CREST FUNDS INC, 485BPOS, 1996-03-29

CREST FUNDS INC
485BPOS, 1996-03-29

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AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON
MARCH 28, 1996.

FILE NO. 33-4163
FILE NO. 811-4620

SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549

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

FORM N-1A
REGISTRATION STATEMENT UNDER THE
SECURITIES ACT OF 1933 / /
POST-EFFECTIVE AMENDMENT NO. 20 /X/

AND

REGISTRATION STATEMENT UNDER THE
INVESTMENT COMPANY ACT OF 1940 / /
AMENDMENT NO. __ /X/

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

CRESTFUNDS, INC.
(EXACT NAME OF REGISTRANT AS SPECIFIED IN CHARTER)

32 SOUTH STREET
BALTIMORE, MARYLAND 21210
(ADDRESS OF PRINCIPAL EXECUTIVE OFFICES, ZIP CODE)

REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE (800) 273-7827

JEFFREY A. COHEN, CONTROLLER
680 EAST SWEDESFORD ROAD
WAYNE, PENNSYLVANIA 19087
(NAME AND ADDRESS OF AGENT FOR SERVICE)

Copies to:
DAVID M. CARTER, ESQUIRE
HUNTON & WILLIAMS
RIVERFRONT PLAZA, EAST TOWER
951 EAST BYRD STREET
RICHMOND, VIRGINIA 23219-4074

It is proposed that this filing will become effective (check
appropriate box)
x immediately upon filing pursuant to paragraph (b) on [date] pursuant
to paragraph (b) 60 days after filing pursuant to paragraph (a) on
[date] pursuant to paragraph (a) of Rule 485 75 days after filing
pursuant to paragraph (a)

<PAGE>

Pursuant to the provisions of Rule 24f-2 under the Investment Company Act of
1940, an indefinite number of shares of common stock is being registered by this
Registration Statement. Registrant's Rule 24f-2 Notice for fiscal year ended
November 30, 1994 was filed on January 25, 1995. Registrant's Rule 24f-2 Notice
for fiscal year November 30, 1995 was filed on January 26, 1996.

<PAGE>

CRESTFUNDS, INC.
CROSS REFERENCE SHEET
POST-EFFECTIVE AMENDMENT NO. 20

N-1A ITEM NO. LOCATION
- -----------------------------------------------------------------
PART A - ALL CLASSES
Item 1. Cover Page Cover Page
Item 2. Synopsis Summary of Fund Expenses
Item 3. Condensed Financial The Funds' Financial
Information History; Performance
Item 4. General Description of Description of Common Stock;
Registrant Investment Objectives and
Policies; Investment
Limitations; Investment
Considerations; Appendix
Item 5. Management of the Adviser; Description of
Trust Common Stock; Administrator
and Distributor; Portfolio
Transactions; Banking Law
Matters; Other Fees; Expenses
of Funds
Item 6. Capital Stock and Other Description of Common Stock;
Securities How to Purchase, Exchange and
Redeem Shares; Dividends and
Taxes
Item 7. Purchase of Securities Administrator and
Being Offered Distributor; How to Purchase,
Exchange and Redeem Fund
Shares; Distribution and
Service Plans
Item 8. Redemption or Repurchase How to Purchase, Exchange and
Redeem Fund Shares
Item 9. Pending Legal Proceedings *

PART B -
Item 10. Cover Page Cover Page
Item 11. Table of Contents Cover Page
Item 12. General Information and Directors and Officers and
History Affiliated Persons
Item 13. Investment Objectives Investment Policies and
and Policies Limitations; Investment
Practices; Portfolio
Transactions
Item 14. Management of the Directors and Officers and
Registrant Affiliated Persons
Item 15. Control Persons and Principal Holders of
Principal Holders Securities
Item 16. Investment Advisory and Directors and Officers and
Other Services Affiliated Persons; The
Adviser; Administrator and
Distributor; Transfer Agent;
Custodian; Auditor
Item 17. Brokerage Allocation Portfolio Transactions
Item 18. Capital Stock and Other *
Securities
Item 19. Purchase, Redemption, Valuation of Portfolio
and Pricing of Securities Securities; Additional
Being Offered Purchase and Redemption
Information; Additional
Information Regarding Pricing
and Redemptions
Item 20. Tax Status Distributions and Taxes
Item 21. Underwriters Administrator and Distributor
Item 22. Calculation of Yield Fund Performance
Quotations
Item 23. Financial Statements Financial Statements

* Not applicable

<PAGE>

CRESTFUNDS(R), INC.--TRUST CLASS
PROSPECTUS

MARCH 28, 1996

CrestFunds(R), Inc. (the "Company"), a Maryland corporation, is a
registered open-end management investment company that offers investors a
selection of money market, bond and equity funds (the "Funds"). The Funds offer
one or more of three classes of shares: the Trust Class shares, the Investors
Class A Shares ("A Shares") and the Investors Class B Shares ("B Shares"). All
three classes of each Fund share a common investment objective and investment
portfolio. This Prospectus relates to shares of the Trust Class, which are
offered to qualified individual or institutional customers whose assets are
managed and/or administered by Crestar Bank's Trust & Investment Management
Group. Trust Class shares of the money market funds also are offered to
qualified individual or institutional customers who have qualified cash
management (or "sweep") accounts with Crestar Bank or one of its bank
affiliates. A Shares and B Shares are offered by a separate prospectus which is
available by calling 1-800-273-7827.

MONEY MARKET FUNDS

Cash Reserve Fund
U.S. Treasury Money Fund
Tax Free Money Fund

THE MONEY MARKET FUNDS' SHARES ARE NEITHER INSURED NOR GUARANTEED BY THE U.S.
GOVERNMENT. THERE CAN BE NO ASSURANCE THAT ANY OF THE MONEY MARKET FUNDS WILL BE
ABLE TO MAINTAIN A STABLE NET ASSET VALUE OF $1.00 PER SHARE.

BOND FUNDS EQUITY FUNDS
<S> <C>
Limited Term Bond Fund Value Fund
Intermediate Bond Fund Capital Appreciation Fund
Government Bond Fund Special Equity Fund
Maryland Municipal Bond Fund
Virginia Intermediate Municipal Bond Fund
Virginia Municipal Bond Fund
</TABLE>

THE FUNDS' SHARES ARE NOT DEPOSITS OR OBLIGATIONS OF, OR GUARANTEED, INSURED OR
ENDORSED BY, CRESTAR BANK, THE FEDERAL DEPOSIT INSURANCE CORPORATION, THE
FEDERAL RESERVE BOARD, OR ANY OTHER GOVERNMENT AGENCY. INVESTING IN MUTUAL FUNDS
INVOLVES RISKS, INCLUDING THE POSSIBLE LOSS OF THE PRINCIPAL AMOUNT INVESTED.
THE VALUE OF AN INVESTMENT IN THE FUNDS AND ITS RETURN WILL FLUCTUATE AND ARE
NOT GUARANTEED. WHEN SOLD, THE VALUE OF AN INVESTMENT MAY BE HIGHER OR LOWER
THAN THE AMOUNT ORIGINALLY INVESTED.

Please read this Prospectus before investing. This Prospectus sets forth
concisely the information about the Funds that a prospective investor should
know before investing, and is designed to help investors decide if a Fund's
goals match their own. Retain this document for future reference. A Statement of
Additional Information (March 28, 1996) for the Trust Class of the Funds and an
Annual Report for the fiscal year ended November 30, 1995 have been filed with
the Securities and Exchange Commission ("SEC") and are incorporated herein by
reference. The Statement of Additional Information and the Annual Report are
available without charge upon request by calling 1-800-273-7827.

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

No dealer, sales representative or any other person has been authorized to give
any information or to make any representations, other than those contained in
this Prospectus and in the related Statement of Additional Information, in
connection with the offer contained in this Prospectus. If given or made, such
other information or representations must not be relied upon as having been
authorized by the Funds or by the Funds' distributor. This Prospectus and the
related Statement of Additional Information do not constitute an offer by any
Fund or the Funds' distributor to sell shares of any Fund to any person to whom
it is unlawful to make such an offer.

<PAGE>
TABLE OF CONTENTS

<TABLE>
<CAPTION>
PAGE
<S> <C>
Summary of Fund Expenses..................................................................................... 3
The Funds' Financial History................................................................................. 5
Investment Objectives and Policies........................................................................... 11
Risk Factors and Investment Considerations................................................................... 18
Investment Limitations....................................................................................... 20
Fund Management.............................................................................................. 21
Pricing of Shares............................................................................................ 21
How to Purchase, Exchange and Redeem Shares.................................................................. 21
Dividends and Tax Matters.................................................................................... 23
Performance.................................................................................................. 25
Portfolio Transactions....................................................................................... 26
Advisory and Related Agreements.............................................................................. 26
Other Expense Information.................................................................................... 28
Banking Law Matters.......................................................................................... 28
Description of Common Stock.................................................................................. 28
Appendix..................................................................................................... 30
Summary of Bond Ratings...................................................................................... 37
Summary of Commercial Paper Ratings.......................................................................... 37
</TABLE>

<PAGE>
SUMMARY OF FUND EXPENSES

The expense summary format below was developed for use by all mutual funds to
help investors make their investment decisions. The purpose of the tables is to
assist investors in understanding the various costs and expenses that an
investor in Trust Class shares would bear directly or indirectly. Investors
should consider this expense information for the Funds along with other
important information in this Prospectus, including each Fund's investment
objective, financial highlights and, where available, past performance. As is
more fully described under the heading "How to Purchase, Exchange and Redeem
Shares," Trust Class shares of the Funds are currently available, without
payment of any sales charge, to qualified individual or institutional customers
whose assets are managed and/or administered by Crestar Bank's Trust &
Investment Management Group. Trust Class shares of the money market funds also
are offered to qualified individuals or institutional customers who have
qualified cash management (or "sweep") accounts with Crestar Bank or one of its
bank affiliates. Such relationships may involve the payment of account or
service fees not reflected in the tables below.

ANNUAL FUND OPERATING EXPENSES (AS A PERCENTAGE OF AVERAGE NET ASSETS) -- NET OF
WAIVERS AND/OR REIMBURSEMENT:

<TABLE>
<CAPTION>
TOTAL
ADVISORY 12B-1 OTHER OPERATING
FUND FEE+ FEES+ EXPENSES+ EXPENSES+

<S> <C> <C> <C> <C>
Cash Reserve Fund.................................................... .40% 0% .26% .66%
U.S. Treasury Money Fund............................................. .40 0 .26 .66
Tax Free Money Fund.................................................. .40 0 .26 .66
Limited Term Bond Fund............................................... .50 0 .28 .78
Intermediate Bond Fund............................................... .60 0 .28 .88
Government Bond Fund................................................. .50 0 .21 .71
Maryland Municipal Bond Fund......................................... .10 0 .61 .71
Virginia Intermediate Municipal Bond Fund............................ .50 0 .22 .72
Virginia Municipal Bond Fund......................................... .50 0 .21 .71
Value Fund........................................................... .75 0 .27 1.02
Capital Appreciation Fund............................................ .75 0 .35 1.10
Special Equity Fund.................................................. .75 0 .29 1.04
</TABLE>

+ Net of waivers and reimbursement.

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

<TABLE>
<CAPTION>
FUND 1 YEAR 3 YEARS 5 YEARS 10 YEARS

<S> <C> <C> <C> <C>
Cash Reserve Fund........................................................ $ 7 $21 $37 $ 82
U.S. Treasury Money Fund................................................. 7 21 37 82
Tax Free Money Fund...................................................... 7 21 37 82
Limited Term Bond Fund................................................... 8 25 43 97
Intermediate Bond Fund................................................... 9 28 49 108
Government Bond Fund..................................................... 7 23 40 88
Maryland Municipal Bond Fund............................................. 7 23 40 88
Virginia Intermediate Municipal Bond Fund................................ 7 23 40 89
Virginia Municipal Bond Fund............................................. 7 23 40 88
Value Fund............................................................... 10 32 56 125
Capital Appreciation Fund................................................ 11 35 61 134
Special Equity Fund...................................................... 11 33 57 127
</TABLE>

<PAGE>
EXPLANATION OF TABLE:

ANNUAL FUND OPERATING EXPENSES. Advisory fees are paid by the Funds to
Capitoline Investment Services Incorporated ("Capitoline" or the "Adviser") for
managing the Funds' investments and business affairs (see "Adviser"). Other
Expenses for the Government Bond Fund, the Maryland Municipal Bond Fund and the
Virginia Municipal Bond Fund are based on estimates for the current fiscal year.
The Funds pay administration fees at an annualized rate of .15% to SEI Financial
Management Corporation ("SFM") for administrative services.

Absent fee waivers, advisory fees for the Government Bond Fund, Maryland
Municipal Bond Fund and Virginia Municipal Bond Fund would be .60% for each
Fund. Absent fee waivers, 12b-1 fees would be .15% for each Fund. Absent the
waiver of administration fees, Other Expenses would be .36% and .36% for the
Government Bond Fund and Virginia Municipal Bond Fund, respectively. Absent all
fee waivers, Total Operating Expenses would be .81% for the Cash Reserve Fund,
U.S. Treasury Money Fund and Tax Free Money Fund and .93%, 1.03%, 1.11%, .87%,
1.11%, 1.36%, 1.17%, 1.25%, and 1.19% for the Limited Term Bond Fund,
Intermediate Bond Fund, Government Bond Fund, Virginia Intermediate Municipal
Bond Fund, Virginia Municipal Bond Fund, Maryland Municipal Bond Fund, Value
Fund, Capital Appreciation Fund and Special Equity Fund, respectively. Please
refer to the sections "Administrator and Distributor," "Transfer Agent and
Custodian" and "Other Expense Information." The information contained in the
table and example above relates only to Trust Class shares; expenses for Trust
Class shares differ from those of A Shares and B Shares. See "Description of
Common Stock." Advisory fees and Other Expenses are reflected in each Fund's
share price and are not charged directly to individual shareholder accounts.

EXAMPLE. The hypothetical example illustrates the expenses associated with a
$1,000 investment in Trust Class shares over periods of 1, 3, 5 and 10 years
based on the expenses in the Table above and an assumed annual return of 5%. THE
RETURN OF 5% AND EXPENSES SHOULD NOT BE CONSIDERED INDICATIONS OF ACTUAL OR
EXPECTED PERFORMANCE OR EXPENSES, BOTH OF WHICH MAY VARY.

<PAGE>
THE FUNDS' FINANCIAL HISTORY

FINANCIAL HIGHLIGHTS. The table that follows is included in the Annual Report
for the Company and has been audited by Deloitte & Touche LLP, independent
auditors. Their report on the financial statements and financial highlights is
included in the Annual Report. Additional performance information is set forth
in the Company's Annual Report, which may be obtained without charge by calling
1-800-273-7827. A Shares became available for purchase in May 1993 and B Shares
became available for purchase in April 1995. Returns prior to those dates do not
reflect the effects of the separate transfer agency arrangements or additional
12b-1 expenses, and therefore may not be representative of A Shares' or B
Shares' expected results. Expenses for A Shares and B Shares vary from those of
Trust Class shares. The financial statements and financial highlights for A
Shares, B Shares and Trust Class shares for the Funds are incorporated by
reference from the Company's Annual Report into the Statement of Additional
Information. The Maryland Municipal Bond Fund had not commenced operations as of
November 30, 1995.

CASH RESERVE FUND

<TABLE>
<CAPTION>
TRUST CLASS
YEAR ENDED NOVEMBER 30
1995 1994 1993 1992 1991 1990 1989 1988 1987**
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
SELECTED PER-SHARE DATA

Net asset value, beginning
of year................... $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00

Income from investment
operations:
Net investment income....... 0.053 0.034 0.027 0.036 0.060 0.079 0.088 0.071 0.062
Distributions:
Net investment income....... (0.053) (0.034) (0.027) (0.036) (0.060) (0.079) (0.088) (0.071) (0.062)
Net asset value, end of
year...................... $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00

TOTAL RETURN++.............. 5.45% 3.46% 2.76% 3.66% 6.17%+ 8.15%+ 9.22% 7.40% 6.62%

RATIOS AND SUPPLEMENTAL DATA
Net assets, end of year
(thousands)............... $520,185 $377,493 $408,036 $496,847 $396,534 $297,683 $395,324 $363,196 $361,521
Ratio of expenses to average
daily net assets (1)...... 0.66% 0.66% 0.66% 0.61% 0.51% 0.49% 0.49% 0.49% 0.49%*
Ratio of net investment
income to average daily
net assets................ 5.31% 3.37% 2.75% 3.50% 6.00% 7.88% 8.82% 7.10% 6.43%*

(1) During the periods,
certain expenses were
voluntarily reimbursed.
The ratios of expenses
to average daily net
assets had such
reimbursements not
occurred are as
follows:............... 0.81% 0.66% 0.66% 0.61% 0.58% 0.59% 0.61% 0.61% 0.65%*
</TABLE>

* Annualized.
** Commencement of operations -- December 8, 1986.
+ Total return would have been lower had the Adviser and/or Administrator not
waived or reimbursed certain expenses during the period.
++ Total return for periods of less than one year are not annualized.

<PAGE>
U.S. TREASURY MONEY FUND

<TABLE>
<CAPTION>
TRUST CLASS
YEAR ENDED NOVEMBER 30
1995 1994 1993 1992 1991 1990 1989 1988 1987**
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
SELECTED PER-SHARE DATA

Net asset value, beginning of
year........................ $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00

Income from investment
operations:
Net investment income......... 0.052 0.033 0.025 0.034 0.058 0.076 0.085 0.068 0.045
Distributions:
Net investment income......... (0.052) (0.033) (0.025) (0.034) (0.058) (0.076) (0.085) (0.068) (0.045)
Net asset value, end of
year........................ $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00

TOTAL RETURN.................. 5.29% 3.30% 2.51% 3.55%+ 6.00%+ 7.92%+ 8.84% 7.03% 4.70%

RATIOS AND SUPPLEMENTAL DATA

Net assets, end of year
(thousands)................. $370,454 $319,477 $342,537 $482,881 $279,790 $204,792 $145,571 $54,996 $29,429
Ratio of expenses to average
daily net assets (1)........ 0.66% 0.66% 0.66% 0.64% 0.56% 0.49% 0.49% 0.49% 0.50%*
Ratio of net investment income
to average daily net
assets...................... 5.16% 3.23% 2.52% 3.37% 5.61% 7.65% 8.52% 6.84% 5.82%*

(1) During the periods
certain expenses were
voluntarily reimbursed.
The ratios of expenses to
average daily net assets
had such reimbursements
not occurred are as
follows:................. 0.81% 0.66%* 0.66% 0.65% 0.62% 0.64% 0.67% 0.73% 1.02%*
</TABLE>

* Annualized.
** Commencement of operations -- February 18, 1987.
+ Total return would have been lower had the Adviser and/or Administrator not
waived or reimbursed certain expenses during the period.

TAX FREE MONEY FUND

<TABLE>
<CAPTION>
TRUST CLASS
YEAR ENDED NOVEMBER 30
1995 1994 1993 1992 1991 1990 1989**
<S> <C> <C> <C> <C> <C> <C> <C>
SELECTED PER-SHARE DATA

Net asset value, beginning of year............... $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00

Income from investment operations:
Net investment income............................ 0.032 0.021 0.019 0.031 0.046 0.057 0.027
Distributions:
Net investment income............................ (0.032) (0.021) (0.019) (0.031) (0.046) (0.057) (0.027)
Net asset value, end of year..................... $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00

TOTAL RETURN..................................... 3.26% 2.07% 1.88% 3.03%+ 4.72%+ 5.86%+ 2.80%

RATIOS AND SUPPLEMENTAL DATA

Net assets, end of year (thousands).............. $202,333 $157,602 $142,284 $155,458 $166,670 $ 43,300 $ 34,667
Ratio of expenses to average daily net assets
(1)............................................ 0.66% 0.67% 0.66% 0.47% 0.27% 0.20% 0.20%*
Ratio of net investment income to average daily
net assets..................................... 3.19% 2.06% 1.85% 3.00% 4.39% 5.70% 5.86%*

(1) During the periods, certain expenses were
voluntarily reimbursed. The ratios of
expenses to average daily net assets had
such waivers and reimbursements not occurred
are as follows:............................. 0.81% 0.67% 0.66% 0.62% 0.70% 0.78% 0.75%*
</TABLE>

* Annualized.
** Commencement of operations -- June 15, 1989.
+ Total return would have been lower had the Advisor and/or Administrator not
waived or reimbursed certain expenses during the period.

<PAGE>
LIMITED TERM BOND FUND

<TABLE>
<CAPTION>
TRUST CLASS
PERIOD FROM
YEAR ENDED YEAR ENDED YEAR ENDED SEPTEMBER 28, 1992**
NOVEMBER 30, NOVEMBER 30, NOVEMBER 30, TO NOVEMBER 30,
1995 1994 1993 1992
<S> <C> <C> <C> <C>
SELECTED PER-SHARE DATA

Net asset value, beginning of period..................... $ 9.49 $ 10.16 $ 9.81 $ 10.00

Income from investment operations:
Net investment income.................................... 0.532 0.480 0.500 0.070
Net realized and unrealized gain/(loss) on investments... 0.534 (0.640) 0.350 (0.190)
Total from investment operations......................... 1.066 (0.160) 0.850 (0.120)
Distributions:
Net investment income.................................... (0.526) (0.480) (0.500) (0.070)
Net realized gain........................................ -- (0.030) -- --
Total distributions...................................... (0.526) (0.510) (0.500) (0.070)
Net asset value, end of period........................... $ 10.03 $ 9.49 $ 10.16 $ 9.81

TOTAL RETURN++........................................... 11.50% (1.56)% 8.84% (1.22)%

RATIOS AND SUPPLEMENTAL DATA

Net assets, end of period (thousands).................... $ 88,789 $ 83,369 $ 85,968 $72,590
Ratio of expenses to average daily net assets............ 0.78% 0.76% 0.77% 1.04%*
Ratio of net investment income to average daily net
assets................................................. 5.44% 4.92% 4.95% 4.46%*
Portfolio turnover rate.................................. 36% 47% 61% 2%
</TABLE>

* Annualized.
** Commencement of operations.
++ Total return for periods of less than one year are not annualized.

INTERMEDIATE BOND FUND

Net asset value, beginning of period..................... $ 9.16 $ 10.20 $ 9.70 $ 10.00

Income from investment operations:
Net investment income.................................... 0.569 0.530 0.520 0.080
Net realized and unrealized gain/(loss) on investments... 0.954 (1.000) 0.500 (0.300)

Total from investment operations......................... 1.523 (0.470) 1.020 (0.220)

Distributions:
Net investment income.................................... (0.563) (0.530) (0.520) (0.080)
Net realized gain........................................ -- (0.040) -- --
Total distributions...................................... (0.563) (0.570) (0.520) (0.080)

Net asset value, end of period........................... $ 10.12 $ 9.16 $ 10.20 $ 9.70

TOTAL RETURN++........................................... 17.07% (4.72)% 10.69% (2.20)%

RATIOS AND SUPPLEMENTAL DATA
Net assets, end of period (thousands).................... $ 81,870 $ 77,143 $ 58,487 $13,759
Ratio of expenses to average daily net assets............ 0.88% 0.88% 0.90% 1.15%*
Ratio of net investment income to average daily net
assets................................................. 5.89% 5.53% 5.15% 4.63%*
Portfolio turnover rate.................................. 37% 39% 28% 0%
</TABLE>

* Annualized.
** Commencement of operations.
++ Total return for periods of less than one year are not annualized.

<PAGE>

GOVERNMENT BOND FUND

<TABLE>
<CAPTION>
TRUST CLASS

PERIOD FROM
APRIL 5, 1995**
TO NOVEMBER 30,
1995
<S> <C>
SELECTED PER-SHARE DATA

Net asset value, beginning of period.................................................................... $ 10.00

Income from investment operations:
Net investment income................................................................................... 0.412
Net realized and unrealized gain (loss) on investments.................................................. 0.753

Total from investment operations........................................................................ 1.165
Distributions:
Net investment income................................................................................... (0.412)
Net realized gain....................................................................................... (0.093)
Total distributions..................................................................................... (0.505)
Net asset value, end of period.......................................................................... $ 10.66

TOTAL RETURN++.......................................................................................... 11.85%

RATIOS AND SUPPLEMENTAL DATA
Net assets, end of period (thousands)................................................................... $10,211
Ratio of expenses to average daily net assets (1)....................................................... 0.71%*
Ratio of net investment income to average daily net assets.............................................. 6.00%*
Portfolio turnover rate................................................................................. 28%

(1) During the period, certain fees and expenses were voluntarily waived and reimbursed. The ratio of
expenses to average daily net assets had such waivers and reimbursements not occurred is as
follows:............................................................................................ 1.11%*
</TABLE>

* Annualized.
** Commencement of operations.
++ Total returns for periods of less than one year are not annualized.

VIRGINIA INTERMEDIATE MUNICIPAL BOND FUND

<TABLE>
<CAPTION>
TRUST CLASS
PERIOD FROM
YEAR ENDED YEAR ENDED JANUARY 11, 1993**
NOVEMBER 30, NOVEMBER 30, TO NOVEMBER 30,
1995 1994 1993
<S> <C> <C> <C>
SELECTED PER-SHARE DATA

Net asset value, beginning of period..................................... $ 9.21 $ 10.33 $ 10.00

Income from investment operations:
Net investment income.................................................... 0.428 0.440 0.390
Net realized and unrealized gain/(loss) on investments................... 1.030 (1.100) 0.330

Total from investment operations......................................... 1.458 (0.660) 0.720
Distributions:
Net investment income.................................................... (0.428) (0.440) (0.390)
Net realized gain........................................................ -- (0.020) --
Total distributions...................................................... (0.428) (0.460) (0.390)

Net asset value, end of period........................................... $ 10.24 $ 9.21 $ 10.33

TOTAL RETURN++........................................................... 16.09% (6.53)%+ 7.25%+

RATIOS AND SUPPLEMENTAL DATA
Net assets, end of period (thousands).................................... $ 43,373 $ 41,365 $39,392
Ratio of expenses to average daily net assets (1)........................ 0.72% 0.65% 0.71%*
Ratio of net investment income to average daily net assets............... 4.34% 4.48% 4.25%*
Portfolio turnover rate.................................................. 28% 24% 39%

(1) During the periods, certain fees and expenses were voluntarily waived
and reimbursed. The ratios of expenses to average daily net assets
had such waivers and reimbursements not occurred are as follows:..... 0.94% 0.77% 0.85%*
</TABLE>

* Annualized.
** Commencement of operations.
+ Total return would have been lower had the Advisor and/or Administrator not
waived and reimbursed certain expenses during the period.
++ Total return for periods of less than one year are not annualized.

<PAGE>

VIRGINIA MUNICIPAL BOND FUND

<TABLE>
<CAPTION>
TRUST CLASS

PERIOD FROM
APRIL 5, 1995**
TO NOVEMBER 30,
1995
<S> <C>
SELECTED PER-SHARE DATA

Net asset value, beginning of period.................................................................... $ 10.00

Income from investment operations:
Net investment income................................................................................... 0.309
Net realized and unrealized gain/(loss) on investments.................................................. 0.445

Total from investment operations........................................................................ 0.754
Distributions:
Net investment income................................................................................... (0.310)
Net realized gain....................................................................................... (0.044)
Total distributions..................................................................................... (0.354)

Net asset value, end of period.......................................................................... $ 10.40

TOTAL RETURN++.......................................................................................... 7.67%

RATIOS AND SUPPLEMENTAL DATA
Net assets, end of period (thousands)................................................................... $ 6,247
Ratio of expenses to average daily net assets (1)....................................................... 0.71%*
Ratio of net investment income to average daily net assets.............................................. 4.61%*
Portfolio turnover rate................................................................................. 35%

(1) During the period, certain expenses were voluntarily waived and reimbursed. The ratio of expenses to
average daily net assets had such waivers and reimbursements not occurred is as follows............. 1.11%*
</TABLE>

* Annualized.
** Commencement of operations.
++ Total return for periods of less than one year are not annualized.

VALUE FUND

Net asset value, beginning of period..................... $ 10.73 $ 11.38 $ 10.50 $ 10.00

Income from investment operations:
Net investment income.................................... 0.245 0.200 0.180 0.030
Net realized and unrealized gain/(loss) on investments... 2.619 (0.240) 0.870 0.500

Total from investment operations......................... 2.864 (0.040) 1.050 0.530
Distributions:
Net investment income.................................... (0.262) (0.190) (0.170) (0.030)
Net realized gain........................................ (1.732) (0.420) -- --
Total distributions...................................... (1.994) (0.610) (0.170) (0.030)

Net asset value, end of period........................... $ 11.60 $ 10.73 $ 11.38 $ 10.50

TOTAL RETURN++........................................... 28.76% (0.49)% 10.05% 5.30%

RATIOS AND SUPPLEMENTAL DATA
Net assets, end of period (thousands).................... $220,386 $166,713 $167,337 $ 82,944
Ratio of expenses to average daily net assets............ 1.02% 1.01% 1.03% 1.28%*
Ratio of net investment income to average daily net
assets................................................. 2.01% 1.82% 1.64% 1.74%*
Portfolio turnover rate.................................. 175% 116% 77% 5%
</TABLE>

* Annualized.
** Commencement of operations.
++ Total return for periods of less than one year are not annualized.

<PAGE>

CAPITAL APPRECIATION FUND

<TABLE>
<CAPTION>
TRUST CLASS
PERIOD FROM
YEAR ENDED YEAR ENDED JANUARY 11, 1993**
NOVEMBER 30, NOVEMBER 30, TO NOVEMBER 30,
1995 1994 1993
<S> <C> <C> <C>
SELECTED PER-SHARE DATA

Net asset value, beginning of period..................................... $ 10.17 $ 9.79 $ 10.00
Income from investment operations:
Net investment income.................................................... 0.043 0.010 0.010
Net realized and unrealized gain/(loss) on investments................... 2.035 0.380 (0.210)

Total from investment operations......................................... 2.078 0.390 (0.200)
Distributions:
Net investment income.................................................... (0.046) (0.010) (0.010)
Net realized gain........................................................ (1.332) -- --
Total distributions...................................................... (1.378) (0.010) (0.010)

Net asset value, end of period........................................... $ 10.87 $ 10.17 $ 9.79

TOTAL RETURN++........................................................... 20.74% 4.13% (2.00)%

RATIOS AND SUPPLEMENTAL DATA
Net assets, end of period (thousands).................................... $ 19,592 $ 12,869 $ 7,741
Ratio of expenses to average daily net assets............................ 1.10% 1.05% 1.11%*
Ratio of net investment income to average daily net assets............... 0.40% 0.17% 0.20%*
Portfolio turnover rate.................................................. 470% 271% 133%
</TABLE>

* Annualized.
** Commencement of operations.
++ Total return for periods of less than one year are not annualized.

SPECIAL EQUITY FUND

Net asset value, beginning of period..................... $ 10.56 $ 12.76 $ 11.19 $ 10.00

Income from investment operations:
Net investment income.................................... 0.100 0.030 0.010 0.010
Net realized and unrealized gain/(loss) on investments... 1.928 (0.460) 1.560 1.180

Total from investment operations......................... 2.028 (0.430) 1.570 1.190
Distributions:
Net investment income.................................... (0.108) (0.020) -- --
Net realized gain........................................ (0.360) (1.750) -- --
Total distributions...................................... (0.468) (1.770) -- --

Net asset value, end of period........................... $ 12.12 $ 10.56 $ 12.76 $ 11.19

TOTAL RETURN++........................................... 20.07% (4.74)% 14.07% 11.90%

RATIOS AND SUPPLEMENTAL DATA
Net assets, end of period (thousands).................... $ 54,221 $ 43,640 $ 32,706 $ 21,925
Ratio of expenses to average daily net assets............ 1.04% 1.03% 1.03% 1.28%*
Ratio of net investment income to average daily net
assets................................................. 0.90% 0.32% 0.06% 0.23%*
Portfolio turnover rate.................................. 81% 117% 95% 3%
</TABLE>

* Annualized.
** Commencement of operations.
++ Total return for periods of less than one year are not
annualized.

<PAGE>

INVESTMENT OBJECTIVES AND POLICIES

Each Fund's objective, together with those policies identified as being
fundamental, may not be changed except by approval of the majority of the
outstanding shares of that Fund. All other investment policies of a Fund may be
changed by the Company's Board of Directors without shareholder approval.
Capitoline will manage each Fund consistent with that Fund's investment
objective and policies. There is no assurance that a Fund will achieve its
investment objective. For more information regarding each Fund's investment
policies, please refer to the Statement of Additional Information.

MONEY MARKET FUNDS:
The investment objective of each money market fund is to provide high current
income to the extent consistent with the preservation of capital and the
maintenance of liquidity. A further objective of Tax Free Money Fund is to
provide high current income exempt from federal income taxes.

Each money market fund invests in accordance with the requirements of Rule 2a-7
("Rule 2a-7") under the Investment Company Act of 1940, as amended (the "1940
Act"). These requirements provide that money market funds must limit their
investments to securities with remaining maturities of 397 days or less and
maintain a dollar-weighted average maturity of 90 days or less. If the
Securities and Exchange Commission ("SEC") adopts new or amended requirements
under Rule 2a-7, the money market funds will comply with all such additional or
amended requirements.

There may be occasions when, in order to raise cash to meet redemptions or to
maintain the quality standards of the portfolio, the Funds might be required to
sell securities at a loss.

CASH RESERVE FUND
Cash Reserve Fund invests only in high quality, U.S. dollar-denominated money
market instruments of U.S. and foreign issuers, including floating and variable
rate instruments. Investments include:

(bullet) obligations of institutions, such as banks and insurance companies.
These obligations include certificates of deposit, bankers' acceptances
and time deposits;

(bullet) obligations of the U.S. and certain foreign governments and their
agencies or instrumentalities;

(bullet) short-term corporate obligations, including commercial paper, notes and
bonds; and

(bullet) other eligible debt obligations, including repurchase agreements.

The Fund's investments in domestic bank obligations (including their foreign
branches) are limited to those banks having total assets in excess of one
billion dollars and subject to regulation by the U.S. Government. The Fund may
also invest in certificates of deposit issued by banks insured by the Federal
Deposit Insurance Corporation ("FDIC") having total assets of less than one
billion dollars, provided that the Fund will at no time own more than an
aggregate of $100,000 in principal and interest obligations (or any higher
principal amount or principal and interest amount, which in the future may be
fully covered by FDIC insurance) of any one such issuer.

The Fund may invest in obligations of U.S. banks, foreign branches of U.S. banks
("Eurodollars"), U.S. branches and agencies of foreign banks ("Yankee dollars"),
and foreign branches of foreign banks. Eurodollar, Yankee dollar, and foreign
bank obligation investments involve risks in addition to those inherent in
investing in domestic bank obligations. These risks may include future
unfavorable political and economic developments, withholding taxes, seizures of
foreign deposits, currency controls, interest limitations, or other governmental
restrictions that might affect payment of principal or interest. Additionally,
there may be less public information available about foreign banks and their
branches. Foreign branches of foreign banks are not regulated by U.S. banking
authorities and generally are not subject to accounting, auditing, or financial
reporting standards comparable to those applicable to U.S. banks. Although
Capitoline carefully considers these factors when making investments, the Fund
does not limit the amount of its assets that can be invested in any one type of
instrument or in any foreign country.

The Fund's investments in obligations of domestic or foreign branches of foreign
banks are limited to U.S. dollar-denominated obligations of foreign banks which,
at the time of investment: (i) have more than $5 billion, or the equivalent in
other currencies, in total assets; and (ii) have branches or agencies in the
United States. Investments in the foregoing foreign bank obligations are further
limited to banks headquartered in and to those branches located in the United
Kingdom, France, Germany, Belgium, the Netherlands, Italy, Switzerland, Denmark,
Norway, Sweden, Australia, Japan and Canada.

Cash Reserve Fund limits its investments in U.S. dollar-denominated foreign
government obligations to those obligations issued or guaranteed by the
governments of the countries listed above. Such obligations may be subject to
the risks described above in connection with the purchase of obligations of
foreign branches of domestic and foreign banks.

<PAGE>
QUALITY. Pursuant to Rule 2a-7 and policies and procedures adopted by the
Company's Board of Directors, Cash Reserve Fund may purchase only high-quality
securities determined by Capitoline to present minimal credit risks. To be
considered high-quality, a security must be a U.S. Government security or rated
in accordance with applicable rules in one of the two highest categories for
short-term securities by at least two nationally recognized statistical rating
organizations ("NRSRO") (or by one, if only one NRSRO has rated the security);
or, if unrated, judged to be of equivalent quality by Capitoline pursuant to
procedures adopted by the Company's Board of Directors. Purchases of unrated
securities and securities rated by only one NRSRO will be ratified by the
Company's Board of Directors. Foreign obligations are considered to be unrated.

High-quality securities are divided into "first tier" and "second tier"
securities. FIRST TIER securities have received the highest rating (e.g.,
Standard & Poor Corporation's ("S&P") A-1 rating) from at least two NRSROs (or
one, if only one has rated the security). SECOND TIER securities have received
ratings within the two highest categories (e.g., S&P A-1 or A-2) from at least
two NRSROs (or one, if only one has rated the security), but do not qualify as
first tier securities. If a security has been assigned different ratings by
different NRSROs, at least two NRSROs must have assigned the higher rating in
order for Capitoline to determine eligibility on the basis of that higher
rating. The Fund does not currently intend to invest in commercial paper rated
below first tier and will not invest more than 10% of its net assets in illiquid
securities. Cash Reserve Fund may not invest more than 5% of its total assets in
second tier securities.

DIVERSIFICATION. The Fund may not invest more than 5% of its total assets in the
securities of any one issuer, except that it may invest up to 25% of its assets
in the first-tier securities of a single issuer for up to three business days.
The Fund may not invest more than 25% of its total assets in any one industry.

Cash Reserve Fund may not invest more than 1% of its total securities or $1
million (whichever is greater) in the second tier securities of a single issuer.

The Fund will invest only in securities which satisfy the requirements of Rule
2a-7. Accordingly, if the issuing government or some other entity, such as an
insurance company or other corporate obligor, guarantees a security purchased by
the Fund, or if a bank issues a letter of credit in support of a security
purchased by the Fund, the Fund will not purchase any security which would
result in the value of all securities issued or guaranteed by that guarantor or
by that issuer of the letter of credit exceeding 10% of the value of the total
assets of the Fund.

U.S. TREASURY MONEY FUND
U.S. Treasury Money Fund's investments are limited to obligations having a
remaining maturity of 397 days or less that are issued by the U.S. Treasury and
repurchase agreements that provide for repurchase within 397 days and that are
collateralized by obligations issued or guaranteed by the U.S. Treasury. The
investment policies of the Fund may result in a lower yield than that of other
money market funds, such as Cash Reserve Fund, which may invest in other types
of instruments.

U.S. Treasury Money Fund limits its investments so as to obtain the highest
investment quality rating by an NRSRO. These quality ratings are based on, but
not limited to, an analysis of the Fund's operational policies, investment
strategies and management. These rating organizations also may undertake an
ongoing analysis and assessment of these criteria in order to continually update
the Fund's rating.

TAX FREE MONEY FUND
Tax Free Money Fund invests only in high-quality municipal securities that have
remaining maturities at the time of purchase of 397 days or less. Although the
Fund will attempt to invest 100% of its assets in tax-exempt municipal
securities, the interest on which is exempt from federal income tax, including
the federal alternative minimum tax, the Fund reserves the right to invest up to
20% of the value of its net assets in securities, including private activity
bonds, the interest on which is fully taxable or subject to the alternative
minimum tax. As a fundamental policy, at least 80% of the Fund's income will,
under normal circumstances, be exempt from federal income tax including the
federal alternative minimum tax.

MUNICIPAL OBLIGATIONS AND INVESTMENT POLICIES. Tax Free Money Fund will invest
in municipal obligations whose interest payments are exempt from federal income
tax. Municipal obligations, which are issued by states, cities, municipalities
or municipal agencies, will include variable rate demand obligations ("VRDOs"),
tax anticipation notes ("TANs"), revenue anticipation notes ("RANs"), bond
anticipation notes ("BANs"), construction loan notes, and tax-exempt commercial
paper. The Fund may also invest in municipal bonds within the maturity
limitations discussed above and may enter into commitments to purchase these
securities on a delayed-delivery basis.

The Fund is non-diversified, which means that it has greater latitude than a
diversified fund to invest in the securities of a relatively few municipal

<PAGE>
issuers. As a non-diversified fund, the Fund may present greater risks than a
diversified fund.

QUALITY. Pursuant to Rule 2a-7 and policies and procedures adopted by the
Company's Board of Directors, the Fund may purchase securities determined by
Capitoline to present minimal credit risks. Securities must be rated in
accordance with applicable rules in the highest rating category for short-term
securities by at least one NRSRO and, if rated by more than one NRSRO, rated in
one of the two highest categories for short-term securities by another NRSRO or,
if unrated, judged to be equivalent to the highest short-term rating category by
Capitoline pursuant to procedures adopted by the Company's Board of Directors.

The Fund will not invest more than 10% of its net assets in illiquid securities.
For purposes of this limitation, "illiquid securities" shall be deemed to
include municipal securities not rated at the time of purchase by the requisite
NRSROs, or not guaranteed or supported by a letter of credit issued by, or
subject to a remarketing agreement with, a responsible party, and not otherwise
determined by Capitoline to be readily marketable.

The Fund may from time to time have more than 25% of its assets invested in
municipal securities of issuers located in one or more of Arizona, California,
Maryland, New Jersey, New York and Pennsylvania and will invest more than 25% of
its assets in municipal securities of issuers located in Virginia.

The Fund will invest in securities, including the foregoing types of securities,
only if the investments are of a type which would satisfy the requirements of
Rule 2a-7. Accordingly, if the issuing government or some other entity, such as
an insurance company or other corporate obligor, guarantees a security purchased
by the Fund, or if a bank issues a letter of credit in support of a security
purchased by the Fund, the Fund will not purchase any security which, as to 75%
of the value of total assets held by the Fund, would result in the value of all
securities issued or guaranteed by that guarantor or by that issuer of the
letter of credit exceeding 10% of the value of the total assets of the Fund.

In order to permit the Fund to invest in new instruments that may be created in
the future, the Fund, upon supplementing its Prospectus, may invest in
obligations other than those listed above, provided the investments are
consistent with the Fund's investment objectives and policies.

The Fund may also purchase shares of other money market funds. Should the Fund
elect to do so, it will incur additional expenses charged by that money market
fund, such as management fees.

TAXABLE INVESTMENTS. Although the Fund will attempt to invest 100% of its assets
in tax-exempt municipal securities, including those securities exempt from the
federal alternative minimum tax amount, the Fund may under certain circumstances
invest up to 20% of the value of its net assets in securities on which the
interest income is fully taxable or subject to the alternative minimum tax.
Subject to such limitation, the Fund may invest in any taxable investment,
including repurchase agreements, appropriate for investment by Cash Reserve
Fund.

Yields on municipal obligations depend on a variety of factors, including the
general conditions of the money markets and of the municipal bond and municipal
note markets, the size of a particular offering, the maturity of the obligation
and the rating of the issue. Municipal obligations with longer maturities tend
to produce higher yields and generally are subject to potentially greater price
fluctuations than obligations with shorter maturities.

The Fund anticipates being as fully invested as practicable in municipal
obligations; however, because the Fund presently does not intend to invest in
taxable obligations, there may be occasions when, as a result of maturities of
portfolio securities or sales of Fund shares or in order to meet anticipated
redemption requests, the Fund may hold cash which is not earning income.

BOND FUNDS:
CORPORATE BOND FUNDS:

LIMITED TERM BOND FUND
Limited Term Bond Fund seeks to provide a high level of current income by
investing in investment-grade fixed-income debt obligations. The Fund is managed
to maintain a dollar-weighted average portfolio maturity of between 1 and 5
years. See "Investment Policies -- Corporate Bond Funds."

INTERMEDIATE BOND FUND
Intermediate Bond Fund seeks to provide a high level of current income by
investing in investment-grade fixed-income debt obligations. The Fund is managed
to maintain a dollar-weighted average portfolio maturity of between 5 and 10
years. See "Investment Policies -- Corporate Bond Funds" below for a complete
description of Fund's investment policies.

INVESTMENT POLICIES -- CORPORATE BOND FUNDS
For each corporate bond fund, Capitoline will consider the ratings of Moody's
Investors Service, Inc. ("Moody's"), S&P, Fitch Investors Service, Inc.
("Fitch"), Duff and Phelps ("Duff") or other

<PAGE>
recognized sources of credit ratings assigned to various obligations.

Each corporate bond fund will seek to obtain a high level of current income by
investing exclusively in investment-grade debt obligations of domestic and
foreign issuers as follows:

(bullet) corporate obligations which are rated at least Baa by Moody's, BBB by
S&P, BBB by Fitch, or BBB by Duff (see "Investment-grade Securities" in
the Appendix to this Prospectus);

(bullet) obligations issued or guaranteed by the U.S. Government, its agencies
or instrumentalities; and

(bullet) commercial paper which is rated Prime-1 by Moody's or A-1 by S&P.

Each corporate bond fund also may purchase unrated securities that are deemed by
Capitoline to be of equivalent quality to investment-grade debt obligations
pursuant to procedures established by the Company's Board of Directors. Credit
ratings are considered at the time of purchase; the sale of securities is not
required in the event of a subsequent rating downgrade. In the event that a
security owned by a Fund is downgraded below the stated ratings categories,
Capitoline will review the security and take appropriate action.

Fixed-income securities held by each corporate bond fund may include (but are
not limited to), in any proportion, bonds, notes, mortgage-related and
asset-backed securities, U.S. Government and government agency obligations, zero
coupon securities, indexed securities, convertible notes and bonds, convertible
preferred securities, foreign securities (see "Foreign Investments" in the
Appendix), and short-term obligations such as certificates of deposit,
repurchase agreements, bankers' acceptances, and commercial paper. The Funds may
also enter into reverse repurchase agreements. These funds also may purchase
shares of money market mutual funds. Should a Fund elect to purchase shares of
money market funds, it will incur additional expenses charged by that money
market fund, such as management fees.

Limited Term Bond Fund may hold individual securities with remaining maturities
of more than 5 years, as long as the Fund's dollar-weighted average portfolio
maturity is no more than 5 years. Intermediate Bond Fund may hold individual
securities with remaining maturities of more than 10 years, as long as its
dollar-weighted average portfolio maturity is no more than 10 years. For the
purpose of determining the dollar-weighted average portfolio maturity of each
corporate bond fund, the maturities of mortgage-backed securities,
collateralized mortgage obligations and asset-backed securities are determined
on a "weighted average life" basis. (The weighted average life is the average
time in which principal is repaid; for a mortgage security, this average time is
calculated by estimating the expected principal payments for the life of the
mortgage.) The weighted average life of such securities is likely to be
substantially shorter than their stated final maturity as a result of scheduled
and unscheduled principal prepayments. The maturities of most of the other
securities held by the corporate bond funds will be determined on a "stated
final maturity" basis. One exception would be "extendible" debt instruments,
which can be retired at the option of the corporate bond funds at various dates
prior to maturity, and which may be treated as maturing on the next optional
retirement date when calculating average portfolio maturity.

The corporate bond funds also may purchase obligations of U.S. banks (including
certificates of deposit and bankers' acceptances) which have capital, surplus,
and undivided profits (as of the date of their most recently published annual
financial statements) of $100 million or more.

In making investment decisions for the corporate bond funds, Capitoline will
consider many factors other than current yield, including preservation of
capital, the potential for realizing capital appreciation, maturity and yield to
maturity. Capitoline will monitor each corporate bond fund's investments in
particular securities or in types of debt securities in response to its
appraisal of changing economic conditions and trends. Capitoline may sell
securities in anticipation of a market decline or purchase securities in
anticipation of a market rise. Each corporate bond fund may invest a portion of
its assets in securities issued by foreign companies and foreign governments,
which may be less liquid or more volatile than domestic investments. The
corporate bond funds will only invest in U.S. dollar-denominated securities.

GOVERNMENT BOND FUNDS:

GOVERNMENT BOND FUND
Government Bond Fund seeks to provide a high level of current income in a manner
consistent with preserving principal by investing primarily in obligations
issued or guaranteed by the U.S. Government or its agencies or instrumentalities
(U.S. Government Securities). In seeking current income, the Fund also may
consider the potential for capital gain.

<PAGE>
remaining assets may be invested in fixed-income securities that are eligible
for purchase by the corporate bond funds. The Fund may purchase securities on a
delayed-delivery basis. There are no limits on the dollar-weighted average
portfolio maturity of the Fund, and, consistent with its investment objective of
obtaining current income while preserving principal, the Fund may acquire
individual securities without regard to their remaining maturities.

The Fund invests in various debt obligations issued or guaranteed by the U.S.
Government or its agencies or instrumentalities, including U.S. Treasury Bonds,
Notes and Bills, Government National Mortgage Association mortgage-backed
securities and mortgage-backed securities issued by the Federal National
Mortgage Association (Fannie Maes) or the Federal Home Loan Mortgage Corporation
(Freddie Macs). The Fund is not restricted as to the percentage of its assets
that may be invested in any one type of U.S. Government Security. The U.S.
Government Securities the Fund invests in may or may not be fully backed by the
U.S. Government. The Fund may enter into repurchase agreements involving U.S.
Government Securities and any other securities in which it may invest and also
may enter into reverse repurchase agreements. The Fund considers "government
securities" to include U.S. Government securities subject to repurchase
agreements. The Fund may for temporary defensive purposes invest without limit
in U.S. Government Securities having a maturity of 365 days or less.

MUNICIPAL BOND FUNDS:

MARYLAND MUNICIPAL BOND FUND
Maryland Municipal Bond Fund seeks to provide high current income exempt from
federal and Maryland income tax in a manner consistent with the preservation of
capital by investing in municipal bonds of investment-grade quality. (See
"Investment-grade Securities" in the Appendix to this Prospectus.) There are no
limits on the dollar-weighted average portfolio maturity of the Fund, and the
Fund may acquire individual securities without regard to their remaining
maturities. See "Investment Policies -- Municipal Bond Funds."

