SHAWMUT FUNDS, 497, 1995-01-03

SHAWMUT FUNDS
497, 1995-01-03

Previous: OPPENHEIMER STRATEGIC INCOME & GROWTH FUND, 497, 1995-01-03

Next: SMITH BARNEY SHEARSON FLORIDA MUNICIPALS FUND, 497, 1995-01-03

SHAWMUT
EQUITY FUNDS
PROSPECTUS

INVESTMENT SHARES

GROWTH AND INCOME EQUITY
GROWTH EQUITY
SMALL CAPITALIZATION EQUITY
QUANTITATIVE EQUITY

December 31, 1994

SHAWMUT GROWTH AND INCOME EQUITY FUND
SHAWMUT GROWTH EQUITY FUND
SHAWMUT SMALL CAPITALIZATION EQUITY FUND
The Shawmut Equity Funds SHAWMUT QUANTITATIVE EQUITY FUND
Investment Shares--Combined Prospectus

The shares offered by this prospectus represent interests in Investment Shares
of the equity portfolios (collectively, the "Equity Funds" or individually, as
appropriate in context, the "Fund") of The Shawmut Funds (the "Trust"), an
open-end management investment company (a mutual fund). In addition to the
Equity Funds, the Trust consists of the following separate investment
portfolios, each having distinct investment objectives and policies:

INCOME FUNDS MONEY MARKET FUNDS
Shawmut Limited Term
Income Fund Shawmut Prime Money Market Fund
Shawmut Intermediate
Government Income Fund Shawmut Connecticut Municipal Money Market Fund
Shawmut Fixed Income Fund Shawmut Massachusetts Municipal Money Market Fund
Shawmut Connecticut
Intermediate Municipal
Income Fund
Shawmut Massachusetts
Intermediate Municipal
Income Fund

This combined prospectus contains the information you should read and know
before you invest in the Equity Funds. Keep this prospectus for future
reference. The Equity Funds have also filed a Combined Statement of Additional
Information for Trust Shares and Investment Shares dated December 31, 1994,
with the Securities and Exchange Commission. The information contained in the
Combined Statement of Additional Information is incorporated by reference into
this prospectus. You may request a copy of the Combined Statement of Additional
Information free of charge, obtain other information, or make inquiries about
the Equity Funds by writing or calling the Trust.

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.

THE SHARES OFFERED BY THIS PROSPECTUS ARE NOT DEPOSITS OR OBLIGATIONS OF
SHAWMUT BANK, ARE NOT ENDORSED OR GUARANTEED BY SHAWMUT BANK, AND ARE NOT
INSURED BY THE FEDERAL DEPOSIT INSURANCE CORPORATION, THE FEDERAL RESERVE BOARD
OR ANY OTHER GOVERNMENT AGENCY. INVESTMENT IN THESE SHARES INVOLVES INVESTMENT
RISKS, INCLUDING FLUCTUATIONS IN VALUE AND EARNINGS AND THE POSSIBLE LOSS OF
PRINCIPAL INVESTED.

INVESTMENT SHARES OF THE SHAWMUT FUNDS ARE AVAILABLE THROUGH REGISTERED
REPRESENTATIVES OF SHAWMUT BROKERAGE, INC. OR OTHER BROKERS, MEMBERS NASD/SIPC.
SHAWMUT BROKERAGE, INC. IS AN AFFILIATE OF SHAWMUT BANK.

Prospectus dated December 31, 1994

Table of Contents

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

SYNOPSIS..................................................................... 2
- --------------------------------------------------------------------------------

EXPENSE SUMMARY.............................................................. 3
- --------------------------------------------------------------------------------

FINANCIAL HIGHLIGHTS......................................................... 4
- --------------------------------------------------------------------------------

GENERAL INFORMATION.......................................................... 6

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

THE SHAWMUT PORTFOLIOS....................................................... 6

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

OBJECTIVES AND POLICIES...................................................... 6

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

INVESTMENTS, STRATEGIES, AND RISKS........................................... 8
- --------------------------------------------------------------------------------

ADMINISTRATION............................................................... 12

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

NET ASSET VALUE.............................................................. 16
- --------------------------------------------------------------------------------

INVESTING IN SHARES.......................................................... 16

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

EXCHANGE PRIVILEGE........................................................... 19

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

REDEEMING SHARES............................................................. 20

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

SHAREHOLDER INFORMATION...................................................... 22

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

EFFECT OF BANKING LAWS....................................................... 23

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

TAX INFORMATION.............................................................. 23

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

OTHER CLASSES OF SHARES...................................................... 24

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

PERFORMANCE INFORMATION...................................................... 24

- --------------------------------------------------------------------------------
Synopsis
INVESTMENT OBJECTIVES

The Shawmut Funds offer you a convenient, affordable way to participate in
separate, professionally managed portfolios of securities. This prospectus
relates only to the Equity Funds of the Trust.

EQUITY FUNDS

SHAWMUT GROWTH AND INCOME EQUITY FUND

("Growth and Income Equity Fund") seeks a relatively high total return through
long-term capital appreciation and current income looking to achieve a current
dividend yield that exceeds the composite yield of securities included in the
Standard & Poor's 500 Composite Stock Index ("Standard & Poor's 500 Index").
While there is no assurance that the Growth and Income Equity Fund will achieve
its objectives, it attempts to do so by investing in a professionally managed,
diversified portfolio consisting primarily of common stocks that are selected
by the investment adviser based upon traditional research techniques.

SHAWMUT GROWTH EQUITY FUND

("Growth Equity Fund") seeks long-term capital appreciation by investing in a
diversified portfolio of growth-oriented equity securities. The Fund Growth
Equity defines growth-oriented equity securities as securities of companies
that are projected by the investment adviser, based upon traditional research
techniques, to show earnings growth superior to the Standard & Poor's 500
Index.

SHAWMUT SMALL CAPITALIZATION EQUITY FUND

("Small Capitalization Equity Fund") seeks long-term capital appreciation by
investing primarily in a portfolio of equity securities comprising the small
capitalization sector of the United States equity market (companies which have
a market value capitalization up to $1 billion).

SHAWMUT QUANTITATIVE EQUITY FUND

("Quantitative Equity Fund") seeks growth of capital by investing in a
diversified portfolio consisting of publicly-traded common stocks listed on
North American stock exchanges or traded in the over-the-counter market. The
selection of investment securities is made by use of a quantitative computer
valuation model, as described in this prospectus.
BUYING SHARES

FUND MANAGEMENT

The Equity Funds' investment adviser is Shawmut Bank, N.A., which makes
investment decisions for the Equity Funds. The sub-adviser to the Quantitative
Equity Fund is Marque Millennium Group Limited.

SHAREHOLDER SERVICES

When you become a shareholder, you can easily obtain information about your
account by calling 1-800-SHAWMUT.

THE SHAWMUT EQUITY FUNDS
Expense Summary
Investment Shares

PORTFOLIOS
SMALL
GROWTH AND CAPITAL
INCOME GROWTH IZATION QUANTITATIVE
EQUITY EQUITY EQUITY EQUITY
FUND FUND FUND FUND
SHAREHOLDER TRANSACTION EXPENSES
Maximum Sales Load Imposed on Purchases
(as a percentage of offering price) 4.00% 4.00% 4.00% 4.00%
Maximum Sales Load Imposed on
Reinvested Dividends
(as a percentage of offering price) None None None None
Contingent Deferred Sales Charge
(as a percentage of
original purchase price or redemption
proceeds, as applicable) None None None None
Redemption Fee (as a percentage of
amount redeemed, if applicable) None None None None
Exchange Fee None None None None

ANNUAL INVESTMENT SHARES OPERATING EXPENSES
(As a percentage of average net assets)
Management Fee (after waivers)(1) 0.80% 0.50% 0.75% 0.00%
12b-1 Fees(2) 0.25% 0.25% 0.25% 0.25%
Total Other Expenses(3) 0.24% 0.68% 0.31% 1.50%
Total Investment Shares Operating
Expenses (after waivers
and reimbursements)(4) 1.29% 1.43% 1.31% 1.75%

(2) The 12b-1 fee has been reduced to reflect the voluntary waiver by the
distributor. The Equity Funds can pay up to 0.50% of the average daily net
assets of Investment Shares as a 12b-1 fee to the distributor.

(3) Other expenses have been reduced to reflect the voluntary waiver by the
custodian for all Equity Funds; reimbursement by the adviser for the Growth
Equity Fund; and the voluntary waiver by the administrator and reimbursement
by the adviser for the Quantitative Equity Fund.

(4) Absent the voluntary waivers and reimbursements explained in the above
footnotes, the Investment Shares Operating Expenses are 1.74% for the Growth
and Income Equity Fund; 2.61% for the Growth Equity Fund; 1.84% for the
Small Capitalization Equity Fund; and 9.12% for the Quantitative Equity
Fund.

The purpose of this table is to assist an investor in understanding the various
costs and expenses that a shareholder of Investment Shares will bear, either
directly or indirectly. For more complete descriptions of the various costs and
expenses, see "Administration" and "Investing in Shares." Wire-transferred
redemptions of less than $5,000 may be subject to additional fees.

1 Year 3 Years 5 Years 10 Years
Growth and Income
Equity Fund.................. $53 $79 $108 $189
Growth Equity Fund............ $54 $83 $115 $204
Small Capitalization
Equity Fund.................. $53 $80 $109 $192
Quantitative Equity Fund...... $57 $93 $131 $238

THE ABOVE EXAMPLES SHOULD NOT BE CONSIDERED A REPRESENTATION OF PAST OR FUTURE
EXPENSES. ACTUAL EXPENSES MAY BE GREATER OR LESS THAN THOSE SHOWN.

The information set forth in the foregoing table and example relates only to
Investment Shares of the Equity Funds. The Equity Funds also offer another class
of shares called Trust Shares. Trust Shares and Investment Shares are subject to
certain of the same expenses; however, Investment Shares are subject to a 12b-1
fee of up to .50 of 1% of average net assets. See "Other Classes of Shares."

THE SHAWMUT EQUITY FUNDS
Financial Highlights

(FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD)

<TABLE>
<CAPTION>
DISTRIBUTIONS
TO
NET REALIZED DIVIDENDS TO SHAREHOLDERS
NET ASSET AND UNREALIZED TOTAL SHAREHOLDERS FROM NET
YEAR ENDED VALUE, NET GAIN/(LOSS) FROM FROM NET REALIZED GAIN
OCTOBER BEGINNING INVESTMENT ON INVESTMENT INVESTMENT ON INVESTMENT
31, OF PERIOD INCOME INVESTMENTS OPERATIONS INCOME TRANSACTIONS
<S> <C> <C> <C> <C> <C> <C>

<CAPTION>
INVESTMENT SHARES
GROWTH AND INCOME EQUITY FUND
<S> <C> <C> <C> <C> <C> <C>
1993* $10.23 0.15 0.48 0.63 (0.17) --
1994 $10.69 0.22 0.72 0.94 (0.20) (0.28)
<CAPTION>
GROWTH EQUITY FUND
<S> <C> <C> <C> <C> <C> <C>
1993* $10.01 0.004 0.480 0.484 (0.004) --
1994 $10.49 0.010 0.390 0.400 (0.002) (0.196)
<CAPTION>
SMALL CAPITALIZATION EQUITY FUND
<S> <C> <C> <C> <C> <C> <C>
1993* $10.52 (0.008) 0.698 0.690 0.000 --
1994 $11.21 (0.01) 0.18 0.17 0.00 (0.32)
<CAPTION>
QUANTITATIVE EQUITY FUND
<S> <C> <C> <C> <C> <C> <C>
1994** $10.03 0.07 0.03 0.10 (0.07) --
<CAPTION>
TRUST SHARES
GROWTH AND INCOME EQUITY FUND
<S> <C> <C> <C> <C> <C> <C>
1993*** $10.00 0.18 0.69 0.87 (0.18) --
1994 $10.69 0.25 0.72 0.97 (0.23) (0.28)
<CAPTION>
GROWTH EQUITY FUND
<S> <C> <C> <C> <C> <C> <C>
1993*** $10.00 0.023 0.487 0.510 (0.019) --
1994 $10.49 0.037 0.390 0.427 (0.032) (0.196)
<CAPTION>
SMALL CAPITALIZATION EQUITY FUND
<S> <C> <C> <C> <C> <C> <C>
1993*** $10.00 0.002 1.210 1.212 (0.002) --
1994 $11.21 0.02 0.17 0.19 (0.01) (0.32)
<CAPTION>
QUANTITATIVE EQUITY FUND
<S> <C> <C> <C> <C> <C> <C>
1994** $10.03 0.07 0.03 0.10 (0.07) --
</TABLE>

* For the period from February 12, 1993 (date of initial public offering) to
October 31, 1993.

** For the period from August 4, 1994 (date of initial public investment) to
October 31, 1994.

*** For the period from December 14, 1992 (date of initial public investment)
to October 31, 1993.

+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.

(See Notes which are an integral part of the Financial Statements)

Further information about the Equity Funds' performance is contained in the
Trust's Combined Annual Report dated October 31, 1994, which can be obtained
free of charge.

<TABLE>
<CAPTION>
NET ASSET NET NET ASSETS, PORTFOLIO
TOTAL VALUE, END TOTAL INVESTMENT EXPENSE WAIVER/ END OF PERIOD TURNOVER
DISTRIBUTIONS OF PERIOD RETURN+ EXPENSES INCOME REIMBURSEMENT(B) (000 OMITTED) RATE
<S> <C> <C> <C> <C> <C> <C> <C>
(0.17) $ 10.69 6.20% 1.25%(a) 1.77%(a) 0.53%(a) $ 16,280 38%
(0.48) $ 11.15 9.12% 1.29% 2.06% 0.45% $ 22,244 73%
(0.004) $ 10.49 4.84% 1.37% (0.10%)(a) 0.72%(a) $ 4,631 71%
(0.198) $ 10.69 3.86% 1.43% 0.09% 1.18% $ 5,846 73%
0.000 $ 11.21 6.56% 1.33%(a) (0.19%)(a) 0.54%(a) $ 15,014 29%
(0.32) $ 11.06 1.64% 1.31% (0.10%) 0.53% $ 19,764 29%
(0.07) $ 10.06 0.94% 1.75%(a) 2.50%(a) 7.37%(a) $ 375 0%
(0.18) $ 10.69 8.80% 0.98%(a) 2.11%(a) 0.27%(a) $ 147,090 38%
(0.51) $ 11.15 9.45% 1.04% 2.31% 0.20% $ 156,827 73%
(0.019) $ 10.49 5.09% 1.06%(a) 0.26%(a) 0.47%(a) $ 20,787 71%
(0.228) $ 10.69 4.16% 1.18% 0.34% 0.93% $ 16,970 73%
(0.002) $ 11.21 12.12% 1.01%(a) 0.02%(a) 0.28%(a) $ 100,382 29%
(0.33) $ 11.07 1.86% 1.06% 0.15% 0.28% $ 101,905 29%
(0.07) $ 10.06 0.94% 1.50%(a) 2.75%(a) 7.12%(a) $ 3,161 0%
</TABLE>

GENERAL INFORMATION

The Trust was established as a Massachusetts business trust under a
Declaration of Trust dated July 16, 1992. The Declaration of Trust permits the
Trust to offer separate series of shares 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 Board of Trustees
(the "Trustees") has established two classes of shares of each of the Equity
Funds, known as Trust Shares and Investment Shares. This prospectus relates
only to Investment Shares of the Equity Funds. Investment Shares are sold
primarily to financial institutions that rely upon the distribution services
provided by the distributor in the marketing of Investment Shares, as well as
to retail customers of such institutions.

A minimum initial investment of $1,000 may be required. Subsequent investments
must be in amounts of at least $100, as described in this prospectus in the
section entitled "Minimum Investment Required," or $50 for participants in the
Systematic Investment Program. Investment Shares are currently sold at net
asset value with a sales load imposed by the Equity Funds, as described in
this prospectus.

THE SHAWMUT PORTFOLIOS

The shareholders of the Equity Funds are shareholders of The Shawmut Funds,
which currently consist of Shawmut Connecticut Intermediate Municipal Income
Fund, Shawmut Connecticut Municipal Money Market Fund, Shawmut Fixed Income
Fund, Shawmut Growth and Income Equity Fund, Shawmut Growth Equity Fund,
Shawmut Intermediate Government Income Fund, Shawmut Limited Term Income Fund,
Shawmut Massachusetts Intermediate Municipal Income Fund, Shawmut
Massachusetts Municipal Money Market Fund, Shawmut Prime Money Market Fund,
Shawmut Quantitative Equity Fund, and Shawmut Small Capitalization Equity
Fund. Shareholders in the Equity Funds have easy access to the other
portfolios of The Shawmut Funds through an exchange program. The Shawmut Funds
are advised by Shawmut Bank, N.A., and distributed by Federated Securities
Corp. The sub-adviser to the Quantitative Equity Fund is Marque Millennium
Group Limited.

OBJECTIVES AND POLICIES
GROWTH AND INCOME EQUITY FUND

INVESTMENT OBJECTIVE

The investment objective of the Growth and Income Equity Fund is to provide a
relatively high total return through long-term capital appreciation and current
income. The investment objective cannot be changed without approval of
shareholders. The Growth and Income Equity Fund generally looks to achieve a
yield that exceeds the composite dividend yield of securities included in the
Standard & Poor's 500 Index. While there is no assurance that the Fund will
achieve its investment objective, it endeavors to do so by following the
investment policies described in this prospectus.

INVESTMENT POLICIES

The investment policies may be changed by the Trustees without shareholder
approval. Shareholders will be notified before any material change in these
policies becomes effective.

ACCEPTABLE INVESTMENTS

UNDER NORMAL MARKET CIRCUMSTANCES, THE GROWTH AND INCOME EQUITY FUND WILL
INVEST AT LEAST 65% OF ITS ASSETS IN GROWTH AND INCOME EQUITY SECURITIES.

In addition, the Growth and Income Equity Fund may invest as described in this
prospectus.

