MEDALIST FUNDS
497, 1995-01-30
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                                              THE MEDALIST FUNDS
                                              (FORMERLY THE SIGNET SELECT
                                              FUNDS)

                                              TRUST SHARES
                                              PROSPECTUS

                                              JANUARY 31, 1995



                                              - 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, AND
ARE NOT ENDORSED OR GUARANTEED BY, SIGNET TRUST COMPANY OR SIGNET BANK OR ANY OF
THEIR AFFILIATES. SUCH SHARES 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
Trust Shares of the Funds offering classes and to shares of the Tax-Free Money
Market Fund, dated January 31, 1995, 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 January 31, 1995


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                                10
- ------------------------------------------------------

  The U.S. Government Securities Fund                                         10
    Acceptable Investments                                                    10
    CMOs                                                                      10
    ARMS                                                                      11
  The Stock Fund                                                              11
    Acceptable Investments                                                    11
    Common Stocks                                                             11
    Other Corporate Securities                                                11
    Commercial Paper                                                          11
    Bank Instruments                                                          11
    American Depositary Receipts ("ADRs")                                     11
    U.S. Government Securities                                                11
    Put and Call Options                                                      12
    Financial Futures and Options on Futures                                  12
      Risks                                                                   12
    Portfolio Turnover                                                        12
    Investment Considerations                                                 13

  The Virginia Municipal Bond Fund and
    The Maryland Municipal Bond Fund                                          13


    Acceptable Investments                                                    13


      Characteristics                                                         13


  The Treasury Money Market Fund                                              14


    Acceptable Investments                                                    14


  The Money Market Fund                                                       14

    Acceptable Investments                                                    14

      Bank Instruments                                                        14


      Short-Term Credit Facilities                                            14


      Asset-Backed Securities                                                 14


    Ratings                                                                   14


  The Tax-Free Money Market Fund                                              15


    Acceptable Investments                                                    15


      Participation Interests                                                 15


    Ratings                                                                   15


  Investment Limitations                                                      15



PORTFOLIO INVESTMENTS AND STRATEGIES                                          15

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


  Regulatory Compliance                                                       15


  Borrowing Money                                                             16

  Selling Short                                                               16
  Restricted and Illiquid Securities                                          16

  When-Issued and Delayed Delivery Transactions                               16


  Investing in Securities of Other
    Investment Companies                                                      16


  Diversification                                                             17


  Non-Diversification                                                         17

  Investing in New Issuers                                                    17
  Repurchase Agreements                                                       17

  Lending of Portfolio Securities                                             17


  Acquiring Securities                                                        18


  Investment Risks                                                            18


  Variable Rate Demand Notes                                                  18


  Credit Enhancement                                                          18


  Demand Features                                                             18

  Participation Interests                                                     19
  Variable Rate Municipal Securities                                          19

  Municipal Leases                                                            19

  Temporary Investments                                                       19

  Municipal Securities                                                        19

    Investment Risks                                                          20
  Futures Contracts and Options to Buy or
    Sell Such Contracts                                                       20


THE MEDALIST FUNDS INFORMATION                                                20

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

  Management of the Trust                                                     20
    Board of Trustees                                                         20
    Investment Adviser                                                        21
      Advisory Fees                                                           21

      Adviser's Background                                                    21


  Distribution of Shares of the Funds                                         22


    Distribution Plan                                                         22


    Administrative Arrangements                                               22


    Glass-Steagall Act                                                        22


  Administration of the Funds                                                 22


    Administrative Services                                                   22


    Custodian                                                                 23


    Transfer Agent and Dividend Disbursing Agent                              23


    Independent Auditors                                                      23


  Expenses of the Funds and Trust Shares                                      23


    Brokerage Transactions                                                    23



NET ASSET VALUE                                                               23

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


INVESTING IN SHARES                                                           24

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


  Share Purchases                                                             24


    By Check                                                                  24


    By Wire                                                                   24


  Minimum Investment Required                                                 24


  What Shares Cost                                                            24


  Certificates and Confirmations                                              25


  Dividends                                                                   25


  Capital Gains                                                               25



REDEEMING SHARES                                                              25

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


    By Telephone                                                              25


    By Mail                                                                   26



SHAREHOLDER INFORMATION                                                       26

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


  Voting Rights                                                               26


  Massachusetts Partnership Law                                               27



EFFECT OF BANKING LAWS                                                        27

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


TAX INFORMATION                                                               28

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


  Federal Income Tax                                                          28


    Virginia Taxes                                                            28

    Maryland Taxes                                                            28

    Other State and Local Taxes                                               29



PERFORMANCE INFORMATION                                                       29

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

OTHER CLASSES OF SHARES                                                       30
- ------------------------------------------------------


ADDRESSES                                                                     31

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


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....................   None     None     None       None       None     None     None
</TABLE>



ANNUAL TRUST SHARES AND TAX-FREE MONEY MARKET SHARES OPERATING EXPENSES (AS A
PERCENTAGE OF 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)(4)   REIMBURSEMENTS(5)
                                                       ----------  ------------  --------------  -------------------
<S>                                                    <C>         <C>           <C>             <C>
The Money Market Fund.................................    0.25%        None           0.30%             0.55%
The Treasury Money Market Fund........................    0.32%        None           0.27%             0.59%
The Tax-Free Money Market Fund........................    0.04%       0.00%           0.32%             0.36%
The Maryland Municipal Bond Fund......................    0.24%        None           0.68%             0.92%
The Virginia Municipal Bond Fund......................    0.48%        None           0.42%             0.90%
The Stock Fund........................................    0.52%        None           0.43%             0.95%
The U.S. Government Securities Fund...................    0.43%        None           0.31%             0.74%
</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 0.50%, 0.50%, 0.50%, 0.75%,
    0.75%, 0.75% and 0.75%, 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. See "Management of the
    Trust--Distribution Plans."



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



(4) Total other expenses for the Tax-Free Money Market Fund would have been
    0.56% absent the voluntary reimbursement of other operating expenses by the
    Adviser. The Adviser can terminate this reimbursement at any time at its
    sole discretion.



(5) 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 0.80%, 0.77%, 1.43%, 1.17%, 1.18% and 1.06%, respectively,
    and the total Operating Expenses for The Tax-Free Money Market Fund would
    have been 1.06%, absent the waivers and reimbursements described above in
    notes 1, 2, and 4.


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 contingent deferred sales charges 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......................................................   $ 6      $ 18      $ 31      $  69
The Treasury Money Market Fund.............................................   $ 6      $ 19      $ 33      $  74
The Tax-Free Money Market Fund.............................................   $ 4      $ 12      $ 20      $  46
The Maryland Municipal Bond Fund...........................................   $ 9      $ 29      $ 51      $ 113
The Virginia Municipal Bond Fund...........................................   $ 9      $ 29      $ 50      $ 111
The Stock Fund.............................................................   $10      $ 30      $ 53      $ 117
The U.S. Government Securities Fund........................................   $ 8      $ 24      $ 41      $  92
</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
contingent deferred sales charge of 2.00%, and a 12b-1 fee of up to 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 of up to 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."




THE U.S. GOVERNMENT SECURITIES FUND


(FORMERLY U.S. GOVERNMENT INCOME FUND)



FINANCIAL HIGHLIGHTS

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

(FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD)



The following table has been audited by Deloitte & Touche LLP, the Fund's
independent auditors. Their report dated November 11, 1994, on the Fund's
Financial Statements is incorporated by reference to the Annual Report dated
September 30, 1994. This table should be read in conjunction with the Fund's
Financial Statements and Notes thereto, which may be obtained from the Fund.



<TABLE>
<CAPTION>
                                                                                            YEAR ENDED SEPTEMBER 30,
                                                                                 ----------------------------------------------
                              TRUST SHARES                                        1994          1993          1992       1991*
- ----------------------------------------------------------------------           ------        ------        ------      ------
<S>                                                                              <C>           <C>           <C>         <C>
NET ASSET VALUE, BEGINNING OF PERIOD                                             $10.90        $10.95        $10.54      $10.00
- ----------------------------------------------------------------------
INCOME FROM INVESTMENT OPERATIONS
- ----------------------------------------------------------------------
 Net investment income                                                             0.63          0.67          0.75        0.78
- ----------------------------------------------------------------------
 Net realized and unrealized gain (loss) on investments                           (0.94)         0.03          0.50        0.54
- ----------------------------------------------------------------------            -----         -----         -----       -----
 Total from investment operations                                                 (0.31)         0.70          1.25        1.32
- ----------------------------------------------------------------------
LESS DISTRIBUTIONS
- ----------------------------------------------------------------------
 Dividends to shareholders from net investment income                             (0.63)        (0.67)(d)     (0.75)      (0.78)
- ----------------------------------------------------------------------
 Distributions to shareholders from net realized gain on investment
 transactions                                                                      --           (0.08)        (0.09)       --
- ----------------------------------------------------------------------
 Distributions to shareholders in excess of net realized gain on investment
 transactions                                                                     (0.13)(c)      --            --          --
- ----------------------------------------------------------------------            -----         -----         -----       -----
 Total distributions                                                              (0.76)        (0.75)        (0.84)      (0.78)
- ----------------------------------------------------------------------            -----         -----         -----       -----
NET ASSET VALUE, END OF PERIOD                                                   $ 9.83        $10.90        $10.95      $10.54
- ----------------------------------------------------------------------            -----         -----         -----       -----
TOTAL RETURN**                                                                    (3.12%)        6.94%        12.42%      14.00%
- ----------------------------------------------------------------------
RATIOS TO AVERAGE NET ASSETS
- ----------------------------------------------------------------------
 Expenses                                                                          0.74%         0.63%         0.52%       0.64%(a)
- ----------------------------------------------------------------------
 Net investment income                                                             6.19%         6.17%         7.01%       8.03%(a)
- ----------------------------------------------------------------------
 Expense waiver/reimbursement (b)                                                  0.32%         0.43%         0.65%       0.93%(a)
- ----------------------------------------------------------------------
SUPPLEMENTAL DATA
- ----------------------------------------------------------------------
 Net assets, end of period (000 omitted)                                         $107,103      $112,334      $95,610     $27,565
- ----------------------------------------------------------------------
 Portfolio turnover rate                                                            227%          154%          201%        101%
- ----------------------------------------------------------------------
</TABLE>



<TABLE>
<CAPTION>
                                                                                            YEAR ENDED SEPTEMBER 30,
                                                                                 ----------------------------------------------
                             INVESTMENT SHARES                                    1994          1993          1992       1991*
- ----------------------------------------------------------------------------     ------        ------        ------      ------
<S>                                                                              <C>           <C>           <C>         <C>
NET ASSET VALUE, BEGINNING OF PERIOD                                             $10.90        $10.95        $10.54      $10.00
- ----------------------------------------------------------------------
INCOME FROM INVESTMENT OPERATIONS
- ----------------------------------------------------------------------
 Net investment income                                                             0.61          0.66          0.75        0.78
- ----------------------------------------------------------------------
 Net realized and unrealized gain (loss) on investments                           (0.94)         0.03          0.50        0.54
- ----------------------------------------------------------------------            -----         -----         -----       -----
 Total from investment operations                                                 (0.33)         0.69          1.25        1.32
- ----------------------------------------------------------------------
LESS DISTRIBUTIONS
- ----------------------------------------------------------------------
 Dividends to shareholders from net investment income                             (0.61)        (0.66)(d)     (0.75)      (0.78)
- ----------------------------------------------------------------------
 Distributions to shareholders from net realized gain on investment
 transactions                                                                        --         (0.08)        (0.09)         --
- ----------------------------------------------------------------------
 Distributions to shareholders in excess of net realized gain on investment
 transactions                                                                     (0.13)(c)        --            --          --
- ----------------------------------------------------------------------            -----         -----         -----       -----
 Total distributions                                                              (0.74)        (0.74)        (0.84)      (0.78)
- ----------------------------------------------------------------------            -----         -----         -----       -----
NET ASSET VALUE, END OF PERIOD                                                   $ 9.83        $10.90        $10.95      $10.54
- ----------------------------------------------------------------------            -----         -----         -----       -----
TOTAL RETURN**                                                                    (3.36%)        6.82%        12.42%      14.00%
- ----------------------------------------------------------------------
RATIOS TO AVERAGE NET ASSETS
- ----------------------------------------------------------------------
 Expenses                                                                          0.99%         0.77%         0.52%       0.64%(a)
- ----------------------------------------------------------------------
 Net investment income                                                             5.94%         5.91%         7.01%       8.03%(a)
- ----------------------------------------------------------------------
 Expense waiver/reimbursement (b)                                                  0.32%         0.43%         0.65%       0.93%(a)
- ----------------------------------------------------------------------
SUPPLEMENTAL DATA
- ----------------------------------------------------------------------
 Net assets, end of period (000 omitted)                                         $112,439      $119,187      $40,274        $10
- ----------------------------------------------------------------------
 Portfolio turnover rate                                                            227%          154%          201%        101%
- ----------------------------------------------------------------------
</TABLE>



 * Reflects operations for the period from October 16, 1990 (date of initial
   public investment) to September 30, 1991.



