MEDALIST FUNDS, 485APOS, 1994-09-29

MEDALIST FUNDS
485APOS, 1994-09-29

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1933 Act File No. 33-36451
1940 Act File No. 811-6158

SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

Form N-1A

REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
X

Pre-Effective Amendment No.

Post-Effective Amendment No. 8 X

and/or

REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT OF
1940 X

Amendment No. 11 X

THE MEDALIST FUNDS

(Exact Name of Registrant as Specified in Charter)

Federated Investors Tower, Pittsburgh, Pennsylvania 15222-3779
(Address of Principal Executive Offices)

(412) 288-1900
(Registrant's Telephone Number)

John W. McGonigle, Esquire,
Federated Investors Tower,
Pittsburgh, Pennsylvania 15222-3779
(Name and Address of Agent for Service)

It is proposed that this filing will become effective:

immediately upon filing pursuant to paragraph (b)
on _________________ pursuant to paragraph (b)
X 60 days after filing pursuant to paragraph (a)
on pursuant to paragraph (a) of Rule 485.

Registrant has filed with the Securities and Exchange
Commission a declaration pursuant to Rule 24f-2 under the
Investment Company Act of 1940, and:

X filed the Notice required by that Rule on November 15,
1993; or
intends to file the Notice required by that Rule on or
about ____________; or
during the most recent fiscal year did not sell any
securities pursuant to Rule 24f-2 under the Investment
Company Act of 1940, and, pursuant to Rule 24f-2(b)(2), need
not file the Notice.

Copies to:

Thomas J. Donnelly, Esquire Charles H. Morin, Esquire
Houston, Houston & Donnelly Dickstein, Shapiro & Morin,
L.L.P.
2510 Centre City Tower 2101 L Street, N.W.
650 Smithfield Street Washington, D.C. 20037
Pittsburgh, Pennsylvania 15222

CROSS-REFERENCE SHEET

This Amendment to the Registration Statement of THE
MEDALIST FUNDS, which is comprised of seven portfolios, (1)
The U.S. Government Securities Fund (2) The Maryland Municipal
Bond Fund, (3) The Money Market Fund, (4) The Treasury Money
Market Fund, (5) The Stock Fund, and (6) The Virginia
Municipal Bond Fund, all of which are offered in two separate
classes of shares known as Investment Shares and Trust Shares,
and (7) The Tax-Free Money Market Fund, which does not
currently offer separate classes of shares, relates only to
The Stock Fund, and is comprised of the following:

PART A. INFORMATION REQUIRED IN A PROSPECTUS.

Prospectus Heading
(Rule 404(c) Cross Reference)

Item 1. Cover Page (1-7) Cover Page.
Item 2. Synopsis (1-7) Summary of Fund Expenses.
Item 3. Condensed Financial
Information To be filed by amendment.
Item 4. General Description of
Registrant (1-7) General Information;
Investment Objective;
Investment Policies; Investment
Limitations.
Item 5. Management of the Fund (1-7) The Medalist Funds
Information; (1-7) Management
of the Trust; (1-7)
Distribution of Shares; (1-6)
Distribution Plan (Investment
Shares only); (1-7)
Administration of the Funds; (1-
7) Expenses of the Funds and
Shares.
Item 6. Capital Stock and Other
Securities (1-7) Dividends; Capital Gains;
Shareholder Information;
Voting Rights; Massachusetts
Partnership Law; Tax
Information; Federal
Income Tax.
Item 7. Purchase of Securities Being
Offered (1-7) Net Asset Value; (1-7)
Investing in Shares; (1-7)
Share Purchases; (1-7) Minimum
Investment Required; (1-7) What
Shares Cost; (1-7) Certificates
and Confirmations; (1-6)
Exchange Privilege (Investment
Shares Only).
Item 8. Redemption or Repurchase (1-7) Redeeming Shares; (1-7)
By Telephone; (1-7) By Mail; (1-
7) Contingent Deferred Sales
Charge (Investment Shares
Only); (1-7) Systematic
Withdrawal Program (Investment
Shares only).
Item 9. Pending Legal Proceedings None.
PART B. INFORMATION REQUIRED IN A STATEMENT OF ADDITIONAL
INFORMATION.

Item 10. Cover Page (1-7) Cover Page.
Item 11. Table of Contents (1-7) Table of Contents.
Item 12. General Information and
History (1-7) General Information About
the Trust.
Item 13. Investment Objectives and
Policies (1-7) Investment Objective and
Policies.
Item 14. Management of the Fund (1-7) The Medalist Funds
Management.
Item 15. Control Persons and Principal
Holders of Securities Not Applicable.
Item 16. Investment Advisory and Other
Services (1-7) Investment Advisory
Services; Administrative
Services.
Item 17. Brokerage Allocation (1-7) Brokerage Transactions.
Item 18. Capital Stock and Other
Securities Not applicable.
Item 19. Purchase, Redemption and
Pricing of Securities Being
Offered (1-7) Purchasing Shares; (1-7)
Determining Net Asset Value; (1-
7) Redeeming Shares; (1-7)
Exchange Privilege (Investment
Shares only).
Item 20. Tax Status (1-7) Tax Status.
Item 21. Underwriters (1-7) Distribution Plan
(Investment Shares only).
Item 22. Calculation of Performance
Data (1-7) Performance Comparisons.
Item 23. Financial Statements To be filed by amendment.

THE MEDALIST FUNDS
(FORMERLY THE SIGNET SELECT
FUNDS)
TRUST SHARES
PROSPECTUS

NOVEMBER 30, 1994

- THE U.S. GOVERNMENT SECURITIES
FUND

- THE STOCK FUND

- THE VIRGINIA MUNICIPAL BOND FUND

- THE MARYLAND MUNICIPAL BOND FUND

- THE TREASURY MONEY MARKET FUND

- THE MONEY MARKET FUND

- THE TAX-FREE MONEY MARKET FUND

THE MEDALIST FUNDS

(FORMERLY THE SIGNET SELECT FUNDS)
TRUST SHARES
PROSPECTUS

The Medalist Funds (the "Trust"), an open-end, management investment company (a
mutual fund) is comprised of the seven separate investment portfolios set forth
below (collectively, the "Funds," individually, a "Fund"), each having a
distinct investment objective and policies. With the exception of The Tax-Free
Money Market Fund, which offers a single class of Shares, the Funds are offered
in two separate classes of shares known as Trust Shares and Investment Shares.

- The U.S. Government Securities Fund (formerly U.S. Government Income
Fund)

- The Stock Fund (formerly Value Equity Fund)

- The Virginia Municipal Bond Fund

- The Maryland Municipal Bond Fund

- The Treasury Money Market Fund

- The Money Market Fund

- The Tax-Free Money Market Fund

THE SHARES OFFERED BY THIS PROSPECTUS ARE NOT DEPOSITS OR OBLIGATIONS OF SIGNET
TRUST COMPANY OR SIGNET BANK, ARE NOT ENDORSED OR GUARANTEED BY SIGNET TRUST
COMPANY OR SIGNET BANK, AND ARE NOT INSURED BY THE FEDERAL DEPOSIT INSURANCE
CORPORATION, THE FEDERAL RESERVE BOARD, OR ANY OTHER GOVERNMENT AGENCY.
INVESTMENT IN THE SHARES OF THE U.S. GOVERNMENT SECURITIES FUND, THE STOCK FUND,
THE VIRGINIA MUNICIPAL BOND FUND, AND THE MARYLAND MUNICIPAL BOND FUND INVOLVES
INVESTMENT RISKS INCLUDING THE POSSIBLE LOSS OF PRINCIPAL. THE TREASURY MONEY
MARKET FUND, THE MONEY MARKET FUND, AND THE TAX-FREE MONEY MARKET FUND ATTEMPT
TO MAINTAIN A STABLE NET ASSET VALUE OF $1.00 PER SHARE; THERE CAN BE NO
ASSURANCE THAT THESE FUNDS WILL BE ABLE TO DO SO.

This prospectus relates only to the Trust Shares of those Funds offering classes
and to shares of The Tax-Free Money Market Fund and contains the information you
should read and know before you invest in any of the Funds. Keep this prospectus
for future reference.

The Funds have also filed a Combined Statement of Additional Information for the
Investment Shares of the Funds dated November 30, 1994, with the Securities and
Exchange Commission. The information contained in the Combined Statement of
Additional Information is incorporated by reference into this prospectus. You
may request a copy of the Combined Statement of Additional Information free of
charge, obtain other information, or make inquiries about any of the Funds by
writing to the Trust or calling 804-771-7470.

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.

Prospectus dated November 30, 1994

TABLE OF CONTENTS
- --------------------------------------------------------------------------------

SYNOPSIS 1
- ------------------------------------------------------

Special Considerations 1

SUMMARY OF FUND EXPENSES--TRUST SHARES
AND TAX-FREE MONEY MARKET SHARES 2

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

FINANCIAL HIGHLIGHTS 3
- ------------------------------------------------------

INVESTMENT OBJECTIVE AND POLICIES OF EACH FUND 9
- ------------------------------------------------------

The U.S. Government Securities Fund 9
Acceptable Investments 9
CMOs 9
ARMS 10
The Stock Fund 10
Acceptable Investments 10
Common Stocks 10
Other Corporate Securities 10
Commercial Paper 10
Bank Instruments 10
U.S. Government Securities 10
Put and Call Options 10
Financial Futures and Options on Futures 11
Risks 11
Portfolio Turnover 11
Investment Considerations 11

The Virginia Municipal Bond Fund and
The Maryland Municipal Bond Fund 12

Acceptable Investments 12

Characteristics 12

The Treasury Money Market Fund 12

Acceptable Investments 12

The Money Market Fund 13

Acceptable Investments 13

Bank Instruments 13

Short-Term Credit Facilities 13

Asset-Backed Securities 13

Ratings 13

The Tax-Free Money Market Fund 13

Acceptable Investments 13

Participation Interests 14

Ratings 14

Investment Limitations 14

PORTFOLIO INVESTMENTS AND STRATEGIES 14

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

Regulatory Compliance 14

Borrowing Money 14

Selling Short 15
Restricted and Illiquid Securities 15

When-Issued and Delayed Delivery Transactions 15

Investing in Securities of Other
Investment Companies 15

Diversification 15

Non-Diversification 15

Investing in New Issuers 16
Repurchase Agreements 16

Lending of Portfolio Securities 16

Acquiring Securities 16

Investment Risks 16

Variable Rate Demand Notes 17

Credit Enhancement 17

Demand Features 17

Participation Interests 17
Variable Rate Municipal Securities 17

Municipal Leases 18

Temporary Investments 18

Municipal Securities 18

Investment Risks 18

Futures Contracts and Options to Buy or
Sell Such Contracts 19

THE MEDALIST FUNDS INFORMATION 19

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

Management of the Trust 19
Board of Trustees 19
Investment Adviser 19
Advisory Fees 19

Adviser's Background 20

Distribution of Shares of the Funds 20

Distribution Plan 20

Administrative Arrangements 21

Glass-Steagall Act 21

Administration of the Funds 21

Administrative Services 21

Custodian 21

Transfer Agent and Dividend Disbursing Agent 21

Legal Counsel 21

Independent Auditors 21

Expenses of the Funds and Trust Shares 21

Brokerage Transactions 22

NET ASSET VALUE 22

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

INVESTING IN SHARES 22

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

Share Purchases 22

By Check 23

By Wire 23

Minimum Investment Required 23

What Shares Cost 23

Certificates and Confirmations 23

Dividends 23

Capital Gains 24

REDEEMING SHARES 24

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

By Telephone 24

By Mail 24

Redemption in Kind 25

SHAREHOLDER INFORMATION 25

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

Voting Rights 25

Massachusetts Partnership Law 26

EFFECT OF BANKING LAWS 26

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

TAX INFORMATION 27

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

Federal Income Tax 27

Virginia Taxes 27

Maryland Taxes 27

Other State and Local Taxes 28

PERFORMANCE INFORMATION 28

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

OTHER CLASSES OF SHARES 29

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

ADDRESSES 30

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

SYNOPSIS
- --------------------------------------------------------------------------------

The Trust, an open-end, management investment company, was established as a
Massachusetts business trust under a Declaration of Trust dated June 20, 1990.
The Declaration of Trust permits the Trust to offer separate series of shares of
beneficial interest representing interests in separate portfolios of securities.
The shares in any one portfolio may be offered in separate classes. As of the
date of this prospectus, the Trustees have established a single class of shares
for The Tax-Free Money Market Fund, and two classes of shares, Trust Shares and
Investment Shares, for each of the other Funds in the Trust.

As of the date of this prospectus, the Trust is comprised of the following seven
portfolios:

- The U.S. Government Securities Fund--seeks to provide current income by
investing in a professionally managed, diversified portfolio limited
primarily to U.S. government securities;

- The Stock Fund--seeks to provide growth of capital and income by
investing in common stocks of high quality companies;

- The Virginia Municipal Bond Fund--seeks to provide current income which
is exempt from federal regular income tax and the personal income tax
imposed by the Commonwealth of Virginia by investing in a portfolio of
Virginia municipal securities;

- The Maryland Municipal Bond Fund--seeks to provide current income which
is exempt from federal regular income tax and the personal income tax
imposed by the State of Maryland by investing in a portfolio of Maryland
municipal securities;

- The Treasury Money Market Fund--seeks to provide current income
consistent with stability of principal by investing in short-term U.S.
Treasury obligations;

- The Money Market Fund--seeks to provide current income consistent with
stability of principal by investing in money market instruments; and

- The Tax-Free Money Market Fund--seeks to provide current income exempt
from federal income tax consistent with stability of principal, by
investing in municipal securities.

This prospectus relates only to the Trust Shares ("Trust Shares") of those Funds
offering classes and to the single class of shares ("Tax-Free Money Market
Shares") of The Tax-Free Money Market Fund (Trust Shares and Tax-Free Money
Market Shares are sometimes collectively referred to as "Shares"). For
information on how to purchase Shares please refer to "Investing in Shares." A
minimum initial investment of $1,000 is required for shares of The Tax-Free
Money Market Fund, and a minimum investment of $10,000 is required for Trust
Shares of the other Funds in the Trust. Shares are sold and redeemed at net
asset value. Information on redeeming Shares may be found under "Redeeming
Shares." The Funds are advised by Signet Asset Management.

SPECIAL CONSIDERATIONS

Investors should be aware of the following general considerations: the market
value of fixed-income securities, which constitute a major part of the
investments of several Funds, may vary inversely in response to changes in
prevailing interest rates. One or more Funds may make certain investments and
employ certain investment techniques that involve other risks, including
entering into repurchase agreements, lending portfolio securities and entering
into futures contracts and related options as hedges. These risks and those
associated with investing in mortgage-backed securities, when-issued securities,
options, variable rate securities and equity securities are described under
"Investment Objective and Policies of Each Fund" and "Portfolio Investments and
Strategies."

SUMMARY OF FUND EXPENSES--TRUST SHARES AND
TAX-FREE MONEY MARKET SHARES

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

The following Fee Table and Example summarize the various costs and expenses
that a shareholder of Trust Shares and Tax-Free Money Market Shares will bear,
either directly or indirectly.

<TABLE>
<CAPTION>
THE THE THE THE
TAX-FREE THE TREASURY MARYLAND VIRGINIA THE U.S.
MONEY MONEY MONEY MUNICIPAL MUNICIPAL THE GOVERNMENT
MARKET MARKET MARKET BOND BOND STOCK SECURITIES
FUND FUND FUND FUND FUND FUND FUND
-------- ------ -------- --------- --------- ----- ----------
<S> <C> <C> <C> <C> <C> <C> <C>
Shareholder Transaction Expenses....................
</TABLE>

ANNUAL TRUST SHARES AND TAX-FREE MONEY MARKET SHARES OPERATING EXPENSES (AS A
PERCENTAGE OF PROJECTED AVERAGE NET ASSETS)

<TABLE>
<CAPTION>
TOTAL TRUST SHARES
TRUST SHARES AND TAX-FREE
AND TAX-FREE MONEY MARKET
MONEY MARKET SHARES OPERATING
NET SHARES EXPENSES NET OF
MANAGEMENT 12B-1 OTHER ANY WAIVERS OR
FEES(1) FEES(2) EXPENSES(3) REIMBURSEMENTS(4)
---------- ------------ ----------- -------------------
<S> <C> <C> <C> <C>
The Money Market Fund....................................
The Treasury Money Market Fund...........................
The Tax-Free Money Market Fund...........................
The Maryland Municipal Bond Fund.........................
The Virginia Municipal Bond Fund.........................
The Stock Fund...........................................
The U.S. Government Securities Fund......................
</TABLE>

(1) The management fee has been reduced to reflect the voluntary waiver by the
investment adviser. The adviser can terminate this voluntary waiver at any
time at its sole discretion. The maximum management fee for The Money Market
Fund, The Treasury Money Market Fund, The Tax-Free Money Market Fund, The
Maryland Municipal Bond Fund, The Virginia Municipal Bond Fund, The Stock
Fund, and The U.S. Government Securities Fund is respectively.

(2) As of the date of this prospectus, The Tax-Free Money Market Fund is not
paying or accruing 12b-1 fees. The Tax-Free Money Market Fund will not
accrue or pay 12b-1 fees until a separate class of shares has been created
for certain institutional investors. The Tax-Free Money Market Fund can pay
up to 0.35% as a 12b-1 fee to the distributor.

(3) Includes administration fees. See "Management of the Trust--Administration
of the Funds."

(4) The total Trust Shares Operating Expenses for The Money Market Fund, The
Treasury Money Market Fund, The Maryland Municipal Bond Fund, The Virginia
Municipal Bond Fund, The Stock Fund and The U.S. Government Securities Fund
would have been respectively,
and the total Operating Expenses for The Tax-Free Money Market Fund would
have been %, absent the waiver of management fees.

EXAMPLE:

You would pay the following expenses on a $1,000 investment, assuming (1) 5%
annual return and (2) redemption at the end of each time period. The Funds
charge no redemption fees for Trust Shares or Tax-Free Money Market Shares.

<TABLE>
<CAPTION>
1 YEAR 3 YEARS 5 YEARS 10 YEARS
------- -------- -------- ---------
<S> <C> <C> <C> <C>
The Money Market Fund......................................................
The Treasury Money Market Fund.............................................
The Tax-Free Money Market Fund.............................................
The Maryland Municipal Bond Fund...........................................
The Virginia Municipal Bond Fund...........................................
The Stock Fund.............................................................
The U.S. Government Securities Fund........................................
</TABLE>

THE PURPOSE OF THE FOREGOING EXAMPLE IS TO ASSIST AN INVESTOR IN UNDERSTANDING
THE VARIOUS COSTS AND EXPENSES THAT A SHAREHOLDER OF TRUST SHARES AND TAX-FREE
MONEY MARKET SHARES WILL BEAR, EITHER DIRECTLY OR INDIRECTLY. FOR A MORE
COMPLETE DESCRIPTION OF THE VARIOUS COSTS AND EXPENSES, SEE "THE MEDALIST FUNDS
INFORMATION" AND "INVESTING IN SHARES." WIRE-TRANSFERRED REDEMPTIONS OF LESS
THAN $5,000 MAY BE SUBJECT TO ADDITIONAL FEES.

THE ABOVE EXAMPLE SHOULD NOT BE CONSIDERED A REPRESENTATION OF PAST OR FUTURE
EXPENSES. ACTUAL EXPENSES MAY BE GREATER OR LESS THAN THOSE SHOWN. THIS EXAMPLE
IS BASED ON ESTIMATED DATA FOR THE FUNDS' FISCAL YEAR ENDING SEPTEMBER 30, 1995.

The information set forth in the foregoing table and Example relates only to
Trust Shares of those Funds offering separate classes, and Tax-Free Money Market
Shares. Investment Shares of those Funds offering separate classes are subject
to certain of the same expenses as Trust Shares with the addition of a maximum
redemption fee of 2.00%, and a 12b-1 fee of 0.25 of 1% of the Investment Shares'
average daily net assets of The Maryland Municipal Bond Fund, The Virginia
Municipal Bond Fund, The Stock Fund and The U.S. Government Securities Fund, and
0.35 of 1% of the Investment Shares' average daily net assets of The Money
Market Fund, The Treasury Money Market Fund, and The Tax-Free Money Market Fund.
See "Other Classes of Shares."

INVESTMENT OBJECTIVE AND POLICIES OF EACH FUND
- --------------------------------------------------------------------------------

The investment objective and policies of each Fund appear below. The investment
objective of a Fund cannot be changed without the approval of holders of a
majority of that Fund's shares. While there is no assurance that a Fund will
achieve its investment objective, it endeavors to do so by following the
investment policies described in this prospectus.

Unless indicated otherwise, the investment policies of a Fund may be changed by
the Trustees without approval of shareholders. Shareholders will be notified
before any material change in these policies becomes effective.

Additional information about investment limitations, strategies that one or more
Funds may employ, and certain investment policies mentioned below, appear in the
"Portfolio Investments and Strategies" section of this Prospectus and in the
Combined Statement of Additional Information.

THE U.S. GOVERNMENT SECURITIES FUND

The investment objective of The U.S. Government Securities Fund is to provide
current income.

ACCEPTABLE INVESTMENTS. The Fund pursues its investment objective by investing
primarily in securities which are primary or direct obligations of the U.S.
government or its instrumentalities or which are guaranteed by the U.S.
government, its agencies, or instrumentalities. The Fund may also invest in
certain collateralized mortgage obligations ("CMOs") and adjustable rate
mortgage securities ("ARMS"), both of which represent or are supported by direct
or indirect obligations of the U.S. government or its instrumentalities. The
Fund will invest, under normal circumstances, at least 65% of the value of its
total assets in U.S. government securities (including such CMOs and ARMS).

The U.S. government securities in which the Fund invests include:

- direct obligations of the U.S. Treasury, such as U.S. Treasury bills,
notes and bonds; and

- obligations of U.S. government agencies or instrumentalities, such as
Federal Home Loan Banks, Farmers' Home Administration, Federal Farm
Credit Banks, Federal National Mortgage Association, Government National
Mortgage Association, and Federal Home Loan Mortgage Corporation.

The obligations of U.S. government agencies or instrumentalities which the Fund
may buy are backed, in a variety of ways, by the U.S. government or its agencies
or instrumentalities. Some of these obligations such as Government National
Mortgage Association mortgage-backed securities and obligations of the Farmers
Home Administration, are backed by the full faith and credit of the U.S.
Treasury. Obligations of the Farmers' Home Administration are also backed by the
issuer's right to borrow from the U.S. Treasury. Obligations of Federal Home
Loan Banks and the Farmers' Home Administration are backed by the discretionary
authority of the U.S. government to purchase certain obligations of agencies or
instrumentalities. Obligations of Federal Home Loan Banks, Farmers' Home
Administration, Federal Farm Credit Banks, Federal National Mortgage
Association, and Federal Home Loan Mortgage Corporation are backed by the credit
of the agency or instrumentality issuing the obligations.

CMOS. The Fund may also invest in CMOs which are rated AAA or better by a
nationally recognized rating agency and which are issued by private entities
such as investment banking firms and companies related to the construction
industry. The CMOs in which the Fund may invest may be: (i) privately issued
securities which are collateralized by pools of mortgages in which each mortgage
is guaranteed as to payment of principal and interest by an agency or
instrumentality of the U.S. government; (ii) privately issued securities which
are collateralized by pools of mortgages in which payment of principal and
interest are guaranteed by the issuer and such guarantee is collateralized by
U.S. government securities; and (iii) other privately issued securities in which
the proceeds of the issuance are invested in mortgage-backed securities and
payment of the principal and interest are supported by the credit of an agency
or instrumentality of the U.S. government. The mortgage-related securities
provide for a periodic payment consisting of both interest and principal. The
interest portion of these payments will be distributed by the Fund as income,
and the capital portion will be reinvested.

ARMS. ARMS are pass-through mortgage securities with adjustable rather than
fixed interest rates. The ARMS in which the Fund invests are issued by
Government National Mortgage Association ("GNMA"), Federal National Mortgage
Association ("FNMA"), and Federal Home Loan Mortgage Corporation ("FHLMC") and
are actively traded. The underlying mortgages which collateralize ARMS issued by
GNMA are fully guaranteed by the Federal Housing Administration ("FHA") or
Veterans Administration ("VA"), while those collateralizing ARMS issued by FHLMC
or FNMA are typically conventional residential mortgages conforming to strict
underwriting size and maturity constraints.

Unlike conventional bonds, ARMS pay back principal over the life of the ARMS
rather than at maturity. Thus, a holder of the ARMS, such as the Fund, would
receive monthly scheduled payments of principal and interest, and may receive
unscheduled principal payments representing payments on the underlying
mortgages. At the time that a holder of the ARMS reinvests the payments and any
unscheduled prepayments of principal that it receives, the holder may receive a
rate of interest which is actually lower than the rate of interest paid on the
existing ARMS. As a consequence, ARMS may be a less effective means of "locking
in" long-term interest rates than other types of U.S. government securities.

THE STOCK FUND

The investment objective of The Stock Fund is to provide growth of capital and
income.

ACCEPTABLE INVESTMENTS. The Fund pursues its investment objective by investing
in common stocks of large, medium and small capitalization companies which are
either listed on the New York or American Stock Exchange or trade in the
over-the-counter markets. The Fund's investment approach is based upon the
conviction that, over the long term, the economy will continue to expand and
develop and that this economic growth will be reflected in the growth of the
revenues and earnings of publicly held corporations. The securities in which the
Fund invests include, but are not limited to, the following securities.

COMMON STOCKS. The Fund invests primarily in common stocks of companies
selected by the Fund's investment adviser on the basis of investment research
techniques, including assessment of earnings and dividend growth prospects of
the companies. Factors such as product position, market share, potential
earnings growth, or asset values will be considered by the investment adviser.
At least 65% of the Fund's portfolio will be invested in common stocks, unless
it is in a defensive position.

OTHER CORPORATE SECURITIES. The Fund may invest in preferred stocks, corporate
bonds, notes, warrants, rights, and convertible securities of these companies.

COMMERCIAL PAPER. The Fund may invest in commercial paper rated A-1 by Standard
& Poor's Ratings Group ("S&P"), or Prime-1 by Moody's Investors Service, Inc.
("Moody's"), or F-1 by Fitch Investors Services ("Fitch") and money market
instruments (including commercial paper) which are unrated but of comparable
quality, including Canadian Commercial Paper ("CCPs") and Europaper.

BANK INSTRUMENTS. The Fund may invest in instruments of domestic and foreign
banks and savings and loans (such as certificates of deposit, demand and time
deposits, savings shares, and bankers' acceptances) if they have capital,
surplus, and undivided profits over $100,000,000, or if the principal amount of
the instrument is insured by the Bank Insurance Fund ("BIF"), which is
administered by the Federal Deposit Insurance Corporation ("FDIC") or the
Savings Association Insurance Fund ("SAIF"), which is administered by the FDIC.
These instruments may include Eurodollar Certificates of Deposit ("ECDs"),
Yankee Certificates of Deposit ("Yankee CDs"), Eurodollar Time Deposits ("ETDs")
and American Depository Receipts ("ADRs"). ADRs are receipts typically issued by
an American bank or trust company that evidences ownership of underlying
securities issued by a foreign issuer.

U.S. GOVERNMENT SECURITIES. The Fund may invest in securities issued and/or
guaranteed as to payment of principal and interest by the U.S. government, its
agencies or instrumentalities including those obligations purchased on a
when-issued or delayed delivered basis.

PUT AND CALL OPTIONS. The Fund may purchase put options on its portfolio
securities. These options will be used as a hedge to attempt to protect
securities which the Fund holds against decreases in value. The Fund may also
write covered call options on all or any portion of its portfolio to generate
income for the Fund. The Fund will write call options on securities either held
in its portfolio or which it has the

right to obtain without payment of further consideration or for which it has
segregated cash or U.S. government securities in the amount of any additional
consideration.

The Fund may purchase and write over-the-counter options on portfolio securities
in negotiated transactions with the buyers or writers of the options when
options on the portfolio securities held by the Fund are not traded on an
exchange. The Fund purchases and writes options only with investment dealers and
other financial institutions (such as commercial banks or savings and loan
associations) deemed creditworthy by the Fund's adviser.

Over-the-counter options are two party contracts with price and terms negotiated
between buyer and seller. In contrast, exchange traded options are third party
contracts with standardized strike prices and expiration dates and are purchased
from a clearing corporation. Exchange-traded options have a continuous liquid
market while over-the-counter options may not. The Fund will not buy call
options or write put options without further notification to shareholders.

FINANCIAL FUTURES AND OPTIONS ON FUTURES. The Fund may purchase and sell
financial futures contracts to hedge all or a portion of its portfolio against
changes in stock prices. Financial futures contracts call for the delivery of
particular debt instruments at a certain time in the future. The seller of the
contract agrees to make delivery of the type of instrument called for in the
contract and the buyer agrees to take delivery of the instrument at the
specified future time.

The Fund may also write call options and purchase put options on financial
futures contracts as a hedge to attempt to protect securities in its portfolio
against decreases in value. When the Fund writes a call option on a futures
contract, it is undertaking the obligation of selling a futures contract at a
fixed price at any time during a specified period if the option is exercised.

Conversely, as purchaser of a put option on a futures contract, the Fund is
entitled (but not obligated) to sell a futures contract at the fixed price
during the life of the option.

The Fund may not purchase or sell futures contracts or related options if
immediately thereafter the sum of the amount of margin deposits on the Fund's
existing futures positions and premiums paid for related options would exceed 5%
of the market value of the Fund's total assets. When the Fund purchases futures
contracts, an amount of cash and cash equivalents, equal to the underlying
commodity value of the futures contracts (less any related margin deposits),
will be deposited in a segregated account with the Fund's custodian (or the
broker, if legally permitted) to collateralize the position and thereby insure
that the use of such futures contract is unleveraged.

RISKS. When the Fund uses financial futures and options on financial
futures as hedging devices, there is a risk that the prices of the
securities subject to the futures contracts may not correlate perfectly
with the prices of the securities in the Fund's portfolio. This may cause
the futures contract and any related options to react differently than the
portfolio securities to market changes. In addition, the Fund's investment
adviser could be incorrect in its expectations about the direction or
extent of market factors such as stock price movements. In these events,
the Fund may lose money on the futures contract or option.

It is not certain that a secondary market for positions in futures
contracts or for options will exist at all times. Although the investment
adviser will consider liquidity before entering into options transactions,
there is no assurance that a liquid secondary market on an exchange or
otherwise will exist for any particular futures contract or option at any
particular time. The Fund's ability to establish and close out futures and
options positions depends on this secondary market.

PORTFOLIO TURNOVER. Although the Fund does not intend to invest for the purpose
of seeking short-term profits, securities in its portfolio will be sold whenever
the Adviser believes it is appropriate to do so in light of the Fund's
investment objective, without regard to the length of time a particular security
may have been held. The Adviser anticipates that the Fund's annual portfolio
turnover rate for the 1994 and subsequent fiscal years will be significantly
higher than the Fund's turnover rates of 67% and 38% recorded in its 1993 and
1992 fiscal years. A high portfolio turnover rate may lead to increased costs
and may also result in higher taxes paid by the Fund's shareholders.

experiencing both periods when stock prices generally increase and periods when
stock prices generally decrease. However, because the Fund invests a portion of
its assets in small capitalization stocks, there are some additional risk
factors associated with investments in the Fund. In particular, stocks in the
small capitalization sector of the United States equity market have historically
been more volatile in price than larger capitalization stocks, such as those
included in the Standard & Poor's 500 Composite Stock Price Index ("Standard &
Poor's 500 Index"). This is because, among other things, small companies have
less certain growth prospects than larger companies; have a lower degree of
liquidity in the equity market; and tend to have a greater sensitivity to
changing economic conditions.

THE VIRGINIA MUNICIPAL BOND FUND AND THE MARYLAND MUNICIPAL BOND FUND

The investment objective of The Virginia Municipal Bond Fund and The Maryland
Municipal Bond Fund is to provide current income which is exempt from federal
regular income tax and the personal income tax imposed by the Commonwealth of
Virginia and the State of Maryland, respectively. (Federal regular income tax
does not include the federal individual alternative minimum tax or the federal
alternative minimum tax for corporations.)

ACCEPTABLE INVESTMENTS. Each Fund pursues its investment objective by investing
in a professionally managed portfolio of securities at least 65% of which is
comprised of Virginia municipal bonds or Maryland municipal bonds, as the case
may be. Each Fund will invest its assets so that, under normal circumstances, at
least 80% of its annual interest income is exempt from federal regular and
Virginia or Maryland state income taxes, respectively, or that at least 80% of
its net assets are invested in obligations, the interest income from which is
exempt from federal regular and Virginia or Maryland state income taxes,
respectively.