GROWTH EQUITY FUND

INVESTMENT OBJECTIVE

The investment objective of the Growth Equity Fund is to provide long-term
capital appreciation. The investment objective cannot be changed without
approval of shareholders. While there is no assurance that the Fund will
achieve its investment objective, it endeavors to do so by following the
investment policies described in this prospectus.

INVESTMENT POLICIES

The investment policies may be changed by the Trustees without shareholder
approval. Shareholders will be notified before any material change in these
policies becomes effective.

ACCEPTABLE INVESTMENTS

UNDER NORMAL MARKET CIRCUMSTANCES, THE GROWTH EQUITY FUND WILL INVEST AT LEAST
65% OF ITS ASSETS IN GROWTH-ORIENTED EQUITY SECURITIES.

The Growth Equity Fund defines growth-oriented equity securities as securities
that are projected by the Growth Equity Fund's investment adviser to show
earnings growth superior to the Standard & Poor's 500 Index.

The Growth Equity Fund invests primarily in equity securities of companies
selected by the investment adviser on the basis of traditional research
techniques, including assessment of earnings and dividend growth prospects and
of the risk and volatility of each company's business. The fundamental changes
which the investment adviser will seek to identify in companies include, for
example, restructuring of basic businesses or reallocations of assets which
present opportunities for significant share price appreciation. At times, the
Growth Equity Fund will invest in securities of companies which are deemed by
the investment adviser to be candidates for acquisition by other entities as
indicated by changes in ownership, changes in standard price-to-value ratios,
and an examination of other standard analytical indices.

In addition, the Growth Equity Fund may invest as described in this prospectus.

SMALL CAPITALIZATION EQUITY FUND

INVESTMENT OBJECTIVE

The investment objective of the Small Capitalization Equity Fund is to provide
long-term capital appreciation. The investment objective of the Small
Capitalization Equity Fund cannot be changed without the approval of
shareholders. While there is no assurance that the Small Capitalization Equity
Fund will achieve its investment objective, it endeavors to do so by following
the investment policies described in this prospectus.

INVESTMENT POLICIES

The investment policies may be changed by the Trustees without shareholder
approval. Shareholders will be notified before any material change in these
policies becomes effective.

ACCEPTABLE INVESTMENTS

UNDER NORMAL CIRCUMSTANCES, THE SMALL CAPITALIZATION EQUITY FUND WILL INVEST AT
LEAST 65% OF ITS TOTAL ASSETS IN EQUITY SECURITIES OF COMPANIES THAT HAVE A
MARKET VALUE CAPITALIZATION OF UP TO $1 BILLION.

In addition, the Small Capitalization Equity Fund may invest as described in
this prospectus.

QUANTITATIVE EQUITY FUND

INVESTMENT OBJECTIVE

The investment objective of the Quantitative Equity Fund is to provide growth
of capital. The investment objective of the Quantitative Equity Fund cannot be
changed without the approval of shareholders. While there is no assurance that
the Quantitative Equity Fund will achieve its investment objective, it
endeavors to do so by following the investment policies described in this
prospectus.

INVESTMENT POLICIES

The investment policies described below may be changed by the Trustees without
shareholder approval. Shareholders will be notified before any material change
in these policies becomes effective.

ACCEPTABLE INVESTMENTS

UNDER NORMAL MARKET CIRCUMSTANCES, THE QUANTITATIVE EQUITY FUND WILL INVEST AT
LEAST 65% OF ITS ASSETS IN EQUITY SECURITIES.

The Quantitative Equity Fund will invest its assets in a diversified portfolio
of equity securities issued by companies with a market value capitalization in
excess of $250 million and a minimum daily average trading volume as
established by the Sub-Adviser from time to time. To select common stocks for
the Quantitative Equity Fund, the Sub-Adviser uses a quantitative computer
valuation model to evaluate the relative attractiveness of common stocks listed
on North American stock exchanges or traded in the over-the-counter market.
Stocks are selected based upon their price momentum, as measured by combining
four quantitative disciplines: price trend analysis, velocity of price
movements (the speed at which securities prices may change), analysis of price
compared to moving averages, and current price and volume activity (for
valuation judgments). Then, the selected stocks are reviewed based upon
fundamental characteristics, such as present and historical price-to-earnings
and market price-to-book ratios; changes in analysts' earnings forecasts; and
positive or negative earnings realized. Since the primary analysis is of price
momentum rather than these fundamentals, the Quantitative Equity Fund will
include stocks with not only capital growth potential, but also with prospects
for growth in earnings and dividends (value characteristics).

The Quantitative Equity Fund is comprised of stocks selected in accordance with
strict investment criteria. Stocks that are candidates for purchase may have
undergone persistent price deterioration and are deemed likely to reverse and
move up in price (a contrarian strategy). The Quantitative Equity Fund will
also purchase stocks that are in firmly established patterns of price
appreciation. Sales of portfolio securities also adhere to a strict discipline
based upon system analytics or price movement, similar to the selection
process.

In addition, the Quantitative Equity Fund may invest as described in this
prospectus.

INVESTMENTS, STRATEGIES, AND RISKS

COMMON STOCK. As described above, the Equity Funds invest primarily in equity
securities. As with other mutual funds that invest primarily in equity
securities, the Equity Funds are subject to market risks. That is, the
possibility exists that common stocks will decline over short or even extended
periods of time, and 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 Equity Funds, other than
the Quantitative Equity Fund, invest primarily in growth-oriented equity
securities (Growth Equity Fund and Growth and Income Equity Fund) or in small
capitalization stocks (Small Capitalization Equity Fund), there are some
additional risk factors associated with investments in the Equity Funds.
Growth-oriented stocks may include issuers with smaller capitalization. Small
capitalization stocks have historically been more volatile in price than larger
capitalization stocks, such as those included in the Standard & Poor's 500
Index. This is because, among other things, smaller companies have a lower
degree of liquidity in the equity market and tend to have a greater sensitivity
to changing economic conditions. Further, in addition to exhibiting greater
volatility, these stocks may, to some degree, fluctuate independently of the
stocks of large companies. That is, the stock of small capitalization companies
may decline in price as the price of large company stocks rises or vice versa.
Therefore, investors should expect that the Equity Funds will be more volatile
than, and may fluctuate independently of, broad stock market indices such as
the Standard & Poor's 500 Index.

In the case of the Quantitative Equity Fund, stocks that show growth or value
characteristics may be included in the investment portfolio, even though those
characteristics do not drive the stock selection process. Because of its price
and volume oriented selection method, the Quantitative Equity Fund tends to be
less volatile than the market. Of course, there can be no assurance that this
will occur.

CONVERTIBLE SECURITIES. Convertible securities are fixed income securities
which may be exchanged or converted into a predetermined number of the issuer's
underlying common stock at the option of the holder during a specified time
period. Convertible securities may take the form of convertible preferred
stock, convertible bonds or debentures, units consisting of "usable" bonds and
warrants or a combination of the features of several of these securities. The
Equity Funds invest in convertible bonds rated "BB" or higher by Standard &
Poor's Ratings Group or Fitch Investors Service, Inc., or "Ba" or higher by
Moody's Investors Service, Inc., at the time of investment. Securities rated
"BB" by Standard & Poor's Ratings Group or Fitch Investors Service, Inc., or
"Ba" by Moody's Investors Service, Inc., either have speculative
characteristics or are predominantly speculative with respect to capacity to
pay interest and repay principal in accordance with the terms of the
obligation. Debt obligations that are not determined to be investment grade are
high-yield, high-risk bonds, typically subject to greater market fluctuations,
and securities in the lowest rating category may be in danger of loss of income
and principal due to an issuer's default. To a greater extent than
investment-grade bonds, the value of lower-rated bonds tends to reflect
short-term corporate, economic, and market developments, as well as investor
perceptions of the issuer's credit quality. In addition, lower-rated bonds may
be more difficult to dispose of or to value than high-rated, lower-yielding
bonds. The investment adviser or sub-adviser, as appropriate, attempts to
reduce the risks described above through diversification of the portfolio and
by credit analysis of each issuer, as well as by monitoring broad economic
trends and corporate and legislative developments. If a convertible bond is
rated below "BB" or "Ba" according to the characteristics set forth here after
a Fund has purchased it, the Fund is not required to drop the convertible bond
from the portfolio, but will consider appropriate action. The investment
characteristics of each convertible security vary widely, which allows
convertible securities to be employed for different investment objectives. A
description of the rating categories is contained in the Appendix to the
Combined Statement of Additional Information.

Convertible bonds and convertible preferred stocks are fixed income securities
that generally retain the investment characteristics of fixed income securities
until they have been converted but also react to movements in the underlying
equity securities. The holder is entitled to receive the fixed income of a bond
or the dividend preference of a preferred stock until the holder elects to
exercise the conversion privilege. Usable bonds are corporate bonds that can be
used in whole or in part, customarily at full face value, in lieu of cash to
purchase the issuer's common stock. When owned as part of a unit along with
warrants, which are options to buy the common stock, they function as
convertible bonds, except that the warrants generally will expire before the
bond's maturity. Convertible securities are senior to equity securities, and
therefore, have a claim to assets of the corporation prior to the holders of
common stock in the case of liquidation. However, convertible securities are
generally subordinated to similar nonconvertible securities of the same
company. The interest income and dividends from convertible bonds and preferred
stocks provide a stable stream of income with generally higher yields than
common stocks, but lower than non-convertible securities of similar quality.
The Equity Funds will exchange or convert the convertible securities held in
their respective portfolios into shares of the underlying common stock in
instances in which, in the investment adviser's opinion, the investment
characteristics of the underlying common shares will assist the particular Fund
in achieving its investment objectives. Otherwise, the Fund will hold or trade
the convertible securities. In selecting convertible securities for a Fund, the
Fund's adviser evaluates the investment characteristics of the convertible
security as a fixed income instrument, and the investment potential of the
underlying equity security for capital appreciation. In evaluating these
matters with respect to a particular convertible security, the Fund's adviser
considers numerous factors, including the economic and political outlook, the
value of the security relative to other investment alternatives, trends in the
determinants of the issuer's profits, and the issuer's management capability
and practices.

SECURITIES OF FOREIGN ISSUERS. The Equity Funds may invest in the securities
of foreign issuers which are freely traded on United States securities
exchanges or in the over-the-counter market in the form of depository receipts.
Securities of a foreign issuer may present greater risks in the form of
nationalization, confiscation, domestic marketability, or other
national or international restrictions. As a matter of practice, the Equity
Funds will not invest in the securities of a foreign issuer if any such risk
appears to the investment adviser to be substantial.

OPTIONS AND FUTURES CONTRACTS. The Equity Funds may buy and sell options and
futures contracts to manage their respective individual exposure to changing
interest rates, security prices, and currency exchange rates. Some options and
futures strategies, including selling futures, buying puts, and writing calls,
tend to hedge the Equity Funds' respective investments against price
fluctuations. Other strategies, including buying futures, writing puts, and
buying calls, tend to increase market exposure. Options and futures may be
combined with each other or with forward contracts in order to adjust the risk
and return characteristics of the overall strategy. The Equity Funds may invest
in options and futures based on any type of security, index, or currency,
including options and futures traded on foreign exchanges and options not
traded on exchanges.

Options and futures can be volatile investments, and involve certain risks. If
the investment adviser applies a hedge at an inappropriate time or judges
market conditions incorrectly, options and futures may lower an Equity Fund's
individual return. An Equity Fund could also experience losses if the prices of
its options and futures positions were poorly correlated with its other
investments, or if it could not close out its positions because of an illiquid
secondary market.

Each of the Equity Funds will not hedge more than 20% of its respective total
assets by selling futures, buying puts, and writing calls under normal
conditions. In addition, each of the Equity Funds will not buy futures or write
puts whose underlying value exceeds 20% of their respective total assets, and
the Equity Funds will not buy calls with a value exceeding 5% of their
respective total assets.

STOCK INDEX FUTURES, SWAP AGREEMENTS, INDEXED SECURITIES, AND OPTIONS. The
Equity Funds may utilize stock index futures contracts, options, swap
agreements, indexed securities, and options on futures contracts, subject to
the limitation that the value of these futures contracts, swap agreements,
indexed securities, and options will not exceed 20% of each of the Equity
Funds' total assets. Also, each Equity Fund will not purchase options to the
extent that more than 5% of the value of the Equity Fund's total assets would
be invested in premiums on open put option positions. In addition, each Equity
Fund does not intend to invest more than 5% of the market value of its total
assets in each of the following: futures contracts, swap agreements, and
indexed securities. When an Equity Fund enters into a swap agreement, assets of
the Fund equal to the value of the swap agreement will be segregated by the
Equity Fund.

There are several risks accompanying the utilization of futures contracts.
First, positions in futures contracts may be closed only on an exchange or
board of trade that furnishes a secondary market for such contracts. While the
Equity Funds plan to utilize futures contracts only if there exists an active
market for such contracts, there is no guarantee that a liquid market will
exist for the contracts at a specified time. Furthermore, because, by
definition, futures contracts look to projected price levels in the future and
not to current levels of valuation, market circumstances may result in there
being a discrepancy between the price of the stock index future and the
movement in the corresponding stock index. The absence of a perfect price
correlation between the futures contract and its underlying stock index could
stem from investors choosing to close futures contracts by offsetting
transactions, rather than satisfying additional margin requirements. This could
result in a distortion of the relationship between the index and the futures
market. In addition, because the futures market imposes less burdensome margin
requirements than the securities market, an increased amount of participation
by speculators in the futures market could result in price fluctuations.

RESTRICTED AND ILLIQUID SECURITIES. The Equity Funds intend to invest in
restricted securities. Restricted securities are any securities in which each
Equity Fund may otherwise invest pursuant to its investment objective and
policies, but which are subject to restriction on resale under federal
securities law. However, each Equity Fund will limit investments in illiquid
securities, including certain restricted securities not determined by the
Trustees to be liquid, non-negotiable fixed time deposits with maturities over
seven days, over-the-counter options, and repurchase agreements providing for
settlement in more than seven days after notice, to 15% of its net assets.

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

The Equity Funds may dispose of a commitment prior to settlement if the adviser
deems it appropriate to do so. In addition, the Equity Funds may enter into
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 Equity Funds may realize short-term profits or
losses upon the sale of such commitments.

LENDING OF PORTFOLIO SECURITIES. In order to generate additional income, each
Equity Fund may lend portfolio securities on a short-term or long-term basis,
or both, up to one-third of the value of its total assets to broker/dealers,
banks, or other institutional borrowers of securities. The Equity Funds 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 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 Equity Funds on a timely basis and the Equity Funds
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.

TEMPORARY INVESTMENTS. In such proportions as, in the judgment of its
investment adviser, prevailing market conditions warrant, each Equity Fund may,
for temporary defensive purposes, invest in:

short-term money market instruments rated in one of the top two rating
categories by a nationally recognized statistical rating organization;

securities issued and/or guaranteed as to payment of principal and interest
by the U.S. government, its agencies, or instrumentalities; and
agreements.

REPURCHASE AGREEMENTS. The U.S. government securities and other securities
in which each Equity Fund invests 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 an Equity Fund and agrees 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 an Equity Fund, the Fund could receive less than the
repurchase price on any sale of such securities.

INVESTING IN SECURITIES OF OTHER INVESTMENT COMPANIES. The Equity Funds may
invest in the securities of other investment companies, but they will not,
respectively, own more than 3% of the total outstanding voting stock of any
investment company, invest more than 5% of their respective total assets in
any one investment company, or invest more than 10% of their respective
total assets in investment companies in general. The Equity Funds will
invest in other investment companies primarily for the purpose of investing
their short-term cash which has not yet been invested in other portfolio
instruments. However, from time to time, on a temporary basis, each of the
Equity Funds may invest exclusively in one other investment company managed
similarly to the appropriate Fund. Shareholders should realize that, when
one of the Equity Funds invests in other investment companies, certain fund
expenses, such as custodian fees and administrative fees, may be duplicated.
The adviser will waive its investment advisory fee on assets invested in
securities of other investment companies.

INVESTMENT LIMITATIONS

THE EQUITY FUNDS FOLLOW A NUMBER OF GUIDELINES IN MANAGING THEIR PORTFOLIOS
IN ORDER TO LIMIT INVESTMENT RISKS.

Each Equity Fund will not:

borrow money directly or through reverse repurchase agreements
(arrangements in which an Equity Fund sells a portfolio instrument for a
percentage of its cash value with an arrangement to buy it back on a set
date) or pledge securities except, under certain circumstances, an Equity
Fund may borrow up to one-third of the value of its total assets and pledge
up to 10% of the value of its total assets to secure such borrowings; or

with respect to 75% of the value of its total assets, invest more than 5%
in securities of one issuer (other than cash, cash items, or securities
issued or guaranteed by the government of the United States or its
agencies or instrumentalities and repurchase agreements collateralized by
such securities), or acquire more than 10% of the outstanding voting
securities of any one issuer.

The above investment limitations cannot be changed without shareholder
approval. The following limitation, however, may be changed by the
Trustees without shareholder approval. Shareholders will be notified
before any material change in this limitation becomes effective.

Each Equity Fund will not:

invest more than 15% of its total assets in securities subject to
restrictions on resale under the Securities Act of 1933 (except for
commercial paper issued under Section 4(2) of the Securities Act of 1933
and certain other securities which meet the criteria for liquidity as
established by the Trustees).

ADMINISTRATION

MANAGEMENT OF THE SHAWMUT FUNDS

BOARD OF TRUSTEES

THE SHAWMUT FUNDS ARE MANAGED BY A BOARD OF TRUSTEES.

The Trustees are responsible for managing the Trust's business affairs and for
exercising all the Trust's powers 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

PURSUANT TO AN INVESTMENT ADVISORY CONTRACT WITH THE TRUST, INVESTMENT
DECISIONS FOR THE EQUITY FUNDS ARE MADE BY SHAWMUT BANK, N.A. (THE "ADVISER"),
SUBJECT TO DIRECTION BY THE TRUSTEES.

The Adviser continually conducts investment research and supervision for the
Equity Funds and is responsible for the purchase or sale of portfolio
instruments, for which it receives an annual fee from the respective assets of
the Equity Funds.