** Based on net asset value, which does not reflect the sales load or contingent
   deferred sales charge, if applicable.



(a) Computed on an annualized basis.



(b) This voluntary expense decrease is reflected in both the expense and net
    investment income ratios shown above.



(c) Distributions are determined in accordance with income tax regulations which
    may differ from generally accepted accounting principles. These
    distributions do not represent a return of capital for federal income tax
    purposes.



(d) Amount includes distributions in excess of net investment income of $0.007
    per share.



Further information about the Fund's performance is contained in the Fund's
annual report dated September 30, 1994, which can be obtained free of charge.





THE STOCK FUND


(FORMERLY VALUE EQUITY FUND)



FINANCIAL HIGHLIGHTS

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

(FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD)



The following table has been audited by Deloitte & Touche LLP, the Fund's
independent auditors. Their report dated November 11, 1994, on the Fund's
Financial Statements is incorporated by reference to the Annual Report dated
September 30, 1994. This table should be read in conjunction with the Fund's
Financial Statements and Notes thereto, which may be obtained from the Fund.



<TABLE>
<CAPTION>
                                                                                            YEAR ENDED SEPTEMBER 30,
                                                                                 ----------------------------------------------
                                TRUST SHARES                                      1994          1993          1992       1991*
- ----------------------------------------------------------------------           ------        ------        ------      ------
<S>                                                                              <C>           <C>           <C>         <C>
NET ASSET VALUE, BEGINNING OF PERIOD                                             $12.39        $12.02        $11.86      $10.00
- ----------------------------------------------------------------------
INCOME FROM INVESTMENT OPERATIONS
- ----------------------------------------------------------------------
 Net investment income                                                             0.20          0.28          0.26        0.32
- ----------------------------------------------------------------------
 Net realized and unrealized gain (loss) on investments                           (0.40)         0.51          0.46        1.85
- ----------------------------------------------------------------------            -----         -----         -----       -----
 Total from investment operations                                                 (0.20)         0.79          0.72        2.17
- ----------------------------------------------------------------------
LESS DISTRIBUTIONS
- ----------------------------------------------------------------------
 Dividends to shareholders from net investment income                             (0.19)        (0.26)        (0.25)      (0.31)
- ----------------------------------------------------------------------
 Distributions to shareholders from net realized gain on investment
 transactions                                                                     (0.20)        (0.16)        (0.31)       --
- ----------------------------------------------------------------------            -----         -----         -----       -----
 Total distributions                                                              (0.39)        (0.42)        (0.56)      (0.31)
- ----------------------------------------------------------------------            -----         -----         -----       -----
NET ASSET VALUE, END OF PERIOD                                                   $11.80        $12.39        $12.02      $11.86
- ----------------------------------------------------------------------            -----         -----         -----       -----
TOTAL RETURN**                                                                    (1.50%)        6.42%         6.31%      22.68%
- ----------------------------------------------------------------------
RATIOS TO AVERAGE NET ASSETS
- ----------------------------------------------------------------------
 Expenses                                                                          0.95%         0.66%         0.95%       0.80%(a)
- ----------------------------------------------------------------------
 Net investment income                                                             1.68%         2.09%         2.25%       3.05%(a)
- ----------------------------------------------------------------------
 Expense waiver/reimbursement (b)                                                  0.23%         0.55%         0.34%       0.38%(a)
- ----------------------------------------------------------------------
SUPPLEMENTAL DATA
- ----------------------------------------------------------------------
 Net assets, end of period (000 omitted)                                         $70,374       $65,841       $49,581     $37,032
- ----------------------------------------------------------------------
 Portfolio turnover rate                                                            205%           67%           38%         84%
- ----------------------------------------------------------------------
</TABLE>



<TABLE>
<CAPTION>
                                                                                            YEAR ENDED SEPTEMBER 30,
                                                                                 ----------------------------------------------
                             INVESTMENT SHARES                                    1994          1993          1992       1991*
- ----------------------------------------------------------------------------     ------        ------        ------      ------
<S>                                                                              <C>           <C>           <C>         <C>
NET ASSET VALUE, BEGINNING OF PERIOD                                             $12.39        $12.02        $11.86      $10.00
- ----------------------------------------------------------------------
INCOME FROM INVESTMENT OPERATIONS
- ----------------------------------------------------------------------
 Net investment income                                                             0.17          0.24          0.26        0.32
- ----------------------------------------------------------------------
 Net realized and unrealized gain (loss) on investments                           (0.39)         0.54          0.46        1.85
- ----------------------------------------------------------------------            -----         -----         -----       -----
 Total from investment operations                                                 (0.22)         0.78          0.72        2.17
- ----------------------------------------------------------------------
LESS DISTRIBUTIONS
- ----------------------------------------------------------------------
 Dividends to shareholders from net investment income                             (0.17)        (0.25)        (0.25)      (0.31)
- ----------------------------------------------------------------------
 Distributions to shareholders from net realized gain on investment
 transactions                                                                     (0.20)        (0.16)        (0.31)       --
- ----------------------------------------------------------------------            -----         -----         -----       -----
 Total distributions                                                              (0.37)        (0.41)        (0.56)      (0.31)
- ----------------------------------------------------------------------            -----         -----         -----       -----
NET ASSET VALUE, END OF PERIOD                                                   $11.80        $12.39        $12.02      $11.86
- ----------------------------------------------------------------------            -----         -----         -----       -----
TOTAL RETURN**                                                                    (1.72%)        6.31%         6.31%      22.68%
- ----------------------------------------------------------------------
RATIOS TO AVERAGE NET ASSETS
- ----------------------------------------------------------------------
 Expenses                                                                          1.20%         0.87%         0.95%       0.80%(a)
- ----------------------------------------------------------------------
 Net investment income                                                             1.40%         1.81%         2.25%       3.05%(a)
- ----------------------------------------------------------------------
 Expense waiver/reimbursement (b)                                                  0.23%         0.55%         0.34%       0.38%(a)
- ----------------------------------------------------------------------
SUPPLEMENTAL DATA
- ----------------------------------------------------------------------
 Net assets, end of period (000 omitted)                                         $26,739       $18,691       $2,290        $488
- ----------------------------------------------------------------------
 Portfolio turnover rate                                                            205%           67%           38%         84%
- ----------------------------------------------------------------------
</TABLE>



 * Reflects operations for the period from October 16, 1990 (date of initial
   public investment) to September 30, 1991.



** Based on net asset value, which does not reflect the sales load or contingent
   deferred sales charge, if applicable.



(a) Computed on an annualized basis.



(b) This voluntary expense decrease is reflected in both the expense and net
    investment income ratios shown above.



Further information about the Fund's performance is contained in the Fund's
annual report dated September 30, 1994, which can be obtained free of charge.





THE VIRGINIA MUNICIPAL BOND FUND


(FORMERLY VIRGINIA MUNICIPAL BOND FUND)



FINANCIAL HIGHLIGHTS

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

(FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD)



The following table has been audited by Deloitte & Touche LLP, the Fund's
independent auditors. Their report dated November 11, 1994, on the Fund's
Financial Statements is incorporated by reference to the Annual Report dated
September 30, 1994. This table should be read in conjunction with the Fund's
Financial Statements and Notes thereto, which may be obtained from the Fund.



<TABLE>
<CAPTION>
                                                                                              YEAR ENDED SEPTEMBER 30,
                                                                                   ----------------------------------------------
                                 TRUST SHARES                                       1994          1993          1992       1991*
- ------------------------------------------------------------------------           ------        ------        ------      -----
<S>                                                                                <C>           <C>           <C>         <C>
NET ASSET VALUE, BEGINNING OF PERIOD                                               $11.26        $10.46        $10.18     $10.00
- ------------------------------------------------------------------------
INCOME FROM INVESTMENT OPERATIONS
- ------------------------------------------------------------------------
 Net investment income                                                               0.48          0.53          0.54       0.57
- ------------------------------------------------------------------------
 Net realized and unrealized gain (loss) on investments                             (0.92)         0.89          0.29       0.18
- ------------------------------------------------------------------------            -----         -----         -----       -----
 Total from investment operations                                                   (0.44)         1.42          0.83       0.75
- ------------------------------------------------------------------------
LESS DISTRIBUTIONS
- ------------------------------------------------------------------------
 Dividends to shareholders from net investment income                               (0.48)(e)     (0.53)        (0.54)     (0.57)
- ------------------------------------------------------------------------
 Distributions to shareholders from net realized gain on investment
 transactions                                                                       (0.06)        (0.09)        (0.01)       --
- ------------------------------------------------------------------------
 Distributions to shareholders in excess of net realized gain on investment
 transactions                                                                       (0.02)(c)      --            --          --
- ------------------------------------------------------------------------            -----         -----         -----       -----
 Total distributions                                                                (0.56)        (0.62)        (0.55)     (0.57)
- ------------------------------------------------------------------------            -----         -----         -----       -----
NET ASSET VALUE, END OF PERIOD                                                     $10.26        $11.26        $10.46     $10.18
- ------------------------------------------------------------------------            -----         -----         -----       -----
TOTAL RETURN**                                                                      (4.01%)       13.62%         8.51%      7.64%
- ------------------------------------------------------------------------
RATIOS TO AVERAGE NET ASSETS
- ------------------------------------------------------------------------
 Expenses                                                                            0.90%         0.75%         0.83%      0.47%(a)
- ------------------------------------------------------------------------
 Net investment income                                                               4.47%         4.85%         5.14%      6.08%(a)
- ------------------------------------------------------------------------
 Expense waiver/reimbursement (b)                                                    0.27%         0.50%         0.86%      1.70%(a)
- ------------------------------------------------------------------------
SUPPLEMENTAL DATA
- ------------------------------------------------------------------------
 Net assets, end of period (000 omitted)                                           $34,165       $41,204       $20,852    $8,546
- ------------------------------------------------------------------------
 Portfolio turnover rate                                                               29%           17%           51%        27%
- ------------------------------------------------------------------------
</TABLE>



<TABLE>
<CAPTION>
                                                                                              YEAR ENDED SEPTEMBER 30,
                                                                                   ----------------------------------------------
                              INVESTMENT SHARES                                     1994          1993          1992       1991*
- ------------------------------------------------------------------------           ------        ------        ------      ------
<S>                                                                                <C>           <C>           <C>         <C>
NET ASSET VALUE, BEGINNING OF PERIOD                                               $11.26        $10.46        $10.18     $10.00
- ------------------------------------------------------------------------
INCOME FROM INVESTMENT OPERATIONS
- ------------------------------------------------------------------------
 Net investment income                                                               0.45          0.51          0.54       0.57
- ------------------------------------------------------------------------
 Net realized and unrealized gain (loss) on investments                             (0.92)         0.89          0.29       0.18
- ------------------------------------------------------------------------            -----         -----         -----      -----
 Total from investment operations                                                   (0.47)         1.40          0.83       0.75
- ------------------------------------------------------------------------
LESS DISTRIBUTIONS
- ------------------------------------------------------------------------
 Dividends to shareholders from net investment income                               (0.45)(d)     (0.51)        (0.54)     (0.57)
- ------------------------------------------------------------------------
 Distributions to shareholders from net realized gain on investment
 transactions                                                                       (0.06)        (0.09)        (0.01)       --
- ------------------------------------------------------------------------
 Distributions to shareholders in excess of net realized gain on investment
 transactions                                                                       (0.02)(c)      --            --          --
- ------------------------------------------------------------------------            -----         -----         -----      -----
 Total distributions                                                                (0.53)        (0.60)        (0.55)     (0.57)
- ------------------------------------------------------------------------            -----         -----         -----      -----
NET ASSET VALUE, END OF PERIOD                                                     $10.26        $11.26        $10.46     $10.18
- ------------------------------------------------------------------------            -----         -----         -----       -----
TOTAL RETURN**                                                                      (4.25%)       13.49%         8.51%      7.64%
- ------------------------------------------------------------------------
RATIOS TO AVERAGE NET ASSETS
- ------------------------------------------------------------------------
 Expenses                                                                            1.15%         0.90%         0.83%      0.47%(a)
- ------------------------------------------------------------------------
 Net investment income                                                               4.22%         4.68%         5.14%      6.08%(a)
- ------------------------------------------------------------------------
 Expense waiver/reimbursement (b)                                                    0.27%         0.50%         0.86%      1.70%(a)
- ------------------------------------------------------------------------
SUPPLEMENTAL DATA
- ------------------------------------------------------------------------
 Net assets, end of period (000 omitted)                                           $74,706       $63,492       $20,883    $6,031
- ------------------------------------------------------------------------
 Portfolio turnover rate                                                               29%           17%           51%        27%
- ------------------------------------------------------------------------
</TABLE>



 * Reflects operations for the period from October 16, 1990 (date of initial
   public investment), to September 30, 1991.