The municipal securities in which each Fund invests are debt obligations,
including industrial development bonds, issued on behalf of the Commonwealth of
Virginia or the State of Maryland, as the case may be, or the political
subdivisions or agencies of each respective state. In addition, each Fund may
invest in debt obligations issued by or on behalf of any state, territory or
possession of the United States, including the District of Columbia, or any
political subdivision or agency or any of these and participation interests in
any of the above obligations, the interest from which is, in the opinion of bond
counsel for the issuers or in the opinion of officers of the relevant Fund
and/or the investment adviser to the relevant Fund, exempt from federal regular
income tax and the personal income tax imposed by the Commonwealth of Virginia
or the State of Maryland, as the case may be.

CHARACTERISTICS. The debt securities in which each Fund invests will only
be rated investment grade or of comparable quality at the time of purchase.
The municipal securities which each Fund buys have essentially the same
characteristics assigned by Moody's and S&P to investment grade bonds.
Investment grade bonds are rated Baa, A, Aa, Aaa by Moody's or BBB, A, AA,
AAA by S&P. Bonds rated "Baa" by Moody's or "BBB" by S&P have speculative
characteristics. Changes in economic conditions or other circumstances are
more likely to lead to weakened capacity to make principal and interest
payments than higher rated bonds. In certain cases, the Funds' adviser may
choose bonds which are unrated, if it judges the bonds to have the same
characteristics as investment grade bonds. If a security's rating is
reduced below the required minimum after a Fund has purchased it, that Fund
is not required to sell the security, but may consider doing so. A
description of the ratings categories is contained in the Appendix to the
Combined Statement of Additional Information.

THE TREASURY MONEY MARKET FUND

The investment objective of The Treasury Money Market Fund is to provide current
income consistent with stability of principal.

ACCEPTABLE INVESTMENTS. The Fund pursues its investment objective by investing
only in a portfolio of short-term U.S. Treasury obligations which are issued by
the U.S. government and are fully guaranteed as to principal and interest by the
United States. They mature in 397 days or less from the date of acquisition
unless they are purchased under a repurchase agreement that provides for
repurchase by the seller within one year from the date of acquisition. The
average maturity of these securities computed on a dollar-weighted basis, will
be 90 days or less.

THE MONEY MARKET FUND

The investment objective of The Money Market Fund is to provide current income
consistent with stability of principal.

ACCEPTABLE INVESTMENTS. The Fund pursues its investment objective by investing
primarily in a diversified portfolio of money market instruments maturing in 397
days or less. The average maturity of these securities, computed on a
dollar-weighted basis, will be 90 days or less. The Fund invests in high quality
money market instruments that are either rated in the highest short-term rating
category by one or more nationally recognized statistical rating organizations
("NRSROs") or of comparable quality to securities having such ratings. Examples
of these instruments include, but are not limited to:

- domestic issues of corporate debt obligations, including variable rate
demand notes;

- commercial paper (including Canadian Commercial Paper and Europaper);

- certificates of deposit, demand and time deposits, bankers' acceptances
and other instruments of domestic and foreign banks and other deposit
institutions ("Bank Instruments");

- short-term credit facilities, such as demand notes;

- asset-backed securities;

- obligations issued or guaranteed as to payment of principal and interest
by the U.S. government or one of its agencies or instrumentalities
("Government Securities"); and

- other money market instruments.

The Fund invests only in instruments denominated and payable in U.S. dollars.

BANK INSTRUMENTS. The Fund only invests in Bank Instruments either issued
by an institution having capital, surplus and undivided profits over $100
million or insured by BIF or SAIF. Bank Instruments may include ECDs,
Yankee CDs and ETDs. The Fund will treat securities credit enhanced with a
bank's letter of credit as Bank Instruments.

SHORT-TERM CREDIT FACILITIES. Demand notes are short-term borrowing
arrangements between a corporation and an institutional lender (such as the
Fund) payable upon demand by either party. The notice period for demand
typically ranges from one to seven days, and the party may demand full or
partial payment. The Fund may also enter into, or acquire participations
in, short-term revolving credit facilities with corporate borrowers. Demand
notes and other short-term credit arrangements usually provide for floating
or variable rates of interest.

ASSET-BACKED SECURITIES. Asset-backed securities are securities issued by
special purpose entities whose primary assets consist of a pool of loans or
accounts receivable. The securities may take the form of beneficial
interest in a special purpose trust, limited partnership interests or
commercial paper or other debt securities issued by a special purpose
corporation. Although the securities often have some form of credit or
liquidity enhancement, payments on the securities depend predominately upon
collections of the loans and receivables held by the issuer.

RATINGS. An NRSRO's highest rating category is determined without regard for
sub-categories and gradations. For example, securities rated, A-1 or A-1+ by
S&P, Prime-1 by Moody's or F-1 (+ or --) by Fitch are all considered rated in
the highest short-term rating category. The Fund will follow applicable
regulations in determining whether a security rated by more than one NRSRO can
be treated as being in the highest short-term rating category; currently, such
securities must be rated by two NRSROs in their highest rating category. See
"Regulatory Compliance."

THE TAX-FREE MONEY MARKET FUND

The investment objective of The Tax-Free Money Market Fund is current income
exempt from federal income tax consistent with stability of principal and
liquidity.

ACCEPTABLE INVESTMENTS. The Fund pursues its investment objective by investing
in a portfolio of municipal securities (as defined below) maturing in 13 months
or less. As a matter of investment policy, which cannot be changed without
shareholder approval, at least 80% of the Fund's annual interest income will be
exempt from federal income tax (including alternative minimum tax). The average
maturity of the securities in the Fund's portfolio, computed on a
dollar-weighted basis, will be 90 days or less.

The Fund invests primarily in debt obligations issued by or on behalf of states,
territories, and possessions of the United States, including the District of
Columbia, and any political subdivision or financing authority of any of these,
the income from which is, in the opinion of qualified legal counsel, exempt from
federal income tax ("municipal securities"). Examples of municipal securities
include, but are not limited to;

- tax and revenue anticipation notes issued to finance working capital
needs in anticipation of receiving taxes or other revenues;

- bond anticipation notes that are intended to be refinanced through a
later issuance of longer-term bonds;

- municipal commercial paper and other short-term notes;

- variable rate demand notes;

- municipal bonds (including bonds having serial maturities and
pre-refunded bonds) and leases;

- construction loan notes insured by the Federal Housing Administration and
financed by the Federal or Government National Mortgage Associations; and

- participation, trust, and partnership interests in any of the foregoing
obligations.

PARTICIPATION INTERESTS. The Fund may purchase interests in municipal
securities from financial institutions such as commercial and investment
banks, savings and loan associations, and insurance companies. These
interests may take the form of participations, beneficial interests in a
trust, partnership interests or any other form of indirect ownership that
allows the Fund to treat the income from the investment as exempt from
federal income tax. The Fund invests in these participation interests in
order to obtain credit enhancement or demand features that would not be
available through direct ownership of the underlying municipal securities.

RATINGS. The municipal securities in which the Fund invests must be rated in one
of the two highest short-term rating categories by one or more NRSROs. The Fund
will follow applicable regulations in determining whether a security rated by
more than one NRSRO can be treated as being in one of the two highest short-term
rating categories; currently, such securities must be rated by two NRSROs in one
of their two highest rating categories. See "Regulatory Compliance."

INVESTMENT LIMITATIONS

The Funds' investment limitations are discussed below under "Borrowing Money",
"Selling Short", "Restricted and Illiquid Securities", "Diversification",
"Investing in New Issuers", and "Acquiring Securities."

PORTFOLIO INVESTMENTS AND STRATEGIES
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REGULATORY COMPLIANCE

The Treasury Money Market Fund, The Money Market Fund, and The Tax-Free Money
Market Fund may follow non-fundamental operational policies that are more
restrictive than their fundamental investment limitations, as set forth in this
prospectus and their Combined Statement of Additional Information, in order to
comply with applicable laws and regulations, including the provisions of and
regulations under the Investment Company Act of 1940, as amended. In particular,
the Funds will comply with the various requirements of Rule 2a-7, which
regulates money market mutual funds. The Treasury Money Market Fund, The Money
Market Fund and The Tax-Free Money Market Fund will also determine the effective
maturity of their respective investments, as well as their ability to consider a
security as having received the requisite short-term ratings by NRSROs,
according to Rule 2a-7. The Funds may change these operational policies to
reflect changes in the laws and regulations without the approval of their
shareholders.

BORROWING MONEY

and pledge up to 15% of the value of those assets to secure such borrowings. The
Tax-Free Money Market Fund may borrow up to one-third of the value of its total
assets, including the amount borrowed. The Tax-Free Money Market Fund will not
purchase any securities while borrowings in excess of 5% of the value of its
total assets are outstanding. These policies cannot be changed without the
approval of holders of a majority of a Fund's Shares.

SELLING SHORT

With respect to The U.S. Government Securities Fund and The Stock Fund, the
Funds will not make short sales of securities, except in certain limited
circumstances. This policy cannot be changed without the approval of holders of
a majority of a Fund's Shares.

RESTRICTED AND ILLIQUID SECURITIES

The Funds may invest in restricted securities. Restricted securities are any
securities in which a Fund may invest pursuant to its investment objective and
policies but which are subject to restriction on resale under federal securities
law. The Funds will not invest more than 10% of the value of their assets in
securities subject to restrictions on resale under the Securities Act of 1933
(except for certain restricted securities which meet the criteria for liquidity
as established by the Board of Trustees). In the case of The U.S. Government
Securities Fund, The Stock Fund and The Money Market Fund this exception
specifically extends to commercial paper issued under Section 4(2) of the
Securities Act of 1933. This policy cannot be changed without the approval of
holders of a majority of a Fund's Shares.

The U.S. Government Securities Fund, The Stock Fund, The Virginia Municipal Bond
Fund and The Maryland Municipal Bond Fund will not invest more than 15% of their
net assets in illiquid securities. The Treasury Money Market Fund, The Money
Market Fund, and The Tax-Free Money Market Fund will not invest more than 10% of
their net assets in illiquid securities.

WHEN-ISSUED AND DELAYED DELIVERY TRANSACTIONS

Each Fund may purchase securities on a when-issued or delayed delivery basis.
These transactions are arrangements in which a Fund purchases securities with
payment and delivery scheduled for a future time. The seller's failure to
complete the transaction may cause a Fund to miss a price or yield considered to
be advantageous. Settlement dates may be a month or more after entering into
these transactions, and the market values of the securities purchased may vary
from the purchase prices. Accordingly, the Fund may pay more/less than the
market value of the securities on the settlement date.

INVESTING IN SECURITIES OF OTHER INVESTMENT COMPANIES

The Funds, except for The Tax-Free Money Market Fund, may invest in the
securities of other investment companies, but will not own more than 3% of the
total outstanding voting stock of any investment company, invest more than 5% of
total assets in any one investment company, or invest more than 10% of total
assets in investment companies in general. The Funds will invest in other
investment companies primarily for the purpose of investing short-term cash
which has not yet been invested in other portfolio instruments. The adviser will
waive its investment advisory fee on assets invested in securities of open-end
investment companies.

The Funds may also hold cash in such proportions as the Fund's adviser may
determine.

DIVERSIFICATION

With respect to 75% of the value of total assets, The U.S. Government Securities
Fund, The Stock Fund and The Money Market Fund will not invest more than 5% in
securities of any one issuer other than cash or securities issued or guaranteed
by the government of the United States or its agencies or instrumentalities and
repurchase agreements collateralized by such securities. These policies cannot
be changed without the approval of holders of a majority of a Fund's Shares.

NON-DIVERSIFICATION

risk than would exist in a diversified investment company because the higher
percentage of investments among fewer issuers may result in greater fluctuation
in the total market value of each Fund's portfolio. Any economic, political or
regulatory developments affecting the value of the securities in each Fund's
portfolio will have a greater impact on the total value of the portfolio than
would be the case if the portfolio were diversified among more issuers.

To meet federal tax requirements for qualifications as a "regulated investment
company" the Funds will limit their investments so at the close of each quarter
of each fiscal year: (a) with regard to at least 50% of their respective total
assets no more than 5% of their respective total assets are invested in the
securities of a single issuer, and (b) no more than 25% of their respective
total assets are invested in the securities of a single issuer.

INVESTING IN NEW ISSUERS

The U.S. Government Securities Fund, The Stock Fund, The Money Market Fund, and
The Tax-Free Money Market Fund will not invest more than 5% of their total
assets in securities of issuers that have records of less than three years of
continuous operations including the operation of any predecessor. The Virginia
Municipal Bond Fund and The Maryland Municipal Bond Fund will not invest more
than 5% of their total assets in industrial development bonds, the principal and
interest of which are paid by companies (or guarantors, where applicable) which
have an operating history of less than three years.

REPURCHASE AGREEMENTS

The securities in which the Funds invest may be purchased pursuant to repurchase
agreements. Repurchase agreements are arrangements in which banks,
broker/dealers, and other recognized financial institutions sell U.S. government
securities or other securities to a Fund and agree at the time of sale to
repurchase them at a mutually agreed upon time and price. To the extent that the
original seller does not repurchase the securities from a Fund, that Fund could
receive more or less than the repurchase price on any sale of such securities.

LENDING OF PORTFOLIO SECURITIES

In order to generate additional income, The U.S. Government Securities Fund, The
Stock Fund, The Treasury Money Market Fund and The Money Market Fund, may lend
portfolio securities on a short-term or a long-term basis up to one-third of the
value of their respective total assets to broker/dealers, banks, or other
institutional borrowers of securities. A Fund will only enter into loan
arrangements with broker/dealers, banks, or other institutions which the
investment adviser has determined are creditworthy under guidelines established
by the Board of Trustees and will receive collateral in the form of cash or U.S.
government securities equal to at least 100% of the value of the securities
loaned.

ACQUIRING SECURITIES

The U.S. Government Securities Fund and The Stock Fund will not acquire more
than 10% of the outstanding voting securities of any one issuer. This policy
cannot be changed without the approval of holders of a majority of the Fund's
shares.

INVESTMENT RISKS

The Stock Fund and The Money Market Fund's ECDs, ETDs, Yankee CDs, and Europaper
are subject to different risks than domestic obligations of domestic banks or
corporations. Examples of these risks include international economic and
political developments, foreign governmental restrictions that may adversely
affect the payment of principal or interest, foreign withholding or other taxes
on interest income, difficulties in obtaining or enforcing a judgment against
the issuing entity, and the possible impact of interruptions in the flow of
international currency transactions. Different risks may also exist for ECDs,
ETDs, and Yankee CDs because the banks issuing these instruments, or their
domestic or foreign branches, are not necessarily subject to the same regulatory
requirements that apply to domestic banks, such as reserve requirements, loan
limitations, examinations, accounting, auditing, recordkeeping, and the public
availability of information. These factors will be carefully considered by the
Fund's adviser in selecting investments for a Fund.

VARIABLE RATE DEMAND NOTES

The Money Market Fund and The Tax-Free Money Market Fund may invest in variable
rate demand notes. Variable rate demand notes are long-term corporate debt
instruments that have variable or floating interest rates and provide the Funds
with the right to tender the security for repurchase at its stated principal
amount plus accrued interest. Such securities typically bear interest at a rate
that is intended to cause the securities to trade at par. The interest rate may
float or be adjusted at regular intervals (ranging from daily to annually), and
is normally based on a published interest rate or interest rate index. Most
variable rate demand notes allow a Fund to demand the repurchase of the security
on not more than seven days' prior notice. Other notes only permit the Funds to
tender the security at the time of each interest rate adjustment or at other
fixed intervals. See "Demand Features." The Funds treat variable rate demand
notes as maturing on the later of the date of the next interest adjustment or
the date on which a Fund may next tender the security for repurchase.

CREDIT ENHANCEMENT

Certain of The Money Market Fund's and The Tax-Free Money Market Fund's
acceptable investments may have been credit enhanced by a guaranty, letter of
credit or insurance. A Fund typically evaluates the credit quality and ratings
of credit enhanced securities based upon the financial condition and ratings of
the party providing the credit enhancement (the "credit enhancer"), rather than
the issuer. Generally, a Fund will not treat credit enhanced securities as
having been issued by the credit enhancer for diversification purposes. However,
under certain circumstances applicable regulations may require a Fund to treat
the securities as having been issued by both the issuer and credit enhancer. The
bankruptcy, receivership or default of the credit enhancer will adversely affect
the quality and marketability of the underlying security.

DEMAND FEATURES

The Money Market Fund and The Tax-Free Money Market Fund may acquire securities
that are subject to puts and standby commitments ("demand features") to purchase
the securities at their principal amount (usually with accrued interest) within
a fixed period (usually seven days) following a demand by a Fund. The demand
feature may be issued by the issuer of the underlying securities, a dealer in
the securities or by another third party, and may not be transferred separately
from the underlying security. A Fund uses these arrangements to provide a Fund
with liquidity and not to protect against changes in the market value of the
underlying securities. The bankruptcy, receivership or default by the issuer of
the demand feature, or a default on the underlying security or other event that
terminates the demand feature before its exercise, will adversely affect the
liquidity of the underlying security. Demand features that are exercisable even
after a payment default on the underlying security may be treated as a form of
credit enhancement.

PARTICIPATION INTERESTS

The Virginia Municipal Bond Fund, The Maryland Municipal Bond Fund, and The
Tax-Free Money Market Fund may purchase participation interests from financial
institutions such as commercial banks, savings and loan associations and
insurance companies. These participation interests give the Funds an undivided
interest in municipal securities. The financial institutions from which the
Funds purchase participation interests frequently provide or secure irrevocable
letters of credit or guarantees to assure that the participation interests are
of good quality. The Board of Trustees will determine that participation
interests meet the prescribed quality standards for the Funds.

VARIABLE RATE MUNICIPAL SECURITIES

Some of the municipal securities which The Virginia Municipal Bond Fund and The
Maryland Municipal Bond Fund purchase may have variable interest rates. Variable
interest rates are ordinarily stated as a percentage of the prime rate of a bank
or some similar standard, such as the 91-day U.S. Treasury bill rate. Many
variable rate municipal securities are subject to repayment of principal on
demand by the Funds (usually in not more than seven days). While some variable
rate municipal securities without this demand feature may not be considered
liquid by the Fund's adviser, the Fund's investment limitations provide that it
will invest no more than 15% of its total assets in illiquid securities. All
variable rate municipal securities will meet the quality standards for the
Funds. The investment adviser has been instructed by the Board of Trustees to
monitor the pricing, quality and

liquidity of the variable rate municipal securities, including participation
interests, held by the Funds on the basis of published financial information and
reports of the rating agencies and other analytical services.

MUNICIPAL LEASES

The Virginia Municipal Bond Fund, The Maryland Municipal Bond Fund, and The
Tax-Free Money Market Fund may purchase municipal securities in the form of
municipal leases which are obligations issued by state and local governments or
authorities to finance the acquisition of equipment and facilities. Municipal
leases may take the form of a lease, an installment purchase contract, a
conditional sales contract, or a participation certificate in any of the above.
Lease obligations may be subject to periodic appropriation. If the entity does
not appropriate funds for future lease payments, the entity cannot be compelled
to make such payments. In the event of failure of appropriation, unless the
participation interests are credit enhanced, it is unlikely that the
participants would be able to obtain an acceptable substitute.

TEMPORARY INVESTMENTS

From time to time, during periods of other than normal market conditions, The
Virginia Municipal Bond Fund, The Maryland Municipal Bond Fund, and The Tax-Free
Money Market Fund may invest in short-term tax-exempt or taxable temporary
investments. These temporary investments include: notes issued by or on behalf
of municipal or corporate issuers; tax-free commercial paper; other temporary
municipal securities; obligations issued or guaranteed by the U.S. government,
its agencies or instrumentalities; other debt securities; commercial paper;
certificates of deposit of banks; and repurchase agreements (arrangements in
which an organization selling a Fund a security agrees at the time of sale to
repurchase it at a mutually agreed upon time and price).

Except for The Tax-Free Money Market Fund, there are no rating requirements
applicable to temporary investments. However, the investment adviser will limit
temporary investments to those it considers to be of good quality. Temporary
investments held by The Tax-Free Money Market Fund must be rated in one of the
two highest short-term rating categories by one or more NRSROs.

Although each Fund is permitted to make taxable, temporary investments, there is
no current intention of generating income subject to federal regular income tax
or Virginia or Maryland personal income tax.

MUNICIPAL SECURITIES

The Virginia Municipal Bond Fund, The Maryland Municipal Bond Fund, and The
Tax-Free Money Market Fund invest principally in municipal securities. Municipal
securities are generally issued to finance public works, such as airports,
bridges, highways, housing, hospitals, mass transportation projects, schools,
streets, and water and sewer works. They are also issued to repay outstanding
obligations, to raise funds for general operating expenses and to make loans to
other public institutions and facilities.

Municipal securities include industrial development bonds issued by or on behalf
of public authorities to provide financing aid to acquire sites or construct and
equip facilities for privately or publicly owned corporations. The availability
of this financing encourages these corporations to locate within the sponsoring
communities and thereby increases local employment.

The two principal classifications of municipal securities are "general
obligation" and "revenue" bonds. General obligation bonds are secured by the
issuer's pledge of its full faith and credit and taxing power for the payment of
principal and interest. Interest on and principal of revenue bonds, however, are
payable only from the revenue generated by the facility financed by the bond or
other specified sources of revenue. Revenue bonds do not represent a pledge of
credit or create any debt of or charge against the general revenues of a
municipality or public authority. Industrial development bonds are typically
classified as revenue bonds.

portfolio. The ability of The Virginia Municipal Bond Fund, The Maryland
Municipal Bond Fund, and The Tax-Free Money Market Fund to achieve their
investment objectives also depends on the continuing ability of the issuers of
municipal securities and participation interests, or the guarantors of either,
to meet their obligations for the payment of interest and principal when due.
With respect to The Virginia Municipal Bond Fund and The Maryland Municipal Bond
Fund, investing in Virginia and Maryland municipal securities which meet a
Fund's quality standards may not be possible if the Commonwealth of Virginia,
the state of Maryland, or their municipalities do not maintain their current
credit ratings. In addition, certain Virginia or Maryland constitutional
amendments, legislative measures, executive orders, administrative regulations
and voter initiatives could result in adverse consequences affecting Virginia
and Maryland municipal securities. In addition, from time to time, the supply of
municipal securities acceptable for purchase by The Virginia Municipal Bond
Fund, The Maryland Municipal Bond Fund, and The Tax-Free Money Market Fund,
could become limited.

The Tax-Free Money Market Fund may invest in municipal securities which are
repayable out of revenue streams generated from economically related projects or
facilities and/or whose issuers are located in the same state. Sizable
investments in these municipal securities could involve an increased risk to the
Fund should any of these related projects or facilities experience financial
difficulties.

Obligations of issuers of municipal securities are subject to the provisions of
bankruptcy, insolvency, and other laws affecting the rights and remedies of
creditors. In addition, the obligations of such issuers may become subject to
laws enacted in the future by Congress, state legislators, or referenda
extending the time for payment of principal and/or interest, or imposing other
constraints upon enforcement of such obligations or upon the ability of states
or municipalities to levy taxes. There is also the possibility that, as a result
of litigation or other conditions, the power or ability of any issuer to pay,
when due, the principal of and interest on its municipal securities may be
materially affected.

FUTURES CONTRACTS AND OPTIONS TO BUY OR SELL SUCH CONTRACTS

The Virginia Municipal Bond Fund and The Maryland Municipal Bond Fund reserve
the right to enter into interest rate futures contracts as a hedge without
shareholder action. Before the Funds begin using this investment technique,
shareholders will be notified.

THE MEDALIST FUNDS INFORMATION

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MANAGEMENT OF THE TRUST

BOARD OF TRUSTEES. The Board of Trustees (the "Board" or the "Trustees") is
responsible for managing the business affairs of the Trust and for exercising
all of the powers of the Trust except those reserved for the shareholders. The
Executive Committee of the Board of Trustees handles the Board's
responsibilities between meetings of the Board.

INVESTMENT ADVISER. Investment decisions for the Trust are made by Signet Asset
Management, the Trust's investment adviser (the "Adviser"), subject to direction
by the Trustees. The Adviser continually conducts investment research and
supervision for each Fund and is responsible for the purchase or sale of
portfolio instruments, for which it receives an annual fee from the assets of
each Fund.

ADVISORY FEES. The Adviser receives an annual investment advisory fee at
annual rates equal to percentages of the relevant Fund's average net assets
as follows: The Treasury Money Market Fund, The Money Market Fund, and The
Tax-Free Money Market Fund--.50%; The U.S. Government Securities Fund, The
Stock Fund, The Virginia Municipal Bond Fund and The Maryland Municipal
Bond Fund--.75%. The fee paid by The U.S. Government Securities Fund, The
Stock Fund, The Virginia Municipal Bond Fund and The Maryland Municipal
Bond Fund, while higher than the advisory fee paid by other mutual funds in
general, is comparable to fees paid by other mutual funds with similar
objectives and policies. The investment advisory contract provides for the
voluntary waiver of expenses by the Adviser from time to time. The Adviser
can terminate this voluntary waiver of expenses at any time with respect to
a Fund at its sole discretion. The Adviser has also undertaken to reimburse
the Funds for operating expenses in excess of limitations established by
certain states.

ADVISER'S BACKGROUND. Signet Asset Management is a division of Signet
Trust Company, a wholly-owned subsidiary of Signet Banking Corporation.
Signet Banking Corporation is a multi-state, multi-bank holding company
which has provided investment management services since 1956. Signet Trust
Company, established in 1975, provides trust and fiduciary services to
individuals, corporations and tax-exempt organizations throughout Virginia
and neighboring states. As of September 30, 1993, Signet Trust Company had
$2.6 billion in total trust assets. Signet Asset Management has investment
authority over $1.6 billion of the $2.6 billion. The Adviser has managed
Signet Select Funds since their inception in 1990. The Adviser manages
three equity common trust funds with $47.5 million in assets and three
fixed income common trust funds with $204.7 million in assets. As part of
their regular banking operations, Signet Bank and Trust may make loans to
public companies. Thus, it may be possible, from time to time, for the
Funds to hold or acquire the securities of issuers which are also lending
clients of Signet Bank and Trust. The lending relationship will not be a
factor in the selection of securities.

E. Christian Goetz has managed The U.S. Government Securities Fund since
August, 1991. Mr. Goetz is a Chartered Financial Analyst, and is currently
Vice President of Signet Trust Company and Director of Fixed Income
Investments for Signet Asset Management, where he has been a fixed income
portfolio manager since 1990. Prior to joining Signet Asset Management, Mr.
Goetz had been a foreign and domestic bond portfolio manager with Central
Fidelity Bank, Richmond, Virginia, since 1988.

Garry M. Allen has managed The Stock Fund since July 1994. Mr. Allen is a
Chartered Financial Analyst, and has since March 1994 been Senior Vice
President of Signet Trust Company and Chief Investment Officer for Signet
Asset Management. Prior to joining Signet Asset Management, Mr. Allen had
been Managing Director of U.S. Equities (November 1990 to March 1994) and
Director, International Asset Management (June 1985 to November 1990) of
Virginia Retirement System.

Elizabeth D. Swartz has managed The Maryland Municipal Bond Fund and The
Virginia Municipal Bond Fund, since February 1992. Ms. Swartz is currently
Investment Officer of Signet Trust Company and Fixed Income Portfolio
Manager for Signet Asset Management. Prior to joining Signet Asset
Management in 1991, Ms. Swartz had been a fixed income portfolio manager
with Sovran Bank, Richmond, Virginia, since 1987.

DISTRIBUTION OF SHARES OF THE FUNDS

Federated Securities Corp. is the principal distributor for Shares of the Funds.
It is a Pennsylvania corporation organized on November 14, 1969, and is the
principal distributor for a number of investment companies. Federated Securities
Corp. is a subsidiary of Federated Investors.

DISTRIBUTION PLAN. Under a distribution plan adopted in accordance with
Investment Company Act Rule 12b-1 on behalf of The Tax-Free Money Market Fund
(the "Plan"), the distributor may select financial institutions such as
fiduciaries, custodians for public funds, investment advisers and brokers/
dealers to provide distribution and/or administrative services as agents for
their clients or customers. Administrative services may include, but are not
limited to, the following functions: providing office space, equipment,
telephone facilities, and various personnel including clerical, supervisory, and
computer as necessary or beneficial to establish and maintain shareholder
accounts and records; processing purchase and redemption transactions and
automatic investments of client account cash balances; answering routine client
inquiries regarding The Tax-Free Money Market Fund; assisting clients in
changing dividend options, account designations, and addresses; and providing
such other services as The Tax-Free Money Market Fund reasonably requests for
its shares.

The distributor will pay financial institutions a fee based upon shares subject
to the Plan and owned by their clients or customers. The schedules of such fees
and the basis upon which such fees will be paid will be determined from time to
time by the Trustees, provided that for any period the total amount of these
fees shall not exceed an annual rate of .35 of 1% of the average net asset value
of Tax-Free Money Market Shares subject to the Plan held during the period by
clients or customers of financial institutions. Any fees paid by the distributor
under the Plan will be reimbursed from the assets of The Tax-Free Money Market
Fund. The Plan will not be activated unless and until a second class of shares
of The Tax-Free Money Market Fund, which will not have a Rule 12b-1 Plan, is
created.

The distributor, in its sole discretion, may uniformly offer to pay all brokers
or dealers selling shares of The Tax-Free Money Market Fund additional amounts
predicated upon the amount of shares of The Tax-Free Money Market Fund or
certain other Funds of The Medalist Funds sold by the broker or dealer. Such
payments, if made, will be in addition to amounts paid under the distribution
plan and will not be an expense of The Tax-Free Money Market Fund.

ADMINISTRATIVE ARRANGEMENTS. The distributor may pay financial institutions a
fee based upon the average net asset value of Shares of their customers invested
in the Trust for providing administrative services. This fee, if paid, will be
reimbursed by the Adviser and not the Trust.

GLASS-STEAGALL ACT. The Glass-Steagall Act prohibits a depository institution
(such as a commercial bank or a savings and loan association) from being an
underwriter or distributor of most securities. In the event the Glass-Steagall
Act is deemed to prohibit depository institutions from acting in the
administrative capacities described above or should Congress relax current
restrictions on depository institutions, the Board of Trustees will consider
appropriate changes in the administrative services.

State securities laws governing the ability of depository institutions to act as
underwriters or distributors of securities may differ from interpretations given
to the Glass-Steagall Act and, therefore, banks and financial institutions may
be required to register as dealers pursuant to state law.

ADMINISTRATION OF THE FUNDS

ADMINISTRATIVE SERVICES. Federated Administrative Services, a subsidiary of
Federated Investors, provides the Funds with certain administrative personnel
and services necessary to operate each Fund and the separate classes. Such
services include shareholder servicing and certain legal and accounting
services. Federated Administrative Services provides these at an annual rate as
specified below:

<TABLE>
<CAPTION>
MAXIMUM AVERAGE AGGREGATE DAILY
ADMINISTRATIVE FEE NET ASSETS OF THE TRUST
----------------------------------- -----------------------------------
<S> <C>
.150 of 1% on the first $250 million
.125 of 1% on the next $250 million
.100 of 1% on the next $250 million
.075 of 1% on assets in excess of $750 million
</TABLE>

The administrative fee received during any fiscal year shall be at least $50,000
per Fund. Federated Administrative Services may voluntarily waive a portion of
its fee.

CUSTODIAN. Signet Trust Company, Richmond, Virginia, is custodian for the
securities and cash of the Funds. Under the Custodian Agreement, Signet Trust
Company holds the Funds' portfolio securities in safekeeping and keeps all
necessary records and documents relating to its duties.

TRANSFER AGENT AND DIVIDEND DISBURSING AGENT. Federated Services Company,
Pittsburgh, Pennsylvania, is transfer agent for the Shares of the Funds and
dividend disbursing agent for the Funds.

LEGAL COUNSEL. Legal counsel is provided by Houston, Houston & Donnelly,
Pittsburgh, Pennsylvania, and Dickstein, Shapiro & Morin, L.L.P., Washington,
D.C.

INDEPENDENT AUDITORS. The independent auditors for the Funds are Deloitte &
Touche, Pittsburgh, Pennsylvania.