ADVISORY FEES

The Adviser receives an annual investment advisory fee equal to 1.00% of each
of the Equity Funds' average daily net assets. The fee paid by the Equity
Funds, while higher than the advisory fee paid by other mutual funds in
general, is with the anticipated advisory fee waivers, comparable to fees paid
by mutual funds with similar objectives and policies. The Adviser has
undertaken to waive a portion of its advisory fee, up to the amount of the
advisory fee, to reimburse each of the Equity Funds for operating expenses in
excess of limitations established by certain states. The Adviser may further
voluntarily waive a portion of its fee or reimburse the Equity Funds for
certain operating expenses. The Adviser can terminate such voluntary waiver or
reimbursement policy with any of the Equity Funds at any time at its sole
discretion.

ADVISER'S BACKGROUND

SHAWMUT BANK, N.A., A NATIONAL BANKING ASSOCIATION, AND ITS AFFILIATES HAVE
MANAGED COMMINGLED FUNDS FOR OVER FIFTY YEARS. AS OF OCTOBER 31, 1994, SHAWMUT
NATIONAL CORPORATION, THROUGH ITS SUBSIDIARIES INCLUDING SHAWMUT
BANK, N.A., MANAGED MORE THAN $15 BILLION IN TOTAL ASSETS. SHAWMUT BANK, N.A.,
HAS SERVED AS AN ADVISER TO MUTUAL FUNDS SINCE THE INCEPTION OF THE SHAWMUT
FUNDS ON DECEMBER 1, 1992.

Shawmut Bank, N.A., a national banking association, along with Shawmut Bank
Connecticut, National Association, and Shawmut Bank NH, are the principal
subsidiaries of Shawmut National Corporation, a super-regional bank holding
company formed on February 29, 1988, and based in southern New England. Shawmut
National Corporation serves consumers through its network of banking offices
with a full range of deposit and lending products, as well as investment
services. As part of its regular banking operations, Shawmut Bank may make
loans to public companies. Thus, it may be possible, from time to time, for the
Equity Funds to hold or acquire the securities of issuers which are also
lending clients of Shawmut Bank. The lending relationship will not be a factor
in the selection of securities. The principal executive offices of the
investment adviser are located at One Federal Street, Boston, Massachusetts
02211.

Brendan J. Henebry has been the portfolio manager of the Growth and Income
Equity Fund since its inception in December 1992. Mr. Henebry has been with
Shawmut Bank, the Growth and Income Equity Fund's Adviser, and its predecessor
since 1965, and has been a Vice President of the Adviser since 1978. During the
past five years, Mr. Henebry has served as Manager of the Growth and Income
Equity Management Group. He is an honors graduate of St. Anselm's College,
where he concentrated in economics.

Philip Tasho has been responsible for managing the Growth Equity Fund since
November 1994. Mr. Tasho joined Shawmut Bank as a portfolio manager in June
1994. Prior to this, he had been employed as Managing Director--Equities with
the investment advisory subsidiary of a bank. Mr. Tasho received his B.A.
degree at Grinnell College, his M.B.A. at George Washington University, and is
also a Chartered Financial Analyst (C.F.A.).

Peter C. Larson has been the portfolio manager of the Small Capitalization
Equity Fund since its inception in December 1992. Mr. Larson joined Shawmut
Bank in 1963 as an investment officer and has been a Vice President in charge
of Shawmut's Small Cap Equity Management product since inception in 1980. He
holds a B.S. degree in finance from the University of Connecticut.

Kenneth J. Garvey is the portfolio manager of the Quantitative Equity Fund. Mr.
Garvey is a Managing Director and co-founder of Marque Millennium Group
Limited, which serves as the sub-adviser to the Quantitative Equity Fund. Mr.
Garvey has served as a senior investment executive at several major investment
firms.

SUB-ADVISER

PURSUANT TO THE TERMS OF AN INVESTMENT SUB-ADVISORY AGREEMENT BETWEEN THE
ADVISER AND MARQUE MILLENNIUM GROUP LIMITED ("MARQUE MILLENNIUM" OR THE
"SUB-ADVISER"), MARQUE MILLENNIUM FURNISHES CERTAIN INVESTMENT ADVISORY
SERVICES TO THE ADVISER ON BEHALF OF THE QUANTITATIVE EQUITY FUND.

Marque Millennium assists the Adviser in identifying securities for potential
purchase and/or sale through its quantitative analysis of common stocks, as
described in the "Acceptable Investments" section for the Quantitative Equity
Fund. For the services provided and the expenses incurred by the Sub-Adviser
pursuant to the sub-advisory agreement, Marque Millennium is entitled to
receive an annual fee of one-half of the total advisory fee being charged (up
to .50 of 1.00% of the Quantitative Equity Fund's average daily net assets
being paid to the Sub-Adviser), payable by the Adviser. Marque Millennium may
elect to waive some or all of its fee. In no event shall the Quantitative
Equity Fund be responsible for any fees due to the Sub-Adviser for its services
to the Adviser.

Marque Millennium, which is located at 126 East 56th Street, New York, New York
10022, provides investment counsel to both individuals and institutions. As of
October 31, 1994, Marque Millennium furnished services, substantially similar
to the services it provides to the Adviser, to other discretionary and
nondiscretionary investment accounts with assets of approximately $575 million.
Marque Millennium has acted as Sub-adviser to the Quantitative Equity Fund
since its inception on June 21, 1994. The Sub-Adviser is a limited partnership
founded and controlled by Wilfred J. Meckel II and Kenneth J. Garvey, Managing
Directors.

DISTRIBUTION OF EQUITY FUNDS' SHARES

FEDERATED SECURITIES CORP. IS THE PRINCIPAL DISTRIBUTOR FOR INVESTMENT SHARES.

Federated Securities Corp., Federated Investors Tower, Pittsburgh, Pennsylvania
15222-3779, 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 the distribution plan adopted in accordance with
Investment Company Act Rule 12b-1 (the "Plan"), each of the Equity Funds will
pay to the distributor an amount computed at an annual rate of up to .50 of 1%
of the average daily net asset value of the Investment Shares of each of the
Equity Funds, to finance any activity which is principally intended to result
in the sale of Investment Shares subject to the Plan.

The distributor may, from time to time and for such periods as it deems
appropriate, voluntarily reduce its compensation under the Plan.

The distributor may select financial institutions such as banks, fiduciaries,
custodians for public funds, investment advisers, and broker/dealers
("brokers") to provide distribution and/or administrative services as agents
for their clients or customers who own Investment Shares of the Equity Funds.
Administrative services may include, but are not limited to, the following
functions: providing office space, equipment, telephone facilities, and various
clerical, supervisory, computer, and other personnel 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; assisting clients in changing
dividend options, account designations, and addresses; and providing such other
services as may reasonably be requested.

The distributor will pay financial institutions a fee based upon the Investment
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 distributor.

The Plan is a "compensation" type plan. As such, the Equity Funds make no
payments to the distributor except as described above. Therefore, the Equity
Funds do not pay for unreimbursed expenses of the distributor, including
amounts expended by the distributor in excess of amounts received by it from
the Equity Funds, interest, carrying, or other financing charges in connection
with excess amounts expended, or the distributor's overhead expenses. However,
the distributor may be able to recover such amounts or may earn a profit from
future payments made by the Equity Funds under the Plan.

OTHER PAYMENTS TO FINANCIAL INSTITUTIONS. The distributor may also pay
financial institutions a fee based on the average net asset value of shares of
their customers invested in an Equity Fund for providing administrative
services. This fee is in addition to the amounts paid under the distribution
plan for administrative services, and, if paid, will be reimbursed by the
Adviser and not by an Equity Fund.

The Adviser or its affiliates may also offer to pay a fee from their own assets
to financial institutions as financial assistance for providing substantial
marketing and sales support. The support may include sponsoring sales,
educational and training seminars for their employees, providing sales
literature, and engineering computer software programs that emphasize the
attributes of an Equity Fund. Such assistance will be predicated upon the
amount of shares the dealer sells or may sell, and/or upon the type and nature
of sales or operational support furnished by the financial institution. These
payments will be made by the Adviser and will not be made from the assets of an
Equity Fund.

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 Trustees will consider appropriate changes in the
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 EQUITY FUNDS

ADMINISTRATIVE SERVICES. Federated Administrative Services ("FAS"), Federated
Investors Tower, Pittsburgh, Pennsylvania 15222-3779, a subsidiary of Federated
Investors, provides the Equity Funds with certain administrative personnel and
services necessary to operate the Equity Funds, such as legal and accounting
services. FAS provides these at an annual rate as specified below:

<TABLE>
<CAPTION>
MAXIMUM AVERAGE AGGREGATED DAILY
ADMINISTRATIVE FEE NET ASSETS OF THE TRUST
<S> <C>
.150 of 1% First $250 million
.125 of 1% Next $250 million
.100 of 1% Next $250 million
.075 of 1% Over $750 million
</TABLE>

The administrative fee received by FAS during any fiscal year shall be at
least $50,000 for each of the Equity Funds. FAS may voluntarily choose to
waive a portion of its fee.

CUSTODIAN. Shawmut Bank, N.A., One Federal Street, Boston, Massachusetts
02211, is custodian for the securities and cash of the Equity Funds. Under the
Custodian Agreement, Shawmut Bank, N.A., holds the Equity Funds' portfolio
securities in safekeeping and keeps all necessary records and documents
relating to its duties.

TRANSFER AGENT, DIVIDEND DISBURSING AGENT, AND PORTFOLIO ACCOUNTING
SERVICES. Federated Services Company,
Federated Investors Tower, Pittsburgh, Pennsylvania 15222-3779, is transfer
agent and dividend disbursing agent for the Equity Funds. It also provides
certain accounting and recordkeeping services with respect to each of the
Equity Funds' portfolio investments.

LEGAL COUNSEL. Legal counsel is provided by Houston, Houston & Donnelly, 2510
Centre City Tower, Pittsburgh, Pennsylvania 15222, and Dickstein, Shapiro &
Morin, L.L.P., 2101 L Street, N.W., Washington, DC 20037.

INDEPENDENT ACCOUNTANTS. The independent accountants for the Equity Funds are
Price Waterhouse LLP, 160 Federal Street, Boston, Massachusetts 02110.

EXPENSES OF THE EQUITY FUNDS AND INVESTMENT SHARES

Holders of Investment Shares pay their allocable portion of the Equity Funds'
and the Trust's expenses. The Trust expenses for which holders of Investment
Shares pay their allocable portion include, but are not limited to: the cost
of organizing the Trust and continuing its existence; registering the Trust
with federal and state securities authorities; Trustees' fees; auditors' fees;
the cost of meetings of Trustees; legal fees of the Trust; association
membership dues; and such non-recurring and extraordinary items as may arise.

The respective Equity Fund expenses for which holders of Investment Shares pay
their allocable portion include, but are not limited to: registering the
Equity Funds and shares of the Equity Funds; investment advisory services;
taxes and commissions; custodian fees; insurance premiums; auditors' fees; and
such non-recurring and extraordinary items as may arise.

At present, no expenses, other than distribution expenses, are allocated
exclusively to the Investment Shares as a class. However, the Trustees reserve
the right to allocate certain other expenses to holders of Investment Shares
as they deem 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 Investment 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 Investment Shares; legal fees relating solely to Investment
Shares; and Trustees' fees incurred as a result of issues relating solely to
Investment Shares.

NET ASSET VALUE

THE TERM "NET ASSET VALUE" REFERS TO THE VALUE OF ONE EQUITY FUND SHARE.

Each Equity Fund's net asset value per Investment Share fluctuates. The net
asset value for Investment Shares is determined by adding the interest of the
Investment Shares in the market value of all securities and other assets of an
Equity Fund, subtracting the interest of the Investment Shares in the
liabilities of an Equity Fund and those attributable to Investment Shares, and
dividing the remainder by the total number of Investment Shares outstanding.
The net asset value for Investment Shares of an Equity Fund may differ from
that of Trust 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

YOU CAN BUY INVESTMENT SHARES BY FEDERAL RESERVE WIRE, MAIL, OR TRANSFER, AS
EXPLAINED BELOW.

Shares of the Equity Funds are sold by the distributor on days on which the New
York Stock Exchange and Federal Reserve Wire System are open for business.
Shares of the Equity Funds may also be purchased in branches of Shawmut Bank,
N.A., Shawmut Bank Connecticut, National Association, Shawmut Bank NH, and
their affiliates (collectively, "Shawmut Bank"), from certain brokers which
have offices located in branches of Shawmut Bank under lease agreements with
Shawmut Bank. Offices of the brokers located in branches of Shawmut Bank are
open on days on which each of Shawmut Bank, the New York Stock Exchange, and
the Federal Reserve Wire System are open for business. Call 1-800-SHAWMUT for
the name and telephone number of the broker located in the Shawmut Bank branch
nearest you. Texas residents must purchase, exchange, and redeem Investment
Shares through Federated Securities Corp. at 1-800-356-2805. The Equity Funds
reserve the right to reject any purchase request.

THROUGH A BROKER. An investor may call a broker to receive information and to
place an order to purchase Investment Shares. Call 1-800-SHAWMUT to speak with
a broker, or for referral to a broker servicing your area. Orders placed
through a broker are considered received when payment is converted to federal
funds and the applicable Equity Fund is notified of the purchase order. The
completion of the purchase transaction will generally occur within one business
day after a broker receives a purchase order. Purchase orders must be received
by a broker before 4:00 p.m. (Eastern time) and must be transmitted by a broker
to the applicable Equity Fund before 5:00 p.m. (Eastern time) in order for
Investment Shares to be purchased at that day's public offering price.

Payment must be made by either check, wire transfer of federal funds, or
federal funds deposited into a deposit account established by the shareholder
at Shawmut Bank. Payment is normally made through a debit to the deposit
account no later than the business day following the conversion of a check into
federal funds. In addition, Investment Shares may be purchased through other
brokers or dealers who have sales agreements with the Equity Funds'
distributor.

DIRECTLY FROM THE EQUITY FUNDS. An investor may place an order to purchase
Investment Shares directly from the Equity Funds. To do so call 1-800-SHAWMUT
to request a new account form. Once received, complete and sign the form;
enclose a check made payable to Shawmut Growth Equity Funds, Shawmut Growth and
Income Equity Fund, Shawmut Quantitative Equity Fund, or Shawmut Small
Capitalization Equity Fund--Investment Shares (as appropriate); and mail both
to The Shawmut Funds, c/o Transfer Agency, 1001 Liberty Avenue, Pittsburgh,
Pennsylvania 15222-3779. The order is considered received after the check is
converted into federal funds and the transfer agent establishes a shareholder
account for the investor. This is generally the next business day after the
Fund receives the check.

MINIMUM INVESTMENT REQUIRED

THE MINIMUM INITIAL INVESTMENT IS $1,000, OR $500 IN THE CASE OF RETIREMENT
PLAN ACCOUNTS.

The minimum initial investment in Investment Shares by an investor is $1,000,
or $500 in the case of retirement plan accounts. Subsequent investments by
participants in the Systematic Investment Program, as described in this
prospectus, or by retirement plan accounts, must be in amounts of at least $50.
Subsequent investments by all other investors must be in amounts of at least
$100. The Equity Funds may waive the initial minimum investment for employees
of Shawmut Bank and its affiliates, from time to time.

WHAT SHARES COST

INVESTMENT SHARES ARE SOLD AT THEIR NET ASSET VALUE NEXT DETERMINED AFTER AN
ORDER IS RECEIVED, PLUS A SALES LOAD.

The net asset value is determined at the close of the New York Stock Exchange,
normally 4:00 p.m. (Eastern time), Monday through Friday, except on: (i) days
on which there are not sufficient changes in the value of an Equity Fund's
portfolio securities that its net asset value might be materially affected;
(ii) days during which no shares are tendered for redemption and no orders to
purchase shares are received; or (iii) on the following holidays: New Year's
Day, Presidents' Day, Good Friday, Memorial Day, Independence Day, Labor Day,
Thanksgiving Day, and Christmas Day.

Investment Shares of the Equity Funds are sold at their net asset value next
determined after an order is received, plus a sales load, as follows:

<TABLE>
<CAPTION>
SALES LOAD AS A PERCENTAGE SALES LOAD AS A PERCENTAGE
OF PUBLIC OFFERING PRICE OF NET AMOUNT INVESTED
<S> <C> <C>
Less than $50,000...................................... 4.00% 4.17%
$50,000 but less than $100,000......................... 3.75% 3.90%
$100,000 but less than $250,000........................ 3.50% 3.63%
$250,000 but less than $500,000........................ 2.50% 2.56%
$500,000 but less than $1 million...................... 2.00% 2.04%
$1 million but less than $3 million.................... 1.00% 1.01%
$3 million or more..................................... 0.50% 0.50%
</TABLE>

PURCHASES AT NET ASSET VALUE. Investment Shares of the Equity Funds may be
purchased at net asset value, without a sales load, by Trustees, Directors, and
employees (and their spouses and children under age 21) of The Shawmut Funds,
Shawmut Bank, the brokers, Marque Millenium Group Limited, 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 Equity
Funds.

SALES CHARGE REALLOWANCE. For sales of Investment Shares of the Equity Funds,
a broker will normally receive up to 85% of the applicable sales load . Any
portion of the sales load which is not paid to a broker will be retained by the
distributor. Other brokers or dealers who sell Investment Shares, if any, will
also normally receive up to 85% of the applicable sales load , with the unpaid
portion being retained by the distributor.

The sales load for Investment Shares sold other than through Shawmut Bank will
be retained by the distributor. The distributor may pay fees to banks out of
the sales load in exchange for sales and/or administrative services performed
on behalf of the bank's customers in connection with the initiation of customer
accounts and purchases of the Equity Funds' Investment Shares.

From time to time, the distributor will conduct sales programs or contests that
compensate brokers with cash or non-cash items, such as merchandise and
attendance at sales seminars in resort locations. The cost of such compensation
is borne by the distributor and is not an Equity Fund expense.

REDUCING THE SALES LOAD

The sales load can be reduced on the purchase of Investment Shares through:

quantity discounts and accumulated purchases;

signing a 13-month letter of intent;

using the reinvestment privilege; or

concurrent purchases.

