal
Housing Administration or Farmers' Home Administration or guaranteed by the
Veterans' Administration. Each Fund may invest in Ginnie Maes of the "fully
modified pass-through" type which are guaranteed as to the timely payment of
principal and interest by the Government National Mortgage Association, a U.S.
government corporation. Interest and principal payments (including prepayments)
on the mortgages underlying mortgage-backed securities are passed through to the
holders of the mortgage-backed security. Prepayments occur when a holder of the
mortgage prepays the remaining principal before the mortgage's scheduled
maturity date. As a result of the pass-through of prepayments of principal on
the underlying securities, mortgage-backed securities are often subject to more
rapid prepayments of principal than their stated maturity would indicate.
Because the prepayment characteristics of the underlying securities 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 price of the securities. During periods of
declining interest rates, such prepayments can be expected to accelerate and the
Fund would be required to reinvest the proceeds at the lower interest rates then
available. In addition, prepayments of mortgages which underlie securities
purchased at a premium may not have been fully amortized at the time the
obligation is repaid and may result in a loss. As a result of these principal
payment features, mortgage-backed securities are generally more volatile
investments than other U.S. government securities.

Each Fund may also purchase U.S. government and U.S. government agency zero
coupon securities. Zero coupon securities are created by separating the coupon
payments and the principal payment from a traditional bond and selling them as
individual securities. They include securities that have been stripped of their
unmatured interest coupons, as well as the individual interest coupons from
those securities that trade separately. Zero coupon securities do not make any
periodic interest payments. Instead, all of the interest and principal is paid
when the securities mature. Zero coupon securities issued by the U.S. government
or by an agency of the U.S. government are direct obligations of the U.S.
government or the agency, and the final maturity value is supported by the U.S.
government or agency security. Zero coupon securities are sold and

15
<PAGE>

priced at a deep discount to their maturity value, the degree of discount being
a function of the length of maturity and the interest rate at which they are
priced.

Interest Rate Sensitivity: The investment income of each Fund is based on the
income earned on the securities it holds, less expenses incurred; thus, a Fund's
investment income may be expected to fluctuate in response to changes in such
expenses or income. For example, the investment income of a Fund may be affected
if it experiences a net inflow of new money that is then invested in securities
whose yield is higher or lower than that earned on the then current investments.

Generally, the value of the securities held by a Fund, and thus the net
asset value ("NAV") of the Fund, will rise when interest rates decline.
Conversely, when interest rates rise, the value of fixed income securities, and
thus the NAV per share of the Fund, may be expected to decline. If the Fund's
advisor incorrectly forecasts interest rates, both the rate of return and the
NAV of the Fund may be adversely affected. As an example, if the advisor
forecasts that interest rates are generally to go up, and accordingly shortens
the maturities of the instruments within the Fund and interest rates in fact go
down, then the interest income gained by the Fund will be less than if the Fund
had not shortened its maturities. Additionally, any capital gain that might have
been achieved because of the longer maturities would be less with the shorter
maturities. Additionally, should the advisor incorrectly forecast that interest
rates are generally going down, lengthen the maturities of the instruments
within the Fund and interest rates in fact go up, then the value of the longer
maturities would decline more than those of the shorter maturities. Thus, the
NAV would also decline more. There is no assurance that the advisor will be
correct in its forecast of changes in interest rates nor that the strategies
employed by the advisor to take advantage of changes in the interest rate
environment will be successful, and thus there is no assurance that a Fund will
achieve its investment objective.

NON-PRINCIPAL STRATEGIES

Futures Contracts and Options: The U.S. Government Fund, the U.S. Government
Intermediate Term Bond Fund and the U.S. Government Short Term Bond Fund may
invest in futures contracts and option contracts on U.S. government debt
securities for hedging purposes only. Futures contracts and options contracts
pose additional risks. See the Statement of Additional Information for a
description of the risks.

Investment Objective: The investment objective of each Fund is not fundamental,
and may be changed by the Board of Trustees without shareholder approval. Any
such change may result in a Fund having an investment objective different from
what the shareholder considered appropriate at the time of investment in the
Fund.

Lending of Portfolio Securities: Each Fund may lend securities to broker-dealers
or institutional investors for their use in connection with short sales,
arbitrages and other securities transactions. A Fund will not lend portfolio
securities unless the loan is secured by collateral (consisting of any
combination of cash and U.S. government securities) in an amount at least equal
(on a daily mark-to-market basis) to the current market value of the securities
loaned. In the event of a bankruptcy or breach of agreement by the borrower of
the securities, the Fund could experience delays and costs in recovering the
securities loaned. A Fund will not enter into securities lending agreements
unless its custodian bank/lending agent will fully indemnify the Fund against
loss due to borrower default. A

16
<PAGE>

Fund may not lend securities with an aggregate market value of more than
one-third of the Fund's total net assets.

When-Issued and Delayed Delivery Securities: Each Fund may purchase debt
obligations on a "when-issued" basis or may purchase or sell securities for
delayed delivery. In when-issued or delayed delivery transactions, delivery of
the securities occurs beyond normal settlement period, but the Fund would not
pay for such securities or start earning interest on them until they are
delivered. However, when a Fund purchases securities on a when-issued or delayed
delivery basis, it immediately assumes the risks of ownership, including the
risk of price fluctuation. Failure of delivery of a security purchased on a
when-issued basis or delayed delivery basis may result in a loss or missed
opportunity to make an alternative investment. Depending on market conditions, a
Fund's when-issued and delayed delivery purchase commitments could cause its net
asset value per share to be more volatile, because such securities may increase
the amount by which the Fund's total assets, including the value of when-issued
and delayed delivery securities held by the Fund, exceed its net assets.

17
<PAGE>

FINANCIAL HIGHLIGHTS

The following condensed financial information has been audited by Tait,
Weller & Baker, the Funds' independent accountants. The information should be
read in conjunction with the audit report and financial statements included in
the 2000 Annual Report to Shareholders. In addition to the data set forth below,
further information about performance of the Funds is contained in the Annual
Report which may be obtained without charge from the Funds' distributor. The
presentation is for a share outstanding throughout each period ended April 30,
except as indicated. The U.S. Government Fund had not commenced operations prior
to April 30, 2000.

[Updated semi-annual information - to be supplied.]

<TABLE>
<CAPTION>
Net Asset Realized Dividends Distributions
Value Net and Unrealized from Net from Value
Beginning Investment Gains (Losses) Investment Capital End
of Period Income of Investments Income Gains of Period
------------------------------------------------------------------------------------------------------------------
U.S. Government Limited Duration Fund
(formerly the U.S. Government Total Return Bond Fund)
------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
2000 $ 8.62 $ 0.32 $(0.50) $(0.32) - $ 8.08
1999 9.60 0.35 (0.79) (0.35) $(0.19) 8.62
1998 9.17 0.43 1.27 (0.44) (0.83) 9.60
1997 9.54 0.45 (0.37) (0.45) -- 9.17
1996 9.37 0.44 0.31 (0.44) (0.14) 9.54
------------------------------------------------------------------------------------------------------------------
U.S. Government Intermediate Term Bond Fund
------------------------------------------------------------------------------------------------------------------
2000 $ 9.77 $ 0.32 $(0.39) $(0.32) - $ 9.38
1999 10.10 0.33 (0.21) (0.33) $(0.12) 9.77
1998 9.72 0.34 0.43 (0.34) (0.05) 10.10
1997 (1) 10.00 0.18 (0.19) (0.18) (0.09) 9.72
------------------------------------------------------------------------------------------------------------------
U.S. Government Short Term Bond Fund
------------------------------------------------------------------------------------------------------------------
2000 $10.09 $ 0.25 $(0.30) $(0.25) - $ 9.79
1999 10.06 0.29 0.19 (0.33) $(0.12) 10.09
1998 9.98 0.29 0.08 (0.29) -- 10.06
1997 (2) 10.00 0.14 (0.01) (0.14) (0.01) 9.98

<CAPTION>
Ratio of Net
Ratio of Investment
Ratio of Net Expenses to Income (loss)
Ratio of Investment Average to Average
Net Assets Expenses to Income Net Assets Net Assets Portfolio
Total End of Average to Average (Excluding (Excluding Turnover
Return Period (000) Net Assets Net Assets Waivers) Waivers) Rate
-------------------------------------------------------------------------------------------------------------------------------
U.S. Government Limited Duration Fund
(formerly the U.S. Government Total Return Bond Fund)
-------------------------------------------------------------------------------------------------------------------------------
<C> <C> <C> <C> <C> <C> <C> <C>
2000 (2.63)% $58,281 1.71% 3.74% 1.71% 3.74% 4,365%
1999 (4.83) 56,124 1.68 3.73 1.68 3.73 1,226
1998 18.91 78,350 1.65 4.41 1.65 4.41 252
1997 0.80 67,936 1.40 4.75 1.40 4.75 202
1996 8.08 71,294 1.23 4.74 1.23 4.74 228
-------------------------------------------------------------------------------------------------------------------------------
U.S. Government Intermediate Term Bond Fund
-------------------------------------------------------------------------------------------------------------------------------
2000 (0.77)% $ 5,281 2.08% 3.39% 2.08% 3.39% 2,255%
1999 1.13 8,564 1.66 3.15 1.66 3.15 711
1998 8.01 2,722 2.17 3.51 2.17 3.51 260
1997 (1) (0.12) 1,247 2.47 3.23 2.48 3.22 299
-------------------------------------------------------------------------------------------------------------------------------
U.S. Government Short Term Bond Fund
-------------------------------------------------------------------------------------------------------------------------------
2000 (0.52)% $ 1,915 2.80% 2.75% 2.80% 2.75% 1,265%
1999 4.79 2,008 1.73 3.15 1.73 3.15 258
1998 3.76 1,868 2.42 3.18 2.60 2.95 47
1997 (2) 1.25 236 3.03 2.58 5.18 0.43 352
</TABLE>

(1) Commenced operations on October 10, 1996. All ratios, except total return,
for the period have been annualized.
(2) Commenced operations on September 3, 1996. All ratios, except total return,
for the period have been annualized.

18
<PAGE>

INVESTMENT ADVISOR
Pauze Swanson Capital Management Co.(TM)
14340 Torrey Chase Boulevard, Suite 170
Houston, Texas 77014

ADMINISTRATOR & TRANSFER AGENT
Champion Fund Services
14340 Torrey Chase Boulevard, Suite 170
Houston, Texas 77014

DISTRIBUTOR
B.C. Ziegler and Company
215 North Main St.
West Bend, Wisconsin 53095

CUSTODIAN
Firstar Bank, N.A
425 Walnut Street
Cincinnati, Ohio 45202

ACCOUNTANTS
Tait, Weller & Baker
8 Penn Center Plaza, Suite 800
Philadelphia, PA 19103

LEGAL COUNSEL
Brown, Cummins & Brown Co., L.P.A.
3500 Carew Tower
441 Vine Street
Cincinnati, Ohio 45202

19
<PAGE>

PAUZE FUNDS(TM)

Several additional sources of information are available to you. The
Statement of Additional Information (SAI), incorporated by reference into this
Prospectus, contains detailed information on Fund policies and operation.
Shareholder reports contain management's discussion of market conditions,
investment strategies and performance results as of the Funds' latest
semi-annual or annual fiscal year end.

Call the Funds at 1-800-327-7170 to request free copies of the SAI and the
Funds' annual and semi-annual reports, to request other information about the
Fund and to make shareholder inquiries.

You may review and copy information about the Funds (including the SAI and
other reports) from the Securities and Exchange Commission Public Reference Room
in Washington, D.C. Call the SEC at 202-942-8090 for room hours and operation.
You may also obtain Fund information on the SEC's Internet site at
http:\\www.sec.gov, and copies of this information may be obtained, after paying
a duplicating fee, by electronic request at the following e-mail address:
[email protected], or by writing the Public Reference Section of the SEC,
Washington, D.C. 20549-0102.

Investment Company Act # 811-08148

20
<PAGE>

PROSPECTUS

PAUZE FUNDS(TM)
--------------------------------------------------------------------------------

PAUZE U.S. GOVERNMENT FUND(TM)
--------------------------------------------------------------------------------
PAUZE U.S. GOVERNMENT
LIMITED DURATION FUND(TM)

PAUZE U.S. GOVERNMENT
SHORT TERM BOND FUND(TM)

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

For Information, Shareholder Services and Requests:

14340 Torrey Chase Blvd., Suite 170
Houston, Texas 77014
1-800-327-7170

[LOGO]

APRIL [ ], 2001

<PAGE>

TABLE OF CONTENTS

ABOUT THE FUNDS...........................................................

HOW THE FUNDS HAVE PERFORMED..............................................

COSTS OF INVESTING IN THE FUNDS...........................................

HOW TO PURCHASE SHARES....................................................

ALTERNATIVE PURCHASE PLANS................................................

HOW TO EXCHANGE SHARES....................................................

HOW TO REDEEM SHARES......................................................

MANAGEMENT OF THE FUNDS...................................................

SHAREHOLDER SERVICES......................................................

HOW SHARES ARE VALUED.....................................................

DISTRIBUTIONS AND TAXES...................................................

ADDITIONAL INFORMATION ABOUT INVESTMENT POLICIES AND RISKS................

FINANCIAL HIGHLIGHTS......................................................

<PAGE>

ABOUT THE FUNDS

INVESTMENT OBJECTIVE

PRINCIPAL STRATEGIES

The Fund's advisor seeks high total return by restructuring the average
duration of the Fund's portfolio securities to take advantage of anticipated
changes in interest rates.

The U.S. GOVERNMENT INTERMEDIATE TERM BOND FUND invests exclusively in U.
S. government debt securities, repurchase agreements backed by the U.S.
government, and futures and options on U.S. government debt securities for
hedging purposes only. U.S. government debt securities may be issued by the U.
S. government or by an agency of the U. S. government, and include zero coupon
securities. The Fund's advisor will restructure the average duration of the
Fund's portfolio to take advantage of anticipated changes

1
<PAGE>

in interest rates, but will maintain the weighted average maturity of the Fund's
portfolio between three and ten years.

The U.S. GOVERNMENT SHORT TERM BOND FUND invests exclusively in U. S.
government debt securities, repurchase agreements backed by the U.S. government,
and futures and options on U.S. government debt securities for hedging purposes
only. U.S. government debt securities may be issued by the U. S. government, or
by an agency of the U. S. government, and include zero coupon securities. The
Fund's advisor will restructure the average duration of the Fund's portfolio to
take advantage of anticipated changes in interest rates, but will maintain the
weighted average maturity of the Fund's portfolio between one and three years.

PRINCIPAL RISKS OF INVESTING IN THE FUNDS

CREDIT RISK. The issuer of the fixed income security (U.S. government agencies)
may not be able to make interest and principal payments when due.