The Fund is non-diversified, which means that it has greater latitude than a
diversified fund with respect to the investment of its assets in the securities
of a relatively few municipal issuers. As a non-diversified fund, the Fund may
present greater risks than a diversified fund.

As a fundamental policy, at least 80% of the Fund's income will, under normal
circumstances, be exempt from regular federal income taxes. Interest on some
"private activity" municipal obligations is subject to the federal alternative
minimum tax ("AMT bonds"). AMT bonds are municipal obligations that benefit a
private or industrial user or finance a private facility. The Fund reserves the
right to invest up to 100% of its assets in AMT bonds.

As a non-fundamental policy, at least 65% of the Fund's assets will be invested
in bonds that will, under normal circumstances, produce income that is exempt
from Maryland income taxes.

VIRGINIA INTERMEDIATE MUNICIPAL BOND FUND

Virginia Intermediate Municipal Bond Fund seeks to provide high current income
exempt from federal and Virginia income tax in a manner consistent with the
preservation of capital by investing in municipal bonds of investment-grade
quality. (See "Investment-grade Securities" in the Appendix to this Prospectus.)
The Fund is managed to maintain a dollar-weighted average portfolio maturity of
between 5 and 10 years. The Fund may hold individual securities with remaining
maturities of more than 10 years, as long as the dollar-weighted average
maturity is no more than 10 years. Stability and growth of principal also will
be considered when choosing securities. See "Investment Policies -- Municipal
Bond Funds."

As a non-fundamental policy, at least 65% of the Fund's assets will be invested
in bonds that will, under normal circumstances, produce income that is exempt
from Virginia income taxes.

<PAGE>
portfolio maturity of the Fund, and the Fund may acquire individual securities
without regard to their remaining maturities. See "Investment Policies --
Municipal Bond Funds."

As a non-fundamental policy, at least 65% of the Fund's assets will be invested
in bonds that will, under normal circumstances, produce income that is exempt
from Virginia income taxes.

INVESTMENT POLICIES -- MUNICIPAL BOND FUNDS
Each municipal bond fund will, consistent with its investment objective,
purchase securities which meet the applicable quality and maturity
characteristics established for that Fund. In doing so, it will consider the
ratings of Moody's or S&P assigned to various obligations.

Each municipal bond fund normally will invest primarily in municipal securities
of all types and of investment-grade quality. Investment grade municipal bonds
are considered to be securities rated Baa or higher by Moody's or BBB or higher
by S&P, and unrated securities that are deemed by Capitoline to be of comparable
quality to each municipal bond fund's ratings requirements. (See
"Investment-grade Securities" in the Appendix to this Prospectus.) Municipal
securities are issued to raise money for various public purposes, including
general purpose financing for state and local governments as well as financing
for specific projects or public facilities. Municipal securities may be backed
by the full taxing power of a municipality, by the revenues derived from a
specific project or by the credit of a private organization. Some municipal
securities are insured by private insurance companies, while others may be
supported by letters of credit furnished by domestic or foreign banks.
Capitoline monitors the financial condition of parties (including insurance
companies, banks, and corporations) whose creditworthiness is relied upon in
determining the credit quality of securities eligible for purchase by each
municipal bond fund. Each municipal bond fund may invest more than 25% of its
assets in industrial development bonds.

Generally, the municipal bond funds' investments in municipal securities may
include fixed, variable, or floating rate general obligation and revenue bonds
(including municipal lease obligations and resource recovery bonds); zero coupon
and asset-backed securities; tax, revenue, or bond anticipation notes; and
tax-exempt commercial paper. The municipal bond funds may buy or sell securities
on a when-issued or delayed-delivery basis (including refunding contracts) and
may acquire standby commitments. See the Appendix.

Each municipal bond fund may deviate from its investment objective for temporary
defensive purposes. During periods when, in Capitoline's opinion, a temporary
defensive posture in the market is appropriate, each municipal bond fund may
hold cash that is not earning interest or may invest in obligations whose
interest may be subject to federal and/or state tax. The municipal bond funds'
defensive investments may include short-term municipal obligations, money market
instruments and shares of money market mutual funds. Should a Fund elect to
purchase shares of money market funds, it will incur additional expenses charged
by that money market fund, such as management fees. Under such circumstances,
the municipal bond funds may each temporarily invest so that less than 80% of
their income distributions are federally and/or state tax-free. Federally
taxable obligations in which a Fund may invest include, but are not limited to,
obligations issued by the U.S. Government or any of its agencies or
instrumentalities, high-quality commercial paper, certificates of deposit, and
repurchase agreements.

RISKS AND SPECIAL CONSIDERATIONS CONCERNING MARYLAND MUNICIPAL BOND FUND
Investors should be aware of certain factors that might affect the financial
condition of issuers of Maryland municipal securities.

<PAGE>

General obligation debt of the State of Maryland is rated Aaa by Moody's, AAA by
S&P and AAA by Fitch; there can be no assurance that these ratings will
continue. There is no general limit on state general obligation bonds imposed by
the State Constitution or laws; state general obligation bonds are payable from
ad valorem taxes and, under the State Constitution, may not be issued unless the
debt is authorized by a law levying an annual tax or taxes sufficient to pay the
debt service within 15 years and prohibiting the repeal of the tax or taxes or
their use for another purpose until the debt has been paid. State and local
general obligation debt on a per capita basis and as a percentage of property
values have increased by 33.4% and 7.1%, respectively since 1990. Although the
State may borrow up to $100 million in short-term notes in anticipation of taxes
and revenues, the State has not made use of this authority. See the Appendix.

The Fund will not use more than 5% of its assets to acquire derivative
securities. For this purpose, "derivative securities" shall mean Indexed
Securities, Stripped Mortgage-Backed Securities and Stripped Government
Securities. See "Appendix" for a description of these types of securities.

RISKS AND SPECIAL CONSIDERATIONS CONCERNING VIRGINIA INTERMEDIATE MUNICIPAL BOND
FUND AND VIRGINIA MUNICIPAL BOND FUND
Investors should be aware of certain factors that might affect the financial
condition of issuers of Virginia municipal securities.

The Constitution of Virginia limits the ability of the Commonwealth to create
debt. An amendment to the Constitution requiring a balanced budget was approved
by the voters on November 6, 1984. The economy of the Commonwealth of Virginia
is based primarily on manufacturing, the government sector (including defense),
agriculture, mining and tourism. The Commonwealth has maintained a high level of
fiscal stability for many years due in large part to conservative financial
operations and diverse sources of revenue. Recessionary conditions beginning in
1990 have resulted in revenue shortfalls which have necessitated budget
revisions and matching expenditure cuts to keep the budget in balance.

The Commonwealth currently has an S&P rating of AAA and a Moody's rating of Aaa
on its general obligation bonds. There can be no assurance that the economic
conditions on which these ratings are based will continue or that particular
bond issues may not be adversely affected by changes in economic or political
conditions. Furthermore, the credit of the Commonwealth is not material to the
ability of political subdivisions and private entities to make payments on the
obligations issued by them. See the Appendix.

EQUITY FUNDS:

VALUE FUND
Value Fund seeks to provide long-term capital appreciation and, as a secondary
objective, current income, by investing primarily in income producing equity
securities of companies with large market capitalizations. See "Investment
Policies -- Value Fund and Capital Appreciation Fund."

The Fund's investments will be broadly diversified among major economic sectors
and among those securities with above-average total return potential. A number
of valuation criteria are considered in the equity selection process, the
principal one being the issue's price to earnings ("P/E") ratio in relation to
other stocks in the same industry. Stocks with the lowest P/E ratios, along with
strong financial quality and above-average earnings momentum, are selected to
secure the best relative values in each economic sector. Capitoline believes
that this approach will produce a portfolio with less volatility and greater
dividend yield than the market as a whole. The Fund will invest primarily in the
income producing equity securities of companies with market capitalizations of
at least $1 billion.

CAPITAL APPRECIATION FUND
Capital Appreciation Fund seeks to provide long-term capital appreciation by
investing primarily in the equity securities of companies with medium to large
market capitalizations.

The Fund may invest a portion of its assets in foreign securities, securities of
small capitalization companies, and in securities having common stock
characteristics, such as rights and warrants. Capitoline considers many factors
when evaluating the overall quality of a security for the Fund, including, but
not limited to, a company's current financial strength, earnings momentum, and
relative value. The Fund will invest primarily in the equity securities of
companies with market capitalizations of at least $250 million.

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As a non-fundamental investment policy, each Fund may to the extent consistent
with its investment objective, invest in any debt security in which the
corporate bond funds may invest. (See "Investment Policies -- Corporate Bond
Funds" on page 13.) As a non-fundamental investment policy, each of the Value
Fund and Capital Appreciation Fund may also invest up to 10% and 5%,
respectively, of its assets in the U.S. Treasury obligations.

Although the Value Fund and Capital Appreciation Fund intend, under normal
circumstances, to be fully invested at all times in the securities mentioned
above, each Fund may make substantial temporary investments in high-quality,
short-term debt securities and money market instruments, including repurchase
agreements, and in shares of other open-end management investment companies
which invest primarily in money market instruments, when Capitoline believes
market conditions warrant a defensive position. Should a Fund elect to purchase
shares of money market funds, it will incur additional expenses charged by that
money market fund, such as management fees.

SPECIAL EQUITY FUND
Special Equity Fund seeks to provide long-term capital appreciation by investing
primarily in the equity securities of companies with small to medium market
capitalizations.

Small to medium capitalization companies with rapid growth rates may have higher
P/E ratios than other companies. The market prices of securities with higher P/E
ratios tend to drop more suddenly in response to negative news than securities
with low P/E's. That is especially true for smaller, less well-known companies
that have a narrow product line or whose securities are thinly traded.

These companies typically tend to offer the potential for accelerated earnings
or revenue growth because of new products or technologies, new channels of
distribution, revitalized management or industry conditions, or similar new
opportunities. Smaller companies often pay no dividends, and current income is
not a goal of the Fund. Representative industries may include, but are not
limited to, technology, health care and biotechnology, environmental services,
communications, and energy and alternative energy.

INVESTMENT POLICIES -- SPECIAL EQUITY FUND
The Fund will invest primarily in domestic and foreign common stock and in
securities convertible into common stock, such as convertible bonds and
convertible preferred stock. The Fund generally will invest primarily in the
securities of companies with market capitalizations of less than $1 billion. It
also may invest a portion of its assets in sponsored ADRs of qualifying foreign
companies (see "Foreign Investments" in the Appendix), and in securities having
common stock characteristics, such as rights and warrants. As a non-fundamental
investment policy, the Fund may also invest up to 5% of its assets in
obligations of the U.S. Treasury.

Although the Special Equity Fund intends, under normal circumstances, to be
fully invested in equity securities, the Fund may make substantial temporary
investments in high-quality, short-term debt securities and money market
instruments, including repurchase agreements, and in the securities of other
open-end management investment companies investing primarily in money market
instruments, when Capitoline believes market conditions warrant a defensive
position. Should the Fund elect to purchase shares of a money market fund, it
will incur additional expenses charged by that money market fund, such as
management fees.

RISK FACTORS AND INVESTMENT CONSIDERATIONS

Individually, none of the Funds constitutes a balanced investment plan. The
money market funds emphasize income, preservation of capital and liquidity and
do not seek the higher yields or capital appreciation that more aggressive
investments may provide. The bond funds tend to provide higher yields than the
money market funds; however, unlike money market funds, the bond funds do not
seek to maintain a stable $1.00 share price, and may not be able to return
dollar for dollar the money invested. The primary focus of the equity funds is
long-term capital appreciation. Fluctuations in the stock market will directly
affect the share price of the equity funds.

A MONEY MARKET FUND'S ability to achieve its investment objective depends on the
quality and maturity of its investments. Although each money market fund's
policies are designed to help maintain a stable $1.00 share price, money market
instruments can change in value when interest rates or an issuer's
creditworthiness change, or if an issuer or guarantor of a security fails to pay
interest or principal when due. If these changes in value are large enough, a
money market fund's share price could deviate (positively or negatively) from
$1.00. In general, securities with longer maturities are more vulnerable to
price changes, although they may provide higher yields.

U.S. TREASURY MONEY FUND is the most conservative of the CrestFunds(R) money
market funds as it invests solely in short-term money market instruments issued
by the U.S. Treasury, and repurchase agreements backed by U.S. Treasury
instruments.

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CASH RESERVE FUND invests in high quality money market instruments that are not
backed by the U.S. Government and therefore is likely to provide higher yields
than U.S. Treasury Money Fund.

TAX FREE MONEY FUND emphasizes tax-free income by investing primarily in the
high quality tax-exempt securities of states, cities, municipalities and
municipal agencies.

Each money market fund's yield will vary from day to day, generally reflecting
current short-term interest rates and other market conditions.

Each CORPORATE BOND FUND emphasizes high current income by investing in
fixed-income securities. Fixed-income securities (except for securities with
floating or variable interest rates) are generally considered to be interest
rate sensitive, which means that their value (and the Funds' share prices) will
tend to decrease when interest rates rise and increase when interest rates fall.
Securities with shorter maturities, while offering lower yields, generally
provide greater price stability than longer-term securities and are less
affected by changes in interest rates. The ability of all bond funds to achieve
their investment objectives depends greatly on the quality and maturity of the
investments and the reliability of the issuer to make interest payments in a
timely manner. Market risk is addressed through a strategy of adjusting the
dollar-weighted average maturity of each bond fund to reflect changing economic
and interest rate environments. The timing of portfolio transactions in response
to anticipated changes in interest rate trends is important to the successful
application of such strategies. Bond funds are generally subject to two risk
factors: (1) credit risk and (2) interest rate risk.

LIMITED TERM BOND FUND is a conservative bond fund which seeks higher current
yields than a money market fund. Because of the different levels of risk
associated with investing in a money market fund, which seeks to maintain a
stable net asset value per share and to preserve principal, and the Limited Term
Bond Fund, which seeks high current income, the Limited Term Bond Fund will
experience greater fluctuations in its principal value than would a money market
fund.

INTERMEDIATE BOND FUND is likely to experience greater share price fluctuation
and potentially higher income than Limited Term Bond Fund, due to its
investments in longer term bonds.

GOVERNMENT BOND FUND is a conservative government bond fund which invests
primarily in U.S. Government securities with intermediate to long maturities.
The Fund may experience greater price fluctuations due to its investments in
longer term bonds.

The MUNICIPAL BOND FUNDS emphasize high tax-free current income by investing
primarily in investment-grade municipal securities. Because Virginia
Intermediate Municipal Bond Fund, Virginia Municipal Bond Fund and Maryland
Municipal Bond Fund invest primarily in Virginia or Maryland obligations, as the
case may be, the quality and supply of eligible securities may present
additional risks to those of more diversified municipal bond funds. Virginia
Intermediate Municipal Bond Fund is less interest rate sensitive than the
Virginia Municipal Bond Fund. It seeks higher Virginia tax free income than a
tax-free money fund, with some share price fluctuation. Virginia Municipal Bond
Fund is likely to experience greater share price fluctuation and potentially
higher tax-free income due to its investments in longer term municipal bonds.
Maryland Municipal Bond Fund also is likely to experience greater share price
fluctuation and potentially higher tax free income than an intermediate term
municipal bond fund.

The EQUITY FUNDS emphasize capital appreciation by investing primarily in common
stock and securities convertible to common stock, such as preferred stock and
convertible bonds. These funds are inherently more risky than the money market
and bond funds. The share prices of companies with larger capitalization tend to
fluctuate less over time than the stock of companies having smaller market
capitalization. Therefore, a stock mutual fund investing in companies with
smaller average market capitalization is more aggressively oriented than one
which invests in companies with a large average market capitalization, and while
a "small-cap" fund's potential for growth may be greater, its share price is
likely to respond more suddenly and dramatically to changes in the stock market.
Because of fluctuating share price and total returns, the equity funds may not
be appropriate investments for investors seeking a more conservative investment.

VALUE FUND emphasizes long-term capital appreciation and current income through
investment in the income producing equity securities of companies with large
market capitalizations. It is anticipated that the Fund will provide more
current income than, but will not achieve capital appreciation at a rate
comparable to, funds that pursue growth as a primary objective.

CAPITAL APPRECIATION FUND invests primarily in the equity securities of
companies with medium to large market capitalization.

SPECIAL EQUITY FUND invests primarily in the equity securities of companies with
small to medium market capitalization. Because these companies usually do not
pay dividends, income is not a goal of the Fund. While Capitoline purchases
securities for the Fund that it believes present the

<PAGE>
greatest opportunity for growth, these securities may also be considered
speculative.

From time to time each Fund, to the extent consistent with its investment
objective, policies and restrictions, may invest in securities of companies with
which Crestar Bank has a lending relationship, including industrial development
bonds and other private activity municipal securities backed by the credit and
security of such companies. The investment objectives and policies for each Fund
are supplemented by its investment limitations. See the Appendix for further
discussion of the Funds' investments.

INVESTMENT LIMITATIONS

The following summarizes each Fund's principal investment limitations. A
complete listing is contained in the Statement of Additional Information. With
the exception of limitations 4, 5, 6, 7(b) and (c), and 9(b) and (c), these
limitations are fundamental and may not be changed without shareholder approval.
Except for the Funds' percentage limitations concerning borrowings, the
limitations and policies discussed in this Prospectus are considered at the time
of purchase. Accordingly, the sale of securities is not required in the event of
a subsequent change in circumstances.

MONEY MARKET FUNDS
1. Each Fund may not, with respect to 75% of its assets (50% in the case of Tax
Free Money Fund), invest more than 5% of the total market value of its assets
(determined at the time of investment) in the securities of any one issuer other
than the U.S. Government, its agencies or instrumentalities.

2. Each Fund may not invest more than 25% of the total market value of its
assets (determined at the time of investment) in the securities of foreign banks
and foreign branches of domestic banks, in the securities of foreign governments
or in the securities of issuers conducting their principal business activities
in any one industry; provided, (i) there is no limitation on the aggregate of
the Fund's investment in obligations (excluding commercial paper) of domestic
commercial banks and in obligations of the U.S. Government, its agencies or
instrumentalities; and (ii) consumer finance companies, industrial finance
companies and gas, electric, water and telephone utility companies are each
considered to be separate industries.

3. Each Fund may not borrow money, except from banks for temporary or emergency
purposes, including the meeting of redemption requests which might require the
untimely disposition of securities. Borrowing in the aggregate may not exceed
10%, and borrowing for purposes other than meeting redemptions may not exceed 5%
of the value of a Fund's total assets (including the amount borrowed) at the
time the borrowing is made. Outstanding borrowings in excess of 5% of the value
of a Fund's total assets will be repaid before any subsequent investments are
made by a Fund.

4. As a non-fundamental limit, Cash Reserve Fund and U.S. Treasury Money Fund
each may not make loans except that each Fund may lend portfolio securities in
an amount not to exceed 10% of the value of its total assets. Tax Free Money
Fund does not currently intend to lend portfolio securities.

CASH RESERVE FUND
5. To comply with Rule 2a-7, the Fund normally may not, with respect to 100% of
its assets, invest more than 5% of the total market value of its assets in the
securities of any one issuer other than the U.S. Government, its agencies or
instrumentalities, provided, however, that the Fund may invest up to 25% of its
total assets in the first tier securities of a single issuer for up to three
days.

MARYLAND MUNICIPAL BOND FUND, VIRGINIA INTERMEDIATE MUNICIPAL BOND FUND AND
VIRGINIA MUNICIPAL BOND FUND

6. For federal tax purposes each Fund will limit its investments so that: (a)
with regard to at least 50% of its total assets, no more than 5% of its total
assets are invested in the securities of a single issuer; and (b) no more than
25% of its total assets are invested in the securities of a single issuer. This
limitation does not apply to "government securities" as defined for federal tax
purposes.

7. Each Fund (a) may borrow money solely for temporary or emergency purposes,
but not in an amount exceeding 33 1/3% of its total assets; (b) may borrow money
only from banks or by engaging in reverse repurchase agreements; and (c) will
not purchase securities when borrowings exceed 5% of its total assets.

CORPORATE BOND, GOVERNMENT BOND, MUNICIPAL BOND AND EQUITY FUNDS
8. Each Fund may not, with respect to 75% of its total assets, purchase the
securities of any issuer (other than securities issued or guaranteed by the U.S.
Government or any of its agencies or instrumentalities) if, as a result, (a)
more than 5% of its total assets would be invested in the securities of that
issuer, or (b) it would hold more than 10% of the outstanding voting securities
of the issuer.

9. Each Fund (a) may borrow money solely for temporary or emergency purposes,
but not in an amount exceeding 33 1/3% of its total assets; (b) may borrow money
only from banks or by engaging in reverse repurchase agreements; and (c) will
not purchase securities when borrowings exceed 5% of its total assets.

<PAGE>
FUND MANAGEMENT

Jeffrey E. Markunas, CFA, is Senior Vice President and Director of Equity
Management for Capitoline. Mr. Markunas has primary responsibility for the
management of Value Fund, Capital Appreciation Fund and Special Equity Fund. In
addition, he oversees the investment management of Crestar's Southeast Equity
Fund, as well as other large institutional equity accounts. Mr. Markunas joined
Capitoline in May, 1992, and has managed the CrestFunds(Register mark) Value
Fund and Special Equity Fund since inception. From April, 1990 to May, 1992, Mr.
Markunas was a portfolio manager with Sovran Capital Management. Prior to that,
he served as Director of Research for Sovran Bank.

Boyce G. Reid, CFA, is Senior Vice President and Director of Fixed-Income
Management for Capitoline. Mr. Reid has primary responsibility for the
management of Limited Term Bond Fund, Intermediate Bond Fund, Government Bond
Fund, Maryland Municipal Bond Fund, Virginia Intermediate Municipal Bond Fund
and Virginia Municipal Bond Fund. He also oversees the investment management of
over $1.4 billion of other pension, endowment, foundation, union and insurance
funds. Mr. Reid has been the Director of Fixed-Income Management since 1986.

Jennifer M. Constine is Vice President and Fixed-Income Portfolio Manager for
Capitoline. Ms. Constine shares responsibility with Mr. Reid for the management
of Limited Term Bond Fund, Intermediate Bond Fund and Government Bond Fund. She
also oversees the investment management of approximately over $422 million of
other pension, endowment, foundation, union and insurance fixed-income funds.
Ms. Constine has been a portfolio manager at Capitoline since 1987.

Cheryl L. Page, CFA, is Assistant Vice President and Fixed-Income Portfolio
Manager for Capitoline. Ms. Page shares responsibility with Mr. Reid for the
management of Maryland Municipal Bond Fund, Virginia Intermediate Municipal Bond
Fund and Virginia Municipal Bond Fund. She also oversees the investment
management of approximately $640 million of other pension, endowment,
foundation, union and insurance funds. Ms. Page has been with Capitoline since
December, 1991; prior to that, she was a portfolio manager for First American
Bank, N.A. for three years.

PRICING OF SHARES

The net asset value per share ("NAV") of Tax Free Money Fund is determined as of
12:00 noon, Eastern time, and as of the close of regular trading hours of the
New York Stock Exchange ("NYSE") (normally 4:00 p.m. Eastern time). The NAV of
Cash Reserve Fund and U.S. Treasury Money Fund is determined as of 1:00 p.m.
Eastern time and as of the close of regular trading hours of the NYSE. The NAV
of each bond and equity fund is determined as of the close of regular trading
hours on the NYSE. Each Fund's NAV is determined on each day the NYSE and the
Funds' custodian, Crestar Bank, are open for business. The NAV of a Fund is
calculated by adding the value of all securities and other assets of a Fund,
deducting the liabilities allocated to each class, and dividing the result by
the proportional number of the shares of the Fund outstanding in a class.

Assets in the money market funds are valued based upon the amortized cost
method. Each money market fund seeks to maintain an NAV of $1.00, although there
can be no assurance that an NAV of $1.00 will be maintained.

With respect to the bond and equity funds, securities which are traded on a
recognized stock exchange are valued at the last sale price on the securities
exchange on which such securities are primarily traded or at the last sale price
on any national securities exchange. Securities traded only on over-the-counter
markets are valued on the basis of closing over-the-counter bid prices.
Securities for which there were no such transactions are valued at the average
of the current bid and asked prices. Securities for which market quotations are
not available are valued at fair value as determined by the Board of Directors.
The Funds may also utilize pricing services in determining the value of their
securities. Debt securities with remaining maturities of 60 days or less at the
time of purchase are valued on an amortized cost basis (unless the Board
determines that such basis does not represent fair value at the time). Under
this method, such securities are valued initially at cost on the date of
purchase. Thereafter, absent unusual circumstances, the Fund assumes a constant
proportionate amortization of any discount or premium until maturity of the
security.

HOW TO PURCHASE, EXCHANGE AND REDEEM SHARES

DISTRIBUTOR
Shares of each Fund are sold on a continuous basis by the Funds' Distributor,
SEI Financial Services Company ("SFS" or the "Distributor"). SFS is a registered
broker-dealer with principal offices at 680 East Swedesford Road, Wayne,
Pennsylvania 19087.

PURCHASE OF SHARES
Before you buy shares, please read the following information to make sure your
investment is accepted and credited properly.

<PAGE>

Trust Class shares are offered continuously to qualified individual or
institutional customers that have entered into an agreement for their assets to
be managed and/or administered by Crestar Bank's Trust and Investment Management
Group. Trust Class shares of the money market funds are offered to qualified
individuals or institutional customers who have qualified cash management (or
"sweep") accounts with Crestar Bank or one of its bank affiliates. The minimum
initial investment required of a bank in each Fund is $1 million, except for
agency accounts for which the minimum is $25,000, and qualified cash management
accounts for which the minimum initial investment is waived. There is no minimum
for subsequent investments. Banks may impose initial or subsequent investment
minimums on their customers. Trust Class shares are sold without a sales charge,
although banks may charge their customer accounts for services provided in
connection with the purchase of shares. Information concerning these services
and any charges may be obtained from the bank. With the exception of agency
accounts, Fund shares may be held of record by the banks, although bank
customers may retain the right to vote them. Generally, shares held in agency
accounts will be registered in the principal's name. Confirmations of share
purchases and redemptions will be sent to shareholders of record. Beneficial
ownership of Fund shares will be recorded by the banks and reflected in the
account statements provided by them to their customers. For further information
on opening an account, contact an account officer at the bank. Sales personnel
of financial institutions distributing the Funds' shares and other persons
entitled to receive compensation for selling such shares may receive differing
compensation.

Shares of the Funds may be purchased through procedures established by the banks
in connection with the requirements of customer accounts. Purchases will be
effected only on days on which the purchasing banks and the Funds are open for
business ("Business Days"). Before the customer authorizes the purchase of
shares of a Fund, this Prospectus should be read in conjunction with information
from the customer's bank concerning services and charges. The issuance of shares
is recorded on the books of the Funds, and share certificates will not be issued
for shares of the Funds. The Funds reserve the right to reject any purchase
order.

EFFECTIVE TIME OF PURCHASES --
MONEY MARKET FUNDS
Purchases will be effected only when federal funds are available for investment
on the Business Day the purchase order is received by Crestar Bank, the Funds'
transfer agent. A purchase order received by Crestar Bank before 12:00 noon for
Tax Free Money Fund and 1:00 p.m. for Cash Reserve Fund and U.S. Treasury Money
Fund will begin earning dividends that day. All other orders received by 4:00
p.m. will be effected at the 4:00 p.m. NAV and will begin earning dividends on
the next Business Day. If federal funds are not received by the transfer agent
by the close of business (normally 4:00 p.m.) on the day of the order, the order
may be cancelled. Shares are purchased at the NAV next determined after receipt
of the order by Crestar Bank.

EFFECTIVE TIME OF PURCHASES --
BOND AND EQUITY FUNDS
Purchase orders for shares in the bond and equity funds must be received by
Crestar Bank before the close of regular trading hours on the NYSE. Orders are
priced according to the NAV determined on that day. Any orders received after
that time will be processed at the NAV next calculated. All purchases must be
paid for in U.S. dollars and checks must be drawn on U.S. banks. Purchase orders
will be executed by 4:00 p.m., on the business day on which the purchase order
is received in good order by Crestar Bank. Payment for the purchase is expected
at the time of the order but must be received within 5 business days of the date
of the order. Each Fund reserves the right to withhold redemption proceeds until
it is reasonably satisfied that checks received as payment have cleared (which
can take up to 7 days). If available funds are not received within 5 business
days, the order may be cancelled and notice thereof will be provided to the
party placing the order.

It is the responsibility of the banks to transmit orders for purchases by their
customers to the Transfer Agent and for the banks to deliver required funds on a
timely basis in accordance with the above-stated procedures. Any fees and/or
losses incurred due to cancellation of an order will be the responsibility of
the party placing the order.

EXCHANGES

Trust Class shares of one Fund normally may only be exchanged for Trust Class
shares of other Funds approved for sale in an investor's state and offered
through the investor's bank. Trust Class money market fund shares held in
qualified cash management accounts may be exchanged for other Trust Class money
market fund shares only. All dividends credited to the shareholder up to the
date of exchange are paid to the shareholder at the end of the month. Each Fund
reserves the right to refuse exchanges if the Fund would be unable to invest
effectively in accordance with its investment objective and policies or would
otherwise be affected adversely. The Funds further reserve the right to
terminate or modify the exchange privilege in the

<PAGE>

future. Exchanges are subject to the same investment minimums and time frames
listed above. An exchange is considered a sale and subsequent purchase of shares
and may result in a capital gain or loss for federal income tax purposes.

Trust Class shares may be exchanged for A Shares or B Shares of the same Fund
should the holder of Trust Class shares cease to be eligible to invest in the
Trust Class. For example, in the event that legal title to Trust Class shares
passes to a trust beneficiary, or in the event that a trust, agency or similar
account distributes Trust Class shares, the shares may be held by the account
beneficiary only if they are promptly exchanged for A Shares or B Shares of
certain funds shares. Each Fund reserves the right to redeem Trust Class shares
held by shareholders not eligible to purchase such shares if not converted to A
Shares or B Shares after 30 days. A Shares may be exchanged for A Shares or B
Shares of certain funds only. A Shares of U.S. Treasury Money Fund are not
currently available for purchase by conversion or otherwise. A Shares of
Government Bond Fund, Maryland Municipal Bond Fund and Virginia Municipal Bond
Fund are only available for purchase by conversion.

REDEMPTION OF SHARES
Customers may redeem all or part of their Trust Class shares of a Fund held
through their bank in accordance with instructions and limitations pertaining to
their account at the bank. It is the responsibility of each bank to transmit
redemption orders to Crestar Bank and to credit the bank's customers' accounts
with the redemption proceeds on a timely basis. No charge for wiring redemption
payments is imposed by the Funds, although banks may charge their customer
accounts for services provided in connection with the redemption of shares of
the Funds. Information concerning these services and any charges are available
from the banks. For further information contact an account officer at the bank.
Redemption orders are effected at the NAV next determined after receipt of the
order in good order by Crestar Bank. All dividends credited to the shareholder
up to the date of redemption are paid to the shareholder at the end of the
month.

Crestar Bank reserves the right to wire redemption proceeds within 7 days
following receipt of the order. With respect to the money market funds, if a
redemption order is received before 12:00 noon (or 1:00 p.m.), on a Business
Day, payment will normally be wired the same day to the bank.

Subject to each Fund's compliance with applicable regulations, each Fund has
reserved the right to pay the redemption, either totally or partially, by a
distribution of securities or other property (instead of cash) from a Fund's
portfolio. The securities or property distributed in such a distribution would
be valued at the same amount as that assigned to them in calculating the NAV for
the shares being sold. If a shareholder receives a distribution in kind,
brokerage or transaction charges may be incurred when converting the securities
to cash, and the shareholder may realize a gain or loss for tax purposes on both
the distribution and the subsequent conversion.

A Trust Class shareholder may be required to redeem shares in a Fund if the
balance in the shareholder's account with the Fund drops below $1 million
($25,000 for agency accounts) as a result of redemptions and the shareholder
does not increase the account's balance to at least $1 million (or $25,000) on
30 days' written notice. If the share balance in a customer's account at a bank
falls below any minimum the customer has agreed to maintain with the bank, the
customer may be required to redeem all or a part of his Fund shares or to
increase his holdings of Fund shares to the extent necessary to maintain the
required minimum balance in the account. Qualified cash management accounts
purchasing Trust Class shares will not be required to maintain a minimum balance
in any Fund.

DIVIDENDS AND TAX MATTERS

DISTRIBUTIONS. Income dividends from the money market and bond funds are
declared daily and distributed monthly. Each equity fund's income dividends are
declared and paid monthly. All Funds distribute substantially all of their net
investment income and capital gains (if any) to shareholders each year. Unless
the Funds are instructed otherwise, all dividends and distributions of capital
gains are automatically reinvested into additional shares of the Fund
immediately upon payment thereof.

FEDERAL TAXES. Interest earned by the Maryland Municipal Bond Fund, Tax Free
Money Fund, Virginia Intermediate Municipal Bond Fund and Virginia Municipal
Bond Fund is federally tax-free when distributed to shareholders as income
dividends. If one of the tax-free funds earned federally taxable income from any
of its investments, it would be distributed as a taxable dividend. These Funds
may invest in securities the interest on which is subject to the federal
alternative minimum tax for individuals, and to the extent that each such Fund
does so, individuals who are subject to the alternative minimum tax will be
required to report a portion of their dividends as a "tax preference item" in
determining their federal taxes.

A portion of each equity fund's dividends may qualify for the dividends-received
deduction for corporations. Distributions from a Fund's taxable net

<PAGE>
investment income and short-term capital gains generally are taxable to
shareholders as dividends, and long-term capital gains (if any) are taxed as
long-term capital gains.

Each Fund's distributions are taxable when they are paid, whether taken in cash
or reinvested in additional shares, except that distributions declared in
December and paid in January will be taxable as if paid on December 31. Each
Fund will send shareholders a tax statement by January 31 showing the tax status
of the distributions received in the past year and will file a copy with the
Internal Revenue Service ("IRS"). You should keep all statements you receive to
assist in your personal recordkeeping.

STATE AND LOCAL TAXES.

MARYLAND MUNICIPAL BOND FUND:

To the extent the Fund qualifies as a regulated investment company under the
Code, it will be subject to tax only on (1) that portion of its income on which
tax is imposed for federal income tax purposes under Section 852(b)(1) of the
Code and (2) that portion of its income which consists of federally tax exempt
interest on obligations other than Maryland Exempt Obligations (hereinafter
defined) to the extent such interest is not paid to Fund shareholders in the
form of exempt-interest dividends. To the extent dividends paid by the Fund
represent interest excludable from gross income for federal income tax purposes,
that portion of exempt-interest dividends that represents interest received by
the Fund on obligations issued by the State of Maryland, its political
subdivisions, Puerto Rico, the U.S. Virgin Islands, or Guam and their respective
authorities or municipalities ("Maryland Exempt Obligations"), will be exempt
from Maryland state and local income taxes when allocated or distributed to a
shareholder of the Fund except in the case of a shareholder that is a financial
institution. Except as noted below, all other dividend distributions will be
subject to Maryland state and local income taxes.

Capital gains distributed by the Fund to a shareholder or any gains realized by
a shareholder from a redemption or sale of shares must be recognized for
Maryland state and local income tax purposes to the extent recognized for
federal income tax purposes. However, capital gains distributions included in
the gross income of shareholders for federal income tax purposes are subtracted
from capital gains income for Maryland income tax purposes to the extent such
distributions are derived from the disposition by the Fund of debt obligations
issued by the State of Maryland, its political subdivisions and authorities.

Except in the case of a shareholder that is a financial institution, dividends
received by a shareholder from the Fund that are derived from interest on U.S.
government obligations will be exempt from Maryland state and local income
taxes.

In the case of individuals, Maryland presently imposes an income tax on items of
tax preference with reference to such items as defined in the Code for purposes
of calculating the federal alternative minimum tax. Interest paid on certain
private activity bonds is a preference item for purposes of calculating the
federal alternative minimum tax. Accordingly, if the Fund holds such bonds, the
excess of 50% of that portion of exempt interest dividends which is attributable
to interest on such bonds over a threshold amount may be taxable by Maryland.
Interest on indebtedness incurred or continued (directly or indirectly) by a
shareholder in order to purchase or carry shares of the Fund will not be
deductible for Maryland state and local income tax purposes. Individuals will
not be subject to personal property tax on their shares of the Fund. Shares of
the Fund held by a Maryland resident at death may be subject to Maryland
inheritance and estate taxes.

VIRGINIA INTERMEDIATE MUNICIPAL BOND FUND AND
VIRGINIA MUNICIPAL BOND FUND:

Under existing Virginia law, provided that Virginia Intermediate Municipal Bond
Fund and Virginia Municipal Bond Fund each qualify as a separate "regulated
investment company" under the Internal Revenue Code and qualify to and pay
dividends that are exempt from federal income tax, distributions to shareholders
from the Funds will not be subject to Virginia income taxation to the extent
that such distributions are either (i) excludable from gross income for federal
income tax purposes and attributable to interest on obligations of Virginia or
any of its political subdivisions or instrumentalities ("Virginia Obligations")
or obligations of Puerto Rico, the United States Virgin Islands or Guam
("Possessions Obligations") or (ii) attributable to interest on obligations
issued by the United States or any authority, commission or instrumentality of
the United States in the exercise of the borrowing power, and backed by the full
faith and credit, of the United States ("United States Obligations"). For
shareholders who are subject to Virginia income taxation, distributions from the
Funds (whether paid in cash or reinvested in additional common stock) generally
will be includable in Virginia taxable income to the extent not described in the
preceding sentence. Thus, for example, the portion of a distribution excludable
from gross income for federal income tax purposes and attributable to interest
on obligations of a state other than Virginia will not be exempt from Virginia
income taxation.

<PAGE>
Interest on indebtedness incurred or continued by a shareholder to purchase or
carry shares of the Funds will not be deductible for Virginia income tax
purposes to the extent such interest expense relates to the portions of
distributions exempt from Virginia income taxation.

To be entitled to an exemption described above for distributions attributable to
interest on Virginia Obligations, Possessions Obligations or United States
Obligations, a shareholder must be able to substantiate the exempt portions of
each distribution with reasonable certainty. The determination of exempt
portions must be made on a monthly (rather than annual or quarterly) basis if,
as planned, the Funds make monthly distributions. Shareholders should retain
their statements from the Funds, which are to be issued at least annually,
showing the percentages of each monthly distribution attributable to interest on
Virginia Obligations, Possessions Obligations and United States Obligations.

Capital gain distributions from the Funds and gain recognized on a sale or other
disposition of shares of the Funds (including transfers in connection with the
redemption or repurchase of shares) generally will not be exempt from Virginia
income taxation.

For taxpayers other than corporations, the maximum marginal Virginia income tax
rate is 5.75%. The same rate applies to capital gains as to other taxable
income.

Interest on indebtedness incurred (directly or indirectly) by a shareholder of
the Funds to purchase or carry shares of the Funds generally will not be
deductible for Virginia income tax purposes. The Funds will not be subject to
any Virginia intangible personal property tax on any obligations in the Funds.
In addition, shares of the Funds held for investment purposes will not be
subject to any Virginia intangible personal property tax.

CAPITAL GAINS. Shareholders in the equity and bond funds may realize a capital
gain or loss when they redeem or exchange shares. For most types of accounts,
the equity and bond funds will report the proceeds of the redemptions to
investors and the IRS annually. However, because the tax treatment also depends
on an individual's purchase price and his personal tax position, shareholders
should keep their regular account statements to use in determining their tax.

"BUYING A DIVIDEND." On the ex-dividend date for an income dividend or
distribution from capital gains, each bond and equity fund's share value is
reduced by the amount of the distribution. If you buy shares just before the
record date ("buying a dividend"), you would pay the full price for the shares
and then receive a portion of the share price as a taxable distribution unless
the distribution were an exempt-interest dividend.

OTHER TAX INFORMATION. In addition to federal taxes, you may be subject to state
or local taxes depending on the laws in their area. Consult your tax adviser
concerning the application of state and local taxes to investments in the Funds,
which may differ from the federal income tax consequences described above.

When you sign your account application, you will be asked to certify that your
social security or taxpayer identification number is correct and that you are
not subject to backup withholding for failing to report income to the IRS. If
you violate IRS regulations, the IRS can require the Funds to withhold 31% of
your taxable distributions and redemptions.

Please refer to the Statement of Additional Information for more information
regarding taxes.

PERFORMANCE

Performance of each Class may be quoted in advertising in terms of YIELD,
EFFECTIVE YIELD, TAX EQUIVALENT YIELD OR TOTAL RETURN, as appropriate.
Performance figures are based on historical results and are not intended to
indicate future performance.

The YIELD of each class of each bond and money market fund is calculated by
dividing the net investment income (net of expenses) (as defined by the SEC)
earned by the fund over a 30-day period (for each bond fund) and 7-day period
(for money market funds), by the average number of shares entitled to receive
distributions, expressed as an annualized percentage rate. The EFFECTIVE YIELD
is calculated similarly, but assumes that the income earned from the investment
is reinvested. The effective yield will be slightly higher than the yield
because of the compounding effect of this assumed reinvestment. Because yield
accounting methods differ from the methods used for other accounting purposes,
each bond and money market fund's yield may not equal its distribution rate, the
income paid to an account or the income reported in the fund's financial
statements.

Tax Free Money Fund and the municipal bond funds also may quote TAX-EQUIVALENT
YIELDS, which show the approximate taxable yield an investor would have to earn,
before taxes, to equal the fund's tax-free yield. A tax-equivalent yield is
calculated by dividing the tax-exempt yield by the result of one minus a stated
federal and/or state tax rate. If only a portion of the Fund's income was tax-
exempt, only that portion is adjusted in the calculation.

<PAGE>
TOTAL RETURNS are based on the overall dollar or percentage change in value of a
hypothetical investment in a Fund and assumes that all dividends and capital
gain distributions are reinvested. A CUMULATIVE TOTAL RETURN reflects a Fund's
performance over a stated period of time. An AVERAGE ANNUAL TOTAL RETURN
reflects the hypothetical annually compounded return that would have produced
the same cumulative total return if the Fund's performance had been constant
over the entire period. Because average annual total returns tend to smooth out
variations in the Funds' returns, investors should recognize that they are not
the same as actual year-by-year results. The yield and total return of the three
classes are calculated separately; the yields and total returns of A Shares and
B Shares will be lower than that of Trust Shares. When a class quotes an average
annual total return covering a period of less than one year, the calculation
assumes the performance will remain constant for the rest of the year. Since
this may or may not occur, these average annual total returns should be viewed
as hypothetical returns rather than actual performance. To illustrate the
components of overall performance, the Funds may separate their cumulative and
average annual total returns into income results and capital gain or loss. The
Funds may quote their total returns on a before tax or after tax basis.

PORTFOLIO TRANSACTIONS

When placing a portfolio transaction, Capitoline attempts to obtain the best net
price and execution of the transaction. Commissions for portfolio transactions
executed on a securities exchange are negotiated between Capitoline and the
executing broker. Capitoline seeks to obtain the lowest commission rate
available from brokers while also considering the quality of the service
rendered by the broker and the broker's provision of the research and execution
services described below. A Fund may, however, pay higher than the lowest
available commission rates when Capitoline believes it is reasonable to do so in
light of the value of the brokerage, research and other services provided by the
broker effecting the transaction. The determination and evaluation of the
reasonableness of the brokerage commissions paid in connection with portfolio
transactions are based to a large degree on the professional opinions of the
persons responsible for the placement and review of such transactions.

Capitoline may place portfolio transactions with broker-dealers who provide
research or execution services to the Funds or other accounts over which
Capitoline or its affiliates exercise investment discretion. Such services may
include advice concerning the value of securities; the availability of
securities or purchasers or sellers of securities; furnishing analyses and
reports concerning issuers, industries, securities, economic factors and trends,
portfolio strategy and performance of accounts; and effecting securities
transactions and performing functions incidental thereto (such as clearance and
settlement). The selection of such broker-dealers is generally made by
Capitoline (to the extent possible consistent with execution considerations) in
accordance with a ranking of broker-dealers determined periodically by
Capitoline's investment staff based upon the quality of research or execution
services provided. The Funds may execute brokerage or other agency transactions
through its distributor or an affiliate of its distributor or through an
affiliate of Capitoline, which are registered broker-dealers.

The frequency of portfolio transactions, a Fund's portfolio turnover rate, will
vary from year to year depending on market conditions. For the fiscal year ended
November 30, 1995, Funds' portfolio turnover rates were: Limited Term Bond Fund,
36%; Intermediate Bond Fund, 37%; Government Bond Fund, 28%; Virginia
Intermediate Municipal Bond Fund, 28%; Virginia Municipal Bond Fund, 35%; Value
Fund, 175%; Capital Appreciation Fund, 470%; and Special Equity Fund, 35%. The
portfolio turnover rate for Maryland Municipal Bond Fund is estimated to be 50%.

ADVISORY AND RELATED AGREEMENTS

ADVISER

Capitoline Investment Services, Incorporated, 919 East Main Street, Richmond,
Virginia 23219, provides investment advisory services to each of the Funds
subject to the general supervision of the Company's Board of Directors.

The Company has entered into Investment Advisory Agreements with Capitoline
("Advisory Agreements") on behalf of each Fund, Capitoline is paid for its
advisory services to each Fund at an annual rate based on the following fee
schedule: Cash Reserve Fund, U.S. Treasury Money Fund and Tax Free Money Fund,
.40% of each Fund's average daily net assets for the first $500 million of net
assets; .35% of each Fund's average daily net assets on the next $500 million of
net assets; and .30% of each Fund's average daily net assets on all remaining
net assets; Capital Appreciation Fund, Value Fund and Special Equity Fund, .75%
of each Fund's average daily net assets; Limited Term Bond Fund and Intermediate
Bond Fund, .50% and .60%, respectively, of each Fund's average daily net assets;
Virginia Intermediate Municipal Bond Fund, .50% of the Fund's average daily net
assets; and Government Bond Fund, Maryland Municipal Bond Fund and Virginia
Municipal Bond Fund, .60% of average daily net assets for its advisory services
to each of these

<PAGE>

Funds. Capitoline, in its sole discretion, may waive all or any portion of its
advisory fee. Any waiver, which may be discontinued at any time, has the effect
of increasing the Fund's yield for the period during which the waiver was in
effect and may not be recouped at a later date. The advisory fees for Capital
Appreciation Fund, Value Fund and Special Equity Fund are higher than those
generally paid by investment companies.

Capitoline, at its sole discretion, may pay financial institutions or other
industry professionals such as investment advisers, accountants, banks, and
estate planning firms ("Qualified Recipients") for shareholder support services.
Capitoline may engage banks and brokers, including Crestar Bank and Crestar
Securities Corporation, as Qualified Recipients to perform certain shareholder
support services. In addition, such Qualified Recipients may impose charges or
other requirements on their customers for automatic investment and other cash
management services which an investor utilizing such Qualified Recipients should
take into consideration when determining the effective yield of an investment in
a Fund.

For the fiscal year ended November 30, 1995, for services provided to the Funds,
Capitoline received advisory fees from Cash Reserve Fund, U.S. Treasury Money
Fund, Tax Free Money Fund, Limited Term Bond Fund, Intermediate Bond Fund,
Government Bond Fund, Virginia Intermediate Municipal Bond Fund, Virginia
Municipal Bond Fund, Value Fund, Capital Appreciation Fund and Special Equity
Fund equal to .40%, .40%, .40%, .50%, .60%, .50%, .50%, .50%, .75%, .75% and
.75%, respectively, of the average daily net assets of each Fund.

Capitoline is a wholly-owned subsidiary of Crestar Bank, which is a subsidiary
of Crestar Financial Corporation, a MidAtlantic Region banking organization.
Crestar Financial Corporation had total assets of approximately $18.3 billion as
of December 31, 1995. Crestar Financial Corporation was organized in 1962 as a
bank holding company registered under the federal Bank Holding Company Act of
1956 and files annual and periodic reports with the Securities and Exchange
Commission under the Securities Exchange Act of 1934. (See "Banking Law
Matters.")

Capitoline was organized in 1973 and is one of the largest investment advisory
organizations in Virginia. As of December 31, 1995, Capitoline managed trust and
investment assets of approximately $11.4 billion.

ADMINISTRATOR AND DISTRIBUTOR
SEI Financial Management Corporation (the "Administrator"), a wholly-owned
subsidiary of SEI Corporation ("SEI"), provides the Company with administrative
services, including fund accounting, regulatory reporting, necessary office
space, equipment, personnel, and facilities.

The Administrator is entitled to a fee, which is calculated daily and paid
monthly, at an annual rate of .15% of the average daily net assets of the Funds.
SEI Financial Services Company, a wholly-owned subsidiary of SEI, serves as
distributor. Each Fund may execute brokerage or other agency transactions
through the Distributor for which the Distributor receives compensation.

DISTRIBUTION AND SERVICE PLANS
The Board of Directors of the Company has approved an Amended and Restated
Distribution and Service Plan (the "Plan") pursuant to Rule 12b-1 of the 1940
Act (the "Rule"). Under this Plan the Distributor is compensated at the annual
rate of .15% of the aggregate average daily net assets of the Trust Class Shares
of each Fund. The Distributor will be compensated for distribution services
provided to the Trust Class shares including the printing and distribution of
Prospectuses, Statements of Additional Information or reports prepared for the
use in connection with the offering of shares of the Funds (other than to
existing shareholders at the time of such mailing), the expenses incurred for
the preparation of any other literature used by the Distributor in connection
with any such offering. The Distributor has agreed to waive any fees payable
pursuant to the Plan, and will bear the costs of other distribution-related
activities. The Distributor reserves the right to terminate its waiver at any
time at its sole discretion.

