CRESTFUNDS INC/, 497, 1998-04-07

CRESTFUNDS INC/
497, 1998-04-07

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[Crestar Logo]

CREST
-----
FUNDS

Trust Class Prospectus
March 31, 1998

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

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
Maryland Municipal Bond Fund
Value Fund
Capital Appreciation Fund
Special Equity Fund

<PAGE>

CrestFunds, Inc. -- Trust Class
PROSPECTUS
March 31, 1998
CrestFunds, Inc. (the "Company"), a Maryland corporation, is a registered
open-end management investment company that offers investors a selection of
money market, bond and equity funds (the "Funds"). The Funds offer one or more
of three classes of shares: the Trust Class shares, the Investors Class A
Shares ("A Shares") and the Investors Class B Shares ("B Shares"). All three
classes of each Fund share a common investment objective and investment
portfolio. This Prospectus relates to shares of the Trust Class, which are
offered to qualified individual or institutional customers whose assets are
managed and/or administered by the Crestar Investment Group. Trust Class shares
of the money market funds are also offered to qualified individual or
institutional customers who have qualified cash management (or "sweep")
accounts with Crestar Bank or one of its bank affiliates. A Shares and B Shares
are offered by a separate prospectus which is available by calling
1-800-273-7827.

MONEY MARKET FUNDS
Cash Reserve Fund
U.S. Treasury Money Fund
Tax Free Money Fund

The money market funds' shares are neither insured nor guaranteed by the U.S.
Government. There can be no assurance that any of the money market funds will
be able to maintain a stable net asset value of $1.00 per share.

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

The Funds' shares are not deposits or obligations of, or guaranteed, insured or
endorsed by, Crestar Bank, the Federal Deposit Insurance Corporation, the
Federal Reserve Board, or any other government agency. Investing in mutual
funds involves risks, including the possible loss of the principal amount
invested. The value of an investment in the Funds and its return will fluctuate
and is not guaranteed. When sold, the value of an investment may be higher or
lower than the amount originally invested.

Please read this Prospectus before investing. This Prospectus sets forth 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 31, 1998) for the Trust Class of the Funds and an
Annual Report for the fiscal year ended November 30, 1997 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 any offer of shares in the Funds. If given or made, such other
information or representations must not be relied upon as having been
authorized by the Funds or by the Funds' distributor. This Prospectus and the
related Statement of Additional Information do not constitute an offer by any
Fund or the Funds' distributor to sell shares of any Fund to any person to whom
it is unlawful to make such an offer.

<PAGE>

Table of Contents

<TABLE>
<CAPTION>
Page
-----
<S> <C>
Summary of Fund Expenses ............................. 3
The Funds' Financial History ......................... 5
Investment Objectives and Policies ................... 13
Risk Factors and Investment Considerations ........... 18
Investment Limitations ............................... 20
Fund Management ...................................... 21
Pricing of Shares .................................... 21
How to Purchase, Exchange and Redeem Shares .......... 21
Dividends and Tax Matters ............................ 23
Performance .......................................... 25
Portfolio Transactions ............................... 26
Advisory and Related Agreements ...................... 26
Other Expense Information ............................ 28
Banking Law Matters .................................. 28
Description of Common Stock .......................... 28
Appendix ............................................. 30
Summary of Bond Ratings .............................. 37
Summary of Commercial Paper Ratings .................. 37
</TABLE>

<PAGE>

Summary of Fund Expenses

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

Annual Fund Operating Expenses (as a percentage of average daily net assets) --
Net of Waivers and/or Reimbursement:

<TABLE>
<CAPTION>
Total
Advisory 12b-1 Other Operating
Fund Fee+ Fees+ Expenses+ Expenses+
- --------------------------------------------------- ---------- ------- ----------- ----------
<S> <C> <C> <C> <C>
Cash Reserve Fund ................................. .38% 0% .27% .65%
U.S. Treasury Money Fund .......................... .40 0 .25 .65
Tax Free Money Fund ............................... .40 0 .26 .66
Limited Term Bond Fund ............................ .50 0 .25 .75
Intermediate Bond Fund ............................ .60 0 .27 .87
Government Bond Fund .............................. .50 0 .16 .66
Maryland Municipal Bond Fund ...................... .22 0 .41 .63
Virginia Intermediate Municipal Bond Fund ......... .50 0 .28 .78
Virginia Municipal Bond Fund ...................... .50 0 .19 .69
Value Fund ........................................ .75 0 .27 1.02
Capital Appreciation Fund ......................... .75 0 .27 1.02
Special Equity Fund ............................... .75 0 .26 1.01
</TABLE>

- ----------
+ Net of waivers and reimbursement.

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

<TABLE>
<CAPTION>
Fund 1 Year 3 Years 5 Years 10 Years
- ---------------------------------------------------- -------- --------- --------- ---------
<S> <C> <C> <C> <C>
Cash Reserve Fund .................................. $ 7 $21 $36 $ 81
U.S. Treasury Money Fund ........................... 7 21 36 81
Tax Free Money Fund ................................ 7 21 37 82
Limited Term Bond Fund ............................. 8 24 42 93
Intermediate Bond Fund ............................. 9 28 48 107
Government Bond Fund ............................... 7 21 37 82
Maryland Municipal Bond Fund ....................... 7 20 35 79
Virginia Intermediate Municipal Bond Fund .......... 8 25 43 97
Virginia Municipal Bond Fund ....................... 7 22 38 86
Value Fund ......................................... 10 32 56 125
Capital Appreciation Fund .......................... 10 32 56 125
Special Equity Fund ................................ 10 32 56 124
</TABLE>

<PAGE>

Explanation of Table:

Annual Fund Operating Expenses. Advisory fees are paid by the Funds to Crestar
Asset Management Company (the "Adviser") for managing the Funds' investments
and business affairs (see "Advisory and Related Agreements -- Adviser"). The
Funds pay administration fees at an annualized rate of .15% to SEI Fund
Resources (the "Administrator") for administrative services.

Absent fee waivers, advisory fees for the Government Bond Fund, Maryland
Municipal Bond Fund and Virginia Municipal Bond Fund would be .60% for each
Fund. Absent fee waivers, 12b-1 Fees would be .15% for each Fund. Absent the
waiver of administration fees, Other Expenses would be .31% for the Government
Bond Fund and .34% for the Virginia Municipal Bond Fund. Absent all fee
waivers, Total Operating Expenses would be .80% for the Cash Reserve Fund, .80%
for the U.S. Treasury Money Fund and .81% for the Tax Free Money Fund, and
.90%, 1.02%, 1.06%, 1.16%, .93%, 1.09%, 1.17%, 1.17%, and 1.16% for the Limited
Term Bond Fund, Intermediate Bond Fund, Government Bond Fund, Maryland
Municipal Bond Fund, Virginia Intermediate Municipal Bond Fund, Virginia
Municipal Bond Fund, Value Fund, Capital Appreciation Fund and Special Equity
Fund, respectively. Please refer to the sections "Advisory and Related
Agreements -- Administrator and Distributor," "Advisory and Related Agreements
- -- Transfer Agent and Custodian" and "Other Expense Information." The
information contained in the table and example above relates only to Trust
Class shares; expenses for Trust Class shares differ from those of A Shares and
B Shares. See "Description of Common Stock." Advisory fees and Other Expenses
are reflected in each Fund's share price and are not charged directly to
individual shareholder accounts.

Example. The hypothetical example illustrates the expenses associated with a
$1,000 investment in Trust Class shares over periods of 1, 3, 5 and 10 years
based on the expenses in the table above and an assumed annual return of 5%.
The return of 5% and expenses should not be considered indications of actual or
expected performance or expenses, both of which may vary.

<PAGE>

The Funds' Financial History

Cash Reserve Fund

<TABLE>
<CAPTION>
Trust Class
---------------------------------------------------
Year Ended November 30
---------------------------------------------------
1997 1996 1995 1994
------------ ------------ ------------ ------------
<S> <C> <C> <C> <C>
Selected Per-Share Data
Net asset value,
beginning of year ........ $ 1.00 $ 1.00 $ 1.00 $ 1.00
------- ------- ------- -------
Income from
investment operations:
Net investment income ..... 0.050 0.049 0.053 0.034
Distributions:
Net investment income ..... ( 0.050) ( 0.049) ( 0.053) ( 0.034)
-------- -------- -------- --------
Net asset value, end of
year ..................... $ 1.00 $ 1.00 $ 1.00 $ 1.00
======== ======== ======== ========
Total Return .............. 5.16% 4.98% 5.45% 3.46%
Ratios and
Supplemental Data
Net assets, end of year
(thousands) .............. $848,140 $621,139 $520,185 $377,493
Ratio of expenses to
average daily net
assets (1) ............... 0.65% 0.66% 0.66% 0.66%
Ratio of net investment
income to average
daily net assets ......... 5.04% 4.87% 5.31% 3.37%
- ----------
(1) During the years,
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: ................ 0.80% 0.81% 0.81% 0.66%

<CAPTION>
Trust Class
----------------------------------------------------------------------------
Year Ended November 30
----------------------------------------------------------------------------
1993 1992 1991 1990 1989 1988
------------ ------------ ------------ ------------ ------------ -----------
<S> <C> <C> <C> <C> <C> <C>
Selected Per-Share Data
Net asset value,
beginning of year ........ $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
------- ------- ------- ------- ------- --------
Income from
investment operations:
Net investment income ..... 0.027 0.036 0.060 0.079 0.088 0.071
Distributions:
Net investment income ..... ( 0.027) ( 0.036) ( 0.060) ( 0.079) ( 0.088) ( 0.071)
-------- -------- -------- -------- -------- --------
Net asset value, end of
year ..................... $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
======== ======== ======== ======== ======== ========
Total Return .............. 2.76% 3.66% 6.17% 8.15% 9.22% 7.40%
Ratios and
Supplemental Data
Net assets, end of year
(thousands) .............. $408,036 $496,847 $396,534 $297,683 $395,324 $363,196
Ratio of expenses to
average daily net
assets (1) ............... 0.66% 0.61% 0.51% 0.49% 0.49% 0.49%
Ratio of net investment
income to average
daily net assets ......... 2.75% 3.50% 6.00% 7.88% 8.82% 7.10%
- ----------
(1) During the years,
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: ................ 0.66% 0.61% 0.58% 0.59% 0.61% 0.61%
</TABLE>

<PAGE>

U.S. Treasury Money Fund

<TABLE>
<CAPTION>
Trust Class
---------------------------------------------------
Year Ended November 30
---------------------------------------------------
1997 1996 1995 1994
------------ ------------ ------------ ------------
<S> <C> <C> <C> <C>
Selected Per-Share Data
Net asset value,
beginning of year ........ $ 1.00 $ 1.00 $ 1.00 $ 1.00
------- ------- ------- -------
Income from investment
operations:
Net investment income ..... 0.048 0.047 0.052 0.033
Distributions:
Net investment income ..... ( 0.048) ( 0.047) ( 0.052) ( 0.033)
-------- -------- -------- -------
Net asset value, end of
year ..................... $ 1.00 $ 1.00 $ 1.00 $ 1.00
======== ======== ======== =======
Total Return .............. 4.91% 4.80% 5.29% 3.30%
Ratios and
Supplemental Data
Net assets, end of year
(thousands) .............. $632,381 $389,051 $370,454 $319,477
Ratio of expenses to
average daily net
assets (1) ............... 0.65% 0.66% 0.66% 0.66%
Ratio of net investment
income to average
daily net assets ......... 4.82% 4.69% 5.16% 3.23%

- -----------------------------
(1) During the years,
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: ................. 0.80% 0.81% 0.81% 0.66%*

<CAPTION>
Trust Class
----------------------------------------------------------------------------
Year Ended November 30
----------------------------------------------------------------------------
1993 1992 1991 1990 1989 1988
------------ ------------ ------------ ------------ ------------ -----------
<S> <C> <C> <C> <C> <C> <C>
Selected Per-Share Data
Net asset value,
beginning of year ........ $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
-------- -------- -------- -------- ------- -------
Income from investment
operations:
Net investment income ..... 0.025 0.034 0.058 0.076 0.085 0.068
Distributions:
Net investment income ..... ( 0.025) ( 0.034) ( 0.058) ( 0.076) ( 0.085) ( 0.068)
-------- -------- -------- -------- -------- --------
Net asset value, end of
year ..................... $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
======== ======== ======== ======== ======== ========
Total Return .............. 2.51% 3.55% 6.00% 7.92% 8.84% 7.03%
Ratios and
Supplemental Data
Net assets, end of year
(thousands) .............. $342,537 $482,881 $279,790 $204,792 $145,571 $ 54,996
Ratio of expenses to
average daily net
assets (1) ............... 0.66% 0.64% 0.56% 0.49% 0.49% 0.49%
Ratio of net investment
income to average
daily net assets ......... 2.52% 3.37% 5.61% 7.65% 8.52% 6.84%

<PAGE>

Tax Free Money Fund

<TABLE>
<CAPTION>
Trust Class
----------------------------------------------------
Year Ended November 30
----------------------------------------------------
1997 1996 1995 1994
------------ ------------ ------------- ------------
<S> <C> <C> <C> <C>
Selected Per-Share Data
Net asset value, beginning of year ....... $ 1.00 $ 1.00 $ 1.00 $ 1.00
-------- -------- -------- -------
Income from investment operations:
Net investment income .................... 0.030 0.029 0.032 0.021
Net realized gain on investments ......... -- 0.002 -- --
-------- -------- --------- --------
Total from investment operations ......... 0.030 0.031 -- --
Distributions:
Net investment income .................... ( 0.030) ( 0.029) ( 0.032) ( 0.021)
Capital gains. ........................... -- ( 0.002) -- --
Total distributions ...................... ( 0.030) ( 0.031) -- --
-------- -------- --------- --------
Net asset value, end of year ............. $ 1.00 $ 1.00 $ 1.00 $ 1.00
======== ======== ========= ========
Total Return ............................. 3.06% 3.14% 3.26% 2.07%
Ratios and Supplemental Data
Net assets, end of year (thousands) ...... $226,837 $182,320 $ 202,333 $157,602
Ratio of expenses to average daily net
assets (1) .............................. 0.66% 0.66% 0.66% 0.67%
Ratio of net investment income to
average daily assets .................... 3.02% 2.88% 3.19% 2.06%

- -------------------------------------------
(1) During the years, 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: ............................ 0.81% 0.81% 0.81% 0.67%

<CAPTION>
Trust Class
--------------------------------------------------------------
Year Ended November 30
--------------------------------------------------------------
1993 1992 1991 1990 1989**
------------ ------------ ------------ ----------- -----------
<S> <C> <C> <C> <C> <C>
Selected Per-Share Data
Net asset value, beginning of year ....... $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
-------- ------- ------- ------- -------
Income from investment operations:
Net investment income .................... 0.019 0.031 0.046 0.057 0.027
Net realized gain on investments ......... -- -- -- -- --
-------- -------- -------- -------- -------
Total from investment operations ......... -- -- -- -- --
Distributions:
Net investment income .................... ( 0.019) ( 0.031) ( 0.046) ( 0.057) ( 0.027)
Capital gains. ........................... -- -- -- -- --
Total distributions ...................... -- -- -- -- --
-------- -------- -------- -------- -------
Net asset value, end of year ............. $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
======== ======== ======== ======== =======
Total Return ............................. 1.88% 3.03% 4.72% 5.86% 2.80%*
Ratios and Supplemental Data
Net assets, end of year (thousands) ...... $142,284 $155,458 $166,670 $ 43,300 $34,667
Ratio of expenses to average daily net
assets (1) .............................. 0.66% 0.47% 0.27% 0.20% 0.20%*
Ratio of net investment income to
average daily assets .................... 1.85% 3.00% 4.39% 5.70% 5.86%*

* Annualized.
** Commencement of operations -- June 15, 1989.

<PAGE>

Limited Term Bond Fund

<TABLE>
<CAPTION>
Trust Class
--------------------------------------
Year Ended November 30
--------------------------------------
1997 1996 1995
------------ ------------ ------------
<S> <C> <C> <C>
Selected Per-Share Data
Net asset value, beginning of year .................................. $ 9.93 $ 10.03 $ 9.49
-------- -------- --------
Income from investment operations:
Net investment income ............................................... 0.570 0.534 0.532
Net realized and unrealized gain/(loss) on investments .............. ( 0.010) ( 0.097) 0.534
-------- --------- --------
Total from investment operations .................................... 0.560 0.437 1.066
Distributions:
Net investment income ............................................... ( 0.570) ( 0.537) ( 0.526)
Capital gains ....................................................... -- -- --
Total distributions ................................................. ( 0.570) ( 0.537) ( 0.526)
-------- --------- --------
Net asset value, end of year ........................................ $ 9.92 $ 9.93 $ 10.03
======== ========= =========
Total Return ........................................................ 5.84% 4.52% 11.50%
Ratios and Supplemental Data
Net assets, end of year (thousands) ................................. $ 77,696 $ 84,973 $ 88,789
Ratio of expenses to average daily net assets (1) ................... 0.75% 0.78% 0.78%
Ratio of net investment income to average daily net assets .......... 5.79% 5.41% 5.44%
Portfolio turnover rate ............................................. 64% 51% 36%

- ----------------------------------------------------------------------
(1) During the years, 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: ....................................................... 0.90% 0.93% 0.93%

<CAPTION>
Trust Class
-----------------------------------------
Year Ended November 30
-----------------------------------------
1994 1993 1992**
------------ ------------ ---------------
<S> <C> <C> <C>
Selected Per-Share Data
Net asset value, beginning of year .................................. $ 10.16 $ 9.81 $ 10.00
-------- -------- ---------
Income from investment operations:
Net investment income ............................................... 0.480 0.500 0.070
Net realized and unrealized gain/(loss) on investments .............. ( 0.640) 0.350 ( 0.190)
--------- -------- -----------
Total from investment operations .................................... ( 0.160) 0.850 ( 0.120)
Distributions:
Net investment income ............................................... ( 0.480) ( 0.500) ( 0.070)
Capital gains ....................................................... ( 0.030) -- --
Total distributions ................................................. ( 0.510) ( 0.500) ( 0.070)
--------- -------- -----------
Net asset value, end of year ........................................ $ 9.49 $ 10.16 $ 9.81
========= ======== ===========
Total Return ........................................................ ( 1.56)% 8.84% ( 1.22)%*
Ratios and Supplemental Data
Net assets, end of year (thousands) ................................. $ 83,369 $ 85,968 $ 72,590
Ratio of expenses to average daily net assets (1) ................... 0.76% 0.77% 1.04%*
Ratio of net investment income to average daily net assets .......... 4.92% 4.95% 4.46%*
Portfolio turnover rate ............................................. 47% 61% 2%

* Annualized.
** Commencement of operations -- September 28, 1992.

Intermediate Bond Fund

<TABLE>
<CAPTION>
Trust Class
----------------------------------------
Year Ended November 30
----------------------------------------
1997 1996 1995
------------- ------------- ------------
<S> <C> <C> <C>
Selected Per-Share Data
Net asset value, beginning of year ................................. $ 9.94 $ 10.12 $ 9.16
--------- -------- --------
Income from investment operations:
Net investment income .............................................. 0.594 0.550 0.569
Net realized and unrealized gain/(loss) on investments ............. 0.021 ( 0.175) 0.954
--------- --------- --------
Total from investment operations ................................... 0.615 0.375 1.523
Distributions:
Net investment income .............................................. ( 0.595) ( 0.555) ( 0.563)
Capital gains ...................................................... -- -- ( 0.040)
Total distributions ................................................ ( 0.595) ( 0.555) ( 0.563)
--------- --------- --------
Net asset value, end of year ....................................... $ 9.96 $ 9.94 $ 10.12
========= ========= =========
Total Return ....................................................... 6.46% 3.92% 17.07%
Ratios and Supplemental Data
Net assets, end of year (thousands) ................................ $ 299,820 $ 281,187 $ 81,870
Ratio of expenses to average daily net assets (1) .................. 0.87% 0.88% 0.88%
Ratio of net investment income to average daily net assets ......... 6.07% 5.70% 5.89%
Portfolio turnover rate ............................................ 66% 35% 37%

- ---------------------------------------------------------------------
(1) During the years, 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: .................................................. 1.02% 1.03% 1.03%

<CAPTION>
Trust Class
-----------------------------------------
Year Ended November 30
-----------------------------------------
1994 1993 1992**
------------ ------------ ---------------
<S> <C> <C> <C>
Selected Per-Share Data
Net asset value, beginning of year ................................. $ 10.20 $ 9.70 $ 10.00
--------- -------- --------
Income from investment operations:
Net investment income .............................................. 0.530 0.520 0.080
Net realized and unrealized gain/(loss) on investments ............. ( 1.000) 0.500 ( 0.300)
--------- -------- ----------
Total from investment operations ................................... ( 0.470) 1.020 ( 0.220)
Distributions:
Net investment income .............................................. ( 0.530) ( 0.520) ( 0.080)
Capital gains ...................................................... -- --
Total distributions ................................................ ( 0.570) ( 0.520) ( 0.080)
--------- -------- ----------
Net asset value, end of year ....................................... $ 9.16 $ 10.20 $ 9.70
========= ========= ==========
Total Return ....................................................... ( 4.72)% 10.69% ( 2.20)%*
Ratios and Supplemental Data
Net assets, end of year (thousands) ................................ $ 77,143 $ 58,487 $ 13,759
Ratio of expenses to average daily net assets (1) .................. 0.88% 0.90% 1.15%*
Ratio of net investment income to average daily net assets ......... 5.53% 5.15% 4.63%*
Portfolio turnover rate ............................................ 39% 28% 0%

* Annualized.
** Commencement of operations -- September 28, 1992.

<PAGE>

Government Bond Fund

<TABLE>
<CAPTION>
Trust Class
--------------------------------------
Year Ended November 30
--------------------------------------
1997 1996 1995**
------------ ------------ ------------
<S> <C> <C> <C>
Selected Per-Share Data
Net asset value, beginning of year ..................................................... $ 10.37 $ 10.66 $ 10.00
--------- -------- --------
Income from investment operations:
Net investment income .................................................................. 0.605 0.591 0.412
Net realized and unrealized gain/(loss) on investments ................................. ( 0.010) ( 0.290) 0.753
--------- --------- --------
Total from investment operations ....................................................... 0.595 0.301 1.165
Distributions:
Net investment income .................................................................. ( 0.605) ( 0.591) ( 0.412)
Capital gains .......................................................................... -- -- ( 0.093)
Total distributions .................................................................... ( 0.605) ( 0.591) ( 0.505)
--------- --------- --------
Net asset value, end of year ........................................................... $ 10.36 $ 10.37 $ 10.66
========= ========= ========
Total Return ........................................................................... 6.04% 3.02% 11.85%*
Ratios and Supplemental Data
Net assets, end of year (thousands) .................................................... $ 34,013 $ 20,171 $ 10,211
Ratio of expenses to average daily net assets (1) ...................................... 0.66% 0.69% 0.71%*
Ratio of net investment income to average daily net assets ............................. 5.99% 5.75% 6.00%*
Portfolio turnover rate ................................................................ 144% 16% 28%

- -----------------------------------------------------------------------------------------
(1) During the years, 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: ......................................................... 1.06% 1.09% 1.11%*
</TABLE>

* Annualized.
** Commencement of operations -- April 5, 1995.