2
<PAGE>

result in shareholders paying above-average amounts of taxes on realized
investment gain. Any short-term gain realized on securities will be taxed to
shareholders as ordinary income. These factors may negatively affect a Fund's
performance.

As with any mutual fund investment, each Fund's returns will vary and you
could lose money.

IS THIS FUND RIGHT FOR YOU?

The Funds may be a suitable investment for:

HOW THE FUNDS HAVE PERFORMED

Except for the U.S. Government Fund, which is recently organized and has
less than one calendar year of operations, the following charts and tables show
the variability of each Fund's returns, which is one indicator of the risks of
investing in the Fund. The bar charts show changes in each Fund's returns from
year to year since the Fund's inception. Sales loads are not reflected in the
bar chart and, if these amounts were reflected, returns would be less than those
shown. The tables show how each Fund's average annual total returns over time
compare to those of a broad-based securities market index. Of course, each
Fund's past performance is not necessarily an indication of its future
performance.

Annual Total Returns as of December 31 of each year: [add 2000 performance
information]

3
<PAGE>

[GRAPHIC OMITTED]

--------------------------------------------------------
Pauze U.S. Government Total Return Bond Fund
Class B Shares
Annual Total Returns

1997 12.13%
1998 2.60%
1999 -4.80%
--------------------------------------------------------

[GRAPHIC OMITTED]

--------------------------------------------------------
Pauze U.S. Government Intermediate Term Bond Fund
Class B Shares
Annual Total Returns

1997 3.88%
1998 4.08%
1999 -3.68%
--------------------------------------------------------

[GRAPHIC OMITTED]

--------------------------------------------------------
Pauze U.S. Government Short Term Bond Fund
Class B Shares
Annual Total Returns

1997 1.56%
1998 1.47%
1999 -0.47%
--------------------------------------------------------

4
<PAGE>

AVERAGE ANNUAL TOTAL RETURNS FOR THE PERIODS ENDED 12/31/00:

1 Year Since Inception
------------------------------

U.S. Government

Limited Duration Fund - Class B [ ]% [ ]%*
Lehman Government Bond Index [ ]% [ ]%%

U.S. Government
Intermediate Term Bond Fund - Class B [ ]% [ ]%*
Lehman U.S. Treas. Intermediate Index [ ]% [ ]%%

U.S. Government
Short Term Bond Fund - Class B [ ]% [ ]%*
Lehman 1-3 Government Index [ ]% [ ]%

*September 3, 1996

For the U.S. Government Limited Duration Fund (formerly the U.S. Government
Total Return Bond Fund)(Class B), the highest return during the periods shown
for a calendar quarter was [ ]% in the [ ] quarter of [ ], and the lowest return
was [ ]% for the [ ] quarter of [ ].

For the U.S. Government Intermediate Term Bond Fund(Class B), the highest
return during the periods shown for a calendar quarter was [ ]% in the [ ]
quarter of [ ], and the lowest return was [ ]% for the [ ] quarter of [ ].

For the U.S. Government Short Term Bond Fund(Class B), the highest return
during the periods shown for a calendar quarter was [ ]% in the [ ] quarter of [
], and the lowest return was [ ]% for the [ ] quarter of [ ].

5
<PAGE>

COSTS OF INVESTING IN THE FUNDS

The following table describes the expenses and fees that you may pay if you
buy and hold shares of any of the Funds.

<TABLE>
<CAPTION>
U.S. Government Fund
--------------------
Class B Class C

SHAREHOLDER FEES (FEES PAID DIRECTLY FROM YOUR INVESTMENT)
<S> <C> <C>
Sales Load Imposed on Purchases None None
Sales Load Imposed on Redemptions(1) 3.75% None
Account Closing Fee (does not apply to exchanges) $ 10 $ 10
Exchange Fee None None

ANNUAL FUND OPERATING EXPENSES (EXPENSES THAT ARE DEDUCTED FROM FUND ASSETS)
Management Fees 0.60% 0.60%
12b-1 Fees 1.00%(2) 1.00%
Other Expenses ___%(3) ____%(3)
Total Fund Operating Expenses ___%(3) ____%(3)

U.S. Gov. Limited Duration Fund(4)
----------------------------------
Class B Class C
SHAREHOLDER FEES (FEES PAID DIRECTLY FROM YOUR INVESTMENT)
Sales Load Imposed on Purchases None None
Sales Load Imposed on Redemptions(1) 3.75% None
Account Closing Fee (does not apply to exchanges) $ 10 $ 10
Exchange Fee None None

ANNUAL FUND OPERATING EXPENSES (EXPENSES THAT ARE DEDUCTED FROM FUND ASSETS)
Management Fees 0.60% 0.60%
12b-1 Fees 1.00%(2) 1.00%
Other Expenses 0.86% 0.86%
Total Fund Operating Expenses 2.46% 2.46%

U.S. Gov. Intermed. Term Bond Fund
----------------------------------
Class B Class C

SHAREHOLDER FEES (FEES PAID DIRECTLY FROM YOUR INVESTMENT)
Sales Load Imposed on Purchases None None
Sales Load Imposed on Redemptions(1) 3.75% None
Account Closing Fee (does not apply to exchanges) $ 10 $ 10
Exchange Fee None None

ANNUAL FUND OPERATING EXPENSES (EXPENSES THAT ARE DEDUCTED FROM FUND ASSETS)
Management Fees 0.50% 0.50%
12b-1 Fees 1.00%(2) 1.00%
Other Expenses 1.33% 1.33%(3)
Total Fund Operating Expenses 2.83% 2.83%(3)

6
<PAGE>

U.S. Gov. Short Term Bond Fund
------------------------------
Class B Class C

ANNUAL FUND OPERATING EXPENSES (EXPENSES THAT ARE DEDUCTED FROM FUND ASSETS)
Management Fees 0.50% 0.50%
12b-1 Fees 1.00%(2) 1.00%
Other Expenses 2.05% 2.05%(3)
Total Fund Operating Expenses 3.55% 3.55%(3)
</TABLE>

EXAMPLE:
--------

1 YEAR 3 YEARS 5 YEARS 10 YEARS
------ ------- ------- --------

U.S. Gov. Fund
--------------
Class B
if you sold your shares
at the end of the period $___ $_____
if you stayed in the Fund $___ $_____
Class C $___ $_____

U.S. Gov. Limited Duration Fund
-------------------------------

Class B
if you sold your shares
at the end of the period $634 $1,102 $1,546 $2,531
if you stayed in the Fund $249 $ 767 $1,311 $2,521
Class C $259 $ 777 $1,321 $2,806

U.S. Intermediate Term Fund
---------------------------

Class B
if you sold your shares
at the end of the period $671 $1,212 $1,729 $2,900
if you stayed in the Fund $286 $ 877 $1,494 $2,890
Class C (3) $296 $ 887 $1,504 $3,167

1 YEAR 3 YEARS 5 YEARS 10 YEARS
------ ------- ------- --------

U.S. Short Term Fund

Class B
if you sold your shares
at the end of the period $743 $1,423 $2,075 $3,579
if you stayed in the Fund $358 $1,088 $1,840 $3,569
Class C $368 $1,098 $1,850 $3,828

(1) The maximum contingent deferred sales charge (CDSC) as set forth in the
table applies to redemptions of shares within two years of purchase. The CDSC
decreases over the period of seven years, to zero, and the Class B shares
convert to no-load shares at that time. See "Alternative Purchase Plans."

7
<PAGE>

(2) Class B shares convert to no-load shares which pay 12b-1 fees of 0.25%, not
1.00%.
(3) Other expenses are estimated.
(4) Formerly the U.S. Government Total Return Bond Fund.

HOW TO PURCHASE SHARES

The minimum initial investment is $1,000. The minimum subsequent investment
is $50. The minimum initial investment for persons enrolled in an automatic
investment plan is $100 and the minimum subsequent investment pursuant to such a
plan is $30 per month per account.

You may purchase shares through a registered representative of a
participating dealer or a participating bank ("Representative") by placing an
order for Fund shares with your Representative, and arranging for your payment.
If you are investing in a Fund for the first time, you will need to set up an
account. Your Representative will help you fill out and submit an application (a
copy of which accompanies this Prospectus).

Shares of a Fund are purchased at a price equal to their net asset value
per share next determined after receipt of an order. When you place an order for
a Fund's shares, you must specify which class of shares you wish to purchase.
See "Alternative Purchase Plans."

All purchase orders received by the Funds' distributor prior to the close
of regular trading on the New York Stock Exchange (4:00 p.m. Eastern time) will
be executed at that day's share price. Otherwise, your purchase will be
processed the next business day, and you will pay the next day's share price. It
is the responsibility of your Representative to transmit orders to the Funds'
distributor on a timely basis.

You may also invest in the following ways:

BY MAIL: Send your application and check or money order, made payable to
the appropriate Fund to:

PAUZE FUNDS(TM)
C/O FIRSTAR BANK
P.O. BOX 641367
CINCINNATI, OHIO 45264-1367

When making subsequent investments, enclose your check with the return
remittance portion of the confirmation of your previous investment or indicate
on your check or a separate piece of paper your name, address and account number
and mail to the address set forth above. Third party checks will not be
accepted, and the Trust reserves the right to refuse to accept second party
checks.

If your telephone order to purchase shares is canceled due to nonpayment
(whether or not your check has been processed by the Fund), you will be
responsible for any loss incurred by the Trust because of such cancellation.

8
<PAGE>

BY WIRE: You may make your initial or subsequent investments in the Funds
by wiring funds. To do so, call the Funds at 1-800-327-7170 for a confirmation
number and wiring instructions.

To assure proper receipt, please be sure your bank includes the Fund name and
the account number that has been assigned to you. If you are opening a new
account, please complete the Account Application form and mail it to the address
indicated in "By Mail" above after completing your wire arrangement.

There are no wire fees charged by the Funds for purchases of $1,000 or
more. A wire fee of up to $20 will be charged by the Funds on wire purchases of
less than $1,000. Your bank may charge wire fees for this service.

BY AUTOMATIC INVESTMENT PLAN: Once your account is open, you may make
investments automatically by completing the automatic investment plan form
authorizing the Funds to regularly draw on your bank account. You may
automatically invest as little as $30 a month beginning within thirty (30) days
after your account is opened. Ask your bank whether it will honor debits through
the Automated Clearing House ("ACH") or, if necessary, preauthorized checks. You
may change the date or amount of your investment any time by written instruction
received by Pauze Funds(TM) at least fifteen business days before the change is
to become effective.

ADDITIONAL INFORMATION ABOUT PURCHASES

If checks are returned unpaid due to nonsufficient funds, stop payment or
other reasons, the Funds will charge $20 and you will be responsible for any
loss incurred by the Fund with respect to canceling the purchase. To recover any
such loss or charge, the Funds reserve the right, without further notice, to
redeem shares already owned by any purchaser whose order is canceled and such a
purchaser may be prohibited from placing further orders unless investments are
accompanied by full payment by wire or cashier's check.

If a Fund incurs a charge for locating a shareholder without a current
address, such charge will be passed through to the shareholder.

9
<PAGE>

ALTERNATIVE PURCHASE PLANS

CLASS B. Class B shares are sold subject to a contingent deferred sales
charge ("CDSC"). Under this plan, all of the purchase payment for Class B shares
is immediately invested in the Fund. The Fund's advisor pays the Fund's
distributor a fee or commission of 3.75% and is reimbursed by the Fund over time
by charging an additional Rule 12b-1 fee of .75% to the Class B shares. If the
broker-dealer provides additional shareholder services, it may receive a
servicing fee of up to 0.25% of Fund assets attributable to your investment. The
servicing fee is paid by the Fund's advisor from the 12b-1 fees it receives from
the Fund. The distributor pays the participating broker-dealer's fee or
commission of 3.25%, which may be increased or decreased in certain
circumstances.

IF A REDEMPTION IS MADE: THE REDEMPTION RATE FOR THE CDSC IS:

year 1 3.75%
year 2 3.75%
year 3 3.25%
year 4 2.75%
year 5 2.25%
year 6 1.75%
year 7 1.25%
Thereafter -0

NOTE: Class B shares convert to no-load shares when the CDSC expires. Each
investment is considered a new investment for calculating the amount of any
CDSC.

A CDSC is imposed on Class B shares if, within the time frames set forth,
you redeem an amount that causes the current value of your account to fall below
the total dollar amount of Class B shares purchased subject to the CDSC. The
CDSC will not be imposed on the redemption of Class B shares acquired as
dividends or other distributions, or on any increase in the net asset value of
the redeemed Class B shares above the original purchase price. Thus, the CDSC
will be imposed on the lower of net asset value or purchase price. Redemptions
will be processed in a manner intended to minimize the amount of redemption that
will be subject to the CDSC. When calculating the CDSC, it will be assumed that
the redemption is made first of Class B shares acquired as dividends, second of
shares that have been held for over the prescribed time and finally of shares
held for less than the prescribed time. If you exchanged Class B shares of one
Pauze Fund for Class B shares of another Pauze Fund, the holding periods will be
added together for purposes of calculating the CDSC.

CLASS C. If you buy Class C shares, all of the purchase payment is
immediately invested in the Fund. To compensate the broker-dealer for its sales
and promotional efforts, plus its continuing service to the Fund's shareholder,
the Fund pays the broker-dealer a continuing annual fee of 0.75% (a distribution
fee) of Fund assets attributable to your investment. If the broker-dealer
provides additional shareholder services, it may receive a servicing fee of up
to 0.25% of Fund assets attributable to your investment. The servicing fee is
paid by the Fund's advisor from the 12b-1 fees it receives from the Fund.

HOW TO DECIDE WHEN TO PURCHASE CLASS B OR CLASS C. The alternative purchase
plans offered by the Funds enable you to choose the class of shares that you
believe will be most beneficial given the amount of your intended purchase, the
length of time you expect to hold the shares and other circumstances. You should
consider whether, during the anticipated length of your intended investment in a
Fund, the accumulated continuing distribution and services fees on Class C
shares would exceed the accumulated

10
<PAGE>

Rule 12b-1 fees plus the CDSC on B shares purchased at the same time.
Representatives may receive different compensation for sales of Class B shares
than sales of Class C shares.

Class B shares are subject to lower Rule 12b-1 fees after they convert to
no-load shares and, accordingly, are expected to receive correspondingly higher
dividends on a per share basis. You may wish to purchase Class B shares if you
expect to hold your shares for an extended period of time because, depending on
the number of years you hold the investment, the continuing distribution and
services fees on Class C shares eventually would exceed the sales load plus the
continuing services fee on Class B shares during the life of your investment.

Each Fund offers a third class of shares by a separate prospectus. Each
class has different sales charges and expenses, which will affect performance.
Information on shares of the Funds offered on a different basis is available
from the Funds upon written request to the address in this Prospectus or by
calling 1-800-327-7170.