QUANTITY DISCOUNTS AND ACCUMULATED PURCHASES. As shown in the table above,
larger purchases reduce the sales load paid. The Equity Funds will combine
purchases made on the same day by the investor, his spouse, and his
children under age 21 when it calculates the sales load paid by an
individual investor.

If an additional purchase of Investment Shares is made, each Equity Fund
will consider the previous purchases still invested in any of the Shawmut
Funds, the purchase price of which includes a sales load. For example, if a
shareholder already owns Investment Shares having a current net asset value
of $30,000, and he purchases $20,000 or more of an Equity Fund at the
current net asset value, the sales load on the additional purchase of an
Equity Fund, according to the schedule now in effect, would be 3.75%
instead of 4.00%.

To receive this sales load reduction, the broker or the distributor must be
notified by the shareholder in writing, at the time the purchase is made,
that Investment Shares are already owned or that purchases are being
combined. Each Equity Fund will reduce the sales load after it confirms the
purchases.

LETTER OF INTENT. If a shareholder intends to purchase at least $50,000 of
Investment Shares in the Equity Funds over the next 13 months, the sales
load may be reduced by signing a letter of intent to that effect. This
letter of intent includes a provision for a sales load adjustment depending
on the amount actually purchased within the 13-month period and a provision
for the custodian to hold up to 4.00% of the total amount intended to be
purchased in escrow (in Investment Shares) until such purchase is
completed.

The amount held in escrow will be applied to the shareholder's account at
the end of the 13-month period unless the amount specified in the letter of
intent is not purchased. In this event, an appropriate number of the
escrowed Investment Shares may be redeemed in order to realize the
difference in the sales load.

This letter of intent will not obligate the shareholder to purchase
Investment Shares, but if the shareholder does, each purchase during the
period will be at the sales load applicable to the total amount intended to
be purchased. This letter may be dated as of a prior date to include any
purchases made within the past 90 days; however, these previous purchases
will not receive the reduced sales load.

REINVESTMENT PRIVILEGE. If Investment Shares in any of the Equity Funds
have been redeemed, the shareholder has a one-time right, within 30 days,
to reinvest the redemption proceeds at the next-determined net asset value
without any sales load. The broker or the distributor must be notified by
the shareholder in writing of the reinvestment in order to eliminate a
sales load. If the shareholder redeems Investment Shares, there may be tax
consequences, and exercise of the reinvestment privilege may result in
additional tax considerations. Shareholders contemplating such transactions
should consult their own tax advisers.

CONCURRENT PURCHASES. For purposes of qualifying for a sales load
reduction, a shareholder has the privilege of combining concurrent
purchases of two or more funds in the Trust, the purchase price of which
includes a sales load. For example, if a shareholder concurrently invests
$30,000 in one of the funds in the Trust with a sales load and $20,000 in
any of the Equity Funds, the sales load would be reduced as described in
the section entitled "What Shares Cost."

To receive this sales load reduction, the broker or the distributor must be
notified by the shareholder in writing at the time the concurrent purchases
are made. The sales load will be reduced after the purchases are confirmed.

SYSTEMATIC INVESTMENT PROGRAM

Once an account in an Equity Fund has been opened, shareholders may add to
their investment on a regular basis in a minimum amount of $50. Under this
program, funds may be automatically withdrawn periodically from the
shareholder's checking account and invested in Investment Shares at the net
asset value next determined after an order is received by
the Equity Fund, plus the applicable sales load. A shareholder may apply
for participation in this program through the broker or the distributor.

SUBACCOUNTING SERVICES

Institutions are encouraged to open single master accounts. However,
certain institutions may wish to use the transfer agent's subaccounting
system to minimize their internal recordkeeping requirements. The transfer
agent charges a fee based on the level of subaccounting services rendered.
Certain institutions holding Investment Shares in a fiduciary, agency,
custodial, or similar capacity may charge or pass through subaccounting
fees as part of or in addition to normal trust or agency account fees. They
may also charge fees for other services provided which may be related to
the ownership of Investment Shares. This prospectus should, therefore, be
read together with any agreement between the customer and the institution
with regard to the services provided, the fees charged for those services,
and any restrictions and limitations imposed.

CERTIFICATES AND CONFIRMATIONS

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

Detailed confirmations of each purchase or redemption are sent to each
shareholder of record. Monthly statements are sent to report account
activity during the previous month, including dividends paid during the
period.

DIVIDENDS

Dividends are declared and paid quarterly to all shareholders invested in
each Equity Fund on the record date.

CAPITAL GAINS

Capital gains realized by an Equity Fund, if any, will be distributed to
that Equity Fund's shareholders at least once every 12 months.

EXCHANGE PRIVILEGE

EXCHANGING SHARES. Shareholders may exchange Investment Shares, with a minimum
net asset value of $1,000, except retirement plan accounts, which must have a
minimum net asset value of $500, for shares of the same designated class of
other funds advised by Shawmut Bank. Shares of funds with a sales load may be
exchanged at net asset value for shares of other funds with an equal sales
load, a lower sales load or no sales load. Shares of funds with no sales load,
or a lower sales load, acquired by direct purchase or reinvestment of dividends
on such shares may be exchanged for shares of funds with a sales load, or a
higher sales load, at net asset value, plus the applicable sales load or
additional incremental sales load, as the case may be, imposed by the fund
shares being purchased.

When an exchange is made from a Fund with a sales load to a Fund with no sales
load, the shares exchanged, and additional shares which have been purchased by
reinvesting dividends on such shares, retain the character of the exchanged
shares for purposes of exercising further exchange privileges; thus, an
exchange of such shares for shares of a Fund with a sales load would be at net
asset value.

Exchanges are subject to the minimum initial purchase requirements of such Fund
being acquired. Prior to any exchange, the shareholder must receive a copy of
the current prospectus of the class of the Fund into which an exchange is to be
effected.

The exchange privilege is available to shareholders residing in any state in
which the fund shares being acquired may legally be sold. Upon receipt of
proper instructions and all necessary supporting documents, Investment Shares
submitted for exchange will be redeemed at the next-determined net asset value.
Written exchange instructions may require a signature guarantee. 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 exchange privilege may be modified or
terminated at any time. Shareholders will be notified of the modification or
termination of the exchange privilege. A shareholder may obtain further
information on the exchange privilege by calling the broker.

EXCHANGE-BY-TELEPHONE. Instructions for exchanges between participating funds
which are part of the Trust may be given by calling a broker or by calling the
Equity Funds. Call 1-800-SHAWMUT to speak with a broker, or for referral to a
broker serving your area. To utilize the exchange-by-telephone service, a
shareholder must complete an authorization form permitting a Shawmut Fund to
honor telephone instructions. The authorization is included in the shareholder
account application. Investment Shares may be exchanged by telephone only
between fund accounts having identical registrations. Exchange instructions
given by telephone may be electronically recorded.

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

Telephone exchange instructions must be received before 4:00 p.m. (Eastern
time) for Investment 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 may have
difficulty in making exchanges by telephone through a broker or the Equity
Funds during times of drastic economic or market changes. If a shareholder
cannot contact a broker or the Equity Funds by telephone, it is recommended
that an exchange request be made in writing and sent by overnight mail to The
Shawmut Funds, c/o Transfer Agency, 1001 Liberty Avenue, Pittsburgh,
Pennsylvania 15222-3779.

If reasonable procedures are not followed by the Equity Funds, they may be
liable for losses due to unauthorized or fraudulent telephone instructions.

REDEEMING SHARES

YOU CAN REDEEM INVESTMENT SHARES BY MAIL OR TELEPHONE. TO ENSURE YOUR SHARES
ARE REDEEMED EXPEDITIOUSLY, PLEASE FOLLOW THE PROCEDURES EXPLAINED BELOW.

The Equity Funds redeem Investment Shares at their net asset value next
determined after Federated Services Company receives the redemption request.
Redemptions will be made on days on which the Equity Funds compute their net
asset value. Requests for redemptions can be made by telephone or in writing by
contacting your broker or directly from the Equity Funds. Redemption requests
received prior to 4:00 p.m. (Eastern time) will be effected on the same
business day.

THROUGH A BROKER

Shareholders may redeem Investment Shares by calling their broker to request
the redemption. Investment Shares will be redeemed at the net asset value next
determined after Federated Services Company receives the redemption request.
The broker is responsible for promptly submitting redemption requests and for
maintaining proper written records of redemption instructions received from the
Equity Funds' shareholders. In order to effect a redemption on the same
business day as a request, the broker is responsible for the timely
transmission of the redemption request to the appropriate Equity Fund.

Before the broker may request redemption by telephone on behalf of a
shareholder, an authorization form permitting the Equity Funds to accept
redemption requests by telephone must first be completed. This authorization is
included in the shareholder account application. Redemption instructions given
by telephone may be electronically recorded. In the event of drastic economic
or market changes, a shareholder may experience difficulty in redeeming by
telephone. If such a case should occur, it is recommended that a redemption
request be made in writing and sent by overnight mail to The Shawmut Funds, c/o
Transfer Agency, 1001 Liberty Avenue, Pittsburgh, Pennsylvania 15222-3779.

If reasonable procedures are not followed by the Equity Funds, they may be
liable for losses due to unauthorized or fraudulent telephone instructions.

DIRECTLY FROM THE EQUITY FUNDS

BY MAIL. A shareholder may redeem Investment Shares by sending a written
request to The Shawmut Funds, c/o Transfer Agency, 1001 Liberty Avenue,
Pittsburgh, Pennsylvania 15222-3779. The written request should include the
shareholder's name, the Equity Funds' name and class of shares name, 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. Shareholders should call
the Equity Funds for assistance in redeeming by mail.

SIGNATURES. 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 the Equity Funds, 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 the Bank
Insurance Fund, which is administered by the Federal Deposit Insurance
Corporation ("FDIC");

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

a savings bank or savings and loan association whose deposits are insured by
the Savings Association Insurance Fund, which is administered by the FDIC;
or
any other "eligible guarantor institution," as defined in the Securities
Exchange Act of 1934.

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

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

RECEIVING PAYMENT

Redemption payments will generally be made directly to the shareholder's
account with Shawmut Bank. This deposit is normally made within one
business day, but in no event more than seven days, after the redemption
request, provided the transfer agent has received payment from the
shareholder. The net asset value of Investment Shares redeemed is
determined, and dividends, if any, are paid up to and including, the day
prior to the day that a redemption request is processed. Pursuant to
instructions from a broker, redemption proceeds may be transferred from a
shareholder account by check or by wire.

BY CHECK. Normally, a check for the proceeds is mailed within one business
day, but in no event more than seven days, after receipt of a proper
redemption request provided the transfer agent has received payment for
Investment Shares from the shareholder.

BY WIRE. Requests to wire proceeds from redemptions received before 4:00
p.m. (Eastern time) will be honored the following business day after a
broker receives proper instructions. Applicable charges are imposed on a
shareholder's account maintained with Shawmut Bank.

ACCOUNTS WITH LOW BALANCES

Due to the high cost of maintaining accounts with low balances, the Equity
Funds may redeem shares in any account and pay the proceeds to the
shareholder if the account balance falls below a required minimum of
$1,000, or $500 in the case of retirement plan accounts. This requirement
does not apply, however, if the balance falls below $1,000 or $500,
respectively, because of changes in an Equity 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.

SYSTEMATIC WITHDRAWAL PROGRAM

Shareholders who desire to receive payments of a predetermined amount may
take advantage of the Systematic Withdrawal Program. Under this program,
Investment Shares are redeemed to provide for periodic withdrawal payments
in an
amount directed by the shareholder. Depending on the amount of the
withdrawal payments, the amount of dividends paid and capital gains
distributions with respect to Investment Shares, and the fluctuation of the
net asset value of Investment Shares redeemed under this program,
redemptions may reduce, and eventually deplete, the shareholder's
investment in the Equity Funds. For this reason, payments under this
program should not be considered as yield or income on the shareholder's
investment in the Equity Funds' Investment Shares. 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 a broker. Because Investment Shares are sold with a sales load, it
is not advisable for shareholders to be purchasing Investment Shares of the
Equity Funds while participating in this program.

REDEMPTION IN KIND

The Equity Funds are obligated to redeem Investment Shares solely in cash
up to $250,000 or 1% of the net asset value of each Equity Fund, whichever
is less, for any one shareholder within a 90-day period.

Any redemption beyond this amount will also be in cash unless the Trustees
determine that further cash payments will have a material adverse effect on
remaining shareholders. In such a case, the Equity Funds will pay all or a
portion of the remainder of the redemption in portfolio instruments, valued
in the same way as an Equity Fund determines net asset value. The portfolio
instruments will be selected in a manner that the Trustees deem fair and
equitable.

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

SHAREHOLDER INFORMATION

VOTING RIGHTS

EACH INVESTMENT SHARE OF AN EQUITY FUND GIVES THE SHAREHOLDER ONE VOTE IN
TRUSTEE ELECTIONS AND OTHER MATTERS SUBMITTED TO SHAREHOLDERS OF THE TRUST FOR
VOTE.

All shares 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 Trust or an Equity Fund's
operation and for the election of Trustees under certain circumstances.

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 outstanding
shares of the Trust.

MASSACHUSETTS PARTNERSHIP LAW

Under certain circumstances, shareholders may be held personally liable as
partners under Massachusetts law for acts or obligations of the Trust on behalf
of an Equity Fund. To protect shareholders of an Equity Fund, the Trust has
filed legal documents with Massachusetts that expressly disclaim the liability
of shareholders of an Equity Fund for 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 on
behalf of an Equity Fund.

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

EFFECT OF BANKING LAWS

Shawmut Bank believes, based upon the advice of its counsel, that it may
perform the services for the Equity Funds 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 Shawmut Bank from continuing to perform all or a part of the above
services for its customers and/or the Equity Funds. 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 the Equity Funds may occur, including
possible termination of any automatic or other Equity Fund share investment and
redemption services then being provided by Shawmut Bank. It is not expected
that existing shareholders would suffer any adverse financial consequences (if
another adviser with equivalent abilities to Shawmut Bank is found) as a result
of any of these occurrences.

TAX INFORMATION

FEDERAL INCOME TAX

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

Each Equity Fund will be treated as a single, separate entity for federal
income tax purposes so that income (including capital gains) and losses
realized by The Shawmut Funds' other portfolios will not be combined for tax
purposes with those realized by each Equity 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 Investment Shares.

Shareholders are urged to consult their own tax advisers regarding the status
of their accounts under state and local tax laws.

OTHER CLASSES OF SHARES

The Equity Funds offer a separate class of shares known as Trust Shares. Trust
Shares of each of the Equity Funds are sold primarily to accounts for which
Shawmut Bank, N.A., or its affiliates, act in a fiduciary or agency capacity,
and, with respect to the Quantitative Equity Fund, to customers of Marque
Millenium Group Limited. Trust Shares are sold at net asset value, without a
sales load, and without a Rule 12b-1 Plan. Investments in Trust Shares are
subject to a minimum initial investment of $1,000.

The amount of dividends payable to Trust Shares will exceed that of 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 shares.

PERFORMANCE INFORMATION

FROM TIME TO TIME THE EQUITY FUNDS ADVERTISE THEIR TOTAL RETURN AND YIELD FOR
INVESTMENT SHARES.

Total return represents the change, over a specified period of time, in the
value of an investment in Investment Shares 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 yields of Investment Shares of the Equity Funds are calculated by dividing
the net investment income per Investment Share (as defined by the Securities
and Exchange Commission) earned by the Equity Funds over a thirty-day period by
the maximum offering price per Investment Share 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 Investment Shares and,
therefore, may not correlate to the dividends or other distributions paid to
shareholders.

Total return and yield will be calculated separately for Trust Shares and
Investment Shares. Because Investment Shares are subject to a sales load and a
12b-1 fee, the total return and yield for Trust Shares, for the same period,
will exceed that of Investment Shares.

The performance information for Investment Shares reflects the effect of the
maximum sales load which, if excluded, would increase the total return and
yield.

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

Further information about the performance of the Equity Funds is contained in
the Trust's Combined Annual Report dated October 31, 1994, which can be
obtained free of charge.

INVESTMENT ADVISER
Shawmut Bank, N.A.
One Federal Street
Boston, MA 02211

ADMINISTRATOR
Federated Administrative Services
Federated Investors Tower
Pittsburgh, PA 15222-3779

CUSTODIAN
Shawmut Bank, N.A.
One Federal Street
Boston, MA 02211

TRANSFER AGENT
Federated Services Company
Federated Investors Tower
Pittsburgh, PA 15222-3779

DISTRIBUTOR
Federated Securities Corp.
Federated Investors Tower
Pittsburgh, PA 15222-3779

LEGAL COUNSEL
Dickstein, Shapiro & Morin, L.L.P.
2101 L Street, N.W.
Washington, D.C. 20037

Houston, Houston & Donnelly
2510 Centre City Tower
Pittsburgh, PA 15222

SHAWMUT
MONEY MARKET FUNDS
PRIME MONEY MARKET
CONNECTICUT MUNICIPAL MONEY MARKET
MASSACHUSETTS MUNICIPAL MONEY MARKET

SHAWMUT INCOME FUNDS
LIMITED TERM INCOME
INTERMEDIATE GOVERNMENT INCOME
FIXED INCOME
CONNECTICUT INTERMEDIATE MUNICIPAL INCOME
MASSACHUSETTS INTERMEDIATE MUNICIPAL INCOME

CALL 1-800-SHAWMUT FOR MORE INFORMATION
ON THE SHAWMUT FAMILY OF FUNDS

820482206
820482305
820482701
820482768
3120919AR (12/94)

SHAWMUT
EQUITY FUNDS
PROSPECTUS

TRUST SHARES

GROWTH AND INCOME EQUITY
GROWTH EQUITY
SMALL CAPITALIZATION EQUITY
QUANTITATIVE EQUITY

December 31, 1994

SHAWMUT GROWTH AND INCOME EQUITY FUND
SHAWMUT GROWTH EQUITY FUND
SHAWMUT SMALL CAPITALIZATION EQUITY FUND
The Shawmut Equity Funds SHAWMUT QUANTITATIVE EQUITY FUND
Trust Shares--Combined Prospectus

The shares offered by this prospectus represent interests in Trust Shares of
the equity portfolios (collectively, the "Equity Funds" or individually, as
appropriate in context, the "Fund") of The Shawmut Funds (the "Trust"), an
open-end management investment company (a mutual fund). In addition to the
Equity Funds, the Trust consists of the following separate investment
portfolios, each having distinct investment objectives and policies:

<TABLE>
<CAPTION>
<S> <C>
INCOME FUNDS MONEY MARKET FUNDS
Shawmut Limited Term
Income Fund Shawmut Prime Money Market Fund
Shawmut Intermediate
Government Income Fund Shawmut Connecticut Municipal Money Market Fund
Shawmut Fixed
Income Fund Shawmut Massachusetts Municipal Money Market Fund
Shawmut Connecticut Intermediate Municipal Income
Fund
Shawmut Massachusetts Intermediate Municipal
Income Fund
</TABLE>

THE SHARES OFFERED BY THIS PROSPECTUS ARE NOT DEPOSITS OR OBLIGATIONS OF
SHAWMUT BANK, ARE NOT ENDORSED OR GUARANTEED BY SHAWMUT BANK, AND ARE NOT
INSURED BY THE FEDERAL DEPOSIT INSURANCE CORPORATION, THE FEDERAL RESERVE BOARD
OR ANY OTHER GOVERNMENT AGENCY. INVESTMENTS IN THESE SHARES INVOLVES INVESTMENT
RISKS, INCLUDING FLUCTUATIONS IN VALUE AND EARNINGS AND THE POSSIBLE LOSS OF
PRINCIPAL INVESTED.