** Based on net asset value, which does not reflect the sales load or contingent
   deferred sales charge, if applicable.



(a) Computed on an annualized basis.



(b) This voluntary expense decrease is reflected in both the expense and net
    investment ratios shown above.



(c) Distributions are determined in accordance with income tax regulations which
    may differ from generally accepted accounting principles. These
    distributions do not represent a return of capital for federal income tax
    purposes.



(d) Amount includes distributions to shareholders in excess of net investment
    income of $0.0001 per share.



(e) Amount includes distributions to shareholders in excess of net investment
    income of $0.0002 per share.



Further information about the Fund's performance is contained in the Fund's
annual report dated September 30, 1994, which can be obtained free of charge.




THE MARYLAND MUNICIPAL BOND FUND


(FORMERLY MARYLAND MUNICIPAL BOND FUND)



FINANCIAL HIGHLIGHTS

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

(FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD)



The following table has been audited by Deloitte & Touche LLP, the Fund's
independent auditors. Their report dated November 11, 1994, on the Fund's
Financial Statements is incorporated by reference to the Annual Report dated
September 30, 1994. This table should be read in conjunction with the Fund's
Financial Statements and Notes thereto, which may be obtained from the Fund.



<TABLE>
<CAPTION>
                                                                                            YEAR ENDED SEPTEMBER 30,
                                                                                 ----------------------------------------------
                                TRUST SHARES                                      1994          1993          1992       1991*
- ----------------------------------------------------------------------           ------        ------        ------      ------
<S>                                                                              <C>           <C>           <C>         <C>
NET ASSET VALUE, BEGINNING OF PERIOD                                             $11.24        $10.39        $10.10      $10.00
- ----------------------------------------------------------------------
INCOME FROM INVESTMENT OPERATIONS
- ----------------------------------------------------------------------
 Net investment income                                                             0.48          0.50          0.54        0.53
- ----------------------------------------------------------------------
 Net realized and unrealized gain (loss) on investments                           (0.97)         0.85          0.29        0.10
- ----------------------------------------------------------------------            -----         -----         -----       -----
 Total from investment operations                                                 (0.49)         1.35          0.83        0.63
- ----------------------------------------------------------------------
LESS DISTRIBUTIONS
- ----------------------------------------------------------------------
 Dividends to shareholders from net investment income                             (0.48)        (0.50)        (0.54)      (0.53)
- ----------------------------------------------------------------------
 Distributions to shareholders from net realized gain on investment
 transactions                                                                     (0.10)         --            --          --
- ----------------------------------------------------------------------            -----         -----         -----       -----
 Total distributions                                                              (0.58)        (0.50)        (0.54)      (0.53)
- ----------------------------------------------------------------------            -----         -----         -----       -----
NET ASSET VALUE, END OF PERIOD                                                   $10.17        $11.24        $10.39      $10.10
- ----------------------------------------------------------------------            -----         -----         -----       -----
TOTAL RETURN**                                                                    (4.50%)       13.37%         8.31%       6.64%
- ----------------------------------------------------------------------
RATIOS TO AVERAGE NET ASSETS
- ----------------------------------------------------------------------
 Expenses                                                                          0.92%         0.86%         0.59%       0.60%(a)
- ----------------------------------------------------------------------
 Net investment income                                                             4.46%         4.64%         5.11%       5.66%(a)
- ----------------------------------------------------------------------
 Expense waiver/reimbursement (b)                                                  0.51%         0.77%         1.91%       1.05%(a)
- ----------------------------------------------------------------------
SUPPLEMENTAL DATA
- ----------------------------------------------------------------------
 Net assets, end of period (000 omitted)                                         $11,301       $12,014       $6,004        $556
- ----------------------------------------------------------------------
 Portfolio turnover rate                                                             27%           23%           34%         35%
- ----------------------------------------------------------------------
</TABLE>



<TABLE>
<CAPTION>
                                                                                            YEAR ENDED SEPTEMBER 30,
                                                                                 ----------------------------------------------
                             INVESTMENT SHARES                                    1994          1993          1992       1991*
- ----------------------------------------------------------------------           ------        ------        ------      ------
<S>                                                                              <C>           <C>           <C>         <C>
NET ASSET VALUE, BEGINNING OF PERIOD                                             $11.24        $10.39        $10.10      $10.00
- ----------------------------------------------------------------------
INCOME FROM INVESTMENT OPERATIONS
- ----------------------------------------------------------------------
 Net investment income                                                             0.45          0.49          0.54        0.53
- ----------------------------------------------------------------------
 Net realized and unrealized gain (loss) on investments                           (0.97)         0.85          0.29        0.10
- ----------------------------------------------------------------------            -----         -----         -----       -----
 Total from investment operations                                                 (0.52)         1.34          0.83        0.63
- ----------------------------------------------------------------------
LESS DISTRIBUTIONS
- ----------------------------------------------------------------------
 Dividends to shareholders from net investment income                             (0.45)        (0.49)        (0.54)      (0.53)
- ----------------------------------------------------------------------
 Distributions to shareholders from net realized gain on investment
 transactions                                                                     (0.10)         --            --          --
- ----------------------------------------------------------------------            -----         -----         -----       -----
 Total distributions                                                              (0.55)        (0.49)        (0.54)      (0.53)
- ----------------------------------------------------------------------            -----         -----         -----       -----
NET ASSET VALUE, END OF PERIOD                                                   $10.17        $11.24        $10.39      $10.10
- ----------------------------------------------------------------------            -----         -----         -----       -----
TOTAL RETURN**                                                                    (4.74%)       13.24%         8.31%       6.64%
- ----------------------------------------------------------------------
RATIOS TO AVERAGE NET ASSETS
- ----------------------------------------------------------------------
 Expenses                                                                          1.17%         1.00%         0.59%       0.60%(a)
- ----------------------------------------------------------------------
 Net investment income                                                             4.22%         4.50%         5.11%       5.66%(a)
- ----------------------------------------------------------------------
 Expense waiver/reimbursement (b)                                                  0.51%         0.77%         1.91%       1.05%(a)
- ----------------------------------------------------------------------
SUPPLEMENTAL DATA
- ----------------------------------------------------------------------
 Net assets, end of period (000 omitted)                                         $34,580       $33,907       $4,053      $2,940
- ----------------------------------------------------------------------
 Portfolio turnover rate                                                             27%           23%           34%         35%
- ----------------------------------------------------------------------
</TABLE>



 * Reflects operations for the period from October 16, 1990 (date of initial
   public investment) to September 30, 1991.



** Based on net asset value, which does not reflect the sales load or contingent
   deferred sales charge, if applicable.



(a) Computed on an annualized basis.



(b) This voluntary expense decrease is reflected in both the expense and net
    investment income ratios shown above.



Further information about the Fund's performance is contained in the Fund's
annual report dated September 30, 1994, which can be obtained free of charge.





THE TREASURY MONEY MARKET FUND


(FORMERLY TREASURY MONEY MARKET FUND)



FINANCIAL HIGHLIGHTS

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

(FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD)



The following table has been audited by Deloitte & Touche LLP, the Fund's
independent auditors. Their report dated November 11, 1994, on the Fund's
Financial Statements is incorporated by reference to the Annual Report dated
September 30, 1994. This table should be read in conjunction with the Fund's
Financial Statements and Notes thereto, which may be obtained from the Fund.



<TABLE>
<CAPTION>
                                                                      YEAR ENDED SEPTEMBER 30,
                                                              -----------------------------------------
                       TRUST SHARES                           1994        1993        1992        1991*
- ----------------------------------------------------------    -----       -----       -----       -----
<S>                                                           <C>         <C>         <C>         <C>
NET ASSET VALUE, BEGINNING OF PERIOD                          $1.00       $1.00       $1.00       $1.00
- ----------------------------------------------------------
INCOME FROM INVESTMENT OPERATIONS
- ----------------------------------------------------------
  Net investment income                                        0.03        0.03        0.04        0.06
- ----------------------------------------------------------
LESS DISTRIBUTIONS
- ----------------------------------------------------------
  Dividends to shareholders from net investment income        (0.03)      (0.03)      (0.04)      (0.06)
- ----------------------------------------------------------    -----       -----       -----       -----
NET ASSET VALUE, END OF PERIOD                                $1.00       $1.00       $1.00       $1.00
- ----------------------------------------------------------    -----       -----       -----       -----
TOTAL RETURN**                                                 3.16%       2.64%       3.61%       5.90%
- ----------------------------------------------------------
RATIOS TO AVERAGE NET ASSETS
- ----------------------------------------------------------
  Expenses                                                     0.59%       0.58%       0.70%       0.51%(a)
- ----------------------------------------------------------
  Net investment income                                        3.30%       2.60%       3.49%       5.65%(a)
- ----------------------------------------------------------
  Expense waiver/reimbursement (b)                             0.18%       0.20%       0.11%       0.27%(a)
- ----------------------------------------------------------
SUPPLEMENTAL DATA
- ----------------------------------------------------------
  Net assets, end of period (000 omitted)                     $304,285    $152,921    $163,451    $129,959
- ----------------------------------------------------------
</TABLE>



<TABLE>
<CAPTION>
                                                                      YEAR ENDED SEPTEMBER 30,
                                                              -----------------------------------------
                    INVESTMENT SHARES                         1994        1993        1992        1991*
- ----------------------------------------------------------    -----       -----       -----       -----
<S>                                                           <C>         <C>         <C>         <C>
NET ASSET VALUE, BEGINNING OF PERIOD                          $1.00       $1.00       $1.00       $1.00
- ----------------------------------------------------------
INCOME FROM INVESTMENT OPERATIONS
- ----------------------------------------------------------
  Net investment income                                        0.03        0.02        0.04        0.06
- ----------------------------------------------------------
LESS DISTRIBUTIONS
- ----------------------------------------------------------
  Dividends to shareholders from net investment income        (0.03)      (0.02)      (0.04)      (0.06)
- ----------------------------------------------------------    -----       -----       -----       -----
NET ASSET VALUE, END OF PERIOD                                $1.00       $1.00       $1.00       $1.00
- ----------------------------------------------------------    -----       -----       -----       -----
TOTAL RETURN**                                                 2.90%       2.52%       3.61%       5.90%
- ----------------------------------------------------------
RATIOS TO AVERAGE NET ASSETS
- ----------------------------------------------------------
  Expenses                                                     0.84%       0.70%       0.70%       0.51%(a)
- ----------------------------------------------------------
  Net investment income                                        2.86%       2.47%       3.49%       5.65%(a)
- ----------------------------------------------------------
  Expense waiver/reimbursement (b)                             0.18%       0.20%       0.11%       0.27%(a)
- ----------------------------------------------------------
SUPPLEMENTAL DATA
- ----------------------------------------------------------
  Net assets, end of period (000 omitted)                     $21,883     $20,382     $12,960      $548
- ----------------------------------------------------------
</TABLE>



 * Reflects operations for the period from October 16, 1990 (date of initial
   public investment) to September 30, 1991.



** Based on net asset value, which does not reflect the sales load or contingent
   deferred sales charge, if applicable.



(a) Computed on an annualized basis.



(b) This voluntary expense decrease is reflected in both the expense and net

    investment income ratios shown above.



THE MONEY MARKET FUND


(FORMERLY MONEY MARKET FUND)



FINANCIAL HIGHLIGHTS

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

(FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD)



The following table has been audited by Deloitte & Touche LLP, the Fund's
independent auditors. Their report dated November 11, 1994, on the Fund's
Financial Statements is incorporated by reference to the Annual Report dated
September 30, 1994. This table should be read in conjunction with the Fund's
Financial Statements and Notes thereto, which may be obtained from the Fund.



