IMPORTANT NOTICE
Dear BayFunds Shareholder:
The following supplements your prospectuses for the BayFunds
Income and Equity Portfolios (Investment Shares and
Institutional Shares) and Money Market Portfolios (Investment
Shares, Institutional Shares and Trust Shares), each dated
March 1, 1996. This supplement provides you with information
concerning the appointment of a new adviser, a change in
ownership of the shareholder servicing agent, and revised
information concerning dividend payments.
We suggest that you keep this supplement with your prospectus
for your records. As always, if you have any questions, please
call 1-800-BAY-FUND.
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RETAIN THIS PORTION AND ATTACH TO YOUR CURRENT PROSPECTUS
BAYFUNDS
INCOME FUNDS AND EQUITY FUND
INVESTMENT SHARES AND INSTITUTIONAL SHARES
MONEY MARKET FUNDS
INVESTMENT SHARES, INSTITUTIONAL SHARES AND TRUST SHARES
SUPPLEMENT TO THE PROSPECTUSES DATED MARCH 1, 1996
1.At a special meeting of the shareholders of BayFunds (the
``Trust'') held on June 28, 1996, shareholders of each Fund
approved a new Investment Advisory Contract between the Trust and
The First National Bank of Boston (``FNBB''), a subsidiary of Bank
of Boston Corporation (``BKBC''). This new Contract with FNBB
became effective at the close of business on July 29, 1996, when
BKBC merged with BayBanks, Inc., which is the parent company of
the Trust's advisers, BayBank, N.A. (``BBNA'') and BayBanks
Investment Management, Inc. (``BBIM''). This new Contract with FNBB
replaces the pre-existing Investment Advisory Agreements between
the Trust and BBNA and BBIM, which terminated automatically upon
the merger. However, in all other respects, the terms, conditions
and fees of the Trust's new Investment Advisory Contract with FNBB
are materially identical to the Trust's pre-existing Investment
Advisory Agreements with BBNA and BBIM. Accordingly, please
supplement your prospectuses with this additional information and
the description below of BKBC and FNBB to reflect that FNBB has
replaced BBNA and BBIM as investment adviser to the Trust.
BKBC is a registered bank holding company, organized in 1970 under
Massachusetts law, which, through its subsidiaries and joint
ventures, is engaged in providing a wide variety of retail,
corporate and international financial services to individuals,
corporate and institutional customers, governments, and other
financial institutions. These services include retail banking,
consumer finance, private banking, trust, mortgage origination and
servicing, domestic corporate and investment banking, leasing,
international banking, commercial real estate lending,
correspondent banking, and securities and payments processing.
BKBC's principal subsidiary is FNBB, a national banking
association. Other major banking subsidiaries of BKBC include Bank
of Boston Connecticut and Rhode Island Hospital Trust National
Bank.
BKBC's and FNBB's principal executive offices are located at 100
Federal Street, Boston, Massachusetts 02110.
FNBB is the successor to a number of banking institutions, the
first of which was chartered in 1784. All of the capital stock of
FNBB (except directors' qualifying shares) is owned directly or
indirectly by BKBC. FNBB has been providing asset management
services since 1890. The Private Bank Division of FNBB is the
investment management group within FNBB that will advise the
Trust. As of December 31, 1995, The Private Bank was responsible
for the investment management of approximately $16 billion of
individual, institutional, endowment and corporate assets,
including $2.5 billion in assets of 1784 Funds, in money market,
equity, and fixed income securities. FNBB presently serves as
investment adviser to 1784 Funds, an open-end management
investment company consisting of 14 portfolios.
2.BayBank Systems, Inc., which serves as the Trust's shareholder
servicing agent, also became a wholly owned subsidiary of BKBC at
the close of business on July 29, 1996, as part of the merger of
BKBC and BayBanks, Inc. Please supplement your prospectuses with
this additional information.
3.Please revise the sub-section entitled ``Dividends and
Distributions'' on page 26 of your ``Income Funds and Equity Fund''
prospectus and on page 24 of your ``Money Market Funds'' prospectus
to reflect that dividends for each of the Income and Money Funds
will be paid within five Business Days of the end of the month in
which dividends are
declared, and that dividends for the Equity Fund will be paid
within five Business Days of the end of the calendar quarter in
which the dividends are declared.
August 16, 1996
FEDERATED INVESTORS
Federated Investors Tower
Pittsburgh, PA 15222-3779
Federated Securities Corp. is the distributor of the funds
and is a subsidiary of Federated Investors.
Cusip 072782501
Cusip 072782808
Cusip 072782873
Cusip 072782303
Cusip 072782402
Cusip 072782881
Cusip 072782709
Cusip 072782600
Cusip 072782204
Cusip 072782105
G00713-03 (8/96)