EXPENSES OF THE FUNDS AND TRUST SHARES

Each Fund pays all of its own expenses and its allocable share of the Trust's
expenses.

The Trust's expenses for which holders of Shares pay their allocable portion
include, but are not limited to: the cost of organizing the Trust and continuing
its existence; registering the Trust; Trustees fees; auditors' fees; the cost of
meetings of Trustees; legal fees of the Trust; association membership dues and
such nonrecurring and extraordinary items as may arise.

Each Fund's expenses for which holders of Shares may pay their allocable portion
include, but are not limited to: registering each Fund and Shares of the Fund;
investment advisory services; taxes and commissions; custodian fees; insurance
premiums; auditors' fees; and such nonrecurring and extraordinary items as may
arise.

At present, no expenses are allocated to Trust Shares as a class. However, the
Board of Trustees reserves the right to allocate certain other expenses to the
shareholders of a particular class as they deem appropriate ("Class Expenses").
In any case, Class Expenses would be limited to: transfer agent fees as
identified by the transfer agent as attributable to holders of Shares; printing
and postage expenses related to preparing and distributing materials such as
shareholder reports, prospectuses and proxies to current shareholders;
registration fees paid to the Securities and Exchange Commission and
registration fees paid to states; expenses related to administrative personnel
and services as required to support holders of Shares of each Fund; legal fees
relating solely to Shares; and Trustees' fees incurred as a result of issues
relating solely to Shares.

BROKERAGE TRANSACTIONS. When selecting brokers and dealers to handle the
purchase and sale of portfolio instruments, the Adviser looks for prompt
execution of the order at a favorable price. In working with dealers, the
Adviser will generally utilize those who are recognized dealers in specific
portfolio instruments, except when a better price and execution of the order can
be obtained elsewhere. In selecting among firms believed to meet these criteria,
the Adviser may give consideration to those firms which have sold or are selling
shares of the Trust. The Adviser makes decisions on portfolio transactions and
selects brokers and dealers subject to review by the Board of Trustees.

NET ASSET VALUE
- --------------------------------------------------------------------------------

With respect to The Treasury Money Market Fund, The Money Market Fund, and The
Tax-Free Money Market Fund, each Fund attempts to stabilize the net asset value
of its Shares at $1.00 by valuing its portfolio securities using the amortized
cost method. The net asset value for Shares is determined by adding the interest
of the Shares in the value of all securities and other assets of the Fund,
subtracting the interest of the Shares in the liabilities of the Fund and those
attributable to Shares and dividing the remainder by the total number of Shares
outstanding. Of course, these Funds cannot guarantee that their net asset value
will always remain at $1.00 per Share.

With respect to The U.S. Government Securities Fund, The Stock Fund, The
Virginia Municipal Bond Fund and The Maryland Municipal Bond Fund, net asset
value per Share fluctuates and is determined by adding the interest of the
Shares in the market value of all securities and other assets of the Fund,
subtracting the interest of the Shares in the liabilities of the Fund and those
attributable to Shares, and dividing the remainder by the total number of Shares
outstanding. The net asset value for Shares may exceed that of Investment Shares
due to the variance in daily net income realized by each class. Such variance
will reflect only accrued net income to which the shareholders of a particular
class are entitled.

INVESTING IN SHARES

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

SHARE PURCHASES

Shares of the Funds are sold on days on which the New York Stock Exchange is
open for business except on Lee-Jackson-King Day, Columbus Day and Veterans'
Day. Shares of the Funds may be purchased through Signet Trust Company. In
connection with the sale of Shares of the Funds, the distributor may from time
to time offer certain items of nominal value to any shareholder or investor. The
Funds reserve the right to reject any purchase request.

With respect to The Treasury Money Market Fund, The Money Market Fund, and The
Tax-Free Money Market Fund, an investor may write or call Signet Trust Company
to place an order to purchase Shares of the Funds. (Call 804-771-7470). Purchase
orders must be received by Signet Trust Company before 4:00 p.m. (Eastern time).
Payment for Shares of the Funds may be made by check or by wire. Orders are
considered received after payment by check is converted into federal funds and
received by Signet Trust Company. Payment must be received by Signet Trust
Company on the next business day after placing the order. For orders received by
11:00 a.m. (Eastern time), shareholders will begin earning dividends on that day
provided payment by wire is received by Signet Trust Company by 2:00 p.m.
(Eastern time) on that day.

With respect to The U.S. Government Securities Fund, The Stock Fund, The
Virginia Municipal Bond Fund and The Maryland Municipal Bond Fund, an investor
may write or call Signet Trust Company to

place an order to purchase Shares of the Fund. (Call 804-771-7470). Purchase
orders must be received by Signet Trust Company before 4:00 p.m. (Eastern time).
Payment for Shares of the Funds may be made by check or by wire. Payment must be
received by Signet Trust Company the next business day.

BY CHECK. Purchases of Shares by check must be made payable to Signet Trust
Company and sent to Signet Trust Company, 7 North Eighth Street, Richmond, VA
23219.

BY WIRE. With respect to The Treasury Money Market Fund, The Money Market Fund,
and The Tax-Free Money Market Fund, payment by wire must be received by Signet
Trust Company before 2:00 p.m. (Eastern time) the next business day after
placing the order. With respect to The U.S. Government Securities Fund, The
Stock Fund, The Virginia Municipal Bond Fund and The Maryland Municipal Bond
Fund, payment by wire must be received by Signet Trust Company the next business
day. Shares of the Funds cannot be purchased by Federal Reserve Wire on Columbus
Day, Veterans' Day or Lee-Jackson-King Day.

MINIMUM INVESTMENT REQUIRED

The minimum initial investment in Shares is $10,000 for those Funds offering
Trust Shares, and $1,000 for The Tax-Free Money Market Fund.

WHAT SHARES COST

Shares of the Funds are sold at their net asset value next determined after an
order is received. There is no sales charge imposed by the Funds.

On Monday through Friday, The U.S. Government Securities Fund, The Stock Fund,
The Virginia Municipal Bond Fund and The Maryland Municipal Bond Fund calculate
net asset value at 4:00 p.m. (Eastern time), while The Treasury Money Market
Fund, The Money Market Fund, and The Tax-Free Money Market Fund, calculate net
asset value at 1:00 p.m. (Eastern time), and 4:00 p.m. (Eastern time), except
on: (i) days on which there are not sufficient changes in the value of a Fund's
portfolio securities that its net asset value might be materially affected; (ii)
days during which no shares of a Fund are tendered for redemption and no orders
to purchase shares are received; or (iii) the following holidays: New Year's
Day, Martin Luther King Day, Presidents' Day, Good Friday, Memorial Day,
Independence Day, Labor Day, Thanksgiving Day, and Christmas Day.

CERTIFICATES AND CONFIRMATIONS

As transfer agent for the Funds, Federated Services Company maintains a share
account for each shareholder of record. Share certificates are not issued unless
requested by contacting Signet Trust Company in writing.

With respect to The Treasury Money Market Fund, The Money Market Fund, and The
Tax-Free Money Market Fund, monthly confirmations are sent to report
transactions such as purchases and redemptions as well as dividends paid during
the month. With respect to The U.S. Government Securities Fund, The Stock Fund,
The Virginia Municipal Bond Fund and The Maryland Municipal Bond Fund, detailed
confirmations of each purchase or redemption are sent to each shareholder. In
addition, monthly confirmations are sent to report dividends paid during that
month.

DIVIDENDS

With respect to The U.S. Government Securities Fund, The Virginia Municipal Bond
Fund, The Maryland Municipal Bond Fund, The Treasury Money Market Fund, The
Money Market Fund, and The Tax-Free Money Market Fund, dividends are declared
daily and paid monthly.

With respect to The Treasury Money Market Fund, The Money Market Fund, and The
Tax-Free Money Market Fund, Shares purchased by wire before 2:00 p.m. (Eastern
time) begin earning dividends that day. Shares purchased by check begin earning
dividends on the day after the check is converted by Signet Trust Company into
federal funds.

With respect to The Stock Fund, dividends are declared and paid quarterly.

Unless cash payments are requested by shareholders in writing to a Fund,
dividends are automatically reinvested in additional Shares of the Fund on
payment dates at the ex-dividend date net asset value without a sales charge.

CAPITAL GAINS

With respect to The Treasury Money Market Fund, The Money Market Fund, and The
Tax-Free Money Market Fund, capital gains, if any, could result in an increase
in dividends. Capital losses could result in a decrease in dividends. If, for
some extraordinary reason, a Fund realizes net long-term capital gains, it will
distribute them at least once every 12 months.

With respect to The U.S. Government Securities Fund, The Stock Fund, The
Virginia Municipal Bond Fund and The Maryland Municipal Bond Fund, capital gains
realized by a Fund, if any, will be distributed at least once every 12 months.

REDEEMING SHARES

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

Each Fund redeems Shares at their net asset value next determined after Signet
Trust Company receives the redemption request. Redemptions will be made on days
on which a Fund computes its net asset value. Telephone or written requests for
redemption must be received in proper form by Signet Trust Company.

BY TELEPHONE. A shareholder may redeem Shares of a Fund by calling Signet Trust
Company to request the redemption. (Call 804-771-7470) Shares will be redeemed
at the net asset value next determined after a Fund receives the redemption
request from Signet Trust Company.

With respect to The Treasury Money Market Fund, The Money Market Fund, and The
Tax-Free Money Market Fund, redemption requests received before 11:00 a.m.
(Eastern time) will be wired the same day, but will not be entitled to that
day's dividend. A redemption request must be received by Signet Trust Company
before 4:00 p.m. (Eastern time). Redemption requests through registered
broker/dealers must be received by Signet Trust Company before 3:00 p.m.
(Eastern time). Signet Trust Company is responsible for promptly submitting
redemption requests and providing proper written redemption instructions to a
Fund. Other registered broker/dealers may charge customary fees and commissions
for this service.

With respect to The U.S. Government Securities Fund, The Stock Fund, The
Virginia Municipal Bond Fund and The Maryland Municipal Bond Fund, a redemption
request must be received by Signet Trust Company before 4:00 p.m. (Eastern time)
in order for Shares to be redeemed at that day's net asset value. Redemption
requests through registered broker/dealers must be received by Signet Trust
Company before 3:00 p.m. (Eastern time) in order for Shares to be redeemed at
that day's net asset value. Signet Trust Company is responsible for promptly
submitting redemption requests and providing proper written redemption
instructions to a Fund. Other registered broker/dealers may charge customary
fees and commissions for this service.

If, at any time, a Fund should determine it necessary to terminate or modify
this method of redemption, shareholders would be promptly notified.

An authorization form permitting a Fund to accept telephone redemption requests
must first be completed. It is recommended that investors request this privilege
at the time of their initial application. If not completed at the time of
initial application, authorization forms and information on this service can be
obtained through Signet Trust Company. Telephone redemption instructions may be
recorded. If reasonable procedures are not followed by a Fund, it may be liable
for losses due to unauthorized or fraudulent telephone instructions.

In the event of drastic economic or market changes, a shareholder may experience
difficulty in redeeming by telephone. If such a case should occur, another
method of redemption, such as "By Mail", should be considered.

BY MAIL. Shareholders may redeem Shares of a Fund by sending a written request
to Signet Trust Company. The written request should include the shareholder's
name, the Fund name, the class of shares, the account number, and the Share or
dollar amount requested. If share certificates have been issued, they must be
properly endorsed and should be sent by registered or certified mail with the
written request to Signet Trust Company.

Shareholders requesting a redemption of $50,000 or more, a redemption of any
amount to be sent to an address other than that on record with a Fund, or a
redemption payable other than to the shareholder of record must have signatures
on written redemption requests guaranteed by:

- a trust company or commercial bank whose deposits are insured by BIF
which is administered by the FDIC;

- a member of the New York, American, Boston, Midwest, or Pacific Stock
Exchange;

- a savings bank or savings and loan association whose deposits are insured
by the SAIF, which is administered by the FDIC; or

- any other "eligible guarantor institution," as defined in the Securities
Exchange Act of 1934.

The Funds do not accept signatures guaranteed by a notary public.

The Funds and their transfer agent have adopted standards for accepting
signature guarantees from the above institutions. The Funds may elect in the
future to limit eligible signature guarantors to institutions that are members
of a signature guarantee program. The Funds and their transfer agent reserve the
right to amend these standards at any time without notice.

Normally, a check for the proceeds is mailed to the shareholder within one
business day, but in no event more than seven days, after receipt of a proper
written redemption request.

REDEMPTION IN KIND

The Trust is obligated to redeem Shares solely in cash up to $250,000 or 1% of
any class' net asset value, whichever is less, for any one shareholder within a
90-day period.

Any redemption beyond this amount will also be in cash unless the Trustees
determine that payments should be in kind. In such a case, the Trust will pay
all or a portion of the remainder of the redemption in portfolio instruments,
valued in the same way as net asset value is determined. The portfolio
instruments will be selected in a manner that the Trustees deem fair and
equitable.

Redemption in kind is not as liquid as a cash redemption. If redemption is made
in kind, shareholders receiving their securities and selling them before their
maturity could receive less than the redemption value of their securities and
could incur transaction costs.

SHAREHOLDER INFORMATION
- --------------------------------------------------------------------------------

VOTING RIGHTS

Each Share of a Fund gives the shareholder one vote in Trustee elections and
other matters submitted to shareholders for vote. All shares of all classes of
each portfolio in the Trust have equal voting rights, except that in matters
affecting only a particular Fund or class, only shareholders of that Fund or
class are entitled to vote. As a Massachusetts business trust, the Trust is not
required to hold annual shareholder meetings. Shareholder approval will be
sought only for certain changes in the operation of the Trust or a Fund and for
the election of Trustees under certain circumstances.

As of November 9, 1993, Signet Trust Company, Richmond, Virginia, acting in
various capacities for numerous accounts, was the owner of record of 10,986,813
shares (99.99%) of The U.S. Government Securities Fund--Trust Shares; 5,202,317
shares (99.99%) of The Stock Fund--Trust Shares; 3,771,697 shares (99.99%) of
The Virginia Municipal Bond Fund--Trust Shares; 1,058,305 shares (99.99%) of The
Maryland Municipal Bond Fund--Trust Shares; 143,210,919 shares (99.99%) of The
Treasury Money Market Fund--Trust Shares; and 138,542,690 shares (99.99%) of The
Money Market Fund--Trust Shares, and therefore, may for certain purposes, be
deemed to control the Funds and be able to affect the outcome of certain matters
presented for a vote of shareholders.

As of November 9, 1993, Stephens Inc., Little Rock, Arkansas, acting as
shareholder for the benefit of individual investors, was the owner of record of
4,749,681 shares (41.66%) of The U.S. Government Securities Fund--Investment
Shares; 3,229,374 shares (49.59%) of The Virginia Municipal Bond
Fund--Investment Shares; 1,542,904 shares (49.41%) of The Maryland Municipal
Bond Fund--
Investment Shares; 20,745,412 shares (98.43%) of The Treasury Money Market
Fund--
Investment Shares; and 9,040,547 shares (84.04%) of The Money Market
Fund--Investment Shares,

and therefore, may, for certain purposes, be deemed to control the funds and be
able to affect the outcome of certain matters presented for a vote of
shareholders.

Trustees may be removed by the Trustees or by shareholders at a special meeting.
A special meeting of the shareholders shall be called by the Trustees upon the
written request of shareholders owning at least 10% of the Trust's outstanding
shares.

MASSACHUSETTS PARTNERSHIP LAW

Under certain circumstances, shareholders may be held personally liable as
partners under Massachusetts law for acts or obligations of the Trust. To
protect shareholders, the Trust has filed legal documents with Massachusetts
that expressly disclaim the liability of shareholders for such acts or
obligations of the Trust. These documents require notice of this disclaimer to
be given in each agreement, obligation, or instrument the Trust or its Trustees
enter into or sign.

In the unlikely event a shareholder is held personally liable for obligations of
the Trust, the Trust is required to use its property to protect or compensate
the shareholder. On request, the Trust will defend any claim made and pay any
judgment against a shareholder for any act or obligation of the Trust.
Therefore, financial loss resulting from liability as a shareholder will occur
only if the Trust cannot meet its obligations to indemnify shareholders and pay
judgments against them from its assets.

EFFECT OF BANKING LAWS
- --------------------------------------------------------------------------------

Banking laws and regulations presently prohibit a bank holding company
registered under the federal Bank Holding Company Act of 1956 or any bank or
non-bank 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, or distributing securities. However, such banking
laws and regulations do not prohibit such a holding company affiliate or banks
generally from acting as investment adviser, transfer agent or custodian to such
an investment company or from purchasing shares of such a company as agent for
and upon the order of such a customer. Signet Trust Company is subject to such
banking laws and regulations.

Signet Trust Company believes, based on the advice of its counsel, that Signet
Asset Management may perform the services for any Fund contemplated by its
advisory agreement with the Trust without violation of the Glass-Steagall Act or
other applicable banking laws or regulations. Changes in either federal or state
statutes and regulations relating to the permissible activities of banks and
their subsidiaries or affiliates, as well as further judicial or administrative
decisions or interpretations of such or future statutes and regulations, could
prevent Signet Asset Management from continuing to perform all or a part of the
above services for its customers and/or a Fund. If it were prohibited from
engaging in these customer-related activities, the Trustees would consider
alternative advisers and means of continuing available investment services. In
such event, changes in the operation of a Fund may occur, including possible
termination of any automatic or other Fund share investment and redemption
services then being provided by Signet Asset Management. It is not expected that
existing shareholders would suffer any adverse financial consequences (if
another adviser with equivalent abilities to Signet Asset Management is found)
as a result of any of these occurrences.

TAX INFORMATION
- --------------------------------------------------------------------------------

FEDERAL INCOME TAX

The Funds anticipate that they will pay no federal income tax because each Fund
expects to meet requirements of the Internal Revenue Code applicable to
regulated investment companies and to receive the special tax treatment afforded
to such companies.

Each Fund will be treated as a single, separate entity for federal income tax
purposes so that income (including capital gains) and losses realized by a Fund
will not be combined for tax purposes with those realized by any of the other
Funds.

With respect to The U.S. Government Securities Fund, The Stock Fund, The
Treasury Money Market Fund and The Money Market Fund, unless otherwise exempt,
shareholders are required to pay federal income tax on any dividends and other
distributions received. This applies whether dividends and distributions are
received in cash or as additional shares. Shareholders of The U.S. Government
Securities Fund, The Stock Fund, The Treasury Money Market Fund and The Money
Market Fund are urged to consult their own tax advisers regarding the status of
their accounts under state and local tax laws.

Shareholders of The Virginia Municipal Bond Fund, The Maryland Municipal Bond
Fund and The Tax-Free Money Market Fund are not required to pay the federal
regular income tax on any dividends received from the Fund that represent net
interest on tax-exempt municipal bonds. However, under the Tax Reform Act of
1986, dividends representing net interest earned on certain "private activity"
bonds issued after August 17, 1986, may be included in calculating the federal
individual alternative minimum tax or the federal alternative minimum tax for
corporations. The Tax-Free Money Market Fund may purchase all types of municipal
bonds, including private activity bonds.

The alternative minimum tax applies when it exceeds the regular tax for the
taxable year. Alternative minimum taxable income is equal to the regular taxable
income of the taxpayer increased by certain "tax preference" items not included
in regular taxable income and reduced by only a portion of the deductions
allowed in the calculation of the regular tax.

Dividends of the Funds representing net interest income earned on some temporary
investments and any realized net short-term gains are taxed as ordinary income.

These tax consequences apply whether dividends are received in cash or as
additional shares.

VIRGINIA TAXES. Income to the Fund that is exempt from Virginia state income
taxes and income taxes imposed by Virginia municipalities will retain its exempt
status when distributed to Virginia shareholders.

Shares of the Fund will not be subject to Virginia state or local personal
property taxes.

MARYLAND TAXES. Holders of the Fund who are individuals, corporations, estates
or trusts and who are subject to Maryland state and local income tax will not be
subject to tax in Maryland on Fund dividends to the extent that such dividends
qualify as exempt-interest dividends of a regulated investment company under
Section 852(b)(5) of the Internal Revenue Code of 1986, as amended (the "Code"),
and are attributable to (i) interest on tax-exempt obligations of the State of
Maryland or its political subdivisions or authorities, (ii) interest on
obligations of the United States or an authority, commission, instrumentality,
possession or territory of the United States, or (iii) gain realized by the Fund
from the sale or exchange of bonds issued by Maryland, a political subdivision
of Maryland, or the United States government (excluding obligations issued by
the District of Columbia, a territory or possession of the United States, or a
department, agency, instrumentality, or political subdivision of the District,
territory or possession).

To the extent that distributions of the Fund are attributable to sources other
than those described above, such as (i) interest on obligations issued by states
other than Maryland or (ii) income from repurchase contracts, such distributions
will not be exempt from Maryland state and local income taxes. In addition, gain
realized by a shareholder upon a redemption or exchange of Fund shares will be
subject to Maryland taxation.

Maryland presently includes in taxable net income items of tax preferences as
defined in the Code. Interest paid on certain private activity bonds constitutes
a tax preference. Accordingly, subject to a threshold amount, 50% of any
distributions of the Fund attributable to such private activity bonds will not
be exempt from Maryland state and local income taxes.

Interest on indebtedness incurred (directly or indirectly) by a shareholder of
the Fund to purchase or carry shares of The Maryland Municipal Bond Fund will
not be deductible for Maryland state and local income tax purposes to the extent
such interest is allocable to exempt-interest dividends.

Shares of the Fund will not be subject to the Maryland personal property tax.

OTHER STATE AND LOCAL TAXES. With respect to The Virginia Municipal Bond Fund
and The Maryland Municipal Bond Fund, distributions representing net interest
received on tax-exempt municipal securities are not necessarily free from income
taxes of any other state or local taxing authority. State laws differ on this
issue and shareholders are urged to consult their own tax advisers.

PERFORMANCE INFORMATION
- --------------------------------------------------------------------------------

From time to time, The U.S. Government Securities Fund and The Stock Fund may
advertise total return and yield. The Virginia Municipal Bond Fund and The
Maryland Municipal Bond Fund may advertise total return, yield and
tax-equivalent yield. The Treasury Money Market Fund and The Money Market Fund
may advertise yield and effective yield. The Tax-Free Money Market Fund may
advertise its yield, effective yield, and tax-equivalent yield.

Total return represents the change, over a specified period of time, in the
value of an investment in a Fund after reinvesting all income and capital gains
distributions. It is calculated by dividing that change by the initial
investment and is expressed as a percentage.

The yield of Shares of The U.S. Government Securities Fund, The Stock Fund, The
Virginia Municipal Bond Fund and The Maryland Municipal Bond Fund is calculated
by dividing the net investment income per Share (as defined by the Securities
and Exchange Commission) earned by Shares over a thirty-day period by the
maximum offering price per share of Shares of a Fund on the last day of the
period. This number is then annualized using semi-annual compounding. The yield
does not necessarily reflect income actually earned by Shares and, therefore,
may not correlate to the dividends or other distributions paid to shareholders.

The yields of Shares of The Treasury Money Market Fund, The Money Market Fund,
and The Tax-Free Money Market Fund represent the annualized rate of income
earned on an investment in Shares over a seven-day period. It is the annualized
dividends earned during the period on the investment, shown as a percentage of
the investment. The effective yield is calculated similarly to the yield, but,
when annualized, the income earned on an investment in Shares is assumed to be
reinvested daily. The effective yield will be slightly higher than the yield
because of the compounding effect of this assumed reinvestment.

The tax equivalent yield of the Shares for The Virginia Municipal Bond Fund, The
Maryland Municipal Bond Fund, and The Tax-Free Money Market Fund is calculated
similarly to the yield, but is adjusted to reflect the taxable yield that the
Shares would have had to earn to equal its actual yield, assuming a specific tax
rate. The tax-equivalent yield does not necessarily reflect income actually
earned by Shares and, therefore, may not correlate to the dividends or other
distributions paid to shareholders.

Shares are sold without any sales load or other similar non-recurring charges.

With respect to The U.S. Government Securities Fund and The Stock Fund, total
return and yield will be calculated separately for Trust Shares and Investment
Shares. Because Investment Shares may be subject to a redemption fee and are
subject to a 12b-1 fee, the total return and yield for Trust Shares for the same
period will exceed that of Investment Shares.

With respect to The Virginia Municipal Bond Fund and The Maryland Municipal Bond
Fund, total return, yield and tax-equivalent yield will be calculated separately
for Trust Shares and Investment Shares. Because Investment Shares may be subject
to a redemption fee and are subject to a 12b-1 fee, the total return and yield
for Trust Shares for the same period will exceed that of Investment Shares.

With respect to The Treasury Money Market Fund and The Money Market Fund, yield
and effective yield will be calculated separately for Trust Shares and
Investment Shares. Because Investment Shares are subject to 12b-1 fees the yield
and effective yield for Trust Shares, for the same period, will exceed that of
Investment Shares.

From time to time, the Funds may advertise their performance using certain
financial publications and/or compare their performance to certain indices.

OTHER CLASSES OF SHARES
- --------------------------------------------------------------------------------

Investment Shares, the other class of shares offered by those Funds offering
separate classes, are sold to customers of Signet Bank, N.A. and Signet
Financial Services, Inc. at net asset value at a minimum initial investment of
$1,000. Under certain circumstances, Investment Shares may be subject to a 2.00%
redemption fee. Investment Shares may be exchanged for Investment Shares of the
Funds at net asset value. Investment Shares are distributed to such institutions
pursuant to a Rule 12b-1 Plan whereby brokers and administrators are paid a fee
of .35 of 1% for The Treasury Money Market Fund and The Money Market Fund and
.25 of 1% for The U.S. Government Securities Fund, The Stock Fund, The Virginia
Municipal Bond Fund and The Maryland Municipal Bond Fund of the Investment
Shares' average net asset value.

The amount of dividends payable to Shares will exceed those payable to
Investment Shares by the difference between class expenses and distribution
expenses borne by shares of each respective class.

The stated advisory fee is the same for both classes of each of the Funds.

ADDRESSES
- --------------------------------------------------------------------------------

<TABLE>
<S> <C> <C>
The U.S. Government Securities Fund Federated Investors Tower
The Stock Fund Pittsburgh, Pennsylvania 15222-3779
The Treasury Money Market Fund
The Money Market Fund
The Virginia Municipal Bond Fund
The Maryland Municipal Bond Fund
The Tax-Free Money Market Fund
- ------------------------------------------------------------------------------------------------
Distributor
Federated Securities Corp. Federated Investors Tower
Pittsburgh, Pennsylvania 15222-3779
- ------------------------------------------------------------------------------------------------
Investment Adviser
Signet Asset Management 7 North Eighth Street
Richmond, Virginia 23219
- ------------------------------------------------------------------------------------------------
Custodian
Signet Trust Company 7 North Eighth Street
Richmond, Virginia 23219
- ------------------------------------------------------------------------------------------------
Transfer Agent, and Dividend Disbursing Agent
Federated Services Company Federated Investors Tower
Pittsburgh, Pennsylvania 15222-3779
- ------------------------------------------------------------------------------------------------
Legal Counsel
Houston, Houston & Donnelly 2510 Centre City Tower
Pittsburgh, Pennsylvania 15222
- ------------------------------------------------------------------------------------------------
Legal Counsel
Dickstein, Shapiro & Morin, L.L.P. 2101 L Street N.W.
Washington, D.C. 20037
- ------------------------------------------------------------------------------------------------
Independent Auditors
Deloitte & Touche LLP 2500 One PPG Place
Pittsburgh, Pennsylvania 15222
- ------------------------------------------------------------------------------------------------
</TABLE>

SIGNET
ASSET MANAGEMENT
A Division of Signet Trust Company

Investment Adviser

FEDERATED SECURITIES CORP. IS THE DISTRIBUTOR OF THE FUNDS.

3042108A-I (11/94)

The Medalist Funds
(formerly the Signet Select Funds)
Trust Shares
consists of seven portfolios:
o The U. S. Government Securities Fund;
o The Stock Fund;
o The Virginia Municipal Bond Fund;
o The Maryland Municipal Bond Fund;
o The Treasury Money Market Fund;
o The Money Market Fund; and
o The Tax-Free Money Market Fund

Combined Statement of Additional Information

This Combined Statement of Additional Information should be read with the
Combined Prospectus for the Trust Shares ("Trust Shares") of The Medalist
Funds (the "Trust") and The Tax-Free Money Market Fund, dated November 30,
1994. This Statement is not a Prospectus itself. To receive a copy of the
prospectus, write to or call the Trust.

FEDERATED INVESTORS TOWER
PITTSBURGH, PA 15222-3779
STATEMENT DATED NOVEMBER 30, 1994
General Information About the Trust

The Trust was established as a Massachusetts business trust under a
Declaration of Trust dated June 20, 1990. As of the date of this Statement,
the Trust consists of seven separate portfolios of securities
(collectively, the "Funds", individually, a "Fund") which are as follows:
U. S. Government Securities Fund, The Stock Fund, The Virginia Municipal
Bond Fund, The Maryland Municipal Bond Fund, The Treasury Money Market
Fund, The Money Market Fund, and The Tax-Free Money Market Fund. On October
1, 1992, the name of the Trust was changed from "The SBK Series" to "Signet
Select Funds." On August 15, 1994, the name of the Trust was changed from
"Signet Select Funds" to "The Medalist Funds."

With the exception of The Tax-Free Money Market Fund, which offers a single
class of shares, the Funds are offered in two classes, Investment Shares
and Trust Shares. This Combined Statement of Additional Information relates
only to the Trust Shares of those Funds offering classes and to shares of
The Tax-Free Money Market Fund.

Investment Objective and Policies of the Funds
The Prospectus discusses the objective of each Fund and the policies it
employs to achieve those objectives. The following discussion supplements
the description of the Funds' investment policies in the Combined
Prospectus.
The Funds' respective investment objectives cannot be changed without
approval of shareholders. The investment policies described below may be
changed by the Trustees without shareholder approval. Shareholders will be
notified before any material change in these policies becomes effective.
Additional information about investment limitations, strategies that one or
more Funds may employ, and certain investment policies mentioned below
appear in the prospectus section "Portfolio Investments and Strategies."

The U.S. Government Securities Fund
Types of Investments
The Fund invests primarily in securities which are guaranteed as to payment
of principal and interest by the U.S. government or its instrumentalities.

U.S. Government Obligations
The types of U.S. government obligations in which the Fund may invest
generally include direct obligations of the U.S. Treasury (such as U.S.
Treasury bills, notes, and bonds) and obligations issued or guaranteed
by U.S. government agencies or instrumentalities. These securities are
backed by:
o the full faith and credit of the U.S. Treasury;
o the issuer's right to borrow from the U.S. Treasury;
o the discretionary authority of the U.S. government to purchase
certain obligations of agencies or
instrumentalities; or
o the credit of the agency or instrumentality issuing the obligations.
Examples of agencies and instrumentalities which may not always receive
financial support from the U.S. government are:
o Federal Land Banks;
o Central Bank for Cooperatives;
o Federal Intermediate Credit Banks;
o Federal Home Loan Banks;
o Farmers Home Administration; and
o Federal National Mortgage Association.

Collateralized Mortgage Obligations (CMOs)
Privately issued CMOs generally represent an ownership interest in
federal agency mortgage pass-through securities such as those issued by
the Government National Mortgage Association. The terms and
characteristics of the mortgage instruments may vary among pass-through
mortgage loan pools.
The market for such CMOs has expanded considerably since its inception.
The size of the primary issuance market and the active participation in
the secondary market by securities dealers and other investors make
government-related pools highly liquid.

The Stock Fund
The Fund invests primarily in the securities of high quality companies,
including common stocks, preferred stocks, corporate bonds, notes, warrants
and convertible securities.

Convertible Securities
Convertible securities are fixed income securities which may be
exchanged or converted into a predetermined number of the issuer's
underlying
common stock at the option of the holder during a specified time
period. Convertible securities may take the form of convertible
preferred stock, convertible bonds or debentures, units consisting of
"usable" bonds and warrants or a combination of the features of several
of these securities. The investment characteristics of each convertible
security vary widely, which allows convertible securities to be
employed for different investment objectives.
The Fund will exchange or convert the convertible securities held in
its portfolio into shares of the underlying common stock in instances
in which, in the investment adviser's opinion, the investment
characteristics of the underlying common shares will assist the Fund in
achieving its investment objectives. Otherwise, the Fund may hold or
trade convertible securities. In selecting convertible securities for
the Fund, the Fund's adviser evaluates the investment characteristics
of the convertible security as a fixed income instrument, and the
investment potential of the underlying equity security for capital
appreciation. In evaluating these matters with respect to a particular
convertible security, the Fund's adviser considers numerous factors,
including the economic and political outlook, the value of the security
relative to other investment alternatives, trends in the determinants
of the issuer's profits, and the issuer's management capability and
practices.