<TABLE>
<CAPTION>
                                                                      YEAR ENDED SEPTEMBER 30,
                                                              -----------------------------------------
                       TRUST SHARES                           1994        1993        1992        1991*
- ----------------------------------------------------------    -----       -----       -----       -----
<S>                                                           <C>         <C>         <C>         <C>
NET ASSET VALUE, BEGINNING OF PERIOD                          $1.00       $1.00       $1.00       $1.00
- ----------------------------------------------------------
INCOME FROM INVESTMENT OPERATIONS
- ----------------------------------------------------------
  Net investment income                                        0.03        0.03        0.04        0.06
- ----------------------------------------------------------
LESS DISTRIBUTIONS
- ----------------------------------------------------------
  Dividends to shareholders from net investment income        (0.03)      (0.03)      (0.04)      (0.06)
- ----------------------------------------------------------    -----       -----       -----       -----
NET ASSET VALUE, END OF PERIOD                                $1.00       $1.00       $1.00       $1.00
- ----------------------------------------------------------    -----       -----       -----       -----
TOTAL RETURN**                                                 3.35%       2.89%       3.79%       5.92%
- ----------------------------------------------------------
RATIOS TO AVERAGE NET ASSETS
- ----------------------------------------------------------
  Expenses                                                     0.55%       0.50%       0.64%       0.51%(a)
- ----------------------------------------------------------
  Net investment income                                        3.25%       2.83%       3.64%       5.99%(a)
- ----------------------------------------------------------
  Expense waiver/reimbursement (b)                             0.25%       0.30%       0.29%       0.36%(a)
- ----------------------------------------------------------
SUPPLEMENTAL DATA
- ----------------------------------------------------------
  Net assets, end of period (000 omitted)                     $132,445    $134,397    $136,616    $57,432
- ----------------------------------------------------------
</TABLE>



<TABLE>
<CAPTION>
                                                                      YEAR ENDED SEPTEMBER 30,
                                                              -----------------------------------------
                    INVESTMENT SHARES                         1994        1993        1992        1991*
- ----------------------------------------------------------    -----       -----       -----       -----
<S>                                                           <C>         <C>         <C>         <C>
NET ASSET VALUE, BEGINNING OF PERIOD                          $1.00       $1.00       $1.00       $1.00
- ----------------------------------------------------------
INCOME FROM INVESTMENT OPERATIONS
- ----------------------------------------------------------
  Net investment income                                        0.03        0.03        0.04        0.06
- ----------------------------------------------------------
LESS DISTRIBUTIONS
- ----------------------------------------------------------
  Dividends to shareholders from net investment income        (0.03)      (0.03)      (0.04)      (0.06)
- ----------------------------------------------------------    -----       -----       -----       -----
NET ASSET VALUE, END OF PERIOD                                $1.00       $1.00       $1.00       $1.00
- ----------------------------------------------------------    -----       -----       -----       -----
TOTAL RETURN**                                                 3.10%       2.77%       3.79%       5.92%
- ----------------------------------------------------------
RATIOS TO AVERAGE NET ASSETS
- ----------------------------------------------------------
  Expenses                                                     0.80%       0.64%       0.64%       0.51%(a)
- ----------------------------------------------------------
  Net investment income                                        3.07%       2.68%       3.64%       5.99%(a)
- ----------------------------------------------------------
  Expense waiver/reimbursement (b)                             0.25%       0.30%       0.29%       0.36%(a)
- ----------------------------------------------------------
SUPPLEMENT DATA
- ----------------------------------------------------------
  Net assets, end of period (000 omitted)                     $15,236     $9,905      $5,803         $1
- ----------------------------------------------------------
</TABLE>



 * Reflects operations for the period from October 16, 1990 (date of initial
   public investment) to September 30, 1991.



** Based on net asset value, which does not reflect the sales load or contingent
   deferred sales charge, if applicable.



(a) Computed on an annualized basis.



(b) This voluntary expense decrease is reflected in both the expense and net

    investment income ratios shown above.



THE TAX-FREE MONEY MARKET FUND


(FORMERLY TAX-FREE MONEY MARKET FUND)



FINANCIAL HIGHLIGHTS

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

(FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD)



The following table has been audited by Deloitte & Touche LLP, the Fund's
independent auditors. Their report dated November 11, 1994, on the Fund's
Financial Statements is incorporated by reference to the Annual Report dated
September 30, 1994. This table should be read in conjunction with the Fund's
Financial Statements and Notes thereto, which may be obtained from the Fund.



<TABLE>
<CAPTION>
                                                                           PERIOD ENDED
                                                                          SEPTEMBER 30,
                                                                              1994*
                                                                          --------------
<S>                                                                       <C>
NET ASSET VALUE, BEGINNING OF PERIOD                                          $ 1.00
- ----------------------------------------------------------------------
INCOME FROM INVESTMENT OPERATIONS
- ----------------------------------------------------------------------
  Net investment income                                                         0.01
- ----------------------------------------------------------------------
LESS DISTRIBUTIONS
- ----------------------------------------------------------------------
  Dividends to shareholders from net investment income                         (0.01)
- ----------------------------------------------------------------------     ---------
NET ASSET VALUE, END OF PERIOD                                                $ 1.00
- ----------------------------------------------------------------------     ---------
TOTAL RETURN**                                                                  0.45%
- ----------------------------------------------------------------------
RATIOS TO AVERAGE NET ASSETS
- ----------------------------------------------------------------------
  Expenses                                                                      0.36%(a)
- ----------------------------------------------------------------------
  Net investment income                                                         2.65%(a)
- ----------------------------------------------------------------------
  Expense waiver/reimbursement (b)                                              0.70%(a)
- ----------------------------------------------------------------------
SUPPLEMENTAL DATA
- ----------------------------------------------------------------------
  Net assets, end of period (000 omitted)                                    $21,967
- ----------------------------------------------------------------------
</TABLE>



 * Reflects operations for the period from July 27, 1994 (date of initial public
   investment) to September 30, 1994.



** Based on net asset value, which does not reflect the sales load or contingent
   deferred sales charge, if applicable.



(a) Computed on an annualized basis.



(b) This voluntary expense decrease is reflected in both the expense and net

    investment income ratios shown above.


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


     - notes, bonds, and discount notes of U.S. government agencies or
       instrumentalities, such as the: Farm Credit System, including the
       National Bank for Cooperatives, Farm Credit Banks, and Banks for
       Cooperatives; Farmers Home Administration; Federal Home Loan Banks;
       Federal Home Loan Mortgage Corporation; Federal National Mortgage
       Association; Government National Mortgage Association; and Student Loan
       Marketing Association.



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 Exchanges 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.
The Fund will only invest in convertible securities rated BBB or higher by
Standard & Poor's Ratings Group ("S&P") or Baa or higher by Moody's Investors
Service, Inc. ("Moody's"). Bonds rated BBB by S&P or Baa by Moody's 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.



COMMERCIAL PAPER.  The Fund may invest in commercial paper rated A-1 by S&P, or
Prime-1 by 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"), and Eurodollar Time Deposits
("ETDs").



AMERICAN DEPOSITARY 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 Fund's 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 Fund's rate of portfolio turnover may exceed that of
certain other mutual funds with the same investment objective. A higher rate of
portfolio turnover involves correspondingly greater transaction expenses which
must be borne directly by the Fund and, thus,




indirectly by its shareholders. In addition, a high rate of portfolio turnover
may result in the realization of larger amounts of capital gains which, when
distributed to the Fund's shareholders, are taxable to them. (Further
information is contained in the Fund's Statement of Additional Information
within the sections "Brokerage Transactions" and "Tax Status"). Nevertheless,
transactions for the Fund's portfolio will be based only upon investment
considerations and will not be limited by any other considerations when the
Fund's investment adviser deems it appropriate to make changes in the Fund's
portfolio.



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



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 NRSRO or be of
comparable quality to securities having such ratings. 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
- --------------------------------------------------------------------------------


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

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 these transactions 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, a Fund may pay more or less than the
market value of the securities on the settlement date.



Each Fund may dispose of a commitment prior to settlement if the adviser deems
it appropriate to do so. In addition, a Fund may enter in transactions to sell
its purchase commitments to third parties at current market values and
simultaneously acquire other commitments to purchase similar securities at later
dates. A Fund may realize short-term profits or losses upon the sale of such
commitments.


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. It should be
noted that investment companies incur certain




expenses, and therefore, any investment by a Fund in shares of another
investment company would be subject to certain duplicate expenses, particularly
transfer agent and custodian fees. The adviser will waive its investment
advisory fee on assets invested in securities of open-end investment companies.



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. This policy cannot be
changed without the approval of holders of a majority of a Fund's Shares.


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.


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.


There is the risk that when lending portfolio securities, the securities may not
be available to the Fund on a timely basis and the Fund may, therefore, lose the
opportunity to sell the securities at a desirable price. In addition, in the
event that a borrower of securities would file for bankruptcy or become
insolvent, disposition of the securities may be delayed pending court action.



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 itself
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 NRSRO.


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.


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.



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

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

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%; 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.



     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 December 31, 1994, Signet Trust Company had
     $9.9 billion in total trust assets. Signet Asset Management has investment
     authority over $2.8 billion of the $9.9 billion. The Adviser has managed
     The Medalist Funds since their inception in 1990. The Adviser manages three
     equity common trust funds with $39 million in assets and three fixed income
     common trust funds with $221 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.



     Effective March 1, 1995, subject to approval of the Trustees, Virtus
     Capital Management, Inc., a wholly-owned subsidiary of Signet Banking
     Corporation, will, by virtue of a reorganization within the Signet holding
     company system, succeed to the business of Signet Asset Management, and
     thus will become Adviser to the Funds. Since those persons currently
     responsible for management of the Funds' assets will have similar
     responsibilities to the Funds as employees of Virtus Capital Management,
     Inc., the reorganization will have no effect on the operations of the Fund.



     E. Christian Goetz has managed The U.S. Government Securities Fund since
     August, 1991, and The Maryland Municipal Bond Fund and The Virginia
     Municipal Bond Fund since November 1994. 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
     The Virginia Retirement System.




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; however, this requirement was waived by the administrator for the year
ended September 30, 1994. 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.


INDEPENDENT AUDITORS.  The independent auditors for the Funds are Deloitte &
Touche LLP, 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 at the time of
purchase.



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
       Exchanges;


     - 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.


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 January 11, 1995,
Bova & Co, Richmond, Virginia, owned approximately 10,523,663 Trust Shares of
The U.S. Government Securities Fund (100%); approximately 5,612,531 Trust Shares
of The Stock Fund (96%); approximately 3,278,593 Trust Shares of The Virginia
Municipal Bond Fund (100%); approximately 960,850 Trust




Shares of The Maryland Municipal Bond Fund (100%); approximately 417,604,382
Trust Shares of The Treasury Money Market Fund (100%); approximately 116,586,184
Trust Shares of The Money Market Fund (100%); and approximately 17,601,826
shares of The Tax-Free Money Market Fund (64.6%), 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.

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.


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. Under existing Virginia laws, distributions made by the Fund
will not be subject to Virginia income taxes to the extent that such
distributions qualify as exempt-interest dividends under the Internal Revenue
Code of 1986, as amended, and represent (i) interest from obligations issued by
or on behalf of the Commonwealth of Virginia or any political subdivision
thereof; or (ii) interest from obligations issued by a territory or possession
of the United States or any political subdivision thereof which federal law
exempts from state income taxes. Conversely, to the extent that distributions
made by the Fund are attributable to other types of obligations, such
distributions will be subject to Virginia income taxes.



MARYLAND TAXES. Under existing Maryland laws, distributions made by the Fund
will not be subject to Maryland state or local income taxes to the extent that
such distributions qualify as exempt-interest dividends under the Internal
Revenue Code, and represent (i) interest on tax-exempt obligations 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). Conversely, to the extent that distributions made by the Fund are
derived from other types of obligations, such distributions will be subject to
Maryland income taxes.



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 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 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%
contingent deferred sales charge. 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
- ------------------------------------------------------------------------------------------------

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 (1/95)


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

                                             JANUARY 31, 1995



                                             - 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



THE SHARES OFFERED BY THIS PROSPECTUS ARE NOT DEPOSITS OR OBLIGATIONS OF, AND
ARE NOT ENDORSED OR GUARANTEED BY, SIGNET TRUST COMPANY OR SIGNET BANK OR ANY OF
THEIR AFFILIATES. SUCH SHARES 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 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.



The Funds have also filed a Combined Statement of Additional Information for the
Investment Shares of the Funds offering classes and to shares of The Tax-Free
Money Market Fund, dated January 31, 1995, 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 toll-free 1-800-723-9512.