Prospectus dated December 31, 1994

Table of Contents

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

SYNOPSIS..................................................................... 2
- --------------------------------------------------------------------------------

EXPENSE SUMMARY.............................................................. 3
- --------------------------------------------------------------------------------

FINANCIAL HIGHLIGHTS......................................................... 4
- --------------------------------------------------------------------------------

GENERAL INFORMATION.......................................................... 6
- --------------------------------------------------------------------------------

THE SHAWMUT PORTFOLIOS....................................................... 6

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

OBJECTIVES AND POLICIES...................................................... 6
- --------------------------------------------------------------------------------

INVESTMENTS, STRATEGIES, AND RISKS........................................... 8
- --------------------------------------------------------------------------------

ADMINISTRATION............................................................... 12
- --------------------------------------------------------------------------------

NET ASSET VALUE.............................................................. 16
- --------------------------------------------------------------------------------

INVESTING IN SHARES.......................................................... 16

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

EXCHANGE PRIVILEGE........................................................... 19
- --------------------------------------------------------------------------------

REDEEMING SHARES............................................................. 20
- --------------------------------------------------------------------------------

SHAREHOLDER INFORMATION...................................................... 22
- --------------------------------------------------------------------------------

EFFECT OF BANKING LAWS....................................................... 23
- --------------------------------------------------------------------------------

TAX INFORMATION.............................................................. 23
- --------------------------------------------------------------------------------

OTHER CLASSES OF SHARES...................................................... 24
- --------------------------------------------------------------------------------

PERFORMANCE INFORMATION...................................................... 24
- --------------------------------------------------------------------------------

Synopsis
INVESTMENT OBJECTIVE

The Shawmut Funds offer you a convenient, affordable way to participate in
separate, professionally managed portfolios of securities. This prospectus
relates only to the Equity Funds of the Trust.

EQUITY FUNDS

SHAWMUT GROWTH AND INCOME EQUITY FUND

SHAWMUT GROWTH EQUITY FUND

("Growth Equity Fund") seeks long-term capital appreciation by investing in a
diversified portfolio of growth-oriented equity securities. The Growth Equity
Fund defines growth-oriented equity securities as securities of companies that
are projected by the investment adviser, based upon traditional research
techniques, to show earnings growth superior to the Standard & Poor's 500
Index.

SHAWMUT SMALL CAPITALIZATION EQUITY FUND

SHAWMUT QUANTITATIVE EQUITY FUND

A minimum initial investment of $1,000 is required. Subsequent investments must
be in amounts of at least $100, as described in this prospectus in the section
entitled "Minimum Investment Required." Trust Shares are currently sold at net
asset value and are redeemed at net asset value without a sales load.

FUND MANAGEMENT

The Equity Funds' investment adviser is Shawmut Bank, N.A., which makes
investment decisions for the Equity Funds. The sub-adviser to the Quantitative
Equity Fund is Marque Millennium Group Limited.

SHAREHOLDER SERVICES

When you become a shareholder, you can easily obtain information about your
account by calling your Shawmut Bank trust officer.

THE SHAWMUT EQUITY FUNDS
Expense Summary
Trust Shares
<TABLE>
<S> <C> <C> <C> <C>
PORTFOLIOS

<CAPTION>
GROWTH AND SMALL
INCOME GROWTH CAPITALIZATION QUANTITATIVE
EQUITY EQUITY EQUITY EQUITY
FUND FUND FUND FUND
<S> <C> <C> <C> <C>
SHAREHOLDER TRANSACTION EXPENSES
Maximum Sales Load Imposed on Purchases
(as a percentage of offering price) None None None None
Maximum Sales Load Imposed on Reinvested Dividends
(as a percentage of offering price) None None None None
Contingent Deferred Sales Charge (as a percentage
of original purchase price or redemption
proceeds, as applicable) None None None None
Redemption Fee (as a percentage of amount
redeemed, if applicable) None None None None
Exchange Fee None None None None
ANNUAL TRUST SHARES OPERATING EXPENSES
(As a percentage of average net assets)
Management Fee (after waivers)(1) 0.80% 0.50% 0.75% 0.00%
12b-1 Fees None None None None
Total Other Expenses(2) 0.24% 0.68% 0.31% 1.50%
Total Trust Shares Operating Expenses (after
waivers and reimbursements)(3) 1.04% 1.18% 1.06% 1.50%
</TABLE>

(2) Other expenses have been reduced to reflect the voluntary waiver by the
custodian for all funds; reimbursement by the adviser for the Growth Equity
Fund; and the voluntary waiver by the administrator and reimbursement by the
adviser for the Quantitative Equity Fund.

(3) Absent the voluntary waivers and reimbursements explained in the above
footnotes, the Trust Shares Operating Expenses are 1.24% for the Growth and
Income Equity Fund; 2.11% for the Growth Equity Fund; 1.34% for the Small
Capitalization Equity Fund; and 8.62% for the Quantitative Equity Fund.

The purpose of this table is to assist an investor in understanding the various
costs and expenses that a shareholder of Trust Shares will bear, either directly
or indirectly. For more complete descriptions of the various costs and expenses,
see "Administration" and "Investing in Shares." Wire-transferred redemptions of
less than $5,000 may be subject to additional fees.

EXAMPLE
You would pay the following expenses on a $1,000 investment assuming (1) 5%
annual return and (2) redemption at the end of each time period. As noted in the
table above, the Equity Funds charge no contingent deferred sales charge.
<TABLE>
<CAPTION>
1 year 3 years 5 years 10 years
<S> <C> <C> <C> <C>
Growth and Income Equity Fund............................................. $11 $33 $57 $127
Growth Equity Fund........................................................ $12 $37 $65 $143
Small Capitalization Equity Fund.......................................... $11 $34 $58 $129
Quantitative Equity Fund.................................................. $15 $47 $82 $179
</TABLE>

THE ABOVE EXAMPLES SHOULD NOT BE CONSIDERED A REPRESENTATION OF PAST OR FUTURE
EXPENSES. ACTUAL EXPENSES MAY BE GREATER OR LESS THAN THOSE SHOWN.

The information set forth in the foregoing table and example relates only to
Trust Shares of the Equity Funds. The Equity Funds also offer another class of
shares called Investment Shares. Trust Shares and Investment Shares are subject
to certain of the same expenses; however, Investment Shares are subject to a
12b-1 fee of up to .50 of 1% of average net assets. See "Other Classes of
Shares."

SHAWMUT EQUITY FUNDS
Financial Highlights

(FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD)

The following table has been audited by Price Waterhouse LLP, the Equity Funds'
independent accountants whose report thereon dated December 16, 1994, is
included in the Annual Report of The Shawmut Funds for the fiscal year ended
October 31, 1994, which is incorporated by reference into the Statement of
Additional Information. This table should be read in conjunction with the
Equity Funds' financial statements and notes thereof, which may be obtained
from the Equity Funds.
<TABLE>
<CAPTION>
DISTRIBUTIONS
NET REALIZED DIVIDENDS TO
AND TO SHAREHOLDERS
NET ASSET UNREALIZED TOTAL SHAREHOLDERS FROM NET
YEAR ENDED VALUE, NET GAIN/(LOSS) FROM FROM NET REALIZED GAIN
OCTOBER BEGINNING INVESTMENT ON INVESTMENT INVESTMENT ON INVESTMENT
31, OF PERIOD INCOME INVESTMENTS OPERATIONS INCOME TRANSACTIONS
<S> <C> <C> <C> <C> <C> <C>

* For the period from February 12, 1993 (date of initial public offering) to
October 31, 1993.
** For the period from August 4, 1994 (date of initial public investment) to
October 31, 1994.

*** For the period from December 14, 1992 (date of initial public investment)
to October 31, 1993.

+ 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.

(See Notes which are an integral part of the Financial Statements)

Further information about the Equity Funds' performance is contained in the
Trust's combined annual report dated October 31, 1994, which can be obtained
free of charge.

<TABLE>
<CAPTION>
NET ASSET NET NET ASSETS, PORTFOLIO
TOTAL VALUE, END TOTAL INVESTMENT EXPENSE WAIVER/ END OF PERIOD TURNOVER
DISTRIBUTIONS OF PERIOD RETURN+ EXPENSES INCOME REIMBURSEMENT(B) (000 OMITTED) RATE
<S> <C> <C> <C> <C> <C> <C> <C>
(0.17) $ 10.69 6.20% 1.25%(a) 1.77%(a) 0.53%(a) $ 16,280 38%
(0.48) $ 11.15 9.12% 1.29% 2.06% 0.45% $ 22,244 73%
(0.004) $ 10.49 4.84% 1.37%(a) (0.10%)(a) 0.72%(a) $ 4,631 71%
(0.198) $ 10.69 3.86% 1.43% 0.09% 1.18% $ 5,846 73%
0.000 $ 11.21 6.56% 1.33%(a) (0.19%)(a) 0.54%(a) $ 15,014 29%
(0.32) $ 11.06 1.64% 1.31% (0.10%) 0.53% $ 19,764 29%
(0.07) $ 10.06 0.94% 1.75%(a) 2.50%(a) 7.37%(a) $ 375 0%
(0.18) $ 10.69 8.80% 0.98%(a) 2.11%(a) 0.27%(a) $ 147,090 38%
(0.51) $ 11.15 9.45% 1.04% 2.31% 0.20% $ 156,827 73%
(0.019) $ 10.49 5.09% 1.06%(a) 0.26%(a) 0.47%(a) $ 20,787 71%
(0.228) $ 10.69 4.16% 1.18% 0.34% 0.93% $ 16,970 73%
(0.002) $ 11.21 12.12% 1.01%(a) 0.02%(a) 0.28%(a) $ 100,382 29%
(0.33) $ 11.07 1.86% 1.06% 0.15% 0.28% $ 101,905 29%
(0.07) $ 10.06 0.94% 1.50%(a) 2.75%(a) 7.12%(a) $ 3,161 0%
</TABLE>

GENERAL INFORMATION

The Trust was established as a Massachusetts business trust under a
Declaration of Trust dated July 16, 1992. The Declaration of Trust permits the
Trust to offer separate series of shares 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 Board of Trustees
(the "Trustees") has established two classes of shares of each of the Equity
Funds, known as Trust Shares and Investment Shares. This prospectus relates
only to Trust Shares of the Equity Funds. Trust Shares of each of the Equity
Funds are sold primarily to accounts for which Shawmut Bank, N.A., or its
affiliates, act in a fiduciary or agency capacity and, with respect to the
Quantitative Equity Fund, to customers of Marque Millenium Group Limited.

A minimum initial investment of $1,000 is required. Subsequent investments
must be in amounts of at least $100, as described in this prospectus in the
section entitled "Minimum Investment Required." Trust Shares are currently
sold at net asset value and are redeemed at net asset value without a sales
load imposed by the Equity Funds.

THE SHAWMUT PORTFOLIOS

OBJECTIVES AND POLICIES

GROWTH AND INCOME EQUITY FUND

INVESTMENT OBJECTIVE

The investment objective of the Growth and Income Equity Fund is to provide a
relatively high total return through long-term capital appreciation and current
income. The investment objective cannot be changed without approval of
shareholders. The Growth and Income Equity Fund generally looks to achieve a
yield that exceeds the composite dividend yield of securities included in the
Standard & Poor's 500 Index. While there is no assurance that the Growth and
Income Equity Fund will achieve its investment objective, it endeavors to do so
by following the investment policies described in this prospectus.

INVESTMENT POLICIES

The investment policies may be changed by the Trustees without shareholder
approval. Shareholders will be notified before any material change in these
policies becomes effective.

ACCEPTABLE INVESTMENTS

UNDER NORMAL MARKET CIRCUMSTANCES, THE GROWTH AND INCOME EQUITY FUND WILL
INVEST AT LEAST 65% OF ITS ASSETS IN GROWTH AND INCOME EQUITY SECURITIES.

In addition, the Growth and Income Equity Fund may invest as described in this
prospectus.

GROWTH EQUITY FUND

INVESTMENT OBJECTIVE

INVESTMENT POLICIES

The investment policies may be changed by the Trustees without shareholder
approval. Shareholders will be notified before any material change in these
policies becomes effective.

ACCEPTABLE INVESTMENTS

UNDER NORMAL MARKET CIRCUMSTANCES, THE GROWTH EQUITY FUND WILL INVEST AT LEAST
65% OF ITS ASSETS IN GROWTH-ORIENTED EQUITY SECURITIES.

In addition, the Growth Equity Fund may invest as described in this prospectus.

SMALL CAPITALIZATION EQUITY FUND

INVESTMENT OBJECTIVE

INVESTMENT POLICIES

The investment policies may be changed by the Trustees without shareholder
approval. Shareholders will be notified before any material change in these
policies becomes effective.

ACCEPTABLE INVESTMENTS

In addition, the Small Capitalization Equity Fund may invest as described in
this prospectus.

QUANTITATIVE EQUITY FUND

INVESTMENT OBJECTIVE

INVESTMENT POLICIES

The investment policies described below may be changed by the Trustees without
shareholder approval. Shareholders will be notified before any material change
in these policies becomes effective.

ACCEPTABLE INVESTMENTS

UNDER NORMAL MARKET CIRCUMSTANCES, THE QUANTITATIVE EQUITY FUND WILL INVEST AT
LEAST 65% OF ITS ASSETS IN EQUITY SECURITIES.

The Quantitative Equity Fund will invest its assets in a diversified portfolio
of equity securities issued by companies with a market value capitalization in
excess of $250 million and a minimum daily average trading volume as
established by the Sub-Adviser, from time to time. To select common stocks for
the Quantitative Equity Fund, the Sub-Adviser uses a quantitative computer
valuation model to evaluate the relative attractiveness of common stocks listed
on North American
stock exchanges or traded in the over-the-counter market. Stocks are selected
based upon their price momentum, as measured by combining four quantitative
disciplines: price trend analysis, velocity of price movements (the speed at
which securities prices may change), analysis of price compared to moving
averages, and current price and volume activity (for valuation judgments).
Then, the selected stocks are reviewed based upon fundamental characteristics,
such as present and historical price-to-earnings and market price-to-book
ratios; changes in analysts' earnings forecasts; and positive or negative
earnings realized. Since the primary analysis is of price momentum rather than
these fundamentals, the Quantitative Equity Fund will include stocks with not
only capital growth potential, but also with prospects for growth in earnings
and dividends (value characteristics).

In addition, the Quantitative Equity Fund may invest as described in this
prospectus.

INVESTMENTS, STRATEGIES, AND RISKS

COMMON STOCK. As described above, the Equity Funds invest primarily in equity
securities. As with other mutual funds that invest primarily in equity
securities, the Equity Funds are subject to market risks. That is, the
possibility exists that common stocks will decline over short or even extended
periods of time, and 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 Equity Funds, other than
the Quantitative Equity Fund, invests primarily in growth-oriented equity
securities (Growth Equity Fund and Growth and Income Equity Fund) or in small
capitalization stocks (Small Capitalization Equity Fund), there are some
additional risk factors associated with investment in the Equity Funds.
Growth-oriented stocks may include issuers with smaller capitalization. Small
capitalization stocks have historically been more volatile in price than larger
capitalization stocks, such as those included in the Standard & Poor's 500
Index. This is because, among other things, smaller companies have a lower
degree of liquidity in the equity market and tend to have a greater sensitivity
to changing economic conditions. Further, in addition to exhibiting greater
volatility, these stocks may, to some degree, fluctuate independently of the
stocks of large companies. That is, the stock of small capitalization companies
may decline in price as the price of large company stocks rises or vice versa.
Therefore, investors should expect that the Equity Funds will be more volatile
than, and may fluctuate independently of, broad stock market indices such as
the Standard & Poor's 500 Index.