DISTRIBUTION (12B-1) FEES. Each Fund has adopted a plan under Rule 12b-1 that
allows the Fund to pay distribution and other fees for the sale and distribution
of its shares. Each plan provides that the applicable Fund will pay a 12b-1 fee
at an annual rate of 0.25% of the Fund's average net assets to the advisor for
its distribution related services and expenses. With respect to Class B shares
and Class C shares, the plans provide that each Fund will use Fund assets
allocable to those shares to pay additional Rule 12b-1 fees of 0.75% of said
assets to cover fees paid to broker-dealers for sales and promotional services.
The payments with respect to Class B shares go to the advisor to compensate it
for fees paid to the selling broker-dealers, and the payments with respect to
the Class C shares go directly to the broker-dealers. Under the plans, the
Advisor bears all distribution expenses of the Funds in excess of the 12b-1
fees. The fees received by the Advisor for any class of shares during any year
may be more or less than its costs for distribution related services provided to
the class of shares. Because the distribution fees are paid out of each Fund's
assets on an on-going basis, over time these fees will increase the cost of your
investment and may cost you more than paying other types of sales charges.

HOW TO EXCHANGE SHARES

BY TELEPHONE: You may direct Pauze Funds(TM) to exchange your shares by
calling toll free 1-800-327-7170. In connection with such exchanges, neither the
Funds nor the transfer agent will be responsible for acting upon any
instructions reasonably believed by them to be genuine. The shareholder, as a
result of this policy, will bear the risk of loss. The Funds and/or the transfer
agent will, however, employ reasonable procedures to confirm that instructions
communicated by telephone are genuine (including requiring some form of personal
identification, providing written confirmation, and tape recording
conversations); and if the Funds and/or the transfer agent do not employ
reasonable procedures, they may be liable for losses due to unauthorized or
fraudulent transactions.

11
<PAGE>

ADDITIONAL INFORMATION ABOUT EXCHANGES

(1) All exchanges are subject to the minimum investment requirements and
any other applicable terms set forth in the prospectus for the Fund whose shares
are being acquired.

(2) There is no charge for exchanges. However, the Funds may impose a $5
charge, which would be paid to the transfer agent, for each exchange transaction
out of any fund account, to cover administrative costs associated with handling
these exchanges. Shareholders will be notified before the Funds impose an
exchange fee.

(5) The exchange privilege may be modified or terminated at any time.

HOW TO REDEEM SHARES

BY MAIL: Your redemption request must include:

(a) original signatures of each registered owner exactly as the shares are
registered;
(b) the fund name and the account number ;
(c) the number of shares or dollar amount to be redeemed; and
(d) any additional documents that may be required for redemption by
corporations, partnerships, trusts or other entities.

Send your written request for redemption form to:

Pauze Funds(TM)
c/o Champion Fund Services
14340 Torrey Chase Blvd., Suite 170
Houston, Texas 77014

BY TELEPHONE: You may request redemption by telephone. If you do not wish
to allow telephone redemptions by any person on the account, you should decline
that option on the account application.

This feature can only be used on non-institutional accounts if:
a) the redemption proceeds are to be mailed to the address of record or
wired to the pre-authorized bank account;

12
<PAGE>

b) there has been no change of address of record on the account within
the preceding 30 days;
c) the person requesting the redemption can provide proper
identification; and
d) the proceeds of the redemption do not exceed $15,000.

SPECIAL REDEMPTION ARRANGEMENTS

SIGNATURE GUARANTEE

REDEMPTION PROCEEDS MAY BE SENT TO YOU:

BY WIRE: You may authorize the Funds to transmit redemption proceeds by
wire provided you send written instructions with a signature guarantee at the
time of redemption. Proceeds from your redemption will usually be transmitted on
the first business day following the redemption. However, the Funds may hold
redemptions proceeds for up to seven days. If the shares to be redeemed were
purchased by check, the redemption proceeds will not be wired until the purchase
check has cleared, which may take up to seven days from the purchase date. A
wire fee of up to $20 will be charged by the Funds, which is deducted from
redemption proceeds.

ADDITIONAL INFORMATION ABOUT REDEMPTIONS

(1) The redemption price may be more or less than your cost, depending on
the net asset value of the Fund's portfolio next determined after your
request is received.

13
<PAGE>

(2) A request to redeem shares in an IRA or similar retirement account
must be accompanied by an IRS Form W4-P and must state a reason for
withdrawal as specified by the IRS. Proceeds from the redemption of
shares from a retirement account may be subject to withholding tax.

(3) Each Fund may redeem existing accounts and refuse a potential account
the privilege of having an account in the Fund if the Fund reasonably
determines that the failure to do so would have a material adverse
consequence to the Fund and its shareholders.

(4) Excessive short term trading has an adverse impact on effective
portfolio management as well as upon Fund expenses. The Funds may
refuse investments from shareholders who engage in short term trading,
including exchanges into a Fund.

ACCOUNT CLOSING FEE

SMALL ACCOUNTS

Fund accounts which fall, for any reason other than market fluctuations,
below $1,000 at any time during a month will be subject to a small account
charge of $5 for that month which is deducted the next business day. The charge
is payable directly to the transfer agent which, in turn, will reduce its
charges to the Fund by an equal amount. The purpose of the charge is to allocate
the cost of maintaining shareholder accounts more equitably among shareholders.

Active automatic investment plan, UGMA/UTMA, and retirement plan accounts
administered by the Funds' administrator or its agents or affiliates will not be
subject to the small account charge.

14
<PAGE>

MANAGEMENT OF THE FUNDS

The advisor furnishes an investment program for the Funds, determines,
subject to the overall supervision and review of the Board of Trustees of the
Trust, what investments should be purchased, sold and held, and makes changes on
behalf of the Trust in the investments of the Funds. For these services, the
advisor received fees for the fiscal year ended April 30, 2000, as a percentage
of net assets, as follows: U.S. Government Limited Duration Fund, 0.60%; U.S.
Government Intermediate Term Fund, 0.50%; and U.S. Government Short Term Fund,
0.50%. The U.S. Government Fund is authorized to pay the advisor a fee equal to
0.60% of its average daily net assets up to $100 million, 0.50% of its average
daily net assets from $100,000,001 to $250 million, 0.45% of its average daily
net assets from $250,000,001 to $500 million, and 0.40% of its average daily net
assets in excess of $500 million.

SHAREHOLDER SERVICES

Each Fund has available a number of plans and services to meet the special
needs of certain investors. Plans available include, but are not limited to:

15
<PAGE>

Application forms and brochures describing these plans and services can be
obtained by calling 1-800-327-7170.

HOW SHARES ARE VALUED

Requests to purchase, exchange and sell shares are processed at the NAV
next calculated after we receive your order in proper form.

DISTRIBUTIONS AND TAXES

DIVIDEND AND CAPITAL GAIN DISTRIBUTIONS

REINVESTMENTS

Dividends and capital gain distributions are automatically reinvested in
additional shares in the same class of the applicable Fund, unless:

16
<PAGE>

o you request the Fund in writing or by phone to pay dividend and/or
capital gain distributions to you in cash, or

o you direct the Fund to invest your distributions in any publicly
available Pauze Fund(TM) for which you have previously opened an
account.

TAXES

ADDITIONAL INFORMATION ABOUT INVESTMENT POLICIES AND RISKS

PRINCIPAL STRATEGIES

United States Treasury securities are backed by the full faith and credit
of the U.S. government. These securities differ only in their interest rates,
maturities, timing of interest payments, and times of issuance. Treasury bills
have initial maturities of one year or less, do not make semi-annual interest
payments, and are purchased or sold at a discount from their face value;
Treasury notes have initial maturities of one to ten years and pay interest
semiannually; and Treasury bonds generally have initial maturities of greater
than ten years and pay interest semi-annually.

17
<PAGE>

Housing Administration or Farmers' Home Administration or guaranteed by the
Veterans' Administration. Each Fund may invest in Ginnie Maes of the "fully
modified pass-through" type which are guaranteed as to the timely payment of
principal and interest by the Government National Mortgage Association, a U.S.
government corporation. Interest and principal payments (including prepayments)
on the mortgages underlying mortgage-backed securities are passed through to the
holders of the mortgage-backed security. Prepayments occur when a holder of the
mortgage prepays the remaining principal before the mortgage's scheduled
maturity date. As a result of the pass-through of prepayments of principal on
the underlying securities, mortgage-backed securities are often subject to more
rapid prepayments of principal than their stated maturity would indicate.
Because the prepayment characteristics of the underlying securities 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 price of the securities. During periods of
declining interest rates, such prepayments can be expected to accelerate and the
Fund would be required to reinvest the proceeds at the lower interest rates then
available. In addition, prepayments of mortgages which underlie securities
purchased at a premium may not have been fully amortized at the time the
obligation is repaid and may result in a loss. As a result of these principal
payment features, mortgage-backed securities are generally more volatile
investments than other U.S. government securities.

18
<PAGE>

NON-PRINCIPAL STRATEGIES

FINANCIAL HIGHLIGHTS

The following condensed financial information has been audited by Tait,
Weller, & Baker, the Funds' independent accountants. The information should be
read in conjunction with the audit report and financial statements included in
the 2000 Annual Report to Shareholders. In addition to the data set forth below,
further information about performance of the Funds is contained in the Annual
Report which may be obtained without charge from the Funds' distributor. The
presentation is for a share outstanding throughout each period ended April 30,
except as indicated. The U.S. Government Fund had not commenced operations prior
to April 30, 2000. [To be updated with semi-annual financial information.]

19
<PAGE>

<TABLE>
<CAPTION>
Net Asset Realized Dividends Distributions Net Asset
Value Net and Unrealized from Net From Liquidations Value
Beginning Investment Gains (Losses) Investment Capital From End
Of Period Income of Investments Income Gains Capital of Period
-------------------------------------------------------------------------------------------------------------------------
U.S. Government Limited Duration Fund
(formerly the U.S. Government Total Return Bond Fund)
-------------------------------------------------------------------------------------------------------------------------
CLASS B
<S> <C> <C> <C> <C> <C> <C> <C>
2000 $9.39 $0.27 $(0.58) $(0.24) - -- $8.84
1999 10.41 0.27 (0.83) (0.27) $(0.19) -- 9.39
1998 9.84 0.36 1.40 (0.36) (0.83) -- 10.41
1997 (1) 10.00 0.27 (0.16) (0.27) -- -- 9.84
CLASS C
2000 $8.99 $0.23 $(0.53) $(0.24) -- -- $8.45
1999 (2) 10.00 0.28 (0.82) (0.28) (0.19) -- 8.99
-------------------------------------------------------------------------------------------------------------------------
U.S. Government Intermediate Term Bond Fund
-------------------------------------------------------------------------------------------------------------------------
CLASS B
2000 $9.81 $0.23 $(0.40) $(0.23) -- -- $9.41
1999 10.12 0.25 (0.19) (0.25) (0.12) -- 9.81
1998 9.74 0.26 0.43 (0.26) (0.05) -- 10.12
1997 (1) 10.00 0.18 (0.15) (0.17) (0.12) -- 9.74
-------------------------------------------------------------------------------------------------------------------------
U.S. Government Short Term Bond Fund
-------------------------------------------------------------------------------------------------------------------------
CLASS B
2000 $9.91 $0.16 $(0.30) $(0.16) -- -- $9.61
1999 (3) 10.00 0.14 0.07 (0.18) (0.12) -- 9.91
1998 (4)* 9.96 0.13 0.07 (0.13) -- (10.03) --
1997 (1) 10.00 0.13 (0.03) (0.13) (0.01) -- 9.96
CLASS C
2000 $10.00 $0.16 $(0.27) $(0.16) -- -- $9.73
1999 9.98 0.22 0.18 (0.26) (0.12) -- 10.00
1998 9.91 0.22 0.07 (0.22) -- -- 9.98
1997 (5) 10.00 0.09 (0.10) (0.08) -- -- 9.91
-------------------------------------------------------------------------------------------------------------------------

20
<PAGE>

<CAPTION>
Ratio of Net
Ratio of Investment
Ratio of Net Expenses to Income (loss)
Ratio of Investment Average to Average
Net Assets Expenses to Income Net Assets Net Assets Portfolio
Total End of Average to Average (Excluding (Excluding Turnover
Return Period (000) Net Assets Net Assets Waivers) Waivers) Rate
-------------------------------------------------------------------------------------------------------------------------
U.S. Government Intermediate Term Bond Fund
-------------------------------------------------------------------------------------------------------------------------
CLASS B
<S> <C> <C> <C> <C> <C> <C> <C>
2000 (1.72)% $968 2.83% 2.64% 2.83% 2.64% 2,255%
1999 0.58 1,060 2.41 2.40 2.41 2.40 711
1998 7.13 442 2.96 2.55 2.96 2.55 260
1997 (1) 0.32 1,418 3.18 2.64 3.20 2.62 447
-------------------------------------------------------------------------------------------------------------------------
U.S. Government Short Term Bond Fund
-------------------------------------------------------------------------------------------------------------------------
CLASS B
2000 (1.40)% $104 3.55% 2.00% 3.55% 2.00% 1,265%
1999 (3) 2.11 106 2.48 2.40 2.48 2.40 258
1998 (4)* 1.99 -- 3.56 2.01 3.56 2.01% 47
1997 (1) 1.05 177 3.85 1.96 6.01 (0.20) 396
CLASS C
2000 (1.14)% $718 3.55% 2.00% 3.55% 2.00% 1,265%
1999 4.01 39 2.48 2.40 2.48 2.40 258
1998 2.93 158 3.26 2.22 3.49 1.99% 47
1997 (5) (0.07) 302 3.53 1.74 5.55 (0.28) 256
-------------------------------------------------------------------------------------------------------------------------
</TABLE>

* Effective December 19, 1997, the sole shareholder liquidated all Class B
shares.
(1) Commenced operations on September 3, 1996. All ratios, except total return,
for the period have been annualized.
(2) Commenced operations on May 13, 1998. All ratios, except total return, for
the period have been annualized.
(3) Commenced operations on September 17, 1998. All ratios, except total
return, for the period have been annualized.
(4) For the period May 1, 1997 to December 19, 1997. All ratios, except total
return, for the period have been annualized.
(5) Commenced operations on November 7, 1996. All ratios, except total return,
for the period have been annualized.