Warrants
Warrants are basically options to purchase common stock at a specific
price (usually at a premium above the market value of the optioned
common stock at issuance) valid for a specific period of time. Warrants
may have a life ranging from less than a year to twenty years or may be
perpetual. However, most warrants have expiration dates after which
they are worthless. In addition, if the market price of the common
stock does not exceed the warrant's exercise price during the life of
the warrant, the warrant will expire as worthless. Warrants have no
voting rights, pay no dividends, and have no rights with respect to the
assets of the corporation issuing them. The percentage increase or
decrease in the market price of the warrant may tend to be greater than
the percentage increase or decrease in the market price of the optioned
common stock.

Futures And Options Transactions
As a means of reducing fluctuations in the net asset value of shares of
the Fund, the Fund may attempt to hedge all or a portion of its
portfolio by buying and selling financial futures contracts, buying put
options on portfolio securities and listed put options on futures
contracts, and writing call options on futures contracts. The Fund may
also write covered call options on portfolio securities to attempt to
increase its current income. The Fund will maintain its positions in
securities, option rights, and segregated cash subject to puts and
calls until the options are exercised, closed, or have expired. An
option position on financial futures contracts may be closed out only
on an exchange which provides a secondary market from options of the
same series.

Financial Futures Contracts
A futures contract is a firm commitment by two parties: the seller, who
agrees to make delivery of the specific type of security called for in
the contract ("going short") and the buyer, who agrees to take delivery
of the security ("going long") at a certain time in the future.
Financial futures contracts call for the delivery of shares of common
stocks represented in a particular index.

Put Options on Financial Futures Contracts
The Fund may purchase listed put options on financial futures
contracts.Unlike entering directly into a futures contract, which
requires the purchaser to buy a financial instrument on a set date at a
specified price, the purchase of a put option on a futures contract
entitles (but does not obligate) its purchaser to decide on or before a
future date whether to assume a short position at the specified price.
Generally, if the hedged portfolio securities decrease in value during
the term of an option, the related futures contracts will also decrease
in value and the option will increase in value. In such an event, the
Fund will normally close out its option by selling an identical option.
If the hedge is successful, the proceeds received by the Fund upon the
sale of the second option will be large enough to offset both the
premium paid by the Fund for the original option plus the decrease in
value of the hedged securities.

Alternatively, the Fund may exercise its put option to close out the
position. To do so, it would simultaneously enter into a futures
contract of the type underlying the option (for a price less than the
strike price of the option) and exercise the option. The Fund would
then deliver the futures contract in return for payment of the strike
price. If the Fund neither closes out nor exercises an option, the
option will expire on the date provided in the option contract, and
only the premium paid for the contract will be lost.

Call Options on Financial Futures Contracts
In addition to purchasing put options on futures, the Fund may write
listed call options on futures contracts to hedge its portfolio. When
the Fund writes a call option on a futures contract, it is undertaking
the obligation of assuming a short futures position (selling a futures
contract) at the fixed strike price at any time during the life of the
option if the option is exercised. As stock prices fall, causing the
prices of futures to go down, the Fund's obligation under a call option
on a future (to sell a futures contract) costs less to fulfill, causing
the value of the Fund's call option position to increase.
In other words, as the underlying futures price goes down below the
strike price, the buyer of the option has no reason to exercise the
call, so that the Fund keeps the premium received for the option. This
premium can substantially offset the drop in value of the Fund's fixed
income or indexed portfolio which is occurring as interest rates rise.
Prior to the expiration of a call written by the Fund, or exercise of
it by the buyer, the Fund may close out the option by buying an
identical option. If the hedge is successful, the cost of the second
option will be less than the premium received by the Fund for the
initial option. The net premium income of the Fund will then
substantially offset the decrease in value of the hedged securities.
The Fund will not maintain open positions in futures contracts it has
sold or call options it has written on futures contracts if, in the
aggregate, the value of the open positions (marked to market) exceeds
the current market value of its securities portfolio plus or minus the
unrealized gain or loss on those open positions, adjusted for the
correlation of volatility between the hedged securities and the futures
contracts. If this limitation is exceeded at any time, the Fund will
take prompt action to close out a sufficient number of open contracts
to bring its open futures and options positions within this limitation.

"Margin" in Futures Transactions
Unlike the purchase or sale of a security, the Fund does not pay or
receive money upon the purchase or sale of a futures contract. Rather,
the Fund is required to deposit an amount of "initial margin" in cash
or U.S. Treasury bills with its custodian (or the broker, if legally
permitted). The nature of initial margin in futures transactions is
different from that of margin in securities transactions in that
futures contract initial margin does not involve the borrowing of funds
by the Fund to finance the transactions. Initial margin is in the
nature of a performance bond or good faith deposit on the contract
which is returned to the Fund upon termination of the futures contract,
assuming all contractual obligations have been satisfied.
A futures contract held by the Fund is valued daily at the official
settlement price of the exchange on which it is traded. Each day the
Fund pays or receives cash, called "variation margin," equal to the
daily change in value of the futures contract. This process is known as
"marking to market." Variation margin does not represent a borrowing or
loan by the Fund but is instead settlement between the Fund and the
broker of the amount one would owe the other if the futures contract
expired. In computing its daily net asset value, the Fund will mark to
market its open futures positions.
The Fund is also required to deposit and maintain margin when it writes
call options on futures contracts.

Purchasing Put Options on Portfolio Securities
The Fund may purchase put options on portfolio securities to protect
against price movements in particular securities in its portfolio. A
put option gives the Fund, in return for a premium, the right to sell
the underlying security to the writer (seller) at a specified price
during the term of the option.

Writing Covered Call Options On Portfolio Securities
The Fund may also write covered call options to generate income. As
writer of a call option, the Fund has the obligation upon exercise of
the option during the option period to deliver the underlying security
upon payment of the exercise price. The Fund may only sell call options
either on securities held in its portfolio or on securities which it
has the right to obtain without payment of further consideration (or
has segregated cash in the amount of any additional consideration).

Over-the-Counter Options
The Fund may purchase and write over-the-counter options on portfolio
securities in negotiated transactions with the buyers or writers of the
options for those options on portfolio securities held by the Fund and
not traded on an exchange.
Over-the-counter options are two party contracts with price and terms
negotiated between buyer and seller. In contrast, exchange-traded
options are third party contracts with standardized strike prices and
expiration dates and are purchased from a clearing corporation.
Exchange-traded options have a continuous liquid market while over-the-
counter options may not.

U.S. Government Obligations
The types of U.S. government obligations in which the Fund may invest are
those set forth under "The U.S. Government Securities Fund--U.S. Government
Obligations."

Commercial Paper
The Fund may invest in commercial paper rated at least A-1 by Standard &
Poor's Ratings Group ("S&P"), Prime-1 by Moody's Investors Service, Inc.
("Moody's"), or F-1 by Fitch Investors Service ("Fitch") and money market
instruments (including commercial paper) which are unrated but of
comparable quality, including Canadian Commercial Paper ("CCPs") and
Europaper. In the case where commercial paper, CCPs or Europaper have
received different ratings from different rating services, such commercial
paper, CCPs or Europaper is an acceptable investment so long as at least
one rating is one of the preceding high quality ratings and provided the
investment adviser has determined that such investment presents minimal
credit risks.

Bank Instruments
The Fund may invest in the instruments of banks and savings and loans whose
deposits are insured by the Bank Insurance Fund ("BIF"), which is
administered by the Federal Deposit Insurance Corporation ("FDIC"), or the
Savings Association Insurance Fund ("SAIF"), which is administered by the
FDIC, such as certificates of deposit, demand and time deposits, savings
shares, and bankers' acceptances. These instruments are not necessarily
guaranteed by those organizations.
In addition to domestic bank obligations such as certificates of deposit,
demand and time deposits, savings shares, and bankers' acceptances, the
Fund may invest in:
o Eurodollar Certificates of Deposit ("ECDs") issued by foreign
branches of U.S. or foreign banks;
o Eurodollar Time Deposits ("ETDs"), which are U.S. dollar-denominated
deposits in foreign branches of U.S. or foreign banks;
o Canadian Time Deposits, which are U.S. dollar-denominated deposits
issued by branches of major Canadian banks located in the United
States; and
o Yankee Certificates of Deposit ("Yankee CDs"), which are U.S. dollar-
denominated certificates of deposit issued by U.S. branches of
foreign banks and held in the United States.

The Virginia Municipal Bond Fund and The Maryland Municipal Bond Fund
Acceptable Investments
The Virginia Municipal Bond Fund and The Maryland Municipal Bond Fund
pursue their investment objectives by investing in professionally managed
portfolios of securities at least 65% of which are comprised of Virginia
(in the case of The Virginia Municipal Bond Fund) or Maryland (in the case
of The Maryland Municipal Bond Fund) municipal securities. The Funds will
invest their assets so that, under normal circumstances, at least 80% of
their annual interest income is exempt from federal regular and Virginia
(in the case of The Virginia Municipal Bond Fund) or Maryland (in the case
of The Maryland Municipal Bond Fund) state income taxes or that at least
80% of their total assets are invested in obligations, the interest income
from which is exempt from federal regular and Virginia (in the case of The
Virginia Municipal Bond Fund) or Maryland (in the case of The Maryland
Municipal Bond Fund) state income taxes.

Characteristics
The municipal securities in which the Funds invest have the
characteristics set forth in the prospectus. An unrated municipal
security will be determined by a Fund's adviser to meet the quality
standards established by the Fund's Board of Trustees if it is of
comparable quality to the rated municipal securities which the Fund
purchases. The Trustees consider the creditworthiness of the issuer of
a municipal security, the issuer of a participation interest if the
Fund has the right to demand payment from the issuer of the interest or
the guarantor of payment by either of those issuers.
If Moody's or S&P's ratings change because of changes in those
organizations or in their rating systems, a Fund will try to use
comparable ratings as standards in accordance with the investment
policies described in the Fund's prospectus.

Types of Acceptable Investments
Examples of Virginia and Maryland municipal securities are:
o municipal notes and tax-exempt commercial paper;
o serial bonds sold with a series of maturity dates;
o tax anticipation notes sold to finance working capital needs of
municipalities in anticipation of receiving taxes at a later date;
o bond anticipation notes sold in anticipation of the issuance of
longer-term bonds in the future;
o revenue anticipation notes sold in expectation of receipt of federal
income available under the Federal Revenue Sharing Program;
o prerefunded municipal bonds refundable at a later date (payment of
principal and interest on prerefunded bonds is assured through the
first call date by the deposit in escrow of U.S. government
securities); or
o general obligation bonds secured by a municipality's pledge of
taxation.

The Treasury Money Market Fund
Types of Investments
The Fund invests only in short-term U.S. Treasury obligations. Short-term
U.S. Treasury obligations as used herein refers to evidences of
indebtedness issued by the United States, or issued by an agency or
instrumentality thereof, and fully guaranteed as to principal and interest
by the United States, maturing in 397 days or less from the date of
acquisition unless they are purchased under a repurchase agreement that
provides for repurchase by the seller within one year from the date of
acquisition. The Fund may also retain Fund assets in cash.

The Money Market Fund
Types of Investments
The Fund invests primarily in money market instruments maturing in 397 days
or less and which include, but are not limited to, commercial paper and
demand master notes, domestic and foreign bank instruments, U.S. government
obligations, and corporate debt obligations.

Bank Instruments
The types of bank instruments in which the Fund invests are those set
forth under "The Stock Fund-Bank Instruments."

U.S. Government Obligations
The types of U.S. government obligations in which the Fund may invest
are those set forth under "The U.S. Government Securities Fund-U.S.
Government Obligations."

The Tax-Free Money Market Fund
The Fund invests in a portfolio of municipal securities maturing in 13
months or less. As a matter of investment policy, which cannot be changed
without shareholder approval, at least 80% of the Fund's annual interest
income will be exempt from federal income tax (including alternative
minimum tax). The average maturity of the securities in the Fund's
portfolio, computed on a dollar-weighted basis, will be 90 days or less.

Portfolio Investments and Strategies
Repurchase Agreements
The Funds or their custodian will take possession of the securities subject
to repurchase agreements and these securities will be marked to market
daily. In the event that a defaulting seller filed for bankruptcy or became
insolvent, disposition of such securities by a Fund might be delayed
pending court action. The Funds believe that under the regular procedures
normally in effect for custody of a Fund's portfolio securities subject to
repurchase agreements, a court of competent jurisdiction would rule in
favor of a Fund and allow retention or disposition of such securities. The
Funds will only enter into repurchase agreements with banks and other
recognized financial institutions such as broker/dealers which are deemed
by the adviser to be creditworthy pursuant to guidelines established by the
Trustees.

Reverse Repurchase Agreements
The Funds may also enter into reverse repurchase agreements. These
transactions are similar to borrowing cash. In a reverse repurchase
agreement a Fund transfers possession of a portfolio instrument to another
person, such as a financial institution, broker, or dealer, in return for a
percentage of the instrument's market value in cash, and agrees that on a
stipulated date in the future the Fund will repurchase the portfolio
instrument by remitting the original consideration plus interest at an
agreed upon rate. The use of reverse repurchase agreements may enable a
Fund to avoid selling portfolio instruments at a time when a sale may be
deemed to be disadvantageous, but the ability to enter into reverse
repurchase agreements does not ensure that a Fund will be able to avoid
selling portfolio instruments at a disadvantageous time.
When effecting reverse repurchase agreements, liquid assets of a Fund, in a
dollar amount sufficient to make payment for the obligations to be
purchased, are segregated at the trade date. These securities are marked to
market daily and are maintained until the transaction is settled.

When-Issued and Delayed Delivery Transactions

These transactions are made to secure what is considered to be an
advantageous price or yield for a Fund. Settlement dates may be a month or
more after entering into these transactions, and the market values of the
securities purchased may vary from the purchase prices.

No fees or other expenses, other than normal transaction costs, are
incurred. However, liquid assets of a Fund sufficient to make payment for
the securities to be purchased are segregated on a Fund's records at the
trade date. These assets are marked to market daily and are maintained
until the transaction has been settled. The Funds may engage in these
transactions to an extent that would cause the segregation of an amount up
to 20% of the total value of their assets. The Funds do not intend to
engage in when-issued and delayed delivery transactions to an extent that
would cause the segregation of more than 20% of the total value of their
respective assets.

Lending of Portfolio Securities
The collateral received when The U.S. Government Securities Fund, The Stock
Fund and The Money Market Fund lend portfolio securities must be valued
daily and, should the market value of the loaned securities increase, the
borrower must furnish additional collateral to the particular Fund. During
the time portfolio securities are on loan, the borrower pays a Fund any
dividends or interest paid on such securities. Loans are subject to
termination at the option of a Fund or the borrower. A Fund may pay
reasonable administrative and custodial fees in connection with a loan and
may pay a negotiated portion of the interest earned on the cash or
equivalent collateral to the borrower or placing broker. The U.S.
Government Securities Fund and The Stock Fund do not have the right to vote
securities on loan, but would terminate the loan and regain the right to
vote if that were considered important with respect to the investment.

Restricted and Illiquid Securities

The Funds may invest in restricted securities. Restricted securities are
any securities in which a Fund may otherwise invest pursuant to its
investment objective and policies but which are subject to restriction on
resale under federal securities law. However, The U.S. Government
Securities Fund, The Stock Fund, The Virginia Municipal Bond Fund and The
Maryland Municipal Bond Fund will limit investments in illiquid securities,
including certain restricted securities determined by the Trustees not to
be liquid, and repurchase agreements providing for settlement in more than
seven days after notice, to 15% of its net assets. In the case of The
Virginia Municpal Bond Fund and The Maryland Municipal Bond Fund, illiquid
securities will include participation interests and variable rate municipal
securities without a demand feature or with a demand feature of longer than
seven days and which the adviser believes cannot be sold within seven days.
The Treasury Money Market Fund, The Money Market Fund, and The Tax-Free
Money Market Fund will limit investments in illiquid securities, including
certain securities determined by the Trustees not to be liquid, and
repurchase agreements providing for settlement in more than seven days
after notice, and in the case of The Money Market Fund, specifically
including non-negotiable fixed income time deposits with maturities over
seven days, to 10% of their net assets.

The U.S. Government Securities Fund, The Stock Fund and The Money Market
Fund may invest in commercial paper issued in reliance on the exemption
from registration afforded by Section 4(2) of the Securities Act of 1933.
Section 4(2) commercial paper is restricted as to disposition under federal
securities law and is generally sold to institutional investors, such as
the Fund, who agree that they are purchasing the paper for investment
purposes and not with a view to public distribution. Any resale by the
purchaser must be in an exempt transaction. Section 4(2) commercial paper
is normally resold to other institutional investors like the Fund through
or with the assistance of the issuer or investment dealers who make a
market in Section 4(2) commercial paper, thus providing liquidity. The
Funds believe that Section 4(2) commercial paper and possibly certain other
restricted securities which meet the criteria for liquidity established by
the Board of Trustees are quite liquid. The Funds intend, therefore, to
treat the restricted securities which meet the criteria for liquidity
established by the Trustees, including Section 4(2) commercial paper, as
determined by a Fund's investment adviser, as liquid and not subject to the
investment limitation applicable to illiquid securities. In addition,
because Section 4(2) commercial paper is liquid, the Funds intend to not
subject such paper to the limitation applicable to restricted securities.

Participation Interests

The financial institutions from which The Virginia Municipal Bond Fund, The
Maryland Municipal Bond Fund, and The Tax-Free Money Market Fund purchase
participation interests frequently provide or secure from other financial
institutions irrevocable letters of credit or guarantees and give a Fund
the right to demand payment on specified notice (normally within thirty
days for The Virginia Municipal Bond Fund and The Maryland Municipal Bond
Fund and seven days for The Tax-Free Money Market Fund) from the issuer of
the letter of credit or guarantee. These financial institutions may charge
certain fees in connection with their repurchase commitments, including a
fee equal to the excess of the interest paid on the municipal securities
over the negotiated yield at which the participation interests were
purchased by a Fund. By purchasing participation interests, a Fund is
buying a security meeting the maturity and quality requirements of a Fund
and is also receiving the tax-free benefits of the underlying securities.

In the acquisition of participation interests, a Fund's investment adviser
will consider the following quality factors:
o the quality of the underlying municipal security (of which a Fund takes
possession);
o the quality of the issuer of the participation interest; and
o a guarantee or letter of credit from a high-quality financial institution
supporting the participation interest.

Variable Rate Municipal Securities

The Virginia Municipal Bond Fund, The Maryland Municipal Bond Fund, and The
Tax-Free Money Market Fund invest in variable municipal securities.
Variable interest rates generally reduce changes in the market value of
municipal securities from their original purchase prices. Accordingly, as
interest rates decrease or increase, the potential for capital appreciation
or depreciation is less for variable rate municipal securities than for
fixed income obligations.

Many municipal securities with variable interest rates purchased by the The
Tax-Free Money Market Fund are subject to repayment of principal (usually
within seven days) on the The Tax-Free Money Market Fund's demand. For
purposes of determining the Fund's average maturity, the maturities of
these variable rate demand municipal securities (including participation
interests) are the longer of the periods remaining until the next
readjustment of their interest rates or the periods remaining until their
principal amounts can be recovered buy exercising the right to demand
payment. The terms of these variable rate demand instruments require
payment of principal and accrued interest from the issuer of the municipal
obligations, the issuer of the participation interests or a guarantor of
either issuer.

Municipal Leases
The Virginia Municipal Bond Fund, The Maryland Municipal Bond Fund, and The
Tax-Free Money Market Fund may purchase municipal securities in the form of
participation interests which represent undivided proportional interests in
lease payments by a governmental or nonprofit entity. The lease payments
and other rights under the lease provide for and secure the payments on the
certificates. Lease obligations may be limited by municipal charter or the
nature of the appropriation for the lease. In particular, lease obligations
may be subject to periodic appropriation. If the entity does not
appropriate funds for future lease payments, the entity cannot be compelled
to make such payments. Furthermore, a lease may provide that the
certificate trustee cannot accelerate lease obligations upon default. The
trustee would only be able to enforce lease payments as they became due. In
the event of a default or failure of appropriation, it is unlikely that the
trustee would be able to obtain an acceptable substitute source of payment.
In determining the liquidity of municipal lease securities, the adviser,
under the authority delegated by the Board of Trustees, will base its
determination on the following factors: (a) whether the lease can be
terminated by the lessee; (b) the potential recovery, if any, from a sale
of the leased property upon termination of the lease; (c) the lessee's
general credit strength (e.g., its debts, administrative, economic and
financial characteristics, and prospects); (d) the likelihood that the
lessee will discontinue appropriating funding for the leased property
because the property is no longer deemed essential to its operations (e.g.,
the potential for an "event of nonappropriation"); and (e) any credit
enhancement of legal recourse provided upon an event of nonappropriation or
other termination of the lease.

Temporary Investments
The Virginia Municipal Bond Fund and The Maryland Municipal Bond Fund may
also invest in temporary investments during times of unusual market
conditions for defensive purposes and to maintain liquidity.

From time to time, such as when suitable Virginia or Maryland municipal
securities are not available to the respective Fund, a Fund may invest a
portion of its assets in cash. Any portion of a Fund's assets maintained in
cash will reduce the amount of assets in Virginia or Maryland municipal
securities held in the respective Fund, and could thereby reduce a Fund's
yield.

Adjustable Rate Mortgage Securities
The U.S. Government Securities Fund invests in adjustable rate mortgage
securities ("ARMS"). Not unlike other U.S. government securities, the
market value of ARMS will generally vary inversely with changes in market
interest rates. Thus, the market value of ARMS generally declines when
interest rates rise and generally rises when interest rates decline.
While ARMS generally entail less risk of a decline during periods of
rapidly rising rates, ARMS may also have less potential for capital
appreciation than other similar investments (e.g. investments with
comparable maturities) because as interest rates decline, the likelihood
increases that mortgages will be prepaid. Furthermore, if ARMS are
purchased at a premium, mortgage foreclosures and unscheduled principal
payment may result in some loss of a holder's principal investment to the
extent of the premium paid. Conversely, if ARMS are purchased at a
discount, both a scheduled payment of principal and an unscheduled
prepayment of principal would increase current and total returns and would
accelerate the recognition of income, which would be taxed as ordinary
income when distributed to shareholders.

Portfolio Turnover
The Funds will not attempt to set or meet a portfolio turnover rate since
any turnover would be incidental to transactions undertaken in an attempt
to achieve a Fund's investment objective. The Stock Fund may experience
greater portfolio turnover than would be expected with a portfolio of
higher-rated securities. A high portfolio turnover will result in increased
transaction costs to the Fund. For the fiscal years ended September 30,
1993 and 1992, the portfolio turnover rates were 297% and 201%,
respectively, for The U.S. Government Securities Fund; 67% and 38%,
respectively, for The Stock Fund; 17% and 51%, respectively, for The
Virginia Municipal Bond Fund; and 23% and 34%, respectively, for The
Maryland Municipal Bond Fund. For the period from ___ to ___ the portfolio
turnover rate for The Tax-Free Money Market Fund was __%.

Investment Limitations
Issuing Senior Securities and Borrowing Money

The Funds will not issue senior securities except that a Fund may
borrow money directly or through reverse repurchase agreements in
amounts up to one-third of the value of its net assets, including the
amount borrowed. The Funds will not borrow money or engage in reverse
repurchase agreements for investment leverage, but rather as a
temporary, extraordinary, or emergency measure or to facilitate
management of the portfolio by enabling a Fund to meet redemption
requests when the liquidation of portfolio securities is deemed to be
inconvenient or disadvantageous. A Fund will not purchase any
securities while any borrowings in excess of 5% of its total assets are
outstanding. With respect to The U.S. Government Securities Fund, The
Stock Fund, The Virginia Municipal Bond Fund, The Maryland Municipal
Bond Fund, The Treasury Money Market Fund, and The Money Market Fund,
during the period any reverse repurchase agreements are outstanding,
the Funds will restrict the purchase of portfolio securities to money
market instruments maturing on or before the expiration date of the
reverse repurchase agreements, but only to the extent necessary to
assure completion of the reverse repurchase agreements.

Selling Short and Buying on Margin
The Funds will not purchase any securities on margin but they may
obtain such short-term credits as may be necessary for clearance of
transactions. With respect to The U.S. Government Securities Fund and
The Stock Fund, the deposit or payment by the Fund of initial or
variation margin in connection with financial futures contracts or
related options transactions is not considered the purchase of a
security on margin. The Virginia Municipal Bond Fund, The Maryland
Municipal Bond Fund, The Treasury Money Market Fund, The Money Market
Fund, and The Tax-Free Money Market Fund may not sell any securities
short.

Pledging Assets
The Funds will not mortgage, pledge, or hypothecate any assets except
to secure permitted borrowings. In these cases the Funds, except The
Tax-Free Money Market Fund, may pledge assets having a market value not
exceeding the lesser of the dollar amounts borrowed or 15% of the value
of total assets of a Fund at the time of the pledge. Margin deposits
for the purchase and sale of financial futures contracts and related
options are not deemed to be a pledge.

Lending Cash or Securities
The U.S. Government Securities Fund, The Stock Fund, The Treasury Money
Market Fund and The Money Market Fund, will not lend any of their
assets, except portfolio securities up to one-third of the value of
their total assets. This shall not prevent a Fund from purchasing or
holding bonds, debentures, notes, certificates of indebtedness, or
other debt securities, entering into repurchase agreements, or engaging
in other transactions where permitted by a Fund's investment objective,
policies, and limitations or the Trust's Declaration of Trust.
The Virginia Municipal Bond Fund and The Maryland Municipal Bond Fund
will not lend any of their assets, except that they may acquire
publicly or nonpublicly issued municipal securities or temporary
investments or enter into repurchase agreements as permitted by a
Fund's investment objective, policies, limitations and Declaration of
Trust.

The Tax-Free Money Market Fund will not lend any of its assets except
that it may purchase or hold portfolio securities permitted by its
investment objective, policies and limitations, or Declaration of
Trust.

Investing in Restricted Securities
Except for The Tax-Free Money Market Fund, the Funds will not invest
more than 10% of their net assets in securities subject to restrictions
on resale under the Securities Act of 1933 (except certain restricted
securities which meet the criteria for liquidity as established by the
Board of Trustees. With respect to The U.S. Government Securities Fund,
The Stock Fund and The Money Market Fund, this exception specifically
extends to commercial paper issued under Section 4(2) of the Securities
Act of 1933 and certain other restricted securities which meet the
criteria for liquidity as established by the Board of Trustees).

The Tax-Free Money Market Fund will not invest more than 10% of its
total assets in securities subject to restrictions on resale under
federal securities law, except for restricted securities determined to
be liquid under criteria established by the Trustees.

Investing in Commodities
The Funds will not purchase or sell commodities, commodity contracts or
commodity futures contracts except for financial futures contracts in
the case of The Stock Fund.

Investing in Real Estate

The Funds will not purchase or sell real estate, although U.S.
Government Securities Fund and The Stock Fund may invest in securities
secured by real estate or interests in real estate or issued by
companies, including real estate investment trusts, which invest in
real estate or interests therein. The Virginia Municipal Bond Fund, The
Maryland Municipal Bond Fund, The Money Market Fund, and The Tax-Free
Money Market Fund may invest in securities of issuers whose business
involves the purchase or sale of real estate or in securities which are
secured by real estate or interests in real estate.

Diversification of Investments
With respect to 75% of the value of its total assets, The U.S.
Government Securities Fund, The Stock Fund and The Money Market Fund
will not purchase securities issued by any one issuer (other than cash,
cash items or securities issued or guaranteed by the government of the
United States or its agencies or instrumentalities and repurchase
agreements collateralized by such securities), if as a result more than
5% of the value of its total assets would be invested in the securities
of that issuer. U.S. Government Fund and The Stock Fund will not
acquire more than 10% of the outstanding voting securities of any one
issuer.

Concentration of Investments
The U.S. Government Securities Fund, The Stock Fund and The Money
Market Fund will not invest 25% or more of the value of their total
assets in any one industry. With respect to The Money Market Fund,
investing in bank instruments (such as time and demand deposits and
certificates of deposit), U.S. government obligations, or instruments
secured by these money market instruments, such as repurchase
agreements for U.S. government obligations, shall not be considered
investments in any one industry.
The Virginia Municipal Bond Fund and The Maryland Municipal Bond Fund
will not purchase securities if, as a result of such purchase, 25% or
more of the value of its total assets would be invested in any one
industry or in industrial development bonds or other securities, the
interest on which is paid from revenues of similar types of projects.
However, these Funds may invest as temporary investments more than 25%
of the value of its assets in cash or cash items, securities issued or
guaranteed by the U.S. government, its agencies, or instrumentalities,
or instruments secured by these money market instruments, such as
repurchase agreements.

The Tax-Free Money Market Fund will not invest 25% or more of the value
of its total assets in any one industry, except that it may invest more
than 25% of its total assets in securities issued or guaranteed by the
U.S. government, its agencies or instrumentalities and industrial
development bonds as long as they are not from the same facility or
similar types of facilities. The Tax-Free Money Market Fund does not
intend to purchase securities that would increase the percentage of its
assets invested in the securities of governmental subdivisions located
in any one state, territory, or U.S. possession to 25% or more.

Underwriting
The Funds will not underwrite any issue of securities, except as a Fund
may be deemed to be an underwriter under the Securities Act of 1933 in
connection with the sale of securities in accordance with its
investment objective, policies, and limitations.

The above limitations cannot be changed with respect to a Fund without
approval of a majority of that Fund's Shares. The following limitations may
be changed by the Trustees without shareholder approval. Shareholders will
be notified before any material change in these limitations becomes
effective.

Investing in Illiquid Securities
The U.S. Government Securities Fund, The Stock Fund, The Virginia
Municipal Bond Fund, and The Maryland Municipal Bond Fund will not
invest more than 15% of the value of their net assets in illiquid
securities, including repurchase agreements providing for settlement in
more than seven days after notice, and certain restricted securities
determined by the Trustees not to be liquid; and, in the case of The
Virginia Municipal Bond Fund and The Maryland Municipal Bond Fund,
specifically including participation interests and variable rate
municipal securities without a demand feature or with a demand feature
of longer than seven days and which the adviser believes cannot be sold
within seven days. The Treasury Money Market Fund, The Money Market
Fund, and The Tax-Free Money Market Fund will not invest more than 10%
of the value of their net assets in illiquid securities, including
repurchase agreements providing for settlement more than seven days
after notice and certain securities determined by the Trustees not to
be liquid; and, in the case of The Money Market Fund, specifically
including non-negotiable fixed income time deposits with maturities
over seven days.

Investing in Securities of Other Investment Companies
The Funds will limit their respective investment in other investment
companies to no more than 3% of the total outstanding voting stock of
any investment company, invest no more than 5% of total assets in any
one investment company, or invest more than 10% of total assets in
investment companies in general. The U.S. Government Securities Fund,
The Stock Fund, The Treasury Money Market Fund and The Money Market
Fund will purchase securities of closed-end investment companies only
in open market transactions involving only customary broker's
commissions. However, these limitations are not applicable if the
securities are acquired in a merger, consolidation, reorganization, or
acquisition of assets. With respect to The Treasury Money Market Fund
and The Money Market Fund, the Funds will limit their investments and
the securities of other investment companies to those of The Money
Market Funds having investment objectives and policies similar to their
own. The Virginia Municipal Bond Fund and The Maryland Municipal Bond
Fund will invest in other investment companies primarily for the
purposes of investing short-term cash which has not yet been invested
in other portfolio instruments. The adviser will waive its investment
advisory fee on assets invested in securities of open-end investment
companies.

Investing in New Issuers

The U.S. Government Securities Fund, The Stock Fund, The Money Market
Fund, and The Tax-Free Money Market Fund will not invest more than 5%
of the value of their total assets in securities of issuers which have
records of less than three years of continuous operations, including
the operation of any predecessor. The Virginia Municipal Bond Fund and
The Maryland Municipal Bond Fund will not invest more than 5% of the
value of its total assets in industrial development bonds where the
payment of principal and interest is the responsibility of companies
(or in the alternative guarantors, where applicable) which have records
of less than three years of continuous operations, including the
operation of any predecessor.