Maryland Municipal Bond Fund

<TABLE>
<CAPTION>
Trust Class
-------------------------
Year Ended November 30
-------------------------
1997 1996**
------------ ------------
<S> <C> <C>
Selected Per-Share Data
Net asset value, beginning of year ....................................................... $ 9.76 $ 10.00
-------- --------
Income from investment operations:
Net investment income .................................................................... 0.426 0.309
Net realized and unrealized gain/(loss) on investments ................................... 0.190 ( 0.240)
-------- --------
Total from investment operations ......................................................... 0.616 0.069
Distributions:
Net investment income .................................................................... ( 0.426) ( 0.309)
Capital gains ............................................................................ -- --
Total distributions ...................................................................... ( 0.426) ( 0.309)
-------- --------
Net asset value, end of year ............................................................. $ 9.95 $ 9.76
======== ========
Total Return ............................................................................. 6.50% 1.07%*
Ratios and Supplemental Data
Net assets, end of year (thousands) ...................................................... $ 11,461 $ 5,808
Ratio of expenses to average daily net assets (1) ........................................ 0.63% 0.71%*
Ratio of net investment income to average daily net assets ............................... 4.38% 4.30%*
Portfolio turnover rate .................................................................. 5% 9%

- -------------------------------------------------------------------------------------------
(1) During the years, 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: ........................................................... 1.28% 1.36%*
</TABLE>

* Annualized.
** Commencement of operations -- March 1, 1996.

<PAGE>

Virginia Intermediate Municipal Bond Fund

<TABLE>
<CAPTION>
Trust Class
---------------------------
Year Ended November 30
---------------------------
1997 1996
------------- -------------
<S> <C> <C>
Selected Per-Share Data
Net asset value, beginning of year ............................................ $ 10.22 $ 10.24
-------- --------
Income from investment operations:
Net investment income ......................................................... 0.463 0.419
Net realized and unrealized gain/(loss) on investments ........................ 0.089 ( 0.021)
--------- ---------
Total from investment operations .............................................. 0.552 0.398
Distributions:
Net investment income ......................................................... ( 0.462) ( 0.418)
Capital gains ................................................................. --
Total distributions ........................................................... ( 0.462) ( 0.418)
--------- ---------
Net asset value, end of year .................................................. $ 10.31 $ 10.22
========= =========
Total Return .................................................................. 5.55% 4.01%
Ratios and Supplemental Data
Net assets, end of year (thousands) ........................................... $ 237,096 $ 243,137
Ratio of expenses to average daily net assets (1) ............................. 0.78% 0.78%
Ratio of net investment income to average daily net assets .................... 4.57% 4.35%
Portfolio turnover rate ....................................................... 30% 25%

- --------------------------------------------------------------------------------
(1) During the years, 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: ..................... 0.93% 0.93%

<CAPTION>
Trust Class
--------------------------------------
Year Ended November 30
--------------------------------------
1995 1994 1993**
------------ ------------ ------------
<S> <C> <C> <C>
Selected Per-Share Data
Net asset value, beginning of year ............................................ $ 9.21 $ 10.33 $ 10.00
-------- --------- --------
Income from investment operations:
Net investment income ......................................................... 0.428 0.440 0.390
Net realized and unrealized gain/(loss) on investments ........................ 1.030 ( 1.100) 0.330
-------- --------- --------
Total from investment operations .............................................. 1.458 ( 0.660) 0.720
Distributions:
Net investment income ......................................................... ( 0.428) ( 0.440) ( 0.390)
Capital gains ................................................................. -- -- ( 0.020)
Total distributions ........................................................... ( 0.428) ( 0.460) ( 0.390)
-------- --------- --------
Net asset value, end of year .................................................. $ 10.24 $ 9.21 $ 10.33
========= ========= ========
Total Return .................................................................. 16.09% ( 6.53)% 7.25%*
Ratios and Supplemental Data
Net assets, end of year (thousands) ........................................... $ 43,373 $ 41,365 $ 39,392
Ratio of expenses to average daily net assets (1) ............................. 0.72% 0.65% 0.71%*
Ratio of net investment income to average daily net assets .................... 4.34% 4.48% 4.25%*
Portfolio turnover rate ....................................................... 28% 24% 39%

* Annualized.
** Commencement of operations -- January 11, 1993.

Virginia Municipal Bond Fund

<TABLE>
<CAPTION>
Trust Class
--------------------------------------
Year Ended November 30
--------------------------------------
1997 1996 1995**
------------ ------------ ------------
<S> <C> <C> <C>
Selected Per-Share Data
Net asset value, beginning of year ....................................................... $ 10.28 $ 10.40 $ 10.00
-------- -------- -------
Income from investment operations:
Net investment income .................................................................... 0.475 0.465 0.309
Net realized and unrealized gain/(loss) on investments ................................... 0.168 ( 0.120) 0.445
--------- --------- --------
Total from investment operations ......................................................... 0.643 0.345 0.754
Distributions:
Net investment income .................................................................... ( 0.475) ( 0.465) ( 0.310)
Capital gains ............................................................................ ( 0.008) -- ( 0.044)
Total distributions ...................................................................... ( 0.483) ( 0.465) ( 0.354)
-------- --------- ---------
Net asset value, end of year ............................................................. $ 10.44 $ 10.28 $ 10.40
========= ========= =========
Total Return ............................................................................. 6.46% 3.48% 7.67%*
Ratios and Supplemental Data
Net assets, end of year (thousands) ...................................................... $ 20,044 $ 15,911 $ 6,247
Ratio of expenses to average daily net assets (1) ........................................ 0.69% 0.71% 0.71%*
Ratio of net investment income to average daily net assets ............................... 4.65% 4.61% 4.61%*
Portfolio turnover rate .................................................................. 39% 24% 35%

* Annualized.
** Commencement of operations -- April 5, 1995.

<PAGE>

Value Fund

<TABLE>
<CAPTION>
Trust Class
-------------------------------
Year Ended November 30
-------------------------------
1997 1996
--------------- ---------------
<S> <C> <C>
Selected Per-Share Data
Net asset value, beginning of year ................................. $ 13.39 $ 11.60
--------- --------
Income from investment operations:
Net investment income .............................................. 0.137 0.166
Net realized and unrealized gain/(loss) on investments ............. 3.237 2.380
--------- ---------
Total from investment operations ................................... 3.374 2.546
Distributions:
Net investment income .............................................. ( 0.145) ( 0.165)
Capital gains ...................................................... ( 0.070) ( 0.591)
Total distributions ................................................ ( 0.215) ( 0.756)
----------- -----------
Net asset value, end of year ....................................... $ 16.55 $ 13.39
=========== ===========
Total Return ....................................................... 25.41% 22.68%
Ratios and Supplemental Data
Net assets, end of year (thousands) ................................ $ 590,824 $ 553,648
Ratio of expenses to average daily net assets(1) ................... 1.02% 1.02%
Ratio of net investment income to average daily net assets ......... 0.77% 1.23%
Portfolio turnover rate ............................................ 100% 82%
Average commission rate (A) ........................................ $ .0576 $ .0548

- ---------------------------------------------------------------------
(1) During the years, 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 ......................................................... 1.17 % 1.17 %

<CAPTION>
Trust Class
---------------------------------------------------------
Year Ended November 30
---------------------------------------------------------
1995 1994 1993 1992**
------------- -------------- ------------- --------------
<S> <C> <C> <C> <C>
Selected Per-Share Data
Net asset value, beginning of year ................................. $ 10.73 $ 11.38 $ 10.50 $ 10.00
-------- -------- -------- ---------
Income from investment operations:
Net investment income .............................................. 0.245 0.200 0.180 0.030
Net realized and unrealized gain/(loss) on investments ............. 2.619 ( 0.240) 0.870 0.500
--------- --------- --------- ----------
Total from investment operations ................................... 2.864 ( 0.040) 1.050 0.530
Distributions:
Net investment income .............................................. ( 0.262) ( 0.190) ( 0.170) ( 0.030)
Capital gains ...................................................... ( 1.732) ( 0.420) -- --
Total distributions ................................................ ( 1.994) ( 0.610) ( 0.170) ( 0.030)
--------- --------- --------- ----------
Net asset value, end of year ....................................... $ 11.60 $ 10.73 $ 11.38 $ 10.50
========= ========= ========= ==========
Total Return ....................................................... 28.76% ( 0.49)% 10.05% 5.30%*
Ratios and Supplemental Data
Net assets, end of year (thousands) ................................ $ 220,386 $166,713 $ 167,337 $ 82,944
Ratio of expenses to average daily net assets(1) ................... 1.02% 1.01% 1.03% 1.28%*
Ratio of net investment income to average daily net assets ......... 2.01% 1.82% 1.64% 1.74%*
Portfolio turnover rate ............................................ 175% 116% 77% 5%
Average commission rate (A) ........................................ -- -- --

- ---------------------------------------------------------------------
(1) During the years, 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 ......................................................... 1.17% 1.01% 1.03% 1.28%
</TABLE>

* Annualized.
** Commencement of operations -- September 28, 1992.
(A) Average commission rate paid per share of security purchases and sales made
during the year. Presentation of the rate is only required for the fiscal
years beginning after September 1, 1995.

Capital Appreciation Fund

<TABLE>
<CAPTION>
Trust Class
-------------------------------
Year Ended November 30
-------------------------------
1997 1996
--------------- ---------------
<S> <C> <C>
Selected Per-Share Data
Net asset value, beginning of year ............................................ $ 13.58 $ 10.87
--------- --------
Income from investment operations:
Net investment income ......................................................... 0.037 0.043
Net realized and unrealized gain/(loss) on investments ........................ 3.005 2.709
--------- ---------
Total from investment operations .............................................. 3.042 2.752
Distributions:
Net investment income ......................................................... ( 0.041) ( 0.042)
Capital gains ................................................................. ( 0.621) --
Total distributions ........................................................... ( 0.662) ( 0.042)
----------- -----------
Net asset value, end of year .................................................. $ 15.96 $ 13.58
=========== ===========
Total Return .................................................................. 23.71% 25.38%
Ratios and Supplemental Data
Net assets, end of year (thousands) ........................................... $ 99,364 $ 32,983
Ratio of expenses to average daily net assets (1) ............................. 1.02% 1.10%
Ratio of net investment income to average daily net assets .................... 0.27% 0.37%
Portfolio turnover rate ....................................................... 123% 86%
Average commission rate (A) ................................................... $ .0624 $ .0764

<CAPTION>
Trust Class
-----------------------------------------
Year Ended November 30
-----------------------------------------
1995 1994 1993**
------------ ------------ ---------------
<S> <C> <C> <C>
Selected Per-Share Data
Net asset value, beginning of year ............................................ $ 10.17 $ 9.79 $ 10.00
--------- -------- --------
Income from investment operations:
Net investment income ......................................................... 0.043 0.010 0.010
Net realized and unrealized gain/(loss) on investments ........................ 2.035 0.380 ( 0.210)
--------- -------- ----------
Total from investment operations .............................................. 2.078 0.390 ( 0.200)
Distributions:
Net investment income ......................................................... ( 0.046) ( 0.010) ( 0.010)
Capital gains ................................................................. ( 1.332) -- --
Total distributions ........................................................... ( 1.378) ( 0.010) ( 0.010)
--------- -------- ----------
Net asset value, end of year .................................................. $ 10.87 $ 10.17 $ 9.79
========= ========= ==========
Total Return .................................................................. 20.74% 4.13% ( 2.00)%*
Ratios and Supplemental Data
Net assets, end of year (thousands) ........................................... $ 19,592 $ 12,869 $ 7,741
Ratio of expenses to average daily net assets (1) ............................. 1.10% 1.05% 1.11%*
Ratio of net investment income to average daily net assets .................... 0.40% 0.17% 0.20%*
Portfolio turnover rate ....................................................... 470% 271% 133%
Average commission rate (A) ................................................... -- -- --

* Annualized.
** Commencement of operations -- January 11, 1993.
(A) Average commission rate paid per share of security purchases and sales made
during the year. Presentation of the rate is only required for the fiscal
years beginning after September 1, 1995.

<PAGE>

Special Equity Fund

<TABLE>
<CAPTION>
Trust Class
-------------------------------
Year Ended November 30
-------------------------------
1997 1996
--------------- ---------------
<S> <C> <C>
Selected Per-Share Data
Net asset value, beginning of year .................................. $ 13.73 $ 12.12
--------- --------
Income from investment operations:
Net investment income ............................................... ( 0.009) 0.050
Net realized and unrealized gain/(loss) on investments .............. 3.114 1.926
----------- ---------
Total from investment operations .................................... 3.105 1.976
Distributions:
Net investment income ............................................... ( 0.005) ( 0.053)
Capital gains ....................................................... ( 0.380) ( 0.313)
Total distributions ................................................. ( 0.385) ( 0.366)
----------- -----------
Net asset value, end of year ........................................ $ 16.45 $ 13.73
=========== ===========
Total Return ........................................................ 23.28% 16.44%
Ratios and Supplemental Data
Net assets, end of year (thousands) ................................. $ 112,403 $ 77,931
Ratio of expenses to average daily net assets (1) ................... 1.01% 1.04%
Ratio of net investment income to average daily net assets .......... ( 0.07%) 0.39%
Portfolio turnover rate ............................................. 148% 98%
Average commission rate (A) ......................................... $ .0572 $ .0620

<CAPTION>
Trust Class
---------------------------------------------------
Year Ended November 30
---------------------------------------------------
1995 1994 1993 1992**
------------ ------------ ------------ ------------
<S> <C> <C> <C> <C>
Selected Per-Share Data
Net asset value, beginning of year .................................. $ 10.56 $ 12.76 $ 11.19 $ 10.00
-------- --------- -------- --------
Income from investment operations:
Net investment income ............................................... 0.100 0.030 0.010 0.010
Net realized and unrealized gain/(loss) on investments .............. 1.928 ( 0.460) 1.560 1.180
--------- ---------- -------- --------
Total from investment operations .................................... 2.028 ( 0.430) 1.570 1.190
Distributions:
Net investment income ............................................... ( 0.108) ( 0.020) -- --
Capital gains ....................................................... ( 0.360) ( 1.750) -- --
Total distributions ................................................. ( 0.468) ( 1.770) -- --
--------- ---------- -------- --------
Net asset value, end of year ........................................ $ 12.12 $ 10.56 $ 12.76 $ 11.19
========= ========== ======== ========
Total Return ........................................................ 20.07% ( 4.74)% 14.07% 11.90%*
Ratios and Supplemental Data
Net assets, end of year (thousands) ................................. $ 54,221 43,640 $ 32,706 $ 21,925
Ratio of expenses to average daily net assets (1) ................... 1.04% 1.03% 1.03% 1.28%*
Ratio of net investment income to average daily net assets .......... 0.90% 0.32% 0.06% 0.23%*
Portfolio turnover rate ............................................. 81% 117% 95% 3%
Average commission rate (A) ......................................... -- -- -- --

<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. The
Adviser will manage each Fund consistent with that Fund's investment objective
and policies. There is no assurance that a Fund will achieve its investment
objective. For more information regarding each Fund's investment policies,
please refer to the Statement of Additional Information.

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

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

- - obligations of institutions, such as banks and insurance companies, including
certificates of deposit, bankers' acceptances and time deposits;

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

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

- - other eligible debt obligations, including repurchase agreements.

The Fund's investments in domestic bank obligations (including their foreign
branches) are limited to those of 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 the Adviser 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 the Adviser 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 the Adviser 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's Ratings Group ("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 the Adviser 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 15% of its net assets in
illiquid securities. Cash Reserve Fund may not invest more than 5% of its total
assets in second tier securities.

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

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

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

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

Tax Free Money Fund
Tax Free Money Fund invests only in high-quality municipal securities. 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. Subject to such limitation, the Fund may
invest in any taxable investment, including repurchase agreements, appropriate
for investment by Cash Reserve Fund.

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

The Fund is non-diversified, which means that it has greater latitude than a
diversified fund to invest in the securities of a relatively few municipal
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
the Adviser 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 the Adviser pursuant to procedures adopted by the Company's Board
of Directors.

The Fund will not invest more than 15% of its net assets in illiquid
securities. For purposes of this limitation, "illiquid securities" shall be
deemed to include

<PAGE>

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 the Adviser 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 the following states:
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 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.

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.

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 one
and five years. See "Investment Policies -- Corporate Bond Funds."

Intermediate Bond Fund
Intermediate Bond Fund seeks to provide a high level of current income by
investing in investment-grade fixed-income debt obligations. The Fund is
managed to maintain a dollar-weighted average portfolio maturity of between
five and ten years. See "Investment Policies -- Corporate Bond Funds."

Investment Policies -- Corporate Bond Funds
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:

- - corporate obligations which are rated at least Baa or its equivalent by an
NRSRO (see "Investment-grade Securities" in the Appendix to this
Prospectus);

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

- - commercial paper which is rated Prime-1 or its equivalent by an NRSRO.

Each corporate bond fund also may purchase unrated securities that are deemed
by the Adviser 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, the
Adviser 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 to this Prospectus), 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 five years, as long as the Fund's dollar-weighted average
portfolio maturity is no more than five years. Intermediate Bond Fund may hold
individual securities with remaining maturities of more than ten years, as long
as its dollar-weighted average portfolio maturity is no more than ten 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

<PAGE>

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, the Adviser will
consider many factors other than current yield, including preservation of
capital, the potential for realizing capital appreciation, maturity and yield
to maturity. The Adviser 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. The Adviser may sell
securities in anticipation of a market decline or purchase securities in
anticipation of a market rise. Each corporate bond fund may invest a portion of
its assets in securities issued by foreign companies and foreign governments,
which may be less liquid or more volatile than domestic investments. The
corporate bond funds will only invest in U.S. dollar-denominated securities.

Government Bond Funds:

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

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 principal, the Fund may acquire
individual securities without regard to their remaining maturities.

The Fund invests in various debt obligations issued or guaranteed by the U.S.
Government or its agencies or instrumentalities, including U.S. Treasury Bonds,
Notes and Bills, Government National Mortgage Association mortgage-backed
securities (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 in which the Fund invests may or may not be
fully backed by the U.S. Government. The Fund may enter into repurchase
agreements involving U.S. Government Securities and any other securities in
which it may invest and also may enter into reverse repurchase agreements. The
Fund considers "government securities" to include U.S. Government Securities
subject to repurchase agreements. The Fund may, for temporary defensive
purposes, invest without limit in U.S. Government Securities having a maturity
of 365 days or less.

Municipal Bond Funds:

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

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 five and ten years. The Fund may hold individual
securities with remaining maturities of more than ten years, as long as the
dollar-weighted average maturity is no more than ten years. Stability and
growth of principal also will be considered when choosing securities. See
"Investment Policies -- Municipal Bond Funds."

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."

Investment Policies -- Municipal Bond Funds
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 its

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equivalent or higher by an NRSRO, and unrated securities that are deemed by the
Adviser 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. The Adviser monitors the financial condition of
parties (including insurance companies, banks, and corporations) upon whose
creditworthiness is relied 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 in this
Prospectus for a complete description of these types of securities.

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

Each municipal bond 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, each municipal bond fund may present greater risks than a diversified
fund.

As a fundamental policy, at least 80% of each municipal bond 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. Each municipal bond fund reserves the right to invest up to 100% of
its assets in AMT bonds, although none of the municipal bond funds have a
current intention of investing in such securities.

As a non-fundamental policy, at least 65% of each municipal bond fund's assets
will be invested in bonds that will, under normal circumstances, produce income
that is exempt from Virginia or Maryland income taxes, as the case may be.

Investors should be aware of certain factors that might affect the financial
condition of issuers of Maryland and Virginia municipal securities. See "Risks
and Special Considerations Concerning Maryland Municipal Bond Fund" and "Risks
and Special Considerations Concerning Virginia Intermediate Municipal Bond Fund
and Virginia Municipal Bond Fund" in the Appendix to this Prospectus.

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. The Adviser
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.

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

The Fund may invest a portion of its assets in foreign securities, securities
of small capitalization companies, and in securities having common stock
characteristics, such as rights and warrants. The Adviser 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.

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.
The Adviser 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 to this Prospectus.) 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. 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".) Each of the Value
Fund and Capital Appreciation Fund may also invest up to 10% and 5%,
respectively, of its assets in the U.S. Treasury obligations.

Although the Value Fund and Capital Appreciation Fund intend, under normal
circumstances, to be fully invested at all times in the securities mentioned
above, each Fund may make substantial temporary investments in high-quality,
short-term debt securities and money market instruments, including repurchase
agreements, and in shares of other open-end management investment companies
which invest primarily in money market instruments, when the Adviser 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.

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 to this Prospectus), and
in securities having common stock characteristics, such as rights and warrants.
As a non-fundamental investment policy, the Fund may also invest up to 5% of
its assets in obligations of the U.S. Treasury.

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

Risk Factors and Investment
Considerations

Individually, none of the Funds constitutes a balanced investment plan. The
money market funds emphasize income, preservation of capital and liquidity and
do not seek the higher yields or capital appreciation that more aggressive
investments may provide. The bond funds tend to provide higher yields than the
money

<PAGE>

market funds; however, unlike money market funds, the bond funds do not seek to
maintain a stable $1.00 share price, and may not be able to return dollar for
dollar the money invested. The primary focus of the equity funds is long-term
capital appreciation. Fluctuations in the stock market will directly affect the
share price of the equity funds.

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

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

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. Since the Fund often purchases securities supported by
credit enhancements from banks and other financial institutions, changes in the
credit quality of these institutions could cause losses to the Fund and affect
its share price.

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

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

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

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

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

The municipal bond funds emphasize tax-free current income by investing
primarily in investment-grade municipal securities. Because Maryland Municipal
Bond Fund, Virginia Intermediate Municipal Bond Fund and Virginia 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. See the Appendix to this
Prospectus. Virginia Intermediate Municipal Bond Fund is less interest rate
sensitive than the Virginia Municipal Bond Fund. It seeks higher Virginia tax
free income than a tax-free money fund, with some share price fluctuation.
Virginia Municipal Bond Fund is likely to experience greater share price
fluctuation and potentially higher tax-free income due to its investments in
longer term municipal bonds. Maryland Municipal Bond Fund also is likely to
experience greater share price fluctuation and potentially higher tax free
income than an intermediate term municipal bond fund.

<PAGE>

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 the Adviser
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
to this Prospectus for further discussion of the Funds' investments.

Investment Limitations

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

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

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

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

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

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

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

<PAGE>

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

The day-to-day management of the Funds is the responsibility of committees
comprised of investment professionals employed by Crestar Asset Management
Company. Each of the Value Fund, Capital Appreciation Fund and Special Equity
Fund is managed by a separate team of equity investment portfolio managers.
Each of the taxable fixed income funds is managed by a team of fixed income
investment portfolio managers. Each of the tax-exempt fixed income funds is
managed by a team of tax-exempt fixed income investment portfolio managers.

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 regularly-scheduled close of normal
trading on 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 regularly-scheduled close of normal
trading on the NYSE. The NAV of each bond and equity fund is determined as of
the regularly-scheduled close of normal trading on the NYSE. Each Fund's NAV is
determined on each day the NYSE and the Funds' custodian, Crestar Bank, are
open for business. The NAV of a Fund is calculated by adding the value of all
securities and other assets of a Fund, deducting the liabilities allocated to
each class, and dividing the result by the proportional number of the shares of
the Fund outstanding in a class.

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

With respect to the bond and equity funds, securities which are traded on a
recognized stock exchange are valued at the last sale price on the securities
exchange on which such securities are primarily traded or at the last sale
price on any national securities exchange. Securities traded only on
over-the-counter markets are valued on the basis of closing over-the-counter
bid prices. Securities for which there were no such transactions are valued at
the most recently quoted bid price. 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 may be valued on an amortized cost basis (unless the Board
determines that such basis does not represent fair value at the time). Under
this method, such securities are valued initially at cost on the date of
purchase. Thereafter, absent unusual circumstances, the Fund assumes a constant
proportionate amortization of any discount or premium until maturity of the
security.

How to Purchase, Exchange and Redeem Shares

Distributor
Shares of each Fund are sold on a continuous basis by the Funds' Distributor,
SEI Investments Distribution Co. (the "Distributor"). The Distributor is a
registered broker-dealer with principal offices at Oaks, Pennsylvania 19456.

