CREST FUNDS INC, 497, 1996-04-03

CREST FUNDS INC
497, 1996-04-03

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

PROSPECTUS

MARCH 28, 1996

CrestFunds(Register mark), 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 Investors Class A Shares ("A
Shares"), the Investors Class B Shares ("B Shares"), and the Trust Class shares.
All three classes of each Fund share a common investment objective and
investment portfolio. This Prospectus relates to the A Shares and the B Shares
which are offered to investors seeking a diversified range of investment
options. Trust Class 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.

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

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................................................................................. 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

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.

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

CAPITAL APPRECIATION FUND

<TABLE>
<CAPTION>
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>

11
<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.

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:

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

o obligations of the U.S. and certain foreign governments and their
agencies or instrumentalities;

o short-term corporate obligations, including commercial paper, notes and
bonds; and

o 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 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.

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.

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
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.

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.

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"),

<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 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.

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
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.

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

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 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:

o 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);

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

o 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.

<PAGE>
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.

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."

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 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.

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

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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.

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 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.

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

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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.

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.

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.

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 a defensive
position. Should the Fund elect to purchase shares of a money market fund, it
will incur

<PAGE>
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.

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(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.

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 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.

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

<PAGE>
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 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.

<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
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.

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 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.

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 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

<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.

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

CrestFunds(Register mark) 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(Register mark) (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(Register mark): 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(Register mark) Account Builder" Accounts). All subsequent purchases
must be at least $100 ($50 for IRAs and "CrestFunds(Register mark) 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.

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 DEALER
CHARGES AS A % OF CONCESSION (AS
NET 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 DEALER
CHARGES AS A % OF CONCESSION (AS
NET 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 DEALER
CHARGES AS A % OF 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 % DEALER
OF NET CONCESSION
OFFERING AMOUNT (AS A % OF
AMOUNT OF PURCHASE IN SINGLE TRASACTION PRICE INVESTED OFFERING 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:

<TABLE>
<CAPTION>
FROM CONTINGENT
DATE OF DEFERRED
PURCHASE SALES CHARGE
<S> <C>
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
</TABLE>

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

<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.

28
<PAGE>
CRESTFUNDS(REGISTER MARK)ACCOUNT BUILDER
CrestFunds(Register mark) 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(Register mark) 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(Register mark) account application you may designate a
pre-determined investment mix to direct a certain percentage (minimum 10%) of
each investment to certain CrestFunds(Register mark). 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(Register mark) 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

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.

<PAGE>

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.

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.

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:
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.

<PAGE>

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.

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.

<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.

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.

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

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

<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
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 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.")

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.

<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 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.

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.

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

<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.

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

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

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

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(Register mark), 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(Register mark), 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(Register mark). The CrestFunds(Register mark) 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

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 Funds' financial report.

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 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.

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 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 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.

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.