Investing in Issuers Whose Securities are Owned by Officers and Trustees
of the Trust
A Fund will not purchase or retain the securities of any issuer if the
officers and Trustees of the Trust or its investment adviser owning
individually more than 1/2 of 1% of the issuer's securities together
own more than 5% of the issuer's securities.

Investing in Minerals
A Fund will not purchase interests in oil, gas, or other mineral
exploration or development programs or leases, although it may purchase
the securities of issuers which invest in or sponsor such programs.

Arbitrage Transactions
A Fund will not enter into transactions for the purpose of engaging in
arbitrage.

Purchasing Securities to Exercise Control
A Fund will not purchase securities of a company for the purpose of
exercising control or management.

Investing in Warrants
The Funds will not invest in warrants, except that The Stock Fund may
invest not more than 5% of its net assets in warrants, including those
acquired in units or attached to other securities. To comply with
certain state restrictions, the Fund will limit its investment in such
warrants not listed on the New York or American Stock Exchanges to 2%
of its net assets. (If state restrictions change, this latter
restriction may be revised without notice to shareholders.) For
purposes of this investment restriction, warrants will be valued at the
lower of cost or market, except that warrants acquired by the Fund in
units with or attached to securities may be deemed to be without value.

Investing in Put Options
Neither The U.S. Government Securities Fund nor The Stock Fund will
purchase put options on securities unless the securities are held in a
Fund's portfolio and not more than 5% of the value of either Fund's
total assets would be invested in premiums on open and put option
positions.

Writing Covered Call Options
Neither The U.S. Government Securities Fund nor The Stock Fund will
write call options on securities unless the securities are held in
their portfolio or unless either Fund is entitled to them in
deliverable form without further payment or after segregating cash in
the amount of any further payment.

Selling Short
Neither The U.S. Government Securities Fund nor The Stock Fund will
sell securities short unless (1) it owns, or has a right to acquire, an
equal amount of such securities, or (2) it has segregated an amount of
its other assets equal to the lesser of the market value of the
securities sold short or the amount required to acquire such
securities. The segregated amount will not exceed 10% of either Fund's
net assets. While in a short position, the Fund will retain the
securities, rights, or segregated assets.

Dealing in Puts and Calls

The Virginia Municipal Bond Fund, The Maryland Municipal Bond Fund, and
The Tax-Free Money Market Fund will not invest in puts, calls,
straddles, spreads, or any combination of them except that The Virginia
Municipal Bond Fund and The Maryland Municipal Bond Fund may purchase
put options on municipal securities in an amount up to 5% of its total
assets or may purchase municipal securities accompanied by agreements
of sellers to repurchase them at a Fund's option.

Except with respect to the Funds' policy of borrowing money, if a
percentage limitation is adhered to at the time of investment, a later
increase or decrease in percentage resulting from any change in value
or net assets will not result in a violation of such restriction.
The U.S. Government Securities Fund and The Stock Fund have no present
intent to borrow money, pledge securities or invest in restricted or
illiquid securities in excess of 5% of the value of their respective
net assets in the coming fiscal year. To comply with registration
requirements in certain states, these Funds (1) will limit the
aggregate value of the assets underlying covered call options or put
options written by a Fund to not more than 25% of its net assets, (2)
will limit the premiums paid for options purchased by a Fund to 20% of
its net assets, and (3) will limit the margin deposits on futures
contracts entered into by a Fund to 5% of its net assets. (If state
requirements change, these restrictions may be revised without
shareholder notification.)
The Virginia Municipal Bond Fund and The Maryland Municipal Bond Fund
have no present intent to issue senior securities or borrow money,
pledge securities, invest in restricted or illiquid securities or
engage in when-issued and delayed delivery transactions in excess of 5%
of the value of its net assets during the fiscal period.
The Treasury Money Market Fund and The Money Market Fund do not expect
to issue senior securities or borrow money, pledge securities, engage
in whenissued and delayed delivery transactions or reverse repurchase
agreements, for The Money Market Fund only, in excess of 5% of the
value of their net assets during the coming fiscal year.

The Tax-Free Money Market Fund does not intend to borrow money or
pledge securities in excess of 5% of the value of its net assets during
the coming fiscal year.

To comply with registration requirements in a certain state, The
Virginia Municipal Bond Fund, The Maryland Municipal Bond Fund, The
Money Market Fund, and The Tax-Free Money Market Fund will not invest
in real estate limited partnerships.
The Medalist Fund Management
Officers and Trustees
Officers and Trustees are listed with their addresses, principal
occupations, and present positions, including any affiliation with Signet
Asset Management, Signet Trust Company, Federated Investors, Federated
Securities Corp., Federated Services Company, and Federated Administrative
Services or the Funds (as defined below).

John F. Donahue@*
Federated Investors Tower
Pittsburgh, PA

Chairman and Trustee

Chairman and Trustee, Federated Investors, Federated Advisers, Federated
Management, and Federated Research; Chairman and Director, Federated
Research Corp.; Chairman, Passport Research, Ltd.; Director, AEtna Life and
Casualty Company; Chief Executive Officer and Director, Trustee, or
Managing General Partner of the Funds. Mr. Donahue is the father of J.
Christopher Donahue, (name positions held) of the Corporation.

John T. Conroy, Jr.
Wood/IPC Commercial Department
John R. Wood and Associates, Inc., Realtors
3255 Tamiami Trail North
Naples, FL

Trustee

President, Investment Properties Corporation; Senior Vice-President, John
R. Wood and Associates, Inc., Realtors; President, Northgate Village
Development Corporation; Partner or Trustee in private real estate ventures
in Southwest Florida; Director, Trustee, or Managing General Partner of the
Funds; formerly, President, Naples Property Management, Inc.

William J. Copeland
One PNC Plaza - 23rd Floor
Pittsburgh, PA

Trustee

Director and Member of the Executive Committee, Michael Baker, Inc.;
Director, Trustee, or Managing General Partner of the Funds; formerly, Vice
Chairman and Director, PNC Bank, N.A., and PNC Bank Corp. and Director,
Ryan Homes, Inc.

J. Christopher Donahue *
Federated Investors Tower
Pittsburgh, PA

Vice President and Trustee

President and Trustee, Federated Investors, Federated Advisers, Federated
Management, and Federated Research; President and Director, Federated
Research Corp.; President, Passport Research, Ltd.; Trustee, Federated
Administrative Services, Federated Services Company, and Federated
Shareholder Services; President or Vice President of the Funds; Director,
Trustee, or Managing General Partner of some of the Funds. Mr. Donahue is
the son of John F. Donahue, Chairman and Director of the Corporation.

James E. Dowd
571 Hayward Mill Road
Concord, MA

Trustee

Attorney-at-law; Director, The Emerging Germany Fund, Inc.; Director,
Trustee, or Managing General Partner of the Funds; formerly, Director, Blue
Cross of Massachusetts, Inc.

Lawrence D. Ellis, M.D.
3471 Fifth Avenue, Suite 1111
Pittsburgh, PA

Trustee

Hematologist, Oncologist, and Internist, Presbyterian and Montefiore
Hospitals; Professor of Medicine and Trustee, University of Pittsburgh;
Director of Corporate Health, University of Pittsburgh Medical Center;
Director, Trustee, or Managing General Partner of the Funds.

Edward L. Flaherty, Jr.@
5916 Penn Mall
Pittsburgh, PA

Trustee

Attorney-at-law; Partner, Meyer and Flaherty; Director, Eat'N Park
Restaurants, Inc., and Statewide Settlement Agency, Inc.; Director,
Trustee, or Managing General Partner of the Funds; formerly, Counsel,
Horizon Financial, F.A., Western Region.

Edward C. Gonzales
Federated Investors Tower
Pittsburgh, PA

Vice President and Treasurer

Vice President, Treasurer, and Trustee, Federated Investors; Vice President
and Treasurer, Federated Advisers, Federated Management, Federated
Research, Federated Research Corp., and Passport Research, Ltd.; Executive
Vice President, Treasurer, and Director, Federated Securities Corp.;
Trustee, Federated Services Company and Federated Shareholder Services;
Chairman, Treasurer, and Trustee, Federated Administrative Services;
Trustee or Director of some of the Funds; Vice President and Treasurer of
the Funds.

Peter E. Madden
225 Franklin Street
Boston, MA

Trustee

Consultant; State Representative, Commonwealth of Massachusetts; Director,
Trustee, or Managing General Partner of the Funds; formerly, President,
State Street Bank and Trust Company and State Street Boston Corporation and
Trustee, Lahey Clinic Foundation, Inc.

Gregor F. Meyer
5916 Penn Mall
Pittsburgh, PA

Trustee

Attorney-at-law; Partner, Meyer and Flaherty; Chairman, Meritcare, Inc.;
Director, Eat'N Park Restaurants, Inc.; Director, Trustee, or Managing
General Partner of the Funds; formerly, Vice Chairman, Horizon Financial,
F.A.

Wesley W. Posvar
1202 Cathedral of Learning
University of Pittsburgh
Pittsburgh, PA

Trustee

Professor, Foreign Policy and Management Consultant; Trustee, Carnegie
Endowment for International Peace, RAND Corporation, Online Computer
Library Center, Inc., and U.S. Space Foundation; Chairman, Czecho Slovak
Management Center; Director, Trustee, or Managing General Partner of the
Funds; President Emeritus, University of Pittsburgh; formerly, Chairman,
National Advisory Council for Environmental Policy and Technology.

Marjorie P. Smuts
4905 Bayard Street
Pittsburgh, PA

Trustee

Public relations/marketing consultant; Director, Trustee, or Managing
General Partner of the Funds.

Craig P. Churman
Federated Investors Tower
Pittsburgh, PA

Vice President and Assistant Treasurer of the Trust

Vice President, Federated Administrative Services; Vice President and
Assistant Treasurer of some of the Funds.

J. Christopher Donahue
Federated Investors Tower
Pittsburgh, PA

Vice President of the Trust

Richard B. Fisher
Federated Investors Tower
Pittsburgh, PA

President

Executive Vice President and Trustee, Federated Investors; Director,
Federated Research Corp.; Chairman and Director, Federated Securities
Corp.; President or Vice President of some of the Funds; Director or
Trustee of some of the Funds.

John W. McGonigle
Federated Investors Tower
Pittsburgh, PA

Vice President and Secretary

Vice President, Secretary, General Counsel, and Trustee, Federated
Investors; Vice President, Secretary, and Trustee, Federated Advisers,
Federated Management, and Federated Research; Vice President and Secretary,
Federated Research Corp. and Passport Research, Ltd.; Trustee, Federated
Services Company; Executive Vice President, Secretary, and Trustee,
Federated Administrative Services; Secretary and Trustee, Federated
Shareholder Services; Executive Vice President and Director, Federated
Securities Corp.; Vice President and Secretary of the Funds.

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

@ Member of the Trust Executive Committee. The Executive Committee of the
Board of Trustees handles the responsibilities of the Board of Trustees
between meetings of the Board.

The Funds
As referred to in the list of Directors and Officers, "Funds" includes the
following investment companies:
American Leaders Fund, Inc.; Annuity Management Series; Automated Cash
Management Trust; Automated Government Money Trust; California Municipal
Cash Trust; Cash Trust Series II; Cash Trust Series, Inc.; DG Investor
Series; Edward D. Jones & Co. Daily Passport Cash Trust; Federated ARMs
Fund; Federated Exchange Fund, Ltd.; Federated GNMA Trust; Federated
Government Trust; Federated Growth Trust; Federated High Yield Trust;
Federated Income Securities Trust; Federated Income Trust; Federated Index
Trust; Federated Intermediate Government Trust; Federated Master Trust;
Federated Municipal Trust; Federated Short-Intermediate Government Trust;
Federated Short-Term U.S. Government Trust; Federated Stock Trust;
Federated Tax-Free Trust; Federated U.S. Government Bond Fund; First
Priority Funds; Fixed Income Securities, Inc.; Fortress Adjustable Rate
U.S. Government Fund, Inc.; Fortress Municipal Income Fund, Inc.; Fortress
Utility Fund, Inc.; Fund for U.S. Government Securities, Inc.; Government
Income Securities, Inc.; High Yield Cash Trust; Insight Institutional
Series, Inc.; Insurance Management Series; Intermediate Municipal Trust;
International Series, Inc.; Investment Series Funds, Inc.; Investment
Series Trust; Liberty Equity Income Fund, Inc.; Liberty High Income Bond
Fund, Inc.; Liberty Municipal Securities Fund, Inc.; Liberty U.S.
Government Money Market Trust; Liberty Term Trust, Inc. - 1999; Liberty
Utility Fund, Inc.; Liquid Cash Trust; Managed Series Trust; Mark Twain
Funds; The Medalist Funds: Money Market Management, Inc.; Money Market
Obligations Trust; Money Market Trust; Municipal Securities Income Trust;
New York Municipal Cash Trust; 111 Corcoran Funds; Peachtree Funds; The
Planters Funds; Portage Funds; RIMCO Monument Funds; The Shawmut Funds;
Short-Term Municipal Trust; Star Funds; The Starburst Funds; The Starburst
Funds II; Stock and Bond Fund, Inc.; Sunburst Funds; Targeted Duration
Trust; Tax-Free Instruments Trust; Trademark Funds; Trust for Financial
Institutions; Trust For Government Cash Reserves; Trust for Short-Term U.S.
Government Securities; Trust for U.S. Treasury Obligations; World
Investment Series, Inc.

Fund Ownership
Officers and Trustees own less than 1% of the outstanding shares of each
Fund.

As of ___, the following shareholders of record owned 5% or more of the
outstanding Investment Shares of these Funds: ___ owned approximately ___
shares (___%) of The Stock Fund; and ___ owned approximately ___ shares
(___%) of The Money Market Fund.

Trustee Liability
The Trust's Declaration of Trust provides that the Trustees will not be
liable for errors of judgment or mistakes of fact or law. However, they are
not protected against any liability to which they would otherwise be
subject by reason of willful misfeasance, bad faith, gross negligence, or
reckless disregard of the duties involved in the conduct of their office.

Investment Advisory Services
Adviser To The Trust

The Trust's investment adviser is Signet Asset Management which is a
division of Signet Trust Company, a wholly-owned subsidiary of Signet
Banking Corporation. Because of the internal controls maintained by Signet
Bank to restrict the flow of non-public information, Fund investments are
typically made without any knowlidge of Signet Bank's or its affiliates'
lending relationships with an issuer.

The adviser shall not be liable to the Trust, a Fund, or any shareholder of
any of the Funds for any losses that may be sustained in the purchase,
holding, or sale of any security or for anything done or omitted by it,
except acts or omissions involving willful misfeasance, bad faith, gross
negligence, or reckless disregard of the duties imposed upon it by its
contract with the Trust.

Advisory Fees
For its advisory services, Signet Asset Management receives an annual
investment advisory fee as described in the prospectus. During the fiscal
years ended September 30, 1994, 1993, and 1992 , the adviser earned fees
from: The U.S. Government Securities Fund, of $___, $___, and $___, of
which $___, $___, and $___ were voluntarily waived; The Stock Fund $___,
$___, and $___, of which $___, $___, and $___ were voluntarily waived; The
Virginia Municipal Bond Fund $___, $___, and $___, of which $___, $___, and
$___ were voluntarily waived; The Maryland Municipal Bond Fund $___, $___,
and $___, of which $___, $___, and $___ were voluntarily waived; The
Treasury Money Market Fund $___, $___, and $___, of which $___, $___, and
$___ were voluntarily waived; and The Money Market Fund $___, $___, and
$___, of which $___, $___, and $___ were voluntarily waived. For the period
from ___ to ___ the adviser earned $___ from The Tax-Free Money Market
Fund, of which $___ was voluntarily waived.

State Expense Limitations
The adviser has undertaken to comply with the expense limitation
established by certain states for investment companies whose shares are
registered for sale in those states. If a Fund's normal operating
expenses (including the investment advisory fee, but not including
brokerage commissions, interest, taxes, and extraordinary expenses)
exceed 2 1/2% per year of the first $30 million of average net assets,
2% per year of the next $70 million of average net assets, and 1 1/2%
per year of the remaining average net assets, the adviser will
reimburse the Fund for its expenses over the limitation. If a Fund's
monthly projected operating expenses exceed this limitation, the
investment advisory fee paid will be reduced by the amount of the
excess, subject to an annual adjustment. If the expense limitation is
exceeded, the amount to be reimbursed by the adviser will be limited,
in any single fiscal year, by the amount of the investment advisory
fee. This arrangement is not part of the advisory contract and may be
amended or rescinded in the future.

Administrative Services
Federated Administrative Services, which is a subsidiary of Federated
Investors, provides administrative personnel and services to the Funds for
the fees set forth in the prospectus. For the fiscal years ended September
30, 1994, 1993, and 1992 , the Funds incurred costs for administrative
services as follows: The U.S. Government Securities Fund incurred $___,
$___, and $___; The Stock Fund incurred $___, $___, and $___; The Virginia
Municipal Bond Fund incurred $___, $___, and $___; The Maryland Municipal
Bond Fund incurred $___, $___, and $___; The Treasury Money Market Fund
incurred $___, $___, and $___; and The Money Market Fund incurred $___,
$___, and $___ of which $___, $___, and $___were voluntarily waived for The
U.S. Government Securities Fund; $___, $___, and $___ were voluntarily
waived for The Stock Fund; $___, $___, and $___ were voluntarily waived for
The Virginia Municipal Bond Fund; $___, $___, and $___ were voluntarily
waived for The Maryland Municipal Bond Fund; $___, $___, and $___were
voluntarily waived for The Treasury Money Market Fund; and $___, $___, and
$___ were voluntarily waived for The Money Market Fund. For the period from
___ to ___ The Tax-Free Money Market Fund paid $___ for administrative
services of which $___ was voluntarily waived.

Custodian
Signet Trust Company is custodian for the securities and cash of the Funds.
Under the Custodian Agreement, Signet Trust Company holds the Funds'
portfolio securities in safekeeping and keeps all necessary records and
documents relating to its duties. The custodian receives a fee at an annual
rate of .05 of 1% on the first $10 million of average net assets of each of
the six respective portfolios and .025 of 1% on average net assets in
excess of $10 million. There is a $20 fee imposed on each transaction. The
custodian fee received during any fiscal year shall be at least $1,000 per
Fund.

Brokerage Transactions
When selecting brokers and dealers to handle the purchase and sale of
portfolio instruments, the adviser looks for prompt execution of the order
at a favorable price. In working with dealers, the adviser will generally
use those who are recognized dealers in specific portfolio instruments,
except when a better price and execution of the order can be obtained
elsewhere. The adviser makes decisions on portfolio transactions and
selects brokers and dealers subject to
guidelines established by the Board of Trustees.
The adviser may select brokers and dealers who offer brokerage and research
services. These services may be furnished directly to the Funds or to the
adviser and may include:
. advice as to the advisability of investing in securities;
. security analysis and reports;
. economic studies;
. industry studies;
. receipt of quotations for portfolio evaluations; and
. similar services.
The adviser and its affiliates exercise reasonable business judgment in
selecting brokers who offer brokerage and research services to execute
securities transactions. They determine in good faith that commissions
charged by such persons are reasonable in relationship to the value of the
brokerage and research services provided.

Research services provided by brokers may be used by the adviser in
advising the Funds and other accounts. To the extent that receipt of these
services may supplant services for which the adviser or its affiliates
might otherwise have paid, it would tend to reduce their expenses.
For the fiscal years ended September 30, 1993, The Stock Fund paid $196,276
in commissions on brokerage transactions.

Purchasing Shares
Shares of the Funds are sold at their net asset value without a sales
charge on days the New York Stock Exchange is open for business. The
procedure for purchasing Shares of the Funds is explained in the prospectus
under "Investing in Shares."

Conversion to Federal Funds

It is the policy of The Treasury Money Market Fund, The Money Market Fund,
and The Tax-Free Money Market Fund to be as fully invested as possible so
that maximum interest may be earned. To this end, all payments from
shareholders must be in federal funds or be converted into federal funds.
Federated Services Company acts as the shareholder's agent in depositing
checks and converting them to federal funds.

Administrative Arrangements
For the fiscal years ended September 30, 1994, 1993 and 1992, the
distributor paid no administrative fees to brokers and administrators
(financial institutions).

Determining Net Asset Value

Net asset values of The U.S. Government Securities Fund, The Stock Fund,
The Virginia Municipal Bond Fund and The Maryland Municipal Bond Fund
generally change each day. The Treasury Money Market Fund, The Money Market
Fund, and The Tax-Free Money Market Fund attempt to stabilize the value of
their Shares at $1.00. The days on which the net asset value is calculated
by these Funds are described in the prospectus.

Determining Market Value of Securities
The market value of The U.S. Government Securities Fund's portfolio
securities are determined as follows:
. according to the mean between the over-the-counter bid and asked prices
provided by an independent pricing service, if available, or at fair value
as determined in good faith by the Fund's Board of Trustees; or
. for short-term obligations with maturities of less than 60 days, at
amortized cost unless the Board of Trustees determines that particular
circumstances of the security indicate otherwise.
Prices provided by independent pricing services may be determined without
relying exclusively on quoted prices and may reflect: institutional trading
in similar groups of securities, yield, quality, coupon rate, maturity,
type of issue, trading characteristics, and other market data.
The market value of The Stock Fund's portfolio securities are determined as
follows:
. for equity securities, according to the last sale price on a national
securities exchange, if available;
. in the absence of recorded sales for listed equity securities, according
to the mean between the last closing bid and asked prices;
. for unlisted equity securities, the latest bid prices;
. for bonds and other fixed income securities, as determined by an
independent pricing service;
. for short-term obligations, according to the mean between bid and asked
prices as furnished by an independent pricing service or for short-term
obligations with maturities of less than 60 days, at amortized cost; or
. for all other securities, at fair value as determined in good faith by
the Board of Trustees.
The U.S. Government Securities Fund and The Stock Fund will value futures
contracts, options, and put options on futures and at their market values
established by the exchanges at the close of option trading on such
exchanges unless the Board of Trustees determine in good faith that another
method of valuing option positions is necessary to appraise their fair
value. Over-the-counter put options will be valued at the mean between the
bid and the asked prices.

Use of the Amortized Cost Method
With respect to The Treasury Money Market Fund, The Money Market Fund, and
The Tax-Free Money Market Fund, the Trustees have decided that the best
method for determining the value of portfolio instruments is amortized
cost. Under this method, portfolio instruments are valued at the
acquisition cost as adjusted for amortization of premium or accumulation of
discount rather than at current market value.
A Fund's use of the amortized cost method of valuing portfolio instruments
depends on its compliance with certain conditions in Rule 2a-7 (the "Rule")
promulgated by the Securities and Exchange Commission under the Investment
Company Act of 1940. Under the Rule, the Trustees must establish procedures
reasonably designed to stabilize the net asset value per share, as computed
for purposes of distribution and redemption, at $1.00 per Share, taking
into account current market conditions and a Fund's investment objective.
Under the Rule, a Fund is permitted to purchase instruments which are
subject to demand features or standby commitments. As defined by the Rule,
a demand feature entitles a Fund to receive the principal amount of the
instrument from the issuer or a third party on (1) no more than 30 days'
notice or (2) at specified intervals not exceeding one year on no more than
30 days' notice. A standby commitment entitles a Fund to achieve same day
settlement and to receive an exercise price equal to the amortized cost of
the underlying instrument plus accrued interest at the time of exercise.
The Funds acquire instruments subject to demand features and standby
commitments to enhance the instrument's liquidity. The Funds treat demand
features and standby commitments as a part of the underlying instruments,
because the Funds do not acquire them for speculative purposes and cannot
transfer them separately from the underlying instruments. Therefore,
although the Rule defines demand features and standby commitments as
"puts", the Fund does not consider them to be separate investments for
purposes of its investment policies.

Monitoring Procedures
The Trustees' procedures include monitoring the relationship between
the amortized cost value per share and the net asset value per share
based upon available indications of market value. The Trustees will
decide what, if any, steps should be taken if there is a difference of
more than .5 of 1% between the two. The Trustees will take any steps
they consider appropriate (such as redemption in kind or shortening the
average portfolio maturity) to minimize any material dilution or other
unfair results arising from differences between the two methods of
determining net asset value.

Investment Restrictions
The Rule requires that a Fund limit its investments to instruments
that, in the opinion of the Trustees, present minimal credit risks and
have received the requisite rating from one or more nationally
recognized statistical rating organizations. If the instruments are not
rated, the Trustees must determine that they are of comparable quality.
The Rule also requires a Fund to maintain a dollar-weighted average
portfolio maturity (not more than 90 days) appropriate to the objective
of maintaining a stable net asset value of $1.00 per Share. In
addition, no instrument with a remaining maturity of more than 397 days
can be purchased by a Fund.
Should the disposition of a portfolio security result in a dollar-
weighted average portfolio maturity of more than 90 days, a Fund will
invest its available cash to reduce the average maturity to 90 days or
less as soon as possible.
A Fund may attempt to increase yield by trading portfolio securities to
take advantage of short-term market variations. Under the amortized cost
method of valuation, neither the amount of daily income nor the net asset
value is affected by any unrealized appreciation or depreciation of the
portfolio.
In periods of declining interest rates, the indicated daily yield on
Shares, computed by dividing the annualized daily income on a Fund's
portfolio by the net asset value computed as above, may tend to be higher
than a similar computation made by using a method of valuation based upon
market prices and estimates.
In periods of rising interest rates, the indicated daily yield on Shares
computed the same way may tend to be lower than a similar computation made
by using a method of calculation based upon market prices and estimates.

Valuing Municipal Securities

With respect to The Virginia Municipal Bond Fund, The Maryland Municipal
Bond Fund, and The Tax-Free Money Market Fund, the Board of Trustees uses
an independent pricing service to value municipal securities. The
independent pricing service takes into consideration: yield; stability;
risk; quality; coupon rate; maturity; type of issue; trading
characteristics; special circumstances of a security or trading market; and
any other factors or market data it considers relevant in determining
valuations for normal institutional size trading units of debt securities
and does not rely exclusively on quoted prices.

Use of Amortized Cost
With respect to The Virginia Municipal Bond Fund and The Maryland Municipal
Bond Fund, the Board of Trustees has decided that the fair value of debt
securities purchased by a Fund with remaining maturities of 60 days or less
shall be their amortized cost value, unless the particular circumstances of
the security indicate otherwise. Under this method, portfolio instruments
and assets are valued at the acquisition cost as adjusted for amortization
of premium or accumulation of discount rather than at current market value.
The Executive Committee continually assesses this method of valuation and
recommends changes where necessary to assure that the Fund's portfolio
instruments are valued at their fair value as determined in good faith by
the Trustees.

Redeeming Shares
Each Fund redeems Shares at the next computed net asset value after a Fund
receives the redemption request. Redemption procedures are explained in the
prospectus under "Redeeming Investment Shares."

Redemption in Kind
Although the Trust intends to redeem Shares in cash, it reserves the right
under certain circumstances to pay the redemption price in whole or in part
by a distribution of securities from a Fund's portfolio.
Redemption in kind will be made in conformity with applicable Securities
and Exchange Commission rules, taking such securities at the same value
employed in determining net asset value and selecting the securities in a
manner the Board of Trustees determine to be fair and equitable.
The Trust has elected to be governed by Rule 18f-1 of the Investment
Company Act of 1940 under which a Fund is obligated to redeem Shares for
any one shareholder in cash only up to the lesser of $250,000 or 1% of any
class' net asset value during any 90-day period. Although a Fund reserves
the right to redeem Shares in kind, it will activate this right only after
providing 60 days' notice to shareholders.

Tax Status
The Funds' Tax Status
The Funds will pay no federal income tax because they expect to meet the
requirements of Subchapter M of the Internal Revenue Code applicable to
regulated investment companies and to receive the special tax treatment
afforded to such companies. To qualify for this treatment, each Fund must,
among other requirements:
. derive at least 90% of its gross income from dividends, interest, and
gains
from the sale of securities;
. derive less than 30% of its gross income from the sale of securities held
less than three months;
. invest in securities within certain statutory limits; and
. distribute to its shareholders at least 90% of its net income earned
during
the year.

Shareholders' Tax Status
With respect to The U.S. Government Securities Fund, The Stock Fund, The
Treasury Money Market Fund and The Money Market Fund, shareholders are
subject to federal income tax on dividends received as cash or additional
shares. No portion of any income dividend paid by a Fund is eligible for
the dividends received deduction available to corporations. These
dividends, and any short-term capital gains, are taxable as ordinary
income.

With respect to The Virginia Municipal Bond Fund, The Maryland Municipal
Bond Fund, and The Tax-Free Money Market Fund, no portion of any income
dividend paid by a Fund is eligible for the dividends received deduction
available to corporations.

Capital Gains
Capital gains experienced by The Treasury Money Market Fund and The
Money Market Fund could result in an increase in dividends. Capital
losses could result in a decrease in dividends. If, for some
extraordinary reason, these Funds realize net long-term capital gains,
such net long-term capital gains will be distributed at least once
every 12 months.
With respect to The U.S. Government Securities Fund and The Stock Fund,
long-term capital gains distributed to shareholders will be treated as long-
term capital gains regardless of how long shareholders have held Shares.
With respect to The Maryland Municipal Bond Fund, The Virginia Municipal
Bond Fund, and The Tax-Free Money Market Fund, capital gains or losses may
be realized by a Fund on the sale of portfolio securities and as a result
of discounts from par value on securities held to maturity. Sales would
generally be made because of:
. the availability of higher relative yields;
. differentials in market values;
. new investment opportunities;
. changes in creditworthiness of an issuer; or
. an attempt to preserve gains or limit losses.
Distribution of long-term capital gains are taxed as such, whether they are
taken in cash or reinvested, and regardless of the length of time the
shareholder has owned the Shares.

Total Return
The average annual total return for The U.S. Government Securities Fund,
The Stock Fund, Virignia Municipal Bond Fund, and The Maryland Municipal
Bond Fund, for the fiscal year ended September 30, 1993 and for the period
from October 12, 1990 (effective date of each Fund's registration
statement) to September 30, 1993 was 4.68% and 10.51%, 4.24% and 11.07%,
11.38% and 9.41%, and 11.13% and 8.96% for Investment Shares and 6.94% and
11.25%, 6.42% and 11.73%, 13.62% and 10.12%, and 13.37% and 9.68% for Trust
Shares.
The average annual total return for Shares of each Fund is the average
compounded rate of return for a given period that would equate a $1,000
initial investment to the ending redeemable value of that investment. The
ending redeemable value is computed by multiplying the number of shares
owned at the end of the period by the maximum offering price per share at
the end of the period. The number of shares owned at the end of the period
is based on the number of shares purchased at the beginning of the period
with $1,000, adjusted over the period by any additional shares, assuming
the monthly/quarterly reinvestment of all dividends and distributions.

Yield
The yield for the seven-day period ended September 30, 1994 for the The
Treasury Money Market Fund and The Money Market Fund were 2.35% and 2.73%,
for Investment Shares and 2.60% and 2.98% for Trust Shares, respectively.
The yield for the seven-day period ended September 30, 1994 for the The Tax-
Free Money Market Fund was ___%.

The The U.S. Government Securities Fund, The Stock Fund, The Virginia
Municipal Bond Fund and The Maryland Municipal Bond Fund's yield for the
thirty-day period ended September 30, 1993 was 4.44%, 1.53%, 3.97% and
3.63% for Investment Shares and 4.69%, 1.78%, 4.22% and 3.88% for Trust
Shares.
The Treasury Money Market Fund, The Money Market Fund, and The Tax-Free
Money Market Fund calculate yield daily, based upon the seven days ending
on the day of the calculation, called the "base period." This yield is
computed by:
. determining the net change in the value of a hypothetical account with a
balance of one share at the beginning of the base period, with the net
change excluding capital changes but including the value of any additional
Shares purchased with dividends earned from the original one share and all
dividends declared on the original and any purchased Shares;
. dividing the net change in the account's value by the value of the
account at the beginning of the base period to determine the base period
return; and
. multiplying the base period return by 365/7.
The yield for Shares of The U.S. Government Securities Fund, The Stock
Fund, The Virginia Municipal Bond Fund and The Maryland Municipal Bond Fund
is determined by dividing the net investment income per share (as defined
by the Securities and Exchange Commission) earned by the class of shares
over a thirty-day period by the maximum offering price per share of the
class of shares on the last day of the period. The yield of the Investment
Shares of the Fund is determined each day by dividing the net investment
income per share (as defined by the Securities and Exchange Commission)
earned by the class of shares over a thirty-day period by the maximum
offering price per share of the class of shares on the last day of the
period. This value is then annualized using semiannual compounding. This
means that the amount of income generated during the thirty-day period is
assumed to be generated each month over a 12-month period and is reinvested
every six months. The yield does not necessarily reflect income actually
earned by the Fund because of certain adjustments required by the
Securities and Exchange Commission and, therefore, may not correlate to the
dividends or other distributions paid to shareholders.
With respect to The U.S. Government Securities Fund and The Stock Fund, the
yield will be calculated separately for Investment Shares and Trust Shares.
Because Investment Shares are subject to a 12b-1 fee, the net yield for
Trust Shares for the same period will exceed that of Investment Shares.
To the extent that financial institutions and broker/dealers charge fees in
connection with services provided in conjunction with an investment in a
Fund, the performance will be reduced for those shareholders paying those
fees.