21
<PAGE>

INVESTMENT ADVISOR
Pauze Swanson Capital Management Co.(TM)
14340 Torrey Chase Boulevard, Suite 170
Houston, Texas 77014

ADMINISTRATOR & TRANSFER AGENT
Champion Fund Services
14340 Torrey Chase Boulevard, Suite 170
Houston, Texas 77014

DISTRIBUTOR
B.C. Ziegler and Company
215 North Main St
West Bend, Wisconsin 53095

CUSTODIAN
Firstar Bank, N.A
425 Walnut Street
Cincinnati, Ohio 45202

ACCOUNTANTS
Tait, Weller & Baker
8 Penn Center Plaza, Suite 800
Philadelphia, PA 19103

LEGAL COUNSEL
Brown, Cummins & Brown Co., L.P.A.
3500 Carew Tower
441 Vine Street
Cincinnati, Ohio 45202

22
<PAGE>

PAUZE FUNDS(TM)

Call the Funds at 800-327-7170 to request free copies of the SAI and the
Funds' annual and semi-annual reports, to request other information about the
Funds and to make shareholder inquiries.

Investment Company Act # 811-08148

23
<PAGE>

STATEMENT OF ADDITIONAL INFORMATION

PAUZE FUNDS

PAUZE U.S. GOVERNMENT FUND

PAUZE U.S. GOVERNMENT LIMITED DURATION FUND
PAUZE U.S. GOVERNMENT INTERMEDIATE TERM BOND FUND
PAUZE U.S. GOVERNMENT SHORT TERM BOND FUND

This Statement of Additional Information ("SAI") is not a Prospectus. It
should be read in conjunction with the Prospectus of the Funds dated April [ ],
2001. This SAI incorporates by reference the financial statements and
independent auditor's report from the Funds' Annual Report to Shareholders for
the fiscal year ended April 30, 2000 ("Annual Report"). A free copy of the
Prospectus and Annual Report can be obtained by writing the Funds at 14340
Torrey Chase, Suite 170, Houston, TX 77014-1024 or by calling the Funds at (800)
327-7170.

The date of this Statement of Additional Information is April [ ], 2001.

TABLE OF CONTENTS

GENERAL INFORMATION........................................................

INVESTMENT OBJECTIVES AND POLICIES.........................................

PORTFOLIO TURNOVER.........................................................

PORTFOLIO TRANSACTIONS.....................................................

MANAGEMENT OF THE TRUST....................................................

PRINCIPAL HOLDERS OF SECURITIES............................................

INVESTMENT ADVISORY SERVICES...............................................

ADMINISTRATOR SERVICES.....................................................

TRANSFER AGENCY AND OTHER SERVICES.........................................

12b-1 PLAN OF DISTRIBUTION.................................................

ADDITIONAL INFORMATION ON REDEMPTIONS......................................

CALCULATION OF PERFORMANCE DATA............................................

TAX STATUS.................................................................

CUSTODIAN..................................................................

INDEPENDENT ACCOUNTANTS....................................................

FINANCIAL STATEMENTS.......................................................

<PAGE>

GENERAL INFORMATION

Pauze Funds (the "Trust") is an open-end management investment company and
is a voluntary association of the type known as a "business trust" organized on
October 15, 1993 under the laws of the Commonwealth of Massachusetts. The Board
of Trustees of the Trust has the power to create additional series, or divide
existing series into two or more classes, at any time, without a vote of
shareholders of the Trust. Each series is authorized to issue four classes of
shares. Each series represents a separate diversified portfolio of securities
(collectively referred to herein as the "Portfolios" or "Funds" and individually
as a "Portfolio" or "Fund").

The assets received by the Trust from the issue or sale of shares of each
Portfolio, and all income, earnings, profits and proceeds thereof, subject only
to the rights of creditors, are allocated to the Portfolio. They constitute the
underlying assets of the Portfolio, are required to be segregated on the books
of accounts, and are to be charged with the expenses with respect to the
Portfolio. In the event additional portfolios are created, any general expenses
of the Trust, not readily identifiable as belonging to the Portfolio, shall be
allocated by or under the direction of the Board of Trustees (the "Trustees") in
such manner as the Trustees determine to be fair and equitable. Shares represent
a proportionate interest in the Portfolio. Shares of each Portfolio have been
divided into classes with respect to which the Trustees have adopted allocation
plans regarding expenses specifically attributable to a particular class of
shares. Subject to such an allocation, all shares are entitled to such dividends
and distributions, out of the income belonging to the Portfolio, as are declared
by the Trustees. Upon liquidation of the Trust, shareholders of the Portfolio
are entitled to share pro rata, adjusted for expenses attributable to a
particular class of shares, in the net assets belonging to the Portfolio
available for distribution.

Under the Trust's Master Trust Agreement, no annual or regular meeting of
shareholders is required; however, the Trustees may call meetings to take action
on matters which require shareholder vote and other matters which the Trustees
determine shareholder vote is necessary or desirable. Whether appointed by prior
Trustees or elected by shareholders, an "Independent" Trustee serves as Trustee
of the Trust for a period of six years. However, the Trustees' terms are
staggered so that the terms of at least 25% of the Board of Trustees will expire
every three years. A Trustee whose term is expiring may be re-elected. Thus,
shareholder meetings will ordinarily be held only once every three years unless
otherwise required by the Investment Company Act of 1940 (the "1940 Act").

On any matter submitted to shareholders, the holder of each share is
entitled to one vote per share (with proportionate voting for fractional shares)
irrespective of the relative net asset values of each Portfolio's shares. On
matters affecting an individual Portfolio, a separate vote of shareholders of
the Portfolio is required. On matters affecting an individual class of shares, a
separate vote of shareholders of the class is required.

Shares do not have cumulative voting rights, which means that in situations
in which shareholders elect Trustees, holders of more than 50% of the shares
voting for the election of Trustees can elect 100% of the Trust's Trustees, and
the holders of less than 50% of the shares voting for the election of Trustees
will not be able to elect any person as a Trustee.

Shares are fully paid and non-assessable by the Trust, have no preemptive
or subscription rights and are fully transferable. There are no conversion
rights.

Under Massachusetts law, the shareholders of the Trust could, under certain
circumstances, be held personally liable for the obligations of the Trust.
However, the Master Trust Agreement disclaims shareholder liability for acts or
obligations of the Trust and requires that notice of such disclaimer be given in
each agreement, obligation or instrument entered into or executed by the Trust
or the Trustees. The Master Trust Agreement provides for indemnification out of
the Trust's property for all losses and expenses of any shareholder held
personally liable for the obligations of the Trust. Thus, the risk of a
shareholder incurring financial loss on account of shareholder liability is
limited to circumstances in which the Trust itself would be unable to meet its
obligations.

2
<PAGE>

INVESTMENT OBJECTIVES AND POLICIES

The following information supplements the discussion of the Funds'
investment objectives and policies in the Funds' Prospectus.

INVESTMENT RESTRICTIONS

The U.S. Government Limited Duration Fund, the U.S. Government Intermediate Term
Bond Fund and the U.S. Government Short Term Bond Fund will not change any of
the following investment restrictions, without, in either case, the affirmative
vote of a majority of the outstanding voting securities of the applicable Fund,
which, as used herein, means the lesser of (1) 67% of the Fund's outstanding
shares present at a meeting at which more than 50% of the outstanding shares of
the Fund are represented either in person or by proxy, or (2) more than 50% of
the Fund's outstanding shares.

The Funds may not:

(1) Issue senior securities.

(2) Borrow money, except that the Fund may borrow not in excess of 33 1/3%
of the total assets of the Fund from banks as a temporary measure for
extraordinary purposes.

(3) Underwrite the securities of other issuers.

(4) Purchase or sell real property (including limited partnership
interests, but excluding readily marketable interests in real estate investment
trusts or readily marketable securities or companies which invest in real
estate).

(5) Engage in the purchase or sale of commodities or commodity contracts;
except that each of the Intermediate Term Fund and the Short Term Fund may
invest in bond futures contracts and options on bond futures contracts for bona
fide hedging purposes.

(6) Lend its assets, except that purchases of debt securities in
furtherance of the Fund's investment objectives will not constitute lending of
assets and except that the Fund may lend portfolio securities with an aggregate
market value of not more than one-third of the Fund's total net assets.
(Accounts receivable for shares purchased by telephone shall not be deemed
loans.)

(7) Purchase any security on margin, except that it may obtain such
short-term credits as are necessary for clearance of securities transactions.
This restriction does not apply to bona fide hedging activity in the
Intermediate Term Fund and Short Term Fund utilizing financial futures and
related options.

(8) Make short sales.

(9) Invest more than 25% of its total assets in securities of companies
principally engaged in any one industry, except that this restriction does not
apply to debt obligations of the United States Government which are protected by
the full faith and credit of the U.S. government.

(10) (a) Invest more than 5% of the value of its total assets in
securities of any one issuer, except such limitation shall not apply to
obligations issued or guaranteed by the U. S. government, its agencies or
instrumentalities, or (b) acquire more than 10% of the voting securities of any
one issuer.

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<PAGE>

The U.S. Government Fund will not change any of the following investment
restrictions, without, in either case, the affirmative vote of a majority of the
outstanding voting securities of the Fund, which, as used herein, means the
lesser of (1) 67% of the Fund's outstanding shares present at a meeting at which
more than 50% of the outstanding shares of the Fund are represented either in
person or by proxy, or (2) more than 50% of the Fund's outstanding shares.

The Fund may not:

(1) Issue senior securities. This limitation is not applicable to
activities that may be deemed to involve the issuance or sale of a senior
security by the Fund, provided that the Fund's engagement in such activities is
consistent with or permitted by the Investment Company Act of 1940, as amended,
the rules and regulations promulgated thereunder or interpretations of the
Securities and Exchange Commission or its staff.

(2) Borrow money, except (a) from a bank, provided that immediately after
such borrowing there is an asset coverage of 300% for all borrowings of the
Fund; or (b) from a bank or other persons for temporary purposes only, provided
that such temporary borrowings are in an amount not exceeding 5% of the Fund's
total assets at the time when the borrowing is made. This limitation does not
preclude the Fund from entering into reverse repurchase transactions, provided
that the Fund have an asset coverage of 300% for all borrowings and repurchase
commitments of the Fund pursuant to reverse repurchase transactions.

(3) Underwrite the securities of other issuers. This limitation is not
applicable to the extent that, in connection with the disposition of portfolio
securities (including restricted securities), the Fund may be deemed an
underwriter under certain federal securities laws.

(4) Purchase or sell real estate. This limitation is not applicable to
investments in marketable securities that are secured by or represent interests
in real estate. This limitation does not preclude the Fund from investing in
mortgage-related securities or investing in companies engaged in the real estate
business or that have a significant portion of their assets in real estate
(including real estate investment trusts).

(5) Engage in the purchase or sale of commodities unless acquired as a
result of ownership of securities or other investments. This limitation does not
preclude the Fund from purchasing or selling options or futures contracts, from
investing in securities or other instruments backed by commodities or from
investing in companies which are engaged in a commodities business or have a
significant portion of their assets in commodities.

(6) Lend its assets, except (a) by loaning portfolio securities, (b) by
engaging in repurchase agreements, or (c) by purchasing non-publicly offered
debt securities. For purposes of this limitation, the term "loans" shall not
include the purchase of a portion of an issue of publicly distributed bonds,
debentures or other securities. (Accounts receivable for shares purchased by
telephone shall not be deemed loans.)

(7) Invest more than 25% of its total assets in a particular industry.
This limitation is not applicable to investments in obligations issued or
guaranteed by the U.S. government, its agencies and instrumentalities or
repurchase agreements with respect thereto.

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<PAGE>

The following investment restrictions have been adopted with respect to the U.S.
Government Limited Duration Fund, the U.S. Government Intermediate Term Bond
Fund, the U.S. Government Short Term Bond Fund and the U.S. Government Fund, and
may be changed by the Board of Trustees without a shareholder vote.

The Funds may not:

(1) Invest in warrants to purchase common stock.

(2) Invest in companies for the purpose of exercising control or
management

(3) Hypothecate, pledge, or mortgage any of its assets, except to secure
loans as a temporary measure for extraordinary purposes and except as may be
required to collateralize letters of credit to secure state surety bonds.

(4) [Participate on a joint or joint and several basis in any trading
account.]

(5) Invest in any foreign securities.

(6) Invest more than 15% of its total net assets in illiquid securities.

(7) Invest in oil, gas or other mineral leases.

(8) In connection with bona fide hedging activities, invest more than
[2.5%] of their assets as initial margin deposits or premiums for futures
contracts and provided that said Funds may enter into futures contracts and
option transactions only to the extent that obligations under such contracts or
transactions represent not more than 100% of a Fund's assets.

In addition, the following investment restrictions have been adopted with
respect to the U.S. Government Fund, and may be changed by the Board of Trustees
without a shareholder vote.

The U.S. Government Fund may not:

(1) Purchase any security on margin, except that it may obtain such
short-term credits as are necessary for clearance of securities transactions.
This restriction does not apply to bona fide hedging activity in the
Intermediate Term Fund and Short Term Fund utilizing financial futures and
related options.

(2) Make short sales.

If a percentage restriction is adhered to at the time of investment, a
later increase or decrease in percentage, resulting from a change in values of
portfolio securities or amount of net assets, will not be considered a violation
of any of the foregoing restrictions.

The following discussion of the investment objectives, policies and risks
associated with the Fund supplements the discussion in the prospectus.

ZERO COUPON BONDS

Each Fund may invest in bonds that are "zero coupon" United States
Government securities (which have been stripped of their unmatured interest
coupons and receipts). The Fund will only invest in "zeros" which are issued by
the United States Treasury or United States government agencies, and not those
issued by broker-dealers or banks. The Fund will not invest in Interest Only or
Principal Only ("IOs" or "POs") mortgage-backed securities or derivative
products. Zero coupon securities tend to be more sensitive to changes in
interest rates than other types of United States

5
<PAGE>

Government securities. As a result, a rise or fall in interest rates will have a
more significant impact on the market value of these securities. Although zero
coupon securities pay no interest to holders prior to maturity, interest on
these securities is accrued as income to the Fund and distributed to its
shareholders. These distributions must be made from the Fund's cash assets, or,
if necessary, from the proceeds of sales of portfolio securities.

REPURCHASE AGREEMENTS

Each Fund may invest a portion of its assets in repurchase agreements with
domestic broker-dealers, banks and other financial institutions, provided the
Fund's custodian always has possession of securities serving as collateral or
has evidence of book entry receipt of such securities. In a repurchase
agreement, a fund purchases securities subject to the seller's agreement to
repurchase such securities at a specified time (normally one day) and price. The
repurchase price reflects an agreed-upon interest rate during the time of
investment. All repurchase agreements must be collateralized by United States
Government or government agency securities, the market values of which equal or
exceed 102% of the principal amount of the repurchase obligation. If an
institution enters insolvency proceedings, the resulting delay in liquidation of
securities serving as collateral could cause the Fund some loss if the value of
the securities declines prior to liquidation. To minimize the risk of loss, each
Fund will enter into repurchase agreements only with institutions and dealers
which are considered creditworthy.