The Plan also permits Capitoline, at its sole discretion, to use all or a
portion of the advisory fee received, as well as its past profits or other
resources, to pay financial institutions or other industry professionals such as
investment advisers, accountants, banks, and estate planning firms for
shareholder support services. Capitoline may engage banks and broker-dealers,
including Crestar Bank and Crestar Securities Corporation, as Qualified
Recipients to perform certain shareholder support services. Such Qualified
Recipients may impose charges or other requirements on their customers for
automatic investment and other cash management services which an investor
utilizing such services through a Qualified Recipient should take into
consideration when determining the effective yield of an investment in a Fund.

<PAGE>

applicable asset based sales charges. In addition, the Distributor will, at its
expense provide promotional incentives such as sales contests and trips to
investment professionals who support the sale of shares of each Fund. In some
instances, these incentives will be offered only to certain types of investment
professionals, such as bank-affiliated or non-bank affiliated broker-dealers, or
to investment professionals whose representatives provide services in connection
with the sale or expected sale of significant amounts of shares.

TRANSFER AGENT AND CUSTODIAN
Crestar Bank (the "Transfer Agent"), 919 East Main Street, Richmond, VA 23219,
acts as each Fund's transfer agent, dividend paying agent and custodian. As
Transfer Agent, Crestar Bank maintains shareholder accounts and records for each
Fund. For its services as Transfer Agent, Crestar Bank is paid a monthly fee at
the annual rate of .05% of average net assets of the Trust Class of each Fund.

As Custodian, Crestar Bank safeguards and controls the Funds' cash and
securities, handles the receipt and delivery of securities and collects income
on Fund investments. For these services, Crestar Bank is paid a monthly fee at
an annual rate of up to .04% of each Fund's average net assets.

Crestar Bank is permitted to subcontract any or all of its functions to one or
more qualified sub-transfer agents, sub-custodians or other persons. Crestar
Bank is permitted to compensate those agents for their services, but no such
compensation may increase the aggregate amount of payments by the Funds to
Crestar Bank pursuant to the Transfer Agent or Custodian Agreements.

OTHER EXPENSE INFORMATION

Subject to the obligations of Capitoline under the Advisory Agreement to
reimburse a Fund for its expenses in excess of the lowest applicable state
limitations, each Fund has confirmed its obligation to pay all of that Fund's
other expenses.

BANKING LAW MATTERS

Banking laws and regulations, including the Glass-Steagall Act (as currently
interpreted by the Board of Governors of the Federal Reserve System), prohibit a
bank holding company registered under the Bank Holding Company Act of 1956 or
any affiliate thereof from sponsoring, organizing, controlling, or distributing
the shares of a registered, open-end investment company continuously engaged in
the issuance of its shares and prohibit banks generally from issuing,
underwriting, selling or distributing securities. The same laws and regulations
generally permit a bank or bank affiliate to act as an investment adviser and to
purchase shares of the investment company as agent for and upon the order of a
customer. Upon advice of counsel, the Company's Board of Directors believes that
Capitoline, Crestar Bank and any bank or bank affiliate may perform processing
or transfer agency or similar services described in this Prospectus for each
Fund and its shareholders without violating applicable federal banking laws or
regulations.

However, judicial or administrative decisions or interpretations of, as well as
changes in, either federal or state statutes or regulations relating to the
activities of banks and their affiliates could prevent a bank or bank affiliate
from continuing to perform all or a part of the activities contemplated by this
Prospectus. If banks or bank affiliates were prohibited from so acting, the
Company would change its existing policies to permit bank customers who are
shareholders to remain shareholders of a Fund and would implement alternative
means for continuing the servicing of such shareholders. In such event, changes
in the operation of the Fund might occur and a shareholder serviced by such bank
or bank affiliates may no longer be able to avail itself of the bank's or its
affiliates' services. It is not expected that shareholders would suffer any
adverse financial consequences as a result of any of these occurrences.

DESCRIPTION OF COMMON STOCK

<PAGE>

the Company's expense, divide the authorized stock into an unlimited number of
separate series. Currently all the authorized stock of the Company is divided
into 12 separate series: Cash Reserve Fund Common Stock, U.S. Treasury Money
Fund Common Stock, Tax Free Money Fund Common Stock, Limited Term Bond Fund
Common Stock, Intermediate Bond Fund Common Stock, Government Bond Fund Common
Stock, Maryland Municipal Bond Fund Common Stock, Virginia Intermediate
Municipal Bond Fund Common Stock, Virginia Municipal Bond Fund Common Stock,
Value Fund Common Stock, Capital Appreciation Fund Common Stock and Special
Equity Fund Common Stock, representing shares for each of the Company's 12
CrestFunds(R). The CrestFunds(R) offer one or more of three classes of shares:
Trust Class (offered by this Prospectus) and A Shares and B Shares (offered by a
separate prospectus). U.S. Treasury Money Fund has indefinitely suspended its
offering of A Shares. The offering may recommence upon supplementing the A
Shares and B Shares Prospectus.

A Shares and B Shares are offered continuously to individual and institutional
customers investing directly in CrestFunds(R). A Shares of the money market
funds are offered at NAV. A Shares of Limited Term Bond Fund are offered at NAV
plus a maximum 2.0% sales charge. A Shares of Intermediate Bond Fund are offered
at NAV plus a maximum 3.0% sales charge. A Shares of Virginia Intermediate Bond
Fund are offered at NAV plus a maximum 3.5% sales charge. Equity funds are
offered at NAV plus a maximum 4.50% sales charge. A Shares of each money market
fund pay an additional distribution-related 12b-1 fee at annual rate of .25% of
the average net assets of the A Shares of that Fund. The A Shares and B Shares
of each Fund also pay a fee for transfer agency services at an annual rate of
.06% of the average net assets of that Fund. Performance of A Shares and B
Shares is lower than that of Trust Class shares of the same Fund due to A
Shares' and B Shares' higher total expenses. A Shares and B Shares bond fund
yields and bond and equity fund total returns generally include the effects of
the maximum applicable sales charge, or contingent deferred sales charge, which
has the effect of lowering the yield and total return figures.

B Shares are offered with a contingent deferred sales charge to retail investors
who engage an investment professional for investment advice. B Shares are
subject to an annual distribution fee at the rate of .75% of average net assets,
an annual shareholder service fee at the rate of .25% of average net assets, and
a contingent deferred sales charge upon redemption within seven years of
purchase, which decreases from a maximum of 5% to 0%. At the end of seven years,
B Shares automatically convert to A Shares. B Shares are available for Special
Equity Fund, Value Fund, Cash Reserve Fund, Government Bond Fund, Maryland
Municipal Bond Fund, and Virginia Municipal Bond Fund. Performance for B Shares
is expected to be lower than that of A Shares and Trust Class shares of a Fund
due to B Shares' higher total expenses.

All shares of the Company have equal voting and liquidation rights, and
fractional shares have those rights proportionately. Generally, shares will be
voted in the aggregate without reference to a particular Fund or Class, unless
the matter affects only one Fund or Class or voting by a Fund or Class is
required by law, in which case shares will be voted separately by the Fund or
Class, as the case may be. Maryland law does not require the Company to hold
annual meetings of shareholders and the Company does not intend to do so, though
special meetings will be held when required by law. Shareholders representing
25% or more of the Company or a Fund may, as set forth in the Company's By-laws,
call meetings of the Company or a Fund, as the case may be, including, in the
case of a meeting of the entire Company, the purpose of voting on removal of one
or more Directors. There are no conversion or preemptive rights in connection
with shares of each Fund. All shares, when issued and paid for, in accordance
with the terms of the offering will be fully paid and non-assessable.

A shareholder owning of record or beneficially more than 25% of a Fund's shares
may be considered to control that Fund. As of March 1, 1996 Crestar Bank was the
record holder of more than 25% of the shares of the following Funds:

<TABLE>
<CAPTION>
FUND NAME SHAREHOLDER %
<S> <C> <C>
Cash Reserve Fund.................................................................... Crestar Bank, Richmond, VA 94%
U.S. Treasury Money Fund............................................................. Crestar Bank, Richmond, VA 99%
Tax Free Money Fund.................................................................. Crestar Bank, Richmond, VA 94%
Limited Term Bond Fund............................................................... Crestar Bank, Richmond, VA 89%
Intermediate Bond Fund............................................................... Crestar Bank, Richmond, VA 88%
Government Bond Fund................................................................. Crestar Bank, Richmond, VA 46%
VA Intermediate Municipal Bond Fund.................................................. Crestar Bank, Richmond, VA 78%
VA Municipal Bond Fund............................................................... Crestar Bank, Richmond, VA 61%
MD Municipal Bond Fund............................................................... Crestar Bank, Richmond, VA 100%
Value Fund........................................................................... Crestar Bank, Richmond, VA 89%
Capital Appreciation Fund............................................................ Crestar Bank, Richmond, VA 44%
Special Equity Fund.................................................................. Crestar Bank, Richmond, VA 84%
</TABLE>

This record ownership includes accounts owning Fund shares for which Crestar
Bank acts as trustee or agent.

<PAGE>
APPENDIX

The following briefly describes the securities in which the Funds may invest and
the transactions they may make. The Funds are not limited by this discussion,
however, and may purchase other types of securities and enter into other types
of transactions if they meet each Fund's respective quality, maturity, and
liquidity requirements.

A complete listing of the Fund's policies and limitations and more detailed
information about the Fund's investments is contained in the Fund's Statement of
Additional Information. Recent holdings and investment strategies are described
in the Fund's financial reports.

AMERICAN DEPOSITARY RECEIPTS ("ADRS"). Value Fund and Capital Appreciation Fund
may invest in sponsored ADRs, which are certificates evidencing ownership of
shares of a foreign-based corporation held in trust by a bank or similar
financial institution. Designed for use in U.S. securities markets, ADRs are
alternatives to the purchase of the underlying securities in their national
markets and currencies. A sponsored ADR is an ADR established jointly by the
issuer of the security underlying the receipt and the bank or other financial
institution holding the receipt.

ASSET-BACKED SECURITIES. Asset-backed securities represent interests in pools of
consumer loans (generally unrelated to mortgage loans) and most often are
structured as pass-through securities. Interest and principal payments
ultimately depend on payment of the underlying loans by individuals, although
the securities may be supported by letters of credit or other credit
enhancements. The value of asset-backed securities may also depend on the
creditworthiness of the servicing agent for the loan pool, the originator of the
loans, or the financial institution providing the credit enhancement. A Fund may
purchase units of beneficial interest in pools of purchase contracts, financing
leases, and sales agreements entered into by municipalities. These municipal
obligations may be created when a municipality enters into an installment
purchase contract or lease with a vendor and may be secured by the assets
purchased or leased by the municipality. However, except in very limited
circumstances, there will be no recourse against the vendor if the municipality
stops making payments. The market for tax-exempt asset-backed securities is
still relatively new. These obligations are likely to involve unscheduled
prepayments of principal.

BANKERS' ACCEPTANCES. The money market funds may purchase bankers' acceptances,
which are time drafts drawn on and accepted by a bank, the customary means of
effecting payment for merchandise sold in import-export transactions and a
source of financing used extensively in international trade.

BANK OBLIGATIONS. The performance of the money market funds may be affected by
conditions affecting the banking industry. Banks are subject to extensive
governmental regulations which may limit both the amounts and types of loans and
other financial commitments they can make and the interest rates and fees they
can charge. Bank profitability is largely dependent on the availability and cost
of capital funds, and has shown significant fluctuation recently as a result of
volatile interest rate levels. In addition, general economic conditions are
important to bank operations, with exposure to credit losses potentially having
an adverse effect.

CERTIFICATES OF DEPOSIT. Cash Reserve Fund and Tax Free Money Fund may purchase
certificates of deposit, which are debt instruments issued by a bank that
usually pays interest. Maturities range from a few weeks to several years.
Interest rates are set by competitive forces in the marketplace.

COLLATERALIZED MORTGAGE OBLIGATIONS. The corporate bond funds may purchase
collateralized mortgage obligations ("CMOs"), which are pay-through securities
collateralized by mortgages or mortgage-backed securities. CMOs are issued in
classes and have different maturities and often are retired in sequence. CMOs
may be issued by governmental or non-governmental entities such as banks and
other mortgage lenders. CMOs may be volatile investments. During periods of
declining interest rates, prepayment of mortgages underlying CMOs can be
expected to accelerate. Prepayment of mortgages which underlie securities
purchased at a premium often results in capital losses, while prepayment of
mortgages purchased at a discount often results in capital gains. Because of
these prepayment risks, the realized yield or total return of a particular issue
may be reduced.

COMMERCIAL PAPER. The money market funds may purchase commercial paper, which is
comprised of short-term obligations issued by banks, broker-dealers,
corporations, or other entities for purposes such as financing their current
obligations. Currently only the Cash Reserve Fund intends to purchase commercial
paper and will limit its purchase of these instruments to those rated Prime-1 by
Moody's or A-1 by S&P.

COMMON STOCK. The equity funds may purchase common stock which is evidence of
ownership of a corporation. Owners typically are entitled to vote on the
selection of directors and other important matters as well as to receive
dividends on their holdings. In the event that a corporation is liquidated, the
claims of secured and unsecured creditors and owners of bonds and preferred
stock take

<PAGE>
precedence over the claims of those who own common stock. For the most part,
however, common stock has more potential for appreciation. Preferred stock is a
class of capital stock that pays dividends at a specified rate and that has
preference over common stock in the payment of dividends and the liquidation of
assets. Preferred stock does not ordinarily carry voting rights.

CONVERTIBLE PREFERRED STOCK. The corporate bond funds and the equity funds may
purchase convertible preferred stock, which is preferred stock that may be
converted or exchanged by the holder into shares of the underlying common stock
at a stated exchange ratio. A convertible security may also be subject to
redemption by the issuer after a particular date and under certain circumstances
(including a specified price) established upon issue. If a convertible security
held by a Fund is called for redemption, the Fund could be required to tender it
for redemption, convert it to the underlying common stock, or sell it to a third
party.

DELAYED-DELIVERY TRANSACTIONS. The money market and bond funds may buy and sell
obligations on a when-issued or delayed-delivery basis, with payment and
delivery taking place at a future date. Ordinarily, a Fund will not earn
interest on securities purchased until they are delivered, failure by the other
party to deliver a security purchased by a Fund may result in a loss or a missed
opportunity to make an alternative investment. The market value of obligations
purchased in this way may change before the delivery date, which could increase
fluctuations in a bond fund's yield.

DEMAND FEATURE. A put that entitles the security holder to repayment of the
principal amount of the underlying security on no more than 30 days' notice at
any time or at specified intervals is a demand feature. With respect to the
money market funds, such intervals may not exceed 397 days. A standby commitment
is a put that entitles the security holder to same-day settlement at amortized
cost plus accrued interest.

FOREIGN INVESTMENTS. The corporate bond funds and the equity funds may invest in
foreign securities traded in the United States, which involve risks in addition
to the risks inherent in domestic investments. The Funds' foreign investments
may be affected by the strength of foreign currencies relative to the U.S.
dollar, or by political or economic developments in foreign countries. Foreign
companies may not be subject to accounting standards or governmental supervision
comparable to U.S. companies, and there may be less public information about
their operations. In addition, foreign markets may be less liquid or more
volatile than U.S. markets and may offer less protection to investors. These
risks are typically greater for investments in less developed countries whose
governments and financial markets may be more susceptible to adverse political
and economic developments. In addition to the political and economic factors
that can affect foreign securities, a governmental issuer may be unwilling to
repay principal and interest when due, and may require that the conditions for
payment be renegotiated. These factors could make foreign investments,
especially those in developing countries more volatile. Capitoline considers
these factors in making investments for the Fund. There is no limitation on the
amount each corporate bond fund and equity fund may invest in foreign securities
or in any one country. The corporate bond funds will invest only in U.S.
dollar-denominated foreign securities.

GOVERNMENT SECURITIES. Securities issued or guaranteed by the U.S. Government or
its agencies or instrumentalities are referred to as government securities. They
may be backed by the credit of the U.S. Government as a whole or only by the
issuing agency. For example, securities issued by the Federal Home Loan Banks
and the Federal Home Loan Mortgage Corporation are supported only by the credit
of the issuing agency, and not by the U.S. Government. Securities issued by the
Federal Farm Credit System, the Federal Land Banks and the Federal National
Mortgage Association are supported by the agency's right to borrow money from
the U.S. Treasury under certain circumstances. U.S. Treasury securities and some
agency securities, such as those issued by the Federal Housing Administration
and the Government National Mortgage Association, are backed by the full faith
and credit of the U.S. Government and are the highest quality government
securities.

ILLIQUID SECURITIES. Illiquid securities are securities which cannot be disposed
of within seven days at approximately the price at which they are being carried
on a Fund's books. An illiquid security includes a demand instrument with a
demand notice period exceeding seven days, where there is no secondary market
for such security, and repurchase agreements of over seven days in length.
Capitoline will determine and monitor the liquidity of portfolio securities
subject to the supervision of the Fund's Board of Directors.

INDEXED SECURITIES. The corporate bond and government bond funds may invest in
indexed securities whose value is linked to currencies, interest rates,
commodities, indices, or other financial indicators. Most indexed securities are
short to intermediate term fixed-income securities whose values at maturity or
interest rates rise or fall according to the change in one or more specified
underlying instruments. Indexed securities may be

<PAGE>
positively or negatively indexed (i.e., their value may increase or decrease if
the underlying instrument appreciates), and may have return characteristics
similar to direct investments in the underlying instrument or to one or more
options on the underlying instrument. Indexed securities may be more volatile
than the underlying instrument itself.

INVESTMENT-GRADE SECURITIES. Investment-grade securities include securities
rated BBB or higher by S&P or Baa or higher by Moody's which generally provide
adequate to strong protection of principal and interest payments. Securities
rated BBB or Baa may be more susceptible to potential adverse changes in
circumstances which may lead to a weakened capacity to make principal and
interest payments, and may have speculative characteristics as well. If a
security is rated investment-grade by one rating agency and below
investment-grade by another rating agency, Capitoline may make a determination
as to the security's investment-grade quality.

LENDING OF PORTFOLIO SECURITIES. Consistent with applicable regulatory
requirements and in order to generate additional income, the corporate bond
funds, taxable money market funds and equity funds may lend their portfolio
securities to broker-dealers and other institutional borrowers. Such loans must
be callable at any time and continuously secured by collateral (cash, U.S.
Government securities or money market instruments) in an amount not less than
the market value, determined daily, of the securities loaned. Loans secured by
cash collateral are invested in short-term high quality debt securities, U.S.
Government securities or money market instruments.

In the event of the bankruptcy of the other party to either a securities loan, a
repurchase agreement or a reverse repurchase agreement, a Fund could experience
delays in recovering either the securities it lent or its cash. To the extent
that, in the meantime, the value of the securities a Fund lent has increased or
the value of the securities it purchased has decreased, it could experience a
loss.

LETTERS OF CREDIT. Issuers or financial intermediaries who provide demand
features or standby commitments often support their ability to buy securities on
demand by obtaining letters of credit ("LOCs") or other guarantees from banks.
LOCs also may be used as credit supports for other types of municipal
instruments. Capitoline may rely upon its evaluation of a bank's credit in
determining whether to purchase an instrument supported by an LOC. In evaluating
a foreign bank's credit, Capitoline will consider whether adequate public
information about the bank is available and whether the bank may be subject to
unfavorable political or economic developments, currency controls, or other
governmental restrictions that might affect the bank's ability to honor its
credit commitment.

MORTGAGE-BACKED SECURITIES. The corporate bond and government bond funds may
purchase mortgage-backed securities issued by government and non-government
entities such as banks, mortgage lenders, or other financial institutions. A
mortgage-backed security may be an obligation of the issuer backed by a mortgage
or pool of mortgages or a direct interest in an underlying pool of mortgages.
Some mortgage-backed securities, such as collateralized mortgage obligations, or
CMOs, make payments of both principal and interest at a variety of intervals;
others make semiannual interest payments at a predetermined rate and repay
principal at maturity (like a typical bond). Mortgage-backed securities are
based on different types of mortgages including those on commercial real estate
or residential properties. Other types of mortgage-backed securities will likely
be developed in the future, and the corporate bond funds may invest in them if
Capitoline determines they are consistent with the Funds' investment objective
and policies.

The market volatility of mortgage-backed securities can be greater than the
market volatility of other bonds. The value of mortgage-backed securities may
change due to shifts in the market's perception of issuers. In addition,
regulatory or tax changes may adversely affect the mortgage securities market as
a whole. Non- government mortgage-backed securities may offer higher yields than
those issued by government entities, but also may be subject to greater price
changes than government issues. Mortgage-backed securities are subject to
prepayment risk. Prepayment, which occurs when unscheduled or early payments are
made on the underlying mortgages, may shorten the effective maturities of these
securities and may lower their total returns. During periods of declining
interest rates, prepayment of mortgages underlying mortgage securities can be
expected to accelerate. Prepayment of mortgages which underlie securities
purchased at a premium often results in capital losses, while prepayment of
mortgages purchased at a discount often results in capital gains. Because of
these unpredictable prepayment characteristics, it is often not possible to
predict accurately the average life or realized yield or total return of a
particular issue. In the absence of a known maturity, market participants
generally refer to a security's estimated average life. An average life estimate
is a function of an assumption regarding anticipated prepayment patterns, based
upon current interest rates, current conditions in the relevant housing markets
and other factors. The assumption is necessarily subjective, and thus

<PAGE>

different market participants can produce different average life estimates with
regard to the same security. There can be no assurance that estimated average
life will be a security's actual average life.

STRIPPED MORTGAGE-BACKED SECURITIES. Securities created when a U.S. Government
agency or a financial institution separates the interest and principal
components of a mortgage-backed security and sells them as individual securities
are stripped mortgage-backed securities. The holder of the "principal-only"
security (PO) receives the principal payments made by the underlying
mortgage-backed security, while the holder of the "interest-only" security (IO)
receives interest payments from the same underlying security. The prices of
stripped mortgage-backed securities may be particularly affected by changes in
interest rates. As interest rates fall, prepayment rates tend to increase, which
tends to reduce prices of IOs and increase prices of POs. Rising interest rates
can have the opposite effect. The market volatility of stripped mortgage-backed
securities tends to be greater than the market volatility of other types of
mortgage-backed securities in which the Funds may invest. If the mortgage assets
which underlie the stripped mortgage-backed securities were to experience
greater than anticipated prepayments of principal, a Fund could fail to fully
recoup its initial investment in these securities, even if they are rated in the
highest rating categories (e.g., AAA or Aaa by S&P or Moody's, respectively).

MUNICIPAL SECURITIES. Municipal securities include general obligation
securities, which are backed by the full taxing power of a municipality, and
revenue securities, which are backed by the revenues of a specific tax, project,
or facility. Industrial development, or private activity, bonds are a type of
revenue bond backed by the credit and security of a private entity and may
involve greater risk; such securities, which may be subject to the federal
alternative minimum tax, include securities issued to finance housing projects,
many hospital and university facilities, student loans, and privately owned
solid waste disposal and water and sewage treatment facilities.

REPURCHASE AGREEMENTS. The corporate bond funds, government bond fund, taxable
money market funds and equity funds may enter into repurchase agreements. In a
repurchase agreement, a Fund buys a security at one price and simultaneously
agrees to sell it back at a higher price. In the event of bankruptcy of the
other party to a repurchase agreement, the Funds could experience delays in
recovering its cash. To the extent that, in the meantime, the value of
securities purchased had decreased, the Funds could experience a loss. In all
cases, Capitoline must find the creditworthiness of the other party to the
transaction satisfactory.

RESOURCE RECOVERY BONDS. The Tax Free Money Fund and the municipal bond funds
may purchase resource recovery bonds, which are a type of revenue bond issued to
build facilities such as solid waste incinerators or waste-to-energy plants.
Typically, a private corporation will be involved, at least during the
construction phase, and the revenue stream will be secured by fees or rents paid
by municipalities for use of the facilities. The viability of a resource
recovery project, environmental protection regulations, and project operator tax
incentives may affect the value and credit quality of resource recovery bonds.

REFUNDING CONTRACTS. The municipal bond funds may invest in refunding contracts
which require the issuer to sell and a Fund to buy refunded municipal
obligations at a stated price and yield on a settlement date that may be several
months or several years in the future.

REVERSE REPURCHASE AGREEMENTS. In a reverse repurchase agreement, a Fund
temporarily transfers possession of a portfolio instrument to another party,
such as a bank or broker-dealer, in return for cash. At the same time, a Fund
agrees to repurchase the instrument at an agreed-upon price and time. A Fund
expects that it will engage in reverse repurchase agreements for temporary
purposes such as to fund redemptions. Reverse repurchase agreements may increase
the risk of fluctuation in the market value of a Fund's assets or in its yield.

While a reverse repurchase agreement is outstanding, a Fund will maintain
appropriate liquid assets such as cash, U.S. Government securities, or other
liquid high grade debt securities in a segregated custodial account to cover its
obligations under the agreement. A Fund will enter into reverse repurchase
agreements only with those parties whose creditworthiness is deemed satisfactory
by Capitoline.

STRIPPED GOVERNMENT SECURITIES. Stripped securities are created by separating
the income and principal components of a debt instrument and selling them
separately. Each Fund may purchase U.S. Treasury STRIPS (Separate Trading of
Registered Interest and Principal of Securities), that are created when the
coupon payments and the principal payment are stripped from an outstanding
Treasury bond by the Federal Reserve Bank. Bonds issued by the Resolution
Funding Corporation (REFCORP) can also be stripped in this fashion. REFCORP
STRIPS are eligible investments for each money market and bond fund.

<PAGE>
Each Fund except the U.S. Treasury Fund may purchase privately stripped
government securities, which are created when a dealer deposits a Treasury
security or federal agency security with a custodian for safekeeping and then
sells the coupon payments and principal payments that will be generated by this
security. Proprietary receipts, such as Certificates of Accrual on Treasury
Securities (CATS), Treasury Investment Growth Receipts (TIGRs), and generic
Treasury Receipts (TRs), are stripped U.S. Treasury securities that are
separated into their component parts through trusts created by their broker
sponsors. Bonds issued by the Financing Corporation (FICO) can also be stripped
in this fashion.

Because of the SEC's views on privately stripped government securities, a Fund
must treat them as it would non-government securities pursuant to regulatory
guidelines applicable to all money market funds. Accordingly, a Fund currently
intends to purchase only those privately stripped government securities that
have either received the highest rating from two nationally recognized rating
services (or one, if only one has rated the security), or, if unrated, been
judged to be of equivalent quality by Capitoline.

TAX AND REVENUE ANTICIPATION NOTES. Tax and revenue anticipation notes are
issued by municipalities in expectation of future tax or other revenues, and are
payable from those specific taxes or revenues. Bond anticipation notes normally
provide interim financing in advance of an issue of bonds or notes, the proceeds
of which are used to repay the anticipation notes. Tax-exempt commercial paper
is issued by municipalities to help finance short-term capital or operating
needs.

TIME DEPOSITS. Time deposits are non-negotiable deposits in a banking
institution earning a specified interest rate over a given period of time. Time
deposits with a maturity of seven business days or more are considered illiquid.

VARIABLE AND FLOATING RATE INSTRUMENTS. The money market funds and the bond
funds may purchase variable and floating rate instruments, including certain
participation interests in municipal obligations, which have interest rate
adjustment formulas that help to stabilize their market values. Many variable
and floating rate instruments also carry demand features that permit the Funds
to sell them at par value plus accrued interest on short notice. When
determining the maturity of a variable or floating rate instrument, the Funds
may look to the date the demand feature can be exercised, or to the date the
interest rate is readjusted, rather than to the final maturity of the
instrument.

ZERO COUPON BONDS. The corporate bond funds may purchase zero coupon bonds. Zero
coupon bonds do not make regular interest payments; instead, they are sold at a
deep discount from their face value and are redeemed at face value when they
mature. Because zero coupon bonds do not pay current income, their prices can be
very volatile when interest rates change. In calculating its daily dividend,
each Fund takes into account as income a portion of the difference between a
zero coupon bond's purchase price and its face value.

RISKS AND SPECIAL CONSIDERATIONS CONCERNING
MARYLAND MUNICIPAL BOND FUND

ECONOMY. The economy of the State of Maryland continues to demonstrate
relatively strong performance, with personal income well above the national
average. Total State employment was 2.58 million in December, 1995 with the
majority of jobs in trade, service, and government sectors. The national
recession caused a loss of jobs in Maryland since employment levels peaked in
mid-1990 but employment levels began to recover in mid-1992. Unemployment was
4.8% in December, 1995, compared to a national average of 5.6%. The State's
population in 1994 was approximately 5 million, with 83% concentrated in the
Baltimore-Washington corridor.

DEBT. In addition to the State of Maryland and its agencies, there are 23
counties and 156 incorporated municipalities in Maryland (including Baltimore
City, which functions much like a county), many of which have outstanding debt.
As described below, a number of Maryland public authorities also issue debt. The
State of Maryland and its political subdivisions issue four basic types of debt
having varying degrees of credit risk: general obligation bonds backed by the
unlimited taxing power of the issuer, revenue bonds secured by specific pledged
taxes or revenue streams, conduit revenue bonds payable from the repayment of
certain loans to entities such as hospitals and universities, and tax-exempt
lease obligations (including certificates of participation in the same), the
payments under which are subject to annual appropriation. In 1995, $1.763
billion in state and local debt was issued in Maryland, with approximately 60%
representing general obligation debt and 40% revenue bonds or lease-backed debt,
compared to 46% general obligation and 54% revenue backed bonds nationally.

<PAGE>

AAA by Fitch; there can be no assurance that these ratings will continue. There
is no general limit on state general obligation bonds imposed by the State
Constitution or laws; state general obligation bonds are payable from ad valorem
taxes and, under the State Constitution, may not be issued unless the debt is
authorized by a law levying an annual tax or taxes sufficient to pay the debt
service within 15 years and prohibiting the repeal of the tax or taxes or their
use for another purpose until the debt has been paid. State and local general
obligation debt on a per capita basis and as a percentage of property values
have increased by 33.4% and 7.1%, respectively since 1990. Although the State
may borrow up to $100 million in short-term notes in anticipation of taxes and
revenues, the State has not made use of this authority.

Many agencies and instrumentalities of the State government are authorized to
borrow money under legislation which expressly provides that the obligations
shall not be deemed to constitute a debt or a pledge of the faith and credit of
the State. The Department of Transportation issues limited, special obligations
payable primarily from fixed-rate excise taxes and other revenues related mainly
to highway use, the amount of which was limited by the General Assembly to
$1.054 billion for fiscal year 1996 (ending June 30, 1996); the principal amount
of such bonds outstanding as of December 31, 1995 was $990.3 million. The
Maryland Transportation Authority, the Community Development Administration of
the Department of Housing and Community Development, the Maryland Stadium
Authority, the Maryland Environmental Service, the public educational
institutions (which include the University of Maryland System, Morgan State
University, St. Mary's College of Maryland and Baltimore City Community
College), the Maryland Food Center Authority and the Maryland Water Quality
Financing Administration also have issued and have outstanding bonds, the
principal of and interest on which are payable solely from specified sources,
principally fees or loan payments generated from use of the facilities,
enterprises financed by the bonds, or other dedicated fees. None of these bonds
constitute debts or pledges of the faith and credit of the State. The issuers of
these obligations are subject to various economic risks and uncertainties, and
the credit quality of the securities issued by them may vary considerably from
that of the State's general obligation bonds. Total outstanding revenue and
enterprise debt of these State units at December 31, 1995 was approximately
$4.17 billion.

Certain State agencies also execute capital lease or conditional purchase
agreements to finance certain facilities; all of the payments under these
arrangements are subject to annual appropriation by the State. In the event that
appropriations are not made, the State and its agencies may not be held
contractually liable for the lease payments. As of December 31, 1995
approximately $113.9 million of lease and conditional purchase financings were
outstanding.

In addition, the Maryland Health and Higher Educational Facilities Authority,
the Maryland Industrial Development Financing Authority, the Northeast Maryland
Waste Disposal Authority and the Maryland Economic Development Corporation issue
conduit revenue bonds, the proceeds of which are lent to borrowers eligible
under relevant State and federal law. These bonds are payable solely from the
loan payments made by the borrowers, and their credit quality vary with the
financial strengths of the respective borrowers.

FINANCIAL. To a large degree, the risk of the portfolio is dependent upon the
financial strength of the State of Maryland, its political subdivisions and the
obligors on conduit revenue bonds. During the 1991, 1992 and 1993 fiscal years,
Maryland experienced the effects of the national recession and a weakened
economy. During this period, the State experienced unanticipated shortfalls in
revenues. At the same time, the State experienced increased expenditures for
public assistance. To address this situation, the State reduced appropriations,
including aid to local governments, in several instances.

As a result of successive rounds of cuts in local and other State expenditures
and increases in taxes, the financial situation of the State stabilized in
fiscal year 1993 with revenues coming in, at or above budgeted amounts,
permitting the State to conclude fiscal year 1993 with a general fund surplus
(budgetary basis) of $10.5 million (after $24.5 million of transfers to reserve
accounts) and a $50.9 million balance in the Revenue Stabilization Account of
the State Reserve Fund. Demonstrating continued improvement, the State ended its
fiscal year 1994 with a general fund surplus of $60 million on a budgetary basis
and $161.8 million on deposit in the Revenue Stabilization Account of the State
Reserve Fund. The State's finances continued to improve in fiscal year 1995,
with revenues exceeding estimate by $217.4 million and expenditures at $184.9
million above budget. The State ended its fiscal year 1995 with a General Fund
undesignated fund balance of $26.5 million (after reservation of $106 million
for fiscal year 1996 expenses) and an additional $286.1 million on deposit in
the Revenue Stabilization Account of the State Reserve Fund.

In April, 1995 the State's General Assembly approved a $14.4 billion budget for
fiscal year 1996, an 8.2% increase above the fiscal year 1995 spending level.
This budget did not include any

<PAGE>

expenditures based upon additional revenue from new or broad-based taxes but
included a $270 million appropriation to the State Reserve Fund (excluding a $60
million deficiency appropriation), including $200 million of which is
appropriated to the Revenue Stabilization Account. When the fiscal year 1996
budget was enacted, the State projected that it would end the fiscal year with a
general fund surplus of $7.8 million on a budgetary basis; it is currently
estimated to be $1.0 million. In December, 1995 the State reduced its estimate
of general fund revenues by $92 million; the Governor has proposed a plan to
address this change that includes reductions in or cancellations of general fund
appropriations, $18 million transferred from the Revenue Stabilization Account
and use of the $26.5 fiscal year 1995 surplus. The State projects a year-end
balance in the Revenue Stabilization Account of the State Reserve Fund of $500
million.

OTHER MARYLAND ISSUERS. Many local Maryland governments have also suffered from
fiscal stress and general declines in financial performance. Recessionary
impacts have resulted in downturns in real estate related receipts, declines in
the growth of income tax revenues, lower cash positions and reduced interest
income. To compensate for reductions in State aid to local governments, local
governments closed this gap by increasing property and other taxes, program
cuts, and curtailing pay raises. Certain counties in Maryland are subject to
voter approval limitations on property tax levy increases or on increases in
governmental spending which limits their flexibility in responding to external
changes. Various tax initiatives to reform existing tax structures in certain
counties were placed on the November, 1992 election ballot and were adopted.
Future initiatives, if proposed and adopted, could create pressure on the
counties and other local governments and their ability to raise revenues. The
Fund cannot predict the impact of any such future tax limitations on debt
quality.

Many Maryland counties have established agencies with bond issuing authority,
such as housing authorities. Maryland municipalities also have the power to
issue conduit revenue bonds. Maryland local governments and their authorities
are subject to various risks and uncertainties, and the credit quality of the
bonds issued by them may vary considerably from that of State general obligation
bonds.

SECTORS. Certain areas of potential investment concentration present unique
risks. In recent years, 6 to 12% of tax-exempt debt issues in Maryland has been
for public or non-profit hospitals. A significant portion of the Fund's assets
may be invested in health care issues. Since 1983, the hospital industry has
been under significant pressure to reduce expenses and limit length of stay, a
phenomenon which has negatively affected the financial health of many hospitals.
While each issue is separately secured by the individual hospital's revenues,
third party reimbursement mechanisms for patient care are common to the group.
At the present time Maryland hospitals operate under a system which reimburses
hospitals according to a State administered set of rates and charges rather than
the Federal Diagnosis Related Group (DRG) system for Medicare payments. Since
1983, Maryland hospitals have operated below the national average in terms of
Medicare cost increases, allowing them to continue operating under a Medicare
waiver. However, any loss of this waiver in the future may have an adverse
impact upon the credit quality of Maryland hospitals. Additionally, national
focus on health care reform and any resulting legislation may further impact the
financial condition of hospitals in Maryland and other states.

The Fund may from time to time invest in solid waste revenue bonds which have
exposure to environmental, technological and market risks which could affect the
security and value of the bonds. Such risks include construction delay or
shortfalls in construction funds due to increased regulation, and market
disruption and revenue variability due to recent court decisions and legislative
proposals.

RISKS AND SPECIAL CONSIDERATIONS CONCERNING VIRGINIA INTERMEDIATE MUNICIPAL BOND
FUND AND VIRGINIA MUNICIPAL BOND FUND

General obligations of cities, towns or counties in Virginia are payable from
the general revenues of the entity, including ad valorem tax revenues on
property within the jurisdiction. The obligation to levy taxes could be enforced
by mandamus, but such a remedy may be impracticable and difficult to enforce.
Under section 15.1-227.61 of the Code of Virginia, a holder of any general
obligation bond in default may file with the Governor an affidavit setting forth
such default. If, after investigating, the Governor determines that such default
exists, he is directed to order the State Comptroller to withhold State funds
appropriated and payable to the entity and apply the amount so withheld to
unpaid principal and interest. The Commonwealth, however, has no obligation to
provide any additional funds necessary to pay such principal and interest.

Revenue bonds issued by Virginia political subdivisions include (1) revenue
bonds payable exclusively from revenue producing governmental enterprises and
(2) industrial revenue bonds, college and hospital revenue bonds and other
private activity bonds which are essentially non-governmental debt issues and
which are payable exclusively by private entities such as non-profit
organizations and business

<PAGE>
concerns of all sizes. State and local governments have no obligation to provide
for payment of such private activity bonds and in many cases would be legally
prohibited from doing so. The value of such private activity bonds may be
affected by a wide variety of factors relevant to particular localities or
industries, including economic developments outside of Virginia.

Virginia municipal securities that are lease obligations are customarily subject
to "non-appropriation" clauses. See "Investment Objective and Policies." Legal
principles may restrict the enforcement of provisions in lease financing
limiting the municipal issuer's ability to utilize property similar to that
leased in the event that debt service is not appropriated.

Chapter 9 of the United States Bankruptcy Code permits a municipality, if
insolvent or otherwise unable to pay its debts as they become due, to file a
voluntary petition for the adjustment of debts provided that such municipality
is "generally authorized to be a debtor under Chapter 9 by State law, or by a
governmental officer or organization empowered by State law to authorize such
entity to be a debtor under such chapter." Current Virginia statutes do not
expressly authorize municipalities generally to file under Chapter 9. It is
unclear, however, whether powers otherwise conferred by Virginia law upon
municipalities generally or governmental officers might provide "general
authorization" for filing a Chapter 9 petition by a municipality. Chapter 9 does
not authorize the filing of involuntary petitions against municipalities.

No Virginia law expressly authorizes Virginia political subdivisions to file
under Chapter 9 of the United States Bankruptcy Code, but recent case law
suggests that the granting of general powers to such subdivisions may be
sufficient to permit them to file voluntary petitions under Chapter 9.

Virginia municipal issuers are generally not required to provide ongoing
information about their finances and operations, although a number of cities,
counties and other issuers prepare annual reports.

Although revenue obligations of the Commonwealth or its political subdivisions
may be payable from a specific project or source, including lease rentals, there
can be no assurance that future economic difficulties and the resulting impact
on Commonwealth and local government finances will not adversely affect the
market value of the portfolio of the Fund or the ability of the respective
obligors to make timely payments of principal and interest on such obligations.

SUMMARY OF BOND RATINGS*

<TABLE>
<CAPTION>
RATING SERVICES
INVESTMENT GRADE MOODY'S S&P
<S> <C> <C>
Highest quality............................................................................ Aaa AAA
High quality............................................................................... Aa AA
Upper medium grade......................................................................... A A
Medium grade, some speculative characteristics............................................. Baa BBB
</TABLE>

SUMMARY OF COMMERCIAL PAPER RATINGS*

<TABLE>
<CAPTION>
RATING SERVICES
MOODY'S S&P
<S> <C> <C>
Highest quality............................................................................ Prime-1 A-1
High quality............................................................................... Prime-2 A-2
</TABLE>

* Please refer to the Statement of Additional Information for a more complete
discussion of these ratings.

<PAGE>

CRESTFUNDS(R), INC.--INVESTORS CLASS A SHARES AND INVESTORS CLASS B
SHARES

PROSPECTUS

MARCH 28, 1996

MONEY MARKET FUNDS

Cash Reserve Fund
U.S. Treasury Money Fund
Tax Free Money Fund

BOND FUNDS EQUITY FUNDS
Limited Term Bond Fund Value Fund
Intermediate Bond Fund Capital Appreciation Fund
Government Bond Fund Special Equity Fund
Maryland Municipal Bond Fund
Virginia Intermediate Municipal Bond Fund
Virginia Municipal Bond Fund

THE FUNDS' SHARES ARE NOT DEPOSITS OR OBLIGATIONS OF, OR GUARANTEED, INSURED OR
ENDORSED BY, CRESTAR BANK, THE FEDERAL DEPOSIT INSURANCE CORPORATION, THE
FEDERAL RESERVE BOARD, OR ANY OTHER GOVERNMENT AGENCY. INVESTING IN MUTUAL FUNDS
INVOLVES RISKS, INCLUDING THE POSSIBLE LOSS OF THE PRINCIPAL AMOUNT INVESTED.
THE VALUE OF AN INVESTMENT IN THE FUNDS AND ITS RETURN WILL FLUCTUATE AND ARE
NOT GUARANTEED. WHEN SOLD, THE VALUE OF AN INVESTMENT IN THE FUNDS MAY BE HIGHER
OR LOWER THAN THE AMOUNT ORIGINALLY INVESTED.

Please read this Prospectus before investing. This Prospectus sets forth
concisely the information about the Funds that a prospective investor should
know before investing, and is designed to help investors decide if a Fund's
goals match their own. Retain this document for future reference. A Statement of
Additional Information (dated March 28, 1996) for the A Shares and the B Shares
of the Funds and an Annual Report for the fiscal year ended November 30, 1995
have been filed with the Securities and Exchange Commission ("SEC") and are
incorporated herein by reference. The Statement of Additional Information and
the Annual Report are available without charge upon request by calling
1-800-273-7827.

<PAGE>

TABLE OF CONTENTS

<TABLE>
<CAPTION>
PAGE
<S> <C>
Summary of Fund Expenses..................................................................................... 3
The Funds' Financial History................................................................................. 6
Investment Objectives and Policies........................................................................... 13
Risk Factors and Investment Considerations................................................................... 21
Investment Limitations....................................................................................... 22
Fund Management.............................................................................................. 23
Pricing of Shares............................................................................................ 23
How to Purchase, Exchange and Redeem Shares.................................................................. 24
Dividends and Tax Matters.................................................................................... 30
Performance.................................................................................................. 33
Portfolio Transactions....................................................................................... 33
Advisory and Related Agreements; Distribution and Service Plans.............................................. 34
Other Expense Information.................................................................................... 36
Banking Law Matters.......................................................................................... 36
Description of Common Stock.................................................................................. 36
Appendix..................................................................................................... 38
Summary of Bond Ratings...................................................................................... 45
Summary of Commercial Paper Ratings.......................................................................... 45
</TABLE>

<PAGE>
SUMMARY OF FUND EXPENSES

The expense summary format below was developed for use by all mutual funds to
help investors make their investment decisions. The purpose of the tables is to
assist you in understanding the various costs and expenses that you would bear
directly or indirectly. You should consider this expense information for the A
Shares and B Shares of the Funds along with other important information in this
Prospectus, including each Fund's investment objective, financial highlights
and, where available, past performance.

SHAREHOLDER TRANSACTION EXPENSES: A SHARES(1)

<TABLE>
<S> <C>
Maximum Sales Load on Purchases (as a percentage of the offering price)
Money Market Funds............................................................................................ 0.00%
Limited Term Bond Fund........................................................................................ 2.00%
Intermediate Bond Fund........................................................................................ 3.00%
Virginia Intermediate Municipal Bond Fund..................................................................... 3.50%
All Other Funds............................................................................................... 4.50%
Sales Load on Reinvested Distributions.......................................................................... None
Deferred Sales Load Imposed on Redemptions...................................................................... None
Redemption Fee.................................................................................................. None*
Exchange Fee.................................................................................................... None
</TABLE>

SHAREHOLDER TRANSACTION EXPENSES: B SHARES(2)

<TABLE>
<S> <C>
Maximum Contingent Deferred Sales Load on Purchases (as a percentage of the offering price)
Cash Reserve Fund............................................................................................. 5.0%+
Government Bond Fund.......................................................................................... 5.0%+
Virginia Municipal Bond Fund.................................................................................. 5.0%+
Maryland Municipal Bond Fund.................................................................................. 5.0%+
Value Fund.................................................................................................... 5.0%+
Special Equity Fund........................................................................................... 5.0%+
Sales Load on Reinvested Distributions.......................................................................... None
Redemption Fee.................................................................................................. None*
Exchange Fee.................................................................................................... None
</TABLE>

* You may be charged a nominal fee for wiring redemption proceeds.
+ Declines from 5.0% in year 1 to 0.0% in year 7.
(1) A Shares of Virginia Municipal Bond Fund, Maryland Municipal Bond Fund and
Government Bond Fund are available through conversion only.
(2) B Shares of Cash Reserve Fund are available through exchange only.

ANNUAL FUND OPERATING EXPENSES (AS A PERCENTAGE OF AVERAGE NET ASSETS) NET OF
WAIVERS AND/OR REIMBURSEMENT:

A SHARES

<TABLE>
<CAPTION>
TOTAL
ADVISORY 12B-1 OTHER OPERATING
FUND FEE+ FEES+ EXPENSES+ EXPENSES+
<S> <C> <C> <C> <C>
Cash Reserve Fund.................................................... .40% 0% .27% .67%
U.S. Treasury Money Fund............................................. .40 0 .27 .67
Tax Free Money Fund.................................................. .40 0 .27 .67
Limited Term Bond Fund............................................... .50 0 .29 .79
Intermediate Bond Fund............................................... .60 0 .29 .89
Government Bond Fund(1).............................................. .50 0 .22 .72
Maryland Municipal Bond Fund(1)...................................... .10 0 .62 .72
Virginia Intermediate Municipal Bond Fund............................ .50 0 .23 .73
Virginia Municipal Bond Fund(1)...................................... .50 0 .22 .72
Value Fund........................................................... .75 0 .28 1.03
Capital Appreciation Fund............................................ .75 0 .36 1.11
Special Equity Fund.................................................. .75 0 .30 1.05
</TABLE>

+ Net of waivers and reimbursement.
(1) A Shares of Virginia Municipal Bond Fund, Maryland Municipal Bond Fund and
Government Bond Fund are available through conversion only.
(2) B Shares of Cash Reserve Fund are available through exchange only.

<PAGE>
B SHARES

+ Net of waivers and reimbursements.

Neither A Shares or B Shares of U.S. Treasury Money Fund are currently being
offered. B Shares are not available for U.S. Treasury Money Fund, Tax Free Money
Fund, Limited Term Bond Fund, Intermediate Bond Fund, Virginia Intermediate
Municipal Bond Fund and Capital Appreciation Fund.

EXAMPLE: You would pay the following expenses including the maximum sales load
or contingent deferred sales load, as applicable, on a $1,000 investment in a
fund, assuming 5% annual return and:

ASSUMING FULL REDEMPTION AT THE END OF EACH TIME PERIOD:

<TABLE>
<CAPTION>
A SHARES 1 YEAR 3 YEARS 5 YEARS 10 YEARS
<S> <C> <C> <C> <C>
Cash Reserve Fund.................................................................. $ 7 $21 $ 37 $ 83
Tax Free Money Fund................................................................ 7 21 37 83
Limited Term Bond Fund............................................................. 28 45 63 116
Intermediate Bond Fund............................................................. 39 58 78 136
Virginia Intermediate Municipal Bond Fund.......................................... 42 58 74 122
Government Bond Fund(1)............................................................ 52 67 83 130
Maryland Municipal Bond Fund....................................................... 52 67 -- --
Virginia Municipal Bond Fund(1).................................................... 52 67 83 130
Value Fund......................................................................... 55 76 99 165
Capital Appreciation Fund.......................................................... 56 79 103 174
Special Equity Fund................................................................ 55 77 100 167
</TABLE>

<TABLE>
<CAPTION>
B SHARES* 1 YEAR 3 YEARS 5 YEARS 10 YEARS**
<S> <C> <C> <C> <C>
Cash Reserve Fund.................................................................. $ 66 $78 $ 103 $148
Government Bond Fund............................................................... 66 80 106 151
Virginia Municipal Bond Fund....................................................... 66 80 106 151
Maryland Municipal Bond Fund....................................................... 66 80 -- --
Value Fund......................................................................... 67 83 111 173
Special Equity Fund................................................................ 69 90 123 190
</TABLE>

ASSUMING NO REDEMPTION:

<TABLE>
<CAPTION>
B SHARES 1 YEAR 3 YEARS 5 YEARS 10 YEARS**
<S> <C> <C> <C> <C>
Cash Reserve Fund.................................................................. $ 16 $48 $ 83 $182
Government Bond Fund............................................................... 16 50 86 185
Virginia Municipal Bond Fund....................................................... 16 50 86 187
Maryland Municipal Bond Fund....................................................... 16 50 -- --
Value Fund......................................................................... 17 53 91 199
Special Equity Fund................................................................ 19 60 103 222
</TABLE>

* Reflects deduction of applicable Contingent Deferred Sales Load.
** Reflects conversion of B Shares to A Shares after seven years.
(1) A Shares of the Government Bond Fund, Virginia Municipal Bond Fund and
Maryland Municipal Bond Fund are available only through conversion of B
Shares after 7 years.