Effective Yield
The effective yield for the seven-day period ended September 30, 1994 for
the The Treasury Money Market Fund and The Money Market Fund was 2.38% and
2.77% for Investment Shares and 2.64% and 3.02% for Trust Shares,
respectively. The effective yield for the period ended September 30, 1994
for The Tax-Free Money Market Fund was ___%.
The effective yield of The Treasury Money Market Fund, The Money Market
Fund, and The Tax-Free Money Market Fund is computed by compounding the
unannualized base period return by:
. adding 1 to the base period return;
. raising the sum to the 365/7th power; and
. subtracting 1 from the result.

Tax-Equivalent Yield
The tax-equivalent yield for both classes of shares for The Virginia
Municipal Bond Fund, The Maryland Municipal Bond Fund, and The Tax-Free
Money Market Fund is calculated similarly to the yield, but is adjusted to
reflect the taxable yield that either class would have had to earn to equal
its actual yield, assuming a 28% tax rate and also assuming that income
earned by the Fund is 100% tax-exempt.
The tax-equivalent yield for the Trust Shares for the thirty-day period
ended September 30, 1994, was 6.37% for The Virginia Municipal Bond Fund
and 6.02% for The Maryland Municipal Bond Fund. The tax-equivalent yield
for the Investment Shares was 5.99% for The Virginia Municipal Bond Fund
and 5.63% for The Maryland Municipal Bond Fund for the same period. The tax-
equivalent yield for The Tax-Free Money Market Fundfor the same period was
___%.

Tax-Equivalency Tables
Both classes of shares may also use a tax-equivalency table in
advertising and sales literature. The interest earned by the municipal
bonds in the Fund's portfolio generally remains free from federal
regular income tax, and is often free from state and local taxes as
well. As the tables below indicate, a "tax-free" investment is an
attractive choice for investors, particularly in times of narrow
spreads between tax-free and taxable yields.

TAXABLE YIELD EQUIVALENT FOR 1994
STATE OF VIRGINIA
COMBINED FEDERAL AND STATE INCOME TAX BRACKET:
20.75% 33.75% 36.75% 41.75%
45.35%
JOINT RETURN: $1-36,900 $36,901-89,150 $89,151-140,000 $140,001-
250,000 Over $250,000
SINGLE RETURN: $1-22,100 $22,101-53,500 $53,501-115,000 $115,001-
250,000 Over $250,000
TAX-EXEMPT YIELD TAXABLE YIELD EQUIVALENT
3.50% 4.42% 5.28% 5.53% 6.01% 6.40%
4.00 5.05 6.04 6.32 6.87 7.32
4.50 5.68 6.79 7.11 7.73 8.23
5.00 6.31 7.55 7.91 8.58 9.15
5.50 6.94 8.30 8.70 9.44 10.06
6.00 7.57 9.06 9.49 10.30 10.98
6.50 8.20 9.81 0.28 11.16 11.89
7.00 8.83 10.57 11.07 12.02 12.81
7.50 9.46 11.32 11.86 12.88 13.72
8.00 10.09 12.08 12.65 13.73 14.64

TAXABLE YIELD EQUIVALENT FOR 1994
STATE OF MARYLAND
INCLUDING LOCAL INCOME TAX
COMBINED FEDERAL, STATE AND LOCAL INCOME TAX BRACKET:
22.50% 35.50% 38.50% 40.00% 43.50% 45.00% 48.60%
JOINT RETURN: $1-36,900 $36,901- $89,151- $140,001- $150,001-
Over $250,000
89,150 140,000 150,000 250,000
SINGLE RETURN: $1-22,100 $22,101- $53,501- $100,001-
$115,001- Over $250,000
53,500 99,999 115,000 250,000
TAX-EXEMPT YIELD TAXABLE YIELD EQUIVALENT
4.00% 5.16% 6.20% 6.50% 6.67% 7.08% 7.27% 7.78%
4.50 5.81 6.98 7.32 7.50 7.96 8.18 8.75
5.00 6.45 7.75 8.13 8.33 8.85 9.09 9.73
5.50 7.10 8.53 8.94 9.17 9.73 10.00 10.70
6.00 7.74 9.30 9.76 10.00 10.62 10.91 11.67
6.50 8.39 10.08 10.57 10.83 11.50 11.82 12.65
7.00 9.03 10.85 11.38 11.67 12.39 12.73 13.62

NOTE: The maximum marginal tax rate for each bracket was used in
calculating
the taxable yield equivalent. Furthermore, additional state and local taxes
paid on comparable taxable investments were not used to increase federal
deductions. The local income tax rate is assumed to be 50% of the state
rate for all counties excluding Worcester.
The charts above are for illustrative purposes only. They are not an
indicator of past or future performance of either class of shares.
*Some portion of the Fund's income may be subject to the federal
alternative minimum tax and state and local taxes.

Performance Comparisons
Each Fund's performance of both classes of shares depends upon such
variables as:
. portfolio quality;
. average portfolio maturity;

. type of instruments in which the portfolio is invested;
. changes in interest rates on money market instruments, in the case of The
Treasury Money Market Fund and The Money Market Fund, or changes in
interest rates and market value of portfolio securities in the case of U.S.
Government Income Fund, The Stock Fund, The Virginia Municipal Bond Fund
and Maryland Municipal Bond Fund;
. changes in each Fund's or each class of Shares' expenses;
. the relative amount of The Treasury Money Market Fund's and The Money
Market Fund's cash flow; and
. various other factors.

In the case of The U.S. Government Securities Fund, The Stock Fund, The
Virginia Municipal Bond Fund and The Maryland Municipal Bond Fund, either
class of shares' performance fluctuates on a daily basis largely because
net earnings and offering price per Share fluctuate daily. Both net
earnings and offering price per Share are factors in the computation of
yield and total return.
From time to time, each Fund may advertise its performance compared to
similar funds or portfolios using certain indices, reporting services, and
financial publications. These may include the following:

The U.S. Government Securities Fund:
. MERRILL LYNCH COMPOSITE 1-5 YEAR TREASURY INDEX is comprised of
approximately 66 issues of U.S. Treasury securities maturing between 1 and
4.99 years, with coupon rates of 4.25% or more. These total return figures
are calculated for one, three, six, and twelve month periods and year-to-
date and include the value of the bond plus income and any price
appreciation or depreciation.
. SALOMON BROTHERS 3-5 YEARS GOVERNMENT INDEX quotes total returns for U.S.
Treasury issues (excluding flower bonds) which have maturities of three to
five years. These total returns are year-to-date figures which are
calculated each month following January 1.
. LIPPER ANALYTICAL SERVICES, INC. ranks funds in various fund categories
by making comparative calculations using total return. Total return assumes
the reinvestment of all capital gains distributions and income dividends
and takes income into account any change in net asset value over a specific
period of time. From time to time, the Trust will quote its Lipper ranking
in the U.S. Government funds category in advertising and sales literature.
. MERRILL LYNCH 3-5 YEAR TREASURY INDEX is comprised of approximately 24
issues of intermediate-term U.S. government and U.S. Treasury securities
with maturities between 3 and 4.99 years and coupon rates above 4.25%.
Index returns are calculated as total returns for periods of one, three,
six and twelve months as well as year-to-date.
. MERRILL LYNCH 3-YEAR TREASURY YIELD CURVE INDEX is an unmanaged index
comprised of the most recently issued 3-year U.S. Treasury notes. Index
returns are calculated as total returns for periods of one, three, six, and
twelve months as well as year-to-date.
. SHEARSON LEHMAN GOVERNMENT INTERMEDIATE INDEX is an unmanaged index
comprised of all publicly issued, non-convertible domestic debt of the U.S.
government, or any agency thereof, or any quasi-federal corporation and of
corporate debt guaranteed by the U.S. government. Only notes and bonds with
a minimum outstanding principal of $1 million and maturities of 1-10 years.

. 3 YEAR TREASURY NOTES Source: Wall Street Journal, Bloomberg Financial
Markets, and Telerate.. MORNINGSTAR, INC., an independent rating service,
is the publisher of the bi-weekly Mutual Fund Values. Mutual Fund Values
rates more than 1,000 NASDAQ-listed mutual funds of all types, according to
their risk-adjusted returns. The maximum rating is five stars, and ratings
are effective for two weeks.

The Stock Fund:
. LIPPER ANALYTICAL SERVICES, INC. ranks funds in various fund categories
by making comparative calculations using total return. Total return assumes
the reinvestment of all capital gains distributions and income dividends
and takes into account any change in net asset value over a specific period
of time. From time to time, the Fund will quote its Lipper ranking in the
"growth and income funds" category in advertising and sales literature.
. DOW JONES INDUSTRIAL AVERAGE ("DJIA") represents share prices of selected
blue-chip industrial corporations as well as public utility and
transportation companies. The DJIA indicates daily changes in the average
price of stocks in any of its categories. It also reports total sales for
each group of industries. Because it represents the top corporations of
America, the DJIA index is a leading economic indicator for the stock
market as a whole.
. STANDARD & POOR'S DAILY STOCK PRICE INDEX OF 500 COMMON STOCKS, a
composite index of common stocks in industry, transportation, and financial
and publicutility companies, compares total returns of funds whose
portfolios areinvested primarily in common stocks. In addition, the
Standard & Poor's index assumes reinvestment of all dividends paid by
stocks listed on the index. Taxes due on any of these distributions are not
included, nor are brokerage or other fees calculated in the Standard &
Poor's figures.

. MORNINGSTAR, INC., an independent rating service, is the publisher of the
bi-weekly Mutual Fund Values. Mutual Fund Values rates more than 1,000
NASDAQ-listed mutual funds of all types, according to their risk-adjusted
returns.The maximum rating is five stars, and ratings are effective for two
weeks.

The Virginia Municipal Bond Fund And The Maryland Municipal Bond Fund:
. LIPPER ANALYTICAL SERVICES, INC. ranks funds in various fund categories
by making comparative calculations using total return. Total return assumes
the reinvestment of all capital gains distributions and income dividends
and takes into account any change in net asset value over a specific period
of time. From time to time, the Fund will quote its Lipper ranking in the
"general municipal bond funds" category in advertising and sales
literature.
. MORNINGSTAR, INC., an independent rating service, is the publisher of the
bi-weekly Mutual Fund Values. Mutual Fund Values rates more than 1,000
NASDAQ-listed mutual funds of all types, according to their risk-adjusted
returns.The maximum rating is five stars, and ratings are effective for two
weeks.

The Treasury Money Market Fund:
. LIPPER ANALYTICAL SERVICES, INC., ranks funds in various fund categories
by making comparative calculations using total return. Total return assumes
the reinvestment of all income dividends and capital gains distributions,
if any. From time to time, the Fund will quote its Lipper ranking in the
"short-term U.S. government funds" category in advertising and sales
literature.
. SALOMON 30-DAY TREASURY BILL INDEX is a weekly quote of the most
representative yields for selected securities, issued by the U.S. Treasury,
maturing in 30 days.

The Money Market Fund:
. LIPPER ANALYTICAL SERVICES, INC., ranks funds in various fund categories
by making comparative calculations using total return. Total return assumes
the reinvestment of all income dividends and capital gains distributions,
if any. From time to time, the Fund will quote its Lipper ranking in the
"money market instruments fund" category in advertising and sales
literature.
. BANK RATE MONITOR NATIONAL INDEX, Miami, Florida, is a financial
reporting service which publishes weekly average rates of 50 leading bank
and thrift institution money market deposit accounts. The rates published
in the index are an average of the personal account rates offered on the
Wednesday prior to the date of publication by ten of the largest banks and
thrifts in each of the five largest Standard Metropolitan Statistical
Areas. Account minimums range upward from $2,500 in each institution and
compounding methods vary. If more than one rate is offered, the lowest rate
is used. Rates are subject to change at any time specified by the
institution. Investors may use such indices or reporting services in
addition to either class of shares' prospectus to obtain a more complete
view of the Share's performance before investing. Of course, when comparing
performance of either class of shares to any index, factors such as
portfolio composition and prevailing market conditions should be considered
in assessing the significance of such comparisons.

The Tax-Free Money Market Fund
LIPPER ANALYTICAL SERVICES, INC. ranks funds in various fund categories by
making comparative calculations using total return. Total return assumes
the reinvestment of all income dividends and capital gains distributions,
if any. From time to time, the Fund will quote its Lipper ranking in the
"Tax-Free Money Market Funds" category in advertising and sales literature.

- -IBC/DONOGHUE'S MONEY FUND REPORT publishes annualized yields of hundreds
of money market funds on a weekly basis, and through its Money Market
Insight publication, reports monthly and 12-month-to-date investment
results for the same money funds.

- -MONEY, A MONTHLY MAGAZINE, regularly ranks money market funds in various
categories based on the latest available seven-day compound effective
yield. From time to time, the Fund will quote its Money ranking in
advertising and sales literature.

- -SALOMON BROTHERS SIX-MONTH PRIME MUNI NOTES is an index of selected
municipal notes, maturing in six months, whose yields are chosen as
representative of this market. Calculations are made weekly and monthly.

- -SALOMON BROTHERS ONE-MONTH TAX-EXEMPT COMMERCIAL PAPER is an index of
selected tax-exempt commercial paper issues, maturing in one month, whose
yields are chosen as representative of this particular market. It is a
weekly quote of the most representative yields for selected securities,
issued by the U.S. Treasury, maturing in 30 days. Calculations are made
weekly and monthly. Ehrlich-Bober & Co., Inc. also tracks this Salomon
Brothers Index.

With respect to The Stock Fund, when comparing funds using
reportingservices, or total return and yield, investors should take into
considerationany relevant differences in funds such as permitted portfolio
compositions and methods used to value portfolio securities and compute
offering price.
Advertisements and other sales literature for both classes of shares may
quote total returns which are calculated on non-standardized base periods.
These total returns also represent the historic change in the value of an
investment in either class of shares based on monthly reinvestment of
dividends over a specified period of time.

Appendix
Standard And Poor's Ratings Group Municipal Bond Rating Definitions
AAA--Debt rated AAA has the highest rating assigned by Standard & Poor's.
Capacity to pay interest and repay principal is extremely strong. AA--Debt
rated AA has a very strong capacity to pay interest and repay principal and
differs from the higher rated issues only in small degree. A--Debt rated A
has a strong capacity to pay interest and repay principal
although it is somewhat more susceptible to the adverse effect of changes
in circumstances and economic conditions than debt in higher rated
categories. BBB--Debt rated BBB is regarded as having an adequate capacity
to pay interest and repay principal. Whereas it normally exhibits adequate
protection parameters, adverse economic conditions or changing
circumstances are more likely to lead to a weakened capacity to pay
interest and repay principal for debt in this category than in higher rated
categories.
BB, B, CCC, CC--Debt rated BB, B, CCC and CC is regarded, on balance, as
predominantly speculative with respect to capacity to pay interest and
repay principal in accordance with the terms of the obligation. BB
indicates the lowest degree of speculation and CC the highest degree of
speculation. While such debt will likely have some quality and protective
characteristics, these are outweighed by large uncertainties of major risk
exposures to adverse conditions.
CI--The rating CI is reserved for income bonds on which no interest is
being paid.
D--Debt rated D is in default, and payment of interest and/or repayment of
principal is in arrears.

Moody's Investors Service, Inc. Municipal Bond Rating Definitions
Aaa--Bonds which are rated Aaa are judged to be of the best quality. They
carry the smallest degree of investment risk and are generally referred to
as "gilt edge." Interest payments are protected by a large or by an
exceptionally stable margin and principal is secure. While the various
protective elements are likely to change, such changes as can be visualized
are most unlikely to impair the fundamentally strong position of such
issues.
Aa--Bonds which are rated Aa are judged to be of high quality by all
standards. Together with the Aaa group they comprise what are generally
known as high grade bonds. They are rated lower than the best bonds because
margins of protection may not be as large as in Aaa securities or
fluctuation of protective elements may be of greater amplitude or there may
be other elements present which make the long term risks appear somewhat
larger than in Aaa securities.
A--Bonds which are rated A possess many favorable investment attributes and
are to be considered as upper medium grade obligations. Factors giving
security to principal and interest are considered adequate but elements may
be present which suggest a susceptibility to impairment some time in the
future. Baa--Bonds which are rated Baa are considered as medium grade
obligations, i.e., they are neither highly protected nor poorly secured.
Interest payments and principal security appear adequate for the present
but certain protective elements may be lacking or may be characteristically
unreliable over any great length of time. Such bonds lack outstanding
investment characteristics and in fact have speculative characteristics as
well.
Ba--Bonds which are Ba are judged to have speculative elements; their
future cannot be considered as well assured. Often the protection of
interest and principal payments may be very moderate and thereby not well
safeguarded during both good and bad times over the future. Uncertainty of
position characterizes bonds in this class.
B--Bonds which are rated B generally lack characteristics of the desirable
investment. Assurance of interest and principal payments or of maintenance
of other terms of the contract over any long period of time may be small.
Caa--Bonds which are rated Caa are of poor standing. Such issues may be in
default or there may be present elements of danger with respect to
principal or interest.
Ca--Bonds which are rated Ca represent obligations which are speculative in
a high degree. Such issues are often in default or have other marked
shortcomings.
C--Bonds which are rated C are the lowest rated class of bonds and issues
so rated can be regarded as having extremely poor prospects of ever
attaining any real investment standing.
FITCH INVESTORS SERVICE, INC., LONG-TERM DEBT RATINGS

AAA--Bonds considered to be investment grade and of the highest credit
quality. The obligor has an exceptionally strong ability to pay interest
and repay principal, which is unlikely to be affected by reasonably
foreseeable events.
AA--Bonds considered to be investment grade and of very high quality. The
obligor's ability to pay interest and repay principal is very strong,
although not quite as strong as bonds rated AAA. Because bonds rated in the
AAA and AA categories are not significantly vulnerable to foreseeable
future developments, short-term debt of these issuers is generally rated F-
1+.
NR--NR indicates that Fitch does not the specific issue.
Plus (+) or Minus (-): Plus and minus signs are used with a rating symbol
to indicate the relative position of a credit within the rating category.
Plus and minus signs, however, are not used in AAA category.
STANDARD & POOR'S CORPORATION, MUNICIPAL NOTE RATINGS
SP-1--Very strong or strong capacity to pay principal and interest. Those
issues determined to possess overwhelming safety characteristics will be
given a plus (+) designation.
SP-2--Satisfactory capacity to pay principal and interest.
MOODY'S INVESTORS SERVICE, SHORT-TERM LOAN RATINGS
MIG1/VMIG1--This designation denotes best quality. There is present strong
protection by established cash flows, superior liquidity support or
demonstrated broad-based access to the market for refinancing.
MIG2/VMIG2--This designation denotes high quality. Margins of protection
are ample although not so large as in the preceding group.

2102608B-R
(11/93)

THE MEDALIST FUNDS
(FORMERLY THE SIGNET SELECT
FUNDS)
INVESTMENT SHARES
PROSPECTUS

NOVEMBER 30, 1994

- THE U.S. GOVERNMENT SECURITIES
FUND

- THE STOCK FUND

- THE VIRGINIA MUNICIPAL BOND FUND

- THE MARYLAND MUNICIPAL BOND FUND

- THE TREASURY MONEY MARKET FUND

- THE MONEY MARKET FUND

- THE TAX-FREE MONEY MARKET FUND

THE MEDALIST FUNDS

(FORMERLY THE SIGNET SELECT FUNDS)
INVESTMENT SHARES
PROSPECTUS

The Medalist Funds (the "Trust"), an open-end management investment company (a
mutual fund), is comprised of the seven separate investment portfolios set forth
below (collectively, the "Funds," individually, a "Fund"), each having a
distinct investment objective and policies. With the exception of the Tax-Free
Money Market Fund, which offers a single class of shares, the Funds are offered
in two separate classes of shares known as Investment Shares and Trust Shares.

- The U.S. Government Securities Fund (formerly U.S. Government Income
Fund)

- The Stock Fund (formerly Value Equity Fund)

- The Virginia Municipal Bond Fund

- The Maryland Municipal Bond Fund

- The Treasury Money Market Fund

- The Money Market Fund

- The Tax-Free Money Market Fund

This prospectus relates only to the Investment Shares of those Funds offering
classes and to shares of The Tax-Free Money Market Fund and contains the
information you should read and know before you invest in any of the Funds. Keep
this prospectus for future reference.

Prospectus dated November 30, 1994

TABLE OF CONTENTS
- --------------------------------------------------------------------------------

SYNOPSIS 1
- ------------------------------------------------------

Special Considerations 1

SUMMARY OF FUND EXPENSES--INVESTMENT SHARES
AND TAX-FREE MONEY MARKET SHARES 2

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

FINANCIAL HIGHLIGHTS 3
- ------------------------------------------------------

INVESTMENT OBJECTIVE AND POLICIES OF EACH FUND 9
- ------------------------------------------------------

The U.S. Government Securities Fund 9
Acceptable Investments 9
CMOs 9
ARMS 9
The Stock Fund 10
Acceptable Investments 10
Common Stocks 10
Other Corporate Securities 10
Commercial Paper 10
Bank Instruments 10
U.S. Government Securities 10
Put and Call Options 10
Financial Futures and Options on Futures 11
Risks 11
Portfolio Turnover 11
Investment Considerations 11
The Virginia Municipal Bond Fund and
The Maryland Municipal Bond Fund 12
Acceptable Investments 12
Characteristics 12

The Treasury Money Market Fund 12

Acceptable Investments 12

The Money Market Fund 12

Acceptable Investments 13

Bank Instruments 13

Short-Term Credit Facilities 13

Asset-Backed Securities 13

Ratings 13

The Tax-Free Money Market Fund 13

Acceptable Investments 13

Participation Interests 14

Ratings 14

Investment Limitations 14

PORTFOLIO INVESTMENTS AND STRATEGIES 14

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

Regulatory Compliance 14

Borrowing Money 14

Selling Short 15
Restricted and Illiquid Securities 15

When-Issued and Delayed Delivery Transactions 15

Investing in Securities of Other
Investment Companies 15

Diversification 15

Non-Diversification 15

Investing in New Issuers 16

Repurchase Agreements 16

Lending of Portfolio Securities 16

Acquiring Securities 16

Investment Risks 16

Variable Rate Demand Notes 16

Credit Enhancement 17

Demand Features 17

Participation Interests 17
Variable Rate Municipal Securities 17

Municipal Leases 18

Temporary Investments 18

Municipal Securities 18
Investment Risks 18

Futures Contracts and Options to Buy or
Sell Such Contracts 19

THE MEDALIST FUNDS INFORMATION 19
- ------------------------------------------------------

Management of the Trust 19
Board of Trustees 19
Investment Adviser 19
Advisory Fees 19
Adviser's Background 19
Distribution of Shares of the Funds 20
Distribution Plan 20

Administrative Arrangements 21

Administration of the Funds 21

Administrative Services 21

Custodian 21
Transfer Agent and Dividend Disbursing Agent 21
Legal Counsel 21
Independent Auditors 21
Expenses of the Funds and Investment Shares 21

Brokerage Transactions 22

NET ASSET VALUE 22

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

INVESTING IN SHARES 22
- ------------------------------------------------------

Share Purchases 22
By Check 22
By Wire 22

Systematic Investment Program 23

Minimum Investment Required 23

What Shares Cost 23
Certificates and Confirmations 23

Dividends 23

Capital Gains 24

EXCHANGE PRIVILEGE 24

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

By Telephone 24

REDEEMING SHARES 24
- ------------------------------------------------------

By Telephone 25

By Mail 25

Contingent Deferred Sales Charge 26

Systematic Withdrawal Program 27

Accounts with Low Balances 27
Redemption in Kind 27

SHAREHOLDER INFORMATION 27
- ------------------------------------------------------

Voting Rights 27
Massachusetts Partnership Law 28

EFFECT OF BANKING LAWS 28
- ------------------------------------------------------

TAX INFORMATION 29

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

Federal Income Tax 29

Virginia Taxes 29
Maryland Taxes 29
Other State and Local Taxes 30

PERFORMANCE INFORMATION 30
- ------------------------------------------------------

OTHER CLASSES OF SHARES 31
- ------------------------------------------------------

ADDRESSES 32
- ------------------------------------------------------

SYNOPSIS
- --------------------------------------------------------------------------------

The Trust, an open-end, management investment company, was established as a
Massachusetts business trust under a Declaration of Trust dated June 20, 1990.
The Declaration of Trust permits the Trust to offer separate series of shares of
beneficial interest representing interests in separate portfolios of securities.
The shares in any one portfolio may be offered in separate classes. As of the
date of this prospectus, the Trustees have established a single class of shares
for The Tax-Free Money Market Fund, and two classes of shares, Investment Shares
and Trust Shares, for each of the other Funds in the Trust.

As of the date of this prospectus, the Trust is comprised of the following seven
portfolios:

- The U.S. Government Securities Fund--seeks to provide current income by
investing in a professionally managed, diversified portfolio limited
primarily to U.S. government securities;

- The Stock Fund--seeks to provide growth of capital and income by
investing in common stocks;

- The Treasury Money Market Fund--seeks to provide current income
consistent with stability of principal by investing in short-term U.S.
Treasury obligations;

- The Money Market Fund--seeks to provide current income consistent with
stability of principal by investing in money market instruments; and

- The Tax-Free Money Market Fund--seeks to provide current income exempt
from federal income tax consistent with stability of principal, by
investing in municipal securities.

This prospectus relates only to the Investment Shares ("Investment Shares") of
those Funds offering classes and to the single class of shares ("The Tax-Free
Money Market Shares") of The Tax-Free Money Market Fund (Investment Shares and
The Tax-Free Money Market Shares are sometimes collectively referred to as
"Shares"). A minimum initial investment of $1,000 is required for each Fund. A
contingent deferred sales charge may be imposed on all Shares of The U.S.
Government Securities Fund, The Stock Fund, The Virginia Municipal Bond Fund and
The Maryland Municipal Bond Fund purchased after October 1, 1992 (other than
Shares purchased through reinvestment of dividends and capital gains
distributions), which are redeemed within five years of their purchase dates.
Information on redeeming Shares may be found under "Redeeming Investment
Shares." The Funds are advised by Signet Asset Management.

SPECIAL CONSIDERATIONS

SUMMARY OF FUND EXPENSES--INVESTMENT SHARES
AND TAX-FREE MONEY MARKET SHARES

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

The following Fee Table and Example summarize the various costs and expenses
that a shareholder of Investment Shares and Tax-Free Money Market Shares will
bear, either directly or indirectly.

SHAREHOLDER TRANSACTION EXPENSES

<TABLE>
<CAPTION>
THE THE THE THE
TAX-FREE THE TREASURY MARYLAND VIRGINIA THE U.S.
MONEY MONEY MONEY MUNICIPAL MUNICIPAL THE GOVERNMENT
MARKET MARKET MARKET BOND BOND STOCK SECURITIES
FUND FUND FUND FUND FUND FUND FUND
--------- ------- --------- ---------- ---------- ------ -----------
<S> <C> <C> <C> <C> <C> <C> <C>
Contingent Deferred Sales Charge (as a
percentage of amount redeemed, if
applicable)(1).........................
</TABLE>

ANNUAL INVESTMENT SHARES AND TAX-FREE MONEY MARKET SHARES OPERATING EXPENSES (AS
A PERCENTAGE OF PROJECTED AVERAGE NET ASSETS)

<TABLE>
<CAPTION>
TOTAL INVESTMENT
SHARES AND TAX-FREE
MONEY MARKET SHARES
NET OPERATING EXPENSES
MANAGEMENT 12B-1 OTHER NET OF ANY WAIVERS OR
FEES(2) FEES(3) EXPENSES(4) REIMBURSEMENTS(5)
----------- -------- ------------ ---------------------
<S> <C> <C> <C> <C>
The Money Market Fund...................................
The Treasury Money Market Fund..........................
The Tax-Free Money Market Fund..........................
The Maryland Municipal Bond Fund........................
The Virginia Municipal Bond Fund........................
The Stock Fund..........................................
The U.S. Government Securities Fund.....................
</TABLE>

(1) A contingent deferred sales charge of 2% will be imposed on The Money Market
Fund, The Treasury Money Market Fund, and The Tax-Free Money Market Fund
only in limited circumstances in which Shares being redeemed are acquired in
exchange for Investment Shares in those Medalist Funds which charge a
contingent deferred sales charge. The contingent deferred sales charge
charged is 2.00% of the lesser of the original purchase price or the net
asset value of Shares redeemed within five years of purchase date.

(2) The management fee has been reduced to reflect the voluntary waiver by the
investment adviser. The adviser can terminate this voluntary waiver at any
time at its sole discretion. The maximum management fee for The Money Market
Fund, The Treasury Money Market Fund, The Tax-Free Money Market Fund, The
Maryland Municipal Bond Fund, The Virginia Municipal Bond Fund, The Stock
Fund, and The U.S. Government Securities Fund is
respectively.

(3) Fees paid by Investment Shares of each Fund for distribution and/or
administrative services provided with respect to Investment Shares. Total
payments of up to .25 of 1% (except The Money Market Fund and The Treasury
Money Market Fund which are 0.35 of 1%) of the average daily net assets
attributable to Investment Shares are permitted under the Distribution
Plans. As of the date of this prospectus, The Tax-Free Money Market Fund is
not paying or accruing 12b-1 fees. The Tax-Free Money Market Fund will not
accrue or pay 12b-1 fees until a separate class of shares has been created
for certain institutional investors. The Tax-Free Money Market Fund can pay
up to 0.35% as a 12b-1 fee to the distributor. See "Management of the
Trust--Distribution Plans."

(4) Includes administration fees. See "Management of the Trust--Administration
of the Funds."

(5) The total Investment Shares Operating Expenses for The Money Market Fund,
The Treasury Money Market Fund, The Maryland Municipal Bond Fund, The
Virginia Municipal Bond Fund, The Stock Fund and The U.S. Government
Securities Fund would have been
respectively, and the total Operating Expenses for The Tax-Free Money Market
Fund would have been %, absent the waiver of management fees.

EXAMPLE:

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

<TABLE>
<CAPTION>
1 YEAR 1 YEAR(+) 3 YEARS 3 YEARS(+) 5 YEARS 5 YEARS(+) 10 YEARS(+)
------- ---------- -------- ----------- -------- ----------- ------------
<S> <C> <C> <C> <C> <C> <C> <C>
The Money Market Fund.......................
The Treasury Money Market Fund..............
The Tax-Free Money Market Fund..............
The Maryland Municipal Bond Fund............
The Virginia Municipal Bond Fund............
The Stock Fund..............................
The U.S. Government Securities Fund.........
</TABLE>

+ Reflects expenses on the same investment, assuming no redemption.

The purpose of the foregoing Example is to assist an investor in understanding
the various costs and expenses that a shareholder of Investment Shares and
Tax-Free Money Market Shares will bear, either directly or indirectly. For a
more complete description of the various costs and expenses, see "The Medalist
Funds Information" and "Investing in Shares." Wire-transferred redemptions of
less than $5,000 may be subject to additional fees.

The above example should not be considered a representation of past or future
expenses. Actual expenses may be greater or less than those shown. This example
is based on estimated data for the Funds' fiscal year ending September 30, 1995.

The information set forth in the foregoing table and Example relates only to
Investment Shares of those Funds offering separate classes, and Tax-Free Money
Market Shares. Trust Shares of those Funds offering separate classes are subject
to certain of the same expenses as Investment Shares, except they bear no
contingent deferred sales charge or 12b-1 fee. See "Other Classes of Shares."

INVESTMENT OBJECTIVE AND POLICIES OF EACH FUND
- --------------------------------------------------------------------------------

THE U.S. GOVERNMENT SECURITIES FUND

The investment objective of The U.S. Government Securities Fund is to provide
current income.