INTERMEDIATE TERM FUND AND SHORT TERM FUND USE OF FUTURES CONTRACTS AND OPTIONS
ON FUTURES CONTRACTS

Futures contracts and options may be used for several reasons: to hedge
securities held to effectively reduce the average weighted maturity; to maintain
cash reserves while remaining fully invested; to facilitate trading; to reduce
transaction costs; or to seek higher investment returns when a futures contract
is priced more attractively than the underlying security or index. Neither Fund
may use futures contracts or options transactions to leverage assets.

The Intermediate Term and Short Term Funds may purchase or sell options on
individual securities, and may enter into trading in options on futures
contracts, may purchase put or call options on futures contracts, and may sell
such options in closing transactions.

The primary risks associated with the use of futures contracts and options
are: (i) imperfect correlation between the change in market value of the U.S.
Government securities held by a Fund and the prices of futures contracts and
options; and (ii) possible lack of a liquid secondary market for a futures
contract and the resulting inability to close a futures position prior to its
maturity date. The risk of imperfect correlation will be minimized by investing
only in those contracts whose price fluctuations are expected to resemble those
of a Fund's underlying securities. The risk that a Fund will be unable to close
out a futures position will be minimized by entering into such transactions on a
national exchange with an active and liquid secondary market.

An option will not be purchased for a Fund if, as a result, the aggregate
initial margins and the premiums paid for all options and futures contracts that
a Fund owns would exceed [2.5%] of its net assets at the time of such purchase.

Futures contracts provide for the future sale by one party and purchase by
another party of a specified amount of a specific security at a specified future
time and at a specified price. Futures contracts which are standardized as to
maturity date and underlying financial instrument are traded on national futures
exchanges. Futures exchanges and trading are regulated under the Commodity
Exchange Act by the Commodity Futures Trading Commission ("CFTC"), a U.S.
government agency.

Although futures contracts by their terms call for actual delivery or
acceptance of the underlying securities, in most cases the contracts are closed
out before the settlement date without the making or taking of delivery. Closing
out an open futures position is done by taking an opposite position ("buying" a
contract which has previously been "sold" or "selling" a contract previously
"purchased") in an identical contract to terminate the position. Brokerage
commissions are incurred when a futures contract is bought or sold.

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<PAGE>

Futures traders are required to make a good faith margin deposit in cash or
government securities with a broker or custodian to initiate and maintain open
positions in futures contracts. A margin deposit is intended to assure
completion of the contract (delivery or acceptance of the underlying security)
if it is not terminated prior to the specified delivery date. Minimal initial
margin requirements are established by the futures exchange and may be changed.
Brokers may establish deposit requirements which are higher than the exchange
minimums. Futures contracts are customarily purchased and sold on margin
deposits which may range upward from less than 5% of the value of the contract
being traded.

After a futures contract position is opened, the value of the contract is
marked to market daily. If the futures contract price changes, then to the
extent that the margin on deposit does not satisfy margin requirements, payment
of additional "variation" margin will be required. Conversely, change in the
contract value may reduce the required margin, resulting in a repayment of
excess margin to the contract holder. Variation margin payments are made to and
from the futures broker for as long as the contract remains open. The Funds
expect to earn interest income on their margin deposits.

Traders in futures contracts may be broadly classified as either "hedgers"
or "speculators". Hedgers use the futures markets primarily to offset
unfavorable changes in the value of securities otherwise held for investment
purposes or expected to be acquired by them. Speculators are less inclined to
own the securities underlying the futures contracts which they trade, and use
futures contracts with the expectation of realizing profits from fluctuations in
the prices of underlying securities. The Funds intend to use futures contracts
only for bona fide hedging purposes.

Regulations of the CFTC, as applicable to a Fund, require that all of its
futures transactions constitute bona fide hedging transactions. A Fund will only
sell futures contracts to protect securities it owns against price declines or
purchase contracts to protect against an increase in the price of securities it
intends to purchase. As evidence of this hedging interest, it is expected that
approximately 75% of its futures contract purchases will be "completed", that
is, equivalent amounts of related securities will have been purchased or are
being purchased by the Fund upon sale of open futures contracts.

Although techniques other than the sale and purchase of futures contracts
could be used to control a Fund's exposure to market fluctuations, the use of
futures contracts may be a more effective means of hedging this exposure. While
a Fund will incur commission expenses in both opening and closing out futures
positions, these costs usually are lower than transaction costs incurred in the
purchase and sale of the underlying securities.

RESTRICTIONS ON THE USE OF FUTURES CONTRACTS

A Fund will not enter into futures contract transaction to the extent that,
immediately thereafter, the sum of its initial margin deposits on open contracts
and premiums paid for all options and futures contracts exceed 2.5% of its net
assets at the time of the transaction. In addition, a Fund will not enter into
futures contracts to the extent that its outstanding obligations to purchase
securities under these contracts would exceed 100% of the Fund's total assets.

RISK FACTORS IN FUTURES TRANSACTIONS

Positions in futures contracts may be closed out only on an exchange which
provides a secondary market for such futures. However, there can be no assurance
that a liquid secondary market will exist for any particular futures contract at
any specific time. Thus, it may not be possible to close a futures position. In
the event of adverse price movements, the Fund would continue to be required to
make daily cash payments to maintain its required margin. In such situations, if
the Fund has insufficient cash, it may have to sell portfolio securities to meet
daily margin requirements at a time when it may be disadvantageous to do so. In
addition, the Fund may be required to make delivery of the instruments
underlying futures contracts it holds. The inability to close options and
futures positions also could have an adverse impact on the ability to
effectively hedge it.

A Fund will minimize the risk that it will be unable to close out a futures
contract by only entering into futures

7
<PAGE>

which are traded on national futures exchanges and for which there appears to be
a liquid secondary market.

The risk of loss in trading futures contracts in some strategies can be
substantial, due both to the low margin deposits required, and the extremely
high degree of leverage involved in futures pricing. As a result, a relatively
small price movement in a futures contract may result in immediate and
substantial loss (as well as gain) to the investor. For example, if at the time
of purchase, 10% of the value of the futures contract is deposited as margin, a
subsequent 10% decrease in the value of the futures contract would result in a
total loss of the margin deposit, before any deduction for the transaction
costs, if the account were then closed out. A 15% decrease would result in a
loss equal to 150% of the original margin deposit if the contract were closed
out. Thus, a purchase or sale of a futures contract may result in losses in
excess of the amount invested in the contract. However, because the futures
strategies of the Fund are engaged in only for hedging purposes, Pauze Swanson
Capital Management Co., the Funds' Investment Advisor, does not believe that the
Funds are subject to the risks of loss frequently associated with leveraged
futures transactions. The Fund would presumably have sustained comparable losses
if, instead of the futures contract, it had invested in the underlying financial
instrument and sold it after the decline.

Utilization of futures transactions by a Fund does involve the risk of
imperfect or no correlation where the securities underlying futures contracts
have different maturities than the portfolio securities being hedged. It is also
possible that a Fund could both lose money on futures contracts and also
experience a decline in value of its portfolio securities. There is also the
risk of loss by a Fund of margin deposits in the event of bankruptcy of a broker
with whom the Fund has an open position in a futures contract or related option.

Most futures exchanges limit the amount of fluctuation permitted in futures
contract prices during a single trading day. The daily limit establishes the
maximum amount that the price of a futures contract may vary either up or down
from the previous day's settlement price at the end of a trading session. Once
the daily limit has been reached in a particular type of contract, no trades may
be made on that day at a price beyond that limit. The daily limit governs only
price movement during a particular trading day and therefore does not limit
potential losses, because the limit may prevent the liquidation of unfavorable
positions. Futures contract prices have occasionally moved to the daily limit
for several consecutive trading days with little or no trading, thereby
preventing prompt liquidation of future positions and subjecting some futures
traders to substantial losses.

FEDERAL TAX TREATMENT OF FUTURES CONTRACTS

Except for transactions a Fund has identified as hedging transactions, the
Fund is required for federal income tax purposes to recognize as income for each
taxable year its net unrealized gains and losses on certain futures contracts
held as of the end of the year as well as those actually realized during the
year. In most cases, any gain or loss recognized with respect to a futures
contract is considered to be 60% long-term capital gain or loss and 40%
short-term capital gain or loss, without regard to the holding period of the
contract. Furthermore, sales of futures contracts which are intended to hedge
against a change in the value of securities held by the Fund may affect the
holding period of such securities and, consequently, the nature of the gain or
loss on such securities upon disposition.

In order for a Fund to continue to qualify for federal income tax treatment
as a regulated investment company, at least 90% of its gross income for a
taxable year must be derived from qualifying income; i.e., dividends, interest,
income derived from loans of securities, gains from the sale of securities or
other income derived with respect to the Fund's business of investment in
securities or currencies. In addition, with respect to tax years commencing
before August 5, 1997, gains realized on the sale or other disposition of
securities held for less than three months must be limited to less than 30% of
the Fund's annual gross income, provided, however, that for purposes of the 30%
test, the Internal Revenue Code of 1986, as amended, provides that losses on
securities underlying an option or a futures contract may be offset against any
gains realized on the disposition of the option or futures contract. It is
anticipated that any net gain realized from the closing out of futures contracts
will be considered a gain from the sale of securities and therefore be
qualifying income for purposes of the 90% requirement. It is anticipated that
unrealized gains on futures contracts which have been open for less than three
months as of the end of a Fund's fiscal year and which are recognized for tax
purposes will not be considered gains on sales of securities held less than
three months for the purpose of the 30% test.

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<PAGE>

The Fund will distribute to shareholders annually any net capital gains
which have been recognized for federal income tax purposes (including unrealized
gains at the end of the Fund's fiscal year) on futures transactions. Such
distributions will be combined with distributions of capital gains realized on
the Fund's other investments and shareholders will be advised on the nature of
the transactions.

SEGREGATED ASSETS AND COVERED POSITIONS

When purchasing futures contracts, selling an uncovered call option, or
purchasing securities on a when-issued or delayed delivery basis, the Funds will
restrict cash, which may be invested in repurchase obligations or liquid
securities. When purchasing a stock index futures contract, the amount of
restricted cash or liquid securities, when added to the amount deposited with
the broker as margin, will be at least equal to the market value of the futures
contract and not less than the market price at which the futures contract was
established. When selling an uncovered call option, the amount of restricted
cash or liquid securities, when added to the amount deposited with the broker as
margin, will be at least equal to the value of securities underlying the call
option and not less than the strike price of the call option. When purchasing
securities on a when-issued or delayed delivery basis, the amount of restricted
cash or liquid securities will be at least equal to the Fund's when-issued or
delayed delivery commitments.

The restricted cash or liquid securities will either be identified as being
restricted in the Fund's accounting records or physically segregated in a
separate account at the Trust's custodian. For the purpose of determining the
adequacy of the liquid securities which have been restricted, the securities
will be valued at market or fair value. If the market or fair value of such
securities declines, additional cash or liquid securities will be restricted on
a daily basis so that the value of the restricted cash or liquid securities,
when added to the amount deposited with the broker as margin, equals the amount
of such commitments by a Fund.

Fund assets need not be segregated if the Fund "covers" the futures
contract or call option sold. For example, the Fund could cover a futures or
forward contract which it has sold short by owning the securities or currency
underlying the contract. The Fund may also cover this position by holding a call
option permitting the Fund to purchase the same futures or forward contract at a
price no higher than the price at which the sell position was established.

A Fund could cover a call option which it has sold by holding the same
security underlying the call option. A Fund may also cover by holding a separate
call option of the same security or stock index with a strike price no higher
than the strike price of the call option sold by the Fund. The Fund could cover
a call option which it has sold on a futures contract by entering into a long
position in the same futures contract at a price no higher than the strike price
of the call option or by owning the securities or currency underlying the
futures contract. The Fund could also cover a call option which it has sold by
holding a separate call option permitting it to purchase the same futures
contract at a price no higher than the strike price of the call option sold by
the Fund.

BORROWING

Each Fund may borrow from a bank up to 33 1/3% of its total assets (reduced
by the amount of all liabilities and indebtedness other than such borrowings) as
a temporary measure for extraordinary purposes. To the extent that a Fund
borrows money, the Fund will be leveraged; at such times, the Fund may
appreciate or depreciate in value more rapidly than its benchmark index. Each
Fund will repay any money borrowed in excess of 33 1/3% of the value of its
total assets prior to purchasing additional portfolio securities.

PORTFOLIO TURNOVER

Pauze Funds' Investment Advisor buys and sells securities for the Fund to
accomplish its investment objectives. The Funds' investment policies may lead to
frequent changes in investments, particularly in periods of rapidly fluctuating
interest rates. The Funds' investments may also be traded to take advantage of
perceived short-term

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<PAGE>

disparities in market values or yields among securities of comparable quality
and maturity.

A change in the securities held by a Fund is known as "portfolio turnover."
Portfolio turnover rates are set forth in the "Financial Highlights" portion of
the prospectus. High portfolio turnover in any given year indicates a
substantial amount of short-term trading, which will result in payment by the
Fund from capital of above-average amounts of markups to dealers and could
result in the payment by shareholders of above-average amounts of taxes on
realized investment gain. These factors may negatively affect a Fund's
performance. Any short-term gain realized on securities will be taxed to
shareholders as ordinary income. See "Tax Status."

PORTFOLIO TRANSACTIONS

Applicable law requires that the Advisor, in executing portfolio
transactions and selecting brokers or dealers, seek the best overall terms
available. In assessing the terms of a transaction, consideration may be given
to various factors, including the breadth of the market in the security, the
price of the security and the financial condition and execution capability of
the broker or dealer (for a specified transaction and on a continuing basis).
When transactions are executed in the over-the-counter market, it is intended
generally to seek first to deal with the primary market makers. However, the
services of brokers will be utilized if it is anticipated that the best overall
terms can thereby be obtained. Purchases of newly issued securities for the Fund
usually are placed with those dealers from which it appears that the best price
or execution will be obtained. Those dealers may be acting as either agents or
principals.

As all portfolio securities transactions were executed with principals,
none of the Funds paid brokerage fees for the fiscal years ended April 30, 1998
through April 30, 2000.

MANAGEMENT OF THE TRUST

The business and affairs of the Funds are managed by the Trust's Board of
Trustees. The Trustees establish policies, as well as review and approve
contracts and their continuance. The Trustees also elect the officers of the
Trust The Trustees and Officers of the Trust, and their principal occupations
during the past five years are set forth below, along with their business
address, 14340 Torrey Chase Blvd., Houston, Texas 77014.