Purchase of Shares
Before you buy shares, please read the following information to make sure your
investment is accepted and credited properly.

Trust Class shares are offered continuously to qualified individual or
institutional customers that have entered into an agreement for their assets to
be managed and/or administered by the Crestar Investment Group. Additionally,
Trust Class shares of the money market funds are offered to qualified
individuals or institutional customers who have qualified cash management (or
"sweep") accounts with Crestar Bank or one of its bank affiliates. The minimum
initial investment required of a bank in each Fund is $1 million, except for
agency accounts for which the minimum is $10,000, and qualified cash management
accounts for

<PAGE>

which the minimum initial investment is waived. There is no minimum for
subsequent investments. Banks may impose initial or subsequent investment
minimums on their customers. Trust Class shares are sold without a sales
charge, although banks may charge their customer accounts for services provided
in connection with the purchase of shares. Information concerning these
services and any charges may be obtained from the bank. With the exception of
agency accounts, Fund shares may be held of record by the banks, although bank
customers may retain the right to vote them. Generally, shares held in agency
accounts will be registered in the principal's name. Confirmations of share
purchases and redemptions will be sent to shareholders of record. Beneficial
ownership of Fund shares will be recorded by the banks and reflected in the
account statements provided by them to their customers. For further information
on opening an account, contact an account officer at the bank. Sales personnel
of financial institutions distributing the Funds' shares and other persons
entitled to receive compensation for selling such shares may receive differing
compensation.

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

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

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

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

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

Trust Class shares may be exchanged for A Shares or B Shares of the same Fund
should the holder of Trust Class shares cease to be eligible to invest in the
Trust Class. Additionally, A Shares or B Shares may be exchanged for Trust
Class shares if the investor is eligible to invest in the Trust Class. For
example, in the event that legal title to Trust Class shares passes to a trust
beneficiary, or in the event that a trust, agency or similar account
distributes Trust Class shares, the shares may be held by the account
beneficiary only if they are promptly exchanged for A Shares or B Shares of
certain funds shares. Each Fund reserves the right to

<PAGE>

redeem Trust Class shares held by shareholders not eligible to purchase such
shares if not converted to A Shares or B Shares after 30 days. A Shares may be
exchanged for A Shares or B Shares of certain funds only. A Shares of U.S.
Treasury Money Fund are not currently available for purchase by conversion or
otherwise. A Shares of Government Bond Fund, Maryland Municipal Bond Fund and
Virginia Municipal Bond Fund are only available for purchase by conversion.

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

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

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

A Trust Class shareholder may be required to redeem shares in a Fund if the
balance in the shareholder's account with the Fund drops below $1 million
($10,000 for agency accounts) as a result of redemptions and the shareholder
does not increase the account's balance to at least $1 million (or $10,000) on
30 days' written notice. If the share balance in a customer's account at a bank
falls below any minimum the customer has agreed to maintain with the bank, the
customer may be required to redeem all or a part of his Fund shares or to
increase his holdings of Fund shares to the extent necessary to maintain the
required minimum balance in the account. Qualified cash management accounts
purchasing Trust Class shares will not be required to maintain a minimum
balance in any Fund.

Dividends and Tax Matters

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

Federal Taxes. Interest earned by Tax Free Money Fund, Maryland Municipal Bond
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.

<PAGE>

State and Local Taxes.

Maryland Municipal Bond Fund:

To the extent the Fund qualifies as a regulated investment company under the
Internal Revenue 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 Internal Revenue 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 Internal
Revenue 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 private activity bonds of an issuer other than the State of
Maryland, its political subdivisions, or other Maryland bond issuing
authorities, the excess of 50% of that portion of exempt- interest dividends
which is attributable to interest on such private activity bonds over a
threshold amount may be taxable by Maryland. Interest on indebtedness incurred
or continued (directly or indirectly) by a shareholder in order to purchase or
carry shares of the Fund will not be deductible for Maryland state and local
income tax purposes. Individuals will not be subject to personal property tax
on their shares of the Fund. Shares of the Fund held by a Maryland resident at
death may be subject to Maryland inheritance and estate taxes.

Virginia Intermediate Municipal Bond Fund and Virginia Municipal Bond Fund:

Under existing Virginia law, provided that Virginia Intermediate Municipal Bond
Fund and Virginia Municipal Bond Fund each qualify as a separate "regulated
investment company" under the Internal Revenue Code and qualify to and pay
dividends that are exempt from federal income tax, distributions to
shareholders from the Funds will not be subject to Virginia income taxation to
the extent that such distributions are either (i) excludable from gross income
for federal income tax purposes and attributable to interest on obligations of
Virginia or any of its political subdivisions or instrumentalities ("Virginia
Obligations") or obligations of Puerto Rico, the U.S. 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

<PAGE>

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.

The Funds will not be subject to any Virginia intangible personal property tax
on any obligations in the Funds. In addition, shares of the Funds held for
investment purposes will not be subject to any Virginia intangible personal
property tax.

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

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

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

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

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

Performance

Performance of each Class may be quoted in advertising in terms of yield,
effective yield, tax equivalent yield or total return, as appropriate.
Performance figures are based on historical results and are not intended to
indicate future performance.

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

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

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

<PAGE>

annual total returns into income results and capital gain or loss. The Funds
may quote their total returns on a before tax or after tax basis.

Portfolio Transactions

When placing a portfolio transaction, the Adviser attempts to obtain the best
net price and execution of the transaction. Commissions for portfolio
transactions executed on a securities exchange are negotiated between the
Adviser and the executing broker. The Adviser 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 the Adviser 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.

The Adviser may place portfolio transactions with broker-dealers who provide
research or execution services to the Funds or other accounts over which the
Adviser or its affiliates exercise investment discretion. These services assist
the Adviser in making investment decisions by providing a variety of
information, including but not limited to: on-line access to financial
information (such as prices and earnings estimates); technical as well as
fundamental analyses of securities and financial markets; portfolio strategy
information; software and hardware that assists in the investment
decision-making process; portfolio performance measurement; and effecting
securities transactions and performing functions incidental thereto (such as
clearance and settlement). The selection of such broker-dealers is generally
made by the Adviser (to the extent possible consistent with execution
considerations) in accordance with a ranking of broker-dealers determined
periodically by the Adviser'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 the Adviser, 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, 1997, the Funds' portfolio turnover rates were: Limited Term
Bond Fund, 64%; Intermediate Bond Fund, 66%; Government Bond Fund, 144%;
Maryland Municipal Bond Fund, 5%; Virginia Intermediate Municipal Bond Fund,
30%; Virginia Municipal Bond Fund, 39%; Value Fund, 100%; Capital Appreciation
Fund, 123%; and Special Equity Fund, 148%.

Advisory and Related Agreements

Adviser
Crestar Asset Management Company (formerly 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 the Adviser
("Advisory Agreements") on behalf of each Fund, pursuant to which the Adviser
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. The Adviser, at 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.

The Adviser, 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. The Adviser may engage banks and brokers, including Crestar Bank and
Crestar Securities Corporation (and affiliates thereof), 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 services should take into consideration when
determining the effective yield of an investment in a Fund.

<PAGE>

For the fiscal year ended November 30, 1997, for services provided to the
Funds, the Adviser 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, Maryland Municipal Bond Fund, Virginia Intermediate
Municipal Bond Fund, Virginia Municipal Bond Fund, Value Fund, Capital
Appreciation Fund and Special Equity Fund equal to .38%, .40%, .40%, .50%,
.60%, .50%, .22%, .50%, .50%, .75%, .75% and .75%, respectively, of the average
daily net assets of each Fund.

The Adviser 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 $22.2 billion
as of December 31, 1997. 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 SEC under the Securities
Exchange Act of 1934. (See "Banking Law Matters.")

The Adviser was organized in 1973 and is one of the largest investment advisory
organizations in Virginia. As of December 31, 1997, the Adviser managed trust
and investment assets of approximately $15 billion.

Administrator and Distributor
SEI Fund Resources (the "Administrator"), a Delaware business trust, provides
the Company with administrative services, including fund accounting, regulatory
reporting, necessary office space, equipment, personnel, and facilities. SEI
Investments Management Corporation, a wholly-owned subsidiary of SEI
Investments Company ("SEI"), is the owner of all beneficial interest in the
Administrator.

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. The Administrator, in its sole discretion, may waive all or any portion
of its fee. SEI Investments Distribution Co. (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 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 the Adviser, 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. The Adviser may engage banks and broker-dealers,
including Crestar Bank and Crestar Securities Corporation (and affiliates
thereof), 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.

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

As Custodian, Crestar Bank safeguards and controls the Funds' cash and
securities, handles the receipt and

<PAGE>

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 the Adviser's obligation to reimburse expenses, each Fund's annual
expenses are estimated and accrued daily, and any appropriate estimated
payments will be made by the Adviser monthly. 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, are allocated among
the Funds in proportion to their average net assets. Transfer agency expenses
attributable to a particular Class of shares are paid by that Class.

Subject to the obligations of the Adviser under the Advisory Agreement to
reimburse a Fund for its expenses in excess of the lowest applicable state
limitations, if any, 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 the Adviser, 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, Inc. Tax
Free Money Fund, Maryland Municipal Bond Fund, Virginia Intermediate Municipal
Bond Fund and Virginia Municipal Bond Fund are non-diversified portfolios of
CrestFunds, 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. Currently all the authorized stock of the Company is divided
into 12 separate series: Cash Reserve Fund Common Stock, U.S. Treasury Money
Fund Common Stock, Tax Free Money Fund Common Stock, Limited Term Bond Fund
Common Stock, Intermediate Bond Fund Common Stock, Government Bond Fund Common
Stock, Maryland Municipal Bond Fund Common Stock, Virginia Intermediate
Municipal Bond Fund Common Stock, Virginia Municipal Bond Fund Common Stock,
Value Fund Common Stock, Capital Appreciation Fund Common Stock and Special
Equity Fund Common Stock, representing shares for each of the Company's 12
CrestFunds. The CrestFunds offer one or more of three classes of shares: Trust
Class (offered by this Prospectus) and A Shares and B Shares (offered by a
separate prospectus). Performance of A Shares and B Shares is lower than that
of Trust Class shares of the same Fund due to A Shares' and B Shares' higher
total expenses. At the end of seven years, B Shares automatically convert to A
Shares. B Shares are available for Special Equity Fund, Value Fund, Cash
Reserve Fund, Government Bond Fund, Maryland Municipal Bond Fund,

<PAGE>

Capital Appreciation Fund and Virginia Municipal Bond Fund. U.S. Treasury Money
Fund has indefinitely suspended its offering of A Shares. The offering may
recommence upon supplementing the A Shares and B Shares Prospectus.

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

A shareholder owning of record or beneficially more than 25% of a Fund's shares
may be considered to control that Fund. As of March 2, 1998, 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 85.93%
U.S. Treasury Money Fund ..................... Crestar Bank, Richmond, VA 100%
Tax Free Money Fund .......................... Crestar Bank, Richmond, VA 94.98%
Limited Term Bond Fund ....................... Crestar Bank, Richmond, VA 86.60%
Intermediate Bond Fund ....................... Crestar Bank, Richmond, VA 92.93%
Government Bond Fund ......................... Crestar Bank, Richmond, VA 80.38%
MD Municipal Bond Fund ....................... Crestar Bank, Richmond, VA 54.55%
VA Intermediate Municipal Bond Fund .......... Crestar Bank, Richmond, VA 93.20%
VA Municipal Bond Fund ....................... Crestar Bank, Richmond, VA 73.23%
Value Fund ................................... Crestar Bank, Richmond, VA 86.93%
Capital Appreciation Fund .................... Crestar Bank, Richmond, VA 70.82%
Special Equity Fund .......................... Crestar Bank, Richmond, VA 84.32%
</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 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

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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. The
Adviser 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. The Adviser 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 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

<PAGE>

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, the Adviser 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. The Adviser 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, the Adviser 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 the Adviser
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 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.

<PAGE>

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, the Adviser must find the credit worthiness of the other party to the
transaction satisfactory.

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 the Adviser.

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.

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

<PAGE>

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 the Adviser.

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 (pound)mal 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 2.67 million in January, 1998 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
5.1% in January, 1998, compared to a national average of 5.2%. The State's
population in 1997 was approximately 5.1 million, with 87% concentrated in the
Baltimore-Washington corridor.

Debt. In addition to the State of Maryland and its agencies, there are 23
counties and 157 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 1997,
$2,882 million in state and local debt was issued in Maryland, with
approximately 41% representing general obligation debt and 59% revenue bonds or
lease-backed debt, compared to 33% general obligation and 67% revenue backed
bonds nationally.

Total combined tax supported debt outstanding of the State, Baltimore City, and
all of the counties, municipalities, and special districts within Maryland
totaled $13.8 billion as of June 30, 1996. The State of Maryland had $3.12
billion in general obligation bonds outstanding as of December 31, 1997.
General obligation debt of the State of Maryland is rated Aaa by Moody's, AAA
by Standard & Poor's 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 transportation and tax supported debt
on a per capita basis and as a percentage of property values have increased by
18.9% and 14.5%, respectively since 1993. 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

<PAGE>

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 is limited by the General Assembly
to $1,074 million for fiscal year 1998 (ending June 30, 1998), the principal
amount of such bonds outstanding as of December 31, 1997 was $868.0 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, higher educational institutions
(which include the University System of Maryland, 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, 1997 was approximately $3,650.4 million.

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, 1997, $93.3
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, the Maryland Economic Development Corporation and the
Maryland Energy Financing Administration 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. After enjoying rapid economic growth in the
1980s, Maryland has experienced declining rates of growth in the 1990s. Despite
this trend, per capita income for residents of Maryland exceeds per capita
income in the United States.

On June 30, 1994, the State of Maryland's General Fund, representing
approximately 50% of each year's total revenues, had a surplus on a budgetary
basis of $60 million, together with $161.8 million on deposit in the Revenue
Stabilization Account of the State Reserve Fund. On June 30, 1995, the General
Fund contained a surplus on a budgetary basis of $26.5 million (after
reservation of $106 million for fiscal year 1996 expenses) and the Revenue
Stabilization Account of the State Reserve Fund contained $286.1 million. In
April 1995, the State's General Assembly approved a $14.4 billion budget for
fiscal year 1996, which budget did not include any expenditures based upon
additional revenue from new or broad-based taxes, but included a $270 million
appropriation to the State Reserve Fund, including $200 million 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 $3.1
million. In December 1995 and March 1996, the State lowered its estimates of
General Fund revenues by a total of $148 million. To address this reduction in
revenues, the State, among other things, reduced General Fund appropriations
and transferred $57 million from the Revenue Stabilization Account. The State
ended fiscal year 1996 with a General Fund surplus on a budgetary basis of
$13.1 million and $461.2 million on deposit in the Revenue Stabilization
Account (net of the transfer to the General Fund). In April 1996, the General
Assembly approved a $14.6 billion fiscal year 1997 budget. The budget as
enacted included funds sufficient to meet all fiscal year 1996 deficiencies and
to meet all specific statutory funding requirements and incorporated $29
million in savings from revisions to the State personnel system and reform to
the welfare and Medicare programs. On June 30, 1997, the General Fund contained
a surplus on a budgetary basis of $207.2 million, $144.5 of which were
designated for fiscal year 1998 operations, in addition to which the Revenue
Stabilization Account of the State Reserve Fund contained $490.1 million.

<PAGE>

$230 million over a five-year period to schools in the City of Baltimore and
related grants to other subdivisions totaling $32 million. When this budget was
enacted, the State estimated the General Fund surplus on a budgetary basis
would be $27.9 million, in addition to which the State projected that there
would be a balance of $554 million in the Revenue Stabilization Account of the
State Reserve Fund. The State currently projects a General Fund balance on a
budgetary basis of $283 million.

The 1998 legislative session of the Maryland General Assembly has not ended.
The State's budget for fiscal year 1999 has not yet been enacted. In addition
to the Governor's executive budget which includes a full year of the five-year
phase-in of a 10% reduction of the personal income tax, $25 million for
computer programming modifications to address the "year 2000" problem, $76
million to provide medical coverage to low income children and pregnant women,
$61.5 million to provide funding for a state-wide public education program
targeted to at-risk students and a $50 million appropriation for additional
funding for the schools in the City of Baltimore, various legislative
proposals, including tax reduction proposals, are being considered.

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 have been placed on election ballots and have been 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, 10 to 27% of tax-exempt debt issues in Maryland have
been for hospitals and other health care facilities. A significant portion of
the Fund's assets may be invested in health care issues. For over a decade, 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 Medicare Prospective
Payment System (PPS). Since 1990, the most recent extension of the waiver,
Maryland hospitals have operated below the national average in terms of
Medicare cost increases, allowing them to continue operating under the 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.

<PAGE>

essentially non-governmental debt issues and which are payable exclusively by
private entities such as non-profit organizations and business 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 "nonappropriation" clauses. See "Investment Objective and Policies."
Legal principles may restrict the enforcement of provisions in lease financing
limiting the municipal issuer's ability to utilize property similar to that
leased in the event that debt service is not appropriated.

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

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

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

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

Summary of Bond Ratings*

<TABLE>
<CAPTION>
Rating Services
----------------
Investment Grade Moody's S&P
- -------------------------------------------------------- --------- ----
<S> <C> <C>
Highest quality ........................................ Aaa AAA
High quality ........................................... Aa AA
Upper medium grade ..................................... A A
Medium grade, some speculative characteristics ......... Baa BBB
</TABLE>

Summary of Commercial Paper Ratings*

<TABLE>
<CAPTION>
Rating Services
-----------------
Moody's S&P
--------- -----
<S> <C> <C>
Highest quality ......... Prime-1 A-1
High quality ............ Prime-2 A-2
</TABLE>

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

<PAGE>

CREST
-----
FUNDS

A Family Of Mutual Funds
Managed By
Crestar Asset Management
Company

<PAGE>

[Crestar Logo]

CREST
-----
FUNDS

Investors Class Prospectus
March 31, 1998

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

Cash Reserve Fund
Tax Free Money Fund
Intermediate Bond Fund
Government Bond Fund
Virginia Intermediate Municipal Bond Fund
Virginia Municipal Bond Fund
Maryland Municipal Bond Fund
Value Fund
Capital Appreciation Fund
Special Equity Fund

<PAGE>

CrestFunds, Inc. -- Investors Class A Shares and Investors Class B Shares
PROSPECTUS
March 31, 1998
CrestFunds, 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
Tax Free Money Fund

BOND FUNDS EQUITY FUNDS

Intermediate Bond Fund Value Fund
Government Bond Fund Capital Appreciation Fund
Maryland Municipal Bond Fund Special Equity Fund
Virginia Intermediate Municipal Bond Fund
Virginia Municipal Bond Fund

The Funds' shares are not deposits or obligations of, or guaranteed, insured or
endorsed by, Crestar Bank, the Federal Deposit Insurance Corporation, the
Federal Reserve Board, or any other government agency. Investing in mutual
funds involves risks, including the possible loss of the principal amount
invested. The value of an investment in the Funds and its return will fluctuate
and is 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 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 31, 1998) for the A Shares and the B Shares of the
Funds and an Annual Report for the fiscal year ended November 30, 1997 have
been filed with the Securities and Exchange Commission ("SEC") and are
incorporated herein by reference. The Statement of Additional Information and
the Annual Report are available without charge upon request by calling
1-800-273-7827.

<PAGE>

Table of Contents

<TABLE>
<CAPTION>
Page
-----
<S> <C>
Summary of Fund Expenses ................................................. 3
The Funds' Financial History ............................................. 6
Investment Objectives and Policies ....................................... 16
Investment Limitations ................................................... 23
Fund Management .......................................................... 24
Pricing of Shares ........................................................ 24
How to Purchase, Exchange and Redeem Shares .............................. 24
Dividends and Tax Matters ................................................ 31
Performance .............................................................. 33
Portfolio Transactions ................................................... 34
Advisory and Related Agreements; Distribution and Service Plans .......... 34
Other Expense Information ................................................ 36
Banking Law Matters ...................................................... 36
Description of Common Stock .............................................. 37
Appendix ................................................................. 39
Summary of Bond Ratings .................................................. 46
Summary of Commercial Paper Ratings ...................................... 46
</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)
Cash Reserve Fund .................................................... 0.00
Tax Free Money Fund .................................................. 0.00
Intermediate Bond Fund ............................................... 3.00
Virginia Intermediate Municipal Bond Fund ............................ 3.50
Value Fund ........................................................... 4.50
Capital Appreciation Fund ............................................ 4.50
Special Equity Fund .................................................. 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 ....................................................................... 5.00%
Government Bond Fund .................................................................... 5.00%+
Maryland Municipal Bond Fund ............................................................ 5.00%+
Virginia Municipal Bond Fund ............................................................ 5.00%+
Value Fund .............................................................................. 5.00%+
Capital Appreciation Fund ............................................................... 5.00%+
Special Equity Fund ..................................................................... 5.00%+
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 Government Bond Fund, Maryland Municipal Bond Fund and Virginia
Municipal 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 daily 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 ................................. .38% 0% .28% .66%
Tax Free Money Fund ............................... .40 0 .27 .67
Intermediate Bond Fund ............................ .60 0 .28 .88
Government Bond Fund(1) ........................... .50 0 .17 .67
Maryland Municipal Bond Fund(1) ................... .22 0 .42 .64
Virginia Intermediate Municipal Bond Fund ......... .50 0 .29 .79
Virginia Municipal Bond Fund(1) ................... .50 0 .20 .70
Value Fund ........................................ .75 0 .28 1.03
Capital Appreciation Fund ......................... .75 0 .28 1.03
Special Equity Fund ............................... .75 0 .27 1.02
</TABLE>

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

<PAGE>

B Shares
- --------

<TABLE>
<CAPTION>
Total
Advisory 12b-1 Other Operating
Fund Fee+ Fees+ Expenses+ Expenses+
- -------------------------------------- ---------- --------- ----------- ------------
<S> <C> <C> <C> <C>
Cash Reserve Fund(2) ................. .38% .95% .28% 1.61%*
Government Bond Fund ................. .50 .95 .17 1.62*
Maryland Municipal Bond Fund ......... .22 .95 .42 1.59*
Virginia Municipal Bond Fund ......... .50 .95 .20 1.65*
Value Fund ........................... .75 .75 .28 1.78*
Capital Appreciation Fund ............ .75 .95 .28 1.98*
Special Equity Fund .................. .75 .95 .27 1.97*
</TABLE>

- ----------
+ Net of waivers and reimbursements.
* Total Operating Expenses have been restated to reflect current fees.
(2) B Shares of Cash Reserve Fund are available through exchange only.

A Shares of U.S. Treasury Money Fund and Limited Term Bond Fund are not
currently being offered. B Shares are not available for U.S. Treasury Money
Fund, Limited Term Bond Fund, Tax Free Money Fund, Intermediate Bond Fund and
Virginia Intermediate Municipal Bond 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 $ 82
Tax Free Money Fund ................................ 7 21 37 83
Intermediate Bond Fund ............................. 39 57 77 135
Government Bond Fund(1) ............................ 7 21 37 83
Maryland Municipal Bond Fund(1) .................... 7 20 36 80
Virginia Intermediate Municipal Bond Fund .......... 43 59 77 129
Virginia Municipal Bond Fund(1) .................... 7 22 39 87
Value Fund ......................................... 55 76 99 165
Capital Appreciation Fund .......................... 55 76 99 165
Special Equity Fund ................................ 55 76 99 164
</TABLE>

<TABLE>
<CAPTION>
B Shares * 1 Year 3 Years 5 Years 10 Years**
- --------------------------------------- -------- --------- --------- -----------
<S> <C> <C> <C> <C>
Cash Reserve Fund ..................... $66 $81 $108 $153
Government Bond Fund .................. 66 81 108 155
Maryland Municipal Bond Fund .......... 66 80 107 151
Virginia Municipal Bond Fund .......... 67 82 110 158
Value Fund ............................ 68 86 116 180
Capital Appreciation Fund ............. 70 92 127 194
Special Equity Fund ................... 70 92 126 193
</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 $51 $ 88 $153
Government Bond Fund.. .................. 16 51 88 155
Maryland Municipal Bond Fund.. .......... 16 50 87 151
Virginia Municipal Bond Fund.. .......... 17 52 90 158
Value Fund .............................. 18 56 96 180
Capital Appreciation Fund. .............. 20 62 107 194
Special Equity Fund ..................... 20 62 106 193
</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, Maryland Municipal Bond Fund and
Virginia Municipal Bond Fund are available only through conversion of B
Shares after seven years. No sales load is applied when converted to A
Shares.