CONVERTIBLE SECURITIES. Convertible securities are fixed income securities
which may be exchanged or converted into a predetermined number of the issuer's
underlying common stock at the option of the holder during a specified time
period. Convertible securities may take the form of convertible preferred
stock, convertible bonds or debentures, units consisting of "usable" bonds and
warrants or a combination of the features of several of these securities. The
Equity Funds invest in convertible bonds rated "BB" or higher by Standard &
Poor's Ratings Group or Fitch Investors Service, Inc., or "Ba" or higher by
Moody's Investors Service, Inc., at the time of investment. Securities rated
"BB" by Standard & Poor's Ratings Group or Fitch Investors Service, Inc.,
or "Ba" by Moody's
Investors Service, Inc., either have speculative characteristics or are
predominantly speculative with respect to capacity to pay interest and repay
principal in accordance with the terms of the obligation. Debt obligations that
are not determined to be investment grade are high-yield, high-risk bonds,
typically subject to greater market fluctuations, and securities in the lowest
rating category may be in danger of loss of income and principal due to an
issuer's default. To a greater extent than investment-grade bonds, the value of
lower-rated bonds tends to reflect short-term corporate, economic, and market
developments, as well as investor perceptions of the issuer's credit quality.
In addition, lower-rated bonds may be more difficult to dispose of or to value
than high-rated, lower-yielding bonds. The investment adviser or sub-adviser,
as appropriate, attempts to reduce the risks described above through
diversification of the portfolio and by credit analysis of each issuer, as well
as by monitoring broad economic trends and corporate and legislative
developments. If a convertible bond is rated below "BB" or "Ba" according to
the characteristics set forth here after a Fund has purchased it, the Fund is
not required to drop the convertible bond from the portfolio, but will consider
appropriate action. The investment characteristics of each convertible security
vary widely, which allows convertible securities to be employed for different
investment objectives. A description of the rating categories is contained in
the Appendix to the Combined Statement of Additional Information.

SECURITIES OF FOREIGN ISSUERS. The Equity Funds may invest in the securities
of foreign issuers which are freely traded on United States securities
exchanges or in the over-the-counter market in the form of depository receipts.
Securities of a foreign issuer may present greater risks in the form of
nationalization, confiscation, domestic marketability, or other national or
international restrictions. As a matter of practice, the Equity Funds will not
invest in the securities of a foreign issuer if any such risk appears to the
investment adviser to be substantial.

OPTIONS AND FUTURES CONTRACTS. The Equity Funds may buy and sell options and
futures contracts to manage their respective individual exposure to changing
interest rates, security prices, and currency exchange rates. Some options and
futures strategies, including selling futures, buying puts, and writing calls,
tend to hedge the Equity Funds' respective investments against price
fluctuations. Other strategies, including buying futures, writing puts, and
buying calls, tend to increase market exposure. Options and futures may be
combined with each other or with forward contracts in order to adjust the risk
and return characteristics of the overall strategy. The Equity Funds may invest
in options and futures based
on any type of security, index, or currency, including options and futures
traded on foreign exchanges and options not traded on exchanges.

Each of the Equity Funds will not hedge more than 20% of its respective total
assets by selling futures, buying puts, and writing calls under normal
conditions. In addition, each of the Equity Funds will not buy futures or write
puts whose underlying value exceeds 20% of its respective total assets, and the
Equity Funds will not buy calls with a value exceeding 5% of its respective
total assets.

STOCK INDEX FUTURES, SWAP AGREEMENTS, INDEXED SECURITIES, AND OPTIONS. The
Equity Funds may utilize stock index futures contracts, options, swap
agreements, indexed securities, and options on futures contracts, subject to
the limitation that the value of these futures contracts, swap agreements,
indexed securities, and options will not exceed 20% of each of the Equity
Funds' total assets. Also, each Equity Fund will not purchase options to the
extent that more than 5% of the value of the Equity Fund's total assets would
be invested in premiums on open put option positions. In addition, each Fund
does not intend to invest more than 5% of the market value of its total assets
in each of the following: futures contracts, swap agreements, and indexed
securities. When an Equity Fund enters into a swap agreement, assets of the
Fund equal to the value of the swap agreement will be segregated by the Fund.

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

The Equity Funds may dispose of a commitment prior to settlement if the adviser
deems it appropriate to do so. In addition, the Equity Funds may enter into
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 Equity Funds may realize short-term profits or
losses upon the sale of such commitments.

TEMPORARY INVESTMENTS. In such proportions as, in the judgment of its
investment adviser, prevailing market conditions warrant, each Equity Fund
may, for temporary defensive purposes, invest in:

short-term money market instruments rated in one of the top two rating
categories by a nationally recognized statistical rating organization;

securities issued and/or guaranteed as to payment of principal and interest
by the U.S. government, its agencies, or instrumentalities; and
repurchase agreements.

REPURCHASE AGREEMENTS. The U.S. government securities and other securities
in which each Equity Fund invests 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 an Equity 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
an Equity Fund, the Fund could receive less than the repurchase price on any
sale of such securities.

INVESTMENT LIMITATIONS

THE EQUITY FUNDS FOLLOW A NUMBER OF GUIDELINES IN MANAGING THEIR PORTFOLIOS IN
ORDER TO LIMIT INVESTMENT RISKS.

Each Equity Fund will not:

borrow money directly or through reverse repurchase agreements (arrangements
in which an Equity Fund sells a portfolio instrument for a percentage of its
cash value with an arrangement to buy it back on a set date) or pledge
securities except, under certain circumstances, an Equity Fund may borrow up
to one-third of the value of its total assets and pledge up to 10% of the
value of its total assets to secure such borrowings; or

with respect to 75% of the value of its total assets, invest more than 5% in
securities of one issuer (other than cash, cash items, or securities issued
or guaranteed by the government of the United States or its agencies or
instrumentalities and repurchase agreements collateralized by such
securities), or acquire more than 10% of the outstanding voting securities of
any one issuer.

The above investment limitations cannot be changed without shareholder
approval. The following limitation, however, may be changed by the Trustees
without shareholder approval. Shareholders will be notified before any
material change in this limitation becomes effective.

Each Equity Fund will not:

invest more than 15% of its total assets in securities subject to
restrictions on resale under the Securities Act of 1933 (except for
commercial paper issued under Section 4(2) of the Securities Act of 1933 and
certain other securities which meet the criteria for liquidity as
established by the Trustees).

ADMINISTRATION

MANAGEMENT OF THE SHAWMUT FUNDS

BOARD OF TRUSTEES

THE SHAWMUT FUNDS ARE MANAGED BY A BOARD OF TRUSTEES.

INVESTMENT ADVISER

PURSUANT TO AN INVESTMENT ADVISORY CONTRACT WITH THE TRUST, INVESTMENT
DECISIONS FOR THE EQUITY FUNDS ARE MADE BY SHAWMUT BANK, N.A. (THE "ADVISER"),
SUBJECT TO DIRECTION BY THE TRUSTEES.

ADVISORY FEES

The Adviser receives an annual investment advisory fee equal to 1.00% of each
of the Equity Fund's average daily net assets. The fee paid by the Equity
Funds, while higher than the advisory fee paid by other mutual funds in
general, is with the anticipated advisory fee waivers, comparable to fees paid
by mutual funds with similar objectives and policies.

The Adviser has undertaken to waive a portion of its advisory fee, up to the
amount of the advisory fee, to reimburse each of the Equity Funds for operating
expenses in excess of limitations established by certain states. The Adviser
may further voluntarily waive a portion of its fee or reimburse the Equity
Funds for certain operating expenses. The Adviser can terminate such voluntary
waiver or reimbursement policy with any of the Equity Funds at any time at its
sole discretion.

ADVISER'S BACKGROUND

SHAWMUT BANK, N.A., A NATIONAL BANKING ASSOCIATION, AND ITS AFFILIATES HAVE
MANAGED COMMINGLED FUNDS FOR OVER FIFTY YEARS. AS OF OCTOBER 31, 1994, SHAWMUT
NATIONAL CORPORATION, THROUGH ITS SUBSIDIARIES INCLUDING SHAWMUT BANK, N.A.,
MANAGED MORE THAN $15 BILLION IN TOTAL ASSETS. SHAWMUT BANK, N.A., HAS SERVED
AS AN ADVISER TO MUTUAL FUNDS SINCE THE INCEPTION OF THE SHAWMUT FUNDS ON
DECEMBER 1, 1992.

Shawmut Bank, N.A., a national banking association, along with Shawmut Bank
Connecticut, National Association, and Shawmut Bank NH, are the principal
subsidiaries of Shawmut National Corporation, a super-regional bank holding
company formed on February 29, 1988, and based in southern New England. Shawmut
National Corporation serves consumers through its network of banking offices
with a full range of deposit and lending products, as well as investment
services. As part of their regular banking operations, Shawmut Bank may make
loans to public companies. Thus, it may be possible, from time to time, for the
Equity Funds to hold or acquire the securities of issuers which are also
lending clients of Shawmut Bank. The lending relationship will not be a factor
in the selection of securities. The principal executive offices of the
investment adviser are located at One Federal Street, Boston, Massachusetts
02211.

Philip Tasho has been responsible for managing the Growth Equity Fund since
November 1994. Mr. Tasho joined Shawmut Bank as a portfolio manager in June
1994. Prior to this, he had been employed as Managing Director-Equities with
the investment advisory subsidiary of a bank. Mr. Tasho received his B.A.
degree at Grinnell College, his M.B.A. at George Washington University, and is
also a Chartered Financial Analyst (C.F.A.)

Kenneth J. Garvey is the portfolio manager of the Quantitative Equity Fund. Mr.
Garvey is the Managing Director and co-founder of Marque Millennium Group
Limited, which serves as the sub-adviser to the Quantitative Equity Fund. Mr.
Garvey has served as a senior investment executive at several major investment
firms.

SUB-ADVISER

DISTRIBUTION OF EQUITY FUNDS' SHARES

FEDERATED SECURITIES CORP. IS THE PRINCIPAL DISTRIBUTOR FOR TRUST SHARES.

PAYMENTS TO FINANCIAL INSTITUTIONS. The distributor may pay financial
institutions a fee based on the average net asset value of shares of their
customers invested in an Equity Fund for providing administrative services. If
paid, this fee will be reimbursed by the Adviser and not by an Equity Fund.

The Adviser or its affiliates may also offer to pay a fee from their own assets
to financial institutions as financial assistance for providing substantial
marketing and sales support. The support may include sponsoring sales,
educational and training seminars for their employees, providing sales
literature, and engineering compute software programs that emphasize the
attributes of an Equity Fund. Such assistance will be predicated upon the
amount of shares the dealer sells or may sell, and/or upon the type and nature
of sales or operational support furnished by the financial institution. These
payments will be made by the Adviser and will not be made from the assets of an
Equity Fund.

ADMINISTRATION OF THE EQUITY FUNDS

<TABLE>
<CAPTION>
MAXIMUM
ADMINISTRATIVE AVERAGE AGGREGATED DAILY
FEE NET ASSETS OF THE TRUST
<S> <C>
.150 of 1% First $250 million
.125 of 1% Next $250 million
.100 of 1% Next $250 million
.075 of 1% Over $750 million
</TABLE>

The administrative fee received by FAS during any fiscal year shall be at
least $50,000 for each of the Equity Funds. FAS may voluntarily choose to
waive a portion of its fee.

TRANSFER AGENT, DIVIDEND DISBURSING AGENT, AND PORTFOLIO ACCOUNTING
SERVICES. Federated Services Company, Federated Investors Tower, Pittsburgh,
Pennsylvania 15222-3779, is transfer agent and dividend disbursing agent for
the Equity Funds. It also provides certain accounting and recordkeeping
services with respect to each of the Equity Funds' portfolio investments.

INDEPENDENT ACCOUNTANTS. The independent accountants for the Equity Funds are
Price Waterhouse LLP, 160 Federal Street, Boston, Massachusetts 02110.

EXPENSES OF THE EQUITY FUNDS AND TRUST SHARES

Holders of Trust Shares pay their allocable portion of the Equity Funds' and
Trust's expenses. The Trust expenses for which holders of Trust Shares pay
their allocable portion include, but are not limited to: the cost of organizing
the Trust and continuing its existence; registering the Trust with federal and
state securities authorities; Trustees' fees; auditors' fees; the cost of
meetings of Trustees; legal fees of the Trust; association membership dues; and
such non-recurring and extraordinary items as may arise.

The respective Equity Fund expenses for which holders of Trust Shares pay their
allocable portion include, but are not limited to: registering the Equity Funds
and shares of the Equity Funds; investment advisory services; taxes and
commissions; custodian fees; insurance premiums; auditors' fees; and such
non-recurring and extraordinary items as may arise.

At present, no expenses are allocated exclusively to the Trust Shares as a
class. However, the Trustees reserve the right to allocate certain other
expenses to holders of Trust Shares as they deem 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 Trust 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 Trust Shares; legal fees relating solely to Trust Shares; and Trustees' fees
incurred as a result of issues relating solely to Trust Shares.

Net Asset Value

THE TERM "NET ASSET VALUE" REFERS TO THE VALUE OF ONE EQUITY FUND SHARE.

Each Equity Fund's net asset value per Trust Share fluctuates. The net asset
value for Trust Shares is determined by adding the interest of the Trust Shares
in the market value of all securities and other assets of an Equity Fund,
subtracting the interest of the Trust Shares in the liabilities of an Equity
Fund and those attributable to Trust Shares, and dividing the remainder by the
total number of Trust Shares outstanding. The net asset value for Trust Shares
of an Equity Fund may differ from 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

YOU CAN BUY TRUST SHARES BY FEDERAL RESERVE WIRE, MAIL, OR TRANSFER, AS
EXPLAINED BELOW.

THROUGH SHAWMUT BANK. An investor may call their Shawmut Bank trust officer to
receive information and to place an order to purchase Trust Shares. Shawmut
Bank will purchase Trust Shares on behalf of investors and maintain all records
relating to the Trust Shares. Through its trust accounting systems, Shawmut
Bank provides shareholders of Trust Shares with detailed periodic statements
that integrate information regarding investments in the Equity Funds with other
Shawmut Bank investment services.

Orders placed through Shawmut Bank are considered received when payment is
converted to federal funds and the applicable Equity Fund is notified of the
purchase order. The completion of the purchase transaction will generally occur
within one business day after Shawmut Bank receives a purchase order. Purchase
orders must be received by Shawmut Bank before 4:00 p.m. (Eastern time) and
must be transmitted by Shawmut Bank to the applicable Equity Fund before 5:00
p.m. (Eastern time) in order for Trust Shares to be purchased at that day's
public offering price.

DIRECTLY FROM THE DISTRIBUTOR. An investor may place an order to purchase
Trust Shares directly from the distributor. To do so: complete and sign the new
account form available from the Equity Funds; complete an application for the
establishment of a trust account with Shawmut Bank; enclose a check made
payable to the full name of your desired portfolio (as appropriate) (see the
cover of the prospectus)--Trust Shares; and mail both to the Equity Funds,
Attention: Vice President, Securities Operations, OF0501, One Federal Street,
Boston, Massachusetts 02211. The order is considered received after a trust
account is established and the check is converted by Shawmut Bank into federal
funds. This is generally the next business day after Shawmut Bank receives the
check.

To purchase Trust Shares of the Equity Funds by wire, call 1-800-SHAWMUT. All
information needed will be taken over the telephone, and the order is
considered received when Shawmut Bank receives payment by wire. To request
additional information concerning purchases by wire, please contact Federated
Securities Corp., the Equity Funds' distributor, at
1-800-356-2805. Shares cannot be purchased by wire on any day which both
Shawmut Bank and the New York Stock Exchange and Federal Reserve Wire System
are not open for business.

MINIMUM INVESTMENT REQUIRED

THE MINIMUM INITIAL INVESTMENT IS $1,000.

The minimum initial investment in Trust Shares by an investor is $1,000.
Subsequent investments must be in amounts of at least $100. The Equity Funds
may waive the initial minimum investment for employees of Shawmut Bank and its
affiliates, from time to time.

WHAT SHARES COST

SHARES ARE SOLD AT THEIR NET ASSET VALUE NEXT DETERMINED AFTER AN ORDER IS
RECEIVED. THERE IS NO SALES LOAD IMPOSED BY THE EQUITY FUNDS UPON THE PURCHASE
OF TRUST SHARES.

SUBACCOUNTING SERVICES

Institutions are encouraged to open single master accounts. However, certain
institutions may wish to use the transfer agent's subaccounting system to
minimize their internal recordkeeping requirements. The transfer agent charges
a fee based on the level of subaccounting services rendered. Certain
institutions holding Trust Shares in a fiduciary, agency, custodial, or similar
capacity may charge or pass through subaccounting fees as part of or in
addition to normal trust or agency account fees. They may also charge fees for
other services provided which may be related to the ownership of Trust Shares.
This prospectus should, therefore, be read together with any agreement between
the customer and the institution with regard to the services provided, the fees
charged for those services, and any restrictions and limitations imposed.

CERTIFICATES AND CONFIRMATIONS

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

Detailed confirmations of each purchase or redemption are sent to Shawmut Bank
or other shareholders of record. Monthly statements are sent by Shawmut Bank to
its trust customers to report account activity during the previous month,
including dividends paid during the period.

DIVIDENDS

Dividends are declared and paid quarterly to all shareholders invested in each
Equity Fund on the record date.

CAPITAL GAINS

Capital gains realized by an Equity Fund, if any, will be distributed to that
Equity Fund's shareholders at least once every 12 months.

EXCHANGE PRIVILEGE

EXCHANGING SHARES. Shareholders may exchange Trust Shares, with a minimum net
asset value of $1,000, for shares of the same designated class of other funds
advised by Shawmut Bank.

The exchange privilege is available to shareholders residing in any state in
which the Fund shares being acquired may legally be sold. Upon receipt of
proper instructions and all necessary supporting documents, Trust Shares
submitted for exchange will be redeemed at the next-determined net asset value.
Written exchange instructions may require a signature guarantee. 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 exchange privilege may be modified or terminated at any time.
Shareholders will be notified of the modification or termination of the
exchange privilege. A shareholder may obtain further information on the
exchange privilege by calling their trust officer at Shawmut Bank.

EXCHANGE-BY-TELEPHONE. Instructions for exchanges between participating funds
which are part of the Trust may be given by telephone to their trust officer at
Shawmut Bank. To utilize the exchange-by-telephone service, a shareholder must
complete an authorization form permitting Shawmut Bank to instruct the Equity
Funds to honor telephone instructions. The authorization is included in Shawmut
Bank's trust account documentation. Trust Shares may be exchanged by telephone
only between trust accounts having identical registrations. Exchange
instructions given by telephone may be electronically recorded.