NAME, ADDRESS & AGE TRUST POSITION PRINCIPAL OCCUPATION

<S> <C> <C>
Philip C. Pauze ** President and President of Pauze, Swanson & Associates
14340 Torrey Chase Blvd. Trustee Investment Advisors, Inc., d/b/a Pauze
Suite 170 Swanson Capital Management Co., an asset
Houston, Texas 77014 management firm specializing in management of
Year of Birth: 1941 fixed income portfolios since April 1993.
Owner of Philip C. Pauze & Associates, a
management consulting firm since April 1993.
Vice President and Registered Representative
with Shearson Lehman Brothers from 1988 to
1993. Financial Consultant to California
Master Trust since 1986.

Nancy Szidlowski Treasurer, Treasurer and Chief Accounting Officer of
14340 Torrey Chase Chief Pauze, Swanson & Associates Investment
Houston, TX 77014 Accounting Advisors, Inc. since January 2001. Accountant
Year of Birth: 1951 Officer in the mutual fund accounting department at
American General Financial Group, an
insurance company, from April 1999 through
December 2000. Lead Accountant of the mutual
fund accounting department at Van Kampen
Investments, a mutual fund company, from
March 1994 through April 1999.

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<PAGE>

Patricia S. Dobson** Trustee and Vice President of Pauze, Swanson & Associates
14340 Torrey Chase Secretary Investment Advisors, Inc. since 1996.
Houston, TX 77014 Assistant Vice President of Pauze Swanson
Year of Birth: 1943 from 1995 to 1996. Administrator of Pauze
Swanson from 1993 to 1995. Vice President of
Champion Fund Services since March 1999.

<PAGE>

Paul J. Hilbert Trustee Attorney with the firm of Paul J. Hilbert &
2301 FM 1960 West Associates, Houston, Texas, practicing civil
Houston, TX 77068 law since 1975. Legislator, Texas House of
Year of Birth: 1949 Representatives since 1982.

Gordon Anderson Trustee Consultant with the Texas Education Agency,
1806 Elk River Rd. Region 4 Education Service Center, School
Houston, TX 77090 Board and Superintendent Development Program
Year of Birth: 1935 since March 1998. President, RAJ Development
Corporation: investor, developer and home
builder from 1997 to 1998. Retired (July
1997) Superintendent of Spring Independent
School District, Houston, Texas.

Wayne F. Collins Trustee Retired. From September 1991 to February 1994
32 Autumn Crescent was Vice President of Worldwide Business
The Woodlands, TX 77381 Planning of the Compaq Computer Corporation.
Year of Birth: 1941 Served Compaq Computer Corporation as Vice
President of Materials Operations from
September 1988 to September 1991; Vice
President, Materials and Resources from April
1985 to September 1991; Vice President,
Corporate Resources from June 1983 to
September 1988.

Robert J. Pierce Trustee Richard Pierce Funeral Service since 1967,
1791 #2 Silverado Trail serving in such capacities as President and
Napa, CA 94558 General Manager. In addition, in June 1997,
Year of Birth: 1945 became Vice President (Western Division) and
Chief Operating Officer (Northern California
Region) of Stewart Enterprises, Inc.
</TABLE>

** This Trustee may be deemed an "interested person" of the Trust as
defined in the Investment Company Act of 1940.

Trustee fees are Trust expenses and each portfolio pays a portion of the
Trustee fees. The compensation paid to the Trustees of the Trust for the fiscal
year ended April 30, 2000 is set forth below.

AGGREGATE COMPENSATION
FROM TRUST (THE TRUST IS
NAME NOT IN A FUND COMPLEX) TOTAL COMPENSATION
---- ---------------------- ------------------
Philip C. Pauze $0 $0
Patricia S. Dobson $0 $0
Paul J. Hilbert $12,500 $12,500
Wayne F. Collins $12,500 $12,500
Gordon Anderson $12,500 $12,500
Robert J. Pierce $12,500 $12,500

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<PAGE>

PRINCIPAL HOLDERS OF SECURITIES

[updated 5% shareholder information and trustees' holdings to be supplied]

Other than indicated below, as of January [ ], 2001, the Officers and Trustees
of the Trust, as a group, owned [less than 1%] of the outstanding shares of the
Pauze Funds(TM). The Trust is aware of the following persons who owned of
record, or beneficially, more than 5% of the outstanding shares of the Pauze
Funds(TM) as of January [ ], 2001:

CLASS NAME & ADDRESS OF OWNER % OWNED TYPE OF OWNERSHIP
----- ----------------------- ------- -----------------

PAUZE U.S. GOVERNMENT FUND

The U.S. Government Fund had not commenced operations as of the date of
this Statement of Additional Information, therefore no shareholder information
is provided.

PAUZE U. S. GOVERNMENT LIMITED DURATION FUND

No Load Norwest Bank Minnesota, NA 6.14% Record
FBO: TX Prepaid Funeral Fund N-G
P O Box 1533
Minneapolis, MN 55480

No Load Donaldson Lufkin & Jenrette 6.34% Record
Securities Corp.
P O Box 2052
Jersey City, NJ 07303-9998

No Load Mechanics Bank of Richmond, TTEE 83.91% Record
FBO California Master Trust
3170 Hilltop Mall Road
Richmond, CA 94806

Class B SEI Trust Company 9.79% Record
FBO 601 Banks
One Freedom Valley Dr.
Oaks, PA 19456

Class B Donaldson Lufkin & Jenrette 90.22% Record
Securities Corp.
P O Box 2052
Jersey City, NJ 07303-9998

Class C Comerica Bank Escrow Agent 47.77% Record
FBO MMC Grantor Escrow Account
411 W. Lafayette
Detroit, MI 48226

Class C Comerica Bank Escrow Agent 48.19% Record
FBO MMC Non-Grantor Escrow Account
411 W. Lafayette
Detroit, MI 48226

12
<PAGE>

PAUZE U. S. GOVERNMENT INTERMEDIATE TERM BOND FUND

No Load Donaldson Lufkin & Jenrette 6.61% Record
Securitites Corp.
P O Box 2052
Jersey City, NJ 07303-9998

No Load Norwest Bank Minnesota, NA 14.87% Record
FBO: TX Prepaid Funeral Fund G
P O Box 1533
Minneapolis, MN 55480

No Load Strafe & Co. F/A/O Cooper Agency 17.34% Record
P O Box 160
Westerville, OH 43086-0160

No Load Norwest Bank Minnesota, NA 53.97% Record
FBO: TX Prepaid Funeral Fund N-G
P O Box 1533
Minneapolis, MN 55480

Class B SEI Trust Company 30.67% Record
FBO 601 Banks
One Freedom Valley Drive
Oaks, PA 19456

Class B Donaldson Lufkin & Jenrette 63.56% Record
Securities Corp.
P O Box 2052
Jersey City, NJ 07303

PAUZE U. S. GOVERNMENT SHORT TERM BOND FUND

No Load CFTOC, Nominee
Community First Trust Co, TTEE 5.43% Record
FBO Hamilton Funeral Service Centers
dba Fitzhenry's Funeral Home and
Crematory
P O Box 1410
Ruston, LA 71273

No Load Mechanics Bank of Richmond, TTEE 5.95% Record
FBO California Master Trust
3170 Hilltop Mall Road
Richmond, CA 94806

No Load Strafe & Co. F/A/O Cooper Agency 8.82% Record
P O Box 160
Westerville, OH 43086-0160

13
<PAGE>

No Load Norwest Bank Minnesota, NA 17. 09% Record
FBO: TX Prepaid Funeral Fund G
P O Box 1533
Minneapolis, MN 55480

No Load Norwest Bank Minnesota, NA 58.53% Record
FBO: TX Prepaid Funeral Fund N-G
P O Box 1533
Minneapolis, MN 55480

Class B Donaldson Lufkin & Jenrette 100% Record
Securitites Corp.
P O Box 2052
Jersey City, NJ 07303-9998

Class C Comerica Bank Escrow Agent 47.89% Record
FBO MMC Grantor Escrow Account
411 W. Lafayette
Detroit, MI 48226

Class C Comerica Bank Escrow Agent 49.31% Record
FBO MMC Non-Grantor Escrow Account
411 W. Lafayette
Detroit, MI 48226

[As of January [ ], 2001, as a result of the beneficial ownership described
above, Mechanics Bank of Richmond, TTEE FBO: California Master Trust may be
deemed to control the Limited Duration Fund (it beneficially owns 81% of the
Fund) and Norwest Bank of Minnesota, NA FBO: TX Prepaid Funeral Fund N-G, may be
deemed to control the Intermediate Term Fund (it beneficially owns 46% of the
Fund) and the Short Term Fund (it beneficially owns 40% of the Fund). Prior to
the public offering of the U.S. Government Fund, _________________________,
[insert address], purchased all of the outstanding shares of the U.S. Government
Fund and may be deemed to control the Fund. Each of these shareholders, as a
result of this ownership, may respectively have the ability to control the
outcome of any proposal submitted for approval to the shareholders of the Fund
the shareholder may be deemed to control, including proposals to change the
Fund's fundamental policies or the terms of the management agreement with the
Fund's investment advisor.]

INVESTMENT ADVISORY SERVICES

Pauze, Swanson & Associates Investment Advisors, Inc., d/b/a Pauze Swanson
Capital Management Co., an investment management firm (the "Advisor"), pursuant
to an Advisory Agreement provides investment advisory and management services to
the Trust. It will compensate all personnel, officers and Trustees of the Trust
if such persons are employees of the Advisor or its affiliates.

The Advisory Agreement for the U.S. Government Limited Duration Fund, the
U.S. Government Intermediate Term Bond Fund and the U.S. Government Short Term
Bond Fund was approved by the Board of Trustees of the Trust (including a
majority of the "disinterested Trustees") and by vote of a majority of the
outstanding voting securities of the Limited Duration Fund in May 1996. The
terms of the votes approving the Advisory Agreement provide that it will
continue until October 31, 1997, and from year to year thereafter as long as it
is approved at least annually both (i) by a vote of a majority of the
outstanding voting securities of the Fund (as defined in

14
<PAGE>

the Investment Company Act of 1940 (the "Act")) or by the Board of Trustees of
the Trust, and (ii) by a vote of a majority of the Trustees who are not parties
to the Advisory Agreement or "interested persons" of any party thereto, cast in
person at a meeting called for the purpose of voting on such approval. The
Advisory Agreement may be terminated on 60 days' written notice by either party
and will terminate automatically if it is assigned. The Advisory Agreement was
approved with respect to the Intermediate Term Fund and the Short Term Fund
during March 1996.

The Advisory Agreement for the U.S. Government Fund was approved by the
Board of Trustees of the Trust (including a majority of the "disinterested
Trustees") and by vote of a majority of the outstanding voting securities of the
U.S. Government Fund in March 2001. The terms of the votes approving the
Advisory Agreement provide that it will continue until for a period of two (2)
years from the date of its execution, and from year to year thereafter, subject
to annual approval by (i) the Board or (ii) a vote of a majority of the
outstanding voting securities of the Fund, provided that in either event
continuance is also approved by a majority of the trustees who are not
interested persons of you or the Trust, by a vote cast in person at a meeting
called for the purpose of voting such approval.

Each Advisory Agreement with the Trust provides for each Fund to pay the
Advisor an annual management fee equal to a percentage of the Fund's average net
assets (1/12 of the applicable percentage monthly) as follows: U.S. Government
Fund and Limited Duration Fund 0.60% on the first $100 million, 0.50% on the
next $150 million, 0.45% on the next $250 million and 0.40% on net assets in
excess of $500 million; Intermediate Term Fund, 0.50%; and Short Term Fund,
0.50%.

For the fiscal years ended April 30, 1998, 1999 and 2000 the Trust, on
behalf of the Limited Duration Fund, paid the Advisor fees (net of expenses paid
by the Advisor or fee waivers) of $442,281, $414,189 and $356,940, respectively.

For the fiscal years ended April 30, 1998, 1999 and 2000 the Trust, on
behalf of the Intermediate Term Fund, paid the Advisor fees (net of expenses
paid by the Advisor or fee waivers) of $13,686, $38,820 and $33,298,
respectively.

For the fiscal years ended April 30, 1998, 1999 and 2000, the Trust, on
behalf of the Short Term Fund, paid the Advisor fees (net of expenses paid by
the Advisor or fee waivers) of $7,608, $19,205 and $9,169, respectively.

The Trust and the Advisor have each adopted a Code of Ethics (the "Code")
under Rule 17j-1 of the Investment Company Act of 1940. The personnel subject to
the Code are permitted to invest in securities, including securities that may be
purchased or held by the Fund. You may obtain a copy of the Code from the
Securities and Exchange Commission.

THE ADMINISTRATOR

Fund Services Inc., ("FSI") d/b/a Champion Fund Services, 14340 Torrey
Chase Blvd., Suite 170 Houston, Texas 77014, under an Administration Agreement
with the Trust dated July 1, 1999, administers the affairs of the Trust. Philip
C. Pauze, President of FSI has been President and a Trustee of the Trust since
its inception in 1993. Fund Services, Inc. assumed responsibilities as
Administrator effective July 1, 1999.

Under the Administration Agreement, the Administrator, subject to the
overall supervision and review of the Board of Trustees of the Trust, FSI
supervises parties providing services to the Trust, provides the Trust with
office space, facilities and business equipment, and provides the services of
executive and clerical personnel for administering the affairs of the Trust.

The Administration Agreement provides for the Trust to pay the
Administrator an annual fee of $145,000, which is allocated among all of the
funds of the Trust pro rata based on their respective net assets. For the period
July 1, 1999 to April 30, 2000, FSI received $119,640 from the Trust for these
services. FSI also provides

15
<PAGE>

transfer agency, dividend disbursing and accounting services to the Funds for
which it receives separate compensation.

TRANSFER AGENT AND OTHER SERVICES

FSI, under a Transfer Agency and Shareholder Services Agreement with the
Trust dated July 1, 1999, provides transfer agency, dividend disbursing, and
shareholder services to the Funds. The Transfer Agency Agreement provides for
the Trust to pay FSI an annual base fee of $90,000, plus $18 per open
shareholder account, plus $1 per shareholder account with 12b-1 fees, plus $1
per shareholder account with front end or back end sales charges, and plus $1
per account in non-annual dividend funds.

FSI, under an Accounting Services Agreement with the Trust dated July 1,
1999, also provides accounting services to the Funds. The Accounting Services
Agreement provides for the Trust to pay FSI an annual fee $125,000, plus an
annual asset based base fee of 0.08% on the second $100 million of assets, 0.06%
on the next $300 million, 0.04% on the next $500 million and 0.02% on assets
over $1 billion. For the period July 1, 1999 to April 30, 2000, FSI received
$103,010 from the Trust for these services.