<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 Crestar
Asset Management Company (the "Adviser") for managing its investments and
business affairs (see "Advisory and Related Agreements,
-- Adviser"). Each Fund pays administration fees at an annualized rate of
.15% to SEI Fund Resources (the "Administrator") 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 and Tax Free Money Fund and .15% for each of the bond and equity
funds; 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, Capital Appreciation Fund, and Special Equity
Fund would be 1.00%.

Absent the waiver of administration fees, Other Expenses for both the A and B
Shares for the Government Bond Fund and Virginia Municipal Bond Fund would be
.32% and .35%, respectively.

Absent all fee waivers, Total Operating Expenses for A Shares would be 1.06%
for the Cash Reserve Fund, 1.07% for the Tax Free Money Fund and 1.03%, 1.07%,
1.17%, .94%, 1.10%, 1.18%, 1.18% and 1.17% for the Intermediate Bond Fund,
Government Bond Fund, Maryland Municipal Bond Fund, Virginia Intermediate
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 1.66%, 1.92%, 2.02%, 1.95%, 2.03%,
2.03% and 2.02% for the Cash Reserve Fund, Government Bond Fund, Maryland
Municipal Bond Fund, Virginia Municipal Bond Fund, Value Fund, Capital
Appreciation Fund and Special Equity Fund, respectively. Please refer to the
sections "Advisory and Related Agreements -- Administrator and Distributor,"
"Advisory and Related Agreements -- 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 seven years of purchase. 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 shares for the Funds are incorporated by
reference from the Company's Annual Report into the Statement of Additional
Information.

Cash Reserve Fund

<TABLE>
<CAPTION>
Investors Class A
--------------------------------------------------------------
Period from
Year Year Year Year May 4,
Ended Ended Ended Ended 1993** to
November November November November November
30, 1997 30, 1996 30, 1995 30, 1994 30, 1994
------------ ----------- ----------- ----------- -------------
<S> <C> <C> <C> <C> <C>
Selected Per-Share Data
Net asset value, beginning
of year ............................. $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
-------- ------- ------- ------- --------
Income from investment
operations:
Net investment income ................ 0.05 0.049 0.053 0.033 0.014
Distributions:
Net investment income ................ (0.050) (0.049) (0.053) (0.033) (0.014)
-------- -------- -------- -------- ---------
Net asset value, end of year ......... $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
======== ======== ======== ======== =========
Total Return ......................... 5.15% 4.97% 5.44% 3.36% 1.49%*
Ratios and Supplemental Data
Net assets, end of year
(thousands) ......................... $135,507 $ 65,411 $ 40,240 $ 11,832 $ 73
Ratio of expenses to average daily
net assets (1) ...................... 0.65% 0.67% 0.67% 0.68% 1.16%*
Ratio of net investment income to
average daily net assets ............ 5.04% 4.85% 5.31% 3.35% 2.25 %
- ----------
(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 ..................... 1.05% 1.07% 1.07% 0.97% 13.00%*

<CAPTION>
Investors Class B+
------------------------------------
Period from
Year Year April 19,
Ended Ended 1995 to
November November November
30, 1997 30, 1996 30, 1995
----------- ----------- ------------
<S> <C> <C> <C>
Selected Per-Share Data
Net asset value, beginning
of year ............................. $ 1.00 $ 1.00 $ 1.00
-------- -------- -------
Income from investment
operations:
Net investment income ................ 0.042 0.040 0.028
Distributions:
Net investment income ................ (0.042) (0.040) (0.028)
--------- --------- --------
Net asset value, end of year ......... $ 1.00 $ 1.00 $ 1.00
========= ========= ========
Total Return ......................... 4.22% 4.08% 2.82%*
Ratios and Supplemental Data
Net assets, end of year
(thousands) ......................... $ 38 $ 15 $ 21
Ratio of expenses to average daily
net assets (1) ...................... 1.56% 1.52% 1.52%*
Ratio of net investment income to
average daily net assets ............ 4.17% 4.02% 4.45%*
- ----------
(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 ..................... 1.71% 1.67% 1.67%*
</TABLE>

* Annualized.
** Commencement of operations.
+ Total return does not include the one time sales charge or contingent
deferred sales charge, where applicable

<PAGE>

U.S. Treasury Money Fund (1)

<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 year ............................. 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 year ................................... N/A $ 1.00 $ 1.00
=======
Total Return ................................................... N/A 0.79% 0.34%
Ratios and Supplemental Data
Net assets, end of year (thousands) ............................ N/A -- $ 17
Ratio of expenses to average daily net assets (2) .............. N/A 0.92%* 1.16%*
Ratio of investment income to average daily net assets ......... N/A 2.31%* 2.02%
- ----------
(1) U.S. Treasury Money Fund ceased operations March 31,
1994.
(2) 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 as follows: ...................... N/A 29.16%* 36.60%*
</TABLE>

* Annualized.
** Commencement of operations.

<PAGE>

Tax Free Money Fund

<TABLE>
<CAPTION>
Investors Class A
------------------------------------------------------------------------------------
Period from
Year Ended Year Ended Year Ended Year Ended May 5, 1993**
November 30, November 30, November 30, November 30, to November 30,
1997 1996 1995 1994 1993
-------------- -------------- -------------- -------------- ----------------
<S> <C> <C> <C> <C> <C>
Selected Per-Share Data
Net asset value, beginning of year ..... $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
------- ------- ------- ------- ------
Income from investment
operations:
Distributions:
Net investment income .................. 0.030 0.029 0.031 0.020 0.009
Net realized gain on investments ....... -- 0.002 -- -- --
-- -- -- --
Total from investment operations ....... 0.030 0.031 0.031 0.020 0.009
Net investment income .................. (0.030) (0.029) (0.031) (0.020) (0.009)
Capital gains .......................... -- (0.002) -- -- --
Total distributions .................... (0.030) (0.031) (0.031) (0.020) (0.009)
-------- -------- -------- -------- -------
Net asset value, end of year ........... $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
======== ======== ======== ======== =======
Total Return ........................... 3.05% 3.13% 3.25% 1.98% 0.88%*
Ratios and Supplemental Data
Net assets, end of year
(thousands) ........................... $ 7,634 $ 2,994 $ 1,627 $ 757 $ 228
Ratio of expenses to average daily
net assets (1) ........................ 0.68% 0.67% 0.67% 0.76% 1.16%*
Ratio of net investment income to
average daily net assets .............. 3.42% 2.86% 3.16% 1.97% 1.35%*
- ----------
(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: ...................... 1.08% 1.07% 1.07% 1.44% 3.00%*
</TABLE>

* Annualized.
** Commencement of operations.

<PAGE>

Limited Term Bond Fund (1)

<TABLE>
<CAPTION>
Investors Class A+
----------------------------------------------------------------------------
Period from
Year Ended Year Ended Year Ended Year Ended May 1, 1993**
November 30, November 30, November 30, November 30, to November 30,
1997 1996 1995 1994 1993
-------------- -------------- -------------- -------------- ----------------
<S> <C> <C> <C> <C> <C>
Selected Per-Share Data
Net asset value, beginning of year ........... $ 9.95 $ 10.06 $ 9.50 $ 10.17 $ 10.11
------- ------- ------- ------- -------
Income from investment operations:
Net investment income ........................ 0.563 0.535 0.530 0.480 0.260
Net realized and unrealized gain/(loss) on
investments ................................. (0.012) ( 0.109) 0.556 ( 0.650) 0.060
-------- -------- -------- -------- -------
Total from investment operations ............. 0.551 0.426 1.086 ( 0.170) 0.320
Distributions:
Net investment income ........................ (0.569) ( 0.536) ( 0.526) ( 0.470) ( 0.260)
Capital gains ................................ -- -- -- ( 0.030) --
Total distributions .......................... (0.569) ( 0.536) ( 0.526) ( 0.500) ( 0.260)
-------- -------- -------- -------- -------
Net asset value, end of year ................. $ 9.93 $ 9.95 $ 10.06 $ 9.50 $ 10.17
======== ======== ======== ======== =======
Total Return ................................. 5.71% 4.40% 11.70% ( 1.72)% 3.16%*
Ratios and Supplemental Data
Net assets, end of year (thousands) .......... $ 926 $ 1,122 $ 1,458 $ 593 $ 427
Ratio of expenses to average daily net
assets (2) .................................. 0.77% 0.79% 0.79% 0.77% 1.02%*
Ratio of net investment income to average
daily net assets ............................ 5.77% 5.39% 5.46% 4.92% 4.70%*
Portfolio turnover rate ...................... 64% 51% 36% 47% 61%
- ----------
(1) Limited Term Bond Fund Investors
Class A ceased operations March 31,
1998.
(2) 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: ................... 0.92% 0.94% 0.94% 1.03% 1.48%*
</TABLE>

* Annualized.
** Commencement of operations.
+ Total return does not include the one time sales charge or contingent
deferred sales charge, where applicable.

<PAGE>

Intermediate Bond Fund

<TABLE>
<CAPTION>
Investors Class A+
----------------------------------------------------------------------------
Period from
Year Ended Year Ended Year Ended Year Ended May 5, 1993**
November 30, November 30, November 30, November 30, to November 30,
1997 1996 1995 1994 1993
-------------- -------------- -------------- -------------- ----------------
<S> <C> <C> <C> <C> <C>
Selected Per-Share Data
Net asset value, beginning of year ........... $ 9.94 $ 10.12 $ 9.16 $ 10.19 $ 10.20
------- ------- ------- ------- -------
Income from investment operations:
Net investment income ........................ 0.592 0.543 0.572 0.520 0.290
Net realized and unrealized gain/(loss) on
investments ................................. 0.022 ( 0.169) 0.951 ( 0.990) ( 0.010)
-------- -------- -------- -------- -------
Total from investment operations ............. 0.614 0.374 1.523 ( 0.470) 0.280
Distributions:
Net investment income ........................ (0.594) ( 0.554) ( 0.563) ( 0.520) --
Capital gains ................................ -- -- -- ( 0.040) ( 0.290)
Total distributions .......................... (0.594) ( 0.554) ( 0.563) ( 0.560) ( 0.290)
-------- -------- -------- -------- -------
Net asset value, end of year ................. $ 9.96 $ 9.94 $ 10.12 $ 9.16 $ 10.19
======== ======== ======== ======== =======
Total Return ................................. 6.45% 3.91% 17.08% ( 4.72)% 2.72%*
Ratios and Supplemental Data
Net assets, end of year (thousands) .......... $ 2,257 $ 2,238 $ 1,729 $ 1,030 $ 618
Ratio of expenses to average daily net
assets (1) .................................. 0.88% 0.89% 0.89% 0.89% 1.15%*
Ratio of net investment income to average
daily net assets ............................ 6.06% 5.54% 5.87% 5.51% 4.90%*
Portfolio turnover rate ...................... 66% 35% 37% 39% 28%
- ----------
(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: ................... 1.03% 1.04% 1.04% 1.05% 1.58%*
</TABLE>

* Annualized.
** Commencement of operations.
+ Total return does not include the one time sales charge or contingent
deferred sales charge, where applicable.

Government Bond Fund

<TABLE>
<CAPTION>
Investors Class B+
---------------------------------------------------
Period from
Year Ended Year Ended April 19, 1995**
November 30, November 30, to November 30,
1997 1996 1995
-------------- -------------- -----------------
<S> <C> <C> <C>
Selected Per-Share Data
Net asset value, beginning of year ................................. $ 10.39 $ 10.68 $ 10.03
------- ------- -------
Income from investment operations:
Net investment income .............................................. 0.516 0.503 0.338
Net realized and unrealized gain/(loss) on investments ............. -- ( 0.291) 0.738
-------- -------- --------
Total from investment operations ................................... 0.516 0.212 1.076
Distributions:
Net investment income .............................................. ( 0.516) ( 0.502) ( 0.333)
Capital gains ...................................................... -- -- ( 0.093)
Total distributions ................................................ ( 0.516) ( 0.502) ( 0.426)
-------- -------- --------
Net asset value, end of year ....................................... $ 10.39 $ 10.39 $ 10.68
======== ======== ========
Total Return ....................................................... 5.17% 2.12% 10.86%*
Ratios and Supplemental Data
Net assets, end of year (thousands) ................................ $ 1,213 $ 698 $ 325
Ratio of expenses to average daily net assets (1) .................. 1.57% 1.55% 1.55%*
Ratio of net investment income to average daily net assets ......... 5.07% 4.89% 5.05%*
Portfolio turnover rate ............................................ 144% 16% 28%
- ----------
(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: .................................................. 1.97% 1.95% 1.95%
</TABLE>

* Annualized.
** Commencement of operations.
+ Total return does not include the one time sales charge or contingent
deferred sales charge, where applicable.

<PAGE>

Maryland Municipal Bond Fund

<TABLE>
<CAPTION>
Investors Class B+
----------------------------------
Period from
Year Ended April 25, 1996**
November 30, to November 30,
1997 1996
-------------- -----------------
<S> <C> <C>
Selected Per-Share Data
Net asset value, beginning of period ..................................................... $ 9.76 $ 9.53
------- ------
Income from investment operations:
Net investment income .................................................................... 0.338 0.200
Net realized and unrealized gain/(loss) on investments ................................... 0.199 0.226
-------- -------
Total from investment operations ......................................................... 0.537 0.426
Distributions:
Net investment income .................................................................... (0.337) (0.196)
-------- -------
Net asset value, end of period ........................................................... $ 9.96 $ 9.76
======== =======
Total Return ............................................................................. 5.64% 7.67%*
Ratios and Supplemental Data
Net assets, end of period (thousands) .................................................... $ 561 $ 113
Ratio of expenses to average daily net assets (1) ........................................ 1.55% 1.55%*
Ratio of net investment income to average daily net assets ............................... 3.44% 3.42%*
Portfolio turnover rate .................................................................. 5% 9%
- ----------
(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: 2.20% 2.20%*
</TABLE>

* Annualized.
** Commencement of operations.
+ Total return does not include the one time sales charge or contingent
deferred sales charge, where applicable.

Virginia Intermediate Municipal Bond Fund

<TABLE>
<CAPTION>
Investors Class A+
----------------------------------------------------------------------------
Period from
Year Ended Year Ended Year Ended Year Ended May 5, 1993**
November 30, November 30, November 30, November 30, to November 30,
1997 1996 1995 1994 1993
-------------- -------------- -------------- -------------- ----------------
<S> <C> <C> <C> <C> <C>
Selected Per-Share Data
Net asset value, beginning of year ........... $ 10.21 $ 10.23 $ 9.20 $ 10.32 $ 10.22
-------- -------- -------- -------- --------
Income from investment operations:
Net investment income ........................ 0.468 0.415 0.428 0.440 0.260
Net realized and unrealized gain/(loss) on
investments ................................. 0.093 ( 0.018) 1.029 ( 1.100) 0.100
--------- --------- -------- --------- --------
Total from investment operations ............. 0.561 0.397 1.457 ( 0.660) 0.360
Distributions:
Net investment income ........................ ( 0.461) ( 0.417) ( 0.427) ( 0.440) ( 0.260)
Capital gains ................................ -- -- -- ( 0.020) --
Total distributions .......................... ( 0.461) ( 0.417) ( 0.427) ( 0.460) ( 0.260)
--------- --------- -------- --------- --------
Net asset value, end of year ................. $ 10.31 $ 10.21 $ 10.23 $ 9.20 $ 10.32
========= ========= ========= ========= ========
Total Return ................................. 5.65% 4.01% 16.10% ( 6.56)% ( 3.53)%*
Ratios and Supplemental Data
Net assets, end of year (thousands) .......... $ 7,826 $ 8,185 $ 8,649 $ 7,481 $ 4,805
Ratio of expenses to average daily net
assets (1) .................................. 0.79% 0.79% 0.73% 0.66% 0.66%*
Ratio of net investment income to average
daily net assets ............................ 4.56% 4.12% 4.33% 4.47% 4.27%*
Portfolio turnover rate ...................... 30% 25% 28% 24% 39%
- ----------
(1) During the periods, certain fees and
expenses were voluntarily waived
and reimbursed. The ratios of
expenses to average daily net assets
had such waivers and
reimbursements not occurred are as
follows: ................................... 0.94% 0.94% 0.95% 0.80% 0.90%* *
</TABLE>

* Annualized.
** Commencement of operations.

+ Total return does not include the one time sales charge or contingent
deferred sales charge, where applicable.

<PAGE>

Virginia Municipal Bond Fund

<TABLE>
<CAPTION>
Investors Class B+
-----------------------------------------------
Period from
Year Ended Year Ended April 27, 1995**
November 30, November 30, to November 30,
1997 1996 1995
-------------- -------------- -----------------
<S> <C> <C> <C>
Selected Per-Share Data
Net asset value, beginning of year .......................................... $ 10.31 $ 10.43 $ 10.06
------- ------- -------
Income from investment operations:
Net investment income ....................................................... 0.387 0.378 0.237
Net realized and unrealized gain/(loss) on investments ...................... 0.176 ( 0.121) 0.409
-------- -------- -------
Total from investment operations ............................................ 0.563 0.257 0.646
Distributions:
Net investment income ....................................................... ( 0.385) ( 0.377) ( 0.232)
Capital gains ............................................................... ( 0.008) -- ( 0.044)
Total distributions ......................................................... ( 0.393) ( 0.377) ( 0.276)
-------- -------- -------
Net asset value, end of year ................................................ $ 10.48 $ 10.31 $ 10.43
======== ======== =======
Total Return ................................................................ 5.58% 2.58% 6.51%*
Ratios and Supplemental Data
Net assets, end of year (thousands) ......................................... $ 1,476 $ 787 $ 628
Ratio of expenses to average daily net assets (1) ........................... 1.60% 1.57% 1.57%*
Ratio of net investment income to average daily net assets .................. 3.73% 3.73% 3.76%*
Portfolio turnover rate ..................................................... 39% 24% 35%
- ----------
(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: ................... 2.00% 1.97% 1.97%*
</TABLE>

* Annualized.
** Commencement of operations.
+ Total return does not include the one time sales charge or contingent
deferred sales charge, where applicable.

<PAGE>

Value Fund

<TABLE>
<CAPTION>
Investors Class A+
---------------------------------------------------------------------
Period from
May 7,
Year Ended Year Ended Year Ended Year Ended 1993** to
November November November November November
30, 1997 30, 1996 30, 1995 30, 1994 30, 1993
-------------- -------------- ------------ ------------ -------------
<S> <C> <C> <C> <C> <C>
Selected Per-Share Data
Net asset value, beginning of
year ............................. $ 13.47 $ 11.66 $ 10.78 $ 11.42 $ 11.06
------- ------- ------- ------- -------
Income from investment
operations: 0.136 0.169 0.250 0.180 0.060
Net investment income .............
Net realized and unrealized
gain/(loss) on investments ....... 3.248 2.396 2.623 ( 0.220) 0.350
-------- -------- -------- -------- -------
Total from investment
operations ....................... 3.384 2.565 2.873 ( 0.040) 0.410
Distributions:
Net investment income ............. ( 0.143) ( 0.164) ( 0.261) ( 0.180) ( 0.050)
Capital gains ..................... ( 0.070) ( 0.591) ( 1.732) ( 0.420) --
Total distributions ............... ( 0.213) ( 0.755) ( 1.993) ( 0.600) ( 0.050)
---------- ---------- -------- -------- -------
Net asset value, end of year ...... $ 16.64 $ 13.47 $ 11.66 $ 10.78 $ 11.42
========== ========== ======== ======== =======
Total Return ...................... 25.42% 22.63% 28.71% ( 0.45)% 3.71%*
Ratios and Supplemental
Data
Net assets, end of year
(thousands) ...................... $28,112 $ 17,997 $ 12,633 $ 8,115 $ 4,058
Ratio of expenses to average
daily net assets (1) ............. 1.03% 1.03% 1.03% 1.02% 1.16%*
Ratio of net investment income
to average daily net assets ...... 0.89% 1.35% 2.14% 1.81% 1.51%*
Portfolio turnover rate ........... 100% 82% 175% 116% 77%
Average commission rate (A) ....... $ .0576 $ .0548 -- -- --
- ----------
(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: ........ 1.18% 1.18% 1.18% 1.04% 1.16%*

<CAPTION>
Investors Class B+
-------------------------------------------
Period from
April 19,
Year Ended Year Ended 1995** to
November November November
30, 1997 30, 1996 30, 1995
--------------- -------------- ------------
<S> <C> <C> <C>
Selected Per-Share Data
Net asset value, beginning of
year ............................. $ 13.44 $ 11.64 $ 11.11
-------- --------- --------
Income from investment
operations: 0.037 0.091 0.120
Net investment income .............
Net realized and unrealized
gain/(loss) on investments ....... 3.234 2.384 1.618
--------- ---------- ---------
Total from investment
operations ....................... 3.271 2.475 1.738
Distributions:
Net investment income ............. ( 0.051) ( 0.084) ( 0.136)
Capital gains ..................... ( 0.070) ( 0.591) ( 1.072)
Total distributions ............... ( 0.121) ( 0.675) ( 1.208)
----------- ----------- ---------
Net asset value, end of year ...... $ 16.59 $ 13.44 $ 11.64
=========== =========== =========
Total Return ...................... 24.63% 21.81% 15.78%*
Ratios and Supplemental
Data
Net assets, end of year
(thousands) ...................... $ 13,269 $ 5,131 $ 2,086
Ratio of expenses to average
daily net assets (1) ............. 1.73% 1.68%* 1.68%*
Ratio of net investment income
to average daily net assets ...... 0.15% 0.71 % 1.13%*
Portfolio turnover rate ........... 100% 82% 175%
Average commission rate (A) ....... $ .0576 $ .0548 --
- ----------
(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: ........ 2.09% 2.03% 2.03%*
</TABLE>

* Annualized.
** Commencement of operations.
+ Total return does not include the one time sales charge or contingent
deferred sales charge, where applicable.
(A) Average commission rate paid per share of security purchases and sales made
during the period. Presentation of the rate is only required for the
fiscal years beginning after September 1, 1995.