The U.S. government securities in which the Fund invests include:

- direct obligations of the U.S. Treasury, such as U.S. Treasury bills,
notes and bonds; and

- obligations of U.S. government agencies or instrumentalities, such as
Federal Home Loan Banks, Farmers' Home Administration, Federal Farm
Credit Banks, Federal National Mortgage Association, Government
National Mortgage Association and Federal Home Loan Mortgage Corporation.

ARMS. ARMS are pass-through mortgage securities with adjustable rather than
fixed interest rates. The ARMS in which the Fund invests are issued by
Government National Mortgage Association

("GNMA"), Federal National Mortgage Association ("FNMA"), and Federal Home Loan
Mortgage Corporation ("FHLMC") and are actively traded. The underlying mortgages
which collateralize ARMS issued by GNMA are fully guaranteed by the Federal
Housing Administration ("FHA") or Veterans Administration ("VA"), while those
collateralizing ARMS issued by FHLMC or FNMA are typically conventional
residential mortgages conforming to strict underwriting size and maturity
constraints.

THE STOCK FUND

The investment objective of The Stock Fund is to provide growth of capital and
income.

OTHER CORPORATE SECURITIES. The Fund may invest in preferred stocks, corporate
bonds, notes, warrants, rights, and convertible securities of these companies.

Conversely, as purchaser of a put option on a futures contract, the Fund is
entitled (but not obligated) to sell a futures contract at the fixed price
during the life of the option.

INVESTMENT CONSIDERATIONS. As with other mutual funds that invest primarily in
equity securities, the Fund is subject to market risks. That is, the possibility
exists that common stocks will decline over short or even extended periods of
time. The United States equity market tends to be cyclical, experiencing both
periods when stock prices generally increase and periods when stock prices
generally decrease. However, because the Fund invests a portion of its assets in
small capitalization

stocks, there are some additional risk factors associated with investments in
the Fund. In particular, stocks in the small capitalization sector of the United
States equity market have historically been more volatile in price than larger
capitalization stocks, such as those included in the Standard & Poor's 500
Composite Stock Price Index ("Standard & Poor's 500 Index). This is because,
among other things, small companies have less certain growth prospects than
larger companies; have a lower degree of liquidity in the equity market; and
tend to have a greater sensitivity to changing economic conditions.

THE VIRGINIA MUNICIPAL BOND FUND AND THE MARYLAND MUNICIPAL BOND FUND

CHARACTERISTICS. The debt securities in which each Fund invests will only
be rated investment grade or of comparable quality at the time of purchase.
The municipal securities which each Fund buys have essentially the same
characteristics assigned by Moody's and S&P to investment grade bonds.
Investment grade bonds are rated Baa, A, Aa, Aaa by Moody's, or BBB, A, AA,
AAA by S&P. Bonds rated "Baa" by Moody's or "BBB" by S&P have speculative
characteristics. Changes in economic conditions or other circumstances are
more likely to lead to weakened capacity to make principal and interest
payments than higher rated bonds. In certain cases, the Funds' adviser may
choose bonds which are unrated, if it judges the bonds to have the same
characteristics as investment grade bonds. If a security's rating is
reduced below the required minimum after a Fund has purchased it, that Fund
is not required to sell the security, but may consider doing so. A
description of the ratings categories is contained in the Appendix to the
Combined Statement of Additional Information.

THE TREASURY MONEY MARKET FUND

The investment objective of The Treasury Money Market Fund is to provide current
income consistent with stability of principal.

THE MONEY MARKET FUND

The investment objective of The Money Market Fund is to provide current income
consistent with stability of principal.

- domestic issues of corporate debt obligations, including variable rate
demand notes;

- commercial paper (including Canadian Commercial Paper and Europaper);

- certificates of deposit, demand and time deposits, bankers' acceptances
and other instruments of domestic and foreign banks and other deposit
institutions ("Bank Instruments");

- short-term credit facilities, such as demand notes;

- asset-backed securities;

- obligations issued or guaranteed as to payment of principal and interest
by the U.S. government or one of its agencies or instrumentalities
("Government Securities"); and

- other money market instruments.

The Fund invests only in instruments denominated and payable in U.S. dollars.

RATINGS. An NRSRO's highest rating category is determined without regard for
sub-categories and gradations. For example, securities rated A-1 or A-1+ by S&P,
Prime-1 by Moody's or F-1 (+ or --) by Fitch are all considered rated in the
highest short-term rating category. The Fund will follow applicable regulations
in determining whether a security rated by more than one NRSRO can be treated as
being in the highest short-term rating category; currently, such securities must
be rated by two NRSROs in their highest rating category. See "Regulatory
Compliance."

THE TAX-FREE MONEY MARKET FUND

The investment objective of The Tax-Free Money Market Fund is current income
exempt from federal income tax consistent with stability of principal and
liquidity.

exempt from federal income tax ("municipal securities"). Examples of municipal
securities include, but are not limited to:

- tax and revenue anticipation notes issued to finance working capital
needs in anticipation of receiving taxes or other revenues;

- bond anticipation notes that are intended to be refinanced through a
later issuance of longer-term bonds;

- municipal commercial paper and other short-term notes;

- variable rate demand notes;

- municipal bonds (including bonds having serial maturities and
pre-refunded bonds) and leases;

- construction loan notes insured by the Federal Housing Administration and
financed by the Federal or Government National Mortgage Associations; and

- participation, trust, and partnership interests in any of the foregoing
obligations.

INVESTMENT LIMITATIONS

PORTFOLIO INVESTMENTS AND STRATEGIES
- --------------------------------------------------------------------------------

REGULATORY COMPLIANCE

The Treasury Money Market Fund, The Money Market Fund and The Tax-Free Money
Market Fund may follow non-fundamental operational policies that are more
restrictive than their fundamental investment limitations, as set forth in this
prospectus and their Combined Statement of Additional Information, in order to
comply with applicable laws and regulations, including the provisions of and
regulations under the Investment Company Act of 1940, as amended. In particular,
the Funds will comply with the various requirements of Rule 2a-7, which
regulates money market mutual funds. The Treasury Money Market Fund, The Money
Market Fund and The Tax-Free Money Market Fund will also determine the effective
maturity of their respective investments, as well as their ability to consider a
security as having received the requisite short-term ratings by NRSROs,
according to Rule 2a-7. The Funds may change these operational policies to
reflect changes in the laws and regulations without the approval of their
shareholders.

BORROWING MONEY

Except for The Tax-Free Money Market Fund the Funds will not borrow money
directly or through reverse repurchase agreements (arrangements in which a Fund
sells a portfolio instrument for a percentage of its cash value with an
agreement to buy it back on a set date) or pledge securities except, under
certain circumstances, a Fund may borrow money up to one-third of the value of
its total assets and pledge up to 15% of the value of those assets to secure
such borrowings. The Tax-Free Money Market Fund may borrow up to one-third of
the value of its total assets, including the amount borrowed. The Tax-Free Money
Market Fund will not purchase any securities while borrowings in

excess of 5% of the value of its total assets are outstanding. These policies
cannot be changed without the approval of holders of a majority of a Fund's
Shares.

SELLING SHORT

RESTRICTED AND ILLIQUID SECURITIES

The Funds may invest in restricted securities. Restricted securities are any
securities in which a Fund may invest pursuant to its investment objective and
policies, but which are subject to restriction on resale under federal
securities law. The Funds will not invest more than 10% of the value of their
assets in securities subject to restrictions on resale under the Securities Act
of 1933 (except for certain restricted securities which meet the criteria for
liquidity as established by the Board of Trustees). In the case of The U.S.
Government Securities Fund, The Stock Fund and The Money Market Fund this
exception specifically extends to commercial paper issued under Section 4(2) of
the Securities Act of 1933. This policy cannot be changed without the approval
of holders of a majority of a Fund's Shares.

The U.S. Government Securities Fund, The Stock Fund, The Virginia Municipal Bond
Fund, and The Maryland Municipal Bond Fund will not invest more than 15 % of
their net assets in illiquid securities. The Treasury Money Market Fund, The
Money Market Fund, and The Tax-Free Money Market Fund will not invest more than
10% of their net assets in illiquid securities.

WHEN-ISSUED AND DELAYED DELIVERY TRANSACTIONS

INVESTING IN SECURITIES OF OTHER INVESTMENT COMPANIES

The Funds may also hold cash in such proportions as the Fund's adviser may
determine.

DIVERSIFICATION

NON-DIVERSIFICATION

The Virginia Municipal Bond Fund, The Maryland Municipal Bond Fund, The Treasury
Money Market Fund, and The Tax-Free Money Market Fund are non-diversified
investment companies, as defined by the Investment Company Act of 1940, as
amended. As such, there is no limit on the percentage of assets which can be
invested in any single issuer. An investment in the Funds, therefore, will
entail greater risk than would exist in a diversified investment company because
the higher percentage of investments among fewer issuers may result in greater
fluctuation in the total market value of each Fund's portfolio. Any economic,
political or regulatory developments affecting the value of the securities in

each Fund's portfolio will have a greater impact on the total value of the
portfolio than would be the case if the portfolio were diversified among more
issuers.

INVESTING IN NEW ISSUERS

REPURCHASE AGREEMENTS

LENDING OF PORTFOLIO SECURITIES

ACQUIRING SECURITIES

INVESTMENT RISKS

VARIABLE RATE DEMAND NOTES

intended to cause the securities to trade at par. The interest rate may float or
be adjusted at regular intervals (ranging from daily to annually), and is
normally based on a published interest rate or interest rate index. Most
variable rate demand notes allow a Fund to demand the repurchase of the security
on not more than seven days' prior notice. Other notes only permit the Funds to
tender the security at the time of each interest rate adjustment or at other
fixed intervals. See "Demand Features." The Funds treat variable rate demand
notes as maturing on the later of the date of the next interest adjustment or
the date on which a Fund may next tender the security for repurchase.

CREDIT ENHANCEMENT

DEMAND FEATURES

The Money Market Fund and The Tax-Free Money Market Fund may acquire securities
that are subject to puts and standby commitments ("demand features") to purchase
the securities at their principal amount (usually with accrued interest) within
a fixed period (usually seven days) following a demand by a Fund. The demand
feature may be issued by the issuer of the underlying securities, a dealer in
the securities or by another third party, and may not be transferred separately
from the underlying security. A Fund uses these arrangements to provide a Fund
with liquidity and not to protect against changes in the market value of the
underlying securities. The bankruptcy, receivership or default by the issuer of
the demand feature, or a default on the underlying security or other event that
terminates the demand feature before its exercise, will adversely affect the
liquidity of the underlying security. Demand Features that are exercisable even
after a payment default on the underlying security may be treated as a form of
credit enhancement.

PARTICIPATION INTERESTS

VARIABLE RATE MUNICIPAL SECURITIES

MUNICIPAL LEASES

TEMPORARY INVESTMENTS

MUNICIPAL SECURITIES

The Virginia Municipal Bond Fund, the Maryland Municipal Bond Fund, and The
Tax-Free Money Market Fund invest principally in municipal securities. Municipal
securities are generally issued to finance public works, such as airports,
bridges, highways, housing, hospitals, mass transportation projects, schools,
streets, and water and sewer works. They are also issued to repay outstanding
obligations, to raise funds for general operating expenses and to make loans to
other public institutions and facilities.

INVESTMENT RISKS. Yields on municipal securities depend on a variety of factors,
including: the general conditions of the municipal bond market; the size of the
particular offering; the maturity of the obligations; and the rating of the
issue. Further, with respect to the Virginia Municipal Bond Fund and The
Maryland Municipal Bond Fund, any adverse economic conditions or developments
affecting the Commonwealth of Virginia, the state of Maryland, or their
municipalities could impact a Fund's portfolio. The ability of The Virginia
Municipal Bond Fund, The Maryland Municipal Bond Fund, and The Tax-Free
Money-Market Fund to achieve their investment objectives also depends on the
continuing ability of the issuers of municipal securities and participation
interests, or the guarantors of either, to meet their obligations for the
payment of interest and principal when due. With respect to

The Virginia Municipal Bond Fund and the Maryland Municipal Bond Fund, investing
in Virginia and Maryland municipal securities which meet a Fund's quality
standards may not be possible if the Commonwealth of Virginia, the state of
Maryland, or their municipalities do not maintain their current credit ratings.
In addition, certain Virginia or Maryland constitutional amendments, legislative
measures, executive orders, administrative regulations and voter initiatives
could result in adverse consequences affecting Virginia and Maryland municipal
securities. In addition, from time to time, the supply of municipal securities
acceptable for purchase by The Virginia Municipal Bond Fund, The Maryland
Municipal Bond Fund, and The Tax-Free Money Market Fund, could become limited.

FUTURES CONTRACTS AND OPTIONS TO BUY OR SELL SUCH CONTRACTS

THE MEDALIST FUNDS INFORMATION

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

MANAGEMENT OF THE TRUST

ADVISORY FEES. The Adviser receives an annual investment advisory fee at
annual rates equal to percentages of the relevant Fund's average net assets
as follows: The Treasury Money Market Fund, The Money Market Fund, and The
Tax-Free Money Market Fund--.50%; and The U.S. Government Securities Fund,
The Stock Fund, The Virginia Municipal Bond Fund and The Maryland Municipal
Bond Fund--.75%. The fee paid by The U.S. Government Securities Fund, The
Stock Fund, The Virginia Municipal Bond Fund and The Maryland Municipal
Bond Fund, while higher than the advisory fee paid by other mutual funds in
general, is comparable to fees paid by other mutual funds with similar
objectives and policies. The investment advisory contract provides for the
voluntary waiver of expenses by the Adviser from time to time. The Adviser
can terminate this voluntary waiver of expenses at any time with respect to
a Fund at its sole discretion. The Adviser has also undertaken to reimburse
the Funds for operating expenses in excess of limitations established by
certain states.

states. As of September 30, 1993, Signet Trust Company had $2.6 billion in
total trust assets. Signet Asset Management has investment authority over
$1.6 billion of the $2.6 billion. The Adviser has managed The Medalist
Funds since their inception in 1990. The Adviser manages three equity
common trust funds with $47.5 million in assets and three fixed income
common trust funds with $204.7 million in assets. As part of their regular
banking operations, Signet Bank and Trust may make loans to public
companies. Thus, it may be possible, from time to time, for the Funds to
hold or acquire the securities of issuers which are also lending clients of
Signet Bank and Trust. The lending relationship will not be a factor in the
selection of securities.

DISTRIBUTION OF SHARES OF THE FUNDS

DISTRIBUTION PLAN. According to the provisions of a distribution plan adopted
pursuant to Investment Company Act Rule 12b-1, the distributor may select
brokers and dealers to provide distribution and administrative services as to
Shares of the Funds. The distributor may also select administrators (including
financial institutions, fiduciaries, custodians for public funds and investment
advisers) to provide administrative services. Administrative services may
include, but are not limited to, the following functions: providing office
space, equipment, telephone facilities, and various personnel including
clerical, supervisory, and computer, as necessary or beneficial to establish and
maintain shareholder accounts and records; processing purchase and redemption
transactions and automatic investments of client account cash balances;
answering routine client inquiries regarding Shares; assisting clients in
changing dividend options, account designations, and addresses; and providing
such other services as each Fund reasonably requests for its Shares.

Brokers, dealers, and administrators will receive fees based upon Shares owned
by their clients or customers. The schedules of such fees and the basis upon
which such fees will be paid will be determined from time to time by the Board
of Trustees, provided that for any period the total amount of fees representing
an expense to the Trust shall not exceed an annual rate of .25 of 1% of the
average net asset value of Shares of The U.S. Government Securities Fund, The
Stock Fund, The Virginia Municipal Bond Fund and The Maryland Municipal Bond
Fund, and .35 of 1% of the average net asset value of Shares of The Treasury
Money Market Fund, The Money Market Fund, and The Tax-Free Money Market Fund
held in the accounts during the period for which the brokers, dealers, and
administrators provide services. Any fees paid by the distributor with respect
to Shares of a Fund pursuant to the distribution plan will be reimbursed by the
Trust from the assets of the Shares of that Fund.

The distributor, in its sole discretion, may uniformly offer to pay all brokers
or dealers selling Shares of a Fund additional amounts predicated upon the
amount of shares of that Fund or certain other Funds of

The Medalist Funds sold by the broker or dealer. Such payments, if made, will be
in addition to amounts paid under the distribution plan and will not be an
expense of a Fund.

ADMINISTRATION OF THE FUNDS

<TABLE>
<CAPTION>
MAXIMUM AVERAGE AGGREGATE DAILY NET
ADMINISTRATIVE FEE ASSETS OF THE TRUST
----------------------------------- -----------------------------------
<S> <C>
.150 of 1% on the first $250 million
.125 of 1% on the next $250 million
.100 of 1% on the next $250 million
.075 of 1% on assets in excess of $750 million
</TABLE>

The administrative fee received during any fiscal year shall be at least $50,000
per Fund; however, this requirement was waived by the administrator for the year
ended September 30, 1993. Federated Administrative Services may voluntarily
waive a portion of its fee.

TRANSFER AGENT AND DIVIDEND DISBURSING AGENT. Federated Services Company,
Pittsburgh, Pennsylvania, is transfer agent for the Shares of the Funds and
dividend disbursing agent for the Funds.

LEGAL COUNSEL. Legal counsel is provided by Houston, Houston & Donnelly,
Pittsburgh, Pennsylvania, and Dickstein, Shapiro & Morin, L.L.P. Washington,
D.C.

INDEPENDENT AUDITORS. The independent auditors for the Funds are Deloitte &
Touche, Pittsburgh, Pennsylvania.

EXPENSES OF THE FUNDS AND INVESTMENT SHARES

Each Fund pays all of its own expenses and its allocable share of the Trust's
expenses.

In addition, the Board of Trustees reserves the right to allocate certain other
expenses to holders of Shares as it deems appropriate ("Class Expenses"). In any
case, Class Expenses would be limited to: distribution fees; transfer agent fees
as identified by the transfer agent as attributable to holders of Shares;
printing and postage expenses related to preparing and distributing materials
such as shareholder reports, prospectuses and proxies to current shareholders;
registration fees paid to the Securities and Exchange Commission and
registration fees paid to state securities commissions; expenses related to
administrative personnel and services as required to support holders of Shares;
legal fees relating solely to Shares; and Trustees' fees incurred as a result of
issues relating solely to Shares.

NET ASSET VALUE
- --------------------------------------------------------------------------------

With respect to The U.S. Government Securities Fund, The Stock Fund, The
Virginia Municipal Bond Fund and The Maryland Municipal Bond Fund, net asset
value per Share fluctuates and is determined by adding the interest of the
Shares in the market value of all securities and other assets of the Fund,
subtracting the interest of the Shares in the liabilities of the Fund and those
attributable to Shares, and dividing the remainder by the total number of Shares
outstanding. The net asset value for Trust Shares may exceed that of Shares due
to the variance in daily net income realized by each class. Such variance will
reflect only accrued net income to which the shareholders of a particular class
are entitled.

INVESTING IN SHARES

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

SHARE PURCHASES

Shares of the Funds are sold on days on which the New York Stock Exchange is
open for business except on Lee-Jackson-King Day, Columbus Day and Veterans'
Day. Shares of the Funds may be purchased through Signet Financial Services,
Inc. In connection with the sale of Shares of the Funds, the distributor may
from time to time offer certain items of nominal value to any shareholder or
investor. The Funds reserve the right to reject any purchase request.

With respect to The Treasury Money Market Fund, The Money Market Fund, and The
Tax-Free Money Market Fund, an investor may write or call Signet Financial
Services, Inc. to place an order to purchase Shares of the Funds. (Call
toll-free 1-800-723-9512). Purchase orders must be received by Signet Financial
Services, Inc. before 4:00 p.m. (Eastern time). Payment for Shares of the Funds
may be made by check or by wire. Orders are considered received after payment by
check is converted into federal funds and received by Signet Financial Services,
Inc. Payment must be received by Signet Financial Services, Inc. on the next
business day after placing the order. For orders received by 11:00 a.m. (Eastern
time), shareholders will begin earning dividends on that day provided payment by
wire is received by Signet Financial Services, Inc. by 2:00 p.m. (Eastern time)
on that day.

With respect to The U.S. Government Securities Fund, The Stock Fund, The
Virginia Municipal Bond Fund and The Maryland Municipal Bond Fund, an investor
may write or call Signet Financial Services, Inc. to place an order to purchase
Shares of the Fund. (Call toll-free 1-800-723-9512). Purchase orders must be
received by Signet Financial Services, Inc. before 4:00 p.m. (Eastern time) in
order for Shares to be purchased at that day's public offering price. Payment
for Shares of the Funds may be made by check or by wire. Payment must be
received by Signet Financial Services, Inc. within five days of placing the
order.

BY CHECK. Purchases of Shares by check must be made payable to Signet Financial
Services, Inc. and sent to Signet Financial Services, Inc., P.O. Box 26301,
Richmond, VA 23260.

BY WIRE. With respect to The Treasury Money Market Fund, The Money Market Fund,
and The Tax-Free Money Market Fund, payment by wire must be received by Signet
Financial Services, Inc. before

2:00 p.m. (Eastern time) by the next business day after placing the order. With
respect to The U.S. Government Securities Fund, The Stock Fund, The Virginia
Municipal Bond Fund and The Maryland Municipal Bond Fund, payment by wire must
be received by Signet Financial Services, Inc. by the fifth business day after
placing the order. Shares of the Funds cannot be purchased by Federal Reserve
Wire on Columbus Day, Veterans' Day or Lee-Jackson-King Day.

SYSTEMATIC INVESTMENT PROGRAM

Once an account has been opened, holders of Shares may add to their investment
on a regular basis in a minimum amount of $100. Under this program, funds may be
automatically withdrawn periodically from the shareholder's checking account and
invested in Shares at the net asset value next determined after an order is
received by Signet Financial Services, Inc., plus the applicable sales charge. A
Shareholder may apply for participation in this program through Signet Financial
Services, Inc.

MINIMUM INVESTMENT REQUIRED

The minimum initial investment in Shares is $1,000. Subsequent investments must
be in amounts of at least $100. No minimum investment is required for officers,
directors and employees (and their spouses and immediate family members) of
Signet Banking Corporation or its subsidiaries.

WHAT SHARES COST

Shares of the Funds are sold at their net asset value next determined after an
order is received. There is no sales charge imposed by the Funds.

On Monday through Friday, The U.S. Government Securities Fund, The Stock Fund,
The Virginia Municipal Bond Fund and The Maryland Municipal Bond Fund calculate
net asset value at 4:00 p.m. (Eastern time), while The Treasury Money Market
Fund and The Money Market Fund calculate net asset value at 1:00 p.m. (Eastern
time), and 4:00 p.m. (Eastern time), except on: (i) days on which there are not
sufficient changes in the value of a Fund's portfolio securities that its net
asset value might be materially affected; (ii) days during which no shares of a
Fund are tendered for redemption and no orders to purchase shares are received;
or (iii) the following holidays: New Year's Day, Martin Luther King Day,
Presidents' Day, Good Friday, Memorial Day, Independence Day, Labor Day,
Thanksgiving Day, and Christmas Day.

CERTIFICATES AND CONFIRMATIONS

With respect to The Treasury Money Market Fund and The Money Market Fund,
monthly confirmations are sent to report transactions such as purchases and
redemptions as well as dividends paid during the month. With respect to The U.S.
Government Securities Fund, The Stock Fund, The Virginia Municipal Bond Fund and
The Maryland Municipal Bond Fund, detailed confirmations of each purchase or
redemption are sent to each shareholder. In addition, monthly confirmations are
sent to report dividends paid during that month.

DIVIDENDS

With respect to The Stock Fund, dividends are declared and paid quarterly.

CAPITAL GAINS

EXCHANGE PRIVILEGE
- --------------------------------------------------------------------------------

Holders of Shares have easy access to Shares of the other funds comprising the
Trust through an exchange program, and exchanges may be made at net asset value
without paying a redemption fee or sales charge upon such exchange.

Shareholders who exercise this exchange privilege must exchange shares having a
net asset value of at least $1,000. Prior to any exchange, the shareholder must
receive a copy of the current prospectus of the participating fund into which an
exchange is to be made.

Upon receipt by Signet Financial Services, Inc. of proper instructions and all
necessary supporting documents, Shares submitted for exchange will be redeemed
at the next-determined net asset value and invested in Investment Shares of the
other participating fund. If the exchanging shareholder does not have an account
in the participating fund whose Shares are being acquired, a new account will be
established with the same registration and reinvestment options for dividends
and capital gains as the account from which Shares are exchanged, unless
otherwise specified by the shareholder. In the case where the new account
registration is not identical to that of the existing account, a signature
guarantee is required. (See "Redeeming Shares By Mail".) Exercise of this
privilege is treated as a sale for federal income tax purposes and, depending on
the circumstances, a short-or long-term capital gain or loss may be realized.
The Fund reserves the right to modify or terminate the exchange privilege at any
time. Shareholders will be notified prior to any modification or termination of
this privilege. Shareholders may obtain further information on the exchange
privilege by calling Signet Financial Services, Inc.

BY TELEPHONE. Shareholders may provide instructions for exchanges between
participating funds by calling Signet Financial Services, Inc. toll-free at
1-800-723-9512. It is recommended that investors request this privilege at the
time of their initial application. Information on this service can be obtained
through Signet Financial Services, Inc. Shares may be exchanged by telephone
only between fund accounts having identical shareholder registrations. Exchange
instructions given by telephone may be electronically recorded. If reasonable
procedures are not followed by a Fund, it may be liable for losses due to
unauthorized or fraudulent telephone instructions.

Any Shares held in certificate form cannot be exchanged by telephone but must be
forwarded to Signet Financial Services, Inc. and deposited to the shareholder's
mutual fund account before being exchanged.

Telephone exchange instructions must be received by Signet Financial Services,
Inc. before 3:00 p.m. (Eastern time) for Shares to be exchanged the same day.
The telephone exchange privilege may be modified or terminated at any time.
Shareholders will be notified of such modification or termination. Shareholders
of a Fund may have difficulty in making exchanges by telephone through banks,
brokers, and other financial institutions during times of drastic economic or
market changes. If a shareholder cannot contact his bank, broker, or financial
institution by telephone, it is recommended that an exchange request be made in
writing and sent by overnight mail to Signet Financial Services, Inc.

REDEEMING SHARES

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

Each Fund redeems Shares at their net asset value, less any applicable
contingent deferred sales charges, next determined after Signet Financial
Services, Inc. receives the redemption request. Redemp-

tions will be made on days on which a Fund computes its net asset value.
Telephone or written requests for redemption must be received in proper form by
Signet Financial Services, Inc.

BY TELEPHONE. A shareholder may redeem Shares of a Fund by calling Signet
Financial Services, Inc. to request the redemption. (Call toll free
1-800-444-7123). Shares will be redeemed at the net asset value next determined
after a Fund receives the redemption request from Signet Financial Services,
Inc.

With respect to The Treasury Money Market Fund, The Money Market Fund, and The
Tax-Free Money Market Fund, redemption requests received before 11:00 a.m.
(Eastern time) will be wired the same day, but will not be entitled to that
day's dividend. A redemption request must be received by Signet Financial
Services, Inc. before 4:00 p.m. (Eastern time). Redemption requests through
registered broker/dealers must be received by Signet Financial Services, Inc.
before 3:00 p.m. (Eastern time). Signet Financial Services, Inc. is responsible
for promptly submitting redemption requests and providing proper written
redemption instructions to a Fund. Other registered broker/dealers may charge
customary fees and commissions for this service.

With respect to The U.S. Government Securities Fund, The Stock Fund, The
Virginia Municipal Bond Fund and The Maryland Municipal Bond Fund, a redemption
request must be received by Signet Financial Services, Inc. before 4:00 p.m.
(Eastern time) in order for Shares to be redeemed at that day's net asset value.
Redemption requests through registered broker/dealers must be received by Signet
Financial Services, Inc. before 3:00 p.m. (Eastern time) in order for Shares to
be redeemed at that day's net asset value. Signet Financial Services, Inc. is
responsible for promptly submitting redemption requests and providing proper
written redemption instructions to a Fund. Other registered broker/dealers may
charge customary fees and commissions for this service.

If, at any time, a Fund should determine it necessary to terminate or modify
this method of redemption, shareholders would be promptly notified.

An authorization form permitting a Fund to accept telephone redemption requests
must first be completed. It is recommended that investors request this privilege
at the time of their initial application. If not completed at the time of
initial application, authorization forms and information on this service can be
obtained through Signet Financial Services, Inc. Telephone redemption
instructions may be recorded. If reasonable procedures are not followed by a
Fund, it may be liable for losses due to unauthorized or fraudulent telephone
instructions.

BY MAIL. Shareholders may redeem Shares of a Fund by sending a written request
to Signet Financial Services, Inc. The written request should include the
shareholder's name, the Fund name, the class of shares, the account number, and
the Share or dollar amount requested. If share certificates have been issued,
they must be properly endorsed and should be sent by registered or certified
mail with the written request to Signet Financial Services, Inc. P.O. Box 26301,
Richmond, VA 23260.

- a trust company or commercial bank whose deposits are insured by BIF,
which is administered by the Federal Deposit Insurance Corporation
("FDIC");

- a member of the New York, American, Boston, Midwest, or Pacific Stock
Exchange;

- a savings bank or savings and loan association whose deposits are insured
by the SAIF, which is administered by the FDIC; or

- any other "eligible guarantor institution," as defined in the Securities
Exchange Act of 1934.

The Funds do not accept signatures guaranteed by a notary public.

Normally, a check for the proceeds is mailed to the shareholder within one
business day, but in no event more than seven days, after receipt of a proper
written redemption request.

CONTINGENT DEFERRED SALES CHARGE--THE U.S. GOVERNMENT SECURITIES FUND,
THE STOCK FUND, THE VIRGINIA MUNICIPAL BOND FUND AND
THE MARYLAND MUNICIPAL BOND FUND

Shareholders redeeming Shares from accounts in the Funds listed above within
five years of the purchase date of those Shares will be charged a contingent
deferred sales charge by the Fund's distributor. The charge will be based upon
the lesser of the original purchase price or the net asset value of the Shares
redeemed, as follows:

<TABLE>
<CAPTION>
CONTINGENT DEFERRED
AMOUNT OF PURCHASE SALES CHARGE
------------------------------------ --------------------
<S> <C>
Under $100,000 2.0%
$100,000-$249,999 1.5%
$250,000-$399,999 1.0%
$400,000-$499,999 0.5%
$500,000 or more None
</TABLE>

Separate purchases will not be aggregated for purposes of determining the
applicable contingent deferred sales charge. In instances in which Fund Shares
have been acquired in exchange for Investment Shares in other Medalist Funds,
(i) the purchase price is the price of the Shares when originally purchased and
(ii) the five year period will begin on the date of the original purchase. The
contingent deferred sales charge will not be imposed on Shares acquired (i)
through the reinvestment of dividends or distribution of capital gains, (ii)
prior to October 1, 1992, or (iii) in exchange for Shares acquired prior to
October 1, 1992. In computing the contingent deferred sales charge, if any,
redemptions are deemed to have occurred in the following order: 1) Shares
acquired through the reinvestment of dividends and long-term capital gains, 2)
Shares purchased prior to October 1, 1992 (including Shares acquired in exchange
for Shares purchased prior to October 1, 1992), 3) Shares purchased more than
five years before the date of redemption, and 4) Shares purchased after October
1, 1992 and redeemed within five years of the date of purchase, determined on a
first-in, first-out basis.

The contingent deferred sales charge will not be imposed on redemption of Shares
(i) following the death or disability (as defined in the Internal Revenue Code)
of a shareholder; (ii) to the extent that the redemption represents a minimum
required distribution from an IRA or other retirement plan to a shareholder who
has attained the age of 70 1/2; (iii) owned by the Trust Division of Signet
Trust Company or other affiliates of Signet Banking Corporation representing
funds which are held in a fiduciary, agency, custodial, or similar capacity, or
owned by directors and employees of the Fund, Signet Banking Corporation or
Federated Securities Corp. or their affiliates, or any bank or investment dealer
who has a sales agreement with Federated Securities Corp. with regard to the
Fund, and their spouses and children under 21; or (iv) if the proceeds from the
redemption are used to purchase a Signet Select variable annuity within 10 days
of the redemption.

The contingent deferred sales charge is not charged when Fund Shares are
exchanged for shares of any other portfolio of The Medalist Funds or when
redemptions are made by the Fund to liquidate accounts with low balances.