<PAGE>
EXPLANATION OF TABLES:

SHAREHOLDER TRANSACTION EXPENSES represent charges paid when you purchase,
redeem or exchange shares of a Fund. Lower sales charges may be available for A
Shares of a Fund with purchases of $50,000 or more in conjunction with various
programs. See "How to Purchase, Exchange and Redeem Shares."

ANNUAL FUND OPERATING EXPENSES. Advisory fees are paid by each Fund to
Capitoline Investment Services, Incorporated ("Capitoline" or the "Adviser") for
managing its investments and business affairs (see "Adviser"). Other Expenses
for the Government Bond Fund, Maryland Municipal Bond Fund and Virginia
Municipal Bond Fund are based on estimates for the current fiscal year. Each
Fund pays administration fees at an annualized rate of .15% to SEI Financial
Management Corporation ("SFM") for administrative services. A Shares of each
Fund are subject to Rule 12b-1 distribution fees of .15% of the average daily
net assets. In addition, A Shares of the money market funds are subject to Rule
12b-1 fees of .25% of average daily net assets. B Shares are subject to Rule
12b-1 distribution and service fees of 1.00% of the average daily net assets,
which includes up to .25% that may be paid to investment professionals for
services provided and expenses incurred in connection with personal service
extended and/or maintenance of B Shares shareholder accounts. Long-term
shareholders may pay more than the economic equivalent of the maximum front-end
sales charges permitted by the NASD. Due to the level of 12b-1 payments, it is
unlikely that such fees will aggregate more than the maximum sales charge
permitted by the NASD.

Absent fee waivers, advisory fees for the Government Bond Fund, Maryland
Municipal Bond Fund and Virginia Municipal Bond Fund would be .60% for each
Fund. Absent fee waivers, 12b-1 fees would be .40% for the A Shares of the Cash
Reserve Fund, U.S. Treasury Money Fund and Tax Free Money Fund and .15% for the
Limited Term Bond Fund, Intermediate Bond Fund, Maryland Municipal Bond Fund,
Virginia Intermediate Municipal Bond Fund, Government Bond Fund, Virginia
Municipal Bond Fund, Value Fund, Capital Appreciation Fund, and Special Equity
Fund; and 12b-1 distribution and service fees for the B Shares of the Cash
Reserve Fund, Government Bond Fund, Maryland Municipal Bond Fund, Virginia
Municipal Bond Fund, Value Fund, and Special Equity Fund would be 1.00%.

Absent the waiver of administration fees, Other Expenses for A and B Shares for
the Government Bond Fund, Maryland Municipal Bond Fund and Virginia Municipal
Bond Fund would be .17% and .37%, .57% and .77%, and .17% and .37%,
respectively.

Absent all fee waivers, Total Operating Expenses for A Shares would be 1.07% for
the Cash Reserve Fund, U.S. Treasury Money Fund and Tax Free Money Fund and
.94%, 1.04%, .94%, 1.12%, 1.37%, 1.12%, 1.18%, 1.26%, and 1.20% for the Limited
Term Bond Fund, Intermediate Bond Fund, Virginia Intermediate Municipal Bond
Fund, Government Bond Fund, Maryland Municipal Bond Fund, Virginia Municipal
Bond Fund, Value Fund, Capital Appreciation Fund, and Special Equity Fund,
respectively; and Total Operating Expenses for the Class B Shares would be
1.68%, 1.95%, 2.22%, 1.97%, 2.03%, and 2.05% for the Cash Reserve Fund,
Government Bond Fund, Maryland Municipal Bond Fund, Virginia Municipal Bond
Fund, Value Fund, and Special Equity Fund, respectively. Please refer to the
sections "Administrator and Distributor," "Transfer Agent and Custodian," and
"Other Expense Information." The information contained in the tables and example
above relates only to A Shares and B Shares; expenses for A Shares and B Shares
differ from those of Trust Class. See "Description of Common Stock." Advisory
fees, 12b-1 distribution and service fees and Other Expenses are reflected in
each Fund's share price and are not charged directly to individual shareholder
accounts.

EXAMPLE. The hypothetical examples illustrate the expenses including the maximum
sales charge or contingent deferred sales charge ("CDSC"), as applicable,
associated with a $1,000 investment in each class of shares over periods of 1,
3, 5 and 10 years, based on the expenses detailed in the table above and an
assumed annual return of 5%. A CDSC IS IMPOSED ONLY IF AN INVESTOR SELLS B
SHARES WITHIN 7 YEARS. SEE "CONTINGENT DEFERRED SALES CHARGE." THE RETURN OF 5%
AND EXPENSES SHOULD NOT BE CONSIDERED INDICATIONS OF ACTUAL OR EXPECTED CLASS
PERFORMANCE OR EXPENSES, BOTH OF WHICH MAY VARY.

<PAGE>
THE FUNDS' FINANCIAL HISTORY

FINANCIAL HIGHLIGHTS. The table that follows is included in the Annual Report
for the Company and has been audited by Deloitte & Touche LLP, independent
auditors. Their report on the financial statements and financial highlights is
included in the Annual Report. Additional performance information is set forth
in the Company's Annual Report, which may be obtained without charge by calling
1-800-273-7827. A Shares became available for purchase in May 1993 and B Shares
became available for purchase in April 1995. Returns prior to that date do not
reflect the effects of the separate transfer agency arrangements or additional
12b-1 expenses, and therefore may not be representative of A Shares' or B
Shares' expected results. Expenses for A Shares vary from those of B Shares and
Trust Class shares. The financial statements and financial highlights for A
Shares, B Shares and Trust Class for the Funds are incorporated by reference
from the Company's Annual Report into the Statement of Additional Information.
The Maryland Municipal Bond Fund had not commenced operations as of November 30,
1995.

CASH RESERVE FUND

<TABLE>
<CAPTION>
INVESTORS CLASS A INVESTORS CLASS B
PERIOD FROM PERIOD FROM
YEAR ENDED YEAR ENDED MAY 4, 1993** APRIL 19, 1995
NOVEMBER 30, NOVEMBER 30, TO NOVEMBER 30, TO NOVEMBER 30,
1995 1994 1993 1995
<S> <C> <C> <C> <C>
SELECTED PER-SHARE DATA
Net asset value, beginning of period....................... $ 1.00 $ 1.00 $ 1.00 $ 1.00
Income from investment operations:
Net investment income...................................... 0.053 0.033 0.014 0.028
Distributions:
Net investment income...................................... (0.053) (0.033) (0.014) (0.028)

Net asset value, end of period............................. $ 1.00 $ 1.00 $ 1.00 $ 1.00

TOTAL RETURN++............................................. 5.44%+ 3.36%+ 1.49%+ 2.82%

RATIOS AND SUPPLEMENTAL DATA
Net assets, end of period (thousands)...................... $ 40,240 $ 11,832 $ 73 $ 21
Ratio of expenses to average daily net assets (1).......... 0.67% 0.68% 1.16%* 1.53%*
Ratio of net investment income to average daily net
assets................................................... 5.31% 3.35% 2.25%* 4.46%*

(1) During the periods, certain expenses were voluntarily
waived and reimbursed. The ratios of expenses to average
daily net assets had such waivers and reimbursements not
occurred are as follows:................................ 1.07% 0.97% 13.00%* 1.68%*
</TABLE>

* Annualized.
** Commencement of operations.
+ Total return does not include the redemption charge and would have been
lower had the Adviser and/or Administrator not waived or reimbursed certain
expenses during the period.
++ Total return for periods of less than one year are not annualized.

<PAGE>
U.S. TREASURY MONEY FUND

<TABLE>
<CAPTION>
INVESTORS CLASS A
PERIOD FROM
YEAR ENDED YEAR ENDED OCTOBER 5, 1993**
NOVEMBER 30, NOVEMBER 30, TO NOVEMBER 30,
1995 1994 1993
<S> <C> <C> <C>
SELECTED PER-SHARE DATA

Net asset value, beginning of period...................................... N/A(1) $ 1.00 $ 1.00

Income from investment operations:
Net investment income..................................................... N/A 0.008 0.003
Distributions:
Net investment income..................................................... N/A (0.008) (0.003)

Net asset value, end of period............................................ N/A $ 1.00 $ 1.00

TOTAL RETURN++............................................................ N/A 0.79%+ 0.34%+

RATIOS AND SUPPLEMENTAL DATA
Net assets, end of period (thousands)..................................... N/A -- $ 17
Ratio of expenses to average daily net assets (2)......................... N/A 0.92%* 1.16%*
Ratio of net investment income to average daily net assets................ N/A 2.31%* 2.02%*

(1) U.S. Treasury Money Fund was not in operation during fiscal 1995.
(2) During the periods, certain expenses were voluntarily reimbursed. The
ratios of expenses to average daily net assets had such reimbursements
not occurred are as follows:........................................... N/A 29.16* 36.60%*
</TABLE>

* Annualized.

** Commencement of operations.

+ Total return would have been lower had the Adviser and/or Administrator not
reimbursed certain expenses during the period.

++ Total return for periods of less than one year are not annualized.

TAX FREE MONEY FUND

<TABLE>
<CAPTION>
INVESTORS CLASS A
PERIOD FROM
YEAR ENDED YEAR ENDED MAY 5, 1993**
NOVEMBER 30, NOVEMBER 30, TO NOVEMBER 30,
1995 1994 1993
<S> <C> <C> <C>
SELECTED PER-SHARE DATA

Net asset value, beginning of period........................................ $ 1.00 $ 1.00 $ 1.00

Income from investment operations:
Net investment income....................................................... 0.031 0.020 0.009
Distributions:
Net investment income....................................................... (0.031) (0.020) (0.009)

Net asset value, end of period.............................................. $ 1.00 $ 1.00 $ 1.00

TOTAL RETURN++.............................................................. 3.25%+ 1.98%+ 0.88%+

RATIOS AND SUPPLEMENTAL DATA
Net assets, end of period (thousands)....................................... $ 1,627 $ 757 $ 228
Ratio of expenses to average daily net assets (1)........................... 0.67% 0.76% 1.16%*
Ratio of net investment income to average daily net assets.................. 3.16% 1.97% 1.35%*

(1) During the periods, certain expenses were voluntarily waived and
reimbursed. The ratios of expenses to average daily net assets had such
waivers and reimbursements not occurred are as follows:.................. 1.07% 1.44% 3.00%*
</TABLE>

* Annualized.

** Commencement of operations.

+ Total return would have been lower had the Administrator not waived and
reimbursed certain expenses during the period.

++ Total return for periods of less than one year are not annualized.

<PAGE>
LIMITED TERM BOND FUND

<TABLE>
<CAPTION>
INVESTORS CLASS A
PERIOD FROM
YEAR ENDED YEAR ENDED MAY 19, 1993**
NOVEMBER 30, NOVEMBER 30, TO NOVEMBER 30,
1995 1994 1993
<S> <C> <C> <C>
SELECTED PER-SHARE DATA

Net asset value, beginning of period........................................ $ 9.50 $ 10.17 $ 10.11

Income from investment operations:
Net investment income....................................................... 0.530 0.480 0.260

Net realized and unrealized gain/(loss) on investments...................... 0.556 (0.650) 0.060

Total from investment operations............................................ 1.086 (0.170) 0.320
Distributions:
Net investment income....................................................... (0.526) (0.470) (0.260)

Net realized gain........................................................... -- (0.030) --

Total distributions......................................................... (0.526) (0.500) (0.260)

Net asset value, end of period $ 10.06 $ 9.50 $ 10.17

TOTAL RETURN++.............................................................. 11.70%+ (1.72)%+ 3.16%+

RATIOS AND SUPPLEMENTAL DATA
Net assets, end of period (thousands)....................................... $ 1,458 $ 593 $ 427
Ratio of expenses to average daily net assets (1)........................... 0.79% 0.77% 1.02%*
Ratio of net investment income to average daily net assets.................. 5.46% 4.92% 4.70%*
Portfolio turnover rate..................................................... 36% 47% 61%

(1) During the periods, certain expenses were voluntarily reimbursed. The
ratios of expenses to average daily net assets had such reimbursements
not occurred are as follows:............................................. 0.94% 1.03% 1.48%*
</TABLE>

* Annualized.
** Commencement of operations.
+ Total return does not include the one time sales charge and would have been
lower had the Administrator not reimbursed certain expenses during the
period.
++ Total return for periods of less than one year are not annualized.

INTERMEDIATE BOND FUND

<TABLE>
<CAPTION>
INVESTORS CLASS A
PERIOD FROM
YEAR ENDED YEAR ENDED MAY 11, 1993**
NOVEMBER 30, NOVEMBER 30, TO NOVEMBER 30,
1995 1994 1993
<S> <C> <C> <C>
SELECTED PER-SHARE DATA

Net asset value, beginning of period........................................ $ 9.16 $ 10.19 $ 10.20

Income from investment operations:
Net investment income....................................................... 0.572 0.520 0.290
Net realized and unrealized gain/(loss) on investments...................... 0.951 (0.990) (0.010)

Total from investment operations............................................ 1.523 (0.470) 0.280
Distributions:
Net investment income....................................................... (0.563) (0.520) --
Net realized gain........................................................... -- (0.040) (0.290)
Total distributions......................................................... (0.563) (0.560) (0.290)

Net asset value, end of period.............................................. $ 10.12 $ 9.16 $ 10.19

TOTAL RETURN++.............................................................. 17.08%+ (4.72)%+ 2.72%+

RATIOS AND SUPPLEMENTAL DATA
Net assets, end of period (thousands)....................................... $ 1,729 $ 1,030 $ 618
Ratio of expenses to average daily net assets (1)........................... 0.89% 0.89% 1.15%*
Ratio of net investment income to average daily net assets.................. 5.87% 5.51% 4.90%*
Portfolio turnover rate..................................................... 37% 39% 28%

(1) During the periods, certain expenses were voluntarily waived and
reimbursed. The ratios of expenses to average daily net assets had such
waivers and reimbursements not occurred are as follows:.................. 1.04% 1.05% 1.58%*
</TABLE>

* Annualized.
** Commencement of operations.
+ Total return does not include the one time sales charge and would have been
lower had the Administrator not reimbursed certain expenses during the
period.
++ Total returns for periods of less than one year are not annualized.

<PAGE>

GOVERNMENT BOND FUND

<TABLE>
<CAPTION>
INVESTORS CLASS B
PERIOD FROM
APRIL 19, 1995**
TO NOVEMBER 30,
1995
<S> <C>
SELECTED PER-SHARE DATA

Net asset value, beginning of period................................................................... $10.03

Income from investment operations:
Net investment income.................................................................................. 0.338
Net realized and unrealized gain (loss) on investments................................................. 0.738

Total from investment operations....................................................................... 1.076
Distributions:
Net investment income.................................................................................. (0.333)

Net realized gain...................................................................................... (0.093)

Total distributions.................................................................................... (0.426)

Net asset value, end of period......................................................................... $10.68
TOTAL RETURN++......................................................................................... 10.86%+
RATIOS AND SUPPLEMENTAL DATA
Net assets, end of period (thousands).................................................................. $ 325
Ratio of expenses to average daily net assets (1)...................................................... 1.55%*
Ratio of net investment income to average daily net assets............................................. 5.05%*
Portfolio turnover rate................................................................................ 28%

(1) During the period, certain fees and expenses were voluntarily waived and reimbursed. The ratio of
expenses to average daily net assets had such waiver and reimbursement not occurred is as
follows:........................................................................................... 1.95%*
</TABLE>

* Annualized.
** Commencement of operations.
+ Total return does not include the redemption charge and would have been
lower had the Administrator not waived and reimbursed certain expenses
during the period.
++ Total return for periods of less than one year are not annualized.

VIRGINIA INTERMEDIATE MUNICIPAL BOND FUND

<TABLE>
<CAPTION>
INVESTORS CLASS A
PERIOD FROM
YEAR ENDED YEAR ENDED MAY 5, 1993**
NOVEMBER 30, NOVEMBER 30, TO NOVEMBER 30,
1995 1994 1993
<S> <C> <C> <C>
SELECTED PER-SHARE DATA

Net asset value, beginning of period........................................ $ 9.20 $10.32 $ 10.22

Income from investment operations:
Net investment income....................................................... 0.428 0.440 0.260
Net realized and unrealized gain/(loss) on investments...................... 1.029 (1.100) 0.100

Total from investment operations............................................ 1.457 (0.660) 0.360
Distributions:
Net investment income....................................................... (0.427) (0.440) (0.260)
Net realized gain........................................................... -- (0.020) --
Total distributions......................................................... (0.427) (0.460) (0.260)

Net asset value, end of period.............................................. $10.23 $ 9.20 $ 10.32

TOTAL RETURN++.............................................................. 16.10%+ (6.56)%+ (3.53)%+

RATIOS AND SUPPLEMENTAL DATA
Net assets, end of period (thousands)....................................... $8,649 $7,481 $ 4,805
Ratio of expenses to average daily net assets (1)........................... 0.73% 0.66% 0.66%*
Ratio of net investment income to average daily net assets.................. 4.33% 4.47% 4.27%*
Portfolio turnover rate..................................................... 28% 24% 39%

(1) During the periods, certain fees and expenses were voluntarily waived
and reimbursed. The ratios of expenses to average daily net assets had
such waivers and reimbursements not occurred are as follows:............ 0.95% 0.80% 0.90%*
</TABLE>

* Annualized.
** Commencement of operations.
+ Total return does not include the one time sales charge and would have been
lower had the Administrator not waived and reimbursed certain expenses
during the period.
++ Total return for periods of less than one year are not annualized.

<PAGE>

VIRGINIA MUNICIPAL BOND FUND

<TABLE>
<CAPTION>
INVESTORS CLASS B
PERIOD FROM
APRIL 17, 1995**
TO NOVEMBER 30,
1995
<S> <C>
SELECTED PER-SHARE DATA

Net asset value, beginning of period.................................................................... $ 10.06

Income from investment operations:
Net investment income................................................................................... 0.237
Net realized and unrealized gain/(loss) on investments.................................................. 0.409

Total from investment operations........................................................................ 0.646
Distributions:
Net investment income................................................................................... (0.232)
Net realized gain....................................................................................... (0.044)
Total distributions..................................................................................... (0.276)
Net asset value, end of period.......................................................................... $ 10.43

TOTAL RETURN++.......................................................................................... 6.51%+

RATIOS AND SUPPLEMENTAL DATA
Net assets, end of period (thousands)................................................................... $ 628
Ratio of expenses to average daily net assets (1)....................................................... 1.57%*
Ratio of net investment income to average daily net assets.............................................. 3.76%*
Portfolio turnover rate................................................................................. 35%

(1) During the period, various fees and expenses were voluntarily waived and reimbursed. The ratio of
expenses to average daily net assets had such waivers and reimbursements not occurred is as
follows:............................................................................................ 1.97%*
</TABLE>

VALUE FUND

<TABLE>
<CAPTION>
INVESTORS
INVESTORS CLASS A CLASS B
YEAR ENDED PERIOD FROM
YEAR ENDED YEAR ENDED MAY 7, 1993** APRIL 5, 1995**
NOVEMBER 30, NOVEMBER 30, TO NOVEMBER 30, TO NOVEMBER 30,
1995 1994 1993 1995
<S> <C> <C> <C> <C>
SELECTED PER-SHARE DATA

Net asset value, beginning of period........................ $10.78 $11.42 $ 11.06 $ 11.11

Income from investment operations:
Net investment income....................................... 0.250 0.180 0.060 0.120
Net realized and unrealized gain/(loss) on investments...... 2.623 (0.220) 0.350 1.618

Total from investment operations............................ 2.873 (0.040) 0.410 1.738
Distributions:
Net investment income....................................... (0.261) (0.180) (0.050) (0.136)
Net realized gain........................................... (1.732) (0.420) -- (1.072)
Total distributions......................................... (1.993) (0.600) (0.050) (1.208)

Net asset value, end of period.............................. $11.66 $10.78 $ 11.42 $ 11.64

TOTAL RETURN++.............................................. 28.71%+ (0.45)%+P+ 3.71%+ 15.78%+

RATIOS AND SUPPLEMENTAL DATA
Net assets, end of period (thousands)....................... $12,633 $8,115 $ 4,058 $ 2,086
Ratio of expenses to average daily net assets (1)........... 1.03% 1.02% 1.16%* 1.68%*
Ratio of net investment income to average daily net
assets.................................................... 2.14% 1.81% 1.51%* 1.13%*
Portfolio turnover rate..................................... 175% 116% 77% 175%

(1) During the period, certain fees and expenses were
voluntarily waived and reimbursed. The ratio of expenses
to average daily net assets had such waiver and
reimbursement not occurred is as follows:............... 1.18% 1.04% 1.16%* 2.03%*
</TABLE>

* Annualized.
** Commencement of operations.
+ Total return does not include the one time sales charge or the redemption
charge, where applicable.
++ Total return for periods of less than one year are not annualized.
P+ Total return would have been lower had the Administrator not waived and
reimbursed certain expenses during the period.

<PAGE>
CAPITAL APPRECIATION FUND

INVESTORS CLASS A
PERIOD FROM
YEAR ENDED YEAR ENDED MAY 7, 1993**
NOVEMBER 30, NOVEMBER 30, TO NOVEMBER 30,
1995 1994 1993
<S> <C> <C> <C>
SELECTED PER-SHARE DATA

Net asset value, beginning of period........................................ $10.08 $ 9.74 $ 9.42

Income from investment operations:
Net investment income....................................................... 0.044 0.010 --
Net realized and unrealized gain on investments............................. 2.013 0.340 0.320

Total from investment operations............................................ 2.057 0.350 0.320
Distributions:
Net investment income....................................................... (0.045) (0.010) --
Net realized gain........................................................... (1.332) -- --
Total distribution.......................................................... (1.377) -- --

Net asset value, end of period.............................................. $10.76 $10.08 $ 9.74

TOTAL RETURN++.............................................................. 20.72%+ 3.70%+ 3.40%+

RATIOS AND SUPPLEMENTAL DATA
Net assets, end of period (thousands)....................................... $3,261 $1,509 $ 649
Ratio of expenses to average daily net assets (1)........................... 1.11% 1.06% 1.36%*
Ratio of net investment income/(loss) to average daily net assets........... 0.39% 0.16% (0.05)%*
Portfolio turnover rate..................................................... 470% 271% 133%

(1) During the periods, certain fees and expenses were voluntarily
reimbursed. The ratios of expenses to average daily net assets had such
reimbursements not occurred are as follows:............................. 1.26% 1.18% 1.80%*
</TABLE>

<PAGE>
SPECIAL EQUITY FUND

<TABLE>
<CAPTION>
INVESTORS CLASS
INVESTORS CLASS A B
PERIOD FROM PERIOD FROM
YEAR ENDED YEAR ENDED MAY 5, 1993** APRIL 5, 1995**
NOVEMBER 30, NOVEMBER 30, TO NOVEMBER 30, TO NOVEMBER 30,
1995 1994 1993 1995
<S> <C> <C> <C> <C>
SELECTED PER-SHARE DATA

Net asset value, beginning of period........................ $10.56 $12.76 $ 11.69 $ 10.61

Income from investment operations:
Net investment income....................................... 0.100 0.030 -- 0.017
Net realized and unrealized gain (loss) on investments...... 1.927 (0.460) 1.070 1.501

Total from investment operations............................ 2.027 (0.430) 1.070 1.508
Distributions:
Net investment income....................................... (0.107) (0.020) -- (0.038)
Net realized gain........................................... (0.360) (1.750) -- --
Total distributions......................................... (0.467) (1.770) -- (0.038)

Net asset value, end of period.............................. $12.12 $10.56 $ 12.76 $ 12.08

TOTAL RETURN++.............................................. 20.06%+ (4.76)%+ 9.19%+ 14.22%+

RATIOS AND SUPPLEMENTAL DATA
Net assets, end of period (thousands)....................... $4,693 $3,436 $ 938 $ 554
Ratio of expenses to average daily net assets (1)........... 1.05% 1.04% 1.28%* 1.90%*
Ratio of net investment income (loss) to average daily net
assets.................................................... 0.89% 0.31% (0.19)%* (0.04)%*
Portfolio turnover rate..................................... 81% 117% 95% 81%

(1) During the periods, certain fees and expenses were
voluntarily reimbursed. The ratios of expenses to average
daily net assets had such reimbursements not occurred are
as follows............................................... 1.20% 1.10% 1.61%* 2.05%*
</TABLE>

* Annualized.

** Commencement of operations.

+ Total return does not include the one time sales charge or the redemption
charge, where applicable, and would have been lower had the Administrator
not reimbursed certain expenses during the period.

++ Total return for periods of less than one year are not annualized.

<PAGE>

INVESTMENT OBJECTIVES AND POLICIES

Each Fund's objective, together with those policies identified as being
fundamental, may not be changed except by approval of the majority of the
outstanding shares of that Fund. All other investment policies of a Fund may be
changed by the Company's Board of Directors without shareholder approval.
Capitoline will manage each Fund consistently with that Fund's investment
objective and policies. There is no assurance that a Fund will achieve its
investment objective. For more information regarding each Fund's investment
policies, please refer to the Statement of Additional Information.

There may be occasions when, in order to raise cash to meet redemptions or to
maintain the quality standards of the portfolio, the Funds might be required to
sell securities at a loss.

CASH RESERVE FUND
Cash Reserve Fund invests only in high quality, U.S. dollar-denominated, money
market instruments of U.S. and foreign issuers including floating and variable
rate instruments. Investments include:

(bullet) obligations of institutions, such as banks and insurance companies.
These obligations include certificates of deposit, bankers'
acceptances and time deposits;

(bullet) obligations of the U.S. and certain foreign governments and their
agencies or instrumentalities;

(bullet) short-term corporate obligations, including commercial paper, notes
and bonds; and

(bullet) other eligible debt obligations, including repurchase agreements.

<PAGE>

QUALITY. Pursuant to Rule 2a-7 and policies and procedures adopted by the
Company's Board of Directors, Cash Reserve Fund may purchase only high-quality
securities determined by Capitoline to present minimal credit risks. To be
considered high-quality, a security must be a U.S. Government security or rated
in accordance with applicable rules in one of the two highest categories for
short-term securities by at least two nationally recognized statistical rating
organizations ("NRSRO") (or by one, if only one NRSRO has rated the security);
or, if unrated, judged to be of equivalent quality by Capitoline pursuant to
procedures adopted by the Company's Board of Directors. Purchases of unrated
securities and securities rated by only one NRSRO will be ratified by the
Company's Board of Directors. Foreign obligations are considered to be unrated.

High-quality securities are divided into "first tier" and "second tier"
securities. First tier securities have received the highest rating (e.g.,
Standard & Poor Corporation's ("S&P") A-1 rating) from at least two NRSROs (or
one, if only one has rated the security). Second tier securities have received
ratings within the two highest categories (e.g., S&P A-1 or A-2) from at least
two NRSROs (or one, if only one has rated the security), but do not qualify as
first tier securities. If a security has been assigned different ratings by
different NRSROs, at least two NRSROs must have assigned the higher rating in
order for Capitoline to determine eligibility on the basis of that higher
rating. The Fund does not currently intend to invest in commercial paper rated
below first tier and will not invest more than 10% of its net assets in illiquid
securities. Cash Reserve Fund may not invest more than 5% of its total assets in
second tier securities.

DIVERSIFICATION. The Fund may not invest more than 5% of its total assets in the
securities of any one issuer, except that it may invest up to 25% of its assets
in the first tier securities of a single issuer for up to three business days.
The Fund may not invest more than 25% of its total assets in any one industry.

Cash Reserve Fund may not invest more than 5% of its total assets in second tier
securities. In addition, the Fund may not invest more than 1% of its total
securities or $1 million (whichever is greater) in the second tier securities of
a single issuer.

Cash Reserve Fund is offered for initial and subsequent investments only through
A Shares. B Shares of Cash Reserve Fund are only available for purchase by
exchange.

U.S. Treasury Money Fund has discontinued offering A Shares. The offering of A
Shares may recommence, and the offering of B Shares may commence upon
supplementation of this Prospectus.

<PAGE>
revenue anticipation notes ("RANs"), bond anticipation notes ("BANs"),
construction loan notes, and tax-exempt commercial paper. The Fund may also
invest in municipal bonds within the maturity limitations discussed above and
may enter into commitments to purchase these securities on a delayed delivery
basis.

The Fund is non-diversified, which means that it has greater latitude than a
diversified fund to invest in the securities of a relatively few municipal
issuers. As a non-diversified fund, the Fund may present greater risks than a
diversified fund.

QUALITY. Pursuant to Rule 2a-7 and policies and procedures adopted by the
Company's Board of Directors, the Fund may purchase securities determined by
Capitoline to present minimal credit risks. Securities must be rated in
accordance with applicable rules in the highest rating category for short-term
securities by at least one NRSRO and, if rated by more than one NRSRO, rated in
one of the two highest categories for short-term securities by another NRSRO,
or, if unrated, judged to be equivalent to the highest short-term rating
category by Capitoline pursuant to procedures adopted by the Company's Board of
Directors.

The Fund may also purchase shares of other money market funds. Should the Fund
elect to do so, it will incur additional expenses charged by that money market
fund, such as management fees.

Tax Free Money Fund currently offers A Shares only; B Shares are not available.

BOND FUNDS:
CORPORATE BOND FUNDS:

LIMITED TERM BOND FUND
Limited Term Bond Fund seeks to provide a high level of current income by
investing in investment-grade, fixed-income debt obligations. The Fund is
managed to maintain a dollar-weighted average portfolio maturity of between 1
and 5 years. See "Investment Policies -- Corporate Bond Funds."

Limited Term Bond Fund currently offers A Shares only; B Shares are not
available.

<PAGE>

Intermediate Bond Fund currently offers A Shares only; B Shares are not
available.

Each corporate bond fund will seek to obtain a high level of current income by
investing exclusively in investment-grade debt obligations of domestic and
foreign issuers as follows:

(bullet) corporate obligations which are rated at least Baa by Moody's, BBB by
S&P, BBB by Fitch, or BBB by Duff (see "Investment-grade Securities"
in the Appendix to this Prospectus);

(bullet) obligations issued or guaranteed by the U.S. Government, its agencies
or instrumentalities; and

(bullet) commercial paper which is rated Prime-1 by Moody's or A-1 by S&P.

Fixed-income securities held by each corporate bond fund may include (but are
not limited to), in any proportion, bonds, notes, mortgage-related and
asset-backed securities, U.S. Government and government agency obligations, zero
coupon securities, indexed securities, convertible notes and bonds, convertible
preferred securities, foreign securities (See "Foreign Investments" in the
Appendix) and short-term obligations such as certificates of deposit, repurchase
agreements, bankers' acceptances, and commercial paper. The Funds may also enter
into reverse repurchase agreements. These funds also may purchase shares of
money market mutual funds. Should a Fund elect to purchase shares of money
market funds, it will incur additional expenses charged by that money market
fund, such as management fees.

<PAGE>
GOVERNMENT BOND FUNDS:

The Fund seeks to achieve its objective by investing primarily in U.S.
Government Securities. Under normal conditions, at least 65% of the Fund's total
assets will be invested in U.S. Government bonds or other debt instruments,
including repurchase agreements secured by U.S. Government Securities. Any
remaining assets may be invested in fixed-income securities that are eligible
for purchase by the corporate bond funds. The Fund may purchase securities on a
delayed delivery basis. There are no limits on the dollar-weighted average
portfolio maturity of the Fund, and, consistent with its investment objective of
obtaining current income while preserving capital, the Fund may acquire
individual securities without regard to their remaining maturities.

The Fund invests in various debt obligations issued or guaranteed by the U.S.
Government or its agencies or instrumentalities, including U.S. Treasury Bonds,
Notes and Bills, Government National Mortgage Association mortgage-backed
pass-through certificates (Ginnie Maes) and mortgage-backed securities issued by
the Federal National Mortgage Association (Fannie Maes) or the Federal Home Loan
Mortgage Corporation (Freddie Macs). The Fund is not restricted as to the
percentage of its assets that may be invested in any one type of U.S. Government
Security. The U.S. Government Securities the Fund invests in may or may not be
fully backed by the U.S. Government. The Fund may enter into repurchase
agreements involving U.S. Government Securities and any other securities in
which it may invest, and also may enter into reverse repurchase agreements. The
Fund considers government securities to include U.S. Government Securities
subject to repurchase agreements. The Fund may for temporary defensive purposes
invest without limit in U.S. Government Securities having a maturity of 365 days
or less.

Government Bond Fund currently offers B Shares only; A Shares are available
through conversion only.

MUNICIPAL BOND FUNDS:

MARYLAND MUNICIPAL BOND FUND

Maryland Municipal Bond Fund seeks to provide high current income exempt from
federal and Maryland income tax in a manner consistent with the preservation of
capital by investing in municipal bonds of investment-grade quality. (See
"Investment-grade Securities" in the Appendix to this Prospectus.) There are no
limits on the dollar-weighted average portfolio maturity of the Fund, and the
Fund may acquire individual securities without regard to their remaining
maturities. See "Investment Policies -- Municipal Bond Funds."

As a non-fundamental policy, at least 65% of the Fund's assets will be invested
in securities that will, under normal circumstances, produce income that is
exempt from Maryland income taxes.

Maryland Municipal Bond Fund currently offers B Shares only; A Shares are
available through conversion only.

VIRGINIA INTERMEDIATE MUNICIPAL BOND FUND
Virginia Intermediate Municipal Bond Fund seeks to provide high current income
exempt from federal and Virginia income tax in a manner consistent with the
preservation of capital by investing in municipal bonds of investment-grade
quality. (See "Investment-grade Securities" in the Appendix to this Prospectus.)
The Fund is managed to maintain a dollar-weighted average portfolio maturity of
between 5 and 10 years. The Fund may hold individual securities with remaining
maturities of more than 10 years, as long as the Fund's dollar-weighted average
maturity is no more than 10 years. Stability and growth of principal also will
be considered when choosing securities. See "Investment Policies -- Municipal
Bond Funds."

<PAGE>
As a fundamental policy, at least 80% of the Fund's income will, under normal
circumstances, be exempt from federal income taxes. Interest on some "private
activity" municipal obligations is subject to the federal alternative minimum
tax ("AMT bonds"). AMT bonds are municipal obligations that benefit a private or
industrial user or finance a private facility. The Fund reserves the right to
invest up to 100% of its assets in AMT bonds, although the Fund has no current
intention of investing in such municipal securities.

As a non-fundamental policy, at least 65% of the Fund's assets will be invested
in securities that will, under normal circumstances, produce income that is
exempt from Virginia income taxes.

Virginia Intermediate Municipal Bond Fund currently offers A Shares only; B
Shares are not available.

VIRGINIA MUNICIPAL BOND FUND
Virginia Municipal Bond Fund seeks to provide high current income exempt from
federal and Virginia income tax in a manner consistent with the preservation of
capital by investing in municipal bonds of investment-grade quality. (See
"Investment-grade Securities" in the Appendix to this Prospectus.) There are no
limits on the dollar-weighted average portfolio maturity of the Fund and the
Fund may acquire individual securities without regard to their remaining
maturities. See "Investment Policies -- Municipal Bond Funds."

As a non-fundamental policy, at least 65% of the Fund's assets will be invested
in Securities that will under normal circumstances produce income that is exempt
from Virginia income taxes.

Virginia Municipal Bond Fund currently offers B Shares only; A Shares are
available through conversion only.

Each municipal bond fund normally will invest primarily in municipal securities
of all types and of investment-grade quality. Investment-grade municipal bonds
are considered to be securities rated Baa or higher by Moody's or BBB or higher
by S&P, and unrated securities that are deemed by Capitoline to be of comparable
quality to each municipal bond fund's ratings requirements. (See
"Investment-grade Securities" in the Appendix to this Prospectus.) Municipal
securities are issued to raise money for various public purposes, including
general purpose financing for state and local governments as well as financing
for specific projects or public facilities. Municipal securities may be backed
by the full taxing power of a municipality, by the revenues derived from a
specific project or by the credit of a private organization. Some municipal
securities are insured by private insurance companies, while others may be
supported by letters of credit furnished by domestic or foreign banks.
Capitoline monitors the financial condition of parties (including insurance
companies, banks, and corporations) whose creditworthiness is relied upon in
determining the credit quality of securities eligible for purchase by each
municipal bond fund. Each municipal bond fund may invest more than 25% of its
assets in industrial development bonds.

<PAGE>
cash that is not earning interest or may invest in obligations whose interest
may be subject to federal and/or state tax. The municipal bond funds' defensive
investments may include short-term municipal obligations, money market
instruments and shares of money market mutual funds. Should a Fund elect to
purchase shares of money market funds, it will incur additional expenses charged
by that money market fund, such as management fees. Under such circumstances,
the municipal bond funds may each temporarily invest so that less than 80% of
their income distributions are federally and/or state tax-free. Federally
taxable obligations in which a Fund may invest include, but are not limited to,
obligations issued by the U.S. Government or any of its agencies or
instrumentalities, high-quality commercial paper, certificates of deposit, and
repurchase agreements.

Total combined tax supported debt outstanding of the State, Baltimore City, and
all of the counties, municipalities, and special districts within Maryland
totaled $12 billion as of June 30, 1994. The State of Maryland had $2.62 billion
in general obligation bonds outstanding as of December 31, 1995. General
obligation debt of the State of Maryland is rated Aaa by Moody's, AAA by S&P and
AAA by Fitch; there can be no assurance that these ratings will continue. There
is no general limit on state general obligation bonds imposed by the State
Constitution or laws; state general obligation bonds are payable from ad valorem
taxes and, under the State Constitution, may not be issued unless the debt is
authorized by a law levying an annual tax or taxes sufficient to pay the debt
service within 15 years and prohibiting the repeal of the tax or taxes or their
use for another purpose until the debt has been paid. State and local general
obligation debt on a per capita basis and as a percentage of property values
have increased by 33.4% and 7.1%, respectively since 1990. Although the State
may borrow up to $100 million in short-term notes in anticipation of taxes and
revenues, the State has not made use of this authority. See the Appendix.

The Constitution of Virginia limits the ability of the Commonwealth to create
debt. An amendment to the Constitution requiring a balanced budget was approved
by the voters on November 6, 1984. The economy of the Commonwealth of Virginia
is based primarily on manufacturing, the government sector (including defense),
agriculture, mining and tourism. The Commonwealth has maintained a high level of
fiscal stability for many years due in large part to conservative financial
operations and diverse sources of revenue. Recessionary conditions beginning in
1990 have resulted in revenue shortfalls, which have necessitated budget
revisions and matching expenditure cuts to keep the budget in balance.

EQUITY FUNDS:

Value Fund offers both A Shares and B Shares.

CAPITAL APPRECIATION FUND
Capital Appreciation Fund seeks to provide long-term capital appreciation by
investing primarily in

<PAGE>
the equity securities of companies with medium to large market capitalizations.

Capital Appreciation Fund currently offers A Shares only; B Shares are not
available.

INVESTMENT POLICIES -- VALUE FUND AND CAPITAL APPRECIATION FUND
Value Fund and Capital Appreciation Fund each will invest primarily in domestic
and foreign common stock and in securities convertible into common stock, such
as convertible bonds and convertible preferred stock rated investment-grade or
better. Capitoline will select stocks for these Funds from a list of companies
traded in the U.S. securities markets, including sponsored American Depositary
Receipts ("ADRs") of qualifying foreign companies. (See "Foreign Investments" in
the Appendix.) A qualitative screening process is employed to exclude companies
with poor earnings results or highly leveraged balance sheets in an effort to
construct a portfolio with low risk characteristics relative to the major stock
market indices, although it is not the intention of either Fund to match the
risk or performance characteristics of any index. As a non-fundamental
investment policy, each Fund may to the extent consistent with its investment
objective, invest in any debt security in which the corporate bond funds may
invest. (See "Investment Policies -- Corporate Bond Funds" on page 16.) As a
non-fundamental investment policy, each of the Value Fund and Capital
Appreciation Fund may also invest up to 10% and 5%, respectively, of its assets
in U.S. Treasury obligations.

Although the Value Fund and Capital Appreciation Fund intend to be fully
invested at all times in the securities mentioned above, under normal
circumstances, each Fund may make substantial temporary investments in
high-quality, short-term debt securities and money market instruments, including
repurchase agreements, and in shares of other open-end management investment
companies which invest primarily in money market instruments, when Capitoline
believes market conditions warrant a defensive position. Should a Fund elect to
purchase shares of money market funds, it will incur additional expenses charged
by that money market fund, such as management fees.

SPECIAL EQUITY FUND
Special Equity Fund seeks to provide long-term capital appreciation by investing
primarily in the equity securities of companies with small to medium market
capitalizations.

Special Equity Fund offers both A Shares and B Shares.

INVESTMENT POLICIES -- SPECIAL EQUITY FUND
The Fund will invest primarily in domestic and foreign common stock and in
securities convertible into common stock, such as convertible bonds and
convertible preferred stock. The Fund generally will invest primarily in the
securities of companies with market capitalizations of less than $1 billion. It
also may invest a portion of its assets in sponsored ADRs of qualifying foreign
companies (see "Foreign Investments" in the Appendix), and in securities having
common stock characteristics, such as rights and warrants. As a non-fundamental
investment policy, each Fund may to the extent consistent with its investment
objective, invest in any debt security in which the corporate bond funds may
invest. The Fund may also invest up to 5% of its assets in obligations of the
U.S. Treasury.

Although the Special Equity intends under normal circumstances, to be fully
invested in equity securities, the Fund may make substantial temporary
investments in high-quality, short-term debt securities and money market
instruments, including repurchase agreements, and in the securities of other
open-end management investment companies investing primarily in money market
instruments, when Capitoline believes market conditions warrant

<PAGE>
a defensive position. Should the Fund elect to purchase shares of a money market
fund, it will incur additional expenses charged by that money market fund, such
as management fees.

RISK FACTORS AND INVESTMENT CONSIDERATIONS

Individually, none of the Funds constitutes a balanced investment plan. The
money market funds emphasize income and preservation of capital and liquidity
and do not seek the higher yields or capital appreciation that more aggressive
investments may provide. The bond funds tend to provide higher yields than the
money market funds; however, unlike money market funds, the bond funds do not
seek to maintain a stable $1.00 share price, and may not be able to return
dollar for dollar the money invested. The primary focus of the equity funds is
long-term capital appreciation. Fluctuations in the stock market will directly
affect the share price of the equity funds.

U.S. TREASURY MONEY FUND is the most conservative of the
CrestFunds(Register mark) money market funds as it invests solely in short-term
money market instruments issued or guaranteed by the U.S. Treasury, and
repurchase agreements backed by U.S. Treasury instruments.

CASH RESERVE FUND invests in high quality money market instruments that are not
backed by the U.S. Government and therefore is likely to provide higher yields
than U.S. Treasury Money Fund.

TAX FREE MONEY FUND emphasizes tax-free income by investing primarily in the
high quality tax-exempt securities of states, cities, municipalities and
municipal agencies.

Each money market fund's yield will vary from day to day, generally reflecting
current short-term interest rates and other market conditions.

LIMITED TERM BOND FUND is a conservative corporate bond fund which seeks higher
current yields than a money market fund. Because of the different levels of risk
associated with investing in a money market fund, which seeks to maintain a
stable net asset value per share and to preserve principal and the Limited Term
Bond Fund, which seeks high current income, the Limited Term Bond Fund will
experience greater fluctuations in its principal value than would a money market
fund.

INTERMEDIATE BOND FUND is likely to experience greater share price fluctuation
and potentially higher income than Limited Term Bond Fund, due to its
investments in longer term bonds.

GOVERNMENT BOND FUND is a conservative government bond fund which invests
primarily in U.S. Government securities with intermediate to long maturities.
The Fund may experience greater share price fluctuations due to its investments
in longer term bonds.

<PAGE>

experience greater share price fluctuation and potentially higher tax-free
income due to its investments in longer term municipal bonds. Maryland Municipal
Bond Fund also is likely to experience greater share price fluctuation and
potentially higher tax-free income than an intermediate term municipal bond
fund.

CAPITAL APPRECIATION FUND invests primarily in the equity securities of
companies with medium to large market capitalization.

INVESTMENT LIMITATIONS

<PAGE>
CASH RESERVE FUND
5. To comply with Rule 2a-7, the Fund normally may not, with respect to 100% of
its assets, invest more than 5% of the total market value of its assets in the
securities of any one issuer other than the U.S. Government, its agencies or
instrumentalities, provided, however, that the Fund may invest up to 25% of its
total assets in the first tier securities of a single issuer for up to three
days.

MARYLAND MUNICIPAL BOND FUND, VIRGINIA INTERMEDIATE MUNICIPAL BOND FUND AND
VIRGINIA MUNICIPAL BOND FUND

FUND MANAGEMENT

Jennifer M. Constine is Vice President and Fixed-Income Portfolio Manager for
Capitoline. Ms. Constine shares responsibility with Mr. Reid for the management
of Limited Term Bond Fund, Intermediate Bond Fund, and the Government Bond Fund.
She also oversees the investment management of approximately over $422 million
of other pension, endowment, foundation, union and insurance fixed-income funds.
Ms. Constine has been a portfolio manager at Capitoline since 1987.

PRICING OF SHARES

The net asset value per share ("NAV") of Tax Free Money Fund is determined as of
12:00 noon, Eastern time and as of the close of regular trading hours of the New
York Stock Exchange ("NYSE") (normally 4:00 p.m. Eastern time). The NAV of Cash
Reserve Fund and U.S. Treasury Money Fund is determined as of 1:00 p.m. Eastern
time and as of the close of regular trading hours on the NYSE, usually 4:00 p.m.
Eastern time. The NAV of each bond and equity fund is determined as of the close
of regular trading hours on the NYSE. Each Fund's NAV is determined on each day
the NYSE and the Funds' custodian, Crestar Bank, are open for business. The NAV
of a Fund is calculated by adding

23
<PAGE>

the value of all securities and other assets of a Fund, deducting the
liabilities allocated to each class, and dividing the result by the proportional
number of the shares of the Fund outstanding in a class.

HOW TO PURCHASE, EXCHANGE AND
REDEEM SHARES

CrestFunds(R) Investors Class offers alternative investment options, A Shares
and B Shares. Investors will want to determine which investment option is best
suited to their needs. Investors who purchase A Shares pay a sales charge at the
time of purchase; that is, A Shares of the equity and bond funds are offered at
NAV plus a sales charge. A Shares of the money market funds are offered at NAV
without a sales charge. There is a Class A share investment option available for
each of the CrestFunds(R) (except for U.S. Treasury Money Fund, which is not
currently offering either Class A shares or Class B shares, and each of
Government Bond Fund, Maryland Municipal Bond Fund and Virginia Municipal Bond
Fund, which currently may be purchased only through Class B shares). Exchanges
are permitted freely among the Class A shares of the Funds, although exchanges
to Class B shares are not permitted. For a description of Sales Charges
applicable to Class A shares, and potential reductions that may be applicable,
see "Sales Charges, Reductions and Dealer Concessions," below.

Class B shares are offered on a contingent deferred sales charge basis. This
means that investors do not pay a sales charge at the time of their initial
investment, but pay a sales charge if they redeem from the Funds. The amount of
deferred sales charge is reduced over time and is eliminated after seven years.
In addition, Class B shares pay distribution and shareholder servicing fees,
which will have the effect of making the annual expense ratio of the Class B
shares of each Fund higher than that of the Class A shares of the same Fund.
Exchanges are permitted freely among Class B shares of the Funds, although
exchanges to Class A shares are generally not permitted. After the seventh year
of investment, Class B shares automatically convert to Class A shares for all
Class B share Funds, including Government Bond Fund, Maryland Municipal Bond
Fund and Virginia Municipal Bond Fund. Class B shares are available on only the
following CrestFunds(R): Maryland Municipal Bond Fund, Virginia Municipal Bond
Fund, Government Bond Fund, Value Fund and Special Equity Fund. Cash Reserve
Fund is available for Class B shares purchased by exchange only from the Class B
shares of another Fund. For a description of contingent deferred sales charges
applicable to Class B shares, see "Contingent Deferred Sales Charge."

The alternative purchase arrangement permits you to choose the method of
purchasing shares that is more beneficial to you. The amount of your purchase,
the length of time you expect to hold the shares, and whether you wish to
receive dividends in cash or in additional shares will all be factors in
determining which sales charge option is best for you. You should consider
whether, over the time you expect to maintain your investment, the accumulated
distribution and service fees and contingent deferred sales charges on B Shares
prior to conversion would be less than the initial sales charge on A Shares, and
to what extent such differential would be offset by the expected higher yield of
A Shares. A shares will normally be more beneficial to you if you qualify for
reduced sales charges (as described below). Sales personnel of broker-dealers
distributing the Funds' shares, and other persons entitled to receive
compensation for selling such shares, may receive differing compensation for
selling A Shares or B Shares.

The Board of Directors of the Company have determined that no conflict of
interest currently exists between A Shares and B Shares. On an ongoing basis,
pursuant to their fiduciary duties under the 1940 Act, as amended, and state
laws, the Directors will seek to ensure that no such conflict arises.

<PAGE>

HOW TO BUY SHARES
Shares are offered continuously, and may be purchased by mail, telephone, wire
or through a Crestar Securities Corporation Investment Representative ("CSC
Investment Representative"). You must complete and return a signed account
application for each account you open. The issuance of shares is recorded on the
books of the Funds, and share certificates will not be issued for shares of the
Funds. For information on opening an account, please consult a CSC Investment
Representative or the Customer Service Center at 1-800-273-7827. Before you buy
shares, please read the following information to make sure your investment is
accepted and credited properly. If you are purchasing through a CSC Investment
Representative, please read any program materials in conjunction with this
prospectus. Certain features may be modified, and additional charges and
limitations may apply.