12B-1 PLAN OF DISTRIBUTION

A separate plan of distribution has been adopted under Rule 12b-1 of the
Investment Company Act of 1940 for each Fund, with separate provisions for each
class of shares. Each plan provides that the applicable Fund may engage in any
activity related to the distribution of its shares. These activities may
include, among others: (a) payments to securities dealers and others that are
engaged in the sale of shares, or that may be advising shareholders regarding
the purchase, sale or retention of shares; (b) payments to securities dealers
and others that hold shares for shareholders in omnibus accounts or as
shareholders of record or provide shareholder support or administrative services
to the Fund and its shareholders; (c) expenses of maintaining personnel who
engage in or support distribution of shares or who render shareholders support
services not otherwise provided by the Trust's transfer agent; (d) costs of
preparing, printing and distributing prospectuses and statements of additional
information and reports of the Fund for recipients other than existing
shareholders; and (e) costs of formulating and implementing marketing and
promotional activities. Payments to a securities dealer or other entity
generally will be based on a percentage of the value of Fund shares held by
clients of the entity.

Expenses which the Fund incurs pursuant to the Distribution Plans are
reviewed quarterly by the Board of Trustees. On an annual basis the Distribution
Plans are reviewed by the Board of Trustees as a whole, and the Trustees who are
not "interested persons" as that term is defined in the 1940 Act, and who have
no direct or indirect financial interest in the operation of the Distribution
Plans ("Qualified Trustees"). Any amendment that materially increases the amount
of expenditures permitted under the Distribution Plan must be approved by a
majority of the outstanding voting securities of the applicable class. A
Distribution Plan may be terminated at any time as to any class by vote of a
majority of the Qualified Trustees, or by vote of a majority of the outstanding
voting securities of the applicable class.

The following table provides information regarding the amount and manner in
which amounts paid by the Funds under the previous Distribution Plans were spent
during the fiscal year ended April 30, 2000

<TABLE>
<CAPTION>
LIMITED DURATION INT. TERM SHORT TERM
FUND BOND FUND BOND FUND TOTAL

<S> <C> <C> <C> <C>
Advertising, Printing Promotion $ 66,488 $ 7,926 $ 2,109 $ 76,523
Administrative Service Fees $ 129,631 $ 6,564 $ 2,910 $ 139,105
Class B Shares Financing $ 12,712 $ 10,239 $ 1,054 $ 24,005
Compensation to Dealers $ 2,674 $ 1,925 $ 4,599
</TABLE>

The Trust expects that the Distribution Plans will be used to pay a
"service fee" to persons who provide personal services to prospective and
existing Fund shareholders and to compensate broker-dealers for sales and
promotional

16
<PAGE>

services. Shareholders of the Funds will benefit from these services and the
Trust expects to benefit from economies of scale as more shareholders are
attracted to the Fund.

DISTRIBUTOR

On July 1, 1999, pursuant to the Fund's Distribution Plan, the Trust
entered into a Distribution Agreement with B. C. Ziegler and Company
("Ziegler"), pursuant to which Ziegler has agreed to act as the Trust's agent in
connection with the distribution of Fund shares, including acting as agent in
states where designated agents are required, reviewing and filing all
advertising and promotional materials and monitoring and reporting to the Board
of Trustees on Trust distribution plans. For such services, Ziegler will be paid
a fixed annual fee of $30,000 and will be reimbursed for expenses incurred on
behalf of the Trust. The Advisor is committed to pay all sums, if any, that
exceed the amount allowed under the Fund's 12b-1 Plan.

ADDITIONAL INFORMATION ON REDEMPTIONS

Suspension of Redemption Privileges: the Trust may suspend redemption
privileges or postpone the date of payment for up to seven days, but cannot do
so for more than seven days after the redemption order is received except during
any period (1) when the bond markets are closed, other than customary weekend
and holiday closings, or trading on the Exchange is restricted as determined by
the Securities and Exchange Commission ("SEC"), (2) when an emergency exists, as
defined by the SEC, which makes it not reasonably practicable for the Trust to
dispose of securities owned by it or not reasonably practicable to fairly
determine the value of its assets, or (3) as the SEC may otherwise permit.

CALCULATION OF PERFORMANCE DATA

TOTAL RETURN

A Fund may advertise performance in terms of average annual total return
for 1, 5 and 10 year periods, or for such lesser periods as the Fund has been in
existence. Average annual total return is computed by finding the average annual
compounded rates of return over the periods that would equate the initial amount
invested to the ending redeemable value according to the following formula:

n
P(1 + T) = ERV

Where: P = a hypothetical initial payment of $1,000
T = average annual total return
n = number of years (exponential number)
ERV = ending redeemable value of a hypothetical $1,000 payment made at
the beginning of the 1, 5 or 10 year periods at the end of the
year or period;

The calculation assumes all charges are deducted from the initial $1,000
payment and assumes all dividends and distributions by the Fund are reinvested
at the price stated in the prospectus on the reinvestment dates during the
period, and includes all recurring fees that are charged to all shareholder
accounts. The calculation assumes the deduction of the maximum contingent sales
charge (for Class B shares). The results do not take into account charges for
optional services which involve nominal fees (such as wire redemption fees).

17
<PAGE>

For the period ended April 30, 2000, the average annual total returns were:

<TABLE>
<CAPTION>
Since
1 Year 3 Year 5 Year Inception
------ ------ ------ ---------
Pauze U. S. Government Limited Duration Fund
<S> <C> <C> <C> <C>
No Load Shares (Inception 1/10/94) (2.63)% 3.30% 3.72% 2.74%
Class B Shares (Inception 9/3/96) (6.72)% 1.60% n/a 1.63%
Class C Shares (Inception 5/13/98) (3.38)% n/a n/a (4.58)%

Pauze U. S. Government Intermediate Term Bond Fund

No Load Shares (Inception 10/10/96) (0.77)% 2.72% n/a 2.26%
Class B Shares (Inception 9/3/96) (5.25)% 0.91% n/a 0.86%

Pauze U. S. Government Short Term Bond Fund

No Load Shares (Inception 9/3/96) (0.52)% 2.66% n/a 2.52%
Class B Shares (Inception 9/3/96) (5.01)% n/a n/a 0.11%
Class C Shares (Inception 11/7/96) (1.14)% 1.91% n/a 1.62%
</TABLE>

The total returns for the Limited Duration Fund No-load shares, Class B,
and Class C shares for the Fiscal year ended April 30, 2000 were (2.63)%,
(3.41)% and (3.38)%, respectively.

The total returns for the Intermediate Term Fund No-load shares and Class B
shares for the Fiscal year ended April 30, 2000 were (0.77)% and (1.72)%,
respectively.

The total returns for the Short Term Fund No-load shares, Class B shares,
and Class C shares for the Fiscal year ended April 30, 2000 were (0.52)%,
(1.40)%, and (1.14)%, respectively.

YIELD

A Fund may also advertise performance in terms of a 30 day yield quotation.
A Fund's "yield" refers to the income generated by an investment in the Fund
over a 30-day (or one month) period (which period will be stated in the
advertisement). Yield is computed by dividing the net investment income per
share earned during the most recent calendar month by the maximum offering price
per share on the last day of such month. This income is then "annualized." That
is, the amount of income generated by the investment during that 30-day period
is assumed to be generated each month over a 12-month period and is shown as a
percentage of the investment. For purposes of the yield calculation, interest
income is computed based on the yield to maturity of each debt obligation and
dividend income is computed based upon the stated dividend rate of each security
in the Fund's portfolio and all recurring charges are recognized.

The 30-day yield quotation is computed by dividing the net investment
income per share earned during the period by the maximum offering price per
share on the last day of the period according to the following formula:

6
YIELD = 2 [ ((A - B)/CD + 1) - 1]

Where: A = dividends and interest earned during the period
B = expenses accrued for the period (net of reimbursement)
C = the average daily number of shares outstanding during the period
that were entitled to receive dividends
D = the maximum offering price per share on the last day of the period

18
<PAGE>

The standard total return and yield results for another class may not take
into account the additional Rule 12b-1 fees for Class B and Class C shares. The
performance of Class B and Class C shares will be lower than that of the other
class of shares. Further, the results for other classes may not take into
account the CDSC for the Class B shares. These fees have the effect of reducing
the actual return realized by shareholders.

The Limited Duration Fund's 30-day yields for No-load shares, Class B, and
Class C shares for the 30 days ending April 30, 2000 were 4.25%, 3.49%, and
3.49%, respectively.

The Intermediate Term Fund's 30-day yields for No-load shares and Class B
shares for the 30 days ending April 30, 2000 were 5.63% and 4.86%, respectively.

The Short Term Fund's 30-day yields for No-load shares, Class B, and Class
C shares for the 30 days ending April 30, 2000 were 4.39%, 3.63%, and 3.63%,
respectively.

NONSTANDARDIZED TOTAL RETURN

A Fund may also advertise performance information (a "non-standardized
quotation") which is calculated differently from "average annual total return."
A non-standardized quotation of total return may be a cumulative return which
measures the percentage change in the value of an account between the beginning
and end of a period, assuming no activity in the account other than reinvestment
of dividends and capital gains distributions. A non-standardized quotation may
also be an average annual compounded rate of return over a specified period,
which may be a period different from those specified for "average annual total
return." In addition, a non-standardized quotation may be an indication of the
value of a $10,000 investment (made on the date of the initial public offering
of a Fund's shares) as of the end of a specified period. These non-standardized
quotations do not include the effect of the applicable sales charge, or charges
for optional services which involve nominal fees, which would reduce the quoted
performance if included. A non-standardized quotation will always be accompanied
by the Fund's "average annual total return" as described above.

A Fund may also include in advertisements data comparing performance with
bond or other indices, or with other mutual funds (as reported in non-related
investment media, published editorial comments and performance rankings compiled
by independent organizations and publications that monitor the performance of
mutual funds). For example, a Fund may compare its performance to rankings
prepared by Lipper Analytical Services, Inc. ("Lipper"), a widely recognized
independent service which monitors the performance of mutual funds, to
Morningstar's Mutual Fund Values, to Moody's Bond Survey Bond Index or to the
Consumer Price Index. Performance information and rankings as reported in
Changing Times, Business Week, Institutional Investor, the Wall Street Journal,
Mutual Fund Forecaster, No-Load Investor, Money Magazine, Forbes, Fortune and
Barrons magazine may also be used in comparing performance of a Fund.

TAX STATUS

TAXATION OF THE FUNDS -- IN GENERAL

As stated in its prospectus, each Fund intends to qualify as a "regulated
investment company" under Subchapter M of the Internal Revenue Code of 1986, as
amended (the "Code"). Accordingly, each Fund will not be liable for federal
income taxes on its taxable net investment income and capital gain net income
that are distributed to shareholders, provided that the Fund distributes at
least 90% of its net investment income and net short-term capital gain for the
taxable year.

To qualify as a regulated investment company, each Fund must, among other
things, (a) derive in each taxable year at least 90% of its gross income from
dividends, interest, payments with respect to securities loans, gains from the
sale or other disposition of stock, securities or foreign currencies, or other
income derived with respect to its business of investing in such stock,
securities or currencies (the "90% test"); and (b) satisfy certain
diversification requirements at the close of each quarter of the Fund's taxable
year.

19
<PAGE>

The Code imposes a non-deductible 4% excise tax on a regulated investment
company that fails to distribute during each calendar year an amount equal to
the sum of (1) at least 98% of its ordinary income for the calendar year, (2) at
least 98% of its net capital gains for the twelve-month period ending on October
31 of the calendar year and (3) any portion (not taxable to the Fund) of the
respective balance from the preceding calendar year. The Funds intend to make
such distributions as are necessary to avoid imposition of this excise tax.

TAXATION OF THE FUNDS' INVESTMENTS

For federal income tax purposes, debt securities purchased by the Funds may
be treated as having original issue discount. Original issue discount represents
interest for federal income tax purposes and can generally be defined as the
excess of the stated redemption price at maturity of a debt obligation over the
issue price. Original issue discount is treated for federal income tax purposes
as earned by the Fund, whether or not any income is actually received, and
therefore, is subject to the distribution requirements of the Code. Generally,
the amount of original issue discount is determined on the basis of a constant
yield to maturity which takes into account the compounding of accrued interest.
Under Section 1286 of the Code, an investment in a stripped bond or stripped
coupon will result in original issue discount.

Debt securities may be purchased by a Fund at a discount which exceeds the
original issue price plus previously accrued original issue discount remaining
on the securities, if any, at the time the Fund purchases the securities. This
additional discount represents market discount for income tax purposes. In the
case of any debt security issued after July 18, 1984, having a fixed maturity
date of more than one year from the date of issue and having market discount,
the gain realized on disposition will be treated as interest income for purposes
of the 90% test to the extent it does not exceed the accrued market discount on
the security (unless the Fund elects to include such accrued market discount in
income in the tax year to which it is attributable). Generally, market discount
is accrued on a daily basis.

A Fund may be required to capitalize, rather than deduct currently, part or
all of any direct interest expense incurred to purchase or carry any debt
security having market discount unless the Fund makes the election to include
market discount currently. Because a Fund must take into account the original
issue discount for purposes of satisfying various requirements for qualifying as
a regulated investment company under Subchapter M of the Code, it will be more
difficult for the Fund to make the distributions to maintain such status and to
avoid the 4% excise tax described above. To the extent that a Fund holds zero
coupon or deferred interest bonds in its portfolio or bonds paying interest in
the form of additional debt obligations, the Fund would recognize income
currently even though the Fund received no cash payment of interest, and would
need to raise cash to satisfy the obligations to distribute such income to
shareholders from sales of portfolio securities.

A Fund may purchase debt securities at a premium (i.e., at a purchase price
in excess of face amount). The premium may be amortized if the Fund so elects.
The amortized premium on taxable securities is allowed as a deduction, and, for
securities issued after September 27, 1985, must be amortized under an economic
accrual method.

All Shareholders will be notified annually regarding the tax status of
distributions received from a Fund.

TAXATION OF THE SHAREHOLDER

Taxable distributions generally are included in a shareholder's gross
income for the taxable year in which they are received. However, dividends
declared in October, November or December and made payable to shareholders of
record in such a month will be deemed to have been received on December 31, if a
Fund pays the dividends during the following January. Since none of the net
investment income of the Fund is expected to arise from dividends on domestic
common or preferred stock, none of the Funds' distributions will qualify for the
70% corporate dividends-received deduction.

20
<PAGE>

Distributions by a Fund will result in a reduction in the fair market value
of the Fund's shares. Should a distribution reduce the fair market value below a
shareholder's cost basis, such distribution nevertheless would be taxable to the
shareholder as ordinary income or long-term capital gain, even though, from an
investment standpoint, it may constitute a partial return of capital. In
particular, investors should be careful to consider the tax implications of
buying shares of a Fund just prior to a distribution. The price of such shares
purchased at that time includes the amount of any forthcoming distribution.
Those investors purchasing the Fund's shares just prior to a distribution may
receive a return of investment upon distribution which will nevertheless be
taxable to them.