<PAGE>

Capital Appreciation Fund

<TABLE>
<CAPTION>
Investors Investors Class A+
-----------------------------------------------------------------------
Period from
Year Ended Year Ended Year Ended Year Ended May 7, 1993**
November November November November to November
30, 1997 30, 1996 30, 1995 30, 1994 30, 1993
-------------- -------------- ------------ ------------ ---------------
<S> <C> <C> <C> <C> <C>
Selected Per-Share Data
Net asset value, beginning of year ........... $ 13.44 $ 10.76 $ 10.08 $ 9.74 $ 9.42
------- ------- -------- -------- ---------
Income from investment operations:
Net investment income ........................ 0.038 0.043 0.044 0.010 --
Net realized and unrealized gain/(loss) on
investments ................................. 2.983 2.677 2.013 0.340 0.320
-------- -------- --------- --------- ---------
Total from investment operations ............. 3.021 2.720 2.057 0.350 0.320
Distributions:
Net investment income ........................ ( 0.040) ( 0.040) ( 0.045) ( 0.010) --
Capital gains ................................ ( 0.621) -- ( 1.332) -- --
Total distributions .......................... ( 0.661) ( 0.040) ( 1.377) ( 0.010) --
========== ========== ========= ========= =========
Net asset value, end of year ................. $ 15.80 $ 13.44 $ 10.76 $ 10.08 $ 9.74
========== ========== ========= ========= =========
Total Return ................................. 23.80% 25.34% 20.72% 3.70% 3.40%*
Ratios and Supplemental Data
Net assets, end of year (thousands) .......... $ 7,900 $ 4,870 $ 3,261 $ 1,509 $ 649
Ratio of expenses to average daily net
assets (1) .................................. 1.03% 1.11% 1.11% 1.06% 1.36%*
Ratio of net investment income to average
daily net assets ............................ 0.27% 0.36% 0.39% 0.16% (0.50)%*
Portfolio turnover rate ...................... 123% 86% 470% 271% 133%
Average commission rate (A) .................. $ .0624 $ .0764 -- -- --
- ----------
(1) During the periods, certain fees and
expenses were voluntarily waived and
reimbursed. The ratios of expenses to
average daily and assets had such
waivers and reimbursements not
occurred are as follows: ................... 1.18% 1.26% 1.26% 1.18% 1.80%*

<CAPTION>
Investors
Class B
--------------
Period from
September
2, 1997**
to November
30, 1997
--------------
<S> <C>
Selected Per-Share Data
Net asset value, beginning of year ........... $ 15.21
--------
Income from investment operations:
Net investment income ........................ ( 0.016)
Net realized and unrealized gain/(loss) on
investments ................................. 0.580
--------
Total from investment operations ............. 0.564
Distributions:
Net investment income ........................ ( 0.004)
Capital gains ................................ --
Total distributions .......................... ( 0.004)
========
Net asset value, end of year ................. $ 15.77
========
Total Return ................................. 27.07%
Ratios and Supplemental Data
Net assets, end of year (thousands) .......... $ 432
Ratio of expenses to average daily net
assets (1) .................................. 1.93%*
Ratio of net investment income to average
daily net assets ............................ ( 0.87)%*
Portfolio turnover rate ...................... 123%
Average commission rate (A) .................. $ .0086
- ----------
(1) During the periods, certain fees and
expenses were voluntarily waived and
reimbursed. The ratios of expenses to
average daily and assets had such
waivers and reimbursements not
occurred are as follows: ................... 2.07%*
</TABLE>

<PAGE>

Special Equity Fund

<TABLE>
<CAPTION>
Investors Class A+
-----------------------------------------------------------------------
Period from
Year Ended Year Ended Year Ended Year Ended May 5, 1993**
November November November November to November
30, 1997 30, 1996 30, 1995 30, 1994 30, 1993
-------------- -------------- ------------ ------------ ---------------
<S> <C> <C> <C> <C> <C>
Selected Per-Share Data
Net asset value, beginning
of year ..................... $ 13.72 $ 12.12 $ 10.56 $ 12.76 $ 11.69
-------- ------- ------- ------- -------
Income from investment
operations: ................. ( 0.011) 0.052 0.100 0.030 --
Net investment income ........
Net realized and
unrealized gain/(loss)
on investments .............. 3.126 1.911 1.927 ( 0.460) 1.070
---------- -------- -------- ------- ---------
Total from investment
operations .................. 3.115 1.963 2.027 ( 0.430) 1.070
Distributions:
Net investment income ........ ( 0.005) ( 0.050) ( 0.107) ( 0.020) --
Capital gains ................ ( 0.380) ( 0.313) ( 0.360) ( 1.750) --
Total Distributions .......... ( 0.385) ( 0.363) ( 0.467) ( 1.770) --
---------- ---------- -------- ------- ---------
Net asset value, end of
year ........................ $ 16.45 $ 13.72 $ 12.12 $ 10.56 $ 12.76
========== ========== ======== ======= =========
Total Return ................. 23.38% 16.34% 20.06% ( 4.76) % 9.19%*
Ratios and
Supplemental Data
Net assets, end of year
(thousands) ................. $ 5,892 $ 4,660 $ 4,693 $ 3,436 $ 938
Ratio of expenses to
average daily net assets
(1) ......................... 1.02% 1.05% 1.05% 1.04% 1.28%*
Ratio of net investment
income to average daily
net assets .................. ( 0.08)% 0.40% 0.89% 0.31% ( 0.19)%*
Portfolio turnover rate ...... 148% 98% 81% 117% 95%
Average commission
rate (A) .................... $ .0572 $ .0620 -- -- --
- ----------
(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. ................... 1.17 % 1.20 % 1.20% 1.10%* 1.61%*

<CAPTION>
Investors Class B+
----------------------------------------------
Period from
Year Ended Year Ended April 5, 1995**
November November to November
30, 1997 30, 1996 30, 1995
-------------- -------------- ----------------
<S> <C> <C> <C>
Selected Per-Share Data
Net asset value, beginning
of year ..................... $ 13.62 $ 12.08 $ 10.61
-------- -------- -------
Income from investment
operations: ................. ( 0.063) ( 0.043) 0.007
Net investment income ........
Net realized and
unrealized gain/(loss)
on investments .............. 3.002 1.899 1.501
---------- ---------- --------
Total from investment
operations .................. 2.939 1.856 1.508
Distributions:
Net investment income ........ -- ( 0.003) ( 0.038)
Capital gains ................ ( 0.380) ( 0.313) --
Total Distributions .......... ( 0.380) ( 0.316) ( 0.038)
---------- ---------- ---------
Net asset value, end of
year ........................ $ 16.18 $ 13.62 $ 12.08
========== ========== =========
Total Return ................. 22.22% 15.47% 14.22%*
Ratios and
Supplemental Data
Net assets, end of year
(thousands) ................. $ 2,133 $ 955 $ 554
Ratio of expenses to
average daily net assets
(1) ......................... 1.93% 1.90% 1.90%*
Ratio of net investment
income to average daily
net assets .................. ( 1.00)% ( 0.47)% ( 0.04)%*
Portfolio turnover rate ...... 148% 98% 81%
Average commission
rate (A) .................... $ .0572 $ .0620 --
- ----------
(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. ................... 2.08 % 2.05 % 2.05%*
</TABLE>

<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. The
Adviser will manage each Fund consistently with that Fund's investment
objective and policies. There is no assurance that a Fund will achieve its
investment objective. For more information regarding each Fund's investment
policies, please refer to the Statement of Additional Information.

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

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

- - obligations of institutions, such as banks and insurance companies, including
certificates of deposit, bankers' acceptances and time deposits;

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

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

- - other eligible debt obligations, including repurchase agreements.

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 the Adviser 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.

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 the Adviser to

<PAGE>

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 the Adviser 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.

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

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

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

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
the Adviser 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 the Adviser pursuant to procedures adopted by the Company's Board
of Directors.

The Fund will not invest more than 15% 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 the Adviser to be readily marketable.

The Fund may also purchase shares of other money market funds. Should the Fund
elect to do so, it will

<PAGE>

incur additional expenses charged by that money market fund, such as management
fees.

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

Bond Funds:

Corporate Bond Funds:

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

- - corporate obligations which are rated at least Baa or its equivalent by an
NRSRO (see "Investment-grade Securities" in the Appendix to this
Prospectus);

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

- - commercial paper which is rated Prime-1 or its equivalent by an NRSRO.

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 to this Prospectus) 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.

Intermediate Bond Fund may hold individual securities with remaining maturities
of more than ten years, as long as its dollar-weighted average portfolio
maturity is no more than ten 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.

<PAGE>

bond fund may invest a portion of its assets in securities issued by foreign
companies and foreign governments, which may be less liquid or more volatile
than domestic investments. The corporate bond funds will only invest in U.S.
Dollar- denominated securities.

Government Bond Funds:

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 in which the Fund invests
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."

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 five and ten years. The Fund may hold individual
securities with remaining maturities of more than ten years, as long as the
Fund's dollar-weighted average maturity is no more than ten years. Stability
and growth of principal also will be considered when choosing securities. See
"Investment Policies -- Municipal Bond Funds."

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."

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 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 its

<PAGE>

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 to this
Prospectus for a complete description of these types of securities.

Each municipal bond 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, each of the municipal bond funds may present greater risks than a
diversified fund.

Equity Funds:

<PAGE>

securities of companies with market capitalizations of at least $1 billion.

Value Fund offers both A Shares and B Shares.

Capital Appreciation Fund offers both A Shares and B Shares.

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. The Adviser 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 to this Prospectus.) 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. 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.") 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
the Adviser believes market conditions warrant a defensive position. Should a
Fund elect to purchase shares of money market funds, it will incur additional
expenses charged by that money market fund, such as management fees.

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

Special Equity Fund offers both A Shares and B Shares.

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 to this Prospectus), 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.

<PAGE>

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

Risk Factors and Investment
Considerations

Individually, none of the Funds constitutes a balanced investment plan. The
money market funds emphasize income 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.

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

Government Bond Fund is a 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 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. See the
Appendix to this Prospectus. Virginia Intermediate Municipal Bond Fund is less
interest rate sensitive than the Virginia Municipal Bond Fund. It seeks higher
Virginia tax-free income than a tax-free money fund, with some share price
fluctuation. Virginia Municipal Bond Fund is likely to experience greater share
price fluctuation and potentially higher tax-free income due to its investments
in longer term municipal bonds. Maryland Municipal Bond Fund also is likely to
experience greater share price fluctuation and potentially higher tax-free
income than an intermediate term municipal bond fund.

The equity funds emphasize capital appreciation by investing primarily in
common stock and securities convertible to common stock, such as preferred
stock and convertible bonds. These funds are inherently more risky than the
money market and bond funds. The share prices of companies with larger
capitalization tend to fluctuate less over time than the stock of companies
having smaller market capitalization. Therefore, a stock mutual fund investing
in companies with smaller average market capitalization is more aggressively
oriented than one which invests in companies with a large average market
capitalization, and while a "small-cap" fund's potential for growth may be
greater, its share price is likely to respond more suddenly and dramatically to
changes

<PAGE>

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.

Capital Appreciation Fund invests primarily in the equity securities of
companies with medium to large market capitalization.

Investment Limitations

4. As a non-fundamental limit, Cash Reserve Fund 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.

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.

<PAGE>

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.

Fund Management

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 regularly-scheduled close of normal
trading on the New York Stock Exchange ("NYSE") (normally 4:00 p.m. Eastern
time). The NAV of Cash Reserve Fund is determined as of 1:00 p.m. Eastern time
and as of the regularly-scheduled close of normal trading on the NYSE, usually
4:00 p.m. Eastern time. The NAV of each bond and equity fund is determined as
of the regularly-scheduled close of normal trading on the NYSE. Each Fund's NAV
is determined on each day the NYSE and the Funds' custodian, Crestar Bank, are
open for business. The NAV of a Fund is calculated by adding the value of all
securities and other assets of a Fund, deducting the liabilities allocated to
each class, and dividing the result by the proportional number of the shares of
the Fund outstanding in a class.

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 most
recently quoted bid price. 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 may be 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

Shares of each Fund are sold on a continuous basis by the Funds' Distributor,
SEI Investments Distribution Co. (the "Distributor"). The Distributor is a
registered broker-dealer with principal offices at Oaks, Pennsylvania 19456.

CrestFunds(R) Investors Class offers alternative investment options, A Shares
and B Shares. Investors will want to determine which investment option is best
suited to their needs. Investors who purchase A Shares pay a sales charge at
the time of purchase; that is, A Shares of the equity and bond funds are
offered at NAV plus a sales charge. A Shares of the money market funds are
offered at NAV without a sales charge. There is a Class A share investment
option available for each of the CrestFunds (except for U.S. Treasury Money
Fund and Limited Term Bond Fund, which are 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

<PAGE>

permitted freely among the Class A shares of the Funds, although exchanges to
Class B shares are not permitted. Additionally, A Shares or B Shares may be
exchanged for Trust Class shares if the investor is eligible to invest in the
Trust Class. 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: Government Bond Fund, Maryland Municipal Bond Fund,
Virginia Municipal Bond Fund, Value Fund, Capital Appreciation 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.

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 Account Builder" Accounts). All subsequent purchases must be at
least $100 ($50 for IRAs and "CrestFunds Account Builder" Accounts). The
Distributor may accept investments of smaller amounts, for either Class A
shares or Class B shares, at its discretion.

<PAGE>

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, 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 two to three 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 Fund) and the Federal funds must be received by
4:00 p.m.

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.

<PAGE>

Value Fund, Capital Appreciation Fund and Special Equity Fund

<TABLE>
<CAPTION>
Class A Sales
Charges as
a % of
----------------------
Dealer
Net Concession
Offering Amount (as a % of
Amount of Purchase in Single Transaction Price Invested Offering Price)
- ------------------------------------------ --------- ---------- ----------------
<S> <C> <C> <C>
Less than $50,000 ........................ 4.50% 4.71% 4.05%
$50,000 to less than $100,000 ............ 4.00 4.17 3.60
$100,000 to less than $250,000 ........... 3.50 3.63 3.15
$250,000 to less than $500,000 ........... 3.00 3.09 2.70
$500,000 to less than $1,000,000 ......... 2.50 2.56 2.25
$1,000,000 or more ....................... 2.00 2.04 1.80
</TABLE>

Virginia Intermediate Municipal Bond Fund

<TABLE>
<CAPTION>
Class A Sales
Charges as
a % of
----------------------
Dealer
Net Concession
Offering Amount (as a % of
Amount of Purchase in Single Transaction Price Invested Offering Price)
- ------------------------------------------ --------- ---------- ----------------
<S> <C> <C> <C>
Less than $50,000 ........................ 3.50% 3.63% 3.15
$50,000 to less than $100,000 ............ 3.09 2.70 3.00
$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 ....................... 0.50 0.50 0.45
</TABLE>

Intermediate Bond Fund

<TABLE>
<CAPTION>
Class A Sales
Charges as
a % of
----------------------
Dealer
Net Concession
Offering Amount (as a % of
Amount of Purchase in Single Transaction 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 0.90
$1,000,000 or more ....................... 0.50 0.50 0.45
</TABLE>

Sales charges for A Shares are waived for (i) current or former Directors or
officers of CrestFunds, 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.

<PAGE>

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 Class 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 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 five 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 the Adviser'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 two to three 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

<PAGE>

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 fund 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.

CrestFunds Account Builder
CrestFunds 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 Account Builder by notifying the Fund in writing
at least five 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 Account Builder to make regular contributions to your retirement
account.

Directed Investment Mix
On your CrestFunds account application you may designate a pre-determined
investment mix to direct a certain percentage (minimum 10%) of each investment
to certain CrestFunds. 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 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
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.

<PAGE>

For more information about IRAs and other tax-sheltered retirement plans,
including eligibility requirements and tax considerations, consult your
financial planner or tax adviser. 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 five
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 seven days). A delay in receiving redemption
proceeds may be avoided by purchasing shares with a cashier's check or other
guaranteed form of payment.

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 1:00 p.m. (or 12:00 noon for the Tax Free
Money Fund), proceeds will be wired to your bank the same day. You may be
charged a nominal fee for wiring redemption proceeds.

Neither the 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.

<PAGE>

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

Federal Taxes. Interest earned by Tax Free Money Fund, Maryland Municipal Bond
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.

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
Internal Revenue 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 Internal Revenue 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

<PAGE>

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.

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 Internal
Revenue 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 private activity bonds of an issuer other than the State of
Maryland, its political subdivisions, or other bond issuing authorities, the
excess of 50% of that portion of exempt-interest dividends which is
attributable to interest on such private activity bonds over a threshold amount
may be taxable by Maryland. Interest on indebtedness incurred or continued
(directly or indirectly) by a shareholder in order to purchase or carry shares
of the Fund will not be deductible for Maryland state and local income tax
purposes. Individuals will not be subject to personal property tax on their
shares of the Fund. Shares of the Fund held by a Maryland resident at death may
be subject to Maryland inheritance and estate taxes.

Virginia Intermediate Municipal Bond Fund and Virginia Municipal Bond Fund:
Under existing Virginia law, provided that Virginia Intermediate Municipal Bond
Fund 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 U.S. 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.

<PAGE>

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

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

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 seven-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 any 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.

For advertising purposes, A Shares and B Shares bond fund yields and bond and
equity fund total returns

<PAGE>

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

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, 1997, the Funds' portfolio turnover rates were: Intermediate
Bond Fund, 66%; Government Bond Fund, 144%; Maryland Municipal Bond Fund, 5%;
Virginia Intermediate Municipal Bond Fund, 30%; Virginia Municipal Bond Fund,
39%; Value Fund, 100%; Capital Appreciation Fund, 123%; and Special Equity
Fund, 148%.

Advisory and Related Agreements;
Distribution and Service Plans

The Company has entered into Investment Advisory Agreements with the Adviser
("Advisory Agreements") on behalf of each Fund, pursuant to which the Adviser
is paid for its advisory services to each Fund at an annual rate based on the
following fee schedule: Cash Reserve 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 and Virginia Intermediate Municipal Bond Fund,
.50% of each Fund's average daily net assets; and Intermediate Bond Fund,
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. The Adviser, at 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.

The Adviser, 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. The Adviser may engage banks and brokers, including Crestar Bank and
Crestar Securities Corporation (and affiliates thereof),

<PAGE>

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, 1997, for services provided to the
Funds, the Adviser received advisory fees from Cash Reserve Fund, Tax Free
Money Fund, Intermediate Bond Fund, Government Bond Fund, Maryland Municipal
Bond Fund, Virginia Intermediate Municipal Bond Fund, Virginia Municipal Bond
Fund, Value Fund, Capital Appreciation Fund and Special Equity Fund equal to
.38%, .40%, .60%, .50%, .22, .50%, .50%, .75%, .75% and .75%, respectively, of
the average daily net assets of each Fund.

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 distribu%ion 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.

In addition to the Plan, the Company's Board of Directors has approved an
Amended and Restated

<PAGE>

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 any time at its 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 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. The Distributor
has agreed to waive a portion of the fees payable pursuant to the B Shares
Plan. The Distributor reserves the right to terminate this waiver at any time
at its sole discretion.

Transfer Agent and Custodian
Crestar Bank (the "Transfer Agent"), 919 East Main Street, Richmond, VA 23219,
acts as each Fund's transfer agent, dividend paying agent and custodian. As
Transfer Agent, Crestar Bank maintains shareholder accounts and records for
each Fund (unless such accounts are maintained by sub-transfer agents). For its
services as Transfer Agent, Crestar Bank is paid a monthly fee at the annual
rate of .06% of average net assets of the A Shares and B Shares of each Fund.

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

Other Expense Information

Each Fund may elect not to qualify its shares for sale in every state. For the
purpose of the Adviser's obligation to reimburse expenses, each Fund's annual
expenses are estimated and accrued daily, and any appropriate estimated
payments will be made by the Adviser monthly. 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. Transfer
agency expenses attributable to a particular Class of shares are paid by that
Class.

Banking Law Matters

<PAGE>

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, Inc. Tax
Free Money Fund, Maryland Municipal Bond Fund, Virginia Intermediate Municipal
Bond Fund and Virginia Municipal Bond Fund are non-diversified portfolios of
CrestFunds, 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 Equity Fund Common
Stock, representing shares for each of the Company's 12 CrestFunds. The
CrestFunds 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). 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.

<PAGE>

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

<PAGE>

Appendix

<PAGE>

claims of secured and unsecured creditors and owners of bonds and preferred
stock take 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.

<PAGE>

change in one or more specified underlying instruments. Indexed securities may
be 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.

<PAGE>

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).

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.

<PAGE>

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 the Adviser.

Risks and Special Considerations Concerning Maryland Municipal Bond Fund

<PAGE>

for another purpose until the debt has been paid. State and local general
obligation transportation and tax supported debt on a per capita basis and as a
percentage of property values have increased by 18.9% and 14.5%, respectively
since 1993. 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 is limited by the General Assembly
to $1,074 million for fiscal year 1998 (ending June 30, 1998); the principal
amount of such bonds outstanding as of December 31, 1997 was $868.0 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, higher educational institutions
(which include the University System of Maryland, 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, 1997 was approximately $3,650.4 million.

<PAGE>

which the Revenue Stabilization Account of the State Reserve Fund contained
$490.1 million.

In April 1997, the General Assembly approved a $15.4 billion fiscal year 1998
budget. This budget (i) includes funds sufficient to meet all specific
statutory funding requirements; (ii) incorporates the first partial year of a
five-year phase-in of a 10% reduction in personal income taxes (estimated to
reduce revenues by $38.5 million in fiscal year 1998 and $450 million when
fully phased in) and certain reductions in sales taxes on certain manufacturing
equipment (estimated to reduce revenues by $38.6 million when the reductions
are fully phased-in during fiscal year 2001); and (iii) includes the first
year's $30 million funding under an agreement to provide additional funds
totaling $230 million over a five-year period to schools in the City of
Baltimore and related grants to other subdivisions totaling $32 million. When
this budget was enacted, the State estimated the General Fund surplus on a
budgetary basis would be $27.9 million, in addition to which the State
projected that there would be a balance of $554 million in the Revenue
Stabilization Account of the State Reserve Fund. The State currently projects a
General Fund balance on a budgetary basis of $283 million.

The 1998 legislative session of the Maryland General Assembly has not ended.
The State's budget for fiscal year 1999 has not yet been enacted. In addition
to the Governor's executive budget which includes a full year of the five-year
phase-in of a 10% reduction of the personal income tax, $25 million for
computer programming modifications to address the "year 2000" problem, $76
million to provide medical coverage to low income children and pregnant women,
$61.5 million to provide funding for a state-wide public education program
targeted to at-risk students and a $50 million appropriation for funding for
the schools in the City of Baltimore, various legislative proposals, including
tax reduction proposals, are being considered.

<PAGE>

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 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.

Summary of Bond Ratings*

Summary of Commercial Paper Ratings*

<TABLE>
<CAPTION>
Rating Services
----------------
Moody's S&P
--------- ----
<S> <C> <C>
Highest quality ......... Prime-1 A-1
High quality ............ Prime-2 A-2
</TABLE>

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

<PAGE>

CREST
-----
FUNDS

A Family Of Mutual Funds
Managed By
Crestar Asset Management
Company

<PAGE>

[Crestar Logo]

CREST
-----
FUNDS

Trust Class Prospectus
March 31, 1998

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

<PAGE>

MONEY MARKET FUNDS
Cash Reserve Fund
U.S. Treasury Money Fund
Tax Free Money Fund

<PAGE>

Table of Contents

<PAGE>

Summary of Fund Expenses

Annual Fund Operating Expenses (as a percentage of average daily net assets) --
Net of Waivers and/or Reimbursement:

- ----------
+ Net of waivers and reimbursement.

