IMPORTANT NOTICE
Dear BayFunds(R) 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 a proposed reorganization of the BayFunds with the
1784 Funds(R).
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
On July 31, 1996 and on August 15, 1996, the Board of Trustees of
BayFunds(R) met to consider and approve an Agreement and Plan of
Reorganization (the ``Reorganization Agreement') between BayFunds
and 1784 Funds(R), another family of mutual funds advised by The
First National Bank of Boston. This proposal was made as a result of
the merger of BayBanks, Inc. (the parent company of BayFunds' former
investment advisers) and Bank of Boston Corporation (the parent
company of the successor investment adviser to BayFunds), and a
desire to combine the two fund families in order to promote
operational efficiencies, reduce duplicative investment advisory and
other expenses, and eliminate market overlap. The Reorganization
Agreement contemplates: (a) the transfer of all of the assets and
balance sheet liabilities of each of the portfolios of the BayFunds
to corresponding portfolios of the 1784 Funds in exchange for shares
of the respective 1784 Funds; (b) the distribution of the 1784 Funds
shares to shareholders of the respective BayFunds; and (c) the
termination and deregistration of BayFunds. Following is a chart of
the proposed reorganization:
BAYFUNDS TO BE ACQUIRED BY THE CORRESPONDING 1784 FUNDS
BayFunds U.S. Treasury Money Market 1784 U.S. Treasury Money
Market Fund
Portfolio
Investment Shares Class A Shares
BayFunds U.S. Treasury Money Market 1784 Institutional U.S.
Treasury Money
Portfolio Market Fund
Institutional Shares
BayFunds Money Market Portfolio1784 Prime Money Market Fund
Investment Shares
Trust Shares
BayFunds Equity Portfolio 1784 Growth Fund
Investment Shares
Institutional Shares
BayFunds Short Term Yield Portfolio 1784 Short-Term Income Fund
Investment Shares
Institutional Shares
BayFunds Bond Portfolio 1784 Income Fund
Investment Shares
Institutional Shares
As proposed, it is anticipated that a Special Meeting of
Shareholders of BayFunds will be held on November 6, 1996, at which
shareholders of record on September 20, 1996, will be asked to
approve the Reorganization Agreement. Prior to such Special Meeting,
these shareholders will receive a Proxy Statement that provides a
detailed description of the Reorganization Agreement, the investment
objectives and policies of the 1784 Funds, tax consequences of the
reorganization, and other important information BayFunds
shareholders should consider in connection with the Special Meeting.
September 26, 1996
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
G00508-06 (9/96)