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

Telephone exchange instructions must be received before 4:00 p.m. (Eastern
time) for Trust 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 may have difficulty
in making exchanges by telephone through Shawmut Bank during times of drastic
economic or market changes. If a shareholder cannot contact Shawmut Bank by
telephone, it is recommended that an exchange request be made in writing and
sent by overnight mail to Shawmut Bank, Attention: Vice President, Securities
Operation, OF0501, One Federal Street, Boston, Massachusetts 02211.

If reasonable procedures are not followed by the Equity Funds, they may be
liable for losses due to unauthorized or fraudulent telephone instructions.

REDEEMING SHARES

YOU CAN REDEEM TRUST SHARES BY MAIL OR TELEPHONE. TO ENSURE YOUR SHARES ARE
REDEEMED EXPEDITIOUSLY, PLEASE FOLLOW THE PROCEDURES EXPLAINED BELOW.

The Equity Funds redeem Trust Shares at their net asset value next determined
after Federated Services Company receives the redemption request. Redemptions
will be made on days on which the Equity Funds compute their net asset value.
Requests for redemptions can be made by telephone or in writing by contacting a
Shawmut Bank trust officer. Redemption requests received prior to 4:00 p.m.
(Eastern time) will be effected on the same business day.

THROUGH SHAWMUT BANK

Shareholders may redeem Trust Shares by calling their Shawmut Bank trust
officer to request the redemption. Trust Shares will be redeemed at the net
asset value next determined after Federated Services Company receives the
redemption request. Shawmut Bank is responsible for promptly submitting
redemption requests and for maintaining proper
written records of redemption instructions received from the Equity Funds'
shareholders. In order to effect a redemption on the same business day as a
request, Shawmut Bank is responsible for the timely transmission of the
redemption request to the appropriate Equity Fund.

Before Shawmut Bank may request redemption by telephone on behalf of a
shareholder, an authorization form permitting the Equity Funds to accept
redemption requests by telephone must first be completed. This authorization is
included in Shawmut Bank's trust account documentation. Redemption instructions
given by telephone may be electronically recorded. In the event of drastic
economic or market changes, a shareholder may experience difficulty in
redeeming by telephone. If such a case should occur, it is recommended that a
redemption request be made in writing and sent by overnight mail to Shawmut
Bank, Attention: Vice President, Securities Operation, OF0501, One Federal
Street, Boston, Massachusetts 02211.

If reasonable procedures are not followed by the Equity Funds, they may be
liable for losses due to unauthorized or fraudulent telephone instructions.

DIRECTLY FROM THE EQUITY FUNDS

BY MAIL. A shareholder may redeem Trust Shares by sending a written request to
Federated Services Company. If Shares are purchased by Shawmut Bank on behalf
of a trust customer, only Shawmut Bank, as the shareholder of record, can
request a redemption from Federated Services Company. The written request
should include the shareholder's name, the Equity Funds' name and class of
shares name, 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. Shareholders
should call the Equity Funds for assistance in redeeming by mail.

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

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

a savings bank or savings and loan association whose deposits are insured by
the Savings Association Insurance Fund, which is administered by the FDIC;
or

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

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

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

RECEIVING PAYMENT

Redemption payments will generally be made directly to the trust account
maintained by an investor with Shawmut Bank. This deposit is normally made
within one business day, but in no event more than seven days, after the
redemption request, provided the transfer agent has received payment from the
shareholder. The net asset value of Trust Shares
redeemed is determined, and dividends, if any, are paid up to and including,
the day prior to the day that a redemption request is processed. Pursuant to
instructions from Shawmut Bank, redemption proceeds may be transferred from a
shareholder account by check or by wire.

BY CHECK. Normally, a check for the proceeds is mailed within one business
day, but in no event more than seven days, after receipt of a proper redemption
request, provided the transfer agent has received payment for Trust Shares from
the shareholder.

BY WIRE. Requests to wire proceeds from redemptions received before 4:00 p.m.
(Eastern time) will be honored the following business day after Shawmut Bank
receives proper instructions.

ACCOUNTS WITH LOW BALANCES

Due to the high cost of maintaining accounts with low balances, the Equity
Funds may redeem shares in any account and pay the proceeds to the shareholder
if the account balance falls below a required minimum of $1,000. This
requirement does not apply, however, if the balance falls below $1,000 because
of changes in an Equity Fund's net asset value.

Before shares are redeemed to close an account, the shareholder is notified in
writing and allowed 30 days to purchase additional shares to meet the minimum
requirement.

REDEMPTION IN KIND

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

Any redemption beyond this amount will also be in cash unless the Trustees
determine that further cash payments will have a material adverse effect on
remaining shareholders. In such a case, the Equity Funds will pay all or a
portion of the remainder of the redemption in portfolio instruments, valued in
the same way as an Equity Fund determines net asset value. The portfolio
instruments will be selected in a manner that the Trustees deem fair and
equitable.

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

SHAREHOLDER INFORMATION

VOTING RIGHTS

EACH TRUST SHARE OF AN EQUITY FUND GIVES THE SHAREHOLDER ONE VOTE IN TRUSTEE
ELECTIONS AND OTHER MATTERS SUBMITTED TO SHAREHOLDERS OF THE TRUST FOR VOTE.

All shares 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 Trust or an Equity Fund's
operation and for the election of Trustees under certain circumstances.

As of December 12, 1994, Olsen & Co., acting in various capacities for various
accounts, was the owner of record of 301,547 shares (95.20%) of Trust Shares of
Quantitative Equity Fund; 1,540,598 shares (100%) of Trust Shares of Growth
Equity Fund; 14,089,293 shares (100%) of Trust Shares of Growth & Income Equity
Fund; and 9,146,775 shares (100%) of Trust Shares of Small Capitalization
Equity Fund.

MASSACHUSETTS PARTNERSHIP LAW

EFFECT OF BANKING LAWS

Shawmut Bank believes, based upon the advice of its counsel, that it may
perform the services for the Equity Funds 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 Shawmut Bank from continuing to perform all or a
part of the above services for its customers and/or the Equity Funds. 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 the Equity
Funds may occur, including possible termination of any automatic or other
Equity Fund share investment and redemption services then being provided by
Shawmut Bank. It is not expected that existing shareholders would suffer any
adverse financial consequences (if another adviser with equivalent abilities
to Shawmut Bank is found) as a result of any of these occurrences.

TAX INFORMATION

FEDERAL INCOME TAX

Shareholders are urged to consult their own tax advisers regarding the status
of their accounts under state and local tax laws.

OTHER CLASSES OF SHARES

The Equity Funds offer a separate class of shares known as Investment Shares.
Investment Shares are sold primarily to financial institutions that rely upon
the distribution services provided by the distributor in the marketing of
Investment Shares, as well as to retail customers of such institutions.
Investment Shares are sold at net asset value plus a sales load. Investments
in Investment Shares are subject to a minimum initial investment of $1,000.

Investment Shares are distributed pursuant to 12b-1 Plans adopted by the Trust
whereby the distributor is paid a fee of up to .50 of 1% of the Investment
Shares' average daily net assets.

The amount of dividends payable to Trust Shares will exceed that of 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 shares.

PERFORMANCE INFORMATION

FROM TIME TO TIME THE EQUITY FUNDS ADVERTISE THEIR TOTAL RETURN AND YIELD FOR
TRUST SHARES.

Total return represents the change, over a specified period of time, in the
value of an investment in Trust Shares 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 yields of Trust Shares of the Equity Funds are calculated by dividing the
net investment income per Trust Share (as defined by the Securities and
Exchange Commission) earned by the Equity Funds over a thirty-day period by the
maximum offering price per Trust Share 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 Trust Shares and, therefore, may
not correlate to the dividends or other distributions paid to shareholders.

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

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

Further information about the performance of the Equity Funds is contained in
the Trust's Combined Annual Report dated October 31, 1994, which can be
obtained free of charge.

INVESTMENT ADVISER
Shawmut Bank, N.A.
One Federal Street
Boston, MA 02211

ADMINISTRATOR
Federated Administrative Services
Federated Investors Tower
Pittsburgh, PA 15222-3779

CUSTODIAN
Shawmut Bank, N.A.
One Federal Street
Boston, MA 02211

TRANSFER AGENT
Federated Services Company
Federated Investors Tower
Pittsburgh, PA 15222-3779

DISTRIBUTOR
Federated Securities Corporation
Federated Investors Tower
Pittsburgh, PA 15222-3779

LEGAL COUNSEL
Dickstein, Shapiro & Morin, LLP
2101 L Street, N.W.
Washington, D.C. 20037

Houston, Houston & Donnelly
2510 Centre City Tower
Pittsburgh, PA 15222

SHAWMUT INCOME FUNDS
LIMITED TERM INCOME
INTERMEDIATE GOVERNMENT INCOME
FIXED INCOME
CONNECTICUT INTERMEDIATE MUNICIPAL INCOME
MASSACHUSETTS INTERMEDIATE MUNICIPAL INCOME

SHAWMUT
MONEY MARKET FUNDS
PRIME MONEY MARKET
CONNECTICUT MUNICIPAL MONEY MARKET
MASSACHUSETTS MUNICIPAL MONEY MARKET

CALL 1-800-SHAWMUT FOR MORE INFORMATION
ON THE SHAWMUT FAMILY OF FUNDS

820482883
820482875
820482834
820482750
3120919AI (12/94)

The Shawmut Equity Funds
(Portfolios of The Shawmut Funds)
Shawmut Growth Equity Fund
Trust Shares
Investment Shares
Shawmut Growth and Income Equity Fund
Trust Shares
Investment Shares
Shawmut Quantitative Equity Fund
Trust Shares
Investment Shares
Shawmut Small Capitalization Equity Fund
Trust Shares
Investment Shares
Combined Statement of Additional Information

Shawmut Growth Equity Fund ("Growth Equity Fund"),
Shawmut Growth and Income Equity Fund ("Growth and
Income Equity Fund"), Shawmut Quantitative Equity Fund
("Quantitative Equity Fund"), and Shawmut Small
Capitalization Equity Fund ("Small Capitalization
Equity Fund")(collectively referred to as the "Equity
Funds") represent interests in diversified investment
portfolios of The Shawmut Funds (the "Trust"). This
Combined Statement of Additional Information should be
read with the respective prospectuses for the Equity
Funds, Trust Shares and Investment Shares, dated
December 31, 1994. This Statement is not a prospectus
itself. To receive a copy of either prospectus, write
or call the Equity Funds.
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 THE PROSPECTUS.
ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL
OFFENSE.
THE SHARES OFFERED BY THE PROSPECTUS ARE NOT DEPOSITS
OR OBLIGATIONS OF SHAWMUT BANK, ARE NOT ENDORSED OR
GUARANTEED BY SHAWMUT BANK, ARE NOT INSURED BY THE
FEDERAL DEPOSIT INSURANCE CORPORATION, THE FEDERAL
RESERVE BOARD OR ANY OTHER GOVERNMENT AGENCY.
INVESTMENT IN THESE SHARES INVOLVES INVESTMENT RISKS,
INCLUDING THE POSSIBLE LOSS OF PRINCIPAL.
INVESTMENT SHARES OF THE SHAWMUT FUNDS ARE AVAILABLE
THROUGH REGISTERED REPRESENTATIVES OF SHAWMUT
BROKERAGE, INC. OR OTHER BROKERS, MEMBERS NASD/SIPC.
SHAWMUT BROKERAGE, INC. IS AN AFFILIATE OF SHAWMUT
BANK.