A shareholder of a Fund should be aware that a redemption of shares
(including any exchange into another Portfolio) is a taxable event and,
accordingly, a capital gain or loss may be recognized. If a shareholder of a
Fund receives a distribution taxable as long-term capital gain with respect to
shares of the Fund and redeems or exchanges shares before he has held them for
more than six months, any loss on the redemption or exchange (not otherwise
disallowed as attributable to an exempt-interest dividend) will be treated as
long-term capital loss to the extent of the long term capital gain recognized.

TAX IDENTIFICATION NUMBER

The Trust is required by federal law to withhold and remit to the United
States Treasury a portion of the dividends, capital gains distributions and
proceeds of redemptions paid to any shareholder who fails to furnish the Trust
with a correct taxpayer identification number, who underreports dividend or
interest income or who fails to provide certification of tax identification
number. In order to avoid this withholding requirement, you must certify on your
application, or on a separate W-9 Form supplied by the transfer agent, that your
taxpayer identification number is correct and that you are not currently subject
to backup withholding or you are exempt from backup withholding. For
individuals, your taxpayer identification number is your social security number.

Instructions to exchange or transfer shares held in established accounts
will be refused until the certification has been provided. In addition, the Fund
assesses a $50 administrative fee if the taxpayer identification number is not
provided by year end.

OTHER TAX CONSIDERATIONS

Distributions to shareholders may be subject to additional state, local and
non-U.S. government taxes, depending on each shareholder's particular tax
situation. Shareholders subject to tax in certain states may be exempt from
state income tax on distributions made by the Fund to the extent such
distributions are derived from interest on direct obligations of the United
States Government. Shareholders are advised to consult their own tax advisers
with respect to the particular tax consequences to them of an investment in
shares of a Fund.

CUSTODIAN

Firstar Bank, N.A., 425 Walnut Street, Cincinnati, Ohio 45202, is Custodian
of the Funds' investments. The Custodian acts as the Funds' depository, safe
keeps their portfolio securities, collects all income and other payments with
respect thereto, disburse funds at the Funds' request and maintains records in
connection with its duties.

INDEPENDENT ACCOUNTANTS

Tait, Weller & Baker, 8 Penn Center Plaza, Suite 800, Philadelphia, PA
19103, has been selected as independent accountants for the Trust for the fiscal
year ending April 30, 2001. Tait, Weller & Baker performs an annual audit of
each Fund's financial statements and provides financial, tax and accounting
consulting services as requested.

21
<PAGE>

FINANCIAL STATEMENTS

The Trust was established on October 15, 1993 and commenced offering shares
of the Limited Duration Fund (formerly the Total Return Bond Fund) in January
1994. In addition, the Trust commenced offering Class B and C shares of the
Limited Duration Fund and No-load, Class B and Class C shares of the
Intermediate Term Fund and Short Term Fund in August 1996. The U.S. Government
Fund had not commenced operations as of the date of this Statement of Additional
Information. The audited financial statements and auditor's report required to
be included in the Statement of Additional Information are hereby incorporated
by reference to the Funds' Annual Report to Shareholders for the period ended
April 30, 2000. The Funds will provide the Annual Report without charge at
written request or request by telephone.

<PAGE>

PART C. OTHER INFORMATION

ITEM 23. Exhibits

(a) Articles of Incorporation.

(i) Declaration of Trust, Amended and Restated Master Trust
Agreement, dated February 9, 1996 (incorporated by
reference to Post-Effective Amendment #5 filed February 15,
1996).

(ii) Amendment No. 1 to Amended and Restated Master Trust
Agreement, dated April 9, 1996 (incorporated by reference
to Post-Effective Amendment #6 filed May 2, 1996).

(iii) Amendment No. 2 to Amended and Restated Master Trust
Agreement, dated January 30, 1997 (incorporated by
reference to Post-Effective Amendment #9 filed February 5,
1997).

(iv) Amendment No. 3 to Amended and Restated Master Trust
Agreement, dated April 30, 1997 (incorporated by reference
to Post-Effective Amendment #10 filed May 6, 1997).

(b) By-Laws. By-laws of Registrant (incorporated by reference to
Post-Effective Amendment #13 filed September 1, 1998).

(c) Instruments Defining Rights of Security Holders. None other than
in the Declaration of Trust, as amended, and By-Laws of the
Registrant.

(d) Investment Advisory Contracts.

(i) Amended and Restated Advisory Agreement between Registrant
and Pauze, Swanson & Associates Investment Advisors, Inc.,
dated June 1, 1996, for the Pauze U.S. Government Limited
Duration Fund (formerly the U.S. Government Total Return
Bond Fund), Pauze U.S. Government Intermediate Term Bond
Fund and Pauze U.S. Government Short Term Bond Fund
(incorporated by reference to Post-Effective Amendment #15
filed August 31, 1999).

(ii) Advisory Agreement for the Pauze U.S. Government Fund - to
be supplied.

(e) Underwriting Contracts.

(i) Distribution Agreement among Registrant, the Advisor and
the Underwriter (incorporated by reference to
Post-Effective Amendment #14 filed July 2, 1999).

(ii) Form of Selling Agreement (incorporated by reference to
Post-Effective Amendment #16 filed May 18, 2000).

<PAGE>

(f) Bonus or Profit Sharing Contracts . None.

(g) Custodian Agreements.

(i) Custodian Agreement between Registrant and Firstar Bank,
N.A. dated August 1, 1996 (incorporated by reference to
Post-Effective Amendment #7 filed July 31, 1996).

(ii) Revised Appendix A to Custodian Agreement between
Registrant and Firstar Bank N.A. (incorporated by reference
to Post-Effective Amendment #12 filed November 26, 1997).

(h) Other Material Contracts. None.

(i) Legal Opinion.

(i) Opinion of Counsel with respect to U.S. Government Total
Return Bond Fund (now the Limited Duration Fund), U.S.
Government Intermediate Term Bond Fund, and U.S. Government
Short Term Bond Fund (incorporated by reference to
Post-Effective Amendment #14 filed July 2, 1999).

(ii) Consent of Counsel with respect to U.S. Government Total
Return Bond Fund (now the Limited Duration Fund), U.S.
Government Intermediate Term Bond Fund, and U.S. Government
Short Term Bond Fund is filed herewith.

(j) Other Opinions. Consent of Independent Accountants is filed
herewith.

(k) Omitted Financial Statements. None.

(l) Initial Capital Agreements. Letter of Initial Stockholder
(incorporated by reference to Post-Effective Amendment #13 filed
September 1, 1998).

(m) Rule 12b-1 Plan.

(i) 12b-1 Plan for Pauze U.S. Government Limited Duration Fund
(formerly the U.S. Government Total Return Bond Fund),
(incorporated by reference to Post-Effective Amendment #14
filed July 2, 1999).

(ii) 12b-1 Plan for Pauze U.S. Government Intermediate Term Bond
Fund (incorporated by reference to Post-Effective Amendment
#14 filed July 2, 1999).

(iii) 12b-1 Plan for Pauze U.S. Government Short Term Bond Fund
(incorporated by reference to Post-Effective Amendment #14
filed July 2, 1999).

(iv) Form of Service Agreement (incorporated by reference to
Post-Effective Amendment #16 filed May 18, 2000).

(v) 12b-1 Plan for Pauze U.S. Government Fund - to be supplied.

<PAGE>

(n) Rule 18f-3 Plan. Amended and restated plan entered into by
Registrant pursuant to Rule 18f-3 (incorporated by reference to
Post-Effective Amendment #10 filed May 6, 1997).

(o) Reserved.

(p) Codes of Ethics. Code of Ethics of the Registrant and the Advisor
(incorporated by reference to Post-Effective Amendment #16 filed
May 18, 2000).

(q) Powers of Attorney.

(i) Powers of Attorney for the Trust, the Trustees and Officers
(incorporated by reference to Post-Effective Amendment #15
filed August 31, 1999).

(ii) Power of Attorney for the Treasurer and Chief Accounting
Officer of the Trust is filed herewith.

ITEM 24. Persons Controlled by or Under Common Control with the Fund.

Information pertaining to persons controlled by or under common
control with Registrant is incorporated by reference to the Statement
of Additional Information of the Pauze U.S. Government Fund, the Pauze
U.S. Government Limited Duration Fund, Pauze U.S. Government Short
Term Bond Fund and the Pauze U.S. Government Intermediate Term Bond
Fund contained in Part B of the Registration Statement at the section
entitled "Principal Holders of Securities."

ITEM 25. Indemnification

(a) Under Article VI of the Registrant's Master Trust Agreement, each
of its Trustees and officers or person serving in such capacity
with another entity at the request of the Registrant (a "Covered
Person") shall be indemnified (from the assets of the Sub-Trust
or Sub-Trusts in question) against all liabilities, including,
but not limited to, amounts paid in satisfaction of judgments, in
compromises or as fines or penalties, and expenses, including
reasonable legal and accounting fees, incurred by the Covered
Person in connection with the defense or disposition of any
action, suit or other proceeding, whether civil or criminal
before any court or administrative or legislative body, in which
such Covered Person may be or may have been involved as a party
or otherwise or with which such person may be or may have been
threatened, while in office or thereafter, by reason of being or
having been such a Trustee or officer, director or trustee,
except with respect to any matter as to which it has been
determined that such Covered Person (i) did not act in good faith
in the reasonable belief that such covered Person's action was in
or not opposed to the best interests of the Trust or (ii) had
acted with willful misfeasance, bad faith, gross negligence or
reckless disregard of the duties involved in the conduct of such
Covered Persons's office (either and both of the conduct
described in (i) and (ii) being referred to hereafter as
"Disabling Conduct"). A determination that the Covered Person is
not entitled to indemnification may be made by (i) a final
decision on the merits by a court or other body before whom the
proceeding was brought that the person to be indemnified was not
liable by reason

<PAGE>

of Disabling Conduct, (ii) dismissal of a court action or an
administrative proceeding against a Covered Person for
insufficiency of evidence of Disabling conduct, or (iii) a
reasonable determination, based upon a review of the facts, that
the indemnitee was not liable by reason of Disabling Conduct by
(a) a vote of the majority of a quorum of Trustees who are
neither "interested persons" of the Trust as defined in Section
1(a)(19) of the 1940 Act nor parties to the proceeding, or (b) as
independent legal counsel in a written opinion.

(b) The Registrant may maintain a standard mutual fund and investment
advisory professional and directors and officers liability
policy. The policy, if maintained, would provide coverage to the
Registrant, its Trustees and officers, and could cover its
Advisor, among others. Coverage under the policy would include
losses by reason of any act, error, omission, misstatement,
misleading statement, neglect or breach of duty.

ITEM 26. Business and Other Connections of the Investment Advisor

Philip C. Pauze
Current Affiliations:

PAUZE, SWANSON & ASSOCIATES INVESTMENT ADVISORS, INC.(TM)
14340 Torrey Chase, Suite 170 Houston, TX 77014
President and Member of the Board of Directors:
10/21/93 to Present

PAUZE FUNDS(TM)
P.O. Box 844
Conshohocken, PA 19428
President, Portfolio Manager, and Member Board of Directors:
November 1, 1993 to Present

B.C. ZIEGLER AND COMPANY
215 North Main Street
West Bend, WI 53095
Broker/Dealer Branch Officer Manager: July 1999 to Present
Licensed Registered Representative: July 1999 to Present

Patricia S. Dobson
Current Affiliations:

PAUZE, SWANSON & ASSOCIATES INVESTMENT ADVISORS, INC.(TM)
14340 Torrey Chase, Suite 170 Houston, TX 77014
Vice President: December 1996 to Present
Corporate Secretary and Member of the Board of Directors:
May 19, 1997 to Present
Assistant Vice President: October 1995 to December 1996

<PAGE>

PAUZE FUNDS(TM)
P.O. Box 844
Conshohocken, PA 19428
Assistant Secretary: June 13, 1997 to Present

B.C. ZIEGLER AND COMPANY
215 North Main Street
West Bend, WI 53095
Licensed Registered Representative: July 1999 to Present

ITEM 27. Principal Underwriters

(a) B.C. Ziegler acts as distributor for Firstar Funds and Principal
Preservation Portfolios, Inc.

(b) Information with respect to each director and officer of B.C.
Ziegler and Co. is incorporated by reference to Schedule A of
Form BD filed by it under the Securities and Exchange Act of 1934
(File No. 8-94).

ITEM 28. Location of Accounts and Records

All accounts and records maintained by the Registrant are kept at the
Underwriter's office located at 215 North Main Street, West Bend, WI
53095; and the Advisor's office located at 14340 Torrey Chase Blvd.,
Suite 170 Houston, TX 77014-1024.

All accounts and records maintained by Firstar Bank N.A., custodian
for Registrant, are maintained at 425 Walnut Street, Cincinnati, Ohio
45202.

ITEM 29. Management Services-None

ITEM 30. Undertakings

Registrant undertakes to call a meeting of shareholders for purposes
of voting upon the question of removal of one or more Trustees when
requested in writing to do so by the holders of at least 10% of the
Trust's outstanding shares, and in connection with such meeting to
comply with the provisions of Section 16(c) of the Investment Company
Act of 1940 relating to shareholder communications.

<PAGE>

SIGNATURE PAGE

Pursuant to the requirements of the Securities Act of 1933 and the
Investment Company Act of 1940, the Registrant certifies that it has duly caused
this Amendment to the Registration Statement on Form N-1A to be signed on its
behalf by the undersigned, thereunto duly authorized in the city of Houston,
state of Texas, on the 16th day of January, 2001.

PAUZE FUNDS

By: /s/ Patricia S. Dobson
--------------------------
Patricia S. Dobson,
Attorney-in-fact

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

Gordon M. Anderson, Trustee*

Wayne F. Collins, Trustee*

Paul J. Hilbert, Trustee* Date: January 16, 2001

Robert J. Pierce, Trustee* *By: /s/ Patricia S. Dobson
-------------------------
Patricia S. Dobson,
Attorney-in-Fact

/s/ Patricia S. Dobson Date: January 16, 2001
-----------------------------------------
Patricia S. Dobson, Trustee and Secretary

Philip C. Pauze, Trustee and President*

/s/ Nancy K. Szidlowski Date: January 16, 2001
-----------------------------------------
Nancy K. Szidlowski, Treasurer and
Chief Accounting Officer

<PAGE>

EXHIBIT INDEX

Page

1. Consent of Counsel.......................................... EX-99.23.i.ii
2. Consent of Independent Accountants.......................... EX-99.23.j
3. Power of Attorney........................................... EX-99.23.q.ii