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

<PAGE>

Explanation of Table:

<PAGE>

The Funds' Financial History

Cash Reserve Fund

<PAGE>

U.S. Treasury Money Fund

<TABLE>
<CAPTION>
Trust Class
---------------------------------------------------
Year Ended November 30
---------------------------------------------------
1997 1996 1995 1994
------------ ------------ ------------ ------------
<S> <C> <C> <C> <C>
Selected Per-Share Data
Net asset value,
beginning of year ........ $ 1.00 $ 1.00 $ 1.00 $ 1.00
------- ------- ------- -------
Income from investment
operations:
Net investment income ..... 0.048 0.047 0.052 0.033
Distributions:
Net investment income ..... ( 0.048) ( 0.047) ( 0.052) ( 0.033)
-------- -------- -------- -------
Net asset value, end of
year ..................... $ 1.00 $ 1.00 $ 1.00 $ 1.00
======== ======== ======== =======
Total Return .............. 4.91% 4.80% 5.29% 3.30 %
Ratios and
Supplemental Data
Net assets, end of year
(thousands) .............. $632,381 $389,051 $370,454 $319,477
Ratio of expenses to
average daily net
assets (1) ............... 0.65% 0.66% 0.66% 0.66 %
Ratio of net investment
income to average
daily net assets ......... 4.82% 4.69% 5.16% 3.23 %

<CAPTION>
Trust Class
----------------------------------------------------------------------------
Year Ended November 30
----------------------------------------------------------------------------
1993 1992 1991 1990 1989 1988
------------ ------------ ------------ ------------ ------------ -----------
<S> <C> <C> <C> <C> <C> <C>
Selected Per-Share Data
Net asset value,
beginning of year ........ $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
------- ------- ------- ------- ------- -------
Income from investment
operations:
Net investment income ..... 0.025 0.034 0.058 0.076 0.085 0.068
Distributions:
Net investment income ..... ( 0.025) ( 0.034) ( 0.058) ( 0.076) ( 0.085) ( 0.068)
-------- -------- -------- -------- -------- --------
Net asset value, end of
year ..................... $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
======== ======== ======== ======== ======== ========
Total Return .............. 2.51% 3.55% 6.00% 7.92% 8.84% 7.03%
Ratios and
Supplemental Data
Net assets, end of year
(thousands) .............. $342,537 $482,881 $279,790 $204,792 $145,571 $ 54,996
Ratio of expenses to
average daily net
assets (1) ............... 0.66% 0.64% 0.56% 0.49% 0.49% 0.49%
Ratio of net investment
income to average
daily net assets ......... 2.52% 3.37% 5.61% 7.65% 8.52% 6.84%

<PAGE>

Tax Free Money Fund

<TABLE>
<CAPTION>
Trust Class
----------------------------------------------------
Year Ended November 30
----------------------------------------------------
1997 1996 1995 1994
------------ ------------ ------------- ------------
<S> <C> <C> <C> <C>
Selected Per-Share Data
Net asset value, beginning of year ....... $ 1.00 $ 1.00 $ 1.00 $ 1.00
------- ------- -------- -------
Income from investment operations:
Net investment income .................... 0.030 0.029 0.032 0.021
Net realized gain on investments ......... -- 0.002 -- --
-------- -------- --------- --------
Total from investment operations ......... 0.030 0.031 -- --
Distributions:
Net investment income .................... ( 0.030) ( 0.029) ( 0.032) ( 0.021)
Capital gains. ........................... -- ( 0.002) -- --
Total distributions ...................... ( 0.030) ( 0.031) -- --
-------- -------- --------- --------
Net asset value, end of year ............. $ 1.00 $ 1.00 $ 1.00 $ 1.00
======== ======== ========= ========
Total Return ............................. 3.06% 3.14% 3.26% 2.07%
Ratios and Supplemental Data
Net assets, end of year (thousands) ...... $226,837 $182,320 $ 202,333 $157,602
Ratio of expenses to average daily net
assets (1) .............................. 0.66% 0.66% 0.66% 0.67%
Ratio of net investment income to
average daily assets .................... 3.02% 2.88% 3.19% 2.06%

<CAPTION>
Trust Class
--------------------------------------------------------------
Year Ended November 30
--------------------------------------------------------------
1993 1992 1991 1990 1989**
------------ ------------ ------------ ----------- -----------
<S> <C> <C> <C> <C> <C>
Selected Per-Share Data
Net asset value, beginning of year ....... $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
------- ------- ------- ------- -------
Income from investment operations:
Net investment income .................... 0.019 0.031 0.046 0.057 0.027
Net realized gain on investments ......... -- -- -- -- --
-------- -------- -------- -------- -------
Total from investment operations ......... -- -- -- -- --
Distributions:
Net investment income .................... ( 0.019) ( 0.031) ( 0.046) ( 0.057) ( 0.027)
Capital gains. ........................... -- -- -- -- --
Total distributions ...................... -- -- -- -- --
-------- -------- -------- -------- -------
Net asset value, end of year ............. $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
======== ======== ======== ======== =======
Total Return ............................. 1.88% 3.03% 4.72% 5.86% 2.80%*
Ratios and Supplemental Data
Net assets, end of year (thousands) ...... $142,284 $155,458 $166,670 $ 43,300 $34,667
Ratio of expenses to average daily net
assets (1) .............................. 0.66% 0.47% 0.27% 0.20% 0.20%*
Ratio of net investment income to
average daily assets .................... 1.85% 3.00% 4.39% 5.70% 5.86%*

* Annualized.
** Commencement of operations -- June 15, 1989.

<PAGE>

Limited Term Bond Fund

<TABLE>
<CAPTION>
Trust Class
--------------------------------------
Year Ended November 30
--------------------------------------
1997 1996 1995
------------ ------------ ------------
<S> <C> <C> <C>
Selected Per-Share Data
Net asset value, beginning of year .................................. $ 9.93 $ 10.03 $ 9.49
------- -------- --------
Income from investment operations:
Net investment income ............................................... 0.570 0.534 0.532
Net realized and unrealized gain/(loss) on investments .............. ( 0.010) ( 0.097) 0.534
-------- --------- --------
Total from investment operations .................................... 0.560 0.437 1.066
Distributions:
Net investment income ............................................... ( 0.570) ( 0.537) ( 0.526)
Capital gains ....................................................... -- -- --
Total distributions ................................................. ( 0.570) ( 0.537) ( 0.526)
-------- --------- --------
Net asset value, end of year ........................................ $ 9.92 $ 9.93 $ 10.03
======== ========= =========
Total Return ........................................................ 5.84% 4.52% 11.50%
Ratios and Supplemental Data
Net assets, end of year (thousands) ................................. $ 77,696 $ 84,973 $ 88,789
Ratio of expenses to average daily net assets (1) ................... 0.75% 0.78% 0.78%
Ratio of net investment income to average daily net assets .......... 5.79% 5.41% 5.44%
Portfolio turnover rate ............................................. 64% 51% 36%

<CAPTION>
Trust Class
-----------------------------------------
Year Ended November 30
-----------------------------------------
1994 1993 1992**
------------ ------------ ---------------
<S> <C> <C> <C>
Selected Per-Share Data
Net asset value, beginning of year .................................. $ 10.16 $ 9.81 $ 10.00
-------- -------- ---------
Income from investment operations:
Net investment income ............................................... 0.480 0.500 0.070
Net realized and unrealized gain/(loss) on investments .............. ( 0.640) 0.350 ( 0.190)
--------- -------- -----------
Total from investment operations .................................... ( 0.160) 0.850 ( 0.120)
Distributions:
Net investment income ............................................... ( 0.480) ( 0.500) ( 0.070)
Capital gains ....................................................... ( 0.030) -- --
Total distributions ................................................. ( 0.510) ( 0.500) ( 0.070)
--------- -------- -----------
Net asset value, end of year ........................................ $ 9.49 $ 10.16 $ 9.81
========= ========= ===========
Total Return ........................................................ ( 1.56)% 8.84% ( 1.22)%*
Ratios and Supplemental Data
Net assets, end of year (thousands) ................................. $ 83,369 $ 85,968 $ 72,590
Ratio of expenses to average daily net assets (1) ................... 0.76% 0.77% 1.04%*
Ratio of net investment income to average daily net assets .......... 4.92% 4.95% 4.46%*
Portfolio turnover rate ............................................. 47% 61% 2%

* Annualized.
** Commencement of operations -- September 28, 1992.

Intermediate Bond Fund

<TABLE>
<CAPTION>
Trust Class
----------------------------------------
Year Ended November 30
----------------------------------------
1997 1996 1995
------------- ------------- ------------
<S> <C> <C> <C>
Selected Per-Share Data
Net asset value, beginning of year ................................. $ 9.94 $ 10.12 $ 9.16
-------- -------- --------
Income from investment operations:
Net investment income .............................................. 0.594 0.550 0.569
Net realized and unrealized gain/(loss) on investments ............. 0.021 ( 0.175) 0.954
--------- --------- --------
Total from investment operations ................................... 0.615 0.375 1.523
Distributions:
Net investment income .............................................. ( 0.595) ( 0.555) ( 0.563)
Capital gains ...................................................... -- -- ( 0.040)
Total distributions ................................................ ( 0.595) ( 0.555) ( 0.563)
--------- --------- --------
Net asset value, end of year ....................................... $ 9.96 $ 9.94 $ 10.12
========= ========= =========
Total Return ....................................................... 6.46% 3.92% 17.07%
Ratios and Supplemental Data
Net assets, end of year (thousands) ................................ $ 299,820 $ 281,187 $ 81,870
Ratio of expenses to average daily net assets (1) .................. 0.87% 0.88% 0.88%
Ratio of net investment income to average daily net assets ......... 6.07% 5.70% 5.89%
Portfolio turnover rate ............................................ 66% 35% 37%

<CAPTION>
Trust Class
-----------------------------------------
Year Ended November 30
-----------------------------------------
1994 1993 1992**
------------ ------------ ---------------
<S> <C> <C> <C>
Selected Per-Share Data
Net asset value, beginning of year ................................. $ 10.20 $ 9.70 $ 10.00
-------- -------- --------
Income from investment operations:
Net investment income .............................................. 0.530 0.520 0.080
Net realized and unrealized gain/(loss) on investments ............. ( 1.000) 0.500 ( 0.300)
--------- -------- ----------
Total from investment operations ................................... ( 0.470) 1.020 ( 0.220)
Distributions:
Net investment income .............................................. ( 0.530) ( 0.520) ( 0.080)
Capital gains ...................................................... -- --
Total distributions ................................................ ( 0.570) ( 0.520) ( 0.080)
--------- -------- ----------
Net asset value, end of year ....................................... $ 9.16 $ 10.20 $ 9.70
========= ========= ==========
Total Return ....................................................... ( 4.72)% 10.69% ( 2.20)%*
Ratios and Supplemental Data
Net assets, end of year (thousands) ................................ $ 77,143 $ 58,487 $ 13,759
Ratio of expenses to average daily net assets (1) .................. 0.88% 0.90% 1.15%*
Ratio of net investment income to average daily net assets ......... 5.53% 5.15% 4.63%*
Portfolio turnover rate ............................................ 39% 28% 0%

* Annualized.
** Commencement of operations -- September 28, 1992.

<PAGE>

Government Bond Fund

<TABLE>
<CAPTION>
Trust Class
--------------------------------------
Year Ended November 30
--------------------------------------
1997 1996 1995**
------------ ------------ ------------
<S> <C> <C> <C>
Selected Per-Share Data
Net asset value, beginning of year ..................................................... $ 10.37 $ 10.66 $ 10.00
-------- -------- --------
Income from investment operations:
Net investment income .................................................................. 0.605 0.591 0.412
Net realized and unrealized gain/(loss) on investments ................................. ( 0.010) ( 0.290) 0.753
--------- --------- --------
Total from investment operations ....................................................... 0.595 0.301 1.165
Distributions:
Net investment income .................................................................. ( 0.605) ( 0.591) ( 0.412)
Capital gains .......................................................................... -- -- ( 0.093)
Total distributions .................................................................... ( 0.605) ( 0.591) ( 0.505)
--------- --------- --------
Net asset value, end of year ........................................................... $ 10.36 $ 10.37 $ 10.66
========= ========= ========
Total Return ........................................................................... 6.04% 3.02% 11.85%*
Ratios and Supplemental Data
Net assets, end of year (thousands) .................................................... $ 34,013 $ 20,171 $ 10,211
Ratio of expenses to average daily net assets (1) ...................................... 0.66% 0.69% 0.71%*
Ratio of net investment income to average daily net assets ............................. 5.99% 5.75% 6.00%*
Portfolio turnover rate ................................................................ 144% 16% 28%

* Annualized.
** Commencement of operations -- April 5, 1995.

Maryland Municipal Bond Fund

<TABLE>
<CAPTION>
Trust Class
-------------------------
Year Ended November 30
-------------------------
1997 1996**
------------ ------------
<S> <C> <C>
Selected Per-Share Data
Net asset value, beginning of year ....................................................... $ 9.76 $ 10.00
------- --------
Income from investment operations:
Net investment income .................................................................... 0.426 0.309
Net realized and unrealized gain/(loss) on investments ................................... 0.190 ( 0.240)
-------- --------
Total from investment operations ......................................................... 0.616 0.069
Distributions:
Net investment income .................................................................... ( 0.426) ( 0.309)
Capital gains ............................................................................ -- --
Total distributions ...................................................................... ( 0.426) ( 0.309)
-------- --------
Net asset value, end of year ............................................................. $ 9.95 $ 9.76
======== ========
Total Return ............................................................................. 6.50% 1.07%*
Ratios and Supplemental Data
Net assets, end of year (thousands) ...................................................... $ 11,461 $ 5,808
Ratio of expenses to average daily net assets (1) ........................................ 0.63% 0.71%*
Ratio of net investment income to average daily net assets ............................... 4.38% 4.30%*
Portfolio turnover rate .................................................................. 5% 9%

* Annualized.
** Commencement of operations -- March 1, 1996.

<PAGE>

Virginia Intermediate Municipal Bond Fund

<CAPTION>
Trust Class
--------------------------------------
Year Ended November 30
--------------------------------------
1995 1994 1993**
------------ ------------ ------------
<S> <C> <C> <C>
Selected Per-Share Data
Net asset value, beginning of year ............................................ $ 9.21 $ 10.33 $ 10.00
-------- -------- --------
Income from investment operations:
Net investment income ......................................................... 0.428 0.440 0.390
Net realized and unrealized gain/(loss) on investments ........................ 1.030 ( 1.100) 0.330
-------- --------- --------
Total from investment operations .............................................. 1.458 ( 0.660) 0.720
Distributions:
Net investment income ......................................................... ( 0.428) ( 0.440) ( 0.390)
Capital gains ................................................................. -- -- ( 0.020)
Total distributions ........................................................... ( 0.428) ( 0.460) ( 0.390)
-------- --------- --------
Net asset value, end of year .................................................. $ 10.24 $ 9.21 $ 10.33
========= ========= ========
Total Return .................................................................. 16.09% ( 6.53)% 7.25%*
Ratios and Supplemental Data
Net assets, end of year (thousands) ........................................... $ 43,373 $ 41,365 $ 39,392
Ratio of expenses to average daily net assets (1) ............................. 0.72% 0.65% 0.71%*
Ratio of net investment income to average daily net assets .................... 4.34% 4.48% 4.25%*
Portfolio turnover rate ....................................................... 28% 24% 39%

* Annualized.
** Commencement of operations -- January 11, 1993.

Virginia Municipal Bond Fund

<TABLE>
<CAPTION>
Trust Class
--------------------------------------
Year Ended November 30
--------------------------------------
1997 1996 1995**
------------ ------------ ------------
<S> <C> <C> <C>
Selected Per-Share Data
Net asset value, beginning of year ....................................................... $ 10.28 $ 10.40 $ 10.00
-------- -------- --------
Income from investment operations:
Net investment income .................................................................... 0.475 0.465 0.309
Net realized and unrealized gain/(loss) on investments ................................... 0.168 ( 0.120) 0.445
--------- --------- --------
Total from investment operations ......................................................... 0.643 0.345 0.754
Distributions:
Net investment income .................................................................... ( 0.475) ( 0.465) ( 0.310)
Capital gains ............................................................................ ( 0.008) -- ( 0.044)
Total distributions ...................................................................... ( 0.483) ( 0.465) ( 0.354)
--------- --------- --------
Net asset value, end of year ............................................................. $ 10.44 $ 10.28 $ 10.40
========= ========= ========
Total Return ............................................................................. 6.46% 3.48% 7.67%*
Ratios and Supplemental Data
Net assets, end of year (thousands) ...................................................... $ 20,044 $ 15,911 $ 6,247
Ratio of expenses to average daily net assets (1) ........................................ 0.69% 0.71% 0.71%*
Ratio of net investment income to average daily net assets ............................... 4.65% 4.61% 4.61%*
Portfolio turnover rate .................................................................. 39% 24% 35%

* Annualized.
** Commencement of operations -- April 5, 1995.

<PAGE>

Value Fund

<TABLE>
<CAPTION>
Trust Class
-------------------------------
Year Ended November 30
-------------------------------
1997 1996
--------------- ---------------
<S> <C> <C>
Selected Per-Share Data
Net asset value, beginning of year ................................. $ 13.39 $ 11.60
-------- --------
Income from investment operations:
Net investment income .............................................. 0.137 0.166
Net realized and unrealized gain/(loss) on investments ............. 3.237 2.380
--------- ---------
Total from investment operations ................................... 3.374 2.546
Distributions:
Net investment income .............................................. ( 0.145) ( 0.165)
Capital gains ...................................................... ( 0.070) ( 0.591)
Total distributions ................................................ ( 0.215) ( 0.756)
----------- -----------
Net asset value, end of year ....................................... $ 16.55 $ 13.39
=========== ===========
Total Return ....................................................... 25.41% 22.68%
Ratios and Supplemental Data
Net assets, end of year (thousands) ................................ $ 590,824 $ 553,648
Ratio of expenses to average daily net assets(1) ................... 1.02% 1.02%
Ratio of net investment income to average daily net assets ......... 0.77% 1.23%
Portfolio turnover rate ............................................ 100% 82%
Average commission rate (A) ........................................ $ .0576 $ .0548

- ---------------------------------------------------------------------
(1) During the years, 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 ......................................................... 1.17% 1.17%

- ---------------------------------------------------------------------
(1) During the years, 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 ......................................................... 1.17% 1.01% 1.03% 1.28%
</TABLE>

Capital Appreciation Fund

<TABLE>
<CAPTION>
Trust Class
-------------------------------
Year Ended November 30
-------------------------------
1997 1996
--------------- ---------------
<S> <C> <C>
Selected Per-Share Data
Net asset value, beginning of year ............................................ $ 13.58 $ 10.87
-------- --------
Income from investment operations:
Net investment income ......................................................... 0.037 0.043
Net realized and unrealized gain/(loss) on investments ........................ 3.005 2.709
--------- ---------
Total from investment operations .............................................. 3.042 2.752
Distributions:
Net investment income ......................................................... ( 0.041) ( 0.042)
Capital gains ................................................................. ( 0.621) --
Total distributions ........................................................... ( 0.662) ( 0.042)
----------- -----------
Net asset value, end of year .................................................. $ 15.96 $ 13.58
=========== ===========
Total Return .................................................................. 23.71% 25.38%
Ratios and Supplemental Data
Net assets, end of year (thousands) ........................................... $ 99,364 $ 32,983
Ratio of expenses to average daily net assets (1) ............................. 1.02% 1.10%
Ratio of net investment income to average daily net assets .................... 0.27% 0.37%
Portfolio turnover rate ....................................................... 123% 86%
Average commission rate (A) ................................................... $ .0624 $ .0764

<CAPTION>
Trust Class
-----------------------------------------
Year Ended November 30
-----------------------------------------
1995 1994 1993**
------------ ------------ ---------------
<S> <C> <C> <C>
Selected Per-Share Data
Net asset value, beginning of year ............................................ $ 10.17 $ 9.79 $ 10.00
-------- -------- --------
Income from investment operations:
Net investment income ......................................................... 0.043 0.010 0.010
Net realized and unrealized gain/(loss) on investments ........................ 2.035 0.380 ( 0.210)
--------- -------- ----------
Total from investment operations .............................................. 2.078 0.390 ( 0.200)
Distributions:
Net investment income ......................................................... ( 0.046) ( 0.010) ( 0.010)
Capital gains ................................................................. ( 1.332) -- --
Total distributions ........................................................... ( 1.378) ( 0.010) ( 0.010)
--------- -------- ----------
Net asset value, end of year .................................................. $ 10.87 $ 10.17 $ 9.79
========= ========= ==========
Total Return .................................................................. 20.74% 4.13% ( 2.00)%*
Ratios and Supplemental Data
Net assets, end of year (thousands) ........................................... $ 19,592 $ 12,869 $ 7,741
Ratio of expenses to average daily net assets (1) ............................. 1.10% 1.05% 1.11%*
Ratio of net investment income to average daily net assets .................... 0.40% 0.17% 0.20%*
Portfolio turnover rate ....................................................... 470% 271% 133%
Average commission rate (A) ................................................... -- -- --

<PAGE>

Special Equity Fund

<TABLE>
<CAPTION>
Trust Class
-------------------------------
Year Ended November 30
-------------------------------
1997 1996
--------------- ---------------
<S> <C> <C>
Selected Per-Share Data
Net asset value, beginning of year .................................. $ 13.73 $ 12.12
--------- --------
Income from investment operations:
Net investment income ............................................... ( 0.009) 0.050
Net realized and unrealized gain/(loss) on investments .............. 3.114 1.926
----------- ---------
Total from investment operations .................................... 3.105 1.976
Distributions:
Net investment income ............................................... ( 0.005) ( 0.053)
Capital gains ....................................................... ( 0.380) ( 0.313)
Total distributions ................................................. ( 0.385) ( 0.366)
----------- -----------
Net asset value, end of year ........................................ $ 16.45 $ 13.73
=========== ===========
Total Return ........................................................ 23.28% 16.44%
Ratios and Supplemental Data
Net assets, end of year (thousands) ................................. $ 112,403 $ 77,931
Ratio of expenses to average daily net assets (1) ................... 1.01% 1.04%
Ratio of net investment income to average daily net assets .......... ( 0.07%) 0.39%
Portfolio turnover rate ............................................. 148% 98%
Average commission rate (A) ......................................... $ .0572 $ .0620

<PAGE>

Investment Objectives and Policies

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.

- - obligations of institutions, such as banks and insurance companies, including
certificates of deposit, bankers' acceptances and time deposits;

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

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

- - other eligible debt obligations, including repurchase agreements.

<PAGE>

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

The Fund will not invest more than 15% of its net assets in illiquid
securities. For purposes of this limitation, "illiquid securities" shall be
deemed to include

<PAGE>

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.

Bond Funds:
Corporate Bond Funds:

- - corporate obligations which are rated at least Baa or its equivalent by an
NRSRO (see "Investment-grade Securities" in the Appendix to this
Prospectus);

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

- - commercial paper which is rated Prime-1 or its equivalent by an NRSRO.

The corporate bond funds also may purchase obligations of U.S. banks (including
certificates of deposit

<PAGE>

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.

Government Bond Funds:

Municipal Bond Funds:

<PAGE>

Equity Funds:

<PAGE>

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.

Risk Factors and Investment
Considerations

<PAGE>

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.

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

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.

<PAGE>

Capital Appreciation Fund invests primarily in the equity securities of
companies with medium to large market capitalization.

Investment Limitations

<PAGE>

apply to "government securities" as defined for federal tax purposes.

Fund Management

Pricing of Shares

How to Purchase, Exchange and Redeem Shares

Purchase of Shares
Before you buy shares, please read the following information to make sure your
investment is accepted and credited properly.

<PAGE>

Dividends and Tax Matters

<PAGE>

State and Local Taxes.

Maryland Municipal Bond Fund:

Virginia Intermediate Municipal Bond Fund and Virginia Municipal Bond Fund:

<PAGE>

distribution attributable to interest on Virginia Obligations, Possessions
Obligations and United States Obligations.

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

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

Performance

<PAGE>

annual total returns into income results and capital gain or loss. The Funds
may quote their total returns on a before tax or after tax basis.

Portfolio Transactions

Advisory and Related Agreements

<PAGE>

As Custodian, Crestar Bank safeguards and controls the Funds' cash and
securities, handles the receipt and

<PAGE>

delivery of securities and collects income on Fund investments. For these
services, Crestar Bank is paid a monthly fee at an annual rate of up to .04% of
each Fund's average net assets.

Other Expense Information

Banking Law Matters

Description of Common Stock

<PAGE>

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

<PAGE>

Appendix

<PAGE>

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.

<PAGE>

on the underlying instrument. Indexed securities may be more volatile than the
underlying instrument itself.