A Shares are offered at NAV plus an initial sales charge. The money market funds
are offered at NAV without a sales charge. The public offering price (the
"offering price") for shares of the equity and bond funds is equal to the NAV
plus the initial sales charge, which is a variable percentage of the offering
price depending upon the dollar amount of the purchase.

B Shares are offered at NAV without an initial sales charge and may be subject
to a CDSC at redemption. The offering price of CDSC shares is equal to the NAV.
For more complete information on how the CDSC is calculated, see "How to
Redeem."

The minimum initial investment for each Fund is $1,000 ($500 for IRAs and
"CrestFunds(R) Account Builder" Accounts). All subsequent purchases must be at
least $100 ($50 for IRAs and "CrestFunds(R) Account Builders" Accounts).

EFFECTIVE TIME OF PURCHASES --
MONEY MARKET FUNDS
Purchases will be effected at the next NAV calculated after an order is received
in good order. A purchase order received before 12:00 noon for Tax Free Money
Fund, and 1:00 p.m. for Cash Reserve Fund and U.S. Treasury Money Fund, will
begin earning dividends that day, provided that payment by wire or other
immediately available funds is received by the Fund or its agent by 4:00 p.m.
that day. All other orders received by 4:00 p.m. will be effected at the 4:00
p.m. NAV and will begin earning dividends on the next business day. Any orders
received after 4:00 p.m. will be effected and begin earning dividends on the
next business day.

BOND AND EQUITY FUNDS
Shares of the equity or bond funds may be purchased at the public offering price
(the "offering price") next determined after the purchase order is received in
good order. Purchase orders must be received in good order before the close of
regular trading hours on the NYSE to receive the offering price determined at
close of business on that day. Any orders received after 4:00 p.m. will be
processed at the offering price next calculated. Financial institutions may
impose different cut-off times for receipt of purchase orders on both the
distribution and the subsequent conversion.

BY MAIL
Please make your check payable to the name of the Fund and mail it to the
address indicated on the application.

For additional purchases, please make your check payable to the name of the
Fund. Indicate your account number on the check and mail it to the address
printed on your account statement.

BY TELEPHONE
Initial investments in a Fund may not be made by telephone unless you are
exchanging shares of another Fund and are establishing the new account with the
same name(s), address and taxpayer identification number.

If you applied for the electronic funds transfer service, you may make
additional investments in a Fund by calling the Customer Service Center
1-800-273-7827. Your shares will be purchased on the day that funds are received
in good order. Allow 2-3 business days after the call for the transfer to take
place.

<PAGE>

BY WIRE

You also may make additional investments in a Fund by wiring Federal funds from
your bank account. You must call the Customer Service Center before wiring
funds. Federal funds should be wired to:

THE CHASE MANHATTAN BANK, N.A.
ABA #021000021
DDA #910-2-733368

Together with the name of the Fund, your account number, your name(s) and the
control number assigned by the CSC Investment Representative. To receive that
day's NAV, you must notify Crestar Bank of the wire by 12:00 noon (or 1:00 p.m.
in the case of the Cash Reserve and U.S. Treasury Money Funds) and the Federal
funds must be received by 4:00 p.m.

<PAGE>

SALES CHARGES, REDUCTIONS AND DEALER CONCESSIONS

A SHARES
The table below sets out applicable sales charges on purchases of A Shares of
each Fund. Reduced sales charges are applicable to purchases of $50,000 or more
of A Shares of a Fund alone or in combination with purchases of A Shares of
other Funds. To obtain the reduction of the sales charge, please consult your
CSC Investment Representative at the time of purchase when a quantity discount
is applicable to your initial purchase. Upon such notification, you will receive
the lowest applicable sales charge, and subsequent trades will automatically
receive the reduced sales charge.

In addition to investing at one time in any combination of A Shares in an amount
entitling you to a reduced sales charge, you may qualify for a reduction of the
sales charge under the Rights of Accumulation, Combined Purchase or Letter of
Intent if your total investment in A Shares amounts to at least $50,000. Please
see the sales charge schedule below to determine the applicable sales charge for
investments totaling more than $50,000. Please consult your CSC Investment
Representative or refer to the Funds' Statement of Additional Information for
details about each of these investment programs. The following table below shows
total sales charges and concessions to Crestar Securities Corporation and other
securities dealers and banks ("Dealers") having agreements with the Distributor.

LIMITED TERM BOND FUND

<TABLE>
<CAPTION>
CLASS A SALES
CHARGES AS A % OF DEALER
CONCESSION
NET (AS A % OF
OFFERING AMOUNT OFFERING
AMOUNT OF PURCHASE IN SINGLE TRANSACTION PRICE INVESTED PRICE)
<S> <C> <C> <C>
Less than $50,000...................................................................... 2.00% 2.04% 1.80%
$50,000 to less than $100,000.......................................................... 1.75 1.78 1.58
$100,000 to less than $250,000......................................................... 1.50 1.52 1.35
$250,000 to less than $500,000......................................................... 1.25 1.27 1.13
$500,000 to less than $1,000,000....................................................... 1.00 1.01 0.90
$1,000,000 or more..................................................................... .50 .50 0.45
</TABLE>

VALUE FUND, CAPITAL APPRECIATION FUND AND SPECIAL EQUITY FUND

<TABLE>
<CAPTION> CLASS A SALES
CHARGES AS A % OF DEALER
CONCESSION
NET (AS A % OF
OFFERING AMOUNT OFFERING
AMOUNT OF PURCHASE IN SINGLE TRASACTION PRICE INVESTED PRICE)
<S> <C> <C> <C>
Less than $50,000...................................................................... 4.50% 4.71% 4.05%
$50,000 to less than $100,000.......................................................... 4.00 4.17 3.60
$100,000 to less than $250,000......................................................... 3.50 3.63 3.15
$250,000 to less than $500,000......................................................... 3.00 3.09 2.70
$500,000 to less than $1,000,000....................................................... 2.50 2.56 2.25
$1,000,000 or more..................................................................... 2.00 2.04 1.80
</TABLE>

VIRGINIA INTERMEDIATE MUNICIPAL BOND FUND

<TABLE>
<CAPTION> CLASS A SALES
CHARGES AS A % OF DEALER
CONCESSION
NET (AS A % OF
OFFERING AMOUNT OFFERING
AMOUNT OF PURCHASE IN SINGLE TRASACTION PRICE INVESTED PRICE)
<S> <C> <C> <C>
Less than $50,000......................................................................... 3.50% 3.63% 3.15%
$50,000 to less than $100,000............................................................. 3.00 3.09 2.70
$100,000 to less than $250,000............................................................ 2.50 2.56 2.25
$250,000 to less than $500,000............................................................ 2.00 2.04 1.80
$500,000 to less than $1,000,000.......................................................... 1.25 1.27 1.13
$1,000,000 or more........................................................................ .50 .50 .45
</TABLE>

<PAGE>

INTERMEDIATE BOND FUND

<TABLE>
<CAPTION> CLASS A SALES
CHARGES AS A % OF DEALER
CONCESSION
NET (AS A % OF
OFFERING AMOUNT OFFERING
AMOUNT OF PURCHASE IN SINGLE TRASACTION PRICE INVESTED PRICE)
<S> <C> <C> <C>
Less than $50,000...................................................................... 3.00% 3.09% 2.70%
$50,000 to less than $100,000.......................................................... 2.50 2.56 2.25
$100,000 to less than $250,000......................................................... 2.00 2.04 1.80
$250,000 to less than $500,000......................................................... 1.50 1.52 1.35
$500,000 to less than $1,000,000....................................................... 1.00 1.01 .90
$1,000,000 or more..................................................................... .50 .50 .45
</TABLE>

Sales charges for A Shares are waived for (i) current or former Directors or
officers of CrestFunds(Register mark), Inc., current or retired officers,
directors, or employees (including part-time employees) of Crestar Financial
Corporation or its direct or indirect subsidiaries (a Crestar Director or
employee), the spouse of a Crestar Director or employee, a Crestar Director or
employee acting as custodian for a minor child, and persons acting as trustee of
a trust for the sole benefit of the minor child of a Crestar Director or
employee; and (ii) shares that the Fund determines are purchased with redemption
proceeds from other mutual fund or annuity complexes.

B SHARES

No sales charge applies to B Shares at the time of purchase. However, a CDSC
does apply on redemption.

CONTINGENT DEFERRED SALES CHARGE (CDSC)

B shares may, upon redemption, be assessed a charge based on the following
schedule:

FROM CONTINGENT
DATE OF DEFERRED
PURCHASE SALES CHARGE

Year 1....................... 5.00%
Year 2....................... 4.00
Year 3....................... 3.00
Year 4....................... 3.00
Year 5....................... 2.00
Year 6....................... 1.00
Year 7....................... 0.00
Year 8....................... Conversion to A Shares

The CDSC is calculated based on the lesser of the cost of B Shares at the
initial date of purchase or the value of B Shares at redemption, not including
any reinvested dividends or capital gains. In determining the applicability and
rate of any CDSC at redemption, B Shares representing reinvested dividends and
capital gain, if any, will be redeemed first, followed by B Shares that have
been held for the longest period of time. B Shares acquired through
distributions (dividends or capital gains) will not be subject to a CDSC. In
addition, the holding period of any B Shares tendered for redemption will be
deemed to include the shareowner's holding period for B Shares of another
Fund(s) that were exchanged for the B Shares tendered for redemption.

CDSC WAIVERS. The CDSC may be waived (i) in cases of death or disability,
provided that the redemption is made within one year following the death or
initial determination of disability, (ii) in connection with a total or partial
redemption made in connection with required distributions made after age 70 1/2
from retirement plans or accounts, or (iii) in connection with a total or
partial redemption of Trust Class Shares and concurrent purchase of B Shares.
For more complete information about the CDSC, including the Conversion Feature
and the permitted circumstances for CDSC waivers, contact your investment
professional.

CONVERSION FEATURE. After a holding period of seven years from the initial date
of purchase (or exchange from B Shares or Trust shares of another Fund), B
Shares convert automatically to A Shares of the Fund. Conversion to A Shares
will be made at NAV. At the time of conversion, a portion of the B Shares
purchased through the reinvestment of dividends or capital gains (Dividend
Shares) will also convert to A Shares. The portion of Dividend Shares that will
convert is determined by the ratio of the current value of your converting B
Shares Non-Dividend Shares to the current value of your total B Shares
Non-Dividend Shares. (A portion of B Shares that had been acquired previously by
exchange also may convert, representing the appreciated value of, and/or
reinvested dividends or capital gains earned on, B Shares prior to their
exchange.)

ADDITIONAL PURCHASE INFORMATION -- A SHARES AND B SHARES. All purchases must be
paid for in U.S. dollars (checks must be drawn on U.S. banks), by electronic
transfer from your checking, savings, or money market account, or by wire. Each
Fund reserves the right to limit the number of your

27
<PAGE>

checks processed at one time. If a check or electronic transfer does not clear,
a Fund may cancel the purchase and you could be held liable for any fees and/or
losses incurred. Payment for the purchase is expected at the time of the order.
If payment is not received within 5 business days of the date of the order, the
order may be canceled and you could be held liable for any fees and/or losses
incurred. The Funds and the Distributor each reserve the right to suspend the
offering of shares for a period of time and to reject any order for the purchase
of shares, including certain purchases by exchange (see "Exchanges"). Purchase
orders may be refused if, in Capitoline's opinion, they are of a size that would
disrupt the management of the Fund.

DIVIDEND AND DISTRIBUTION OPTIONS --
A SHARES AND B SHARES
You have a choice of distribution options when completing your account
application.

The SHARE OPTION reinvests your income dividends and capital gain distributions
(if any) in additional A Shares or B Shares as applicable. Income dividends and
capital gain distributions will be reinvested at the NAV as of the record date
for the distribution.

The INCOME-EARNED OPTION reinvests your capital gain distributions (if any) and
pays your income dividends in cash.

With the CASH OPTION, you receive both income dividends and capital gain
distributions (if any) in cash. Cash distributions will be sent to you by check
on the payable date, which may be more than seven days after the reinvestment
date. You may also receive your distribution by electronic funds transfer. Allow
2 to 3 business days for the transfer to take place.

If you select the Income-Earned Option or the Cash Option and the U.S. Postal
Service cannot deliver your checks and the checks are returned for non-delivery,
your distributions will be held by the Fund without interest.

You may choose the Targeted Dividends Option to have distributions from a Fund
automatically invested in A Shares or B Shares, when applicable, of another
Fund. Note that distributions may only be directed to an existing account with a
registration identical to your account in the originating Fund and that meets
investment minimum requirements. Certain sales charges and restrictions may
apply. If no distribution option is selected when an account is opened, all
dividends and capital gains will automatically be reinvested into the Fund of
origin.

You may change your distribution option at any time by notifying the Fund in
writing at the address on your statement or by contacting your CSC Investment
Representative at least five days prior to the next payable date. On the day a
bond or equity portfolio goes ex-dividend, the amount of the distribution is
deducted from the share price. Reinvestment of distributions will be made at
that day's NAV. Distribution checks normally will be mailed within seven days
after the last day of the month.

EXCHANGES -- A SHARES AND B SHARES
A Shares of a particular Fund may be exchanged for A Shares of other Funds that
are currently available for purchase and approved for sale in your state. A
sales charge differential may apply to exchanges from the money market funds or
exchanges among bond funds or from a bond to one of the equity funds that has a
higher initial sales charge.

B Shares of a particular Fund may be exchanged for B Shares of other Funds that
are currently available for purchase and approved for sale in your state. A CDSC
will not apply to B Shares redeemed for exchange.

Each Fund reserves the right to refuse exchanges if the Fund would be unable to
invest effectively in accordance with its investment objective and policies or
would otherwise be affected adversely. The Funds further reserve the right to
terminate or modify the exchange privilege in the future. Exchanges are subject
to the same investment minimums and time frames listed above. An exchange is
considered a sale and subsequent purchase of shares and may result in a capital
gain or loss for federal income tax purposes. For information on making A Shares
or B Shares exchanges, please consult your CSC Investment Representative or, to
exchange shares into a Fund in which you already have an account, contact the
Customer Service Center at 1-800-273-7827.

SHAREHOLDER SERVICES --
A SHARES AND B SHARES
The following services are available to certain shareholders of the Funds.
Please check with your CSC Investment Representative regarding your eligibility.

ELECTRONIC FUNDS TRANSFER SERVICE
Electronic Funds Transfer Service lets you authorize electronic transfers of
money to buy or sell shares of a Fund or move money between your bank account
and your Fund account with one phone call. Allow two to three business days
after the call for the transfer to take place. For money recently invested,
allow normal check-clearing time (up to seven days) before redemption proceeds
are sent to your bank.

<PAGE>

CRESTFUNDS(R) ACCOUNT BUILDER
CrestFunds(R) Account Builder is a simple way to maintain a regular investment
program. The minimum initial investment is $500 per Fund. After that, you may
arrange automatic transfers (minimum $50 per monthly transaction per Fund) from
your bank account to your Fund account on a periodic basis. You will be sent a
written confirmation of each transaction and a debit entry will appear on your
bank statement. You may change the amount of your investment, skip an
investment, or stop CrestFunds(R) Account Builder by notifying the Fund in
writing at least 5 business days prior to your next scheduled investment date.

If you have purchased shares of a Fund through a retirement plan, you may use
CrestFunds(Register mark) Account Builder to make regular contributions to your
retirement account.

DIRECTED INVESTMENT MIX

On your CrestFunds(R) account application you may designate a pre-determined
investment mix to direct a certain percentage (minimum 10%) of each investment
to certain CrestFunds(R). For example, for every amount invested, 50% could be
directed to one Fund, 30% to another Fund, and 20% to a third. The total must
equal 100%. Investments will be directed to your pre-selected Funds without
regard to market conditions or investment objective. You may change your
selections by notifying CrestFunds(R) in writing at the address printed on your
account statement. Any change in your investment selections will not apply to
previous amounts invested. You may choose from the dividend distribution options
previously described, however, dividends are not reinvested using the Directed
Investment Mix option. Investment minimums must be met.

CHECKWRITING -- A SHARES ONLY
Checkwriting is only available to investors in A Shares of Cash Reserve Fund,
U.S. Treasury Money Fund and Tax Free Money Fund. Checks must be written for a
minimum of $500. There is no charge for this service, and you may write an
unlimited number of checks. Accounts may not be closed by check.

IRAS
You may purchase shares in a Fund through an IRA. The minimum initial investment
for these accounts is $500 per Fund. IRAs help investors save for retirement and
shelter investment income from current taxes.

For more information about IRAs and other tax-sheltered retirement plans,
including eligibility requirements and tax considerations, consult your
financial planner or tax advisor. Other fees may be charged by the IRA custodian
or trustee.

STATEMENTS AND REPORTS
You will be sent a confirmation after every transaction that affects your share
balance or your account registration. In addition, you will be sent a
consolidated statement. At least twice a year you will receive the financial
statements of the Fund (or Funds) in which you have invested, with a summary of
its investments and performance. To reduce expenses, only one copy of most
shareholder reports (such as the Funds' Annual Report) may be mailed to your
household. Please call the Customer Service Center at 1-800-273-7827 if you need
additional copies of a particular report.

The Funds pay for shareholder services, but not for special services such as
producing and mailing historical account documents. You may be required to pay
fees for these special services. Consult your CSC Investment Representative or
the Customer Service Center for details.

HOW TO REDEEM SHARES --
A SHARES AND B SHARES
At the time you complete your account application, you will designate the method
by which you wish to receive redemption payments. This designation and other
changes to your account registration may only be changed by written notification
to the Fund at the address indicated on your statement. Allow 5 business days
for any change to be effected. Appropriate endorsement and signature guarantees
are required.

Shares may be redeemed by mail, by telephone, by wire or through your CSC
Investment Representative. To ensure acceptance of your redemption request,
please follow the procedures described below.

You may redeem all or a portion of your shares on any business day. Your shares
will be redeemed at the next NAV calculated after your redemption request has
been received and accepted and less any applicable charge for the B Shares.
Shares will earn dividends through the date of redemption; however, shares
redeemed at the market close on a Friday or prior to a holiday will continue to
earn dividends until the next business day.

Each Fund reserves the right to withhold redemption proceeds until the Fund is
reasonably satisfied that checks or electronic transfers received as payment
have cleared (which can take up to 7 days). A delay in receiving redemption
proceeds may be avoided by purchasing shares with a cashier's check or other
guaranteed form of payment.

<PAGE>
Subject to each Fund's compliance with applicable regulations, each Fund has
reserved the right to pay redemptions, either totally or partially, by a
distribution of securities or other property (instead of cash) from its
portfolio. The securities or property distributed in such a distribution would
be valued at the same amount as that assigned to them in calculating the NAV for
the shares being sold. If you receive such a distribution you will incur
brokerage or transaction charges when converting the securities to cash, and you
may realize a gain or loss for tax purposes on both the distribution and the
subsequent conversion.

BY MAIL
To have redemption proceeds mailed to the address printed on your account
statement you must send a "letter of instruction" specifying the name of the
Fund, the number of shares to be redeemed, your name and your account number.

Your letter of instruction must be signed by all persons authorized to sign for
the account, exactly as it is registered, accompanied by signature guarantee(s).

BY TELEPHONE OR WIRE
You may redeem shares by calling 1-800-273-7827. If on your account application
you chose to receive your redemption proceeds in the form of a check, redemption
proceeds will be sent to the record address. If you choose the electronic funds
transfer service on your account application, you may redeem shares of a Fund by
calling the Customer Service Center. Allow two to three business days after your
call for the transfer to take place. Accounts cannot be closed by this service.

If you selected the wire feature, you may receive redemption proceeds by wire by
calling the Customer Service Center. Your money normally will be wired to your
bank on the next business day. With respect to the money market funds, if your
redemption order is received by 12:00 noon (or 1:00 p.m. in the case of the Cash
Reserve and U.S. Treasury Money Funds), proceeds will be wired to your bank the
same day. You may be charged a nominal fee for wiring redemption proceeds.

Neither the Fund's Transfer Agent nor the Fund will be responsible for any loss,
liability, cost or expense for acting upon telephone or wire instructions
reasonably believed to be genuine and the investor will bear all risk of loss.
The Fund and Transfer Agent maintain procedures, including identification
methods and other means, for ascertaining the identity of callers and
authenticity of instructions.

ADDITIONAL REDEMPTION INFORMATION --
A SHARES AND B SHARES

REINSTATEMENT PRIVILEGE --
A SHARES ONLY
If you have redeemed all or part of your A Shares of a Fund, you may reinvest an
amount equal to all or a portion of the redemption proceeds in the Fund or in
any of the other Funds, at the NAV next determined after receipt of your
investment order, without a sales charge, provided that such reinvestment is
made within 30 days of redemption. You must reinstate your shares into an
account with the same registration. This privilege may be exercised only once by
a shareholder with respect to a Fund. Contact your CSC Investment Representative
for more information.

SYSTEMATIC WITHDRAWAL PLAN --
A SHARES ONLY
You can have monthly, quarterly or semi-annual checks sent from your account to
you, to a person named by you, or to your bank checking account. Your Systematic
Withdrawal Plan payments are drawn from share redemptions and must be in the
amount of $250 or more per Fund per month. If Systematic Withdrawal Plan
redemptions exceed income dividends earned on your shares, your account
eventually may be exhausted. Since a sales charge is applied on new shares you
buy, it is to your disadvantage to buy shares while also making systematic
redemptions. Contact your CSC Investment Representative for more information.
Systematic Withdrawal is not available for B Shares.

MAINTENANCE BALANCES
You may be required to redeem A Shares in a Fund if the balance in that Fund
drops below $500 as a result of redemptions, and you do not increase the
account's balance to the minimum on 30 days' written notice. You must maintain
an account balance of $1,000 in B Shares ($500 for IRAs). If your account falls
below $500 due to redemption, the Transfer Agent may waive the CDSC and close
your account at the NAV next determined on the day your account is closed and
mail you the proceeds at the address shown on the Transfer Agent's records.

DIVIDENDS AND TAX MATTERS

<PAGE>
otherwise, all dividends and distributions of capital gains are automatically
reinvested into additional shares of the Fund immediately upon payment thereof.

FEDERAL TAXES. Interest earned by the Maryland Municipal Bond Fund, Tax Free
Money Fund, Virginia Intermediate Municipal Bond Fund and Virginia Municipal
Bond Fund is federally tax-free when distributed to shareholders as income
dividends. If one of the tax-free funds earned federally taxable income from any
of its investments, it would be distributed as a taxable dividend. These Funds
may invest in securities the interest on which is subject to the federal
alternative minimum tax for individuals and, to the extent that each such Fund
does so, individuals who are subject to the alternative minimum tax will be
required to report a portion of their dividends as a "tax preference item" in
determining their federal taxes.

A portion of each equity fund's dividends may qualify for the dividends-received
deduction for corporations. Distributions from a Fund's taxable net investment
income and short-term capital gains generally are taxable to shareholders as
dividends, and long-term capital gains (if any) are taxed as long-term capital
gains.

The B Shares of each Fund automatically convert to A Shares after seven years
from purchase. The Company has received the advice of counsel that the
conversion from B to A Shares will not be a taxable event for the Fund or the
shareholder. In the event that in the opinion of counsel, this advice may not be
relied upon due to a change in the law, applicable regulations, or other
factors, the Directors of the Company will then consider whether to terminate
the conversion privilege or take such other steps as they determine to be in the
best interest of shareholders.

STATE AND LOCAL TAXES.

MARYLAND MUNICIPAL BOND FUND:

<PAGE>
resident at death may be subject to Maryland inheritance and estate taxes.

VIRGINIA INTERMEDIATE MUNICIPAL BOND FUND AND VIRGINIA MUNICIPAL BOND FUND:

Under existing Virginia law, provided that Virginia Intermediate Municipal Bond
Fund or Virginia Municipal Bond Fund each qualify as a separate "regulated
investment company" under the Internal Revenue Code and qualify to and pay,
dividends that are exempt from federal income tax, distributions to shareholders
from that Fund will not be subject to Virginia income taxation to the extent
that such distributions are either (i) excludable from gross income for federal
income tax purposes and attributable to interest on obligations of Virginia or
any of its political subdivisions or instrumentalities ("Virginia Obligations")
or obligations of Puerto Rico, the United States Virgin Islands or Guam
("Possessions Obligations") or (ii) attributable to interest on obligations
issued by the United States or any authority, commission or instrumentality of
the United States in the exercise of the borrowing power, and backed by the full
faith and credit, of the United States ("United States Obligations"). For
shareholders who are subject to Virginia income taxation, distributions from the
Funds (whether paid in cash or reinvested in additional common stock) generally
will be includable in Virginia taxable income to the extent not described in the
preceding sentence. Thus, for example, the portion of a distribution excludable
from gross income for federal income tax purposes and attributable to interest
on obligations of a state other than Virginia will not be exempt from Virginia
income taxation. Interest on indebtedness incurred or continued by a shareholder
to purchase or carry shares of the Funds will not be deductible for Virginia
income tax purposes to the extent such interest expense relates to the portions
of distributions exempt from Virginia income taxation.

For taxpayers other than corporations, the maximum marginal Virginia income tax
rate is 5.75%. The same rate applies to capital gains as to other taxable
income.

Please refer to the Statement of Additional Information for more information
regarding taxes.

<PAGE>
PERFORMANCE

Performance of each class may be quoted in advertising in terms of YIELD,
EFFECTIVE YIELD, TAX EQUIVALENT YIELD OR TOTAL RETURN, as appropriate.
Performance figures are based on historical results and are not intended to
indicate future performance.

The YIELD of each class of each bond and money market fund is calculated by
dividing the net investment income (net of expenses) (as defined by the SEC)
earned by the Fund over a 30-day period (for bond funds) and 7-day period (for
money market funds), by the average number of shares entitled to receive
distributions, expressed as an annualized percentage rate. The effective yield
is calculated similarly, but assumes that the income earned from the investment
is reinvested. The EFFECTIVE YIELD will be slightly higher than the yield
because of the compounding effect of this assumed reinvestment. Because yield
accounting methods differ from the methods used for other accounting purposes,
each bond and money market fund's yield may not equal its distribution rate, the
income paid to an account or the income reported in the Fund's financial
statements.

TOTAL RETURNS are based on the overall dollar or percentage change in value of a
hypothetical investment in a Fund and assumes that all dividends and capital
gain distributions are reinvested. A CUMULATIVE TOTAL RETURN reflects a Fund's
performance over a stated period of time. An AVERAGE ANNUAL TOTAL RETURN
reflects the hypothetical annually compounded return that would have produced
the same cumulative total return if the Fund's performance had been constant
over the entire period. Because average annual total returns tend to smooth out
variations in the Funds' returns, investors should recognize that they are not
the same as actual year-by-year results. The yield and total return of the three
classes are calculated separately; the yields and total returns of A Shares and
B Shares will be lower than that of Trust Class shares. When a class quotes an
average annual total return covering a period of less than one year, the
calculation assumes the performance will remain constant for the rest of the
year. Since this may or may not occur, these average annual total returns should
be viewed as hypothetical returns rather than actual performance. To illustrate
the components of overall performance, the Funds may separate their cumulative
and average annual total returns into income results and capital gain or loss.
The Funds may quote their total returns on a before tax or after tax basis.

For advertising purposes, A Shares and B Shares bond fund yields and bond and
equity fund total returns generally include the effects of the maximum
applicable charges and fees applicable to that class, which is the maximum sales
charge and 12b-1 fee for A Shares of a particular fund, and the maximum CDSC for
the period and 12b-1 and shareholder servicing fees for B Shares. Excluding the
sales charge from the calculation would result in higher yield and total return
figures.

PORTFOLIO TRANSACTIONS

<PAGE>
periodically by Capitoline's investment staff based upon the quality of research
or execution services provided. The Funds may execute brokerage or other agency
transactions through its distributor or an affiliate of its distributor or
through an affiliate of Capitoline, which are registered broker-dealers.

The frequency of portfolio transactions, a Fund's portfolio turnover rate, will
vary from year to year depending on market conditions. For the fiscal year ended
November 30, 1995, the Funds' portfolio turnover rates were: Limited Term Bond
Fund, 36%; Intermediate Bond Fund, 37%; Government Bond Fund, 28%; Virginia
Intermediate Municipal Bond Fund, 28%; Virginia Municipal Bond Fund, 35%; Value
Fund, 175%; Capital Appreciation Fund, 470%; and Special Equity Fund, 35%. The
portfolio turnover rates for Maryland Municipal Bond Fund is estimated to be
50%.

ADVISORY AND RELATED AGREEMENTS; DISTRIBUTION AND SERVICE PLANS

ADVISER

The Company has entered into Investment Advisory Agreements with Capitoline
("Advisory Agreements") on behalf of each Fund. Capitoline is paid for its
advisory services to each Fund at an annual rate based on the following fee
schedule: Cash Reserve Fund, U.S. Treasury Money Fund and Tax Free Money Fund,
.40% of each Fund's average daily net assets for the first $500 million of net
assets; .35% of each Fund's average daily net assets on the next $500 million of
net assets; and .30% of each Fund's average daily net assets on all remaining
net assets; Capital Appreciation Fund, Value Fund and Special Equity Fund, .75%
of each Fund's average daily net assets; Limited Term Bond Fund, and
Intermediate Bond Fund, .50%, and .60%, respectively, of each Fund's average
daily net assets; Virginia Intermediate Municipal Bond Fund, .50% of the Fund's
average daily net assets; and Government Bond Fund, Maryland Municipal Bond Fund
and Virginia Municipal Bond Fund, .60% of average daily net assets for its
advisory services to each of these Funds. Capitoline, in its sole discretion,
may waive all or any portion of its advisory fee. Any waiver, which may be
discontinued at any time, has the effect of increasing the Fund's yield for the
period during which the waiver was in effect and may not be recouped at a later
date. The advisory fees for Capital Appreciation Fund, Value Fund and Special
Equity Fund are higher than those generally paid by investment companies.

Capitoline, at its sole discretion, may pay financial institutions, or other
industry professionals such as investment advisers, accountants, banks, and
estate planning firms ("Qualified Recipients") for shareholder support services.
Capitoline may engage banks and brokers, including Crestar Bank and Crestar
Securities Corporation, as Qualified Recipients to perform certain shareholder
support services. In addition, such Qualified Recipients may impose charges or
other requirements on their customers for automatic investment and other cash
management services which an investor utilizing such Qualified Recipients should
take into consideration when determining the effective yield of an investment in
a Fund.

For the fiscal year ended November 30, 1995, for services provided to the Funds,
Capitoline received advisory fees from Cash Reserve Fund, U.S. Treasury Money
Fund, Tax Free Money Fund, Limited Term Bond Fund, Intermediate Bond Fund,
Government Bond Fund, Virginia Intermediate Municipal Bond Fund, Virginia
Municipal Bond Fund, Value Fund, Capital Appreciation Fund and Special Equity
Fund equal to .40%, .40%, .40%, .50%, .60%, .50%, .50%, .50%, .75%, .75%, and
.75%, respectively, of the average daily net assets of each Fund.

Capitoline is a wholly-owned subsidiary of Crestar Bank, which is a subsidiary
of Crestar Financial Corporation, a Mid-Atlantic Region banking organization.
Crestar Financial Corporation had total assets of approximately $18.3 billion as
of December 31, 1995. Crestar Financial Corporation was organized in 1962 as a
bank holding company registered under the federal Bank Holding Company Act of
1956 and files annual and periodic reports with the Securities and Exchange
Commission under the Securities Exchange Act of 1934. (See "Banking Law
Matters.")

The Administrator is entitled to a fee, which is calculated daily and paid
monthly, at an annual rate of .15% of the average daily net assets of the Funds.

<PAGE>
SEI Financial Services Company (the "Distributor") a wholly-owned subsidiary of
SEI, serves as distributor. Each Fund may execute brokerage or other agency
transactions through the Distributor, for which the Distributor receives
compensation.

DISTRIBUTION AND SERVICE PLANS
The Board of Directors of the Company has approved an Amended and Restated
Distribution and Service Plan (the "Plan") pursuant to Rule 12b-1 of the 1940
Act (the "Rule"). Under this Plan the Distributor is compensated at the annual
rate of .15% of the aggregate average daily net assets of the Trust Class shares
and Class A Shares of each Fund. The Distributor will be compensated for
distribution services provided to the Trust Class shares including the printing
and distribution of Prospectuses, Statements of Additional Information or
reports prepared for the use in connection with the offering of shares of the
Funds (other than to existing shareholders at the time of such mailing), the
expenses incurred for the preparation of any other literature used by the
Distributor in connection with any such offering. The Distributor has agreed to
waive any fees payable pursuant to the Plan, and will bear the costs of other
distribution-related activities. The Distributor reserves the right to terminate
its waiver at any time at its sole discretion.

The Distributor may pay all or a portion of the distribution fee to Qualified
Recipients who sell shares of each Fund. Qualified Recipients who provide
enhanced inquiry, order entry and sales facilities in connection with
transactions in Fund shares by their clients may receive a fee up to the maximum
applicable asset based sales charges. In addition, the Distributor will, at its
expense provide promotional incentives such as sales contests and trips to
investment professionals who support the sale of shares of each Fund. In some
instances, these incentives will be offered only to certain types of investment
professionals, such as bank-affiliated or non-bank affiliated broker-dealers, or
to investment professionals whose representatives provide services in connection
with the sale or expected sale of significant amounts of shares.

In addition to the Plan, the Company's Board of Directors has approved an
Amended and Restated Distribution and Service Plan (the "Money Market Plan")
with the Distributor pursuant to the Rule on behalf of the A Shares of each
money market fund. Under the Money Market Plan, the Distributor is paid for
distribution-related activities including securing purchasers of shares of the A
Shares of the money market funds, and for certain shareholder support services.
For this service, the Distributor is compensated at an annual rate of .25% of
the average net assets of the A Shares of each money market fund. All or a
portion of the Money Market Plan fees may be paid by the Distributor to
Qualified Recipients as compensation for selling A Shares of the money market
funds and for providing ongoing sales support services or for shareholder
support services. Fees paid pursuant to the Money Market Plan are separate fees
of the A Shares of each money market fund and will reduce the net investment
income and total return of the A Shares of these Funds. The Distributor has
agreed to waive any fees payable pursuant to the Money Market Plan. The
Distributor reserves the right to terminate this waiver at anytime at it sole
discretion.

Further, the Company's Board of Directors has approved an additional
Distribution and Service Plan with the Distributor pursuant to the Rule applying
to B Shares (the "B Shares Plan") that authorizes payment of a distribution fee
and a shareholder servicing fee. B Shares are authorized to pay a monthly
distribution fee at an annual rate of .75% of B Shares' average daily net assets
of such class. Also, pursuant to the B Shares Plan, the Distributor is
compensated at an annual rate of .25% of B Shares' average net assets for
providing ongoing shareholder support services to investors in B Shares. B
Shares of each applicable Fund bear the fees pursuant to their Plan.
Compensation may be paid by the Distributor to persons and institutions who
provide administrative or accounting services not otherwise provided by the
Adviser, Transfer Agent or Administrator. Distribution fees and shareholder
services fees will reduce the net investment income and total return of a Fund's
B Shares.

<PAGE>

shareholder accounts and records for each Fund (unless such accounts are
maintained by sub-transfer agents). For its services as Transfer Agent, Crestar
Bank is paid a monthly fee at the annual rate of .06% of average net assets of
the A Shares and B Shares of each Fund.

As Custodian, Crestar Bank safeguards and controls the Funds' cash and
securities, handles the receipt and delivery of securities, and collects income
on Fund investments. For these services, Crestar Bank is paid a monthly fee at
an annual rate of up to .04% of each Fund's average net assets.

OTHER EXPENSE INFORMATION

Each Fund may elect not to qualify its shares for sale in every state. For the
purpose of Capitoline's obligation to reimburse expenses, each Fund's annual
expenses are estimated and accrued daily, and any appropriate estimated payments
will be made by Capitoline monthly. Each Fund's expenses include Company
expenses attributable to a particular Fund, are allocated to that Fund. Expenses
not directly attributable to a particular Fund, which are allocated among the
Funds in proportion to their average daily net assets. Expenses attributable to
a particular Class of shares are paid by that Class. Subject to the obligations
of Capitoline under the Advisory Agreement to reimburse a Fund for its expenses
in excess of the lowest applicable state limitations, each Fund has confirmed
its obligation to pay all of that Fund's other expenses.

BANKING LAW MATTERS

DESCRIPTION OF COMMON STOCK

Cash Reserve Fund, U.S. Treasury Money Fund, Limited Term Bond Fund,
Intermediate Bond Fund, Government Bond Fund, Value Fund, Capital Appreciation
Fund and Special Equity Fund are diversified portfolios of CrestFunds(R), Inc.
Maryland Municipal Bond Fund, Tax Free Money Fund, Virginia Intermediate
Municipal Bond Fund and Virginia Municipal Bond Fund are non-diversified
portfolios of CrestFunds(R), Inc. The authorized capital stock of the Company,
which was incorporated as a Maryland corporation on March 17, 1986, consists of
20 billion shares of stock having a par value of one tenth of one cent ($.001)
per share. The Board of Directors may, without shareholder approval and at the
Company's expense, divide the authorized stock into an unlimited number of
separate series, and the costs of doing so will be borne by the Company.
Currently all the authorized stock of the Company is divided into 12 separate
series: Cash Reserve Fund Common Stock, U.S. Treasury Money Fund Common Stock,
Tax Free Money Fund Common Stock, Limited Term Bond Fund Common Stock,
Intermediate Bond Fund Common Stock, Government Bond Fund Common Stock, Maryland
Municipal Bond Fund Common Stock, Virginia Intermediate Municipal Bond Fund
Common Stock, Virginia Municipal Bond Fund Common Stock, Value Fund Common
Stock, Capital Appreciation Fund Common Stock and Special

<PAGE>

Equity Fund Common Stock, representing shares for each of the Company's 12
CrestFunds(R). The CrestFunds(R) offer one or more of three classes of shares: A
Shares and B Shares (offered by this Prospectus) and Trust Class shares (offered
to qualified individuals and institutions by a separate prospectus).

Trust Class shares are offered continuously at NAV to individual or
institutional customers that have entered into a custody, agency, or trust
agreement with Crestar Bank, which is managed and/or administered by Crestar
Bank's Trust & Investment Management Group. Trust Class shares of the money
market fund also are offered to qualified individuals or institutional customers
who have qualified management or "sweep" accounts with Crestar Bank or one of
its bank affiliates. The expenses of each Class of a Fund are generally the
same, except that the distribution related fees of the Trust Class shares of the
Funds are lower than distribution related fees payable by the A Shares and B
Shares. The Trust Class also pays lower (.05% instead of .06%) transfer agency
fees. Generally, each Class may exchange for shares of its Class only.
Performance of Trust Class shares is expected to be higher than performance of A
Shares or B Shares due to Trust Class' lower expenses, and A Shares performance
is expected to be higher than that of B Shares due to its lower expenses.

A Shares normally may only be exchanged for A Shares, and B Shares for B Shares,
but in certain circumstances Trust Class shares may be exchanged for A Shares or
B Shares. Please refer to the Statement of Additional Information for more
information.

All shares of the Company have equal voting and liquidation rights, and
fractional shares have those rights proportionately. Generally, shares will be
voted in the aggregate without reference to a particular Fund or Class, unless
the matter affects only one Fund or Class or unless voting by a Fund or Class is
required by law, in which case shares will be voted separately by the Fund or
Class, as the case may be. Maryland law does not require the Company to hold
annual meetings of shareholders and the Company does not intend to do so, though
special meetings will be held when required by law. Shareholders representing
25% or more of the Company or a Fund may, as set forth in the Company's By-laws,
call meetings of the Company or a Fund, as the case may be, including, in the
case of a meeting of the entire Company, the purpose of voting on removal of one
or more Directors. There are no conversion or preemptive rights in connection
with shares of each Fund. All shares, when issued and paid for, in accordance
with the terms of the offering will be fully paid and non-assessable.

A shareholder owning of record or beneficially more than 25% of a Fund's shares
may be considered to control that Fund. As of March 1, 1996, Crestar Bank was
the record holder of more than 25% of the shares of the following Funds:

<TABLE>
<CAPTION>
FUND NAME SHAREHOLDER %
<S> <C> <C>
Cash Reserve Fund...................................................................... Crestar Bank, Richmond, VA 94%
U.S. Treasury Money Fund............................................................... Crestar Bank, Richmond, VA 99%
Tax Free Money Fund.................................................................... Crestar Bank, Richmond, VA 94%
Limited Term Bond Fund................................................................. Crestar Bank, Richmond, VA 89%
Intermediate Bond Fund................................................................. Crestar Bank, Richmond, VA 88%
Government Bond Fund................................................................... Crestar Bank, Richmond, VA 46%
VA Intermediate Municipal Bond Fund.................................................... Crestar Bank, Richmond, VA 78%
VA Municipal Bond Fund................................................................. Crestar Bank, Richmond, VA 61%
MD Municipal Bond Fund................................................................. Crestar Bank, Richmond, VA 100%
Value Fund............................................................................. Crestar Bank, Richmond, VA 89%
Capital Appreciation Fund.............................................................. Crestar Bank, Richmond, VA 44%
Special Equity Fund.................................................................... Crestar Bank, Richmond, VA 84%
</TABLE>

This record ownership includes accounts owning fund shares for which Crestar
Bank acts as trustee or agent.

<PAGE>
APPENDIX

AMERICAN DEPOSITARY RECEIPTS ("ADRS"). Value Fund and Capital Appreciation Fund
may invest in sponsored ADRs which are certificates evidencing ownership of
shares of a foreign-based corporation held in trust by a bank or similar
financial institution. Designed for use in U.S. securities markets, ADRs are
alternatives to the purchase of the underlying securities in their national
markets and currencies. A sponsored ADR is an ADR established jointly by the
issuer of the security underlying the receipt and the bank or other financial
institution holding the receipt.

FOREIGN INVESTMENTS. The corporate bond funds and the equity funds may invest in
foreign securities traded in the United States, which involve risks in addition
to the risks inherent in domestic investments. The Funds' foreign investments
may be affected by the strength of foreign currencies relative to the U.S.
dollar, or by political or economic developments in foreign countries. Foreign
companies may not be subject to accounting standards or governmental supervision
comparable to U.S. companies, and there may be less public information about
their operations. In addition, foreign markets may be less liquid or more
volatile than U.S. markets and may offer less protection to investors. These
risks are typically greater for investments in less developed countries whose
governments and financial markets may be more susceptible to adverse political
and economic developments. In addition, to the political and economic factors
that can affect foreign securities, a governmental issuer may be unwilling to
repay principal and interest when due, and may require that the conditions for
payment be re-negotiated. These factors could make foreign investments,
especially those in developing countries more volatile. Capitoline considers
these factors in making investments for the Fund. There is no limitation on the
amount each corporate bond fund and equity fund may invest in foreign securities
or in any one country. The corporate bond funds will invest only in U.S.
dollar-denominated foreign securities.

INVESTMENT-GRADE SECURITIES. Investment-grade securities include securities
rated BBB or higher by S&P or Baa or higher by Moody's which generally provide
adequate to strong protection of principal and interest payments. Securities
rated BBB or Baa may be more susceptible to potential adverse changes in
circumstances which may lead to a weakened capacity to make principal and
interest payments and may have speculative characteristics as well. If a
security is rated investment-grade by one rating agency and below
investment-grade by another rating agency, Capitoline may make a determination
as to the security's investment-grade quality.

MORTGAGE-BACKED SECURITIES. The corporate bond and government bond funds may
purchase mortgage-backed securities issued by government and non- government
entities such as banks, mortgage lenders, or other financial institutions. A
mortgage-backed security may be an obligation of the issuer backed by a mortgage
or pool of mortgages or a direct interest in an underlying pool of mortgages.
Some mortgage-backed securities, such as CMOs, make payments of both principal
and interest at a variety of intervals; others make semiannual interest payments
at a predetermined rate and repay principal at maturity (like a typical bond).
Mortgage-backed securities are based on different types of mortgages including
those on commercial real estate or residential properties. Other types of
mortgage-backed securities will likely be developed in the future, and the
corporate bond funds may invest in them if Capitoline determines they are
consistent with the Funds' investment objective and policies.

The market volatility of mortgage-backed securities can be greater than the
market volatility of other bonds. The value of mortgage-backed securities may
change due to shifts in the market's perception of issuers. In addition,
regulatory or tax changes may adversely affect the mortgage securities market as
a whole. Non-government mortgage-backed securities may offer higher yields than
those issued by government entities, but also may be subject to greater price
changes than government issues. Mortgage-backed securities are subject to
prepayment risk. Prepayment, which occurs when unscheduled or early payments are
made on the underlying mortgages, may shorten the effective maturities of these
securities and may lower their total returns. During periods of declining
interest rates, prepayment of mortgages underlying mortgage securities can be
expected to accelerate. Prepayment of mortgages which underlie securities
purchased at a premium often results in capital losses, while prepayment of
mortgages purchased at a discount often results in capital gains. Because of
these unpredictable prepayment characteristics, it is often not possible to
predict accurately the average life or realized yield or total return of a
particular issue. In the absence of a known maturity, market participants
generally refer to a security's estimated average life. An average life estimate
is a function of an assumption regarding anticipated prepayment patterns, based
upon current interest rates, current conditions in the relevant housing markets
and other factors. The assumption is necessarily subjective, and thus

<PAGE>
different market participants can produce different average life estimates with
regard to the same security. There can be no assurance that estimated average
life will be a security's actual average life.

STRIPPED MORTGAGE-BACKED SECURITIES. Securities created when a U.S. government
agency or a financial institution separates the interest and principal
components of a mortgage-backed security and sells them as individual securities
are stripped mortgage-backed securities. The holder of the "principal-only"
security (PO) receives the principal payments made by the underlying
mortgage-backed security, while the holder of the "interest-only" security (IO)
receives interest payments from the same underlying security. The prices of
stripped mortgage-backed securities may be particularly affected by changes in
interest rates. As interest rates fall, prepayment rates tend to increase, which
tends to reduce prices of IOs and increase prices of POs. Rising interest rates
can have the opposite effect. The market volatility of stripped mortgage-backed
securities tends to be greater than the market volatility of other types of
mortgage-backed securities in which the Funds may invest. If the mortgage assets
which underlie the stripped mortgage-backed securities were to experience
greater than anticipated prepayments of principal, a Fund could fail to fully
recoup its initial investment in these securities, even if they are rated in the
highest rating categories (e.g., AAA or Aaa by S&P or Moody's, respectively).

REPURCHASE AGREEMENTS. The corporate bond funds, government bond fund, taxable
money market funds and equity funds may enter into repurchase agreements. In a
repurchase agreement, a Fund buys a security at one price and simultaneously
agrees to sell it back at a higher price. In the event of bankruptcy of the
other party to a repurchase agreement, the Funds could experience delays in
recovering its cash. To the extent that, in the meantime, the true value of
securities purchased had decreased, the Funds could experience a loss. In all
cases, Capitoline must find the credit worthiness of the other party to the
transaction satisfactory.

While a reverse repurchase agreement is outstanding, a Fund will maintain
appropriate liquid assets such as cash, U.S. government securities, or other
liquid high grade debt securities, in a segregated custodial account to cover
its obligations under the agreement. A Fund will enter into reverse repurchase
agreements only with those parties whose creditworthiness is deemed satisfactory
by Capitoline.

RISKS AND SPECIAL CONSIDERATIONS CONCERNING MARYLAND MUNICIPAL BOND FUND

<PAGE>
AAA by Fitch; there can be no assurance that these ratings will continue. There
is no general limit on state general obligation bonds imposed by the State
Constitution or laws; state general obligation bonds are payable from ad valorem
taxes and, under the State Constitution, may not be issued unless the debt is
authorized by a law levying an annual tax or taxes sufficient to pay the debt
service within 15 years and prohibiting the repeal of the tax or taxes or their
use for another purpose until the debt has been paid. State and local general
obligation debt on a per capita basis and as a percentage of property values
have increased by 33.4% and 7.1%, respectively since 1990. Although the State
may borrow up to $100 million in short-term notes in anticipation of taxes and
revenues, the State has not made use of this authority.

In April, 1995 the State's General Assembly approved a $14.4 billion budget for
fiscal year 1996, an 8.2% increase above the fiscal year 1995 spending level.
This budget did not include any

<PAGE>
expenditures based upon additional revenue from new or broad-based taxes but
included a $270 million appropriation to the State Reserve Fund (excluding a $60
million deficiency appropriation), including $200 million of which is
appropriated to the Revenue Stabilization Account. When the fiscal year 1996
budget was enacted, the State projected that it would end the fiscal year with a
general fund surplus of $7.8 million on a budgetary basis; it is currently
estimated to be $1.0 million. In December, 1995 the State reduced its estimate
of general fund revenues by $92 million; the Governor has proposed a plan to
address this change that includes reductions in or cancellations of general fund
appropriations, $18 million transferred from the Revenue Stabilization Account
and use of the $26.5 fiscal year 1995 surplus. The State projects a year-end
balance in the Revenue Stabilization Account of the State Reserve Fund of $500
million.

RISKS AND SPECIAL CONSIDERATIONS CONCERNING VIRGINIA INTERMEDIATE MUNICIPAL BOND
FUND AND VIRGINIA MUNICIPAL BOND FUND.

SUMMARY OF BOND RATINGS*

<TABLE>
<CAPTION>
RATING SERVICES
INVESTMENT GRADE MOODY'S S&P
<S> <C> <C>
Highest quality........................................................................................ Aaa AAA
High quality........................................................................................... Aa AA
Upper medium grade..................................................................................... A A
Medium grade, some speculative characteristics......................................................... Baa BBB
</TABLE>

SUMMARY OF COMMERCIAL PAPER RATINGS*

<TABLE>
<CAPTION>
RATING SERVICES
MOODY'S S&P
<S> <C> <C>
Highest quality....................................................................................... Prime-1 A-1
High quality.......................................................................................... Prime-2 A-2
</TABLE>

* Please refer to the Statement of Additional Information for a more complete
discussion of these ratings.