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 January 31, 1995


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                                10

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


  The U.S. Government Securities Fund                                         10


    Acceptable Investments                                                    10


    CMOs                                                                      10


    ARMS                                                                      11


  The Stock Fund                                                              11


    Acceptable Investments                                                    11


    Common Stocks                                                             11


    Other Corporate Securities                                                11


    Commercial Paper                                                          11


    Bank Instruments                                                          11


    American Depositary Receipts ("ADRs")                                     11


    U.S. Government Securities                                                11


    Put and Call Options                                                      12


    Financial Futures and Options on Futures                                  12


      Risks                                                                   12


    Portfolio Turnover                                                        12


    Investment Considerations                                                 13


  The Virginia Municipal Bond Fund and
    The Maryland Municipal Bond Fund                                          13


    Acceptable Investments                                                    13


      Characteristics                                                         13


  The Treasury Money Market Fund                                              14


    Acceptable Investments                                                    14


  The Money Market Fund                                                       14


    Acceptable Investments                                                    14


      Bank Instruments                                                        14


      Short-Term Credit Facilities                                            14


      Asset-Backed Securities                                                 14


    Ratings                                                                   14


  The Tax-Free Money Market Fund                                              15


    Acceptable Investments                                                    15


      Participation Interests                                                 15


    Ratings                                                                   15


  Investment Limitations                                                      15



PORTFOLIO INVESTMENTS AND STRATEGIES                                          15

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


  Regulatory Compliance                                                       15


  Borrowing Money                                                             16


  Selling Short                                                               16


  Restricted and Illiquid Securities                                          16


  When-Issued and Delayed Delivery Transactions                               16


  Investing in Securities of Other
    Investment Companies                                                      16


  Diversification                                                             17


  Non-Diversification                                                         17


  Investing in New Issuers                                                    17


  Repurchase Agreements                                                       17


  Lending of Portfolio Securities                                             17


  Acquiring Securities                                                        18


  Investment Risks                                                            18


  Variable Rate Demand Notes                                                  18


  Credit Enhancement                                                          18


  Demand Features                                                             18


  Participation Interests                                                     19


  Variable Rate Municipal Securities                                          19


  Municipal Leases                                                            19


  Temporary Investments                                                       19


  Municipal Securities                                                        19


    Investment Risks                                                          20


  Futures Contracts and Options to Buy or
    Sell Such Contracts                                                       20



THE MEDALIST FUNDS INFORMATION                                                21

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


  Management of the Trust                                                     21


    Board of Trustees                                                         21


    Investment Adviser                                                        21


      Advisory Fees                                                           21


      Adviser's Background                                                    21


  Distribution of Shares of the Funds                                         22


    Distribution Plan                                                         22


    Administrative Arrangements                                               22


    Glass-Steagall Act                                                        22


  Administration of the Funds                                                 23


    Administrative Services                                                   23


    Custodian                                                                 23


    Transfer Agent and Dividend Disbursing Agent                              23


    Independent Auditors                                                      23


  Expenses of the Funds and Investment Shares                                 23


    Brokerage Transactions                                                    23



NET ASSET VALUE                                                               24

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


INVESTING IN SHARES                                                           24

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


  Share Purchases                                                             24


    By Check                                                                  24


    By Wire                                                                   24


  Systematic Investment Program                                               25


  Minimum Investment Required                                                 25


  What Shares Cost                                                            25


  Certificates and Confirmations                                              25


  Dividends                                                                   25


  Capital Gains                                                               25



EXCHANGE PRIVILEGE                                                            26

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


    By Telephone                                                              26



REDEEMING SHARES                                                              26

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


    By Telephone                                                              26


    By Mail                                                                   27


  Contingent Deferred Sales Charge                                            28


  Systematic Withdrawal Program                                               29


  Accounts with Low Balances                                                  29



SHAREHOLDER INFORMATION                                                       29

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


  Voting Rights                                                               29


  Massachusetts Partnership Law                                               29



EFFECT OF BANKING LAWS                                                        30

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


TAX INFORMATION                                                               30

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


  Federal Income Tax                                                          30


    Virginia Taxes                                                            31


    Maryland Taxes                                                            31


    Other State and Local Taxes                                               31



PERFORMANCE INFORMATION                                                       31

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


OTHER CLASSES OF SHARES                                                       32

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


ADDRESSES                                                                     33

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


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 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 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"). For information on how to purchase Shares please refer to "Investing
in 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

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--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).............................    None      None      None       2.00%       2.00%    2.00%      2.00%
</TABLE>



ANNUAL INVESTMENT SHARES AND TAX-FREE MONEY MARKET SHARES OPERATING EXPENSES (AS
A PERCENTAGE OF 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)(5)     REIMBURSEMENTS(6)
                                                         -----------  --------  ---------------  ---------------------
<S>                                                      <C>          <C>       <C>              <C>
The Money Market Fund...................................    0.25%       0.25%        0.30%               0.80%
The Treasury Money Market Fund..........................    0.32%       0.25%        0.27%               0.84%
The Tax-Free Money Market Fund..........................    0.04%       0.00%        0.32%               0.36%
The Maryland Municipal Bond Fund........................    0.24%       0.25%        0.68%               1.17%
The Virginia Municipal Bond Fund........................    0.48%       0.25%        0.42%               1.15%
The Stock Fund..........................................    0.52%       0.25%        0.43%               1.20%
The U.S. Government Securities Fund.....................    0.43%       0.25%        0.31%               0.99%
</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 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 0.50%, 0.50%, 0.50%, 0.75%,
    0.75%, 0.75% and 0.75%, 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 0.25 of 1% (except The Money Market Fund and The Treasury
    Money Market Fund which have total payments of up to 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) Total other expenses for The Tax-Free Money Fund, would have been 0.56%
    absent the voluntary reimbursement of other operating expenses by the
    Adviser. The Adviser can terminate this reimbursement at any time at its
    sole discretion.



(6) 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 1.05%, 1.02%, 1.68%, 1.42%, 1.43% and 1.31%,
    respectively, and the total Operating Expenses for The Tax-Free Money Market
    Fund would have been 1.06%, absent the waivers and reimbursements described
    above in notes 2, 3, and 5.


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..........................   $ 8       $  8       $ 26        $26        $ 44        $44          $ 99
The Treasury Money Market Fund.................   $ 9       $  9       $ 27        $27        $ 47        $47          $104
The Tax-Free Money Market Fund.................   $ 4       $  4       $ 12        $12        $ 20        $20          $ 46
The Maryland Municipal Bond Fund...............   $33       $ 12       $ 60        $37        $ 89        $64          $142
The Virginia Municipal Bond Fund...............   $32       $ 12       $ 59        $37        $ 87        $63          $140
The Stock Fund.................................   $33       $ 12       $ 60        $38        $ 90        $66          $145
The U.S. Government Securities Fund............   $31       $ 10       $ 54        $32        $ 79        $55          $121
</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 The 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."




THE U.S. GOVERNMENT SECURITIES FUND


(FORMERLY U.S. GOVERNMENT INCOME FUND)



FINANCIAL HIGHLIGHTS

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

(FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD)



The following table has been audited by Deloitte & Touche LLP, the Fund's
independent auditors. Their report dated November 11, 1994, on the Fund's
Financial Statements is incorporated by reference to the Annual Report dated
September 30, 1994. This table should be read in conjunction with the Fund's
Financial Statements and Notes thereto, which may be obtained from the Fund.



<TABLE>
<CAPTION>
                                                                                              YEAR ENDED SEPTEMBER 30,
                                                                                     -------------------------------------------
                                INVESTMENT SHARES                                     1994         1993         1992      1991*
- ---------------------------------------------------------------------------------    ------       ------       ------     ------
<S>                                                                                  <C>          <C>          <C>        <C>
NET ASSET VALUE, BEGINNING OF PERIOD                                                 $10.90       $10.95       $10.54     $10.00
- ------------------------------------------------------------------------
INCOME FROM INVESTMENT OPERATIONS
- ------------------------------------------------------------------------
 Net investment income                                                                 0.61         0.66         0.75       0.78
- ------------------------------------------------------------------------
 Net realized and unrealized gain (loss) on investments                               (0.94)        0.03         0.50       0.54
- ------------------------------------------------------------------------               ----         ----         ----       ----
 Total from investment operations                                                     (0.33)        0.69         1.25       1.32
- ------------------------------------------------------------------------
LESS DISTRIBUTIONS
- ------------------------------------------------------------------------
 Dividends to shareholders from net investment income                                 (0.61)       (0.66)(d)    (0.75)     (0.78)
- ------------------------------------------------------------------------
 Distributions to shareholders from net realized gain on investment transactions         --        (0.08)       (0.09)        --
- ------------------------------------------------------------------------
 Distributions to shareholders in excess of net realized gain on investment
 transactions                                                                         (0.13)(c)       --           --         --
- ------------------------------------------------------------------------               ----         ----         ----       ----
 Total distributions                                                                  (0.74)       (0.74)       (0.84)     (0.78)
- ------------------------------------------------------------------------               ----         ----         ----       ----
NET ASSET VALUE, END OF PERIOD                                                       $ 9.83       $10.90       $10.95     $10.54
- ------------------------------------------------------------------------               ----         ----         ----       ----
TOTAL RETURN**                                                                        (3.36%)       6.82%       12.42%     14.00%
- ------------------------------------------------------------------------
RATIOS TO AVERAGE NET ASSETS
- ------------------------------------------------------------------------
 Expenses                                                                              0.99%        0.77%        0.52%      0.64%(a)
- ------------------------------------------------------------------------
 Net investment income                                                                 5.94%        5.91%        7.01%      8.03%(a)
- ------------------------------------------------------------------------
 Expense waiver/reimbursement (b)                                                      0.32%        0.43%        0.65%      0.93%(a)
- ------------------------------------------------------------------------
SUPPLEMENTAL DATA
- ------------------------------------------------------------------------
 Net assets, end of period (000 omitted)                                             $112,439     $119,187     $40,274       $10
- ------------------------------------------------------------------------
 Portfolio turnover rate                                                                227%         154%         201%       101%
- ------------------------------------------------------------------------
</TABLE>



<TABLE>
<CAPTION>
                                                                                              YEAR ENDED SEPTEMBER 30,
                                                                                     -------------------------------------------
                                  TRUST SHARES                                        1994         1993         1992      1991*
- ---------------------------------------------------------------------------------    ------       ------       ------     ------
<S>                                                                                  <C>          <C>          <C>        <C>
NET ASSET VALUE, BEGINNING OF PERIOD                                                 $10.90       $10.95       $10.54     $10.00
- ------------------------------------------------------------------------
INCOME FROM INVESTMENT OPERATIONS
- ------------------------------------------------------------------------
 Net investment income                                                                 0.63         0.67         0.75       0.78
- ------------------------------------------------------------------------
 Net realized and unrealized gain (loss) on investments                               (0.94)        0.03         0.50       0.54
- ------------------------------------------------------------------------               ----         ----         ----       ----
 Total from investment operations                                                     (0.31)        0.70         1.25       1.32
- ------------------------------------------------------------------------
LESS DISTRIBUTIONS
- ------------------------------------------------------------------------
 Dividends to shareholders from net investment income                                 (0.63)       (0.67)(d)    (0.75)     (0.78)
- ------------------------------------------------------------------------
 Distributions to shareholders from net realized gain on investment transactions       --          (0.08)       (0.09)      --
- ------------------------------------------------------------------------
 Distributions to shareholders in excess of net realized gain on investment
 transactions                                                                         (0.13)(c)     --           --         --
- ------------------------------------------------------------------------               ----         ----         ----       ----
 Total distributions                                                                  (0.76)       (0.75)       (0.84)     (0.78)
- ------------------------------------------------------------------------               ----         ----         ----       ----
NET ASSET VALUE, END OF PERIOD                                                       $ 9.83       $10.90       $10.95     $10.54
- ------------------------------------------------------------------------               ----         ----         ----       ----
TOTAL RETURN**                                                                        (3.12%)       6.94%       12.42%     14.00%
- ------------------------------------------------------------------------
RATIOS TO AVERAGE NET ASSETS
- ------------------------------------------------------------------------
 Expenses                                                                              0.74%        0.63%        0.52%      0.64%(a)
- ------------------------------------------------------------------------
 Net investment income                                                                 6.19%        6.17%        7.01%      8.03%(a)
- ------------------------------------------------------------------------
 Expense waiver/reimbursement (b)                                                      0.32%        0.43%        0.65%      0.93%(a)
- ------------------------------------------------------------------------
SUPPLEMENTAL DATA
- ------------------------------------------------------------------------
 Net assets, end of period (000 omitted)                                             $107,103     $112,334     $95,610    $27,565
- ------------------------------------------------------------------------
 Portfolio turnover rate                                                                227%         154%         201%       101%
- ------------------------------------------------------------------------
</TABLE>



 * Reflects operations for the period from October 16, 1990 (date of initial
   public investment) to September 30, 1991.