CONTINGENT DEFERRED SALES CHARGE--THE TREASURY MONEY MARKET FUND,
THE MONEY MARKET FUND AND THE TAX-FREE MONEY MARKET FUND

A contingent deferred sales charge will be imposed only in certain instances in
which the Shares of The Treasury Money Market Fund, The Money Market Fund, or
The Tax-Free Money Market Fund being redeemed were acquired in exchange for
Shares of those other Medalist Funds which charge a contingent deferred sales
charge ("CDSC Shares"). If Shares of The Treasury Money Market Fund, The Money
Market Fund, or The Tax-Free Money Market Fund were acquired in exchange for
CDSC Shares, redemption of the Shares of The Treasury Money Market Fund, The
Money Market Fund, or The Tax-Free Money Market Fund within five years of the
purchase of the CDSC Shares, will have the same consequences as described under
"Contingent Deferred Sales Charge--The U.S. Government

Securities Fund, The Stock Fund, The Virginia Municipal Bond Fund, and The
Maryland Municipal Bond Fund."

SYSTEMATIC WITHDRAWAL PROGRAM

Shareholders who desire to receive payments of a predetermined amount may take
advantage of the Systematic Withdrawal Program. Under this program, Shares are
redeemed to provide for periodic withdrawal payments in an amount directed by
the shareholder. Depending upon the amount of the withdrawal payments, the
amount of dividends paid and capital gains distributions with respect to Shares,
and the fluctuation of the net asset value of Shares redeemed under this
program, redemptions may reduce, and eventually deplete, the shareholder's
investment in Shares of a Fund. For this reason, payments under this program
should not be considered as yield or income on the shareholder's investment in
Shares of a Fund. To be eligible to participate in this program, a shareholder
must have an account value of at least $10,000. A shareholder may apply for
participation in this program through Signet Financial Services, Inc.

ACCOUNTS WITH LOW BALANCES

Due to the high cost of maintaining accounts with low balances, a Fund may
redeem Shares in any account, except retirement plans, and pay the proceeds to
the shareholder if the account balance falls below the required minimum value of
$1,000 due to shareholder redemptions. This requirement does not apply, however,
if the balance falls below $1,000 because of changes in a Fund's net asset
value. Before Shares are redeemed to close an account, the shareholder is
notified in writing and allowed 30 days to purchase additional Shares to meet
the minimum requirement.

REDEMPTION IN KIND

The Trust is obligated to redeem Shares solely in cash up to $250,000 or 1% of
any class' net asset value, whichever is less, for any one shareholder within a
90-day period.

SHAREHOLDER INFORMATION
- --------------------------------------------------------------------------------

VOTING RIGHTS

As of November 9, 1993, Signet Trust Company, Richmond, Virginia, acting in
various capacities for numerous accounts, was the owner of record of 10,986,813
shares (99.99%) of The U.S. Government Securities Fund--Trust Shares; 5,202,317
shares (99.99%) of The Stock Fund--Trust Shares; 3,771,697 shares (99.99%) of
The Virginia Municipal Bond Fund--Trust Shares; 1,058,305 shares (99.99%) of The
Maryland Municipal Bond Fund--Trust Shares; 143,210,919 shares (99.99%) of The
Treasury Money Market Fund--Trust Shares; and 138,542,690 shares (99.99%) of The
Money Market Fund--Trust Shares, and therefore, may, for certain purposes, be
deemed to control the Funds and be able to affect the outcome of certain matters
presented for a vote of shareholders.

MASSACHUSETTS PARTNERSHIP LAW

EFFECT OF BANKING LAWS
- --------------------------------------------------------------------------------

TAX INFORMATION
- --------------------------------------------------------------------------------

FEDERAL INCOME TAX

Shareholders of The Virginia Municipal Bond Fund, The Maryland Municipal Bond
Fund and The Tax-Free Money Market Fund are not required to pay the federal
regular income tax on any dividends received from the Fund that represent net
interest on tax-exempt municipal bonds. However, under the Tax reform Act of
1986, dividends representing net interest earned on certain "private activity"
bonds issued after August 17, 1986, may be included in calculating the federal
individual alternative minimum tax or the federal alternative minimum tax for
corporations. The Virginia Municipal Bond Fund, The Maryland Municipal Bond Fund
and The Tax-Free Money Market Fund may purchase all types of municipal bonds,
including private activity bonds.

Dividends of the Funds representing net interest income earned on some temporary
investments and any realized net short-term gains are taxed as ordinary income.

These tax consequences apply whether dividends are received in cash or as
additional shares.

Shares of the Fund will not be subject to Virginia state or local personal
property taxes.

MARYLAND TAXES. Holders of the Fund who are individuals, corporations, estates
or trusts and who are subject to Maryland state and local income tax will not be
subject to tax in Maryland on Fund dividends to the extent that such dividends
qualify as exempt-interest dividends of a regulated investment company under
Section 852(b)(5) of the Internal Revenue Code of 1986, as amended (the "Code"),
and which are attributable to (i) interest on tax-exempt obligations of the
State of Maryland or its political subdivisions or authorities, (ii) interest on
obligations of the United States or an authority, commission, instrumentality,
possession or territory of the United States, or (iii) gain realized by the Fund
from the sale or exchange of bonds issued by Maryland, a political subdivision
of Maryland, or the United States government (excluding obligations issued by
the District of Columbia, a territory or possession of the United States, or a
department, agency, instrumentality, or political subdivision of the District,
territory or possession).

Interest on indebtedness incurred (directly or indirectly) by a shareholder of
the Fund to purchase or carry shares of the The Maryland Municipal Bond Fund
will not be deductible for Maryland state and local income tax purposes to the
extent such interest is allocable to exempt-interest dividends.

Shares of the Fund will not be subject to the Maryland personal property tax.

PERFORMANCE INFORMATION
- --------------------------------------------------------------------------------

The yield of Shares of The Treasury Money Market Fund, The Money Market Fund,
and The Tax-Free Money Market Fund represent the annualized rate of income
earned on an investment in Shares over a seven-day period. It is the annualized
dividends earned during the period on the investment, shown as a percentage of
the investment. The effective yield is calculated similarly to the yield, but,
when annualized, the income earned on an investment in Shares is assumed to be
reinvested daily. The effective yield will be slightly higher than the yield
because of the compounding effect of this assumed reinvestment.

With respect to The U.S. Government Securities Fund and The Stock Fund, total
return and yield will be calculated separately for Investment Shares and Trust
Shares. Because Investment Shares may be subject to a redemption fee and are
subject to a 12b-1 fee, the total return and yield for Trust Shares for the same
period will exceed that of Investment Shares.

With respect to The Virginia Municipal Bond Fund and The Maryland Municipal Bond
Fund, total return, yield and tax-equivalent yield will be calculated separately
for Investment Shares and Trust Shares. Because Investment Shares may be subject
to a contingent deferred sales charge and are subject to a 12b-1 fee, the total
return and yield for Trust Shares for the same period will exceed that of
Investment Shares.

With respect to The Treasury Money Market Fund and The Money Market Fund, yield
and effective yield will be calculated separately for Investment Shares and
Trust Shares. Because Investment Shares are subject to 12b-1 fees the yield and
effective yield for Trust Shares, for the same period, will exceed that of
Investment Shares.

From time to time, the Funds may advertise their performance using certain
financial publications and/or compare their performance to certain indices.

OTHER CLASSES OF SHARES
- --------------------------------------------------------------------------------

Trust Shares, the other class of shares offered by those Funds offering separate
classes, are sold to trusts, fiduciaries and institutions at net asset value at
a minimum initial investment of $10,000. Trust Shares are not sold pursuant to a
Rule 12b-1 Plan.

The amount of dividends payable to Trust Shares will exceed those payable to
Investment Shares by the difference between class expenses and distribution
expenses borne by shares of each respective class.

The stated advisory fee is the same for both classes of each of the Funds.

[THIS PAGE INTENTIONALLY LEFT BLANK]

ADDRESSES
- --------------------------------------------------------------------------------

SIGNET
ASSET MANAGEMENT
A Division of Signet Trust Company

Investment Adviser

FEDERATED SECURITIES CORP. IS THE DISTRIBUTOR OF THE FUNDS.

3042108A-R (8/94)

The Medalist Funds
(formerly the Signet Select Funds)
Investment Shares
consists of seven portfolios:
o The U. S. Government Securities Fund;
o The Stock Fund;
o The Virginia Municipal Bond Fund;
o The Maryland Municipal Bond Fund;
o The Treasury Money Market Fund;
o The Money Market Fund; and
o The Tax-Free Money Market Fund

Combined Statement of Additional Information

This Combined Statement of Additional Information should be read with the
Combined Prospectus for the Investment Shares ("Investment Shares") of The
Medalist Funds (the "Trust") and The Tax-Free Money Market Fund, dated
November 30, 1994. This Statement is not a prospectus itself. To receive a
copy of the prospectus, write to or call the Trust.

FEDERATED INVESTORS TOWER
PITTSBURGH, PA 15222-3779

STATEMENT DATED NOVEMBER 30, 1994

General Information About the Trust

With the exception of The Tax-Free Money Market Fund, which offers a single
class of shares, the Funds are offered in two classes, Investment Shares
and Trust Shares. This Combined Statement of Additional Information relates
only to the Investment Shares of those Funds offering classes and to shares
of The Tax-Free Money Market Fund.

The Stock Fund
The Fund invests primarily in the securities of high quality companies,
including common stocks, preferred stocks, corporate bonds, notes, warrants
and convertible securities.

U.S. Government Obligations
The types of U.S. government obligations in which the Fund may invest are
those set forth under "The U.S. Government Securities Fund--U.S. Government
Obligations."

Bank Instruments
The types of bank instruments in which the Fund invests are those set
forth under "The Stock Fund-Bank Instruments."

U.S. Government Obligations
The types of U.S. government obligations in which the Fund may invest
are those set forth under "The U.S. Government Securities Fund-U.S.
Government Obligations."

When-Issued and Delayed Delivery Transactions

Restricted and Illiquid Securities

Participation Interests

Variable Rate Municipal Securities

Investment Limitations
Issuing Senior Securities and Borrowing Money

Investing in Commodities
The Funds will not purchase or sell commodities, commodity contracts or
commodity futures contracts except for financial futures contracts in
the case of The Stock Fund.

Investing in Real Estate

Investing in New Issuers

Arbitrage Transactions
A Fund will not enter into transactions for the purpose of engaging in
arbitrage.

Purchasing Securities to Exercise Control
A Fund will not purchase securities of a company for the purpose of
exercising control or management.

Dealing in Puts and Calls

The Tax-Free Money Market Fund does not intend to borrow money or
pledge securities in excess of 5% of the value of its net assets during
the coming fiscal year.

John F. Donahue@*
Federated Investors Tower
Pittsburgh, PA

Chairman and Trustee

John T. Conroy, Jr.
Wood/IPC Commercial Department
John R. Wood and Associates, Inc., Realtors
3255 Tamiami Trail North
Naples, FL

Trustee

William J. Copeland
One PNC Plaza - 23rd Floor
Pittsburgh, PA

Trustee

J. Christopher Donahue *
Federated Investors Tower
Pittsburgh, PA

Vice President and Trustee

James E. Dowd
571 Hayward Mill Road
Concord, MA

Trustee

Attorney-at-law; Director, The Emerging Germany Fund, Inc.; Director,
Trustee, or Managing General Partner of the Funds; formerly, Director, Blue
Cross of Massachusetts, Inc.

Lawrence D. Ellis, M.D.
3471 Fifth Avenue, Suite 1111
Pittsburgh, PA

Trustee

Edward L. Flaherty, Jr.@
5916 Penn Mall
Pittsburgh, PA

Trustee

Edward C. Gonzales
Federated Investors Tower
Pittsburgh, PA

Vice President and Treasurer

Peter E. Madden
225 Franklin Street
Boston, MA

Trustee

Gregor F. Meyer
5916 Penn Mall
Pittsburgh, PA

Trustee

Wesley W. Posvar
1202 Cathedral of Learning
University of Pittsburgh
Pittsburgh, PA

Trustee

Marjorie P. Smuts
4905 Bayard Street
Pittsburgh, PA

Trustee

Public relations/marketing consultant; Director, Trustee, or Managing
General Partner of the Funds.

Craig P. Churman
Federated Investors Tower
Pittsburgh, PA

Vice President and Assistant Treasurer of the Trust

Vice President, Federated Administrative Services; Vice President and
Assistant Treasurer of some of the Funds.

J. Christopher Donahue
Federated Investors Tower
Pittsburgh, PA

Vice President of the Trust

Richard B. Fisher
Federated Investors Tower
Pittsburgh, PA

President

John W. McGonigle
Federated Investors Tower
Pittsburgh, PA

Vice President and Secretary

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

@ Member of the Trust Executive Committee. The Executive Committee of the
Board of Trustees handles the responsibilities of the Board of Trustees
between meetings of the Board.

Fund Ownership
Officers and Trustees own less than 1% of the outstanding shares of each
Fund.

Investment Advisory Services
Adviser To The Trust

Distribution Plan
The Trust has adopted a Plan for Shares of the Funds pursuant to Rule 12b-1
which was promulgated by the Securities and Exchange Commission pursuant to
the Investment Company Act of 1940. The Plan provides that the Funds'
distributor, Federated Securities Corp., shall act as the distributor of
Shares, and it permits the payment of fees to brokers and dealers for
distribution and administrative services and to administrators for
administrative services. The Plan is designed to (i) stimulate brokers and
dealers to provide distribution and administrative support services to the
Funds and their holders of Shares and (ii) stimulate administrators to
render administrative support services to the Funds and their holders of
Shares. These services are to be provided by a representative who has
knowledge of the holder of Shares' particular circumstances and goals, and
include, but are not limited to: providing office space, equipment,
telephone facilities, and various personnel including clerical,
supervisory, and computer, as necessary or beneficial to establish and
maintain shareholder accounts and records; processing purchase and
redemption transactions and automatic investments of client account cash
balances; answering routine client inquiries regarding the Funds; assisting
clients in changing dividend options, account designations, and addresses;
and providing such other services as the Trust reasonably requests.
Other benefits which the Funds hope to achieve through the Plan include,
but are not limited to the following: (1) an efficient and effective
administrative system; (2) a more efficient use of assets of holders of
Shares by having them rapidly invested in the Funds with a minimum of delay
and administrative detail; and (3) an efficient and reliable records system
for holders of Shares and prompt responses to shareholder requests and
inquiries concerning their accounts.
By adopting the Plan, the Board of Trustees expects that the Funds will be
able to achieve a more predictable flow of cash for investment purposes and
to meet redemptions. This will facilitate more efficient portfolio
management and assist the Funds in seeking to achieve their respective
investment objectives. By identifying potential investors in Shares whose
needs are served by a particular Fund's objective, and properly servicing
these accounts, the Funds may be able to curb sharp fluctuations in rates
of redemptions and sales.

There were no fees paid to brokers and administrators (financial
institutions) pursuant to the Plan for the years ended September 30, 1994,
1993 and 1992.

Conversion to Federal Funds

Administrative Arrangements
For the fiscal years ended September 30, 1994, 1993 and 1992, the
distributor paid no administrative fees to brokers and administrators
(financial institutions).

Determining Net Asset Value

Valuing Municipal Securities

Total Return
The average annual total return for The U.S. Government Securities Fund,
The Stock Fund, The Virignia Municipal Bond Fund, and The Maryland
Municipal Bond Fund, for the fiscal year ended September 30, 1993 and for
the period from October 12, 1990 (effective date of each Fund's
registration statement) to September 30, 1993 was 4.68% and 10.51%, 4.24%
and 11.07%, 11.38% and 9.41%, and 11.13% and 8.96% for Investment Shares
and 6.94% and 11.25%, 6.42% and 11.73%, 13.62% and 10.12%, and 13.37% and
9.68% for Trust Shares.
The average annual total return for Shares of each Fund is the average
compounded rate of return for a given period that would equate a $1,000
initial investment to the ending redeemable value of that investment. The
ending redeemable value is computed by multiplying the number of shares
owned at the end of the period by the maximum offering price per share at
the end of the period. The number of shares owned at the end of the period
is based on the number of shares purchased at the beginning of the period
with $1,000, adjusted over the period by any additional shares, assuming
the monthly/quarterly reinvestment of all dividends and distributions.

Tax-Equivalent Yield
The tax-equivalent yield for both classes of shares for The Virginia
Municipal Bond Fund and The Maryland Municipal Bond Fund, and for The Tax-
Free Money Market Fund is calculated similarly to the yield, but is
adjusted to reflect the taxable yield that either class would have had to
earn to equal its actual yield, assuming a 28% tax rate and also assuming
that income earned by the Fund is 100% tax-exempt.
The tax-equivalent yield for the Trust Shares for the thirty-day period
ended September 30, 1994, was 6.37% for The Virginia Municipal Bond Fund
and 6.02% for The Maryland Municipal Bond Fund. The tax-equivalent yield
for the Investment Shares was 5.99% for The Virginia Municipal Bond Fund
and 5.63% for The Maryland Municipal Bond Fund for the same period. The tax-
equivalent yield for The Tax-Free Money Market Fund for the same period was
___%.

Performance Comparisons
Each Fund's performance of both classes of shares depends upon such
variables as:
. portfolio quality;
. average portfolio maturity;

2102608B-R
(11/93)

PART C. OTHER INFORMATION.

Item 24. Financial Statements and Exhibits:
(a) Financial Statements (to be filed by amendment)
(b) Exhibits:
(1) (i)Copy of Declaration of Trust of the
Registrant; (7)
(ii) Copy of Amendment No. 1,
dated September 20, 1990, to the
Declaration of Trust;(2)
(iii) Copy of Amendment No. 2,
dated November 14, 1991, to the
Declaration of Trust;(5)
(iv) Conformed copy of Amend No. 5
, dated May 27, 1994, to the
Declaration of Trust;(9)
(2) Copy of By-Laws of the Registrant;(1)
(3) Not applicable;
(4) Copy of Specimen Certificate for Shares of
Beneficial Interest of the Registrant (8);
(5) Conformed copy of Investment Advisory
Contract of the Registrant;(9)
(6) Conformed copy of Exhibit D to Distributor's
Contract of the Registrant;(9)
(7) Not applicable;

+ All exhibits have been filed electronically.

(1) Response is incorporated by reference to Registrant's
Initial Registration Statement on Form N-1A filed August 24,
1990. (File No. 33-36451 and 811-6158).
(2) Response is incorporated by reference to Registrant's Pre-
Effective Amendment No. 3 and Amendment No. 3 to its
Registration Statement on Form N-1A filed October 9, 1990.
(File Nos. 33-36451 and 811-6158).
(3) Response is incorporated by reference to Registrant's Post-
Effective Amendment No. 1 and Amendment No. 4 to its
Registration Statement on Form N-1A filed on May 9, 1991.
(File Nos. 33-36451 and 811-6158).
(4) Response is incorporated by reference to the Registrant's
Post-Effective Amendment No. 2 and Amendment No. 5 to its
Registration Statement on Form N-1A filed on October 9,
1991. (File Nos. 33-36451 and 811-6158).
(5) Response is incorporated by reference to the Registrant's
Post-Effective Amendment No. 3 and Amendment No. 6 to its
Registration Statement on Form N-1A filed on December 2,
1991. (File Nos. 33-36451 and 811-6158).
(6) Response is incorporated by reference to the
Registrant's Post-Effective Amendment No. 4 and Amendment
No. 7 to its Registration Statement on Form N-1A filed
December 1, 1992. (File Nos. 33-36451 and 811-6158)
(7) Response is incorporated by reference to the
Registrant's Post-Effective Amendment No. 5 and Amendment
No. 8 to its Registration Statement on Form N-1A filed
November 24, 1993. (File Nos. 33-36451 and 811-6158)
(8) Response in incorporated by reference to Registrant's
Post-Effective Amendment No. 6 and Amendment No. 9 to its
Registration Statement on Form N-1A filed April 21, 1994.
(File Nos. 33-36451 and 811-6158)
(9) Response in incorporated by reference to Registrant's
Post-Effective Amendment No. 7 and Amendment No. 10 to its
Registration Statement on Form N-1A filed June 20, 1994.
(File Nos. 33-36451 and 811-6158)

(8) Conformed copy of Custodian Agreement of the
Registrant;(9)
(9) Conformed copy of Transfer Agency and Service
Agreement (Fund Accounting and Shareholder
Recordkeeping) of the Registrant;(9)
(10) Copy of Opinion and Consent of Counsel
as to legality of shares being
registered;(2)
(11) (i)Copy of Consent of Independent
Auditors;(7)
(ii) Opinions of Special Tax
Counsel;(2)
(12) Not applicable;
(13) Copy of Initial Capital
Understanding;(2)
(14) Not applicable;
(15) (i)Copy of Amendment No. 1 to Exhibit
A of the Distribution Plan;(9)
(ii) Copy of Amendment No. 1 to
Fee Schedule for 12b-1 Agreement;(9)
(iii) Form of Administrative
Services Agreement;(9)
(16) Schedule for Computation of Fund
Performance Data;(3)
(17) Power of Attorney;(6)
(18) Not applicable.

+ All exhibits have been filed electronically.

Item 25. Persons Controlled by or Under Common Control with
Registrant:

No persons are controlled by the Registrant.

Item 26. Number of Holders of Securities:

Number of Record Holders
Title of Class as of April 8, 1994

Shares of beneficial interest The U.S. Government
Securities Fund - Trust Shares 4
The U.S. Government
Securities Fund - Investment Shares
4290
The Maryland Municipal
Bond Fund - Trust Shares 4
The Maryland Municipal
Bond Fund - Investment Shares
1,089
The Money Market Fund
- Trust Shares 4
The Money Market Fund
- Investment Shares102
The Treasury Money Market
Fund
- Trust Shares 8
The Treasury Money Market
Fund
- Investment Shares 36
The Stock Fund
- Trust Shares 5
The Stock Fund
- Investment Shares2,386
The Virginia Municipal
Bond Fund - Trust Shares 4
The Virginia Municipal
Bond Fund - Investment Shares
1,707

Item 27. Indemnification: (1.)

Item 28. Business and Other Connections of Investment Adviser:

(a) For a description of the other business of Signet
Asset Management, the investment adviser, see the
section entitled "The Medalist Funds Information -
Management of The Medalist Funds" in Part A.

(1) Response is incorporated by reference to Registrant's Post-
Effective Amendment No. 1 and Amendment No. 4 to its
Registration Statement on Form N-1A filed on May 9, 1991.
(File Nos. 33-36451 and 811-6158).
(3) Response is incorporated by reference to Registrant's Post-
Effective Amendment No. 1 and Amendment No. 4 to its
Registration Statement on Form N-1A filed on May 9, 1991.
(File Nos. 33-36451 and 811-6158).
(6) Response is incorporated by reference to the
Registrant's Post-Effective Amendment No. 4 and Amendment
No. 7 to its Registration Statement on Form N-1A filed
December 1, 1992. (File Nos. 33-36451 and 811-6158)
The Officers of the investment adviser are:

Other Substantial
Positions with Business,
Profession,
Name the Adviser Vocation or
Employment

Leslie P. Hunter President
Raymond E. Williams, Jr. Senior Vice
President
Frank Pipino Senior Vice President
Joe Rose Vice President
Bob Perrin Vice President
Betty Speegle Vice President
David E. Buffington Vice President
Joe Stork Vice President
Nancy Koble Trust Officer
Margaret M. Lynch Assistant Vice President
Tim Maris Assistant Vice President
Aleen Easterling Vice President
Deitra Mitchell Assistant Vice President
Eugenia Freiburger Vice President
Patty Holder Assistant Vice President
Ray Baker Assistant Vice President
Tucker Henley Assistant Vice President
C. Lunsford Johnson Assistant Vice President
Charlotte Harris Vice President
Beth King Trust Officer
Bill Petroff Vice President
Darlene Parrish Trust Finance Officer
Gregory Weirich Vice President
Cynthia Wright Assistant Vice President
Jerry Weaks Vice President
Jim Carscaddon Assistant Vice President
Tom Francy Vice President
Pegram Johnson Vice President

DIRECTORS

Name

David K. Hunt
Leslie P. Hunter
Wallace B. Millner, III
T. Gaylon Layfield, III
Stewart P. McEntee
John F. Vogel

Item 29. Principal Underwriters:

(a) Federated Securities Corp., the Distributor for
shares of the Registrant, also acts as principal
underwriter for the following open-end investment
companies: American Leaders Fund, Inc.; Annuity
Management Series; Automated Cash Management Trust;
Automated Government Money Trust; California
Municipal Cash Trust; Cash Trust Series II; Cash
Trust Series, Inc.; DG Investor Series; Edward D.
Jones & Co. Daily Passport Cash Trust; Federated
ARMs Fund; Federated Exchange Fund, Ltd.; Federated
GNMA Trust; Federated Government Trust; Federated
Growth Trust; Federated High Yield Trust; Federated
Income Securities Trust; Federated Income Trust;
Federated Index Trust; Federated Institutional
Trust; Federated Intermediate Government Trust;
Federated Master Trust; Federated Municipal Trust;
Federated Short-Intermediate Government Trust;
Federated Short-Term U.S. Government Trust;
Federated Stock Trust; Federated Tax-Free Trust;
Federated U.S. Government Bond Fund; First Priority
Funds; Fixed Income Securities, Inc.; Fortress
Adjustable Rate U.S. Government Fund, Inc.;
Fortress Municipal Income Fund, Inc.; Fortress
Utility Fund, Inc.; Fund for U.S. Government
Securities, Inc.; Government Income Securities,
Inc.; High Yield Cash Trust; Insight Institutional
Series, Inc.; Insurance Management Series;
Intermediate Municipal Trust; International Series,
Inc.; Investment Series Funds, Inc.; Investment
Series Trust; Liberty Equity Income Fund, Inc.;
Liberty High Income Bond Fund, Inc.; Liberty
Municipal Securities Fund, Inc.; Liberty U.S.
Government Money Market Trust; Liberty Term Trust,
Inc. - 1999; Liberty Utility Fund, Inc.; Liquid
Cash Trust; Managed Series Trust; Mark Twain Funds;
The Medalist Funds: Money Market Management, Inc.;
Money Market Obligations Trust; Money Market Trust;
Municipal Securities Income Trust; New York
Municipal Cash Trust; 111 Corcoran Funds; Peachtree
Funds; The Planters Funds; Portage Funds; RIMCO
Monument Funds; The Shawmut Funds; Short-Term
Municipal Trust; Star Funds; The Starburst Funds;
The Starburst Funds II; Stock and Bond Fund, Inc.;
Sunburst Funds; Targeted Duration Trust; Tax-Free
Instruments Trust; Trademark Funds; Trust for
Financial Institutions; Trust For Government Cash
Reserves; Trust for Short-Term U.S. Government
Securities; Trust for U.S. Treasury Obligations;
World Investment Series, Inc.

Federated Securities Corp. also acts as principal
underwriter for the following closed-end investment
company: Liberty Term Trust, Inc.- 1999.

(b)
(1) (2) (3)
Name and Principal Positions and Offices Positions and
Offices
Business Address With Underwriter With
Registrant___

Richard B. Fisher Director, Chairman, Vice President
Federated Investors Tower Chief Executive
Officer,
Pittsburgh, PA 15222-3779 Chief Operating
Officer,
and Asst. Treasurer,
Federated Securities Corp.

Edward C. Gonzales Director, Executive Vice President,
Federated Investors Tower President, and
Treasurer, Treasurer,
Pittsburgh, PA 15222-3779 Federated
Securities Corp. and Trustee

John W. McGonigle Director, Executive Vice President
Federated Investors Tower Vice President
and and Secretary
Pittsburgh, PA 15222-3779 Assistant
Secretary,
Federated Securities Corp.

John A. Staley, IV Executive Vice President Vice
President
Federated Investors Tower and Assistant
Secretary,
Pittsburgh, PA 15222-3779 Federated
Securities Corp.

John B. Fisher President-Institutional Sales, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779

James F. Getz President-Broker/Dealer, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779

Mark R. Gensheimer Executive Vice President of --
Federated Investors Tower Bank/Trust
Pittsburgh, PA 15222-3779 Federated Securities Corp.

Mark W. Bloss Senior Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779

Theodore Fadool, Jr. Senior Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779

Bryant R. Fisher Senior Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779

Christopher T. Fives Senior Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779

James S. Hamilton Senior Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779

James M. Heaton Senior Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779

H. Joseph Kennedy Senior Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779
(1) (2) (3)
Name and Principal Positions and Offices Positions and
Offices
Business Address With Underwriter With
Registrant___

Keith Nixon Senior Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779

Timothy C. Pillion Senior Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779

James R. Ball Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779

Richard W. Boyd Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779

Jane E. Broeren-Lambesis Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779

Mary J. Combs Vice President, --
Federated Investors Tower Federated
Securities Corp.
Pittsburgh, PA 15222-3779

R. Edmond Connell, Jr. Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779

Laura M. Deger Vice President, --
Federated Investors Tower Federated
Securities Corp.
Pittsburgh, PA 15222-3779

Jill Ehrenfeld Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779

Mark D. Fisher Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779

Joseph D. Gibbons Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779

David C. Glabicki Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779

Richard C. Gonzales Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779

Scott A. Hutton Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779

William J. Kerns Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779
(1) (2) (3)
Name and Principal Positions and Offices Positions and
Offices
Business Address With Underwriter With
Registrant___

William E. Kugler Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779

Dennis M. Laffey Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779

Francis J. Matten, Jr. Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779

Mark J. Miehl Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779

J. Michael Miller Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779

R. Jeffrey Niss Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779

Michael P. O'Brien Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779

Solon A. Person, IV Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779

Robert F. Phillips Vice President, --
Federated Investors Tower Federated
Securities Corp.
Pittsburgh, PA 15222-3779

Eugene B. Reed Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779

Paul V. Riordan Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779

Charles A. Robison Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779

David W. Spears Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779

Jeffrey A. Stewart Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779

Thomas E. Territ Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779
(1) (2) (3)
Name and Principal Positions and Offices Positions and
Offices
Business Address With Underwriter With
Registrant___

William C. Tustin Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779

Richard B. Watts Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779

Philip C. Hetzel Assistant Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779

Ernest L. Linane Assistant Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779

S. Elliott Cohan Secretary, Federated Assistant
Federated Investors Tower Securities Corp. Secretary
Pittsburgh, PA 15222-3779

Item 30. Location of Accounts and Records: (1.)

Item 31. Management Services: Not applicable.

Item 32. Undertakings:

Registrant hereby undertakes to comply with the
provisions of Section 16(c) of the 1940 Act with
respect to the removal of Trustees and the calling of
special shareholder meetings by shareholders.

Registrant hereby undertakes to furnish each
person to whom a prospectus is delivered with a
copy of the Registrant's latest annual report to
shareholders, upon request and without charge.

Registrant hereby undertakes to file a post-effective
amendment on behalf of The Tax-Free Money Market Fund,
using financial statements which need not be certified,
within four to six months of the effective date of
Registrant's 1933 Act Registration Statement.

(1) Response is incorporated by reference to Registrant's Post-
Effective Amendment No. 1 and Post-Effective Amendment No. 4
to its Registration Statement on Form N-1A filed on May 9,
1991. (File Nos. 33-36451 and 811-6158).

SIGNATURES

Pursuant to the requirements of the Securities Act of
1933 and the Investment Company Act of 1940, the Registrant,
THE MEDALIST FUNDS, has duly caused this Amendment to its
Registration Statement to be signed on its behalf by the
undersigned, thereunto duly authorized, all in the City of
Pittsburgh and Commonwealth of Pennsylvania, on the 29th day
of September 1994.

SIGNET SELECT FUNDS

BY: /s/C. Grant Anderson
C. Grant Anderson, Assistant Secretary
Attorney in Fact for John F. Donahue
September 29, 1994

Pursuant to the requirements of the Securities Act of
1933, this Amendment to its Registration Statement has been
signed below by the following person in the capacity and on
the date indicated:

NAME TITLE
DATE

By: /s/C. Grant Anderson
C. Grant Anderson Attorney In Fact September
29, 1994
ASSISTANT SECRETARY For the Persons
Listed Below

NAME TITLE

John F. Donahue* Chairman and Trustee
(Chief Executive Officer)

Edward C. Gonzales* President, Treasurer,
and Trustee (Principal
Financial and
Accounting Officer)

John T. Conroy, Jr.* Trustee

William J. Copeland* Trustee

James E. Dowd* Trustee

Lawrence D. Ellis, M.D.* Trustee

Edward L. Flaherty, Jr.* Trustee

Peter E. Madden* Trustee

Gregor F. Meyer* Trustee

Wesley W. Posvar* Trustee

Marjorie P. Smuts* Trustee

* By Power of Attorney