<PAGE>

CRESTFUNDS(R), INC.
TRUST CLASS SHARES
STATEMENT OF ADDITIONAL INFORMATION
MARCH 28, 1996

This Statement is not a prospectus but should be read in conjunction with the
current Trust Class Prospectus (dated March 28, 1996) for CrestFunds(R), Inc.
(the "Company"). Please retain this document for future reference. The financial
statements and financial highlights, included in the Annual Report for the
fiscal year ended November 30, 1995 for Cash Reserve Fund, U.S. Treasury Money
Fund, Tax Free Money Fund, Limited Term Bond Fund, Intermediate Bond Fund ,
Government Bond Fund, Virginia Intermediate Municipal Bond Fund, Virginia
Municipal Bond Fund, Value Fund, Capital Appreciation Fund and Special Equity
Fund, are incorporated herein by reference. To obtain without charge additional
copies of the Trust Class Prospectus, the Annual Report, or the Investors Class
A Shares ("A Shares") and Investors Class B Shares ("B Shares") Prospectus or
Statement of Additional Information, please call 1-800-273-7827.

TABLE OF CONTENTS PAGE

INVESTMENT POLICIES AND LIMITATIONS........................................ 3

INVESTMENT PRACTICES....................................................... 7

PORTFOLIO TRANSACTIONS..................................................... 12

VALUATION OF PORTFOLIO SECURITIES.......................................... 13

FUND PERFORMANCE........................................................... 14

ADDITIONAL INFORMATION REGARDING PRICING AND REDEMPTIONS................... 20

DISTRIBUTIONS AND TAXES.................................................... 20

DIRECTORS AND OFFICERS AND AFFILIATED PERSONS.............................. 24

THE ADVISER................................................................ 25

ADMINISTRATOR AND DISTRIBUTOR.............................................. 27

TRANSFER AGENT............................................................. 31

CUSTODIAN.................................................................. 31

AUDITOR.................................................................... 31

PRINCIPAL HOLDERS OF SECURITIES............................................ 31

FINANCIAL STATEMENTS....................................................... 32

APPENDIX................................................................... 34

<PAGE>

Adviser:
Capitoline Investment Services, Incorporated ("Capitoline" or the "Adviser")

Transfer Agent:
Crestar Bank (the "Transfer Agent")

Custodian:
Crestar Bank (the "Custodian")

Administrator:
SEI Financial Management Corporation ("SFM")

Distributor:
SEI Financial Services Company ("SFS")

-2-

<PAGE>

INVESTMENT POLICIES AND LIMITATIONS

The following policies and limitations supplement those set forth in the
Prospectus. Unless otherwise noted, whenever an investment policy or limitation
states a maximum percentage of a Fund's assets that may be invested in any
security or other asset, or sets forth a policy regarding quality standards,
such standard or percentage limitation shall be determined immediately after and
as a result of the Fund's acquisition of such security or other asset.
Accordingly, any subsequent changes in values, net assets, or other
circumstances will not be considered when determining whether the investment
complies with a Fund's investment policies and limitations.

Each Fund's fundamental investment policies and limitations cannot be changed
without approval by a "majority of the outstanding voting securities," of the
Fund (67% or more of the voting securities present or 50% of the outstanding
voting securities, whichever is less) as defined in the Investment Company Act
of 1940 (the "1940 Act"). However, except for the fundamental investment
limitations set forth below, the investment policies and limitations described
in this Statement of Additional Information are not fundamental and may be
changed without shareholder approval.

THE FOLLOWING ARE THE FUNDAMENTAL INVESTMENT LIMITATIONS OF CASH RESERVE FUND,
U.S. TREASURY MONEY FUND AND TAX FREE MONEY FUND SET FORTH IN THEIR ENTIRETY.
EACH MONEY MARKET FUND MAY NOT:

1. with respect to 75% of the Fund's assets (50% in the case of Tax Free
Money Fund), invest more than 5% of the total market value of its assets
(determined at the time of investment) in the securities of any one issuer
other than the United States Government, its agencies or
instrumentalities;

2. issue senior securities;

3. make short sales of securities;

4. purchase securities on margin or write put and call options;

5. borrow money, except from banks for temporary or emergency purposes,
including the meeting of redemption requests which might require the
untimely disposition of securities. Borrowing in the aggregate may not
exceed 10%, and borrowing for purposes other than meeting redemptions may
not exceed 5%, of the value of the Fund's total assets (including the
amount borrowed) at the time the borrowing is made. Outstanding borrowings
in excess of 5% of the value of the Fund's total assets will be repaid
before any subsequent investments are made by the Fund;

6. act as an underwriter of securities;

7. invest in the aggregate more than 10% of the value of its net assets in
securities, including municipal lease agreements, for which there is no
readily available market and in repurchase agreements maturing in more
than 7 days;

8. invest more than 25% of the total market value of its assets (determined
at the time of investment) in the securities of foreign banks and foreign
branches of domestic banks, in the securities of foreign governments or in
the securities of issuers conducting their principal business activities
in any one industry; provided, (i) there is no limitation on the aggregate
of the Fund's investment in obligations (excluding commercial paper) of
domestic commercial banks and in obligations of the United States
Government, its agencies or its instrumentalities; and (ii) consumer
finance companies, industrial finance companies and gas, electric, water
and telephone utility companies are each considered to be separate
industries;

9. invest in real estate (other than debt obligations secured by real estate
or interests therein or debt obligations issued by companies which invest
in real estate or interests therein);

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10. make loans, except that a Fund may (i) purchase publicly issued debt
securities for its portfolio, (ii) enter into repurchase agreements, (iii)
with respect to Tax Free Money Fund, lend its portfolio securities in an
amount up to 10% of the value of its total assets, and (iv) with respect
to Cash Reserve Fund and U.S. Treasury Money Fund, lend its portfolio
securities in an amount up to 33 1/3% of the value of its total assets;

11. purchase securities having voting rights except, in the case of Tax Free
Money Fund, securities of other investment companies (to the extent
permitted by the 1940 Act). Subject to certain exceptions, including a
merger, acquisition, consolidation or reorganization involving an
investment company, the 1940 Act contains a prohibition against a Fund (i)
investing more than 5% of its total assets in the securities of another
single investment company, (ii) investing more than 10% of its total
assets in securities of investment companies, and (iii) purchasing more
than 3% of the total outstanding voting stock of another investment
company;

12. invest in securities issued, or guaranteed as to principal and interest,
by companies that have conducted operations for less than three years,
including the operations of predecessors;

13. invest in interest in oil or gas or interests in other mineral exploration
or development programs;

14. invest in or hold securities of any issuer if officers and directors of
the Company or Capitoline, individually owning beneficially more than 1/2
of 1% of the securities of the issuer, in the aggregate own more than 5%
of the issuer's securities;

15. purchase Restricted Securities (as defined in Rule 144 under the
Securities Act of 1933 (the "Securities Act"));

16. make investments for the purpose of exercising control over any issuer or
other person; and

17. pledge, mortgage, assign or encumber any of its assets except to the
extent necessary to secure a borrowing permitted by clause (5).

THE FOLLOWING ARE THE FUNDAMENTAL INVESTMENT LIMITATIONS OF LIMITED TERM BOND
FUND, INTERMEDIATE BOND FUND, GOVERNMENT BOND FUND, MARYLAND MUNICIPAL BOND
FUND, VIRGINIA INTERMEDIATE MUNICIPAL BOND FUND AND VIRGINIA MUNICIPAL BOND FUND
SET FORTH IN THEIR ENTIRETY. EACH BOND FUND MAY NOT:

1. with respect to 75% of its total assets (50% in the case of Maryland
Municipal Bond Fund, Virginia Intermediate Municipal Bond Fund and
Virginia Municipal Bond Fund), purchase the securities of any issuer
(other than securities issued or guaranteed by the U.S. Government, or any
of its agencies or instrumentalities) if, as a result thereof, (a) more
than 5% of the Fund's total assets would be invested in the securities of
that issuer, or (b) the Fund would hold more than 10% of the outstanding
voting securities of that issuer;

2. issue senior securities, except as permitted under the 1940 Act;

3. borrow money, except that the Fund may borrow money for temporary or
emergency purposes (not for leveraging or investment) in an amount not
exceeding 33 1/3% of its total assets (including the amount borrowed) less
liabilities (other than borrowings). Any borrowings that come to exceed
this amount will be reduced within three days (not including Sundays and
holidays) to the extent necessary to comply with the 33 1/3% limitation;

4. underwrite securities issued by others, except to the extent that the Fund
may be considered an underwriter within the meaning of the Securities Act
in the disposition of restricted securities;

5. purchase or sell real estate unless acquired as a result of ownership of
securities or other instruments, but this shall not prevent the Fund from
investing in securities or other instruments backed by real estate or
securities of companies engaged in the real estate business;

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6. purchase or sell physical commodities unless acquired as a result of
ownership of securities or other instruments;

7. lend any security or make any other loan if, as a result, more than 33
1/3% of its total assets would be lent to other parties, but this
limitation does not apply to purchases of debt securities or to repurchase
agreements;

8. Maryland Municipal Bond Fund, Virginia Intermediate Municipal Bond Fund
and Virginia Municipal Bond Fund may not purchase the securities of any
issuer (other than securities issued or guaranteed by the U.S. Government
or any of its agencies or instrumentalities, or tax-exempt obligations
issued or guaranteed by a U.S. territory or possession or a state or local
government, or a political subdivision of any of the foregoing) if, as a
result, more than 25% of each Fund's total assets would be invested in
securities of companies whose principal business activities are in the
same industry; and

9. Limited Term Bond Fund, Intermediate Bond Fund and Government Bond Fund
may not purchase the securities of any issuer (other than securities
issued or guaranteed by the U.S. government or any of its agencies or
instrumentalities) if, as a result, more than 25% of each Fund's total
assets would be invested in the securities of companies whose principal
business activities are in the same industry.

THE FOLLOWING ARE THE FUNDAMENTAL INVESTMENT LIMITATIONS OF VALUE FUND, CAPITAL
APPRECIATION FUND AND SPECIAL EQUITY FUND SET FORTH IN THEIR ENTIRETY. EACH
EQUITY FUND MAY NOT:

1. with respect to 75% of its total assets, purchase the securities of any
issuer (other than securities issued or guaranteed by the U.S. Government,
or any of its agencies or instrumentalities) if, as a result thereof, (a)
more than 5% of the Fund's total assets would be invested in the
securities of that issuer, or (b) the Fund would hold more than 10% of the
outstanding voting securities of that issuer;

2. issue senior securities, except as permitted under the 1940 Act;

4. underwrite securities issued by others, except to the extent that the Fund
may be considered an underwriter within the meaning of the Securities Act
in the disposition of restricted securities;

5. purchase the securities of any issuer (other than securities issued or
guaranteed by the U.S. government or any of its agencies or
instrumentalities) if, as a result, more than 25% of the Fund's total
assets would be invested in the securities of companies whose principal
business activities are in the same industry;

6. purchase or sell real estate unless acquired as a result of ownership of
securities or other instruments (but this shall not prevent the Fund from
investing in securities or other instruments backed by real estate or
securities of companies engaged in the real estate business);

7. purchase or sell physical commodities unless acquired as a result of
ownership of securities or other instruments; and

8. lend any security or make any other loan if, as a result, more than 33
1/3% of its total assets would be lent to other parties, but this
limitation does not apply to purchases of debt securities or to repurchase
agreements.

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<PAGE>

THE FOLLOWING LIMITATIONS ARE NOT FUNDAMENTAL AND MAY BE CHANGED WITHOUT
SHAREHOLDER APPROVAL.

MONEY MARKET FUNDS:

i. Tax Free Money Fund does not currently intend to purchase a security
(other than a security issued or guaranteed by the U.S. Government or
any of its agencies or instrumentalities) if, as a result, more than 5%
of its total assets would be invested in the securities of a single
issuer, provided that the Fund may invest up to 50% of its total assets
in the first tier securities of a single issuer for up to three
business days.

ii. Cash Reserve Fund does not currently intend to purchase a security
(other than a security issued or guaranteed by the U.S. Government or
any of its agencies or instrumentalities) if, as a result, more than 5%
of its total assets would be invested in the securities of a single
issuer, provided that the Fund may invest up to 25% of its total assets
in the first tier securities of a single issuer for up to three
business days.

iii. Each Fund does not currently intend to lend any security or make any
other loan if, as a result, more than 10% of the value of its total
assets would be lent to other parties, but this limitation does
not apply to the purchase of debt securities or to repurchase
agreements.

iv. Tax Free Money Fund does not currently intend to lend any security or
make any other loan.

v. To meet federal requirements for qualification as a "regulated
investment company" the Tax Free Money Fund limits its investments so
that at the close of each quarter of its taxable year: (a) with regard
to at least 50% of total assets, no more than 5% of total assets are
invested in the securities of a single issuer, and (b) no more than 25%
of total assets are invested in the securities of a single issuer.
These limitations do not apply to "government securities" as defined
for federal tax purposes.

ALL BOND AND EQUITY FUNDS

vi. Each Fund does not currently intend to purchase securities on margin,
except that a Fund may obtain such short-term credits as are necessary
for the clearance of transactions.

vii. Each Fund may borrow money only from a bank or by engaging in
reverse repurchase agreements with any party (reverse repurchase
agreements are treated as borrowings for purposes of fundamental
limitation 3). Each Fund will not purchase any security while
borrowings representing more than 5% of its total assets are
outstanding.

viii. Each Fund does not currently intend to purchase any security if,
as a result, more than 10% of its net assets would be invested in
securities that are deemed to be illiquid because they are subject
to legal or contractual restrictions on resale or because they
cannot be sold or disposed of in the ordinary course of business at
approximately the prices at which they are valued.

ix. Each Fund does not currently intend to purchase securities of other
investment companies except pursuant to the provisions of the 1940 Act.

x. Each Fund does not currently intend to purchase the securities of any
issuer (other than securities issued or guaranteed by domestic or
foreign governments or political subdivisions thereof) if, as a result,
more than 5% of its total assets would be invested in the securities of
business enterprises that, including predecessors, have a record of
less than three years of continuous operation.

xi. Each Fund does not currently intend to invest in oil, gas, or other
mineral exploration or development programs or leases.

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<PAGE>

xii. Each Fund does not currently intend to purchase or hold the
securities of any issuer if those officers and Directors of a
Fund who individually own more than 1/2 of 1% of the securities
of such issuer together own more than 5% of such issuer's
securities.

xiii. Each Fund does not currently intend to sell securities short.

CORPORATE BOND FUNDS, GOVERNMENT BOND FUND, AND EQUITY FUNDS ONLY

xiv. With respect to 100% of its total assets, each Fund does not
currently intend to purchase the securities of any issuer (other
than securities issued or guaranteed by the U.S. Government or
any of its agencies or instrumentalities) if, as a result
thereof, a Fund would own more than 10% of the outstanding
voting securities of such issuer.

xv. Each of the corporate bond and government bond funds does not
currently intend to purchase warrants. Warrants acquired by a
Fund in units or attached to securities are not subject to this
restriction.

xvi. Each Fund does not currently intend to purchase or sell futures
contracts or put or call options. This limitation does not apply
to options attached to, or acquired or traded together with,
their underlying securities, and does not apply to securities
that incorporate features similar to options or futures
contracts.

MARYLAND MUNICIPAL BOND FUND, VIRGINIA INTERMEDIATE MUNICIPAL BOND FUND AND
VIRGINIA MUNICIPAL BOND FUND ONLY

xvii. To meet federal tax requirements for qualification as a
"regulated investment company," Maryland Municipal Bond Fund,
Virginia Intermediate Municipal Bond Fund and Virginia
Municipal Bond Fund each limits its investments so that
at the close of each quarter of its taxable year: (a) with
regard to at least 50% of total assets, no more than 5% of total
assets are invested in the securities of a single issuer, and
(b) no more than 25% of total assets are invested in the
securities of a single issuer. Limitations (a) and (b) do not
apply to "government securities" as defined for federal tax
purposes.

xviii. Each Fund does not currently intend to engage in
repurchase agreements or make loans, but this
limitation does not apply to purchases of debt
securities.

xix. Each Fund does not currently intend to purchase or sell futures
contracts or call options. This limitation does not apply to
options attached to, or acquired or traded together with, their
underlying securities, and does not apply to securities that
incorporate features similar to options or futures contracts.

INVESTMENT PRACTICES

Each Fund's investments must be consistent with its investment objective and
policies. Accordingly, not all of the security types and investment techniques
discussed below are eligible investments for each of the Funds.

REPURCHASE AGREEMENTS. In a repurchase agreement, a Fund purchases a security
and simultaneously commits to resell that security to the seller at an agreed
upon price. The resale price reflects the purchase price plus an agreed upon
incremental amount which is unrelated to the coupon rate or maturity of the
purchased security. A repurchase agreement involves the obligation of the seller
to pay the agreed upon price, which obligation is in effect secured by the value
(at least equal to the amount of the agreed upon resale price and marked to
market daily) of the underlying security. Each fund may engage in a repurchase
agreement with respect to any security in which it is authorized to invest
(except that, with respect to the money market funds, the security may have a
maturity in excess of 397 days). While it does not presently appear possible to
eliminate all risks from these transactions (particularly the possibility of a
decline in the market value of the underlying securities, as well as delays and
costs to the Funds in connection with bankruptcy proceedings), it is the Funds'
current policy to limit repurchase agreements to those parties whose
creditworthiness has been reviewed and found satisfactory by Capitoline pursuant
to procedures established by the Board of Directors.

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<PAGE>

REVERSE REPURCHASE AGREEMENTS. In a reverse repurchase agreement a Fund sells a
portfolio instrument to another party, such as a bank or broker-dealer, in
return for cash and agrees to repurchase the instrument at a particular price
and time. While a reverse repurchase agreement is outstanding, a Fund will
maintain appropriate liquid assets in a segregated custodial account to cover
its obligation under the agreement. A Fund will enter into reverse repurchase
agreements only with parties whose creditworthiness has been found satisfactory
by Capitoline. Such transactions may increase fluctuations in the market value
of a Fund's assets and may be viewed as a form of leverage.

SECURITIES LENDING. The Funds (except Tax Free Money Fund, Maryland Municipal
Bond Fund, Virginia Intermediate Municipal Bond Fund and Virginia Municipal Bond
Fund) may lend securities to parties such as broker-dealers or institutional
investors. Securities lending allows a Fund to retain ownership of the
securities loaned and, at the same time, to earn additional income. Since there
may be delays in the recovery of loaned securities, or even a loss of rights in
collateral supplied should the borrower fail financially, loans will be made
only to parties deemed by Capitoline to be creditworthy pursuant to procedures
established by the Board of Directors. Furthermore, they will only be made if,
in Capitoline's judgment, the income to be earned from such loans would justify
the risk.

It is the current view of the staff of the Securities and Exchange Commission
("SEC") that a Fund may engage in loan transactions only under the following
conditions: (1) the Fund must receive at least 100% collateral in the form of
cash or cash equivalents (e.g., U.S. Treasury bills or notes) from the borrower;
(2) the borrower must increase the collateral whenever the market value of the
securities loaned (determined on a daily basis) rises above the value of the
collateral; (3) after giving notice, the Fund must be able to terminate the loan
at any time; (4) the Fund must receive reasonable interest on the loan or a flat
fee from the borrower, as well as amounts equivalent to any dividends, interest,
or other distributions on the securities loaned and any increase in market
value; (5) the Fund may pay only reasonable custodian fees in connection with
the loan; and (6) the Board of Directors must be able to vote proxies on the
securities loaned, either by terminating the loan or by entering into an
alternative arrangement with the borrower.

Cash received through loan transactions may be invested in short-term high
quality debt securities, U.S. government securities or money market instruments.
Investing this cash subjects that investment, as well as the security loaned, to
market forces (i.e., capital appreciation or depreciation).

FOREIGN INVESTMENTS. Investing in securities issued by companies or other
issuers whose principal activities are outside the United States may involve
significant risks in addition to the risks inherent in U.S. investments. The
value of securities denominated in foreign currencies and of dividends and
interest paid with respect to such securities will fluctuate based on the
relative strength of the U.S. dollar. In addition, there is generally less
publicly available information about foreign issuers' financial condition and
operations, particularly those not subject to the disclosure and reporting
requirements of the U.S. securities laws. Foreign issuers are generally not
bound by uniform accounting, auditing and financial reporting requirements and
standards of practice comparable to those applicable to U.S. issuers. Further,
economies of particular countries or areas of the world may differ favorably or
unfavorably from the economy of the United States.

Investing abroad also involves different political and economic risks. Foreign
investments may be affected by actions of foreign governments adverse to the
interests of U.S. investors, including the possibility of expropriation or
nationalization of assets, confiscatory taxation, restrictions on U.S.
investment or on the ability to repatriate assets or convert currency into U.S.
dollars, or other government intervention. There may be a greater possibility of
default by foreign governments or foreign government-sponsored enterprises.
Investments in foreign countries also involve a risk of local political,
economic, or social instability, military action or unrest, or adverse
diplomatic developments. There is no assurance that Capitoline will be able to
anticipate these potential events or counter their effects. The considerations
noted above generally are intensified for investments in developing countries.
Developing countries may have relatively unstable governments, economies based
on only a few industries, and securities markets that trade a small number of
securities.

Foreign markets may offer less protection to investors than U.S. markets. It is
anticipated that in most cases the best available market for foreign securities
will be on exchanges or in over-the-counter markets located outside of the
United States. Foreign stock markets, while growing in volume and
sophistication, are generally not as developed as those in

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<PAGE>

the United States, and securities of some foreign issuers (particularly those
located in developing countries) may be less liquid and more volatile that
securities of comparable U.S. issuers. Foreign security trading practices,
including those involving securities settlement where fund assets may be
released prior to receipt of payment, may expose a Fund to increased risk in the
event of a failed trade or the insolvency of a foreign broker-dealer, and may
involve substantial delays. In addition, the costs of foreign investing,
including withholding taxes, brokerage commissions and custodial costs, are
generally higher that for U.S. investors. In general, there is less overall
governmental supervision and regulation of securities exchanges, brokers, and
listed companies than in the United States. It may also be difficult to enforce
legal rights in foreign countries.

Cash Reserve Fund, the corporate bond funds and the equity funds may invest in
U.S. dollar denominated foreign securities that impose restrictions on transfer
within the U.S. or to U.S. persons. Although securities subject to transfer
restrictions may be marketable abroad, they may be less liquid than foreign
securities of the same class that are not subject to such restrictions.

American Depositary Receipts and European Depositary Receipts ("ADRs" and
"EDRs") are certificates evidencing ownership of shares of a foreign-based
issuer held in trust by a bank or similar financial institution. Designed for
use in U.S. and European securities markets, respectively, ADRs and EDRs are
alternatives to the purchase of the underlying securities in their national
markets and currencies.

INDEXED SECURITIES. A Fund may purchase securities whose prices are indexed to
the prices of other securities, securities indices, currencies, precious metals
or other commodities, or other financial indicators. Indexed securities
typically, but not always, are debt securities or deposits whose value at
maturity or coupon rate is determined by reference to a specific instrument or
statistic. Gold-indexed securities, for example, typically provide for a
maturity value that depends on the price of gold, resulting in a security whose
price tends to rise and fall together with gold prices.

The performance of indexed securities depends to a great extent on the
performance of the security or other instrument to which they are indexed, and
may also be influenced by interest rate changes. At the same time, indexed
securities are subject to the credit risks associated with the issuer of the
security, and their values may decline substantially if the issuer's
creditworthiness deteriorates. Recent issuers of indexed securities have
included banks, corporations, and certain U.S. government agencies. Indexed
securities may be more volatile than the underlying instruments.

DELAYED DELIVERY TRANSACTIONS. These transactions involve a commitment by a Fund
to purchase or sell specific securities at a predetermined price and/or yield,
with payment and delivery taking place after a period longer than the customary
settlement period for that type of security (and more than seven days in the
future). Typically, no interest accrues to the purchaser until the security is
delivered. Each money market and bond fund may receive fees for entering into
delayed delivery transactions.

When purchasing securities on a delayed delivery basis, a Fund assumes the
rights and risks of ownership, including the risk of price and yield
fluctuations. Because a Fund is not required to pay for securities until the
delivery date, these risks are in addition to the risks associated with the
Fund's other investments. If a Fund remains substantially fully invested at a
time when delayed delivery purchases are outstanding, the delayed delivery
purchases may result in a form of leverage. When delayed delivery purchases are
outstanding, a Fund will set aside cash or other appropriate liquid assets such
as U.S. government securities, or other high grade debt securities in a
segregated custodial account to cover its purchase obligations. When a Fund has
sold a security on a delayed delivery basis, the Fund does not participate in
further gains or losses with respect to the security. If the other party to a
delayed delivery transaction fails to deliver or pay for the securities, the
Fund could miss a favorable price or yield opportunity, or could suffer a loss.
A Fund may renegotiate delayed delivery transactions after they are entered
into, and may sell underlying securities before they are delivered, which may
result in capital gains or losses.

REFUNDING CONTRACTS. A Fund may purchase securities on a when-issued basis in
connection with the refinancing of an issuer's outstanding indebtedness.
Refunding contracts require the issuer to sell and the Fund to buy refunded
municipal obligations at a stated price and yield on a settlement date that may
be several months or several years in the future.

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A Fund generally will not be obligated to pay the full purchase price if it
fails to perform under a refunding contract. Instead, refunding contracts
generally provide for payment of liquidated damages to the issuer (currently
15-20% of the purchase price). A Fund may secure its obligations under a
refunding contract by depositing collateral or a letter of credit equal to the
liquidated damages provisions of the refunding contract. When required by SEC
guidelines, a Fund will place liquid assets such as cash, U.S. government
securities, or other high grade debt securities in a segregated custodial
account equal in amount to its obligations under refunding contracts.

VARIABLE OR FLOATING RATE DEMAND OBLIGATIONS ("VRDOS"/"FRDOS") are tax-exempt
obligations that bear variable or floating interest rates and carry rights that
permit holders to demand payment of the unpaid principal balance plus accrued
interest from the issuers or certain financial intermediaries. Floating rate
securities have interest rates that change whenever there is a change in a
designated base rate while variable rate instruments provide for a specified
periodic adjustment in the interest rate. These formulas are designed to result
in a market value for the VRDO or FRDO that approximates its par value.

With respect to each money market fund, a demand instrument with a conditional
demand feature must have received both a short-term and a long-term high quality
rating or, if unrated, have been determined to be of comparable quality pursuant
to procedures adopted by the Board of Directors. A demand instrument with an
unconditional demand feature may be acquired solely in reliance upon a
short-term high quality rating or, if unrated, upon finding of comparable
short-term quality pursuant to procedures adopted by the Board of Directors.

A Fund may invest in fixed-rate bonds that are subject to third party puts and
in participation interests in such bonds held by a bank in trust or otherwise.
These bonds and participation interests have tender options or demand features
that permit the Funds to tender (or put) their bonds to an institution at
periodic intervals of up to one year and to receive the principal amount
thereof. Each Fund considers variable rate instruments structured in this way
("participating VRDOs") to be essentially equivalent to other VRDOs that it may
purchase. The IRS has not ruled whether the interest on participating VRDOs is
tax-exempt, and accordingly, the Funds intend to purchase these instruments
based on opinions of bond counsel.

With respect to the money market funds, a variable rate instrument that matures
in 397 days or less may be deemed to have a maturity equal to the period
remaining until the next readjustment of the interest rate. A variable rate
instrument that matures in greater than 397 days but that is subject to a demand
feature that is 397 days or less may be deemed to have a maturity equal to the
longer of the period remaining until the next readjustment of the interest rate
or the period remaining until the principal amount can be recovered through
demand. A floating rate instrument that is subject to a demand feature may be
deemed to have a maturity equal to the period remaining until the principal
amount may be recovered through demand. The money market funds may purchase a
demand instrument with a remaining final maturity in excess of 397 days only if
the demand feature can be exercised on no more than 30 days' notice (a) at any
time or (b) at specific intervals not exceeding 397 days.

TENDER OPTION BONDS are created by coupling an intermediate or long-term
tax-exempt bond (generally held pursuant to a custodial agreement) with a tender
agreement that gives the holder the option to tender the bond at its face value.
As consideration for providing the tender option, the sponsor (usually a bank,
broker-dealer, or other financial institution) receives periodic fees equal to
the difference between the bond's fixed coupon rate and the rate (determined by
a remarketing or similar agent) that would cause the bond, coupled with the
tender option, to trade at par on the date of such determination. After payment
of the tender option fee, a Fund effectively holds a demand obligation that
bears interest at the prevailing short-term tax-exempt rate. Subject to
applicable regulatory requirements, the money market funds may buy tender option
bonds if the agreement gives the Fund the right to tender the bond to its
sponsor no less frequently than once every 397 days. In selecting tender option
bonds for the Funds, Capitoline will, pursuant to procedures established by the
Board of Directors, consider the creditworthiness of the issuer of the
underlying bond, the custodian, and the third party provider of the tender
option. In certain instances, a sponsor may terminate a tender option if, for
example, the issuer of the underlying bond defaults on interest payments.

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STANDBY COMMITMENTS are puts that entitle holders to same day settlement at an
exercise price equal to the amortized cost of the underlying security plus
accrued interest, if any, at the time of exercise. A Fund may acquire standby
commitments to enhance the liquidity of portfolio securities, but in the case of
the money market funds, only when the issuers of the commitments present minimal
risk of default.

Ordinarily a Fund will not transfer a standby commitment to a third party,
although it could sell the underlying municipal security to a third party at any
time. A Fund may purchase standby commitments separate from or in conjunction
with the purchase of securities subject to such commitments. In the latter case,
a Fund would pay a higher price for the securities acquired, thus reducing their
yield to maturity. Standby commitments will not affect the dollar-weighted
average maturity of the money market funds, or the valuation of the securities
underlying the commitments.

Standby commitments are subject to certain risks, including the ability of
issuers of standby commitments to pay for securities at the time the commitments
are exercised; the fact that standby commitments are not marketable by the
Funds; and the possibility that the maturities of the underlying securities may
be different from those of the commitments.

MUNICIPAL LEASE OBLIGATIONS. The municipal bond funds may invest a portion of
their assets in municipal leases and participation interests therein. These
obligations, which may take the form of a lease, an installment purchase, or a
conditional sale contract, are issued by state and local governments and
authorities to acquire land and a wide variety of equipment and facilities, such
as fire and sanitation vehicles, telecommunications equipment, and other capital
assets. Generally, a Fund will not hold such obligations directly as a lessor of
the property, but will purchase a participation interest in a municipal
obligation from a bank or other third party. A participation interest gives a
Fund a specified, undivided interest in the obligation in proportion to its
purchased interest in the total amount of the obligation.

Municipal leases frequently have risks distinct from those associated with
general obligation or revenue bonds. State constitutions and statutes set forth
requirements that states or municipalities must meet to incur debt. These may
include voter referenda, interest rate limits, or public sale requirements.
Leases, installment purchases, or conditional sale contracts (which normally
provide for title to the leased asset to pass to the governmental issuer) have
evolved as a means for governmental issuers to acquire property and equipment
without meeting their constitutional and statutory requirements for the issuance
of debt. Many leases and contracts include "non-appropriation" clauses providing
that the governmental issuer has no obligation to make future payments under the
lease or contract unless money is appropriated for such purpose by the
appropriate legislative body on a yearly or other periodic basis.
Non-appropriation clauses free the issuer from debt issuance limitations.

FEDERALLY TAXABLE OBLIGATIONS. The municipal bond funds do not intend to invest
in securities whose interest is taxable; however, from time to time each such
Fund may invest a portion of its assets in fixed-income obligations whose
interest is subject to federal income tax. For example, each such Fund may
invest in obligations whose interest is taxable pending the investment or
reinvestment in municipal securities of proceeds from the sale of its shares or
sales of portfolio securities.

Should a municipal bond fund invest in taxable obligations, it would purchase
securities that in Capitoline's judgment are of high quality. These include
obligations issued or guaranteed by the U.S. Government, its agencies or
instrumentalities; obligations of domestic banks; and repurchase agreements. The
bond funds' standards for high quality taxable obligations are essentially the
same as those described by Moody's Investors Service, Inc. in rating corporate
obligations within its two highest ratings of Prime-1 and Prime-2, and those
described by Standard and Poor's Corporation in rating corporate obligations
within its two highest ratings of A-1 and A-2. Additionally, each Fund will
purchase such obligations only in accordance with the quality standards as set
forth in the Prospectus.

Proposals to restrict or eliminate the federal income tax exemption for interest
on municipal obligations are introduced before Congress from time to time.
Proposals may also be introduced before state legislatures that would affect the
state tax treatment of a Fund's distributions. If such proposals were enacted,
the availability of municipal obligations and the value of each Funds' holdings
would be affected and the Board of Directors would reevaluate the Funds'
objectives and policies.

-11-

<PAGE>

Each municipal bond fund anticipates being as fully invested as practicable in
municipal securities; however, there may be occasions when as a result of
maturities of portfolio securities, or sales of Fund shares, or in order to meet
redemption requests, a Fund may hold cash that is not earning income. In
addition, there may be occasions when, in order to raise cash to meet
redemptions or to preserve credit quality, a Fund may be required to sell
securities at a loss.

PORTFOLIO TRANSACTIONS

Capitoline may place portfolio transactions with broker-dealers which furnish,
without cost, certain research, statistical, and quotation services of value to
Capitoline and its affiliates in advising the Funds and other clients, provided
that it shall always seek best price and execution with respect to the
transactions. Certain investments may be appropriate for the Funds and for other
clients advised by Capitoline. Investment decisions for the Funds and other
clients are made with a view to achieving their respective investment objectives
and after consideration of such factors as their current holdings, availability
of cash for investment, and the size of their investments generally. A
particular security may be bought or sold for only one client or in different
amounts and at different times for more than one but less that all clients.
Likewise, a particular security may be bought for one or more clients when one
or more other clients are selling the security. In addition, purchases or sales
of the same security may be made for two or more clients of Capitoline on the
same day. In such event, such transactions will be allocated among the clients
in a manner believed by Capitoline to be equitable to each. In some cases, this
procedure could have an adverse effect on the price or amount of the securities
purchased or sold by the Fund. Purchase and sale orders for a Fund may be
combined with those of other clients of Capitoline in the interest of achieving
the most favorable net results for a Fund.

Transactions on U.S. stock exchanges and other agency transactions involve the
payment by a Fund of negotiated brokerage commissions. Such commissions vary
among different brokers. Also, a particular broker may charge different
commissions according to such factors as the difficulty and size of the
transaction. Transactions in foreign securities often involve the payment of
fixed brokerage commissions, which are generally higher than those in the United
States. There is generally no stated commission in the case of securities traded
in the over-the-counter markets, but the price paid by a Fund usually includes
an undisclosed dealer commission or mark-up. In underwritten offerings, the
price paid by a Fund includes a disclosed, fixed commission or discount retained
by the underwriter or dealer.

Capitoline places all orders for the purchase and sale of portfolio securities
for a Fund through a substantial number of brokers and dealers. In so doing, it
uses its best efforts to obtain for a Fund the best price and execution
available. In seeking the best price and execution, Capitoline, having in mind a
Fund's best interest, considers all factors it deems relevant, including, by way
of illustration, price, the size of the transaction, the nature of the market
for the security, the amount of the commission, the timing of the transaction
taking into account market process and trends, the reputation, experience and
financial stability of the broker-dealer involved, and the quality of service
rendered by the broker-dealer in other transactions.

It has for many years been a common practice in the investment advisory business
for advisers of investment companies and other institutional investors to
receive research, statistical, and quotation services from broker-dealers that
execute portfolio transactions for the clients of such advisers. Consistent with
this practice, Capitoline receives research, statistical, and quotation services
from many broker-dealers with which it places a Fund's portfolio transactions.
These services, which in some cases may also be purchased for cash, include such
matters as general economic and security market reviews, industry and company
reviews, evaluations of securities, and recommendations as to the purchase and
sale of securities. Some of these services are of value to Capitoline and its
affiliates in advising various of their clients (including the Funds), although
not all of these services are necessarily useful and of value in managing the
Funds. The fee paid by a Fund to Capitoline is not reduced because Capitoline
and its affiliates receive such services.

As permitted by Section 28(e) of the Securities Exchange Act of 1934 (the "1934
Act"), as amended, Capitoline may cause a Fund to pay a broker-dealer that
provides brokerage and research services to Capitoline a commission in excess of
the commission charged by another broker-dealer for effecting a particular
transaction. To cause a Fund to pay any such greater commissions Capitoline must
determine in good faith that such commissions are reasonable in relation to the
value of the brokerage or research service provided by such executing
broker-dealers viewed in terms of a particular

-12-

<PAGE>

transaction or Capitoline's overall responsibilities to the Fund or its other
clients. In reaching this determination, Capitoline will not attempt to place a
specific dollar value on the brokerage or research services provided or to
determine what portion of the compensation should be related to those services.

It is expected that a Fund may execute brokerage or other agency transactions
through the Distributor or an affiliate of the Distributor or through an
affiliate of the Advisor, which are registered broker-dealers, for a commission
consistent with the 1940 Act, the 1934 Act and rules promulgated by the SEC.
Under these provisions, the Distributor or an affiliate of the Advisor is
permitted to receive and retain compensation for effecting portfolio
transactions for a Fund on a securities exchange. These rules further require
that commissions paid to the Distributor by a Fund for exchange transactions not
exceed "usual and customary" brokerage commissions. The rules define "usual and
customary" commissions to include amounts which are "reasonable and fair
compared to the commission, fee or other remuneration received or to be received
by other brokers in connection with comparable transactions involving similar
securities being purchased or sold on a securities exchange during a comparable
period of time." In addition, the Fund may direct commission business to one or
more designated broker-dealers in connection with such broker-dealers' provision
of services to the Fund or payment of certain Fund expenses (e.g., custody,
pricing and professional fees). The Directors of the Company, including those
who are not "interested persons" of the Company have adopted procedures for
evaluating the reasonableness of commissions paid to the Distributor and will
review these procedures periodically.

Brokerage commissions paid by the following Funds for the fiscal years ended
1995, 1994 and 1993 were:

==========================================================================
1995 1994 1993
- --------------------------------------------------------------------------
Value $1,111,862 $467,961 $32,110
- --------------------------------------------------------------------------
Capital Appreciation** $ 321,065 $ 77,685 ----
- --------------------------------------------------------------------------
Special Equity* $ 217,673 $116,129 $ 9,220
==========================================================================

* Inception date 9/28/92
** Inception date 1/11/93

During fiscal year ended 1995, the Fund paid brokerage commissions with respect
to these Funds in the amount of $151,676 to SEI Financial Services Company,
which represented 0.6% of the Fund's aggregate brokerage commissions for such
period. The dollar amount of transactions effected through such broker
represented 0.3% of the Fund's aggregate dollar amount of transactions involving
the payment of commissions for such period.

Certain of the Funds that invest primarily in fixed income securities pay SEI
Financial Services Company a fee with respect to repurchase transactions. For
fiscal 1995 these fees were as follows: U.S. Treasury Money Fund, $74,696.00;
Cash Reserve Fund, $62,813; Limited Term Bond Fund, $334; Intermediate Bond
Fund, $118; and Government Bond Fund, $54. These fees represent the only
commissions paid by these Funds.

VALUATION OF PORTFOLIO SECURITIES

MONEY MARKET FUNDS. Like most money market funds, the Funds value their
investments on the basis of amortized cost. This technique involves valuing an
instrument at its cost as adjusted for amortization of premium or accretion of
discount rather than its value based on current market quotations or appropriate
substitutes which reflect current market conditions. The amortized cost value of
an instrument may be higher or lower than the price a Fund would receive if it
sold the instrument.

Valuing a Fund's instruments on the basis of amortized cost and use of the term
"money market fund" are permitted by Rule 2a-7 under the 1940 Act. The Funds
must adhere to certain conditions under Rule 2a-7; these conditions are
summarized in the Prospectus.

-13-

<PAGE>

The Company's Board of Directors oversees Capitoline's adherence to SEC rules
concerning money market funds, and has established procedures designed to
stabilize each money market fund's NAV at $1.00. At such intervals as they deem
appropriate, the Directors consider the extent to which NAV calculated by using
market valuations would deviate from $1.00 per share. If the Directors believe
that a deviation from a Fund's amortized cost per share may result in material
dilution or other unfair results to shareholders, the Directors have agreed to
take such corrective action, if any, as they deem appropriate to eliminate or
reduce, to the extent reasonably practicable, the dilution or unfair results.
Such corrective action could include selling portfolio instruments prior to
maturity to realize capital gains or losses or to shorten average portfolio
maturity; withholding dividends; redeeming shares in kind; establishing NAV by
using available market quotations; and such other measures as the Directors may
deem appropriate.

During periods of declining interest rates, a Fund's yield based on amortized
cost may be higher than the yield based on market valuations. Under these
circumstances, a shareholder in a Fund would be able to obtain a somewhat higher
yield than would result if the Fund utilized market valuations to determine its
NAV. The converse would apply in a period of rising interest rates.

BOND FUNDS. Valuations of portfolio securities furnished by the pricing service
employed by the Funds are based upon a computerized matrix system and/or
appraisals by the pricing service, in each case in reliance upon information
concerning market transactions and quotations from recognized securities
dealers. The methods used by the pricing service and the quality of valuations
so established are reviewed by officers of the Funds and the Funds' pricing
agent under general supervision of the Board of Directors. There are a number of
pricing services available, and the Board of Directors, on the basis of on-going
evaluation of these services, may obtain quotes directly from broker-dealers or
market makers, may use other pricing services or discontinue the use of any
pricing service in whole or in part.

EQUITY FUNDS. Securities owned by the Funds are appraised by various methods
depending on the market or exchange on which they trade. Securities traded on
the New York Stock Exchange or the American Stock Exchange are appraised at the
last sale price, or if no sale has occurred, at the closing bid price.
Securities traded on other exchanges are appraised as nearly as possible in the
same manner. Securities and other assets for which exchange quotations are not
readily available are valued on the basis of closing over-the-counter bid
prices, if available, or at their fair value as determined in good faith under
consistently applied procedures under the general supervision of the Board of
Directors.

FUND PERFORMANCE

YIELD CALCULATIONS. In computing each Class of the money market funds' YIELD for
a period, the net change in value of a hypothetical account containing one share
reflects the value of additional shares purchased with dividends from the one
original share and dividends declared on both the original share and any
additional shares. The net change is then divided by the value of the account at
the beginning of the period to obtain a base period return. This base period
return is annualized to obtain a current ANNUALIZED YIELD. Each Class of the
money market funds may also calculate a compounded EFFECTIVE YIELD by
compounding the base period return over a one year period. In addition to the
current yield, each Class may quote yields in advertising based on any
historical seven day period. Yields for the money market funds are calculated on
the same basis as other money market funds, as required by regulation.

For the bond funds, yields used in advertising are computed by dividing a Class'
interest income for a given 30-day or one-month period, net of a Class of
shares' expenses, by the average number of shares of the class entitled to
receive dividends during the period, dividing this figure by the Class' NAV (A
Shares includes the maximum sales charge) at the end of the period and
annualizing the result (assuming compounding of income) in order to arrive at an
annual percentage rate. Income is calculated for purposes of each Class' yield
quotations in accordance with standardized methods applicable to all stock and
bond funds. In general, interest income is reduced with respect to bonds trading
at a premium over their par value by subtracting a portion of the premium from
income on a daily basis, and is increased with respect to bonds trading at a
discount by adding a portion of the discount to daily income. Capital gains and
losses generally are excluded from the calculation.

-14-

<PAGE>

Income calculated for the purposes of determining each Class of the bond funds'
yield differs from income as determined for other accounting purposes. Because
of the different accounting methods used, and because of the compounding of
income assumed in yield calculations, each Class' yield may not equal its
distribution rate, the income paid to shareholder accounts, or income reported
in the Fund's financial statements.

For purposes of the municipal funds, a TAX-EQUIVALENT YIELD is the rate an
investor would have to earn from a fully taxable investment after taxes to equal
a Class' tax-free yield. Tax-equivalent yields are calculated by dividing a
Class' yield by the result of one minus a stated federal or combined federal,
state, and city tax rate. (If only a portion of the Class' yield was tax-exempt,
only that portion is adjusted in the calculation.) If any portion of a Class'
income is derived from obligations subject to state or federal income taxes, its
tax-equivalent yield will generally be lower.

Yield information may be useful in reviewing a Class' performance and in
providing a basis for comparison with other investment alternatives. However,
each Class' yield fluctuates, unlike investments that pay a fixed interest rate
over a stated period of time. When comparing investment alternatives, investors
should also note the quality and maturity of the portfolio securities of the
respective investment companies that they have chosen to consider.

Investors should recognize that in periods of declining interest rates a Class'
yield will tend to be somewhat higher than prevailing market rates, and in
periods of rising interest rates a Class' yield will tend to be somewhat lower.
Also, when interest rates are falling, the inflow of net new money to a Class
from the continuous sale of its shares will likely be invested in instruments
producing lower yields than the balance of the Fund's holdings, thereby reducing
the Class' current yield. In periods of rising interest rates, the opposite can
be expected to occur.

The distribution rate, which expresses the historical amount of income dividends
paid as a percentage of the share price may also be quoted. The distribution
rate is calculated by dividing the daily dividend per share by its offering
price (including the maximum sales charge, if applicable) for each day in the
30-day period, averaging the resulting percentages, then expressing the average
rate in annualized terms. The distribution rate may also be calculated without
giving effect to applicable sales charges.

The following table shows the effect of a shareholder's tax status on effective
yield under the federal, Virginia State and Maryland State income tax laws for
1995. It shows the approximate yield a taxable security must provide at various
income brackets to produce after-tax yields equivalent to those of hypothetical
tax-exempt obligations yielding from 2% to 8%. Of course, no assurance can be
given that any of the Tax Free Money Fund and municipal bond funds will achieve
any specific tax-exempt yield. While the Funds invest principally in obligations
whose interest is exempt from federal income tax, other income received by the
Funds may be taxable, and income produced by the Tax Free Money Fund will
generally be subject to Virginia or Maryland State income taxation, as the case
may be.

-15-

<PAGE>

1995 TAX RATES AND TAX-EQUIVALENT YIELDS

Taxable
Income*

Combined Combined
Federal Federal
and and
Federal Virginia Maryland Virginia Maryland
Tax Tax Tax Tax Tax
Bracket** Bracket*** Bracket**** Brackets Brackets

single return joint return
<S> <C> <C> <C> <C> <C> <C>
$0 - $23,350 $0 - $39,000 15.00% 5.75% 8.00% 19.89% 21.80%

$23,351 - $56,550 $ 39,001 - $ 94,250 28.00% 5.75% 8.00% 32.14% 33.76%

$56,551 - $117,950 $ 94,251 - $143,600 31.00% 5.75% 8.00% 34.97% 36.52%

$117,951 - $256,500 $143,601 - $256,500 36.00% 5.75% 8.00% 39.68% 41.12%

$256,501 - above $256,501 - above 39.60% 5.75% 8.00% 43.07% 44.43%
</TABLE>

* Taxable income (gross income after all exemptions, adjustments, and
deductions) based on current tax rates.

** Excludes the impact of the phaseout of personal exemptions, limitation on
itemized deductions, and other credits, exclusions, and adjustments which may
raise a taxpayer's marginal tax rate. An increase in a shareholder's marginal
tax rate would increase that shareholder's tax-equivalent yield.

*** Virginia has a graduated income tax. The top rate is 5.75% applicable to
Virginia taxable income over $17,000.

**** Maryland has a graduated income tax. The top rate is 5.00% applicable to
Maryland taxable income over $3,000. In general, Maryland local income taxes
imposed by various counties range from 50% to 60% of the State income tax
liability, although Worcester County currently imposes an income tax equal to
30% of the state income tax liability. The rate stated assumes a local income
tax imposed at 60% of the amount of the state income tax and the tax-equivalent
yield table below applicable to effective combined federal and Maryland state
tax rates approximates the effect of exemption of distributions of tax-exempt
income from the Maryland Municipal Bond Fund from local income tax imposed at
that rate.

If your Federal tax rate in 1995 is:
15.00% 28.00% 31.00% 36.00% 39.60%

Then your tax-equivalent yield is:

Yield

2.00% 2.35% 2.78% 2.90% 3.13% 3.31%
3.00% 3.53% 4.17% 4.35% 4.69% 4.97%
4.00% 4.71% 5.56% 5.80% 6.25% 6.62%
5.00% 5.88% 6.94% 7.25% 7.81% 8.28%
6.00% 7.06% 8.33% 8.70% 9.38% 9.93%

-16-

<PAGE>

7.00% 8.24% 9.92% 10.14% 10.94% 11.59%
8.00% 9.41% 11.11% 11.59% 12.50% 13.25%

If your effective combined federal and Virginia state tax rate is:
19.89% 32.14% 34.97% 39.68% 43.07%

Then your tax-equivalent yield is:

Yield

2.00% 2.50% 2.95% 3.08% 3.32% 3.51%
3.00% 3.75% 4.42% 4.61% 4.97% 5.27%
4.00% 4.99% 5.89% 6.15% 6.63% 7.03%
5.00% 6.24% 7.37% 7.69% 8.29% 8.78%
6.00% 7.49% 8.34% 9.23% 9.95% 10.54%
7.00% 8.74% 10.32% 10.76% 11.60% 12.30%
8.00% 9.99% 11.79% 12.30% 13.26% 14.05%

If your effective combined federal and Maryland state tax rate is:
21.80% 33.76% 36.52% 41.12% 44.43%

Then your tax-equivalent yield is:

Yield

2.00% 2.56% 3.02% 3.15% 3.40% 3.60%
3.00% 3.84% 4.53% 4.73% 5.10% 5.40%
4.00% 5.12% 6.04% 6.30% 6.79% 7.20%
5.00% 6.39% 7.55% 7.88% 8.49% 9.00%
6.00% 7.67% 9.06% 9.45% 10.19% 10.80%
7.00% 8.95% 10.57% 11.03% 11.89% 12.60%
8.00% 10.23% 12.08% 12.60% 13.59% 14.40%

Each of the Funds may invest a portion of its assets in obligations that are
subject to state or federal income tax. When a Fund invests in these
obligations, its tax-equivalent yield will be lower. In the tables immediately
above, tax-equivalent yields are calculated assuming investments made by the
Virginia Intermediate Municipal Bond and Virginia Municipal Bond Funds are 100%
federally and Virginia tax-free and assuming investments made by the Maryland
Municipal Bond Fund are 100% federally and Maryland tax-free.