** Based on net asset value, which does not reflect the sales load or contingent
   deferred sales charge, if applicable.



(a) Computed on an annualized basis.



(b) This voluntary expense decrease is reflected in both the expense and net
    investment income ratios shown above.



(c) Distributions are determined in accordance with income tax regulations which
    may differ from generally accepted accounting principles. These
    distributions do not represent a return of capital for federal income tax
    purposes.



(d) Amount includes distributions in excess of net investment income of $0.007
    per share.



Further information about the Fund's performance is contained in the Fund's
annual report dated September 30, 1994, which can be obtained free of charge.




THE STOCK FUND


(FORMERLY VALUE EQUITY FUND)



FINANCIAL HIGHLIGHTS

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

(FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD)



The following table has been audited by Deloitte & Touche LLP, the Fund's
independent auditors. Their report dated November 11, 1994, on the Fund's
Financial Statements is incorporated by reference to the Annual Report dated
September 30, 1994. This table should be read in conjunction with the Fund's
Financial Statements and Notes thereto, which may be obtained from the Fund.



<TABLE>
<CAPTION>
                                                                                              YEAR ENDED SEPTEMBER 30,
                                                                                     -------------------------------------------
                                INVESTMENT SHARES                                     1994         1993         1992      1991*
- ---------------------------------------------------------------------------------    ------       ------       ------     ------
<S>                                                                                  <C>          <C>          <C>        <C>
NET ASSET VALUE, BEGINNING OF PERIOD                                                 $12.39       $12.02       $11.86     $10.00
- ------------------------------------------------------------------------
INCOME FROM INVESTMENT OPERATIONS
- ------------------------------------------------------------------------
 Net investment income                                                                 0.17         0.24         0.26       0.32
- ------------------------------------------------------------------------
 Net realized and unrealized gain (loss) on investments                               (0.39)        0.54         0.46       1.85
- ------------------------------------------------------------------------               ----         ----         ----       ----
 Total from investment operations                                                     (0.22)        0.78         0.72       2.17
- ------------------------------------------------------------------------
LESS DISTRIBUTIONS
- ------------------------------------------------------------------------
 Dividends to shareholders from net investment income                                 (0.17)       (0.25)       (0.25)     (0.31)
- ------------------------------------------------------------------------
 Distributions to shareholders from net realized gain on investment transactions      (0.20)       (0.16)       (0.31)      --
- ------------------------------------------------------------------------               ----         ----         ----       ----
 Total distributions                                                                  (0.37)       (0.41)       (0.56)     (0.31)
- ------------------------------------------------------------------------               ----         ----         ----       ----
NET ASSET VALUE, END OF PERIOD                                                       $11.80       $12.39       $12.02     $11.86
- ------------------------------------------------------------------------               ----         ----         ----       ----
TOTAL RETURN**                                                                        (1.72%)       6.31%        6.31%     22.68%
- ------------------------------------------------------------------------
RATIOS TO AVERAGE NET ASSETS
- ------------------------------------------------------------------------
 Expenses                                                                              1.20%        0.87%        0.95%      0.80%(a)
- ------------------------------------------------------------------------
 Net investment income                                                                 1.40%        1.81%        2.25%      3.05%(a)
- ------------------------------------------------------------------------
 Expense waiver/reimbursement (b)                                                      0.23%        0.55%        0.34%      0.38%(a)
- ------------------------------------------------------------------------
SUPPLEMENTAL DATA
- ------------------------------------------------------------------------
 Net assets, end of period (000 omitted)                                             $26,739      $18,691      $2,290       $488
- ------------------------------------------------------------------------
 Portfolio turnover rate                                                                205%          67%          38%        84%
- ------------------------------------------------------------------------
</TABLE>



<TABLE>
<CAPTION>
                                                                                              YEAR ENDED SEPTEMBER 30,
                                                                                     -------------------------------------------
                                  TRUST SHARES                                        1994         1993         1992      1991*
- ---------------------------------------------------------------------------------    ------       ------       ------     ------
<S>                                                                                  <C>          <C>          <C>        <C>
NET ASSET VALUE, BEGINNING OF PERIOD                                                 $12.39       $12.02       $11.86     $10.00
- ------------------------------------------------------------------------
INCOME FROM INVESTMENT OPERATIONS
- ------------------------------------------------------------------------
 Net investment income                                                                 0.20         0.28         0.26       0.32
- ------------------------------------------------------------------------
 Net realized and unrealized gain (loss) on investments                               (0.40)        0.51         0.46       1.85
- ------------------------------------------------------------------------               ----         ----         ----       ----
 Total from investment operations                                                     (0.20)        0.79         0.72       2.17
- ------------------------------------------------------------------------
LESS DISTRIBUTIONS
- ------------------------------------------------------------------------
 Dividends to shareholders from net investment income                                 (0.19)       (0.26)       (0.25)     (0.31)
- ------------------------------------------------------------------------
 Distributions to shareholders from net realized gain on investment transactions      (0.20)       (0.16)       (0.31)      --
- ------------------------------------------------------------------------               ----         ----         ----       ----
 Total distributions                                                                  (0.39)       (0.42)       (0.56)     (0.31)
- ------------------------------------------------------------------------               ----         ----         ----       ----
NET ASSET VALUE, END OF PERIOD                                                       $11.80       $12.39       $12.02     $11.86
- ------------------------------------------------------------------------               ----         ----         ----       ----
TOTAL RETURN**                                                                        (1.50%)       6.42%        6.31%     22.68%
- ------------------------------------------------------------------------
RATIOS TO AVERAGE NET ASSETS
- ------------------------------------------------------------------------
 Expenses                                                                              0.95%        0.66%        0.95%      0.80%(a)
- ------------------------------------------------------------------------
 Net investment income                                                                 1.68%        2.09%        2.25%      3.05%(a)
- ------------------------------------------------------------------------
 Expense waiver/reimbursement (b)                                                      0.23%        0.55%        0.34%      0.38%(a)
- ------------------------------------------------------------------------
SUPPLEMENTAL DATA
- ------------------------------------------------------------------------
 Net assets, end of period (000 omitted)                                             $70,374      $65,841      $49,581    $37,032
- ------------------------------------------------------------------------
 Portfolio turnover rate                                                                205%          67%          38%        84%
- ------------------------------------------------------------------------
</TABLE>



 * Reflects operations for the period from October 16, 1990 (date of initial
   public investment) to September 30, 1991.



** Based on net asset value, which does not reflect the sales load or contingent
   deferred sales charge, if applicable.



(a) Computed on an annualized basis.



(b) This voluntary expense decrease is reflected in both the expense and net
    investment income ratios shown above.



Further information about the Fund's performance is contained in the Fund's
annual report dated September 30, 1994, which can be obtained free of charge.




THE VIRGINIA MUNICIPAL BOND FUND


(FORMERLY VIRGINIA MUNICIPAL BOND FUND)



FINANCIAL HIGHLIGHTS

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

(FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD)



The following table has been audited by Deloitte & Touche LLP, the Fund's
independent auditors. Their report dated November 11, 1994, on the Fund's
Financial Statements is incorporated by reference to the Annual Report dated
September 30, 1994. This table should be read in conjunction with the Fund's
Financial Statements and Notes thereto, which may be obtained from the Fund.



<TABLE>
<CAPTION>
                                                                                              YEAR ENDED SEPTEMBER 30,
                                                                                     -------------------------------------------
                                INVESTMENT SHARES                                     1994         1993         1992      1991*
- ---------------------------------------------------------------------------------    ------       ------       ------     ------
<S>                                                                                  <C>          <C>          <C>        <C>
NET ASSET VALUE, BEGINNING OF PERIOD                                                 $11.26       $10.46       $10.18     $10.00
- ------------------------------------------------------------------------
INCOME FROM INVESTMENT OPERATIONS
- ------------------------------------------------------------------------
 Net investment income                                                                 0.45         0.51         0.54       0.57
- ------------------------------------------------------------------------
 Net realized and unrealized gain (loss) on investments                               (0.92)        0.89         0.29       0.18
- ------------------------------------------------------------------------               ----         ----         ----       ----
 Total from investment operations                                                     (0.47)        1.40         0.83       0.75
- ------------------------------------------------------------------------
LESS DISTRIBUTIONS
- ------------------------------------------------------------------------
 Dividends to shareholders from net investment income                                 (0.45)(d)    (0.51)       (0.54)     (0.57)
- ------------------------------------------------------------------------
 Distributions to shareholders from net realized gain on investment transactions      (0.06)       (0.09)       (0.01)      --
- ------------------------------------------------------------------------
 Distributions to shareholders in excess of net realized gain on investment
 transactions                                                                         (0.02)(c)     --           --         --
- ------------------------------------------------------------------------               ----         ----         ----       ----
 Total distributions                                                                  (0.53)       (0.60)       (0.55)     (0.57)
- ------------------------------------------------------------------------               ----         ----         ----       ----
NET ASSET VALUE, END OF PERIOD                                                       $10.26       $11.26       $10.46     $10.18
- ------------------------------------------------------------------------               ----         ----         ----       ----
TOTAL RETURN**                                                                        (4.25%)      13.49%        8.51%      7.64%
- ------------------------------------------------------------------------
RATIOS TO AVERAGE NET ASSETS
- ------------------------------------------------------------------------
 Expenses                                                                              1.15%        0.90%        0.83%      0.47%(a)
- ------------------------------------------------------------------------
 Net investment income                                                                 4.22%        4.68%        5.14%      6.08%(a)
- ------------------------------------------------------------------------
 Expense waiver/reimbursement (b)                                                      0.27%        0.50%        0.86%      1.70%(a)
- ------------------------------------------------------------------------
SUPPLEMENTAL DATA
- ------------------------------------------------------------------------
 Net assets, end of period (000 omitted)                                             $74,706      $63,492      $20,883    $6,031
- ------------------------------------------------------------------------
 Portfolio turnover rate                                                                 29%          17%          51%        27%
- ------------------------------------------------------------------------
</TABLE>



<TABLE>
<CAPTION>
                                                                                              YEAR ENDED SEPTEMBER 30,
                                                                                     -------------------------------------------
                                  TRUST SHARES                                        1994         1993         1992      1991*
- ---------------------------------------------------------------------------------    ------       ------       ------     ------
<S>                                                                                  <C>          <C>          <C>        <C>
NET ASSET VALUE, BEGINNING OF PERIOD                                                 $11.26       $10.46       $10.18     $10.00
- ------------------------------------------------------------------------
INCOME FROM INVESTMENT OPERATIONS
- ------------------------------------------------------------------------
 Net investment income                                                                 0.48         0.53         0.54       0.57
- ------------------------------------------------------------------------
 Net realized and unrealized gain (loss) on investments                               (0.92)        0.89         0.29       0.18
- ------------------------------------------------------------------------               ----         ----         ----       ----
 Total from investment operations                                                     (0.44)        1.42         0.83       0.75
- ------------------------------------------------------------------------
LESS DISTRIBUTIONS
- ------------------------------------------------------------------------
 Dividends to shareholders from net investment income                                 (0.48)(e)    (0.53)       (0.54)     (0.57)
- ------------------------------------------------------------------------
 Distributions to shareholders from net realized gain on investment transactions      (0.06)       (0.09)       (0.01)      --
- ------------------------------------------------------------------------
 Distributions to shareholders in excess of net realized gain on investment
 transactions                                                                         (0.02)(c)     --           --         --
- ------------------------------------------------------------------------               ----         ----         ----       ----
 Total distributions                                                                  (0.56)       (0.62)       (0.55)     (0.57)
- ------------------------------------------------------------------------               ----         ----         ----       ----
NET ASSET VALUE, END OF PERIOD                                                       $10.26       $11.26       $10.46     $10.18
- ------------------------------------------------------------------------               ----         ----         ----       ----
TOTAL RETURN**                                                                        (4.01%)      13.62%        8.51%      7.64%
- ------------------------------------------------------------------------
RATIOS TO AVERAGE NET ASSETS
- ------------------------------------------------------------------------
 Expenses                                                                              0.90%        0.75%        0.83%      0.47%(a)
- ------------------------------------------------------------------------
 Net investment income                                                                 4.47%        4.85%        5.14%      6.08%(a)
- ------------------------------------------------------------------------
 Expense waiver/reimbursement (b)                                                      0.27%        0.50%        0.86%      1.70%(a)
- ------------------------------------------------------------------------
SUPPLEMENTAL DATA
- ------------------------------------------------------------------------
 Net assets, end of period (000 omitted)                                             $34,165      $41,204      $20,852    $8,546
- ------------------------------------------------------------------------
 Portfolio turnover rate                                                                 29%          17%          51%        27%
- ------------------------------------------------------------------------
</TABLE>



 * Reflects operations for the period from October 16, 1990 (date of initial
   public investment), to September 30, 1991.