<PAGE>

Because of the SEC's views on privately stripped government securities, a Fund
must treat them as it would

<PAGE>

Risks and Special Considerations Concerning Maryland Municipal Bond Fund

Many agencies and instrumentalities of the State government are authorized to
borrow money under legislation which expressly provides that the obligations

<PAGE>

Risks and Special Considerations Concerning Virginia Intermediate Municipal
Bond Fund and Virginia Municipal Bond Fund

<PAGE>

Summary of Bond Ratings*

Summary of Commercial Paper Ratings*

<TABLE>
<CAPTION>
Rating Services
-----------------
Moody's S&P
--------- -----
<S> <C> <C>
Highest quality ......... Prime-1 A-1
High quality ............ Prime-2 A-2
</TABLE>

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

<PAGE>

CrestFunds, Inc. -- Trust Class
PROSPECTUS
March 31, 1998
CrestFunds, 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"). This Prospectus, however,
relates only to the following three separate diversified investment portfolios
(each a "Portfolio" and, together, the "Portfolios"): Maximum Growth Portfolio,
Growth and Income Portfolio, and Balanced Portfolio. Each Portfolio offers
investors a range of asset allocation strategies designed to accommodate
different investors' philosophies and goals by investing in select underlying
funds in the CrestFunds(R) Family of Funds. The Portfolios are currently
managed by Crestar Asset Management Company (the "Adviser"). Each Portfolio
offers one class of shares, Trust Class shares, which are offered primarily to
tax-advantaged and other employee benefit or retirement accounts which have
entered into certain management, administration and/or servicing arrangements
with Crestar Bank or its affiliates.

MAXIMUM GROWTH PORTFOLIO
GROWTH AND INCOME PORTFOLIO
BALANCED PORTFOLIO

The Portfolios' 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 portfolios and its
return will fluctuate and is not guaranteed. When sold, the value of an
investment may be higher or lower than the amount originally invested.

Please read this Prospectus before investing. This Prospectus sets forth
concisely information about the above-referenced Portfolios that a prospective
investor should know before investing, and is designed to help investors decide
if a Portfolio's goals match their own. Retain this document for future
reference. A Statement of Additional Information (dated March 31, 1998) and an
Annual Report for the fiscal year ended November 30, 1997 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.

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 any offer of shares in the Portfolios. If given or made, such
other information or representations must not be relied upon as having been
authorized by the Portfolios or SEI Investments Distribution Co. (the
"Distributor"). This Prospectus and the related Statement of Additional
Information do not constitute an offer by any Portfolio or Distributor to sell
shares of any Portfolio to any person to whom it is unlawful to make such an
offer.

<PAGE>

Table of Contents

<TABLE>
<CAPTION>
Page
------
<S> <C>
Summary of Portfolio Expenses .................................. 3-LV
The Portfolios' Financial History .............................. 5-LV
Investment Objectives and Policies ............................. 7-LV
General Investment Policies of the Portfolios .................. 8-LV
Investment Limitations of the Portfolios ....................... 10-LV
Pricing of Shares and Valuation ................................ 10-LV
How to Purchase, Exchange and Redeem Shares .................... 10-LV
Dividends and Tax Matters ...................................... 11-LV
Performance .................................................... 12-LV
Portfolio Transactions ......................................... 13-LV
Advisory and Related Agreements ................................ 13-LV
Other Expense Information ...................................... 15-LV
Banking Law Matters ............................................ 15-LV
Description of Common Stock .................................... 15-LV
Description of Permitted Investments and Risk Factors .......... 16-LV
</TABLE>

2-LV

<PAGE>

Summary of Portfolio Expenses

The expense summary format below was developed for use by all mutual funds to
help investors make their investment decisions. The purpose of these tables is
to assist investors in understanding the various costs and expenses that an
investor in the Portfolios would bear. Investors should consider this expense
information for the Portfolios along with other important information in this
Prospectus, including each Portfolio's investment objective. Shares of the
Portfolios are currently offered, without payment of any sales charge,
primarily to tax-advantaged and other employee benefit or retirement accounts
with which Crestar Bank, or affiliates thereof, has entered into certain
management, administration, and/or servicing arrangements. Such relationships
may involve the payment of account or service fees not reflected in the tables
below.

The Portfolios invest in Trust Class shares of the underlying CrestFunds that
are also advised by the Adviser. The underlying CrestFunds primarily invest
directly in stocks, bonds and other securities. The Portfolios will not incur
any sales charges when they invest in underlying CrestFunds.

The Portfolios' Expense Table

The table below does not reflect any of the operating costs and investment
advisory fees of the underlying CrestFunds. The Portfolios, and ultimately the
Portfolios' shareholders, will indirectly bear their pro-rata share of the
expenses of the underlying CrestFunds. Investors would not incur the
Portfolios' expenses as detailed below if they were to perform their own review
and analysis and invest in the affiliated underlying CrestFunds directly.

Annual Portfolio Operating Expenses (as a percentage of average net assets) --
Net of Waivers and/or Reimbursements:

<TABLE>
<CAPTION>
Maximum Growth Growth And Income Balanced
Portfolio Portfolio Portfolio
---------------- ------------------- ----------
<S> <C> <C> <C>
Advisory Fee (1) ..................... .08% .10% .12%
12b-1 Fees ........................... None None None
Other Expenses (2) ................... .17% .15% .13%
----- ----- -----
Total Operating Expenses (3) ......... .25% .25% .25%
</TABLE>

- ----------
(1) The Adviser has voluntarily agreed to waive its advisory and management
fees and/or reimburse certain expenses to keep the total operating
expenses of each Portfolio from exceeding .25% of each Portfolio's total
assets. Absent fee waivers and/or expense reimbursements, the advisory
fees for each Portfolio would be .25%.

(2) SEI Fund Resources (the "Administrator") has voluntarily agreed to waive
its fee for each Portfolio for a twelve month period, effective on the
commencement of operations. Absent fee waivers and/or expense
reimbursements, "Other Expenses" are estimated to be .48% for the Maximum
Growth Portfolio, .34% for the Growth and Income Portfolio, and .17% for
the Balanced Portfolio.

(3) Absent fee waivers and/or expense reimbursements, total operating expenses
for the Maximum Growth Portfolio, Growth and Income Portfolio, and
Balanced Portfolio would be .73%, .59% and .42%, respectively.

Explanation of Annual Portfolio Operating Expenses. Advisory fees are paid by
the Portfolios to the Adviser for managing the Portfolios' investments and
business affairs (see "Advisory and Related Agreements"). Advisory fees and
Other Expenses are reflected in each Portfolio's share price and are not
charged directly to individual shareholder accounts. The expenses and fees of
the underlying CrestFunds are not reflected in the above expense table.

Example Reflecting Expenses of the Portfolios and the Underlying CrestFunds

You would pay the following direct and indirect expenses on a $1,000 investment
in a Portfolio, assuming the Portfolios' share of the expenses incurred by the
underlying CrestFunds ("Indirect Expenses"), as set forth below in "Ranges of
the Portfolios' Share of Indirect Expenses", and further assuming (1) 5% annual
return and (2) redemption at the end of each time period:

<TABLE>
<CAPTION>
Portfolio 1 Year 3 Years 5 Years 10 Years
- -------------------------------------- -------- --------- --------- ---------
<S> <C> <C> <C> <C>
Maximum Growth Portfolio ............. $13 $39 $68 $149
Growth and Income Portfolio .......... $12 $38 $64 $140
Balanced Portfolio ................... $12 $37 $61 $136
</TABLE>

Explanation of Example. This hypothetical example illustrates the expenses
associated with a $1,000 investment over periods of 1 and 3 years based on the
expenses in the table above and an assumed annual return of

3-LV

<PAGE>

5%. The Example includes Indirect Expenses for the underlying CrestFunds' most
recent fiscal year. The Indirect Expenses are calculated by taking the midpoint
of the ranges of Indirect Expenses applicable to each Portfolio, as set forth
below in "Ranges of the Portfolios' Share of Indirect Expenses." The actual
amount of Indirect Expenses will fluctuate each time the Portfolios' assets are
reallocated among the underlying CrestFunds, which are used in calculating the
ranges of the Portfolios' share of Indirect Expenses. The return of 5% and
expenses should not be considered indications of actual or expected performance
or expenses, both of which may vary.

Expenses of the Underlying CrestFunds

The chart below provides the total operating expense ratios for the underlying
CrestFunds, which are used in calculating the ranges of the Portfolios' share
of Indirect Expenses. The following figures are based on historical expenses
for each underlying fund's most recently reported fiscal year end and are
calculated as a percentage of average net assets of each underlying fund.

<TABLE>
<CAPTION>
Asset Class Expense Ratio
- ------------------------------------ --------------
<S> <C>
Cash Reserve Fund .................. .65%
Limited Term Bond Fund ............. .75%
Intermediate Bond Fund ............. .87%
Government Bond Fund ............... .66%
Value Fund ......................... 1.02%
Capital Appreciation Fund .......... 1.02%
Special Equity Fund ................ 1.01%
</TABLE>

Ranges of the Portfolios' Share Of Indirect Expenses

Based upon the current asset allocation percentages for each Portfolio (see
"Investment Objectives and Policies") and the above expense ratios for the
underlying CrestFunds, the ranges of the weighted average of the expense ratios
of the underlying CrestFunds in which each Portfolio currently expects to
invest are as follows:

<TABLE>
<CAPTION>
Ranges Of
Indirect Expense
Portfolio Ratios
- ------------------------------------- -----------------
<S> <C>
Maximum Growth Portfolio ............ .94 - 1.02%
Growth and Income Portfolio ......... .84 - .97%
Balanced Portfolio .................. .79 - .94%
</TABLE>

4-LV

<PAGE>

The Portfolios' Financial History

Maximum Growth Portfolio

<TABLE>
<CAPTION>
Trust Class
---------------------------
Period from July 1, 1997**
to November 30, 1997
---------------------------
<S> <C>
Selected Per-Share Data
Net asset value, beginning of year ..................................................... $ 10.00
-------
Income from investment operations:
Net investment income .................................................................. 0.032
Net realized and unrealized gain/(loss) on investments ................................. 0.650
-------
Net investment income .................................................................. ( 0.032)
Capital gains .......................................................................... --
Total distributions .................................................................... ( 0.032)
-------
Net asset value, end of year ........................................................... $ 10.65
=======
Total Return ........................................................................... 6.82%*
Ratios and Supplemental Data
Net assets, end of year (thousands) .................................................... $13,712
Ratio of expenses to average daily net assets (1) ...................................... 0.25%*
Ratio of net investment income to average daily net assets ............................. 0.72%*
Portfolio turnover rate ................................................................ 34%

(1) During the years, 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: ......................................................... 0.73%*
</TABLE>

* Annualized.
** Commencement of operations -- June 30, 1997.

Growth and Income Portfolio

<TABLE>
<CAPTION>
Trust Class
---------------------------
Period from July 1, 1997**
to November 30, 1997
---------------------------
<S> <C>
Selected Per-Share Data
Net asset value, beginning of year ..................................................... $ 10.00
-------
Income from investment operations:
Net investment income .................................................................. 0.091
Net realized and unrealized gain/(loss) on investments ................................. 0.506
-------
Net investment income .................................................................. ( 0.087)
Capital gains .......................................................................... --
Total distributions .................................................................... ( 0.087)
-------
Net asset value, end of year ........................................................... $ 10.51
=======
Total Return ........................................................................... 5.97%*
Ratios and Supplemental Data
Net assets, end of year (thousands) .................................................... $22,521
Ratio of expenses to average daily net assets (1) ...................................... 0.25%*
Ratio of net investment income to average daily net assets ............................. 2.11%*
Portfolio turnover rate ................................................................ 25%

* Annualized.
** Commencement of operations -- June 30, 1997.

5-LV

<PAGE>

Balanced Portfolio

<TABLE>
<CAPTION>
Trust Class
---------------------------
Period from July 1, 1997**
to November 30, 1997
---------------------------
<S> <C>
Selected Per-Share Data
Net asset value, beginning of year ..................................................... $ 10.00
--------
Income from investment operations:
Net investment income .................................................................. 0.116
Net realized and unrealized gain/(loss) on investments ................................. 0.454
--------
Net investment income .................................................................. ( 0.110)
Capital gains .......................................................................... --
Total distributions .................................................................... ( 0.110)
--------
Net asset value, end of year ........................................................... $ 10.46
========
Total Return ........................................................................... 5.70%*
Ratios and Supplemental Data
Net assets, end of year (thousands) .................................................... $ 89,442
Ratio of expenses to average daily net assets (1) ...................................... 0.25%*
Ratio of net investment income to average daily net assets ............................. 2.66%*
Portfolio turnover rate ................................................................ 43%

* Annualized.
** Commencement of operations -- June 30, 1997.

6-LV

<PAGE>

Investment Objectives and Policies

The Portfolios provide investors with the opportunity to pursue three distinct
asset allocation strategies implemented through investments in shares of
selected CrestFunds. By investing in the Portfolios, investors have the
opportunity to diversify and allocate their assets among the broad range of
funds in CrestFunds. The Adviser simplifies the diversification and asset
allocation process by reviewing, analyzing, selecting, monitoring, reallocating
and rebalancing each Portfolio's holdings of CrestFunds for investors.

The assets of each Portfolio will be allocated among underlying CrestFunds in
accordance with its investment objective, the Adviser's outlook for the
economy, the financial markets and the relative market valuations of the
underlying CrestFunds. Each Portfolio has the ability to invest its assets
allocated to a particular asset class in one or more of the underlying
CrestFunds, which have differing investment objectives, policies and risk
characteristics (see "Investments in Shares of the Underlying CrestFunds"). The
risks associated with investing in a Portfolio will vary depending upon how the
assets within its asset classes are allocated from time to time among the
underlying CrestFunds. Although the Portfolios currently expect to invest in
one or more of the underlying CrestFunds identified below, the Adviser has the
discretion to change the particular CrestFunds used as underlying investments
for the Portfolios. If the Adviser determines in the future that it is in a
Portfolio's best interest, the Adviser may substitute or include other
underlying CrestFunds, including CrestFunds that do not currently exist.

Cash Reserve Fund
Limited Term Bond Fund
Intermediate Bond Fund
Government Bond Fund
Capital Appreciation Fund
Special Equity Fund
Value Fund

The investment objective of each Portfolio is set forth below. Each Portfolio's
objective, the asset allocation percentage ranges described below, the list of
underlying CrestFunds described above, and those policies identified as
non-fundamental may be changed by the Company's Board of Directors without
shareholder approval. A Portfolio's investment policies identified as
fundamental may not be changed except by approval of the majority of the
outstanding shares of that Portfolio. The Adviser will manage each Portfolio
consistent with that Portfolio's investment objective and policies. There is no
assurance that a Portfolio will achieve its investment objective. For more
information regarding each Portfolio's investment policies, please refer to the
Statement of Additional Information.

Maximum Growth Portfolio

The Maximum Growth Portfolio seeks to provide a high level of capital
appreciation, without regard to current income. Under normal market conditions,
at least 80% of the Portfolio's total assets will be invested in shares of
underlying CrestFunds that invest primarily in equity securities that seek
capital appreciation. The Portfolio's remaining assets may be invested in
shares of underlying CrestFunds that invest primarily in fixed-income
securities, shares of underlying CrestFunds that are money market funds,
securities issued by the U.S. Government, its agencies or instrumentalities,
repurchase agreements and short-term paper.

In general, relative to the other Portfolios, the Maximum Growth Portfolio
should offer investors the potential for a high level of capital growth, and
the potential for a lower level of current income, while subjecting investors
to a medium to high level of principal risk. The Portfolio currently plans to
invest in shares of the following underlying CrestFunds within the percentage
ranges set forth below:

<TABLE>
<CAPTION>
Investment Range
(Percent of the Maximum
Asset Class Growth Portfolio's Assets)
- --------------------------- ---------------------------
<S> <C>
Equity .................... 80-100%
Value Fund
Capital Appreciation Fund
Special Equity Fund
Money Market .............. 0-20%
Cash Reserve Fund

</TABLE>

Growth and Income Portfolio
The Growth and Income Portfolio seeks to provide long-term capital
appreciation, with current income as a secondary objective. Under normal market
conditions, at least 80% of the Portfolio's total assets will be invested in
shares of underlying CrestFunds that invest primarily in either equity
securities that seek capital appreciation, or invest primarily in fixed-income
securities that seek income. The Portfolio's remaining assets may be invested
in shares of underlying CrestFunds that are money market funds, securities
issued by the U.S. Government, its agencies or instrumentalities, repurchase
agreements and short-term paper.

7-LV

<PAGE>

In general, relative to the other Portfolios, the Growth and Income Portfolio
should offer investors the potential for a medium to high level of capital
growth and the potential for a medium level of income, while subjecting
investors to a medium level of principal risk. The Portfolio currently plans to
invest in shares of the following underlying CrestFunds within the percentage
ranges set forth below:

<TABLE>
<CAPTION>
Investment Range
(Percent of the Growth and
Asset Class Income Portfolio's Assets)
- --------------------------- ---------------------------
<S> <C>
Equity .................... 60-80%
Value Fund
Capital Appreciation Fund
Special Equity Fund
Bond ...................... 20-40%
Limited Term Bond Fund
Intermediate Bond Fund
Government Bond Fund
Money Market .............. 0-20%
Cash Reserve Fund

</TABLE>

Balanced Portfolio
The Balanced Portfolio seeks both capital appreciation and current income.
Under normal market conditions, the Portfolio will invest primarily in shares
of underlying CrestFunds that invest primarily in equity securities, but at
least 25% of the Portfolio's total assets will be invested in shares of
underlying CrestFunds that invest primarily in fixed-income securities. The
Portfolio's remaining assets may be invested in shares of underlying CrestFunds
that are money market funds, securities issued by the U.S. Government, its
agencies or instrumentalities, repurchase agreements and short-term paper.

In general, relative to the other Portfolios, the Balanced Portfolio should
offer investors a balanced level of income and capital appreciation, while
subjecting investors to a lower level of principal risk. The Portfolio
currently plans to invest in shares of the following underlying CrestFunds
within the percentage ranges set forth below:

<TABLE>
<CAPTION>
Investment Range
(Percent of the Balanced
Asset Class Portfolio's Assets)
- --------------------------- -------------------------
<S> <C>
Equity .................... 40-70%
Value Fund
Capital Appreciation Fund
Special Equity Fund
Bond ...................... 30-60%
Limited Term Bond Fund
Intermediate Bond Fund
Government Bond Fund
Money Market .............. 0-20%
Cash Reserve Fund

</TABLE>

General Investment Policies of the
Portfolios

To achieve each Portfolio's investment objective, the Adviser will attempt to
identify and select a diversified portfolio of underlying CrestFunds. In the
selection process, the Adviser analyzes many factors, including the underlying
CrestFunds' investment objectives, total return, volatility and expenses. Each
Portfolio invests a percentage of its assets, within percentage ranges the
Adviser believes appropriate, in select underlying CrestFunds, which are
separately-managed series of the Company. The percentages will reflect the
extent to which each Portfolio invests in the particular market segment
represented by each underlying fund in CrestFunds, and the varying degrees of
potential investment risk and reward represented by each Portfolio's
investments in those corresponding underlying funds. These percentage ranges
may change when it is appropriate in light of each Portfolio's investment
objective. Each Portfolio may invest up to 100% of its assets in shares of the
underlying CrestFunds. In addition, when the Adviser deems it appropriate, for
temporary defensive purposes, each Portfolio may invest 100% of its assets
directly in securities issued by the U.S. Government or its agencies or
instrumentalities, repurchase agreements, short-term paper and shares of
underlying CrestFunds that are money market funds (and shares of unaffiliated
money market funds, as permitted by the SEC). To the extent that a Portfolio is
engaged in temporary defensive investing, it will not be pursuing its
investment objective. When the Adviser deems it appropriate, in order to meet
liquidity needs, each Portfolio may invest its assets directly in securities
issued by the U.S. Government or its agencies or instrumentalities, repurchase
agreements, short-term paper and shares of underlying CrestFunds that are money
market funds (and shares of unaffiliated money market funds, as permitted by
the SEC).

Investments in Shares of the Underlying CrestFunds

Each of the underlying CrestFunds pursues its own investment objective by
investing in particular types of securities. Each underlying fund's objectives
and primary investment policies are set forth below.

Cash Reserve Fund -- The Cash Reserve Fund, a money market fund, seeks to
provide high current income to the extent consistent with the preservation of
capital and the maintenance of liquidity by investing in high quality, U.S.
dollar-denominated money market instruments of U.S. and foreign issuers,
including floating and variable rate instruments.

8-LV

<PAGE>

Limited Term Bond Fund--The Limited Term Bond Fund seeks to provide a high
level of current income by investing exclusively in investment-grade
fixed-income securities of U.S. and foreign issuers. The Fund is managed to
maintain a dollar-weighted average portfolio maturity of between 1 and 5 years.

Intermediate Bond Fund--The Intermediate Bond Fund seeks to provide a high
level of current income by investing exclusively in investment-grade fixed-
income securities of U.S and foreign issuers. The Fund is managed to maintain a
dollar-weighted average portfolio maturity of between 5 and 10 years.

Government Bond Fund--The 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. In seeking current income, the Fund also may
consider the potential for capital gain. 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.

Value Fund--The 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 U.S and foreign companies with large market
capitalizations.

Capital Appreciation Fund--The Capital Appreciation Fund seeks to provide
long-term capital appreciation by investing primarily in the equity securities
of U.S and foreign companies with medium to large market capitalizations.

Special Equity Fund--The Special Equity Fund seeks to provide long-term capital
appreciation by investing primarily in the equity securities of U.S and foreign
companies with small to medium market capitalizations.

The following risk factors are associated with a Portfolio's investments in
underlying CrestFunds:

- - When the Portfolios invest in underlying CrestFunds, shareholders will be
exposed to the risks associated with investing in those underlying
CrestFunds. Those risks include risks associated with investing in foreign
securities, asset-backed securities, delayed delivery transactions,
American Depositary Receipts, mortgage-backed securities, repurchase
agreements and reverse repurchase agreements.

- - The Portfolios and the underlying CrestFunds have the same officers,
Directors and investment adviser, which may give rise to certain conflicts
of interest.

- - Each Portfolio's investment performance is substantially related to the
investment performance of the underlying CrestFunds.

- - Investing in the underlying CrestFunds involves certain additional expenses
that would not be present in a direct investment in the underlying
CrestFunds. When a Portfolio invests in underlying CrestFunds, shareholders
bear not only the Portfolio's expenses, but also the expenses of the
underlying CrestFunds.

Summary information about the principal types of investments made by the
underlying CrestFunds is set forth in the "Description of Permitted Investments
and Risk Factors." More information about the underlying CrestFunds is
contained in the Portfolios' Statement of Additional Information, and in the
Prospectus and Statement of Additional Information relating to the underlying
CrestFunds, which may be obtained without charge by writing the Distributor at
Oaks, Pennsylvania 19456, or by calling 1-800-273-7827.

Investments In Other Securities

In addition to shares of the underlying CrestFunds, the Portfolios may invest
in the following types of securities, which are described briefly below. The
Portfolios 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 of their respective investment objectives and policies.

Bankers' Acceptances. Bankers' acceptances are time drafts or bills of exchange
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. Maturities are generally six months or
less.

Certificates Of Deposit. Certificates of deposit are interest bearing
instruments with a specific maturity. They are issued by banks and savings and
loan institutions in exchange for the deposit of funds and normally can be
traded in the secondary market prior to maturity.

Commercial Paper. Commercial paper is comprised of short-term obligations
issued by banks, broker-dealers, municipalities, corporations or other entities
for purposes such as financing their current obligations.

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.

Repurchase Agreements. In a repurchase agreement, a mutual fund buys a security
at one price and

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simultaneously agrees to sell it back at a higher price. In the event of
bankruptcy of the other party to a repurchase agreement, the mutual fund could
experience delays in recovering its cash. To the extent that, in the meantime,
the value of securities purchased had decreased, the mutual fund could
experience a loss.