TOTAL RETURN CALCULATIONS. TOTAL RETURNS quoted in advertising reflect all
aspects of the Class of shares' return, including the effect of reinvesting
dividends and capital gain distributions (if any), and any change in the Class'
NAV over the period. AVERAGE ANNUAL TOTAL RETURNS are calculated by determining
the growth or decline in value of a hypothetical historical investment in a
Class over a stated period, and then calculating the annually compounded
percentage rate that would have produced the same result if the rate of growth
or decline in value had been constant over the period. For example, a cumulative
total return of 100% over ten years would produce an average annual total return
of 7.18%, which is the steady annual rate of return that would equal 100% growth
on a compounded basis in ten years. While average annual total returns are a
convenient means of comparing investment alternatives, investors should realize
that a Class of shares' performance is not constant over time, but changes from
year to year, and that average annual total returns represent averaged figures
as opposed to the actual year-to-year performance of the Class.

-17-

<PAGE>

capital (including capital gains and changes in share price) in order to
illustrate the relationship of these factors and their contributions to total
return. A Shares' total returns may be quoted with or without taking the maximum
sales charge into account. Excluding A Shares' sales charge from a total return
calculation produces a higher total return figure. Total returns, yields, and
other performance information may be quoted numerically or in a table, graph, or
similar illustration.

HISTORICAL FUND RESULTS. The following table shows the money market funds'
yields and effective yields for each Class for the seven-day period ended
November 30, 1995.

<TABLE>
<CAPTION>
Effective Tax-Equivalent
Yield+ Yield+ Yield+*
Trust Trust Trust
A Shares B Shares Class A Shares B Shares Class A Shares B Shares Class
-------- -------- ----- -------- -------- ----- -------- -------- -----
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Cash Reserve Fund 5.28% 5.28% 5.29% 5.42% 5.42% 5.43% N/A N/A N/A
U.S. Treasury Money Fund N/A N/A 5.18% N/A N/A 5.31% N/A N/A N/A
Tax Free Money Fund 3.14% N/A 3.14% 3.18% N/A 3.19% 4.55% N/A 4.55%

</TABLE>

* Based on an assumed federal income tax rate of 31%.

+ Each money market fund's A Shares, which became effective May 3, 1993, pay an
additional distribution-related 12b-1 fee of .25%, which, when taken into
account, results in lower yields. Effective March 31, 1994, U.S. Treasury Money
Fund discontinued offering A Shares, and the .25% Rule 12b-1 distribution fee
for all the money market funds was waived.

Cash Reserve Fund's B Shares became effective on March 29, 1995, at which time a
.65% 12b-1 fee (plus a .25% shareholder service fee) began to be imposed.

The following table shows yields and effective yields for each class of the bond
funds for the 30-day period ended November 30, 1995 and the average annual total
returns for each bond and equity fund for the period ended November 30, 1995.

Yield
Trust Class A Shares B Shares

Limited Term Bond Fund 5.26% 5.13% N/A
Intermediate Bond Fund 5.49% 5.31% N/A
Government Bond Fund 5.60% N/A 4.73%
Virginia Intermediate Municipal Bond Fund 4.03% 3.88% N/A
Virginia Municipal Bond Fund 4.39% N/A 3.53%

-18-

<PAGE>

Average Annual Total Returns+
1 year* Life of Fund*
A Shares B Shares Trust A Shares B Shares Trust
Class Class
<S> <C> <C> <C> <C> <C> <C>
Limited Term Bond (9/28/92) 9.51% N/A 11.50% 4.67% N/A 5.38%
Intermediate Bond Fund (9/28/92) 13.61% N/A 12.07% 5.90% N/A 6.12%
Government Bond Fund (4/19/95) N/A 9.64%++ 18.56%++ N/A 5.86% 11.85%
VA Intermediate Muni. Bond (1/11/93) 12.08% N/A 16.09% 4.06% N/A 5.40%
VA Municipal Bond Fund (4/17/95) N/A 10.53%++ 11.89%++ N/A 6.51% 7.67%
Value Fund (9/28/92) 22.90% 16.92%++ 28.76% 11.59% 10.78% 13.25%
Capital Appreciation (1/11/93) 15.24% N/A 20.74% 5.24% N/A 7.50%
Special Equity Fund (9/28/92) 14.64% 14.48%++ 20.87% 11.01% 9.22% 12.63%

</TABLE>

* Life of Fund figures are for the period beginning on the date indicated
above through November 30, 1995.

+ Average annual total returns include the effect of the maximum sales charge.
Effective May 3, 1993, the Funds commenced sales of A Shares. This performance
information reflects the A Shares' 12b-1 fees and revised transfer agency
fee arrangements for the period May 3, 1993 to November 30, 1995, and therefore,
may not be representative of A Shares performance.

++ Ratios are annualized.

Initial offering of B Shares was made on March 29, 1995, at which time a .65%
12b-1 fee (plus a .20% shareholder service fee) began to be imposed which fees
are also reflected.

Each Class' performance may be compared in advertising to the performance of
other mutual funds in general or to the performance of particular types of
mutual funds, especially those with similar objectives. This performance may be
expressed as a ranking prepared by Lipper Analytical Services, Inc. ("Lipper,"
sometimes referred to as "Lipper Analytical Services"), an independent service,
that monitors the performance of mutual funds. The Lipper performance analysis
ranks funds on the basis of total return, assuming reinvestment of all
distributions, but does not take sales charges or redemption fees into
consideration and is prepared without regard to tax consequences. In addition,
each Class of the municipal funds' performance may be compared in advertising to
the performance of representative individual municipal securities and unit
investment trusts comprised of municipal securities.

The Lipper General Equity Funds Average can be used to show how the Funds'
performance compares to a broad-based set of equity mutual funds. The Lipper
General Equity Funds Average is an average of the total returns of all equity
mutual funds (excluding international funds and funds that specialize in
particular industries or types of investments) tracked by Lipper.

Ibbotson Associates of Chicago, Illinois provides historical returns of the
capital markets in the United States. Each Class may compare its performance to
the long-term performance of the U.S. capital markets in order to demonstrate
general long-term risk versus reward investment scenarios. Performance
comparisons could also include the value of a hypothetical investment in common
stocks, long-term bonds, or U.S. Treasury securities.

Each Class of the money market funds also may compare its performance or the
performance of securities in which it may invest to IBC/Donoghue's MONEY FUND
AVERAGES(TM), which monitors the performance of taxable and tax-free money
market funds. This index, which also assumes reinvestment of distributions, is
published by IBC/Donoghue's MONEY FUND REPORT(R) of Ashland, Massachusetts
01721.

Each Class also may quote in advertising the performance of various unmanaged
indices as may be selected from time to time, and may compare the price
volatility of these indices to the price volatility of the Standard & Poor's
Composite Index of 500 Stocks ("S&P 500(R) Index"). These indices may include,
but are not limited to, the examples shown in the Appendix.

-19-

<PAGE>

ADDITIONAL INFORMATION REGARDING PRICING AND REDEMPTIONS

The Funds are open for business and their NAVs are calculated each day the New
York Stock Exchange ("NYSE") and the Custodian, Crestar Bank, are open. The NAV
of each money market fund is determined as of 12:00 Noon Eastern time for Tax
Free Money Fund, and 1:00 p.m. Eastern time for Cash Reserve Fund and U.S.
Treasury Money Fund, and as of the close of regular trading hours of the NYSE,
normally 4:00 p.m. Eastern time. The NAV of each equity and bond fund is
determined as of the close of regular trading hours of the NYSE. The NYSE and
Crestar Bank have designated the following holiday closings for 1996, and
Capitoline expects the schedule to be the same in the future: New Year's Day
(observed), Dr. Martin Luther King, Jr. Day, Presidents' Day, Good Friday,
Memorial Day (observed), Independence Day, Labor Day, Columbus Day (observed),
Veterans' Day, Thanksgiving Day and Christmas Day. The holiday closing schedule
may be changed by the NYSE and Crestar Bank. When the NYSE is closed, or when
trading is restricted for any reason other than its customary weekend or holiday
closings, or under emergency circumstances as determined by the SEC to merit
such action, the Funds will determine NAVs at the close of business, the time of
which will coincide with the closing of the NYSE. To the extent that Fund
securities are traded in other markets on days the NYSE or Crestar Bank are
closed (and a Fund is not open for business), a Fund's NAV may be significantly
affected on days when investors do not have access to the Fund to purchase or
redeem shares.

If the Directors determine that existing conditions make cash payment
undesirable, redemption payments may be made in whole or in part in securities
or other property, valued for this purpose as they are valued in computing the
NAV of each Fund. Shareholders receiving securities or other property on
redemption may realize a gain or loss for tax purposes and will incur any costs
of sale, as well as the associated inconveniences.

Pursuant to Rule 11a-3 under the 1940 Act, a Fund is required to give
shareholders at least 60 days' notice prior to terminating or modifying a Fund's
exchange privilege. Under the Rule, the 60 day notification requirement may be
waived if (i) the only effect of a modification would be to reduce or eliminate
an administrative fee, redemption fee or deferred sales charge ordinarily
payable at the time of exchange or (ii) a Fund temporarily suspends the offering
of shares as permitted under the 1940 Act or by the SEC or because it is unable
to invest amounts effectively in accordance with its investment objective and
policies.

In the Prospectus, the Funds have notified shareholders that they reserve the
right at any time without prior notice to shareholders to refuse exchange
purchases by any person or group if, in Capitoline's judgment, a Fund would be
unable to invest effectively in accordance with its investment objective and
policies, or would otherwise potentially be adversely affected.

DISTRIBUTIONS AND TAXES

DISTRIBUTIONS. If you request to have distributions mailed to you and the U.S.
Postal Service cannot deliver your checks, or if your checks remain uncashed for
six months, the Fund will hold your distributions without interest or until you
provide the Fund with alternate instructions.

Each money market and bond fund declares dividends equal to its entire net
investment income (including, in the case of the Cash Reserve Fund and U.S.
Treasury Money Fund, net realized short-term capital gains, if any) on each
business day of that Fund. Equity funds declare and pay dividends monthly. Net
capital gains (and, in the case of Tax Free Money Fund, net short-term capital
gains), if any, are declared and distributed annually by all Funds, normally in
December. Each money market fund and bond fund declares dividends for Saturdays,
Sundays and holidays on the previous business day, and pay dividends after the
close of business on the last business day of each month. Unless the Fund's
Transfer Agent is otherwise instructed, all dividends and distributions of
capital gains are automatically re-invested into additional shares of common
stock of that Fund immediately upon payment thereof.

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<PAGE>

Fund, including Maryland Municipal Bond Fund, intends to qualify for each
subsequent fiscal year, for tax treatment as a "regulated investment company"
under the Internal Revenue Code. By distributing all of its net investment
income and any net realized short-term and long-term capital gains for a taxable
year in accordance with the timing requirements imposed by the Code, and by
meeting certain other requirements relating to the sources of income and
diversification of assets, a Fund should not be liable for federal income or
excise taxes.

TAX FREE MONEY FUND, MARYLAND MUNICIPAL BOND FUND, VIRGINIA INTERMEDIATE
MUNICIPAL BOND FUND AND VIRGINIA MUNICIPAL BOND FUND (COLLECTIVELY THE
"MUNICIPAL FUNDS"). Dividends paid to shareholders by any of the Municipal Funds
out of tax-exempt interest income earned by such a Fund ("exempt-interest
dividends") generally will not be subject to federal income tax, provided that
(as intended) at least 50% of the value of the Fund's total assets at the close
of each quarter of its taxable year is comprised of obligations, the interest on
which is excluded from gross income under section 103(a) of the Internal Revenue
Code. Substantially all of the dividends paid by Tax Free Money Fund are
anticipated to be exempt from regular federal income taxes. Under normal
circumstances, at least 80% of the income from Maryland Municipal Bond Fund,
Virginia Intermediate Municipal Bond Fund and Virginia Municipal Bond Fund will
be exempt from regular federal income taxes. However, persons who are
"substantial users" (or "related persons" of substantial users) of facilities
financed by private activity bonds held by a Fund may be subject to tax on their
pro rata share of the interest income from such bonds and should consult their
tax advisers before purchasing shares of that Fund. Dividends paid by a Fund out
of its taxable net investment income (including realized net short-term capital
gains, if any) are taxable to shareholders as ordinary income notwithstanding
that such dividends are reinvested in additional shares of that Fund.
Distributions of net capital gains, if any, are taxable as long-term capital
gains to the shareholder receiving them regardless of the length of time the
shares on which such distributions are paid may have been held. With respect to
a shareholder who receives exempt-interest dividends on shares of a fund held
for six months or less, any loss on the sale or exchange of such shares will, to
the extent of the amount of such exempt-interest dividends, be disallowed. In
addition, a long-term capital gain distribution with respect to shares will
cause any loss on a subsequent sale or exchange of such shares not so disallowed
to be treated as long-term capital loss to the extent of such long-term capital
gain distribution, if such shares are held for six months or less.

Under current federal tax law (1) interest on certain private activity bonds is
treated as an item of tax preference for purposes of the federal alternative
minimum tax imposed on individuals and corporations, though for regular federal
income tax purposes such interest remains fully tax-exempt, and (2) interest on
all tax-exempt obligations is included in "adjusted current earnings" of
corporations for federal alternative minimum tax purposes. Because Tax Free
Money Fund expects to purchase private activity bonds, a portion (not expected
to exceed 20%) of the Fund's exempt-interest dividends may constitute an item of
tax preference for those shareholders subject to the federal alternative minimum
tax. Maryland Municipal Bond Fund, Virginia Intermediate Municipal Bond Fund and
Virginia Municipal Bond Fund each may invest in municipal obligations, the
interest on which is subject to the federal alternative minimum tax ("AMT
securities"). To the extent that these Funds invest in AMT securities,
shareholders who are subject to the AMT will be required to report a portion of
that Fund's dividends as a "tax preference item" in determining their federal
taxes.

Every shareholder required to file a federal individual income tax return is
required to include for informational purposes the amount of exempt-interest
dividends received from the municipal bond funds during the taxable year. Exempt
interest dividends are included in determining what portion, if any, of a
person's social security benefits and railroad retirement benefits are subject
to federal income tax.

Interest on indebtedness incurred by shareholders to purchase or carry shares of
each municipal bond fund generally is not deductible for federal income tax
purposes. Shares of each municipal bond fund may be considered to have been
purchased or carried with borrowed funds even though those funds are not
directly linked to the shares.

The exemption for federal income tax purposes of dividends derived from interest
on municipal securities does not necessarily result in an exemption under the
income or other tax laws of any state or local taxing authority. Shareholders of
the municipal bond funds may be exempt from state and local taxes on
distributions of tax-exempt interest income derived from obligations of the
state and/or municipalities of the state in which they reside but may be subject
to tax on income derived from the municipal securities of other jurisdictions.
Shareholders are advised to consult with their tax

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<PAGE>

advisers concerning the application of state and local taxes to investments in a
municipal bond fund which may differ from the federal income tax consequences
described above.

FEDERAL TAXES. Distributions from each Fund's taxable net investment income and
net short-term capital gains are taxed as dividends, and capital gain
distributions are taxed as long-term capital gains. A portion of the equity
funds' dividends may qualify for the dividends received deduction for
corporations. The Funds' distributions are taxable when they are paid, whether
taken in cash or reinvested in additional shares, except that distributions
declared in October, November or December to shareholders of record in such
month and paid the subsequent January will be taxed as though paid on December
31.

The Funds will send shareholders a tax statement by January 30 showing the
status of the taxable distributions received in the prior year, and will file a
copy with the IRS. In addition, within 60 days from the end of each Fund's
fiscal year end, the shareholders will be notified as to the portion of
distributions paid that qualify as exempt-interest dividends, capital gain
distributions, and qualified dividends for corporate investors. It is suggested
that shareholders keep all statements received to assist in personal
recordkeeping.

STATE AND LOCAL TAXES. In addition to federal taxes, shareholders may be subject
to state or local taxes on their investment, depending on state law.

State of Maryland. To the extent the Maryland Municipal Bond Fund qualifies as a
regulated investment company under the Code, it will be subject to tax only on
(1) that portion of its income on which tax is imposed for federal income tax
purposes under Section 852(b)(1) of the Code and (2) that portion of its income
which consists of federally tax exempt interest on obligations other than
Maryland Exempt Obligations (hereinafter defined) to the extent such interest is
not paid to Maryland Municipal Bond Fund shareholders in the form of
exempt-interest dividends. To the extent dividends paid by the Maryland
Municipal Bond Fund represent interest excludable from gross income for federal
income tax purposes, that portion of exempt-interest dividends that represents
interest received by the Maryland Municipal Bond Fund on obligations issued by
the State of Maryland, its political subdivisions, Puerto Rico, the U.S. Virgin
Islands, or Guam and their respective authorities or municipalities ("Maryland
Exempt Obligations"), will be exempt from Maryland state and local income taxes
when allocated or distributed to a shareholder of the Maryland Municipal Bond
Fund except in the case of a shareholder that is a financial institution. Except
as noted below, all other dividend distributions will be subject to Maryland
state and local income taxes.

Capital gains distributed by the Maryland Municipal Bond Fund to a shareholder
or any gains realized by a shareholder from a redemption or sale of shares must
be recognized for Maryland state and local income tax purposes to the extent
recognized for federal income tax purposes. However, capital gains distributions
included in the gross income of shareholders for federal income tax purposes are
subtracted from capital gains income for Maryland income tax purposes to the
extent such distributions are derived from the disposition by the Maryland
Municipal Bond Fund of debt obligations issued by the State of Maryland, its
political subdivisions and authorities.

Except in the case of a shareholder that is a financial institution, dividends
received by a shareholder from the Maryland Municipal Bond Fund that are derived
from interest on U.S. government obligations will be exempt from Maryland state
and local income taxes.

In the case of individuals, Maryland presently imposes an income tax on items of
tax preference with reference to such items as defined in the Code for purposes
of calculating the federal alternative minimum tax. Interest paid on certain
private activity bonds is a preference item for purposes of calculating the
federal alternative minimum tax. Accordingly, if the Maryland Municipal Bond
Fund holds such bonds, the excess of 50% of that portion of exempt interest
dividends which is attributable to interest on such bonds over a threshold
amount may be taxable by Maryland. Interest on indebtedness incurred or
continued (directly or indirectly) by a shareholder in order to purchase or
carry shares of the Maryland Municipal Bond Fund will not be deductible for
Maryland state and local income tax purposes. Individuals will not be subject to
personal property tax on their shares of the Maryland Municipal Bond Fund.
Shares of the

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<PAGE>

Maryland Municipal Bond Fund held by a Maryland resident at death may be subject
to Maryland inheritance and estate taxes.

Commonwealth of Virginia. Under existing Virginia law, distributions from
Virginia Intermediate Municipal Bond Fund and Virginia Municipal Bond Fund will
not be subject to Virginia individual, trust, estate, or corporate income
taxation to the extent that such distributions are either (i) excludable from
federal gross income and attributable to interest on obligations of Virginia,
its political subdivisions, or its instrumentalities, or Puerto Rico, United
States Virgin Islands, or Guam or (ii) attributable to interest on direct
obligations of the United States. These Virginia income tax exemptions will be
available only if a Fund (i) qualifies as a separate "regulated investment
company" under the Internal Revenue Code and (ii) complies with the requirement
of the Internal Revenue Code that at least 50% of the value of its assets at the
close of each quarter of its taxable year is invested in state, municipal, or
other obligations described in Section 103(a) of the Internal Revenue Code.
These Funds intend to comply with those requirements.

Other distributions from these Funds, including capital gains, generally will
not be exempt from Virginia income taxation.

Interest on indebtedness incurred (directly or indirectly) by a shareholder of
Virginia Intermediate Municipal Bond Fund or Virginia Municipal Bond Fund to
purchase or carry shares of these Funds generally will not be deductible for
Virginia income tax purposes. These Funds will not be subject to any Virginia
intangible personal property tax on any obligations in a Fund. In addition,
shares of a Fund held for investment purposes will not be subject to any
Virginia intangible personal property tax.

To be entitled to the exemption described above for distributions attributable
to certain interest on Virginia obligations, obligations of certain United
States possessions or direct United States obligations, a shareholder must be
able to substantiate the exempt portions of each distribution with reasonable
certainty. The determination of exempt portions must be made on a monthly
(rather than annual or quarterly) basis if, as planned, Virginia Intermediate
Municipal Bond Fund and Virginia Municipal Bond Fund each makes monthly
distributions. Accordingly, shareholders should retain their statements from
these Funds, which are to be issued at least annually, showing the percentages
of each monthly distribution attributable to interest on Virginia obligations,
possessions obligations and United States obligations.

CAPITAL GAINS. Shareholders may realize a capital gain or loss when they redeem
(sell) or exchange shares of the Funds. For most types of accounts, the Funds
will report the proceeds of a shareholder's redemptions to the shareholder and
the IRS annually. However, because the tax treatment also depends on the
purchase price and the shareholder's personal tax position, shareholders should
keep their regular account statements to use in determining their tax.

"BUYING A DIVIDEND." On the ex-dividend date for an equity or bond fund
distribution, the Fund's share value is reduced by the amount of the
distribution. If a shareholder were to buy shares just before the record date
("buying a dividend"), the shareholder would pay the full price for the shares
and then, in effect, receive a portion of the price back as a taxable
distribution.

OTHER TAX INFORMATION. When an investor signs his account application, he will
be asked to provide his social security or taxpayer identification number and
certify that the number provided is correct and that he is not subject to 31%
backup withholding for failing to report income to the IRS. If an investor fails
to provide the correct number or violates IRS regulations, the IRS can require
the Funds to withhold 31% of his taxable distributions and redemptions.

Each Class calculates dividend and capital gain distributions separately. Each
Fund is treated as a separate entity in all respects for tax purposes. There is
a risk that a Fund may be unable to meet tax rules that require mutual funds to
derive less than 30% of their gross income from gains realized upon the sale of
securities held less than 3 months. If this were to occur, the affected Fund may
be required to pay federal as well as Maryland state income taxes from its
assets.

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<PAGE>

The information above is only a summary of some of the tax consequences
generally affecting the Funds and their shareholders, and no attempt has been
made to discuss individual tax consequences. In addition to federal income
taxes, shareholders may be subject to state and local taxes on distributions
received from the Funds. Investors should consult their tax advisers to
determine whether a Fund is suitable to their particular situations.

DIRECTORS AND OFFICERS AND AFFILIATED PERSONS

The Directors and officers of the Company and their principal occupations during
the past five years are set forth below. The Director who is an "interested
person" (as defined in the 1940 Act) by virtue of his affiliation with either a
fund or Capitoline is indicated by an asterisk (*).

* Jesse F. Williams III, Chairman, President, and Director. Chairman of the
Board, Harrison & Bates Incorporated (real estate company), since 1971. Mr.
Williams is also a member of the advisory board of Crestar Bank. His address is
823 East Main Street, Suite 1800, Richmond, Virginia 23219.

F. David Fowler, Director. Dean of School of Business and Public Management of
George Washington University since 1992. Mr. Fowler is also a member of the
board of directors of FTP Software Corporation (software sales). Previously, he
was a Partner at KPMG Peat Marwick LLP (public accountants). His business
address is 710 21st Street, N.W., Suite 206, Washington, D.C. 20052.

John Bruce James, Jr., Director. Vice President of Virginia Landmark Corporation
(real estate company) since 1970. Mr. James is also a member of the Commission
of Architectural Review, City of Richmond, since 1982; a member of the Board of
Trustees of the Instructive Visiting Nurses Association since 1976; and a member
of the Board of Directors of The Retreat Hospital, Richmond, Virginia, since
1982. Previously, he was a member of the Board of Trustees, Hampden-Sydney
College. His address is 3910 Exeter Road, Richmond, Virginia 23221.

Jean L. Oakey, Director. Partner at Wells Coleman & Co. (public accountants).
Her business address is 3800 Patterson Avenue, Richmond, Virginia 23221.

Glen Douglas Pond, Director. Retired. Formerly the Director of the Virginia
Retirement System. His address is 21 Waterfront Court, Cedar Point, Urbanna,
Virginia 23175.

David M. Carter, Secretary, Partner, Hunton and Williams, Fund Counsel.

Kevin P. Robins, Vice President, Assistant Secretary. Senior Vice President &
General Counsel of SEI, the Administrator and the Distributor since 1994. Vice
President of SEI, the Administrator and the Distributor 1992-1994. Associate,
Morgan, Lewis & Bockius (law firm) prior to 1992.

Jeffrey A. Cohen, Controller, Assistant Secretary. CPA, Director, International
and Domestic Funds Accounting, SEI Corporation since 1991. Audit Manager, Price
Waterhouse prior to 1991.
As of September 30, 1995, the Directors and officers owned in the aggregate less
than 1% of the outstanding shares of any Fund.

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<PAGE>

As of November 30, 1995, the Directors and officers of the Company received the
following compensation:

<TABLE>
<CAPTION>
============================================================================================================================
Total
Aggregate Compensation from
Compensation From Pension or Retirement Estimated Annual Registrant and Fund
Registrant for Fiscal Benefits Accrued as Benefits Upon Complex Paid to Directors
Name of Person, Position Year Ended 1995 Part of Fund Expenses Retirement for Fiscal Year Ended 1995
- ----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Jesse F. Williams, III, $7,000 0 0 $7,000
Chairman, President and
Director
- ---------------------------------------------------------------------------------------------------------------------
F. David Fowler, $7,000 0 0 $7,000
Director
- ---------------------------------------------------------------------------------------------------------------------
John Bruce James, Jr., $7,000 0 0 $7,000
Director
- ---------------------------------------------------------------------------------------------------------------------
Jean L. Oakey, $7,000 0 0 $7,000
Director
- ---------------------------------------------------------------------------------------------------------------------
Glen Douglas Pond, $7,000 0 0 $7,000
Director
=====================================================================================================================
</TABLE>

The Company was incorporated in the state of Maryland as Bayshore Funds, Inc. on
March 17, 1986. At a special meeting of shareholders held July 7, 1992,
shareholders approved an amendment to the Articles of Incorporation changing the
name to CrestFunds, Inc. The change was effective July 10, 1992.

THE ADVISER

Pursuant to Investment Advisory Agreements, as amended (the "Advisory
Agreements") Capitoline Investment Services, Incorporated, a wholly-owned
subsidiary of Crestar Bank, a subsidiary of Crestar Financial Corp., furnishes
at its own expense all services, facilities and personnel necessary in
connection with managing each Fund's investments and effecting portfolio
transactions for each Fund. Each Advisory Agreement will continue in effect only
if such continuance is specifically approved at least annually by the Board of
Directors or by vote of the shareholders, and in either case by a majority of
the Directors who are not parties to each Advisory Agreement or interested
persons of any such party, at a meeting called for the purpose of voting on each
Advisory Agreement.

Each Advisory Agreement is terminable without penalty by any Fund on 60 days'
written notice when authorized either by vote of its shareholders or by a vote
of a majority of the Board of Directors, or by the Adviser on 60 days' written
notice, and will automatically terminate in the event of its assignment. Each
Advisory Agreement also provides that, with respect to each Fund, neither the
Adviser nor its personnel shall be liable for any error of judgment or mistake
of law or for any act or omission in the performance of its duties to the Fund,
except for willful misfeasance, bad faith or gross negligence in the performance
of the Adviser's or their duties or by reason of reckless disregard of its or
their obligations and duties under the Advisory Agreements. Each Advisory
Agreement provides that the Adviser may render services to others.

The fees paid pursuant to the Advisory Agreements are accrued daily and paid
monthly. For its services under the Advisory Agreements, the Adviser receives
fees with respect to each Fund at the annual rates set forth below:

MONEY MARKET FUNDS

.40% of each Fund's average daily net assets on the first $500 million of net
assets; .35% of each Fund's average daily net assets on the next $500 million of
net assets; and

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<PAGE>

.30% of each Fund's average daily net assets on all remaining net assets.

CAPITAL APPRECIATION FUND, VALUE FUND AND SPECIAL EQUITY FUND

.75% of each Fund's average daily net assets.

LIMITED TERM BOND FUND AND VIRGINIA INTERMEDIATE MUNICIPAL BOND FUND

.50% of each Fund's average daily net assets.

INTERMEDIATE BOND FUND

.60% of Bond Fund's average daily net assets.

MARYLAND MUNICIPAL BOND FUND, GOVERNMENT BOND FUND AND VIRGINIA MUNICIPAL BOND
FUND

.60% of each Fund's average daily net assets.

The Adviser may choose to waive or reimburse a Fund for a portion of that Fund's
investment advisory fee.

For the fiscal years ended November 30, 1995, 1994 and 1993, the advisory fees
paid to the Adviser with respect to each money market Fund were as follows:

<TABLE>
<CAPTION>
11/30/95 Waived 11/30/94 Waived 11/30/93 Waived
<S> <C> <C> <C> <C> <C> <C>
Cash Reserve Fund $1,933,503 $0 $1,657,907 $0 $1,975,064 $0
U.S. Treasury Money Fund $1,296,973 $0 $1,332,498 $0 $1,600,262 $0
Tax Free Money Fund $ 766,014 $0 $ 605,671 $0 $ 704,097 $0

</TABLE>

Fees paid to the Adviser with respect to the bond and equity funds were as
follows:

<TABLE>
<CAPTION>
11/30/95 Waived 11/30/94 Waived 11/30/93 Waived
<S> <C> <C> <C> <C> <C> <C>
Limited Term Bond Fund $ 417,675 $0 $ 429,077 $0 $ 381,139 $0
Intermediate Bond Fund $ 469,601 $0 $ 429,478 $0 $ 255,722 $0
Virginia Intermediate Municipal
Bond Fund $ 249,142 $0 $ 254,392 $0 $ 107,415 $0
Value Fund $1,521,942 $0 $1,360,865 $0 $1,047,885 $0
Capital Appreciation Fund $ 141,723 $0 $ 87,096 $0 $ 40,173 $0
Special Equity Fund $ 386,056 $0 $ 321,826 $0 $ 206,402 $0
Government Bond Fund $ 35,722 $5,370 N/A N/A N/A N/A
Virginia Municipal Bond Fund $ 19,433 $3,239 N/A N/A N/A N/A
Maryland Municipal Bond Fund N/A N/A N/A N/A N/A N/A

</TABLE>

None of the Maryland Municipal Bond, Government Bond or Virginia Municipal Bond
Funds conducted operations during the fiscal years ended November 30, 1994 and
1993.

In addition to receiving its advisory fee from the Funds, the Adviser may also
act and be compensated as investment manager for its clients with respect to
assets which are invested in a Fund. In some instances the Adviser may elect to
credit against any investment management fee received from a client who is also
a shareholder in the Fund an amount equal to all or a portion of the fees
received by the Adviser and its affiliates from a Fund with respect to the
client's assets invested in the Fund.

-26-

<PAGE>

The Adviser has agreed to reimburse a Fund for certain of the operating expenses
(exclusive of interest, taxes, and brokerage fees and expenses paid pursuant to
the Distribution Plan and organization expenses, all to the extent permitted by
applicable state law or regulation) which in any year exceed the limits
prescribed by any state in which the Fund's shares are qualified for sale.
Currently, the most restrictive expense ratio limitation imposed by any state is
2 1/2% of the first $30 million of a Fund's average net assets, 2% of the next
$70 million of its average net assets and 1 1/2% of its average net assets in
excess of $100 million. Shares of the Funds are not currently qualified for sale
in any state which limits operating expenses. For the purpose of this obligation
to reimburse expenses, each Fund's annual expenses are estimated and accrued
daily, and any appropriate estimated payments will be made by the Adviser
monthly. No such reimbursement was payable with respect to the fiscal year ended
November 30, 1995.

Subject to the obligations of the Adviser to reimburse a Fund for its excess
expenses as described above, the Company has, under each Advisory Agreement,
confirmed its obligation to pay all other expenses, including interest charges,
taxes, brokerage fees and commissions; certain insurance premiums; fees,
interest charges and expenses of the custodian, transfer agent and dividend
disbursing agent; telecommunications expenses; auditing, legal and compliance
expenses; costs of forming the corporation and maintaining corporate existence;
costs of preparing and printing the Company's prospectus, statement of
additional information, subscription order forms and shareholder reports and
delivering them to existing and prospective shareholders; costs of maintaining
books of original entry for portfolio and Fund accounting and other required
books and accounts and of calculating the net asset value of shares of the
Funds; costs of reproduction, stationery and supplies; compensation of directors
and officers and employees of the Company and costs of other personnel
performing services for the Company who are not officers of the Adviser, the
Company's Distributor or their respective affiliates; costs of corporate
meetings; SEC registration fees and related expenses; state securities laws
registration fees and related expenses; fees payable to the Adviser under the
Advisory Agreements and to the Company's Distributor under the Administration
and Distribution Agreement and all other fees and expenses paid by a Fund or
Class pursuant to the Administration Plans or Distribution Plans.

ADMINISTRATOR AND DISTRIBUTOR

THE ADMINISTRATOR

The Company and SEI Financial Services Corporation (the "Administrator") have
entered into an administration agreement (the "Administration Agreement")
effective March 1, 1995.

The Administration Agreement provides that the Administrator shall not be liable
for any error of judgment or mistake of law or for any loss suffered by the
Trust in connection with the matters to which the Administration Agreement
relates, except a loss resulting from willful misfeasance, bad faith or
negligence on the part of the Administrator in the performance of its duties or
from reckless disregard by it of its duties and obligations thereunder.

The Administrator, a wholly-owned subsidiary of SEI Corporation ("SEI"), was
organized as a Delaware corporation in 1969 and has its principal business
offices at 680 East Swedesford Road, Wayne, PA 19087. Alfred P. West, Jr., Henry
H. Greer and Carmen V. Romeo, constitute the Board of Directors of the
Administrator and the Distributor. Mr. West is the Chairman of the Board and
Chief Executive Officer of SEI, the Administrator and the Distributor. Mr. Greer
serves as the President and Chief Operating Officer of SEI, the Administrator
and the Distributor. SEI and its subsidiaries are leading providers of funds
evaluation services, trust accounting systems, and brokerage and information
services to financial institutions, institutional investors and money managers.
The Administrator also serves as administrator to the following other mutual
funds: SEI Daily Income Trust; SEI Liquid Asset Trust; SEI Tax Exempt Trust; SEI
Index Funds; SEI Institutional Managed Trust; SEI International Trust; Stepstone
Funds; The Advisors' Inner Circle Fund, The Pillar Funds; CUFund; STI Classic
Funds; CoreFunds, Inc.; First American Funds, Inc.; First American Investment
Funds, Inc.; The Arbor Fund; 1784 Funds; MarquisSM Funds, Morgan Grenfell
Investment Trust; The PBHG Funds, Inc; Inventor Funds, Inc.; The Achievement
Funds Trust; Insurance Investment Products Trust; Bishop Street Funds; Conestoga
Family of Funds; and The Rembrandt Funds.

-27-

<PAGE>

The Administrator is entitled to a fee, calculated daily and paid monthly, at an
annual rate of .15% of average daily net assets of each of the Funds.

For the fiscal year ended November 30, 1995, the Administrator was compensted
for its services under the Administration Agreement as follows:

Cash Reserve Fund $724,959, of which $0 was waived
U.S. Treasury Money Fund $486,365, of which $0 was waived
Tax Free Money Fund $287,134, of which $0 was waived
Limited Term Bond Fund $125,310, of which $0 was waived
Intermediate Bond Fund $117,410, of which $0 was waived
Government Bond Fund $ 8,805, of which $8,805 was waived
VA Intermediate Municipal
Bond Fund $ 74,748, of which $34,384 was waived
VA Municipal Bond Fund $ 4,858, of which $4,858 was waived
Value Fund $304,389, of which $0 was waived
Capital Appreciation Fund $ 28,470, of which $0 was waived
Special Equity Fund $ 77,120, of which $0 was waived.

THE DISTRIBUTOR

SEI Financial Services Company (the "Distributor"), a wholly-owned subsidiary of
SEI, and the Company are parties to a distribution agreement ("Distribution
Agreement") effective as of March 1, 1995. The Distribution Agreement shall be
reviewed and ratified at least annually (i) by the Company's Directors or by the
vote of a majority of the outstanding shares of the Company, and (ii) by the
vote of a majority of the Directors of the Company who are not parties to the
Distribution Agreement or interested persons (as defined in the 1940 Act) of any
party to the Distribution Agreement, cast in person at a meeting called for the
purpose of voting on such approval. The Distribution Agreement will terminate in
the event of any assignment, as defined in the 1940 Act, and is terminable with
respect to a particular Fund on not less than sixty days' notice by the
Directors, by vote of a majority of the outstanding shares of such Fund or by
the Distributor.

DISTRIBUTION PLAN

The Board of Directors of the Company has approved an Amended and Restated
Distribution and Service Plan (the "Distribution Plan") pursuant to Rule 12b-1
of the 1940 Act (the "Rule"). Under the Distribution Plan the Distributor is
compensated at the annual rate of .15% of the aggregate average daily net assets
of the Trust Class shares of the Funds. The Distributor will be compensated for
distribution services provided to the Trust Class shares including the printing
and distribution of Prospectuses, Statements of Additional Information or
reports prepared for the use in connection with the offering of shares of the
Fund (other than to existing shareholders at the time of such mailing), the
expenses incurred for the preparation of any other literature used by the
Distributor in connection with any such offering. The Distributor has agreed to
waive any fees payable pursuant to the Distribution Plan attributable to Trust
Class shares, and will bear the costs of other distribution-related activities.
The Distributor reserves the right to terminate its waiver at any time at its
sole discretion.

A SHARES AND B SHARES DISTRIBUTION PLANS

The Distribution Plan further provides that the A Shares will pay the
Distributor a fee of .15% of the average daily net assets of the funds and an
additional .25% of the average daily net assets of the money market funds, which
the Distributor can use to compensate broker/dealers and service providers,
including the Adviser and its affiliates which provide administrative and/or
distribution services to the Class A Shareholders or their customers who
beneficially own Class A Shares. All of the fees currently are being waived by
the Distributor.

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<PAGE>

The Company has adopted the Investors Class B Distribution and Service Plan (the
"B Shares Distribution Plan") in accordance with the provisions of the Rule
which regulates circumstances under which an investment company may directly or
indirectly bear expenses relating to the distribution of its shares. The B
Shares Distribution Plan provides that B Shares will pay the Distributor a fee
of .75% of the average daily net assets of the funds which offer B Shares.
Continuance of the B Shares Distribution Plan must be approved annually by a
majority of the Directors of the Company. The B Shares Distribution Plan
requires that quarterly written reports of amounts spent under the B Shares
Distribution Plan and the purposes of such expenditures be furnished to and
reviewed by the Directors. The B Shares Distribution Plan may not be amended to
increase materially the amount which may be spent thereunder without approval by
a majority of the outstanding shares of the Company. All material amendments of
the Plan will require approval by a majority of the Directors of the Company and
of the Qualified Directors.

For the fiscal year ended November 30, 1995, the Distributor was compensated
beginning March 1, 1995 for its services under the B Shares Distribution Plan as
follows:

Cash Reserve Fund $ 74, of which $10 was waived
Government Bond Fund $ 656, of which $87 was waived
VA Municipal Bond Fund $1,835, of which $245 was waived
Value Fund $3,833, of which $511 was waived
Special Equity Fund $1,403, of which $87 was waived.

Also, pursuant to the B Shares Distribution Plan, the Distributor is compensated
at an annual rate of .25% of B Shares' average net assets for providing ongoing
shareholder support services to investors in B Shares for its services as
follows:

Cash Reserve Fund $ 25, of which $5 was waived
Government Bond Fund $ 217, of which $43 was waived
VA Municipal Bond Fund $ 612, of which $122 was waived
Value Fund $1,277, of which $255 was waived
Special Equity Fund $ 468, of which $94 was waived.

Prior to March 1, 1995, Fidelity Distributor Corporation ("FDC") served as the
Funds' administrator and distributor under Administrative and Distribution
Plans.

For the fiscal years ended November 30, 1995 (through February 28, 1995),
November 30, 1994 and 1993, FDC was compensated for its services under each
operative Distribution Plan as follows:

Cash Reserve Fund $152,042, $631,053 and $744,853, of which $0,
$0 and $0 was waived
U.S. Treasury Money Fund $112,822, $499,978 and $600,093, of which $0,
$0 and $0 was waived
Tax Free Money Fund $65,682, $228,173 and $264,036, of which
$0, $0 and $0 was waived
Limited Term Bond Fund $30,482, $128,753 and $114,342, of which $0,
$0 and $0 was waived
Intermediate Bond Fund $28,685, $107,382 and $63,930, of which $0,
$0 and $0 was waived
VA Intermediate Municipal $18,356, $76,321 and $32,224,
Bond Fund of which $15,576, $64,180 and $27,670 was waived
Value Fund $65,118, $272,207 and $209,577, of which $0,
$0 and $0 was waived
Capital Appreciation Fund $5,362, $17,420 and $8,035, of which $0,
$0 and $0 was waived
Special Equity Fund $17,171, $64,372 and $41,280, of which $0,
$0 and $0 was waived.

For the fiscal years ended November 30, 1995 (through February 28, 1995),
November 30, 1994 and 1993, FDC was compensated under the A Shares Distribution
Plan which provides for an additional .25% of average daily net assets of the
money market funds as follows: Cash Reserve Fund, $12,283, $9,057 and $24; U.S.
Treasury Money Fund, $0, $0 and $0; and Tax Free Money Fund, $468, $939 and
$141.

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<PAGE>

The following represents expenses made pursuant to the Rule for the fiscal year
ended November 30, 1995.

=========================================================================================================
12b-1 Expenses
=========================================================================================================
Third Party Promotion and Marketing
Fund Payments Advertising Management Distribution Maintenance
- ---------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Cash Reserve Fund $ 64 -- -- -- --
- ---------------------------------------------------------------------------------------------------------
U.S. Treasury Money Fund -- -- -- -- --
- ---------------------------------------------------------------------------------------------------------
Tax Free Money Fund -- -- -- -- --
- ---------------------------------------------------------------------------------------------------------
Limited Term Bond Fund -- -- -- -- --
- ---------------------------------------------------------------------------------------------------------
Intermediate Bond Fund -- -- -- -- --
- ---------------------------------------------------------------------------------------------------------
Government Bond Fund 569 -- -- -- --
- ---------------------------------------------------------------------------------------------------------
VA Intermediate Municipal -- -- -- -- --
Bond Fund
- ---------------------------------------------------------------------------------------------------------
VA Municipal Bond Fund 1,590 -- -- -- --
- ---------------------------------------------------------------------------------------------------------
Value Fund 3,322 -- -- -- --
- ---------------------------------------------------------------------------------------------------------
Capital Appreciation Fund -- -- -- -- --
- ---------------------------------------------------------------------------------------------------------
Special Equity Fund 1,216 -- -- -- --
=========================================================================================================

</TABLE>

In addition, Capitoline may use all or a portion of the fee received under its
advisory contract, past profits or other resources to pay financial institutions
and other industry professionals such as investment advisors, broker-dealers
(including Crestar Securities Corporation) accountants and estate planning firms
("Qualified Recipients") for shareholder services. These Qualified Recipients
may be paid for such services from the fees paid by the Funds to Capitoline. The
Plans also provide that Capitoline may engage banks as Qualified Recipients for
performing certain shareholder support services. Capitoline will make such
payments only to Qualified Recipients who provide shareholder support services.
These shareholder services may include, among other things, answering client
inquiries, investing client account balances automatically in Fund shares,
arranging for bank wires, and such other client services of a nature generally
provided by a bank as may seem appropriate. Capitoline will enter into written
agreements with Qualified Recipients who receive payments pursuant to a Plan.
Payments will be made on the basis of the average daily net asset value of a
Fund's shares owned by shareholders for whom the Qualified Recipient is the
holder of record or with whom the Qualified Recipient has a servicing
relationship.

As discussed in the Prospectus, the Company recognizes that the Glass-Steagall
Act and other applicable laws prohibit banks from engaging in the business of
underwriting, selling or distributing securities. Accordingly, the Distributor
will engage banks as Qualified Recipients only to perform administrative and
shareholder servicing functions. While the matter is not free from doubt, the
Company's Board of Directors believes on advice of counsel that such laws should
not preclude a bank from performing shareholder support services. However,
judicial or administrative decisions or interpretations of such laws, as well as
changes in federal or state statutes or regulations relating to the permissible
activities of banks and their subsidiaries or affiliates, could prevent a bank
from continuing to perform all or a part of its servicing activities. If banks
or bank affiliates were prohibited from so acting, the Company would change its
existing policies to permit bank customers who are shareholders to remain
shareholders of a Fund and would implement alternative means for continuing the
servicing of such shareholders. In such event, changes in the operation of a
Fund

-30-

<PAGE>

might occur and a shareholder serviced by such bank might no longer be able to
make use of any automatic investment or other services then being provided by
the bank.

TRANSFER AGENT

Pursuant to a Transfer Agent Agreement dated as of July 10, 1992 between the
Company, on behalf of each of the Funds, and Crestar Bank, the Transfer Agent
for each of the Funds is Crestar Bank ("Transfer Agent"). The Transfer Agent
maintains an account for each shareholder and monitors tax reporting, performs
other transfer agency functions and acts as dividend disbursing agent for each
Fund. For these services, the Transfer Agent will be paid an annual fee of .06%
of the average daily net assets of the A Shares and B Shares of each Fund and
.05% of the average daily net assets of the Trust Class of each Fund.

The Transfer Agent Agreement will continue in effect only if such continuance is
specifically approved at least annually by the Board of Directors or by a vote
of the shareholders and in either case by a majority of the Directors who are
not parties to the Transfer Agent Agreement or interested persons of any such
party, at a meeting called for the purpose of voting on the Transfer Agent
Agreement.

CUSTODIAN

Pursuant to a Custodian Agreement dated as of July 10, 1992 between the Company,
on behalf of each of the Funds, and Crestar Bank, Crestar Bank (the "Custodian")
acts as the Custodian of each Fund's assets. The Custodian's responsibilities
include safeguarding and controlling the Funds' cash and securities, handling
the receipt and delivery of securities and collecting income on Fund
investments. For these services, the Custodian will receive a fee, with respect
to each money market fund, computed and paid monthly, based on the total net
assets of each such Fund, the number of portfolio transactions of the Fund and
the number of securities in the Fund's portfolio. The Custodian's fee for any
fiscal year of the Company will not exceed, with respect to each money market
fund, .04% of each such Fund's average daily net assets. The Custodian's fee
with respect to each bond and equity fund will be .04% of each such Fund's
average daily net assets.

AUDITOR

Deloitte & Touche LLP, Two World Financial Center, New York, New York 10281,
independent auditors, have been selected as auditors for the Company. Deloitte &
Touche LLP has acted as independent auditors of the Company since its inception.

PRINCIPAL HOLDERS OF SECURITIES

A shareholder owning of record or beneficially more than 25% of a particular
Fund's shares may be considered to be a "controlling person" of that Fund.
Accordingly, its vote could have a more significant effect on matters presented
at shareholder meetings than the votes of the fund's other shareholders. The
following persons owned of record 25% or more of the outstanding shares of the
Trust Class of the indicated Funds as of March 1, 1996:

FUND NAME SHAREHOLDER %

Cash Reserve Fund Crestar Bank 94%
P.O. Box 26665
Richmond, VA 23261

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<PAGE>

U.S. Treasury Money Fund Crestar Bank 99%
P.O. Box 26665
Richmond, VA 23261

Tax Free Money Fund Crestar Bank 94%
P.O. Box 26665
Richmond, VA 23261

Limited Term Bond Fund Crestar Bank 89%
P.O. Box 26665
Richmond, VA 23261

Intermediate Bond Fund Crestar Bank 88%
P.O. Box 26665
Richmond, VA 23261

Government Bond Fund Crestar Bank 46%
P.O. Box 26665
Richmond, VA 23261

Virginia Intermediate Crestar Bank 78%
Municipal Bond Fund P.O. Box 26665
Richmond, VA 23261

Virginia Municipal Bond Fund Crestar Bank 61%
P.O. Box 26665
Richmond, VA 23261

MD Municipal Bond Fund Crestar Bank 100%
P.O. Box 26665
Richmond, VA 23261

Value Fund Crestar Bank 89%
P.O. Box 26665
Richmond, VA 23261

Capital Appreciation Fund Crestar Bank 44%
P.O. Box 26665
Richmond, VA 23261

Special Equity Fund Crestar Bank 84%
P.O. Box 26665
Richmond, VA 23261

FINANCIAL STATEMENTS

The financial statements and financial highlights for the fiscal year ended
November 30, 1995 for Cash Reserve Fund, U.S. Treasury Money Fund, Tax Free
Money Fund, Limited Term Bond Fund, Intermediate Bond Fund, Government Bond
Fund, Virginia Intermediate Municipal Bond Fund, Virginia Municipal Bond Fund,
Value Fund, Capital

-32-

<PAGE>

Appreciation Fund and Special Equity Fund are included in the Annual Report
which is a separate report supplied with this Statement of Additional
Information. The financial statements and financial highlights are incorporated
herein by reference.

-33-

<PAGE>

APPENDIX

Description of selected indices:

Dow Jones Industrial Average is an unmanaged index of 30 common stock prices
representing stocks of major industrial companies and includes reinvestment of
dividends.

Standard & Poor's 500 Composite Stock Price Index is an unmanaged index of
common stock prices and includes reinvestment of dividends.

NASDAQ Composite Index is an unmanaged index of over-the-counter stock prices
and does not assume reinvestment of dividends.

Russell 2000 Index is an unmanaged index of small capitalization stocks that
includes reinvestment of dividends.