** Based on net asset value, which does not reflect the sales load or contingent
   deferred sales charge, if applicable.



(a) Computed on an annualized basis.



(b) This voluntary expense decrease is reflected in both the expense and net
    investment ratios shown above.



(c) Distributions are determined in accordance with income tax regulations which
    may differ from generally accepted accounting principles. These
    distributions do not represent a return of capital for federal income tax
    purposes.



(d) Amount includes distributions to shareholders in excess of net investment
    income of $0.0001 per share.



(e) Amount includes distributions to shareholders in excess of net investment
    income of $0.0002 per share.



Further information about the Fund's performance is contained in the Fund's
annual report dated September 30, 1994, which can be obtained free of charge.




THE MARYLAND MUNICIPAL BOND FUND


(FORMERLY MARYLAND MUNICIPAL BOND FUND)



FINANCIAL HIGHLIGHTS

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

(FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD)



The following table has been audited by Deloitte & Touche LLP, the Fund's
independent auditors. Their report dated November 11, 1994, on the Fund's
Financial Statements is incorporated by reference to the Annual Report dated
September 30, 1994. This table should be read in conjunction with the Fund's
Financial Statements and Notes thereto, which may be obtained from the Fund.



<TABLE>
<CAPTION>
                                                                                              YEAR ENDED SEPTEMBER 30,
                                                                                     -------------------------------------------
                                INVESTMENT SHARES                                     1994         1993         1992      1991*
- ---------------------------------------------------------------------------------    ------       ------       ------     ------
<S>                                                                                  <C>          <C>          <C>        <C>
NET ASSET VALUE, BEGINNING OF PERIOD                                                 $11.24       $10.39       $10.10     $10.00
- ------------------------------------------------------------------------
INCOME FROM INVESTMENT OPERATIONS
- ------------------------------------------------------------------------
 Net investment income                                                                 0.45         0.49         0.54       0.53
- ------------------------------------------------------------------------
 Net realized and unrealized gain (loss) on investments                               (0.97)        0.85         0.29       0.10
- ------------------------------------------------------------------------               ----         ----         ----       ----
 Total from investment operations                                                     (0.52)        1.34         0.83       0.63
- ------------------------------------------------------------------------
LESS DISTRIBUTIONS
- ------------------------------------------------------------------------
 Dividends to shareholders from net investment income                                 (0.45)       (0.49)       (0.54)     (0.53)
- ------------------------------------------------------------------------
 Distributions to shareholders from net realized gain on investment transactions      (0.10)        --           --         --
- ------------------------------------------------------------------------               ----         ----         ----       ----
 Total distributions                                                                  (0.55)       (0.49)       (0.54)     (0.53)
- ------------------------------------------------------------------------               ----         ----         ----       ----
NET ASSET VALUE, END OF PERIOD                                                       $10.17       $11.24       $10.39     $10.10
- ------------------------------------------------------------------------               ----         ----         ----       ----
TOTAL RETURN**                                                                        (4.74%)      13.24%        8.31%      6.64%
- ------------------------------------------------------------------------
RATIOS TO AVERAGE NET ASSETS
- ------------------------------------------------------------------------
 Expenses                                                                              1.17%        1.00%        0.59%      0.60%(a)
- ------------------------------------------------------------------------
 Net investment income                                                                 4.22%        4.50%        5.11%      5.66%(a)
- ------------------------------------------------------------------------
 Expense waiver/reimbursement (b)                                                      0.51%        0.77%        1.91%      1.05%(a)
- ------------------------------------------------------------------------
SUPPLEMENTAL DATA
- ------------------------------------------------------------------------
 Net assets, end of period (000 omitted)                                             $34,580      $33,907      $4,053     $2,940
- ------------------------------------------------------------------------
 Portfolio turnover rate                                                                 27%          23%          34%        35%
- ------------------------------------------------------------------------
</TABLE>



<TABLE>
<CAPTION>
                                                                                              YEAR ENDED SEPTEMBER 30,
                                                                                     -------------------------------------------
                                  TRUST SHARES                                        1994         1993         1992      1991*
- ---------------------------------------------------------------------------------    ------       ------       ------     ------
<S>                                                                                  <C>          <C>          <C>        <C>
NET ASSET VALUE, BEGINNING OF PERIOD                                                 $11.24       $10.39       $10.10     $10.00
- ------------------------------------------------------------------------
INCOME FROM INVESTMENT OPERATIONS
- ------------------------------------------------------------------------
 Net investment income                                                                 0.48         0.50         0.54       0.53
- ------------------------------------------------------------------------
 Net realized and unrealized gain (loss) on investments                               (0.97)        0.85         0.29       0.10
- ------------------------------------------------------------------------               ----         ----         ----       ----
 Total from investment operations                                                     (0.49)        1.35         0.83       0.63
- ------------------------------------------------------------------------
LESS DISTRIBUTIONS
- ------------------------------------------------------------------------
 Dividends to shareholders from net investment income                                 (0.48)       (0.50)       (0.54)     (0.53)
- ------------------------------------------------------------------------
 Distributions to shareholders from net realized gain on investment transactions      (0.10)        --           --         --
- ------------------------------------------------------------------------               ----         ----         ----       ----
 Total distributions                                                                  (0.58)       (0.50)       (0.54)     (0.53)
- ------------------------------------------------------------------------               ----         ----         ----       ----
NET ASSET VALUE, END OF PERIOD                                                       $10.17       $11.24       $10.39     $10.10
- ------------------------------------------------------------------------               ----         ----         ----       ----
TOTAL RETURN**                                                                        (4.50%)      13.37%        8.31%      6.64%
- ------------------------------------------------------------------------
RATIOS TO AVERAGE NET ASSETS
- ------------------------------------------------------------------------
 Expenses                                                                              0.92%        0.86%        0.59%      0.60%(a)
- ------------------------------------------------------------------------
 Net investment income                                                                 4.46%        4.64%        5.11%      5.66%(a)
- ------------------------------------------------------------------------
 Expense waiver/reimbursement (b)                                                      0.51%        0.77%        1.91%      1.05%(a)
- ------------------------------------------------------------------------
SUPPLEMENTAL DATA
- ------------------------------------------------------------------------
 Net assets, end of period (000 omitted)                                             $11,301      $12,014      $6,004       $556
- ------------------------------------------------------------------------
 Portfolio turnover rate                                                                 27%          23%          34%        35%
- ------------------------------------------------------------------------
</TABLE>



 * Reflects operations for the period from October 16, 1990 (date of initial
   public investment) to September 30, 1991.



** Based on net asset value, which does not reflect the sales load or contingent
   deferred sales charge, if applicable.



(a) Computed on an annualized basis.



(b) This voluntary expense decrease is reflected in both the expense and net
    investment income ratios shown above.



Further information about the Fund's performance is contained in the Fund's
annual report dated September 30, 1994, which can be obtained free of charge.




THE TREASURY MONEY MARKET FUND


(FORMERLY TREASURY MONEY MARKET FUND)



FINANCIAL HIGHLIGHTS

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

(FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD)



The following table has been audited by Deloitte & Touche LLP, the Fund's
independent auditors. Their report dated November 11, 1994, on the Fund's
Financial Statements is incorporated by reference to the Annual Report dated
September 30, 1994. This table should be read in conjunction with the Fund's
Financial Statements and Notes thereto, which may be obtained from the Fund.



<TABLE>
<CAPTION>
                                                                    YEAR ENDED SEPTEMBER 30,
                                                          --------------------------------------------
                  INVESTMENT SHARES                       1994         1993         1992         1991*
- -----------------------------------------------------     -----        -----        -----        -----
<S>                                                       <C>          <C>          <C>          <C>
NET ASSET VALUE, BEGINNING OF PERIOD                      $1.00        $1.00        $1.00        $1.00
- -----------------------------------------------------
INCOME FROM INVESTMENT OPERATIONS
- -----------------------------------------------------
  Net investment income                                    0.03         0.02         0.04         0.06
- -----------------------------------------------------
LESS DISTRIBUTIONS
- -----------------------------------------------------
  Dividends to shareholders from net investment
  income                                                  (0.03)       (0.02)       (0.04)       (0.06)
- -----------------------------------------------------     -----        -----        -----        -----
NET ASSET VALUE, END OF PERIOD                            $1.00        $1.00        $1.00        $1.00
- -----------------------------------------------------     -----        -----        -----        -----
TOTAL RETURN**                                             2.90%        2.52%        3.61%        5.90%
- -----------------------------------------------------
RATIOS TO AVERAGE NET ASSETS
- -----------------------------------------------------
  Expenses                                                 0.84%        0.70%        0.70%        0.51%(a)
- -----------------------------------------------------
  Net investment income                                    2.86%        2.47%        3.49%        5.65%(a)
- -----------------------------------------------------
  Expense waiver/reimbursement (b)                         0.18%        0.20%        0.11%        0.27%(a)
- -----------------------------------------------------
SUPPLEMENTAL DATA
- -----------------------------------------------------
  Net assets, end of period (000 omitted)                 $21,883      $20,382      $12,960       $548
- -----------------------------------------------------
</TABLE>



<TABLE>
<CAPTION>
                                                                    YEAR ENDED SEPTEMBER 30,
                                                          --------------------------------------------
                    TRUST SHARES                          1994         1993         1992         1991*
- -----------------------------------------------------     -----        -----        -----        -----
<S>                                                       <C>          <C>          <C>          <C>
NET ASSET VALUE, BEGINNING OF PERIOD                      $1.00        $1.00        $1.00        $1.00
- -----------------------------------------------------
INCOME FROM INVESTMENT OPERATIONS
- -----------------------------------------------------
  Net investment income                                    0.03         0.03         0.04         0.06
- -----------------------------------------------------
LESS DISTRIBUTIONS
- -----------------------------------------------------
  Dividends to shareholders from net investment
  income                                                  (0.03)       (0.03)       (0.04)       (0.06)
- -----------------------------------------------------     -----        -----        -----        -----
NET ASSET VALUE, END OF PERIOD                            $1.00        $1.00        $1.00        $1.00
- -----------------------------------------------------     -----        -----        -----        -----
TOTAL RETURN**                                             3.16%        2.64%        3.61%        5.90%
- -----------------------------------------------------
RATIOS TO AVERAGE NET ASSETS
- -----------------------------------------------------
  Expenses                                                 0.59%        0.58%        0.70%        0.51%(a)
- -----------------------------------------------------
  Net investment income                                    3.30%        2.60%        3.49%        5.65%(a)
- -----------------------------------------------------
  Expense waiver/reimbursement (b)                         0.18%        0.20%        0.11%        0.27%(a)
- -----------------------------------------------------
SUPPLEMENTAL DATA
- -----------------------------------------------------
  Net assets, end of period (000 omitted)                 $304,285     $152,921     $163,451     $129,959
- -----------------------------------------------------
</TABLE>



 * Reflects operations for the period from October 16, 1990 (date of initial
   public investment) to September 30, 1991.



** Based on net asset value, which does not reflect the sales load or contingent
   deferred sales charge, if applicable.



(a) Computed on an annualized basis.



(b) This voluntary expense decrease is reflected in both the expense and net

    investment income ratios shown above.



THE MONEY MARKET FUND


(FORMERLY MONEY MARKET FUND)



FINANCIAL HIGHLIGHTS

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

(FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD)



The following table has been audited by Deloitte & Touche LLP, the Fund's
independent auditors. Their report dated November 11, 1994, on the Fund's
Financial Statements is incorporated by reference to the Annual Report dated
September 30, 1994. This table should be read in conjunction with the Fund's
Financial Statements and Notes thereto, which may be obtained from the Fund.