Short-Term Paper. Short-term paper is comprised of instruments, such as notes
and bills of exchange, that are payable on demand or that have a maturity of
nine months or less.

Time Deposits. Time deposits are non-negotiable receipts issued by a bank in
exchange for the deposit of funds. Like a certificate of deposit, it earns a
specified rate of interest over a definite period of time; however, it cannot
be traded in the secondary market.

Investment Limitations
of the Portfolios

The following summarizes each Portfolio's principal investment limitations. A
complete listing is contained in the Statement of Additional Information. These
limitations are fundamental and may not be changed without shareholder
approval. Except for the Portfolios' percentage limitations concerning
borrowing, 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.

1. Each Portfolio may not, with respect to 75% of its total assets, purchase
the securities of any issuer (other than securities of other investment
companies and 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.

2. Each Portfolio may borrow money for temporary or emergency purposes in an
amount not exceeding 5% of the Portfolio's total assets. In addition, each
Portfolio may borrow money in excess of 5% of the Portfolio's total assets for
any reason (a) by borrowing from banks or (b) by engaging in reverse repurchase
agreements.

Pricing of Shares and Valuation

The net asset value ("NAV") per share of each Portfolio is determined by
dividing the total market value of such Portfolio's investments and other
assets, less any liabilities, by the total number of outstanding shares of that
Portfolio. The assets of each Portfolio consist primarily of shares of the
underlying CrestFunds, which are valued at their respective net asset values.
Excluding shares of the underlying CrestFunds, portfolio securities generally
are valued at the last quoted sales price for such securities. Securities
traded only on over-the-counter markets are valued at the last over-the-counter
bid price. Securities for which there were no transactions on the valuation
date are valued at the most recent quoted bid price. A pricing service may be
used to obtain last sale price of each security held. Securities for which
market quotations are not readily available are valued at fair value as
determined by the Board of Directors. NAV per share is determined daily as of
the regularly-scheduled close of normal trading on the New York Stock Exchange
("NYSE") (normally, 4:00 p.m. Eastern time) on each Business Day.

How to Purchase, Exchange and
Redeem Shares

Distributor
Shares of each Portfolio are sold on a continuous basis by the Portfolios'
Distributor. The Distributor is a registered broker-dealer with principal
offices at Oaks, Pennsylvania 19456.

Purchase of Shares
Trust Class shares are offered continuously to tax-advantaged and other
employee benefit or retirement accounts with which Crestar Bank, or an
affiliate thereof, has entered into certain management, administration, and/or
servicing agreements. For further information on opening an account, contact
your plan sponsor or financial intermediary for the services and procedures
which pertain to your account. Sales personnel of financial institutions
distributing the Portfolios' shares and other persons entitled to receive
compensation for selling such shares may receive differing compensation.

Purchases will be effected only on days on which the NYSE and the Portfolios'
custodian, Crestar Bank, are open for business ("Business Days"). The issuance
of shares is recorded on the books of the Portfolios, and share certificates
will not be issued for shares of the Portfolios. The Portfolios reserve the
right to reject any purchase order. The Distributor may accept investments of
smaller amounts, at its discretion.

Effective Time of Purchases
Purchase orders for the Portfolios must be received by Crestar Bank before the
regular close of business of the NYSE (currently, 4:00 p.m., Eastern time) on a
Business Day. Orders are priced according to the NAV determined on that day.
Any orders received after that time will be processed at the NAV next
calculated. All purchases must be paid for in U.S. dollars and checks must be
drawn on U.S. banks. Purchase orders will be executed by 4:00 p.m., Eastern
time,

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on the Business Day on which the purchase order is received in good order by
Crestar Bank. Payment for the purchase is expected at the time of the order but
must be received within 5 business days of the date of the order. Each
Portfolio reserves the right to withhold redemption proceeds until it is
reasonably satisfied that checks received as payment have cleared (which can
take up to 7 days). If available funds are not received within 5 business days,
the order may be canceled and notice thereof will be provided to the party
placing the order.

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

Exchanges
Investors may exchange shares of the Portfolios for Trust Class shares of other
Portfolios. All accrued dividends credited to the shareholder up to the date of
exchange are paid to the shareholder at the end of the month. Each Portfolio
reserves the right to refuse exchanges if the Portfolio would be unable to
invest effectively in accordance with its investment objective and policies or
would otherwise be affected adversely. The Portfolios further reserve the right
to terminate or modify the exchange privilege in the future. Exchanges are
subject to the same 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.

Investors may also exchange shares of the Portfolios for Trust Class shares,
Investors Class A shares or Investors Class B shares of the underlying
CrestFunds. Each Fund reserves the right to redeem Trust Class shares held by
shareholders who are not eligible to purchase Trust Class shares if such shares
are not converted to Investors Class A shares or Investors Class B shares after
30 days.

To exchange Trust Class shares of the Portfolios for shares of other Portfolios
or the underlying CrestFunds, such shares must be available for purchase by
investors, the investor must be eligible to purchase such shares, and the
shares must be offered by the investor's plan sponsor or financial
intermediary. Exchange purchases by any person or group may be refused if, in
the Adviser's judgment, a Portfolio or a Fund would be unable to invest
effectively in accordance with its investment objective and policies, or would
otherwise potentially be adversely affected.

Redemption of Shares
Customers may redeem all or part of their Trust Class shares of a Portfolio
held through their employee benefit or retirement account in accordance with
instructions and limitations pertaining to their account. It is the
responsibility of each plan sponsor or financial intermediary to transmit
redemption orders to Crestar Bank and to credit the customers' accounts with
the redemption proceeds on a timely basis. No charge for wiring redemption
payments is imposed by the Portfolios, although banks may charge their customer
accounts for services provided in connection with the redemption of shares of
the Portfolios. Information concerning these services and any charges are
available from the plan sponsor or financial intermediary. Redemption orders
are effected at the NAV next determined after receipt of the order in good
order by Crestar Bank. All dividends credited to the shareholder up to the date
of redemption are paid to the shareholder at the end of the month.

Crestar Bank reserves the right to wire redemption proceeds within 7 days
following receipt of the order.

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

With respect to tax-advantaged and other employee benefit or retirement
accounts, any distributions personally received by a shareholder from the
account prior to age 59 1/2 are generally subject to a 10% penalty tax, as well
as to ordinary income taxes. To avoid the 10% penalty, such shareholders must
generally roll over your distribution to another tax-advantaged account or
tax-qualified retirement plan (if permitted) within 60 days.

Dividends and Tax Matters

Distributions. Income dividends from the Portfolios are declared and
distributed monthly. All Portfolios distribute substantially all of their net
investment income and capital gains (if any) to shareholders

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each year. Unless the Portfolios are instructed otherwise, all income dividends
and capital gains distributions are automatically reinvested into additional
shares of the Portfolio immediately upon payment thereof.

Federal Taxes. Each Portfolio'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 Portfolio 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 record keeping.

Capital Gains. Shareholders may realize a capital gain or loss when they redeem
or exchange shares. For most types of accounts, the Portfolios 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 the
individual's personal tax position, shareholders should keep their regular
account statements to use in determining their tax.

"Buying a Dividend." On the ex-dividend date for an income dividend or
distribution from capital gains, each Portfolio'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.

Other Tax Information. In addition to federal taxes, an investor may be subject
to state or local taxes depending on the laws in such investor's area. An
investor should consult a tax adviser concerning the application of state and
local taxes to investments in the Portfolios, which may differ from the federal
income tax consequences described above. When an investor signs an account
application, such investor will be asked to certify that the social security or
taxpayer identification number is correct and that the investor is not subject
to backup withholding for failing to report income to the IRS. If an investor
violates IRS regulations, the IRS can require the Portfolios to withhold 31% of
such investor's taxable distributions and redemptions. Please refer to the
Statement of Additional Information for more information regarding taxes.

Tax-Deferred Investments. Individual retirement accounts and participants in
other tax-qualified retirement plans generally will not be subject to federal
tax liability on either income or capital gain distributions from the
Portfolios. Rather, participants in such plans will be taxed when they begin
taking distributions from their individual retirement accounts and/or the
plans. There are various restrictions under the Internal Revenue Code on
eligibility, contributions and withdrawals, depending on the type of tax-
deferred account or tax-qualified retirement plan. The rules governing
tax-deferred accounts and tax-qualified retirement plans are complex, and
failure to comply with the governing rules and regulations may result in a
substantial cost to an investor, including the loss of tax advantages and the
imposition of additional taxes and penalties by the IRS. An investor should
consult with a tax professional on the specific rules governing your own plan.

Performance

Performance of a Portfolio may be quoted in advertising in terms of yield,
effective yield or total return, as appropriate. Performance figures are based
on historical results and are not intended to indicate future performance.

Yield is calculated by dividing the net investment income (net of expenses)
earned by the Portfolio over a 30-day period, 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 Portfolio's yield may not equal its distribution
rate, the income paid to an account or the income reported in the Portfolio's
financial statements.

Total returns are based on the overall dollar or percentage change in value of
a hypothetical investment in a Portfolio and assumes that all dividends and
capital gain distributions are reinvested. A cumulative total return reflects a
Portfolio'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 Portfolio's performance had
been constant over the entire period. Because average annual total returns tend
to smooth out variations in the Portfolios' returns, investors should recognize
that they are not the same as actual year-by-year results. When a Portfolio
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 Portfolios may

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separate their cumulative and average annual total returns into income results
and capital gain or loss. The Portfolios may quote their total returns on a
before tax or after tax basis.

Portfolio Transactions

As discussed above, the Portfolios will primarily invest in shares of the
underlying CrestFunds. Orders for transactions in these underlying funds will
be placed with SEI Investments Distribution Co., distributor for the underlying
CrestFunds and the Portfolios. The Portfolios may execute brokerage or other
agency transactions through an affiliate of the Distributor or through an
affiliate of the Adviser, which are registered broker-dealers.

To ensure that a Portfolio's assets are allocated in accordance with its
investment objective, the Adviser will reallocate a Portfolio's assets within
the percentage ranges shown previously (see "Investment Objectives and
Policies"). A Portfolio's investments are continuously monitored and are
reallocated as often as the Adviser deems appropriate. In addition, to ensure
that a Portfolio's allocations fall within the selected percentage ranges, the
Adviser will adjust or rebalance the allocation of underlying CrestFunds in
each Portfolio. Portfolio allocations are typically reviewed once every month
for rebalancing at the discretion of the Adviser. If, however, market
conditions warrant, the Adviser may make more frequent reallocation and
rebalancing decisions, which will result in a higher portfolio turnover rate.
The Portfolios will purchase or sell shares of the underlying CrestFunds and
other portfolio securities: (a) to accommodate purchases and redemptions of
each Portfolio's shares; (b) in response to market or other economic
conditions; and (c) to maintain or modify the allocation of each Portfolio's
assets among the underlying portfolios within the percentage limits deemed from
time to time by the Adviser to be appropriate. It is important to note,
however, that the portfolio turnover rate of certain of the underlying
CrestFunds may exceed 100%. Such a turnover rate may result in higher
transaction costs and may result in additional tax consequences for
shareholders (including the Portfolios).

The frequency of portfolio transactions, also known as a Portfolio's portfolio
turnover rate, will vary from year to year depending on market conditions. For
the fiscal year ended November 30, 1997, the Portfolio's portfolio turnover
rates were: Maximum Growth Portfolio, 34%; Growth and Income Portfolio, 25%;
and Balanced Portfolio, 43%.

Advisory and Related Agreements

The Adviser
Crestar Asset Management Company (the "Adviser"), formerly Capitoline
Investment Services, Incorporated, 919 East Main Street, Richmond, Virginia
23219, provides investment advisory services to each of the Portfolios subject
to the general supervision of the Company's Board of Directors.

The Adviser is a wholly-owned subsidiary of Crestar Bank, which is a subsidiary
of Crestar Financial Corporation, a MidAtlantic Region banking organization.
Crestar Financial Corporation had total assets of approximately $22.2 billion
as of December 31, 1997. 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.")

Portfolio Management
The Portfolios will be managed by the Adviser's Policy & Strategy Committee.
The Adviser's Policy & Strategy Committee is comprised of the President & Chief
Investment Officer, Director of Equity Investment Management, Director of Fixed
Income Investment Management, Director of Cash Investment Management and senior
portfolio managers. The Committee meets regularly, usually on a weekly basis,
to review the financial market outlook and implement asset allocation
adjustments as needed.

Performance Information for the Adviser's Asset Allocation Programs

The assets now in the Maximum Growth, Growth and Income, and Balanced
Portfolios previously were managed by Crestar Asset Management Company pursuant
to discretionary asset allocation programs prior to each such Portfolio's
commencement of operations.

Set forth below is certain performance data for these asset allocation
programs, which is relevant because the asset allocation programs were managed
using substantially the same investment objectives, policies and restrictions
as apply to each respective Portfolio. Please note, however, that the asset
allocation programs were not subject to certain investment limitations,
diversification requirements, and other restrictions imposed by the Investment
Company Act of 1940 and the Internal Revenue Code, which, if they had been
applicable, may have adversely affected the asset allocation programs'
performance. Moreover,

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the performance data shown below does not represent the historical performance
of any Portfolio and should not be interpreted as indicative of the future
performance of any Portfolio.

The asset allocation programs did not incur expenses that directly correspond
to the advisory, administrative, and other fees to which the Portfolios are
subject. Accordingly, the performance information for the asset allocation
programs in the table below has been adjusted by applying the total expense
ratios before voluntary waivers and reimbursements for the corresponding
Portfolio, as disclosed herein, which reduced the actual performance of the
asset allocation programs. The Portfolios, however, currently operate subject
to total expense ratios which, as a result of certain waivers of fees and
reimbursements of expenses, are lower expense ratios than those applied to the
performance information below.

The average annual total returns for each asset allocation program (adjusted to
reflect Portfolio expenses, before voluntary waivers and reimbursements) for
the one-year and three-year periods ended June 30, 1997, as well as the period
from inception of the asset allocation programs through that date, were as
follows:

<TABLE>
<CAPTION>
One Year Three Years Since Inception
(Ending 6/30/97) (Ending 6/30/97) (1/1/93-6/30/97)
------------------ ------------------ -----------------
<S> <C> <C> <C>
Maximum Growth Asset Allocation Program(1) ............ 21.66% 18.96% 13.75%
Growth and Income Asset Allocation Program(2) ......... 17.10% 15.44% 11.25%
Balanced Asset Allocation Program(3) .................. 15.21% 13.77% 10.12%
</TABLE>

- ---------------------
(1) After voluntary waivers and reimbursements currently in effect, the average
annual total returns for the Maximum Growth Asset Allocation Program for
the above periods were 22.22%, 19.50% and 14.28%, respectively.
(2) After voluntary waivers and reimbursements currently in effect, the average
annual total returns for the Growth and Income Asset Allocation Program
for the above periods were 17.52%, 15.86% and 11.66%, respectively.
(3) After voluntary waivers and reimbursements currently in effect, the average
annual total returns for the Balanced Asset Allocation Program for the
above periods were 15.41%, 13.98% and 10.32%, respectively.

Advisory Agreements
The Company has entered into investment advisory agreements with the Adviser
("Advisory Agreements") on behalf of each Portfolio, pursuant to which the
Adviser is paid for its advisory services to each Portfolio at an annual rate
of .25% of the average daily net assets of each Portfolio. The Adviser, at its
sole discretion, may waive or reimburse a Portfolio for a portion of that
Portfolio's investment advisory fee in order to limit total operating expenses.
Any waiver, which may be discontinued at any time, has the effect of increasing
the Portfolio's yield for the period during which the waiver was in effect and
may not be recouped at a later date.

Administrator and Distributor
The Administrator, a Delaware business trust, provides the Company with
administrative services, including fund accounting, regulatory reporting,
necessary office space, equipment, personnel and facilities. SEI Investments
Management Corporation, a wholly-owned subsidiary of SEI Investments Company
("SEI"), is the owner of all beneficial interest in the Administrator.

The Administrator is entitled to a fee of $40,000 annually for each Portfolio.
Commencing with the operation of each Portfolio, the Administrator has
voluntarily agreed to waive its fee for a twelve month period. The Distributor,
a wholly-owned subsidiary of SEI, provides the Company with distribution
services. Each Portfolio may execute brokerage or other agency transactions
through the Distributor for which the Distributor receives compensation.

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

As custodian, Crestar Bank safeguards and controls the Portfolios' cash and
securities, handles the receipt and delivery of securities and collects income
on portfolio investments. For these services, Crestar Bank is paid a monthly
fee at an annual rate of .03% of each Portfolio'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 Portfolios to
Crestar Bank pursuant to transfer agent or custodian agreements.

Directors and Officers
Pursuant to the Company's Articles of Incorporation, the Board of Directors
decides upon matters of general policy and reviews the actions of the Adviser,
Administrator and Distributor. The officers of the

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Company conduct and supervise its daily business operations.

Other Expense Information

For the purpose of the Adviser's obligation to reimburse expenses, each
Portfolio's annual expenses are estimated and accrued daily, and any
appropriate estimated payments will be made by the Adviser monthly. Each
Portfolio's expenses, which include Company expenses attributable to a
particular Portfolio, are allocated to that Portfolio. Expenses not directly
attributable to a particular Portfolio, are allocated among the Portfolios in
proportion to their average net assets.

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 the Adviser, Crestar Bank and any bank or bank affiliate may perform
processing or transfer agency or similar services described in this Prospectus
for each Portfolio 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 Portfolio and would implement
alternative means for continuing the servicing of such shareholders. In such
event, changes in the operation of the Portfolio 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

The Maximum Growth Portfolio, Growth and Income Portfolio, and Balanced
Portfolio are diversified portfolios of the Company. 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. Currently all the authorized stock
of the Company is divided into fifteen separate series: Maximum Growth
Portfolio Common Stock, Growth and Income Portfolio Common Stock, Balanced
Portfolio Common Stock, Cash Reserve Fund Common Stock, U.S. Treasury Money
Fund Common Stock, Tax Free Money Fund Common Stock, Limited Term Bond Fund
Common Stock, Intermediate Bond Fund Common Stock, Government Bond Fund Common
Stock, Maryland Municipal Bond Fund Common Stock, Virginia Intermediate
Municipal Bond Fund Common Stock, Virginia Municipal Bond Fund Common Stock,
Value Fund Common Stock, Capital Appreciation Fund Common Stock and Special
Equity Fund Common Stock, representing shares for each of the Company's fifteen
CrestFunds. The CrestFunds offer one or more of three classes of shares: Trust
Class shares, Investors Class A shares and Investors Class B shares, which
provide for variations in distribution and servicing costs, transfer agent
fees, voting rights and dividends. Such variations may affect performance. For
more information concerning these classes, please refer to the prospectus for
the underlying CrestFunds, contact the Distributor at Oaks, Pennsylvania 19456
or call 1-800-273-7827.

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 series or class,
unless the matter affects only one series or class or voting by a series or
class is required by law, in which case shares will be voted separately by the
series 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 series may, as set forth in the
Company's By-laws, call meetings of the Company or a series, 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 series. All shares, when
issued and paid for in accordance

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<PAGE>

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 Portfolios'
shares may be considered to control that Portfolio. As of March 27, 1998,
Crestar Bank was the record holder of more than 25% of the shares of the
following Portfolios:

<TABLE>
<CAPTION>
Portfolio Name Shareholder %
- ------------------------------------- ---------------------------- -----
<S> <C> <C>
Maximum Growth Portfolio ............ Crestar Bank, Richmond, VA 100%
Growth and Income Portfolio ......... Crestar Bank, Richmond, VA 100%
Balanced Portfolio .................. Crestar Bank, Richmond, VA 100%
</TABLE>

Description of Permitted Investments and Risk Factors

The following briefly describes the primary types of securities in which the
underlying CrestFunds may invest. The underlying CrestFunds 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 of their respective
investment objectives and policies, and their respective quality, maturity and
liquidity requirements. More detailed information about the underlying
CrestFunds' investments is contained in the Portfolio's Statement of Additional
Information, and in the Prospectus and Statement of Additional Information
relating to the underlying CrestFunds, which may be obtained without charge by
writing the Distributor at Oaks, Pennsylvania 19456, or by calling
1-800-273-7827.

American Depositary Receipts ("ADRs"). ADRs are securities, typically issued by
a U.S. financial institution (a "depositary"), that evidence ownership
interests in a security or a pool of securities issued by a foreign issuer and
deposited with the depositary. ADRs may be available through "sponsored" or
"unsponsored" facilities. A sponsored facility is established jointly by the
issuer of the security underlying the receipt and a depositary, whereas an
unsponsored facility may be established by a depositary without participation
by the issuer of the underlying security. Designed for use in U.S. securities
markets, ADRs are alternatives to the purchase of the underlying securities in
their national markets and currencies.

Equity Securities. Equity securities, such as common stocks, are units 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 precedence over the claims of those who own common stock. For the
most part, however, common stock has more potential for appreciation.
Investments in common stocks are subject to market risks which may cause their
prices to fluctuate over time. Changes in value of portfolio securities will
not necessarily affect cash income derived from these securities but will
affect a mutual fund's net asset value. Investments in small capitalization
companies involve greater risk than is customarily associated with larger, more
established companies due to the greater business risks of small size, limited
markets and financial resources, narrow product lines and the frequent lack of
depth of management.

Fixed-Income Securities. Fixed-income securities are debt obligations issued by
governments, corporations, municipalities and other borrowers. The market value
of fixed income investments will change in response to interest rate changes
and other factors. During periods of falling interest rates, the values of
outstanding fixed income securities generally rise. Conversely, during periods
of rising interest rates, the values of such securities generally decline.
Moreover, while securities with longer maturities tend to produce higher
yields, the prices of longer maturity securities are also subject to greater
market fluctuations as a result of changes in interest rates. Changes by
recognized agencies in the rating of any fixed income security and in the
ability of an issuer to make payments of interest and principal will also
affect the value of these investments.

Foreign Investments. Investing in foreign securities traded in the United
States involves risks in addition to the risks inherent in domestic
investments. Foreign investments may be affected by the strength of foreign
currencies relative to the U.S. dollar, or by political or economic
developments in foreign countries. Foreign companies may not be subject to
accounting standards or governmental supervision comparable to U.S. companies,
and there may be less public information about their operations. In addition,
foreign markets may be less liquid or more volatile than U.S. markets and may
offer less protection to investors. These risks are typically greater for
investments in less developed countries whose governments and financial markets
may be more susceptible to adverse political and economic developments. In
addition to the political and economic factors that can affect foreign
securities, a governmental issuer may be unwilling to repay principal and
interest when due, and may require that the conditions for payment be
renegotiated. These factors could make foreign investments, especially those in
developing countries more volatile. There is no limitation on the

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<PAGE>

amount each underlying corporate bond fund and equity fund may invest in
foreign securities or in any one country.

Investment-Grade Securities. Investment-grade securities include securities
rated BBB or higher by Standard & Poor's Corporation ("S&P") or Baa or higher
by Moody's Investors Service ("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.

Mortgage-Backed Securities. Mortgage-backed securities are securities issued by
government and non-government entities such as banks, mortgage lenders or other
financial institutions. These instruments entitle the holder to a share of all
interest and principal payments from mortgages underlying the security. The
mortgages backing these securities include conventional thirty-year fixed rate
mortgages, graduated payment mortgages, and adjustable rate mortgages. A
mortgage-backed security may be an obligation of the issuer backed by a
mortgage or pool of mortgages or a direct interest in an underlying pool of
mortgages. Some mortgage-backed securities, such as collateralized mortgage
obligations ("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.

Preferred Stock. 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.

U.S. Government Securities. U.S. Government securities are securities issued or
guaranteed by the U.S. Government or its agencies or instrumentalities. 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.

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<PAGE>

CREST
-----
FUNDS

A Family Of Mutual Funds
Managed By
Crestar Asset Management
Company