Russell 1000 Growth Index, an unmanaged index, is a broad measure of the
performance of growth companies and includes reinvestment of dividends and
capital gains.

Value Line Index, an unmanaged index, is a broad measure of both large and small
companies and includes reinvestment of dividends and capital gains.

Lehman Brothers Aggregate Bond Index, an unmanaged index, is a broad measure of
bond performance and includes reinvestment of dividends.

Lehman Brothers General Obligation Bond Index, an unmanaged index, is a broad
measure of the performance of tax-exempt bonds and includes reinvestment of
dividends.

Lehman Brothers Government Bond Index is an index comprised of all public
obligations of the U.S. Treasury, U.S. Government agencies, quasi-federal
corporations, and of corporate debt guaranteed by the U.S. Government. The index
excludes flower bonds, foreign targeted issues, and mortgage-backed securities.

Lehman Brothers Corporate Bond Index is an index comprised of all public,
fixed-rate, non-convertible investment-grade domestic corporate debt. Issues
included in this index are rated at least Baa by Moody's Investors Service or
BBB by Standard and Poor's Corporation or, in the case of unrated bonds, BBB by
Fitch Investors Service. Collateralized mortgage obligations are not included in
the Corporate Bond Index.

The Government Bond Index and the Corporate Bond Index combine to form the
Corporate Bond Index.

Lehman Brothers Intermediate Corporate Bond Index is an index comprised of all
public, fixed-rate, non-convertible investment-grade domestic corporate debt.
Issues included in this index have remaining maturities of one to ten years and
are rated at least Baa by Moody's Investors Service or BBB by Standard and
Poor's Corporation or, in the case of unrated bonds, BBB by Fitch Investors
Service.

Lehman Brothers Long-Term Corporate Bond Index is an index comprised of all
public, fixed-rate, non-convertible investment-grade domestic corporate debt.
Issues included in this index have remaining maturities greater than ten years
and are rated at least Baa by Moody's Investors Service or BBB by Standard and
Poor's Corporation, or, in the case of unrated bonds, BBB by Fitch Investors
Service.

Salomon Brothers High Grade Corporate Bond Index is an index of high quality
corporate bonds with a minimum maturity of at least ten years and with total
debt outstanding of at least $50 million. Issues included in the index are rated
AA or better by Moody's Investors Service or AA or better by Standard & Poor's
Corporation.

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<PAGE>

Merrill Lynch High and Medium Quality Intermediate-Term Corporate Index is an
index comprised of all public, fixed-rate, non-convertible corporate debt.
Issues included in this index have remaining maturities of between one year and
9.99 years. Issues included in the index are rated at least BBB by Standard &
Poor's Corporation.

Dollar-weighted average maturity is derived by multiplying the value of each
investment by the number of days remaining to its maturity, adding these
calculations, and then dividing the total by the value of a Fund's portfolio. An
obligation's maturity is typically determined on a stated financial maturity
basis, although there are some exceptions to this rule. For example, if it is
probable that the issuer of an instrument will take advantage of a
maturity-shortening device, such as a call, refunding, or redemption provision,
the date in which the instrument will probably be called, refunded or redeemed
may be considered to be its maturity date. Also, the maturities of
mortgage-backed securities and some asset-backed securities, such as
collateralized mortgage obligations, are determined on a weighted average life
basis, which is the average time for principal to be repaid. For a mortgage
security, this average time is calculated by estimating the expected principal
payments during the life of the mortgage. The weighted average life of these
securities is likely to be substantially shorter than their stated final
maturity.

Description of Moody's Investors Service, Inc.'s ratings of state and municipal
notes:

Moody's ratings for state and municipal and other short-term obligations are
designated Moody's Investment Grade ("MIG," or "VMIG" for variable rate
obligations). This distinction is in recognition of the difference between
short-term credit risk and long-term credit risk. Factors affecting the
liquidity of the borrower and short-term cyclical elements are critical in
short-term ratings, while other factors of major importance in bond risk,
long-term secular trends for example, may be less important over the short run.
Symbols used will be as follows:

MIG-1/VMIG-1 - This designation denotes best quality. There is present strong
protection by established cash flows, superior liquidity support or demonstrated
broad-based access to the market for refinancing.

MIG-2/VMIG-2 - This designation denotes high quality. Margins of protection are
ample although not so large as in the preceding group.

Description of Standard & Poor's Corporation's ratings of state and municipal
notes:

SP-1 - Very strong or strong capacity to pay principal and interest. Those
issues determined to possess overwhelming safety characteristics will be given a
plus (+) designation.

SP-2 - Satisfactory capacity to pay principal and interest.

Description of Moody's Investors Service, Inc.'s municipal bond ratings:

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

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

A - Bonds which are rated A possess many favorable investment attributes and are
to be considered as upper medium grade obligations. Factors giving security to
principal and interest may be present which suggest a susceptibility to
impairment sometime in the future.

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<PAGE>

Baa - Bonds which are rated Baa are considered as medium grade obligations,
i.e., they are neither highly protected nor poorly secured. Interest payments
and principal security appear adequate for the present but certain protective
elements may be lacking or may be characteristically unreliable over any great
length of time. Such bonds lack outstanding investment characteristics and in
fact have speculative characteristics as well.

Moody's applies numerical modifiers, 1, 2, and 3, in each generic rating
classification from Aa through B in its corporate bond rating system. The
modifier 1 indicates that the security ranks in the higher end of its generic
rating category; the modifier 2 indicates a mid-range ranking; and the modifier
3 indicates that the issue ranks in the lower end of its generic rating
category.

Description of Standard & Poor's Corporation's municipal bond ratings:

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

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

A - Debt rated 'A' has a strong capacity to pay interest and repay principal,
although it is somewhat more susceptible to the adverse effects of changes in
circumstances and economic conditions.

BBB - Debt rated 'BBB' is regarded as having an adequate capacity to pay
interest and repay principal. Whereas it normally exhibits adequate protection
parameters, adverse economic conditions or changing circumstances are more
likely to lead to a weakened capacity to pay interest and repay principal for
debt in this category than in higher categories.

The ratings from AA to CCC may be modified by the addition of a plus or minus to
show relative standing within the major rating categories.

Description of Moody's Investors Service, Inc.'s commercial paper ratings:
Issuers rated Prime-1 (or related supporting institutions) have a superior
capacity for repayment of short-term promissory obligations. Prime-1 repayment
capacity will normally be evidenced by the following characteristics:

. Leading market positions in well-established industries.

. High rates of return on funds employed.

. Conservative capitalizations structures with moderate reliance
on debt and ample asset protection.

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

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

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

-36-

<PAGE>

Description of Standard & Poor's Corporation's commercial paper ratings:

A - Issues assigned this highest rating are regarded as having the greatest
capacity for timely payment. Issues in this category are delineated with the
numbers 1, 2, and 3 to indicate the relative degree of safety.

A-1 - This designation indicates that the degree of safety regarding timely
payment is either overwhelming or very strong. Those issues determined to
possess overwhelming safety characteristics will be denoted with a plus (+) sign
designation.

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

-37-

<PAGE>

CRESTFUNDS(R), INC.
INVESTORS CLASS SHARES
STATEMENT OF ADDITIONAL INFORMATION
MARCH 28, 1996

This Statement is not a prospectus but should be read in conjunction with the
current Investors Class A Shares ("A Shares") and Investors Class B Shares ("B
Shares") Prospectus (dated March 28, 1996) for CrestFunds(R), Inc. (the
"Company"). Please retain this document for future reference. The financial
statements and financial highlights, included in the Annual Report for the
fiscal year ended November 30, 1995 for Cash Reserve Fund, U.S. Treasury Money
Fund, Tax Free Money Fund, Limited Term Bond Fund, Intermediate Bond Fund,
Government Bond Fund, Virginia Intermediate Municipal Bond Fund, Virginia
Municipal Bond Fund, Value Fund, Capital Appreciation Fund and Special Equity
Fund are incorporated herein by reference. To obtain without charge additional
copies of the A Shares and B Shares Prospectus, the Annual Report, or the Trust
Class Prospectus or Statement of Additional Information, please call
1-800-273-7827.

TABLE OF CONTENTS PAGE

INVESTMENT POLICIES AND LIMITATIONS.................................. 3

INVESTMENT PRACTICES................................................. 7

PORTFOLIO TRANSACTIONS............................................... 12

VALUATION OF PORTFOLIO SECURITIES.................................... 13

FUND PERFORMANCE..................................................... 14

ADDITIONAL PURCHASE AND REDEMPTION INFORMATION....................... 19

ADDITIONAL INFORMATION REGARDING PRICING AND REDEMPTIONS............. 20

DISTRIBUTIONS AND TAXES.............................................. 21

DIRECTORS AND OFFICERS AND AFFILIATED PERSONS........................ 24

THE ADVISER.......................................................... 26

ADMINISTRATOR AND DISTRIBUTOR........................................ 28

TRANSFER AGENT....................................................... 31

CUSTODIAN............................................................ 32

AUDITOR.............................................................. 32

PRINCIPAL HOLDERS OF SECURITIES...................................... 32

FINANCIAL STATEMENTS................................................. 33

APPENDIX............................................................. 34

<PAGE>

Adviser:
Capitoline Investment Services, Incorporated ("Capitoline" or the "Adviser")

Transfer Agent:
Crestar Bank (the "Transfer Agent")

Custodian:
Crestar Bank (the "Custodian")

Administrator:
SEI Financial Management Corporation ("SFM")

Distributor:
SEI Financial Services Company ("SFS")

-2-

<PAGE>

INVESTMENT POLICIES AND LIMITATIONS

THE FOLLOWING ARE THE FUNDAMENTAL INVESTMENT LIMITATIONS OF CASH RESERVE FUND,
U.S. TREASURY MONEY FUND AND TAX FREE MONEY FUND SET FORTH IN THEIR ENTIRETY.
EACH MONEY MARKET FUND MAY NOT:

2. issue senior securities;

3. make short sales of securities;

4. purchase securities on margin or write put and call options;

6. act as an underwriter of securities;

9. invest in real estate (other than debt obligations secured by real estate
or interests therein or debt obligations issued by companies which invest
in real estate or interests therein);

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<PAGE>

12. invest in securities issued, or guaranteed as to principal and interest,
by companies that have conducted operations for less than three years,
including the operations of predecessors;

13. invest in interest in oil or gas or interests in other mineral exploration
or development programs;

15. purchase Restricted Securities (as defined in Rule 144 under the
Securities Act of 1933 (the "Securities Act"));

16. make investments for the purpose of exercising control over any issuer or
other person; and

17. pledge, mortgage, assign or encumber any of its assets except to the
extent necessary to secure a borrowing permitted by clause (5).

2. issue senior securities, except as permitted under the 1940 Act;

4. underwrite securities issued by others, except to the extent that the Fund
may be considered an underwriter within the meaning of the Securities Act
in the disposition of restricted securities;

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<PAGE>

6. purchase or sell physical commodities unless acquired as a result of
ownership of securities or other instruments;

THE FOLLOWING ARE THE FUNDAMENTAL INVESTMENT LIMITATIONS OF VALUE FUND, CAPITAL
APPRECIATION FUND AND SPECIAL EQUITY FUND SET FORTH IN THEIR ENTIRETY. EACH
EQUITY FUND MAY NOT:

2. issue senior securities, except as permitted under the 1940 Act;

4. underwrite securities issued by others, except to the extent that the Fund
may be considered an underwriter within the meaning of the Securities Act
in the disposition of restricted securities;

7. purchase or sell physical commodities unless acquired as a result of
ownership of securities or other instruments; and

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<PAGE>

THE FOLLOWING LIMITATIONS ARE NOT FUNDAMENTAL AND MAY BE CHANGED WITHOUT
SHAREHOLDER APPROVAL.

MONEY MARKET FUNDS:

iii. Each Fund does not currently intend to lend any security or make any
other loan if, as a result, more than 10% of the value of its total
assets would be lent to other parties, but this limitation does not
apply to the purchase of debt securities or to repurchase agreements.

iv. Tax Free Money Fund does not currently intend to lend any security or
make any other loan.

ALL BOND AND EQUITY FUNDS

vi. Each Fund does not currently intend to purchase securities on margin,
except that a Fund may obtain such short-term credits as are necessary
for the clearance of transactions.

vii. Each Fund may borrow money only from a bank or by engaging in reverse
repurchase agreements with any party (reverse repurchase agreements are
treated as borrowings for purposes of fundamental limitation 3). Each
Fund will not purchase any security while borrowings representing more
than 5% of its total assets are outstanding.

viii. Each Fund does not currently intend to purchase any security if, as a
result, more than 10% of its net assets would be invested in securities
that are deemed to be illiquid because they are subject to legal or
contractual restrictions on resale or because they cannot be sold or
disposed of in the ordinary course of business at approximately the
prices at which they are valued.

ix. Each Fund does not currently intend to purchase securities of other
investment companies except pursuant to the provisions of the 1940 Act.

xi. Each Fund does not currently intend to invest in oil, gas, or other
mineral exploration or development programs or leases.

-6-

<PAGE>

xii. Each Fund does not currently intend to purchase or hold the securities
of any issuer if those officers and Directors of a Fund who
individually own more than 1/2 of 1% of the securities of such issuer
together own more than 5% of such issuer's securities.

xiii. Each Fund does not currently intend to sell securities short.

CORPORATE BOND FUNDS, GOVERNMENT BOND FUND, AND EQUITY FUNDS ONLY

xiv. With respect to 100% of its total assets, each Fund does not currently
intend to purchase the securities of any issuer (other than securities
issued or guaranteed by the U.S. Government or any of its agencies or
instrumentalities) if, as a result thereof, a Fund would own more than
10% of the outstanding voting securities of such issuer.

xv. Each of the corporate bond and government bond funds does not currently
intend to purchase warrants. Warrants acquired by a Fund in units or
attached to securities are not subject to this restriction.

xvi. Each Fund does not currently intend to purchase or sell futures
contracts or put or call options. This limitation does not apply to
options attached to, or acquired or traded together with, their
underlying securities, and does not apply to securities that
incorporate features similar to options or futures contracts.

MARYLAND MUNICIPAL BOND FUND, VIRGINIA INTERMEDIATE MUNICIPAL BOND FUND AND
VIRGINIA MUNICIPAL BOND FUND ONLY

xvii. To meet federal tax requirements for qualification as a "regulated
investment company," Maryland Municipal Bond Fund, Virginia
Intermediate Municipal Bond Fund and Virginia Municipal Bond Fund each
limits its investments so that at the close of each quarter of its
taxable year: (a) with regard to at least 50% of total assets, no more
than 5% of total assets are invested in the securities of a single
issuer, and (b) no more than 25% of total assets are invested in the
securities of a single issuer. Limitations (a) and (b) do not apply to
"government securities" as defined for federal tax purposes.

xviii. Each Fund does not currently intend to engage in repurchase
agreements or make loans, but this limitation does not apply to
purchases of debt securities.

xix. Each Fund does not currently intend to purchase or sell futures
contracts or call options. This limitation does not apply to options
attached to, or acquired or traded together with, their underlying
securities, and does not apply to securities that incorporate features
similar to options or futures contracts.

INVESTMENT PRACTICES

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<PAGE>

Cash received through loan transactions may be invested in short-term, high
quality debt securities, U.S. government securities or money market instruments.
Investing this cash subjects that investment, as well as the security loaned, to
market forces (i.e., capital appreciation or depreciation).

-8-

<PAGE>

-9-

<PAGE>

-10-

<PAGE>

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<PAGE>

PORTFOLIO TRANSACTIONS

As permitted by Section 28(e) of the Securities Exchange Act of 1934, as amended
(the "1934 Act"), Capitoline may cause a Fund to pay a broker-dealer that
provides brokerage and research services to Capitoline a commission in excess of
the commission charged by another broker-dealer for effecting a particular
transaction. To cause a Fund to pay any such greater commissions Capitoline must
determine in good faith that such commissions are reasonable in relation to the
value of the brokerage or research service provided by such executing
broker-dealers viewed in terms of a particular

-12-

<PAGE>

Brokerage commissions paid by the following Funds for the fiscal years ended
1995, 1994 and 1993 were:

================================================================================
1995 1994 1993
- --------------------------------------------------------------------------------
Value $1,111,862 $467,961 $32,110
- --------------------------------------------------------------------------------
Capital Appreciation** $ 321,065 $ 77,685 ---
- --------------------------------------------------------------------------------
Special Equity* $ 217,673 $116,129 $ 9,220
================================================================================

* Inception date 9/28/92
** Inception date 1/11/93

During fiscal year ended 1995, the Fund paid brokerage commissions in the amount
of $151,676 to SEI Financial Services Company, which represented 0.6% of the
Fund's aggregate brokerage commissions for such period. The dollar amount of
transactions effected through such broker represented 0.3% of the Fund's
aggregate dollar amount of transactions involving the payment of commissions for
such period.

VALUATION OF PORTFOLIO SECURITIES

-13-

<PAGE>

BOND FUNDS. Valuations of portfolio securities furnished by the pricing service
employed by the Funds are based upon a computerized matrix system and/or
appraisals by the pricing service, in each case in reliance upon information
concerning market transactions and quotations from recognized securities
dealers. The methods used by the pricing service and the quality of valuations
so established are reviewed by officers of the Funds and the Funds' pricing
agent under general supervision of the Board of Directors. There are a number of
pricing services available, and the Board of Directors, on the basis of on-going
evaluation of these services, may obtain quotes directly from broker-dealers or
market-makers, may use other pricing services or discontinue the use of any
pricing service in whole or in part.

FUND PERFORMANCE

-14-

<PAGE>

-15-

<PAGE>

1995 TAX RATES AND TAX-EQUIVALENT YIELDS

Taxable
Income*

<TABLE>
<CAPTION>
Combined Combined
Federal Federal
and and
Federal Virginia Maryland Virginia Maryland
Tax Tax Tax Tax Tax
Bracket** Bracket*** Bracket**** Brackets Brackets
<S> <C> <C> <C> <C> <C> <C>
single return joint return

$0 - $23,350 $0 - $39,000 15.00% 5.75% 8.00% 19.89% 21.80%

$23,351 - $56,550 $ 39,001 - $ 94,250 28.00% 5.75% 8.00% 32.14% 33.76%

$56,551 - $117,950 $ 94,251 - $143,600 31.00% 5.75% 8.00% 34.97% 36.52%

$117,951 - $256,500 $143,601 - $256,500 36.00% 5.75% 8.00% 39.68% 41.12%

$256,501 - above $256,501 - above 39.60% 5.75% 8.00% 43.07% 44.43%
</TABLE>

* Taxable income (gross income after all exemptions, adjustments, and
deductions) based on current tax rates.

*** Virginia has a graduated income tax. The top rate is 5.75% applicable to
Virginia taxable income over $17,000.

If your Federal tax rate in 1995 is:
<TABLE>
<S> <C> <C> <C> <C>
15.00% 28.00% 31.00% 36.00% 39.60%
</TABLE>

Then your tax-equivalent yield is:
<TABLE>
<S> <C> <C> <C> <C> <C>
Yield
2.00% 2.35% 2.78% 2.90% 3.13% 3.31%
3.00% 3.53% 4.17% 4.35% 4.69% 4.97%
4.00% 4.71% 5.56% 5.80% 6.25% 6.62%
5.00% 5.88% 6.94% 7.25% 7.81% 8.28%
6.00% 7.06% 8.33% 8.70% 9.38% 9.93%
7.00% 8.24% 9.92% 10.14% 10.94% 11.59%
8.00% 9.41% 11.11% 11.59% 12.50% 13.25%
</TABLE>

-16-

<PAGE>

If your effective combined federal and Virginia state tax rate is:
<TABLE>
<S> <C> <C> <C> <C>
19.89% 32.14% 34.97% 39.68% 43.07%
</TABLE>

Then your tax-equivalent yield is:
<TABLE>
<S> <C> <C> <C> <C> <C>
Yield
2.00% 2.50% 2.95% 3.08% 3.32% 3.51%
3.00% 3.75% 4.42% 4.61% 4.97% 5.27%
4.00% 4.99% 5.89% 6.15% 6.63% 7.03%
5.00% 6.24% 7.37% 7.69% 8.29% 8.78%
6.00% 7.49% 8.34% 9.23% 9.95% 10.54%
7.00% 8.74% 10.32% 10.76% 11.60% 12.30%
8.00% 9.99% 11.79% 12.30% 13.26% 14.05%
</TABLE>

If your effective combined federal and Maryland state tax rate is:
<TABLE>
<S> <C> <C> <C> <C>
21.80% 33.76% 36.52% 41.12% 44.43%
</TABLE>

Then your tax-equivalent yield is:
<TABLE>
<S> <C> <C> <C> <C> <C>
Yield
2.00% 2.56% 3.02% 3.15% 3.40% 3.60%
3.00% 3.84% 4.53% 4.73% 5.10% 5.40%
4.00% 5.12% 6.04% 6.30% 6.79% 7.20%
5.00% 6.39% 7.55% 7.88% 8.49% 9.00%
6.00% 7.67% 9.06% 9.45% 10.19% 10.80%
7.00% 8.95% 10.57% 11.03% 11.89% 12.60%
8.00% 10.23% 12.08% 12.60% 13.59% 14.40%
</TABLE>

Each of the Funds may invest a portion of its assets in obligations that are
subject to state or federal income tax. When a Fund invests in these
obligations, its tax-equivalent yield will be lower. In the table immediately
above, tax-equivalent yields are calculated assuming investments made by the
Virginia Intermediate Municipal Bond and Virginia Municipal Bond Funds are 100%
federally and Virginia tax-free and assuming investments made by the Maryland
Municipal Bond Fund are 100% federally and Maryland tax-free.

In addition to average annual total returns, each Class may quote unaveraged or
CUMULATIVE TOTAL RETURNS reflecting the simple change in value of an investment
over a stated period. Average annual and cumulative total returns may be quoted
as a percentage or as a dollar amount, and may be calculated for a single
investment, a series of investments, or a series of redemptions, over any time
period. Total returns may be broken down into their components of income and
capital (including capital gains and changes in share price) in order to
illustrate the relationship of these factors and their contributions to total
return. A Shares' total returns may be quoted with or without taking the maximum
sales charge into account. Excluding A Shares' sales charge from a total return
calculation produces a higher total return figure.

-17-

<PAGE>

Total returns, yields, and other performance information may be quoted
numerically or in a table, graph, or similar illustration.

HISTORICAL FUND RESULTS. The following table shows the money market funds'
yields and effective yields for each Class for the seven-day period ended
November 30, 1995.

* Based on an assumed federal income tax rate of 31%.

Cash Reserve Fund's B Shares, became effective on March 29, 1995, at which time
a .75% 12b-1 fee plus a .25% shareholder service fee began to be imposed.

<TABLE>
<CAPTION>
Yield
Trust Class A Shares B Shares
<S> <C> <C> <C>
Limited Term Bond Fund 5.26% 5.13% N/A
Intermediate Bond Fund 5.49% 5.31% N/A
Government Bond Fund 5.60% N/A 4.73%
Virginia Intermediate Municipal Bond Fund 4.03% 3.88% N/A
Virginia Municipal Bond Fund 4.39% N/A 3.53%
</TABLE>

<TABLE>
<CAPTION>
Average Annual Total Returns+

1 year* Life of Fund*
A Shares B Shares Trust A Shares B Shares Trust
Class Class
<S> <C> <C> <C> <C> <C> <C>
Limited Term Bond (9/28/92) 9.51% N/A 11.50% 4.67% N/A 5.38%
Intermediate Bond Fund (9/28/92) 13.61% N/A 12.07% 5.90% N/A 6.12%
Government Bond Fund (4/05/95) N/A 9.64%++ 18.56%++ N/A 5.86% 11.85%
VA Intermediate Muni. Bond (1/11/93) 12.08% N/A 16.09% 4.06% N/A 5.40%
VA Municipal Bond Fund (4/05/95) N/A 10.53%++ 11.89%++ N/A 6.51% 7.67%
Value Fund (9/28/92) 22.90% 16.92%++ 28.76% 11.59% 10.78% 13.25%
Capital Appreciation (1/11/93) 15.24% N/A 20.74% 5.24% N/A 7.50%
Special Equity Fund (9/28/92) 14.64% 14.48%++ 20.87% 11.01% 9.22% 12.63%
</TABLE>

-18-

<PAGE>

* Life of Fund figures are for the period beginning on the date indicated
above through November 30, 1995.
+ Average annual total returns include the effect of the maximum sales charge.
Effective May 3, 1993, the Funds commenced sales of A Shares. This
performance information reflects the A Shares' 12b-1 fees and revised
transfer agency arrangements for the period May 3, 1993 to November 30,
1995, and therefore, may not be representative of A Shares performance.
Initial offering of B Shares was made on March 29, 1995, at which time a
.65% 12b-1 fee (plus a .20% shareholder service fee) began to be imposed
which fees are also reflected.
++ Ratios are annualized.

ADDITIONAL PURCHASE AND REDEMPTION INFORMATION

You may qualify for a reduction in A Shares sales charge under the following
programs:

COMBINED PURCHASES. When you invest in A Shares for several accounts at the same
time, you may combine these investments into a single transaction if the total
is at least $50,000. The following may qualify for this privilege: an
individual, or "company" as defined in Section 2(a)(8) of the 1940 Act; an
individual, spouse, and their children under age 21 purchasing for his, her, or
their own account; a trustee, administrator or other fiduciary purchasing for a
single trust estate or single fiduciary account or for a single or a
parent-subsidiary group of "employee benefit plans" (as defined in Section 3(3)
of the Employee Retirement Income Security Act of 1974); and tax-exempt
organizations under Section 501(c)(3) of the Internal Revenue Code.

RIGHTS OF ACCUMULATION. Your "Rights of Accumulation" permit reduced sales
charges on any future purchases after you have reached a new breakpoint in A
Shares' sales charge schedule (see A Shares' Prospectus for the sales charge
schedule). You can add the value of existing A Shares and B Shares of the Fund
held by you, your spouse, and your

-19-

<PAGE>

children under age 21 determined at the previous day's NAV at the close of
business, to the amount of your new purchase valued at the current offering
price to determine your reduced sales charge.

LETTER OF INTENT. If you anticipate purchasing $50,000 or more of shares of A
Shares in one Fund or in combination with shares of other Funds within a
13-month period, you may obtain shares of the Funds at the same reduced sales
charge as though the total quantity were invested in one lump sum, by filing a
nonbinding Letter of Intent (the Letter) within 90 days of the start of the
purchases. Each investment you make after signing the Letter will be entitled to
the sales charge applicable to the total investment indicated in the Letter. For
example, a $2,500 purchase toward a $50,000 Letter would receive the same
reduced sales charge as if the $50,000 had been invested at one time. Neither
income dividends nor capital gain distributions taken in additional shares will
apply toward the completion of the Letter. [For these purposes, however, a
purchase of B Shares will be credited toward the total amount of the committed
investment.]

Your initial investment must be at least 5% of the total amount you plan to
invest. Out of the initial purchase, 5% of the dollar amount specified in the
Letter will be registered in your name and held in escrow. The shares held in
escrow cannot be redeemed or exchanged until the Letter is satisfied or the
additional sales charges have been paid. You will earn income dividends and
capital gain distributions on escrowed shares. The escrow will be released when
your purchase of the total amount has been completed. You are not obligated to
complete the Letter.

If you purchase more than the amount specified in the Letter and qualify for a
further sales charge reduction, the sales charge will be adjusted to reflect
your total purchase at the end of 13 months. Surplus funds will be applied to
the purchase of additional shares at the then current offering price applicable
to the total purchase.

If you do not complete your purchase under the Letter within the 13-month
period, your sales charge will be adjusted upward, corresponding to the amount
actually purchased, and if after written notice, you do not pay the increased
sales charge, sufficient escrowed shares will be redeemed to pay such charge.

CRESTFUNDS ACCOUNT BUILDER. You can make regular investments in A Shares or B
Shares of a Fund with the CrestFunds Account Builder by completing the
appropriate section of the account application and attaching a voided personal
check with your bank's magnetic ink coding number across the front. If your bank
account is jointly owned, be sure that all owners sign. Investments may be made
monthly by automatically deducting $50 or more from your bank checking account.
You may change the amount of your monthly purchase by notifying the Funds at the
address on your account statement at least 5 days prior to your next purchase.
There is a $500 minimum initial investment requirement for automatic investment
plans.

Your account will be drafted on or about the days indicated on your application.
Shares will be purchased at the offering price next determined following receipt
of the order by the Transfer Agent. You may cancel the Account Builder option at
any time without payment of a cancellation fee. You will receive a confirmation
from the Transfer Agent for every transaction, and a debit entry will appear on
your bank statement.

As provided for in Rule 22d-1 under the 1940 Act, the Distributor will waive A
Shares' sales charge in connection with a Fund's merger with or acquisition of
any investment company or trust.

ADDITIONAL INFORMATION REGARDING PRICING AND REDEMPTIONS

The Funds are open for business and their NAVs are calculated each day the New
York Stock Exchange ("NYSE") and the custodian, Crestar Bank, are open. The NAV
of each money market fund is determined as of 12:00 Noon Eastern time for Tax
Free Money Fund, and 1:00 p.m. Eastern time for Cash Reserve Fund and U.S.
Treasury Money Fund, and as of the close of regular trading hours of the NYSE,
normally 4:00 p.m. Eastern time. The NAV of each equity and bond fund is
determined as of the close of regular trading hours of the NYSE. The NYSE and
Crestar Bank have designated the following holiday closings for 1996, and
Capitoline expects the schedule to be the same in the future: New Year's Day
(observed), Dr. Martin Luther King, Jr. Day, Presidents' Day, Good Friday,
Memorial Day (observed), Independence Day, Labor Day, Columbus Day (observed),
Veterans' Day, Thanksgiving Day and Christmas Day. The

-20-

<PAGE>

holiday closing schedule may be changed by the NYSE and Crestar Bank. When the
NYSE is closed, or when trading is restricted for any reason other than its
customary weekend or holiday closings, or under emergency circumstances as
determined by the SEC to merit such action, the Funds will determine NAVs at the
close of business, the time of which will coincide with the closing of the NYSE.
To the extent that Fund securities are traded in other markets on days the NYSE
or Crestar Bank are closed (and a Fund is not open for business), a Fund's NAV
may be significantly affected on days when investors do not have access to the
Fund to purchase or redeem shares.

In the Prospectus, the Funds have notified shareholders that they reserve the
right at any time without prior notice to shareholders to refuse exchange
purchases by any person or group, if, in Capitoline's judgment, a Fund would be
unable to invest effectively in accordance with its investment objective and
policies, or would otherwise potentially be adversely affected.

DISTRIBUTIONS AND TAXES

DISTRIBUTIONS. If you request to have distributions mailed to you and the U.S.
Postal Service cannot deliver your checks, or if your checks remain uncashed for
six months, the Fund will hold your distributions without interest until you
provide the Fund with alternate instructions.

Cash Reserve Fund, U.S. Treasury Money Fund, Tax Free Money Fund, Limited Term
Bond Fund, Intermediate Bond Fund, Government Bond Fund, Virginia Intermediate
Municipal Bond Fund, Virginia Municipal Bond Fund, Value Fund, Capital
Appreciation Fund and Special Equity Fund each qualified for the fiscal year
ended November 30, 1995, and each Fund, including Maryland Municipal Bond Fund,
intends to qualify for each subsequent fiscal year, for tax treatment as a
"regulated investment company" under Subchapter M the Internal Revenue Code. By
distributing all of its net investment income and any net realized short-term
and long-term capital gains for a taxable year in accordance with the timing
requirements imposed by the Code, and by meeting certain other requirements
relating to the sources of income and diversification of assets, a Fund should
not be liable for federal income or excise taxes.

-21-

<PAGE>

of each quarter of its taxable year is comprised of obligations, the interest on
which is excluded from gross income under section 103(a) of the Internal Revenue
Code. Substantially all of the dividends paid by Tax Free Money Fund are
anticipated to be exempt from regular federal income taxes. Under normal
circumstances, at least 80% of the income from Maryland Municipal Bond Fund,
Virginia Intermediate Municipal Bond Fund and Virginia Municipal Bond Fund will
be exempt from regular federal income taxes. However, persons who are
"substantial users" (or "related persons" of substantial users) of facilities
financed by private activity bonds held by a Fund may be subject to tax on their
pro rata share of the interest income from such bonds and should consult their
tax advisers before purchasing shares of that Fund. Dividends paid by a Fund out
of its taxable net investment income (including realized net short-term capital
gains, if any) are taxable to shareholders as ordinary income notwithstanding
that such dividends are reinvested in additional shares of that Fund.
Distributions of net capital gains, if any, are taxable as long-term capital
gains to the shareholder receiving them regardless of the length of time the
shares on which such distributions are paid may have been held. With respect to
a shareholder who receives exempt-interest dividends on shares of a fund held
for six months or less, any loss on the sale or exchange of such shares will, to
the extent of the amount of such exempt-interest dividends, be disallowed. In
addition, a long-term capital gain distribution with respect to shares will
cause any loss on a subsequent sale or exchange of such shares not so disallowed
to be treated as long-term capital loss to the extent of such long-term capital
gain distribution, if such shares are held for six months or less.

-22-

<PAGE>

STATE AND LOCAL TAXES. In addition to federal taxes, shareholders may be subject
to state or local taxes on their investment, depending on state law.

In the case of individuals, Maryland presently imposes an income tax on items of
tax preference with reference to such items as defined in the Code for purposes
of calculating the federal alternative minimum tax. Interest paid on certain
private activity bonds is a preference item for purposes of calculating the
federal alternative minimum tax. Accordingly, if the Maryland Municipal Bond
Fund holds such bonds, the excess of 50% of that portion of exempt interest
dividends which is attributable to interest on such bonds over a threshold
amount may be taxable by Maryland. Interest on indebtedness incurred or
continued (directly or indirectly) by a shareholder in order to purchase or
carry shares of the Maryland Municipal Bond Fund will not be deductible for
Maryland state and local income tax purposes. Individuals will not be subject to
personal property tax on their shares of the Maryland Municipal Bond Fund.
Shares of the Maryland Municipal Bond Fund held by a Maryland resident at death
may be subject to Maryland inheritance and estate taxes.

-23-

<PAGE>

at the close of each quarter of its taxable year is invested in state,
municipal, or other obligations described in Section 103(a) of the Internal
Revenue Code. These Funds intend to comply with those requirements.

Other distributions from these Funds, including capital gains, generally will
not be exempt from Virginia income taxation.

DIRECTORS AND OFFICERS AND AFFILIATED PERSONS

-24-

<PAGE>

Jean L. Oakey, Director. Partner at Wells Coleman & Co. (public accountants).
Her business address is 3800 Patterson Avenue, Richmond, Virginia 23221.

Glen Douglas Pond, Director. Retired. Formerly the Director of the Virginia
Retirement System. His address is 21 Waterfront Court, Cedar Point, Urbanna,
Virginia 23175.

David M. Carter, Secretary, Partner, Hunton and Williams, Fund Counsel.

Jeffrey A. Cohen, Controller, Assistant Secretary. CPA, Director, International
and Domestic Funds Accounting, SEI Corporation since 1991. Audit Manager, Price
Waterhouse prior to 1991.

As of September 30, 1995, the Directors and officers owned in the aggregate less
than 1% of the outstanding shares of any Fund.

As of November 30, 1995, the Directors and officers of the Company received the
following compensation:

================================================================================================================================
Total Compensation from
Aggregate Registrant and Fund
Compensation From Pension or Retirement Estimated Annual Complex Paid to Directors
Registrant for Fiscal Benefits Accrued as Benefits Upon for Fiscal Year Ended
Name of Person, Position Year Ended 1995 Part of Fund Expenses Retirement 1995
- --------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Jesse F. Williams, III, $7,000 0 0 $7,000
Chairman, President and
Director
- --------------------------------------------------------------------------------------------------------------------------------
F. Dean Fowler, $7,000 0 0 $7,000
Director
- --------------------------------------------------------------------------------------------------------------------------------
John Bruce James, Jr., $7,000 0 0 $7,000
Director
- --------------------------------------------------------------------------------------------------------------------------------
Jean L. Oakey, $7,000 0 0 $7,000
Director

- -------------------------------------------------------------------------------------------------------------------------------
Glen Douglas Pond, $7,000 0 0 $7,000
Director
================================================================================================================================

</TABLE>

-25-

<PAGE>

THE ADVISER

MONEY MARKET FUNDS

.40% of each Fund's average daily net assets on the first $500 million of net
assets;
.35% of each Fund's average daily net assets on the next $500 million of net
assets; and
.30% of each Fund's average daily net assets on all remaining net assets.

CAPITAL APPRECIATION FUND, VALUE FUND AND SPECIAL EQUITY FUND

.75% of each Fund's average daily net assets.

LIMITED TERM BOND FUND AND VIRGINIA INTERMEDIATE MUNICIPAL BOND FUND

.50% of each Fund's average daily net assets.

INTERMEDIATE BOND FUND

.60% of Bond Fund's average daily net assets.

-26-

<PAGE>

MARYLAND MUNICIPAL BOND FUND, GOVERNMENT BOND FUND AND VIRGINIA MUNICIPAL BOND
FUND

.60% of each Fund's average daily net assets.

The Adviser may choose to waive or reimburse a Fund for a portion of that Fund's
investment advisory fee.

For the fiscal years ended November 30, 1995, 1994 and 1993, the advisory fees
paid to the Adviser with respect to each money market fund were as follows:

</TABLE>

Fees paid to the Adviser with respect to the bond and equity funds were as
follows:

</TABLE>

None of the Maryland Municipal Bond, Government Bond or Virginia Municipal Bond
Funds conducted operations during the fiscal years ended November 30, 1994 and
1993.

-27-

<PAGE>

of forming the corporation and maintaining corporate existence; costs of
preparing and printing the Company's prospectus, statement of additional
information, subscription order forms and shareholder reports and delivering
them to existing and prospective shareholders; costs of maintaining books of
original entry for portfolio and Fund accounting and other required books and
accounts and of calculating the net asset value of shares of the Funds; costs of
reproduction, stationery and supplies; compensation of directors and officers
and employees of the Company and costs of other personnel performing services
for the Company who are not officers of the Adviser, the Company's Distributor
or their respective affiliates; costs of corporate meetings; SEC registration
fees and related expenses; state securities laws registration fees and related
expenses; fees payable to the Adviser under the Advisory Agreements and to the
Company's Distributor under the Administration and Distribution Agreement and
all other fees and expenses paid by a Fund or Class pursuant to the
Administration Plans or Distribution Plans.

ADMINISTRATOR AND DISTRIBUTOR

THE ADMINISTRATOR

The Company and SEI Financial Services Corporation (the "Administrator") have
entered into an administration agreement (the "Administration Agreement")
effective March 1, 1995.

The Administrator, a wholly-owned subsidiary of SEI Corporation ("SEI"), was
organized as a Delaware corporation in 1969 and has its principal business
offices at 680 East Swedesford Road, Wayne, PA 19087. Alfred P. West, Jr., Henry
H. Greer and Carmen V. Romeo, constitute the Board of Directors of the
Administrator and the Distributor. Mr. West is the Chairman of the Board and
Chief Executive Officer of SEI, the Administrator and the Distributor. Mr. Greer
serves as the President and Chief Operating Officer of SEI, the Administrator
and the Distributor. SEI and its subsidiaries are leading providers of funds
evaluation services, trust accounting systems, and brokerage and information
services to financial institutions, institutional investors and money managers.
The Administrator also serves as administrator to the following other mutual
funds: SEI Daily Income Trust; SEI Liquid Asset Trust; SEI Tax Exempt Trust; SEI
Index Funds; SEI Institutional Managed Trust; SEI International Trust; Stepstone
Funds; The Advisors' Inner Circle Fund, The Pillar Funds; CUFund; STI Classic
Funds; CoreFunds, Inc.; First American Funds, Inc.; First American Investment
Funds, Inc.; The Arbor Fund; 1784 Funds; Marquis(SM) Funds, Morgan
Grenfell Investment Trust; The PBHG Funds, Inc; Inventor Funds, Inc.; The
Achievement Funds Trust; Insurance Investment Products Trust; Bishop Street
Funds; Conestoga Family of Funds; and The Rembrandt Funds.

The Administrator is entitled to a fee, calculated daily and paid monthly, at an
annual rate of .15% of average daily net assets of each of the Funds.

For the fiscal year ended November 30, 1995, the Administrator was compensated
for its services under the Administration Agreement as follows:

Cash Reserve Fund $724,959, of which $0 was waived
U.S. Treasury Money Fund $486,365, of which $0 was waived
Tax Free Money Fund $287,134, of which $0 was waived
Limited Term Bond Fund $125,310, of which $0 was waived
Intermediate Bond Fund $117,410, of which $0 was waived
Government Bond Fund $ 8,805, of which $8,805 was waived
VA Intermediate Municipal Bond Fund $ 74,748, of which $34,384 was waived
VA Municipal Bond Fund $ 4,858, of which $4,858 was waived

-28-

<PAGE>

Value Fund $304,389, of which $0 was waived
Capital Appreciation Fund $ 28,470, of which $0 was waived
Special Equity Fund $ 77,120, of which $0 was waived.

THE DISTRIBUTOR

DISTRIBUTION PLAN

The Board of Directors of the Company has approved an Amended and Restated
Distribution and Service Plan (the "Distribution Plan") pursuant to Rule 12b-1
of the 1940 Act (the "Rule"). Under the Trust Class Distribution Plan the
Distributor is compensated at the annual rate of .15% of the aggregate average
daily net assets of the Trust Class shares of the Fund. The Distributor will be
compensated for distribution services provided to the Trust Class shares
including the printing and distribution of Prospectuses, Statements of
Additional Information or reports prepared for the use in connection with the
offering of shares of the Fund (other than to existing shareholders at the time
of such mailing), the expenses incurred for the preparation of any other
literature used by the Distributor in connection with any such offering. The
Distributor has agreed to waive any fees payable pursuant to the Distribution
Plan attributable to Trust Class shares, and will bear the costs of other
distribution-related activities. The Distributor reserves the right to terminate
its waiver at any time at its sole discretion.

A SHARES AND B SHARES DISTRIBUTION PLANS

The Company has adopted the Investors Class B Shares Distribution and Service
Plan (the "B Shares Distribution Plan") in accordance with the provisions of the
Rule which regulates circumstances under which an investment company may
directly or indirectly bear expenses relating to the distribution of its shares.
The B Shares Distribution Plan provides that B Shares will pay the Distributor a
fee of .75% of the average daily net assets of the funds which offer B Shares.
Continuance of the B Shares Distribution Plan must be approved annually by a
majority of the Directors of the Company. The B Shares Distribution Plan
requires that quarterly written reports of amounts spent under the B Shares
Distribution Plan and the purposes of such expenditures be furnished to and
reviewed by the Directors. The B Shares Distribution Plan may not be amended to
increase materially the amount which may be spent thereunder without approval by
a majority of the outstanding shares of the Company. All material amendments of
the Plan will require approval by a majority of the Directors of the Company and
of the Qualified Directors.

For the fiscal year ended November 30, 1995, the Distributor was compensated
beginning March 1, 1995 for its services under the B Shares Distribution Plan as
follows:

Cash Reserve Fund $74, of which $10 was waived

-29-

<PAGE>

Government Bond Fund $ 656, of which $87 was waived
VA Municipal Bond Fund $1,835, of which $245 was waived
Value Fund $3,833, of which $511 was waived
Special Equity Fund $1,403, of which $87 was waived.

Also, pursuant to the B Shares Distribution Plan, the Distributor is compensated
at an annual rate of .25% of B Shares' average net assets for providing ongoing
shareholder services to investors in B Shares as follows:

Prior to March 1, 1995, Fidelity Distributor Corporation ("FDC") served as the
Funds' administrator and distributor under Administrative and Distribution
Plans.

For the fiscal years ended November 30, 1995 (through February 28, 1995),
November 30, 1994 and 1993, FDC was compensated for its services under each
operative Distribution Plan as follows:

Cash Reserve Fund $152,042, $631,053 and $744,853,
of which $0, $0 and $0 was waived
U.S. Treasury Money Fund $112,822, $499,978 and $600,093,
of which $0, $0 and $0 was waived
Tax Free Money Fund $65,682, $228,173 and $264,036,
of which $0, $0 and $0 was waived
Limited Term Bond Fund $30,482, $128,753 and $114,342,
of which $0, $0 and $0 was waived
Intermediate Bond Fund $28,685, $107,382 and $63,930,
of which $0, $0 and $0 was waived
VA Intermediate Municipal $18,356, $76,321 and $32,224,
Bond Fund of which $15,576, $64,180 and $27,670
was waived
Value Fund $65,118, $272,207 and $209,577,
of which $0, $0 and $0 was waived
Capital Appreciation Fund $5,362, $17,420 and $8,035,
of which $0, $0 and $0 was waived
Special Equity Fund $17,171, $64,372 and $41,280,
of which $0, $0 and $0 was waived.

The following represents expenses made pursuant to the Rule for the fiscal year
ended November 30, 1995.

===============================================================================================================================
12b-1 Expenses
===============================================================================================================================
Third Party Promotion and Marketing
Fund Payments Advertising Management Distribution Maintenance
- -------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Cash Reserve Fund $ 64 -- -- -- --
- -------------------------------------------------------------------------------------------------------------------------------
U.S. Treasury Money Fund -- -- -- -- --
- -------------------------------------------------------------------------------------------------------------------------------
Tax Free Money Fund -- -- -- -- --
- -------------------------------------------------------------------------------------------------------------------------------
Limited Term Bond Fund -- -- -- -- --
- -------------------------------------------------------------------------------------------------------------------------------
Intermediate Bond Fund -- -- -- -- --
- -------------------------------------------------------------------------------------------------------------------------------
Government Bond Fund 569 -- -- -- --
- -------------------------------------------------------------------------------------------------------------------------------
VA Intermediate Municipal -- -- -- -- --
Bond Fund
- -------------------------------------------------------------------------------------------------------------------------------
VA Municipal Bond Fund 1,590 -- -- -- --
- -------------------------------------------------------------------------------------------------------------------------------
Value Fund 3,322 -- -- -- --
- -------------------------------------------------------------------------------------------------------------------------------
Capital Appreciation Fund -- -- -- -- --
- -------------------------------------------------------------------------------------------------------------------------------
Special Equity Fund 1,216 -- -- -- --
===============================================================================================================================

</TABLE>

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<PAGE>

In addition, Capitoline may use all or a portion of the fee received under its
advisory contract, past profits or other resources to pay financial institutions
and other industry professionals such as investment advisors, broker-dealers
(including Crestar Securities Corporation), accountants and estate planning
firms ("Qualified Recipients") for shareholder services. These Qualified
Recipients may be paid for such services from the fees paid by the Funds to
Capitoline. The Plans also provide that Capitoline may engage banks as Qualified
Recipients for performing certain shareholder support services. Capitoline will
make such payments only to Qualified Recipients who provide shareholder support
services. These shareholder services may include, among other things, answering
client inquiries, investing client account balances automatically in Fund
shares, arranging for bank wires, and such other client services of a nature
generally provided by a bank as may seem appropriate. Capitoline will enter into
written agreements with Qualified Recipients who receive payments pursuant to a
Plan. Payments will be made on the basis of the average daily net asset value of
a Fund's shares owned by shareholders for whom the Qualified Recipient is the
holder of record or with whom the Qualified Recipient has a servicing
relationship.

TRANSFER AGENT

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<PAGE>

parties to the Transfer Agent Agreement or interested persons of any such party,
at a meeting called for the purpose of voting on the Transfer Agent Agreement.

CUSTODIAN

AUDITOR

PRINCIPAL HOLDERS OF SECURITIES

A shareholder owning of record or beneficially more than 25% of a particular
Fund's shares may be considered to be a "controlling person" of that Fund.
Accordingly, its vote could have a more significant effect on matters presented
at shareholder meetings than the votes of the fund's other shareholders. The
following persons owned of record 25% or more of the outstanding Trust Class
shares of the indicated Funds as of September 30, 1995:

FUND NAME SHAREHOLDER %

Cash Reserve Fund Crestar Bank 94%
P.O. Box 26665
Richmond, VA 23261

U.S. Treasury Money Fund Crestar Bank 99%
P.O. Box 26665
Richmond, VA 23261

Tax Free Money Fund Crestar Bank 94%
P.O. Box 26665
Richmond, VA 23261

Limited Term Bond Fund Crestar Bank 89%
P.O. Box 26665
Richmond, VA 23261

Intermediate Bond Fund Crestar Bank 88%
P.O. Box 26665
Richmond, VA 23261

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<PAGE>

Government Bond Fund Crestar Bank 46%
P.O. Box 26665
Richmond, VA 23261

Virginia Intermediate Crestar Bank 78%
Municipal Bond Fund P.O. Box 26665
Richmond, VA 23261

Virginia Municipal Bond Fund Crestar Bank 61%
P.O. Box 26665
Richmond, VA 23261

MD Municipal Bond Fund Crestar Bank 100%
P.O. Box 26665
Richmond, VA 23261

Value Fund Crestar Bank 89%
P.O. Box 26665
Richmond, VA 23261

Capital Appreciation Fund Crestar Bank 44%
P.O. Box 26665
Richmond, VA 23261

Special Equity Fund Crestar Bank 84%
P.O. Box 26665
Richmond, VA 23261

FINANCIAL STATEMENTS

The financial statements and financial highlights for the fiscal year ended
November 30, 1995 for Cash Reserve Fund, U.S. Treasury Money Fund, Tax Free
Money Fund, Limited Term Bond Fund (formerly known as Short/Intermediate Bond
Fund), Intermediate Bond Fund (formerly known as Bond Fund), Government Bond
Fund, Virginia Intermediate Municipal Bond Fund (formerly known as Virginia
Municipal Bond Fund), Virginia Municipal Bond Fund, Value Fund, Capital
Appreciation Fund and Special Equity Fund are included in the Annual Report
which is a separate report supplied with this Statement of Additional
Information. The financial statements and financial highlights are incorporated
herein by reference.