<TABLE>
<CAPTION>
                                                                    YEAR ENDED SEPTEMBER 30,
                                                          --------------------------------------------
                  INVESTMENT SHARES                       1994         1993         1992         1991*
- -----------------------------------------------------     -----        -----        -----        -----
<S>                                                       <C>          <C>          <C>          <C>
NET ASSET VALUE, BEGINNING OF PERIOD                      $1.00        $1.00        $1.00        $1.00
- -----------------------------------------------------
INCOME FROM INVESTMENT OPERATIONS
- -----------------------------------------------------
  Net investment income                                    0.03         0.03         0.04         0.06
- -----------------------------------------------------
LESS DISTRIBUTIONS
- -----------------------------------------------------
  Dividends to shareholders from net investment
  income                                                  (0.03)       (0.03)       (0.04)       (0.06)
- -----------------------------------------------------     -----        -----        -----        -----
NET ASSET VALUE, END OF PERIOD                            $1.00        $1.00        $1.00        $1.00
- -----------------------------------------------------     -----        -----        -----        -----
TOTAL RETURN**                                             3.10%        2.77%        3.79%        5.92%
- -----------------------------------------------------
RATIOS TO AVERAGE NET ASSETS
- -----------------------------------------------------
  Expenses                                                 0.80%        0.64%        0.64%        0.51%(a)
- -----------------------------------------------------
  Net investment income                                    3.07%        2.68%        3.64%        5.99%(a)
- -----------------------------------------------------
  Expense waiver/reimbursement (b)                         0.25%        0.30%        0.29%        0.36%(a)
- -----------------------------------------------------
SUPPLEMENT DATA
- -----------------------------------------------------
  Net assets, end of period (000 omitted)                 $15,236      $9,905       $5,803          $1
- -----------------------------------------------------
</TABLE>



<TABLE>
<CAPTION>
                                                                    YEAR ENDED SEPTEMBER 30,
                                                          --------------------------------------------
                    TRUST SHARES                          1994         1993         1992         1991*
- -----------------------------------------------------     -----        -----        -----        -----
<S>                                                       <C>          <C>          <C>          <C>
NET ASSET VALUE, BEGINNING OF PERIOD                      $1.00        $1.00        $1.00        $1.00
- -----------------------------------------------------
INCOME FROM INVESTMENT OPERATIONS
- -----------------------------------------------------
  Net investment income                                    0.03         0.03         0.04         0.06
- -----------------------------------------------------
LESS DISTRIBUTIONS
- -----------------------------------------------------
  Dividends to shareholders from net investment
  income                                                  (0.03)       (0.03)       (0.04)       (0.06)
- -----------------------------------------------------     -----        -----        -----        -----
NET ASSET VALUE, END OF PERIOD                            $1.00        $1.00        $1.00        $1.00
- -----------------------------------------------------     -----        -----        -----        -----
TOTAL RETURN**                                             3.35%        2.89%        3.79%        5.92%
- -----------------------------------------------------
RATIOS TO AVERAGE NET ASSETS
- -----------------------------------------------------
  Expenses                                                 0.55%        0.50%        0.64%        0.51%(a)
- -----------------------------------------------------
  Net investment income                                    3.25%        2.83%        3.64%        5.99%(a)
- -----------------------------------------------------
  Expense waiver/reimbursement (b)                         0.25%        0.30%        0.29%        0.36%(a)
- -----------------------------------------------------
SUPPLEMENTAL DATA
- -----------------------------------------------------
  Net assets, end of period (000 omitted)                 $132,445     $134,397     $136,616     $57,432
- -----------------------------------------------------
</TABLE>



 * Reflects operations for the period from October 16, 1990 (date of initial
   public investment) to September 30, 1991.



** Based on net asset value, which does not reflect the sales load or contingent
   deferred sales charge, if applicable.



(a) Computed on an annualized basis.



(b) This voluntary expense decrease is reflected in both the expense and net

    investment income ratios shown above.



THE TAX-FREE MONEY MARKET FUND


(FORMERLY TAX-FREE MONEY MARKET FUND)



FINANCIAL HIGHLIGHTS

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

(FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD)



The following table has been audited by Deloitte & Touche LLP, the Fund's
independent auditors. Their report dated November 11, 1994, on the Fund's
Financial Statements is incorporated by reference to the Annual Report dated
September 30, 1994. This table should be read in conjunction with the Fund's
Financial Statements and Notes thereto, which may be obtained from the Fund.



<TABLE>
<CAPTION>
                                                                           PERIOD ENDED
                                                                          SEPTEMBER 30,
                                                                              1994*
                                                                          --------------
<S>                                                                       <C>
NET ASSET VALUE, BEGINNING OF PERIOD                                          $ 1.00
- ----------------------------------------------------------------------
INCOME FROM INVESTMENT OPERATIONS
- ----------------------------------------------------------------------
  Net investment income                                                         0.01
- ----------------------------------------------------------------------
LESS DISTRIBUTIONS
- ----------------------------------------------------------------------
  Dividends to shareholders from net investment income                         (0.01)
- ----------------------------------------------------------------------     ---------
NET ASSET VALUE, END OF PERIOD                                                $ 1.00
- ----------------------------------------------------------------------     ---------
TOTAL RETURN**                                                                  0.45%
- ----------------------------------------------------------------------
RATIOS TO AVERAGE NET ASSETS
- ----------------------------------------------------------------------
  Expenses                                                                      0.36%(a)
- ----------------------------------------------------------------------
  Net investment income                                                         2.65%(a)
- ----------------------------------------------------------------------
  Expense waiver/reimbursement (b)                                              0.70%(a)
- ----------------------------------------------------------------------
SUPPLEMENTAL DATA
- ----------------------------------------------------------------------
  Net assets, end of period (000 omitted)                                    $21,967
- ----------------------------------------------------------------------
</TABLE>



 * Reflects operations for the period from July 27, 1994 (date of initial public
   investment) to September 30, 1994.



** Based on net asset value, which does not reflect the sales load or contingent
   deferred sales charge, if applicable.



(a) Computed on an annualized basis.



(b) This voluntary expense decrease is reflected in both the expense and net

    investment income ratios shown above.


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


     - notes, bonds, and discount notes of U.S. government agencies or
       instrumentalities, such as the: Farm Credit System, including the
       National Bank for Cooperatives, Farm Credit Banks, and Banks for
       Cooperatives; Farmers Home Administration; Federal Home Loan Banks;
       Federal Home Loan Mortgage Corporation; Federal National Mortgage
       Association; Government


       National Mortgage Association; and Student Loan Marketing Association.



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 Exchanges 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.
The Fund will only invest in convertible securities rated BBB or higher by
Standard & Poor's Ratings Group ("S&P") or Baa or higher by Moody's Investor's
Service, Inc. ("Moody's"). Bonds rated BBB by S&P or Baa by Moody's 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.



COMMERCIAL PAPER.  The Fund may invest in commercial paper rated A-1 by S&P, or
Prime-1 by 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"), and Eurodollar Time Deposits
("ETDs").


AMERICAN DEPOSITARY 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 Fund's 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 Fund's rate of portfolio turnover may exceed that of
certain other mutual funds with the same investment objective. A higher rate of
portfolio turnover involves correspondingly greater transaction expenses which
must be borne directly by the Fund and, thus,




indirectly by its shareholders. In addition, a high rate of portfolio turnover
may result in the realization of larger amounts of capital gains which, when
distributed to the Fund's shareholders, are taxable to them. (Further
information is contained in the Fund's Statement of Additional Information
within the sections "Brokerage Transactions" and "Tax Status"). Nevertheless,
transactions for the Fund's portfolio will be based only upon investment
considerations and will not be limited by any other considerations when the
Fund's investment adviser deems it appropriate to make changes in the Fund's
portfolio.



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



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 organization
("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 NRSRO or be of
comparable quality to securities having such ratings. 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
- --------------------------------------------------------------------------------

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

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 these transactions 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, a Fund may pay more or less than the
market value of the securities on the settlement date.



The Trust may dispose of a commitment prior to settlement if the adviser deems
it appropriate to do so. In addition, the Trust may enter in transactions to
sell its purchase commitments to third parties at current market values and
simultaneously acquire other commitments to purchase similar securities at later
dates. The Trust may realize short-term profits or losses upon the sale of such
commitments.


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. It should be
noted that investment companies incur certain




expenses, and therefore, any investment by a Fund in shares of another
investment company would be subject to certain duplicate expenses, particularly
transfer agent and custodian fees. The adviser will waive its investment
advisory fee on assets invested in securities of open-end investment companies.



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. This policy cannot be
changed without the approval of holders of a majority of a Fund's Shares.



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.



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.


There is the risk that when lending portfolio securities, the securities may not
be available to the Fund on a timely basis and the Fund may, therefore, lose the
opportunity to sell the securities at a desirable price. In addition, in the
event that a borrower of securities would file for bankruptcy or become
insolvent, disposition of the securities may be delayed pending court action.



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 itself
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 NRSRO.


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 off or charge against the general revenues of a
municipality or public authority. Industrial development bonds are typically
classified as revenue bonds.


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.



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

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%; 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.



     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 December 31, 1994, Signet Trust Company had
     $9.9 billion in total trust assets. Signet Asset Management has investment
     authority over $2.8 billion of the $9.9 billion. The Adviser has managed
     The Medalist Funds since their inception in 1990. The Adviser manages three
     equity common trust funds with $39 million in assets and three fixed income
     common trust funds with $221 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.



     Effective March 1, 1995, subject to approval of the Trustees, Virtus
     Capital Management, Inc., a wholly-owned subsidiary of Signet Banking
     Corporation, will, by virtue of a reorganization within the Signet holding
     company system, succeed to the business of Signet Asset Management, and
     thus will become Adviser to the Funds. Since those persons currently
     responsible for management of the Funds' assets will have similar
     responsibilities to the Funds as employees of Virtus Capital Management,
     Inc., the reorganization will have no effect on the operations of the Fund.



     E. Christian Goetz has managed The U.S. Government Securities Fund since
     August, 1991, and The Maryland Municipal Bond Fund and The Virginia
     Municipal Bond Fund since November 1994. 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
     The Virginia Retirement System.



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.  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 will, periodically, uniformly offer to pay cash or promotional
incentives in the form of trips to sales seminars at luxury resorts, tickets or
other items to all dealers selling shares of the Funds. Such payments will be
predicated upon the amount of shares of the Funds that are sold by the 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.


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 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, 1994. 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.


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

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.

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.


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 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 at the time of
purchase.



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 Financial Services, Inc. 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.

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 charge, next determined after Signet Financial
Services, Inc. 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 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.


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 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.

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 Federal Deposit Insurance Corporation
       ("FDIC");


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


     - 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.



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;
(iv) 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; owned by non-trust customers
("customers") of fee-based planners, investment advisers or banking institutions
(collectively, "Institutions") where such Institutions have an agreement with,
and such customers have a brokerage account with, Signet Financial Services,
Inc.; (vi) purchased through the Imprint Program sponsored by Signet Financial
Services, Inc.; or (vii) if the proceeds from the redemption are used to
purchase a Strive 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 at net asset value, less any applicable contingent deferred sales
charge, 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.


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 January 11, 1995,
Stephens Inc., Little Rock, Arkansas, owned approximately 2,784,480 Investment
Shares of The U.S. Government Securities Fund (26%); approximately 2,035,032
Investment Shares of The Virginia Municipal Bond Fund (30%); approximately
22,352,342 Investment Shares of The Treasury Money Market Fund (67%);
approximately 9,248,672 Investment Shares of The Money Market Fund (32%); and
Bova & Co, Richmond, Virginia, owned approximately 17,601,826 shares of The
Tax-Free Money Market Fund (65%), and therefore, may, for certain purposes, be
deemed to control the respective Fund 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.

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.

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 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.



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. Under existing Virginia laws, distributions made by the Fund
will not be subject to Virginia income taxes to the extent that such
distributions qualify as exempt-interest dividends under the Internal Revenue
Code of 1986, as amended, and represent (i) interest from obligations issued by
or on behalf of the Commonwealth of Virginia or any political subdivision
thereof; or (ii) interest from obligations issued by a territory or possession
of the United States or any political subdivision thereof which federal law
exempts from state income taxes. Conversely, to the extent that distributions
made by the Fund are attributable to other types of obligations, such
distributions will be subject to Virginia income taxes.



MARYLAND TAXES. Under existing Maryland laws, distributions made by the Fund
will not be subject to Maryland state or local income taxes to the extent that
such distributions qualify as exempt-interest dividends under the Internal
Revenue Code, and represent (i) interest on tax-exempt obligations 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). Conversely, to the extent that distributions made by the Fund are
derived from other types of obligations, such distributions will be subject to
Maryland income taxes.


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 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.


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.


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
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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.


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

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-R (1/95)





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