Federated Investors Tower
Pittsburgh, Pennsylvania 15222-3779
Statement dated December 31, 1994.
FEDERATED SECURITIES
CORP.
Distributor
A subsidiary of
Federated Investors
General Information About
the Fund 1
Investment Objective and
Policies 1
Types of Investments 1
When-Issued and Delayed
Delivery Transactions 2
Restricted and Illiquid
Securities 2
Repurchase Agreements 3
Reverse Repurchase
Agreements 3
Lending of Portfolio
Securities 3
Portfolio Turnover 3
Derivative Securities 3
Investment Limitations 5
The Shawmut Funds
Management 8
The Funds 11
Equity Funds Ownership 11
Trustee Liability 13
Investment Advisory
Services 13
Adviser to the Equity
Funds 13
Advisory Fees 13
Sub-Adviser to the
Quantitative Equity Fund 13
Sub-Advisory Fees 13
Administrative Services 14
Brokerage Transactions 14
Distribution Plan
(Investment Shares) 15
Conversion to Federal
Funds 15
Determining Net Asset Value 15
Determining Market Value
of Securities 16
Exchange Privilege 16
Requirements for Exchange 16
Making an Exchange 16
Redeeming Shares 16
Redemption in Kind 16
Tax Status 16
The Equity Funds' Tax
Status 16
Shareholders' Tax Status 17
Capital Gains 17
Total Return 17
Yield 17
Performance Comparisons 18
Financial Statements 18
Appendix 19
General Information About the Fund
The Equity Funds are portfolios of The Shawmut Funds, which
was established as a Massachusetts business trust under a
Declaration of Trust dated on July 16, 1992.
Shares of the Equity Funds are offered in two classes, known
as Trust Shares and Investment Shares (individually and
collectively referred to as "Shares"). This Combined
Statement of Additional Information relates to the above
mentioned Shares of the Equity Fund.
Investment Objective and Policies
The Growth Equity Fund's and the Small Capitalization Equity
Fund's investment objectives are to provide long-term
capital appreciation. The Growth and Income Equity Fund's
investment objective is to provide a relatively high total
return through long-term capital appreciation and current
income. The Quantitative Equity Fund's investment objective
is to provide growth of capital. The investment objectives
cannot be changed without approval of shareholders.
The policies described below may be changed by the Board of
Trustees (the "Trustees") without shareholder approval.
Shareholders will be notified before any material change in
these policies becomes effective.
Types of Investments
The Growth and Income Equity Fund and the Growth Equity Fund
invest principally in a professionally-managed and
diversified portfolios of common stocks of companies with
prospects for above-average growth and dividends or of
companies where significant fundamental changes are taking
place. The Growth and Income Equity Fund and the Growth
Equity Fund will seek to invest in equity securities of
companies that are projected to show earnings growth
superior to the Standard & Poor's 500 Composite Stock Index.
Although the Growth and Income Equity Fund and the Growth
Equity Fund may invest in other securities and in money
market instruments, it is the Growth and Income Equity
Fund's and the Growth Equity Fund's policies, under normal
market conditions, to invest at least 65% of its assets in
equity securities. The securities in which the Growth and
Income Equity Fund and the Growth Equity Fund may invest
include foreign securities, as described in the prospectus.
The Quantitative Equity Fund invests primarily in a
diversified portfolio of publicly-traded common stocks
listed on North American stock exchanges. The selection of
investment securities is made by use of a quantitative
computer valuation model, as described in the prospectus.
Under normal circumstances, the Quantitative Equity Fund
will invest at least 65% of its total assets in equity
securities. In addition, the Quantitative Equity Fund may
invest as described below and as described in the
prospectus.
The Small Capitalization Equity Fund invests primarily in a
diversified portfolio of equity securities of companies that
have a market value capitalization of up to $1 billion to
achieve long-term capital appreciation and current income.
Under normal circumstances, the Small Capitalization Equity
Fund will invest at least 65% of its total assets in growth
and income equity securities. In addition, the Small
Capitalization Equity Fund may invest as described below,
and as described in the prospectus.
The Equity Funds intend to limit their respective
investments in foreign securities which are not freely
traded on United States securities exchanges or the over-the-
counter market in the form of depository receipts to no more
than 5% of its total assets.
Money Market Instruments
The Equity Funds may invest in the following money
market instruments:
oinstruments of domestic banks and savings and loans
if they have capital, surplus, and undivided profits
of over $100,000,000, or if the principal amount of
the instrument is insured in full by the Federal
Deposit Insurance Corporation; and
oprime commercial paper (rated A-1 by Standard &
Poor's Ratings Group, Prime-1 by Moody's Investors
Service, Inc., or F-1 by Fitch Investors Service,
Inc.).
U.S. Government Obligations
The types of U.S. government obligations in which the
Equity Funds may invest generally include direct
obligations of the U.S. Treasury (such as U.S. Treasury
bills, notes, and bonds) and obligations issued or
guaranteed by U.S. government agencies or
instrumentalities. These securities are backed by:
othe full faith and credit of the U.S. Treasury;
othe issuer's right to borrow an amount limited to a
specific line of credit from the U.S. Treasury;
othe discretionary authority of the U.S. government to
purchase certain obligations of agencies or
instrumentalities; or
othe credit of the agency or instrumentality issuing
the obligations.
Examples of agencies and instrumentalities which are
permissible investments which may not always receive
financial support from the U.S. government are:
oFederal Farm Credit Banks;
oFederal Home Loan Banks;
oFederal National Mortgage Association;
oStudent Loan Marketing Association; and
oFederal Home Loan Mortgage Corporation.
When-Issued and Delayed Delivery Transactions
These transactions are made to secure what is considered to
be an advantageous price or yield for the Equity Funds. No
fees or other expenses, other than normal transaction costs,
are incurred. However, liquid assets of the Equity Funds
sufficient to make payment for the securities to be
purchased are segregated on the Equity Funds' records at the
trade date. These assets are marked to market daily and are
maintained until the transaction has been settled. The
Equity Funds do not intend to engage in when-issued and
delayed delivery transactions to an extent that would cause
the segregation of more than 20% of the total value of its
assets.
Restricted and Illiquid Securities
The Equity Funds may invest in commercial paper issued in
reliance on the exemption from registration afforded by
Section 4(2) of the Securities Act of 1933. Section 4(2)
commercial paper is restricted as to disposition under
federal securities law and is generally sold to
institutional investors, such as the Equity Funds, who agree
that they are purchasing the paper for investment purposes
and not with a view to public distribution. Any resale by
the purchaser must be in an exempt transaction. Section 4(2)
commercial paper is normally resold to other institutional
investors like the Equity Funds through or with the
assistance of the issuer or investment dealers who make a
market in Section 4(2) commercial paper, thus providing
liquidity. The Equity Funds believe that Section 4(2)
commercial paper and possibly certain other restricted
securities which meet the criteria for liquidity established
by the Trustees are quite liquid. The Equity Funds intend,
therefore, to treat the restricted securities which meet the
criteria for liquidity established by the Trustees,
including Section 4(2) commercial paper (as determined by
the Equity Funds' adviser), as liquid and not subject to the
investment limitation applicable to illiquid securities. In
addition, because Section 4(2) commercial paper is liquid,
the Equity Funds do not intend to subject such paper to the
limitation applicable to restricted securities.
The ability of the Trustees to determine the liquidity of
certain restricted securities is permitted under a
Securities and Exchange Commission (the "SEC") Staff
position set forth in the adopting release for Rule 144A
under the Securities Act of 1933 (the "Rule"). The Rule is a
non-exclusive, safe-harbor for certain secondary market
transactions involving securities subject to restrictions on
resale under federal securities laws. The Rule provides an
exemption from registration for resales of otherwise
restricted securities to qualified institutional buyers. The
Rule was expected to further enhance the liquidity of the
secondary market for securities eligible for resale under
the Rule. The Trust, on behalf of the Equity Funds, believes
that the Staff of the SEC has left the question of
determining the liquidity of all restricted securities
(eligible for resale under Rule 144A) for determination to
the Trustees. The Trustees consider the following criteria
in determining the liquidity of certain restricted
securities:
othe frequency of trades and quotes for the security;
othe number of dealers willing to purchase or sell the
security and the number of other potential buyers;
odealer undertakings to make a market in the security;
and
othe nature of the security and the nature of the
marketplace trades.
Repurchase Agreements
Repurchase agreements are arrangements in which banks,
broker/dealers, and other recognized financial institutions
sell U.S. government securities or certificates of deposit
to the Equity Funds and agree at the time of sale to
repurchase them at a mutually agreed upon time and price
within one year from the date of acquisition. An Equity Fund
requires its custodian to take possession of the securities
subject to repurchase agreements and these securities are
marked to market daily. To the extent that the original
seller does not repurchase the securities from the Equity
Fund, the Equity Fund could receive less than the repurchase
price on any sale of such securities. In the event that such
a defaulting seller filed for bankruptcy or became
insolvent, disposition of such securities by an Equity Fund
might be delayed pending court action. The Equity Funds
believe that, under the regular procedures normally in
effect for custody of an Equity Fund's portfolio securities
subject to repurchase agreements, a court of competent
jurisdiction would rule in favor of the Equity Fund and
allow retention or disposition of such securities. The
Equity Funds will only enter into repurchase agreements with
banks and other recognized financial institutions, such as
broker/dealers, which are deemed by the Equity Funds'
adviser to be creditworthy pursuant to guidelines
established by the Trustees.
Reverse Repurchase Agreements
The Equity Funds may also enter into reverse repurchase
agreements. These transactions are similar to borrowing
cash. In a reverse repurchase agreement, an Equity Fund
transfers possession of a portfolio instrument to another
person, such as a financial institution, broker, or dealer,
in return for a percentage of the instrument's market value
in cash, and agrees that on a stipulated date in the future
the Equity Fund will repurchase the portfolio instrument by
remitting the original consideration plus interest at an
agreed upon rate. The use of reverse repurchase agreements
may enable an Equity Fund to avoid selling portfolio
instruments at a time when a sale may be deemed to be
disadvantageous, but the ability to enter into reverse
repurchase agreements does not ensure that the Equity Fund
will be able to avoid selling portfolio instruments at a
disadvantageous time.
When effecting reverse repurchase agreements, liquid assets
of an Equity Fund in a dollar amount sufficient to make
payment for the obligations to be purchased are segregated
at the trade date. These securities are marked to market
daily and are maintained until the transaction is settled.
Lending of Portfolio Securities
The collateral received when an Equity Fund lends portfolio
securities must be valued daily and, should the market value
of the loaned securities increase, the borrower must furnish
additional collateral to an Equity Fund. During the time
portfolio securities are on loan, the borrower pays the
Equity Fund any dividends or interest paid on such
securities. Loans are subject to termination at the option
of the Equity Funds or the borrower. The Equity Funds may
pay reasonable administrative and custodial fees in
connection with a loan and may pay a negotiated portion of
the interest earned on the cash or equivalent collateral to
the borrower or placing broker.
Portfolio Turnover
Although the Equity Funds do not intend to invest for the
purpose of seeking short-term profits, securities in a
portfolio will be sold whenever the investment adviser
believes it is appropriate to do so in light of the Equity
Funds' investment objectives without regard to the length of
time a particular security may have been held.
During the period from August 4, 1994 (date of initial
public investment) to October 31, 1994, the portfolio
turnover rate for the Quantitative Equity Fund was 0%.
During the fiscal year ended October 31, 1994, the
portfolio turnover rates for the Growth Equity Fund, Growth
and Income Equity Fund, and Small Capitalization Equity Fund
were 73%, 73%, and 29%, respectively. During the period from
December 14, 1992 (date of initial public investment), to
October 31, 1993, the portfolio turnover rates for the
Growth Equity Fund, Growth and Income Equity Fund, and Small
Capitalization Equity Fund were 71%, 38%, and 29%,
respectively.
Derivative Securities
Put and Call Options
An Equity Fund may purchase and sell put options on its
portfolio securities as described in the prospectus.
Stock Index Futures and Options
The Equity Funds may utilize stock index futures
contracts and options on stocks, stock indices and
stock index futures contracts for the purposes of
managing cash flows into and out of an Equity Fund's
portfolio and potentially reducing transactional costs.
The Equity Funds may not use stock index futures
contracts and options for speculative purposes.
As a means of reducing fluctuations in the net asset
value of shares of the Equity Funds, the Equity Funds
may attempt to hedge all or a portion of its portfolio
through the purchase of listed put options on stocks,
stock indices, and stock index futures contracts. These
options will be used as a form of forward pricing to
protect portfolio securities against decreases in value
resulting from market factors, such as an anticipated
increase in interest rates. A purchased put option
gives the Equity Funds, in return for a premium, the
right to sell the underlying security to the writer
(seller) at a specified price during the term of the
option. Put options on stock indices are similar to put
options on stocks except for the delivery requirements.
Instead of giving the Equity Funds the right to make
delivery of stock at a specified price, a put option on
a stock index gives the Equity Funds, as holders, the
right to receive an amount of cash upon exercise of the
option.
An Equity Fund may also write covered call options. As
the writer of a call option, the Equity Funds have the
obligation upon exercise of the option during the
option period to deliver the underlying security upon
payment of the exercise price.
An Equity Fund may only: (1) buy listed put options on
stock indices and stock index futures contracts; (2)
buy listed put options on securities held in its
portfolio; and (3) sell listed call options either on
securities held in its portfolio or on securities which
it has the right to obtain without payment of further
consideration (or has segregated cash in the amount of
any such additional consideration). An Equity Fund will
maintain its positions in securities, option rights,
and segregated cash subject to puts and calls until the
options are exercised, closed, or expired. An Equity
Fund may also enter into stock index futures contracts.
A stock index futures contract is a bilateral agreement
which obligates the seller to deliver (and the
purchaser to take delivery of) an amount of cash equal
to a specific dollar amount times the difference
between the value of a specific stock index at the
close of trading of the contract and the price at which
the agreement is originally made. There is no physical
delivery of the stocks constituting the index, and no
price is paid upon entering into a futures contract.
In general, option contracts are closed out prior to
their expiration. An Equity Fund, when purchasing or
selling a futures contract, will initially be required
to deposit in a segregated account in the broker's name
with the Equity Fund's custodian an amount of cash or
U.S. government securities approximately equal to 5%-
10% of the contract value. This amount is known as
"initial margin," and it is subject to change by the
exchange or board of trade on which the contract is
traded. Subsequent payments to and from the broker are
made on a daily basis as the price of the index or the
securities underlying the futures contract fluctuates.
These payments are known as "variation margins," and
the fluctuation in value of the long and short
positions in the futures contract is a process referred
to as "marking to market." An Equity Fund may decide to
close its position on a contract at any time prior to
the contract's expiration. This is accomplished by the
Equity Fund taking an opposite position at the then-
prevailing price, thereby terminating its existing
position in the contract. Because the initial margin
resembles a performance bond or good-faith deposit on
the contract, it is returned to the Equity Fund upon
the termination of the contract, assuming that all
contractual obligations have been satisfied. Therefore,
the margin utilized in futures contracts is readily
distinguishable from the margin employed in security
transactions, since the margin employed in futures
contracts does not involve the borrowing of funds to
finance the transaction.
Restrictions on the Use of Futures Contracts and Options
An Equity Fund will not enter into futures contracts to
the extent that, immediately thereafter, the sum of its
initial margin deposits on open contracts exceeds 5% of
the market value of the Equity Fund's total assets.
Further, an Equity Fund will enter into stock index
futures contracts only for bona fide hedging purposes
or such other purposes permitted under Part 4 of the
regulations promulgated by the Commodity Futures
Trading Commission. Also, an Equity Fund may not enter
into stock index futures contracts and options to the
extent that the value of such contracts would exceed
20% of the Equity Fund's total net assets and may not
purchase put options to the extent that more than 5% of
the value of the Equity Fund's total assets would be
invested in premiums on open put option positions.
Indexed Securities
The Equity Funds may invest in indexed securities whose
value is linked to foreign currencies, interest rates,
commodities, indices, or other financial indicators.
Most indexed securities are short to intermediate term
fixed-income securities whose values at maturity or
interest rates rise or fall according to the change in
one or more specified underlying instruments. Indexed
securities may be positively or negatively indexed
(i.e., their value may increase or decrease if the
underlying instrument appreciates), and may have return
characteristics similar to direct investments in the
underlying instrument or to one or more options on the
underlying instrument. Indexed securities may be more
volatile than the underlying instrument itself.
Swap Agreements
As one way of managing its exposure to different types
of investments, the Equity Funds may enter into
interest rate swaps, currency swaps, and other types of
swap agreements such as caps, collars, and floors. In a
typical interest rate swap, one party agrees to make
regular payments equal to a floating interest rate
times a "notional principal amount," in return for
payments equal to a fixed rate times the same amount,
for a specified period of time. If a swap agreement
provides for payments in different currencies, the
parties might agree to exchange notional principal
amount as well. Swaps may also depend on other prices
or rates, such as the value of an index or mortgage
prepayment rates.
In a typical cap or floor agreement, one party agrees
to make payments only under specified circumstances,
usually in return for payment of a fee by the other
party. For example, the buyer or an interest rate cap
obtains the right to receive payments to the extent
that a specified interest rate exceeds an agreed-upon
level, while the seller of an interest rate floor is
obligated to make payments to the extent that a
specified interest rate falls below an agreed-upon
level. An interest rate collar combines elements of
buying a cap and selling a floor.
Swap agreements will tend to shift the Equity Funds'
investment exposure from one type of investment to
another. For example, if the Equity Funds agreed to
exchange payments in dollars for payments in foreign
currency, the swap agreement would tend to decrease the
Equity Funds' exposure to U.S. interest rates and
increase its exposure to foreign currency and interest
rates. Caps and floors have an effect similar to buying
or writing options. Depending on how they are used,
swap agreements may increase or decrease the overall
volatility of the Equity Funds' investments and its
share price and yield.
Swap agreements are sophisticated hedging instruments
that typically involve a small investment of cash
relative to the magnitude of risks assumed. As a
result, swaps can be highly volatile and may have a
considerable impact on the Equity Funds' performance.
Swap agreements are subject to risks related to the
counterparty's ability to perform, and may decline in
value if the counterparty's creditworthiness
deteriorates. The Equity Funds may also suffer losses
if they are unable to terminate outstanding swap
agreements or reduce their exposure through offsetting
transactions.
Investment Limitations
Selling Short and Buying on Margin
The Equity Funds will not sell any securities short or
purchase any securities on margin, but may obtain such
short-term credits as may be necessary for clearance of
purchases and sales of portfolio securities. A deposit
or payment by the Equity Funds of initial or variation
margin in connection with futures contracts or related
options transactions is not considered the purchase of
a security on margin.
Issuing Senior Securities and Borrowing Money
The Equity Funds will not issue senior securities
except that the Equity Funds may borrow money directly
or through reverse repurchase agreements in amounts up
to one-third of the value of its total assets,
including the amounts borrowed; and except to the
extent that the Equity Funds will enter into futures
contracts. The Equity Funds will not borrow money or
engage in reverse repurchase agreements for investment
leverage, but rather as a temporary, extraordinary, or
emergency measure to facilitate management of the
portfolio by enabling the Equity Funds to meet
redemption requests when the liquidation of portfolio
securities is deemed to be inconvenient or
disadvantageous. The Equity Funds will not purchase any
securities while borrowings in excess of 5% of their
respective total assets are outstanding.
Pledging Assets
The Equity Funds will not mortgage, pledge, or
hypothecate any assets except to secure permitted
borrowings. In those cases, it may mortgage, pledge, or
hypothecate assets having a market value not exceeding
10% of the value of total assets at the time of the
pledge. For purposes of this limitation, the following
will not be deemed to be pledges of an Equity Fund's
assets: (a) the deposit of assets in escrow in
connection with the writing of covered put or call
options and the purchase of securities on a when-issued
basis; and (b) collateral arrangements with respect to
(i) the purchase and sale of stock options (and options
on stock indices) and (ii) initial or variation margin
for futures contracts. Margin deposits for the purchase
and sale of futures contracts and related options are
not deemed to be a pledge.
Investing in Real Estate
An Equity Fund will not purchase or sell real estate,
including limited partnership interests, although it
may invest in the securities of companies whose
business involves the purchase or sale of real estate
or in securities which are secured by real estate or
interests in real estate.
Investing in Commodities
The Equity Funds will not purchase or sell commodities,
commodity contracts, or commodity futures contracts
except to the extent that an Equity Fund may engage in
transactions involving financial futures contracts or
options on financial futures contracts.
Diversification of Investments
With respect to securities comprising 75% of the value
of its total assets, the Equity Funds will not purchase
securities issued by any one issuer (other than cash,
cash items, or securities issued or guaranteed by the
government of the United States or its agencies or
instrumentalities and repurchase agreements
collateralized by such securities) if, as a result,
more than 5% of the value of their respective total
assets would be invested in the securities of that
issuer. An Equity Fund will not acquire more than 10%
of the outstanding voting securities of any one issuer.
Concentration of Investments
The Equity Funds will not invest 25% or more of the
value of their respective total assets in any one
industry (other than securities issued by the U.S.
government, its agencies or instrumentalities).
However, the Equity Funds may invest as temporary
investments more than 25% of the value of their
respective assets in cash or cash items, securities
issued or guaranteed by the U.S. government, its
agencies or instrumentalities, or instruments secured
by these money market instruments, such as repurchase
agreements.
Underwriting
An Equity Fund will not underwrite any issue of
securities, except as it may be deemed to be an
underwriter under the Securities Act of 1933 in
connection with the sale of securities in accordance
with its investment objective, policies, and
limitations.
Lending Cash or Securities
An Equity Fund will not lend any of its assets, except
portfolio securities up to one-third of the value of
its total assets. This shall not prevent an Equity Fund
from purchasing or holding money market instruments,
repurchase agreements, obligations of the U.S.
government, its agencies or instrumentalities, variable
rate demand notes, bonds debentures, notes,
certificates of indebtedness, or certain debt
instruments as permitted by its investment objective,
policies, and limitations or the Trust's Declaration of
Trust.
The above investment limitations cannot be changed without
shareholder approval. The following limitations, however,
may be changed by the Trustees without shareholder approval.
Shareholders will be notified before any material change in
these limitations becomes effective.
Investing in Restricted Securities
An Equity Fund will not invest more than 10% of its
total assets in securities subject to restrictions on
resale under the Securities Act of 1933, except for
commercial paper issued under Section 4(2) of the
Securities Act of 1933 and certain other restricted
securities which meet the criteria for liquidity as
established by the Trustees.
Investing in Illiquid Securities
An Equity Fund will not invest more than 15% of the
value of its net assets in illiquid securities,
including repurchase agreements providing for
settlement in more than seven days after notice, non-
negotiable fixed time deposits with maturities over
seven days, over-the-counter options, and certain
securities not determined by the Trustees to be liquid.
Investing in Minerals
The Equity Funds will not purchase interests in oil,
gas, or other mineral exploration or development
programs or leases, except it may purchase the
securities of issuers which invest in or sponsor such
programs.
Investing in New Issuers
The Equity Funds will not invest more than 5% of the
value of its total assets in securities of issuers
which have records of less than three years of
continuous operations, including the operation of any
predecessor.
Investing in Issuers Whose Securities are Owned by
Officers and Trustees of the Trust
The Equity Funds will not purchase or retain the
securities of any issuer if the officers and Trustees
of the Trust or the Equity Funds' investment adviser,
owning individually more than 1/2 of 1% of the issuer's
securities, together own more than 5% of the issuer's
securities.
Purchasing Securities to Exercise Control
The Equity Funds will not purchase securities of a
company for purpose of exercising control or
management.
Investing in Warrants
The Equity Funds will not invest more than 5% of its
net assets in warrants. No more than 2% of this 5% may
be warrants which are not listed on the New York or
American Stock Exchanges.
Investing in Put Options
An Equity Fund will not purchase put options on
securities, unless the securities are held in the
Equity Fund's portfolio and not more than 5% of the
value of the Equity Fund's total assets would be
invested in premiums on open put option positions.
Writing Covered Call Options
An Equity Fund will not write call options on
securities unless the securities are held in the Equity
Fund's portfolio or unless the Equity Fund is entitled
to them in deliverable form without further payment or
after segregating cash in the amount of any further
payment. An Equity Fund will not write call options in
excess of 5% of the value of its total assets.
Investing in Securities of Other Investment Companies
The Equity Funds will limit their investment in other
investment companies to no more than 3% of the total
outstanding voting stock of any investment company,
will invest no more than 5% of total assets in any one
investment company, and will invest no more than 10% of
its total assets in investment companies in general.
The Equity Funds will purchase securities only in open
market transactions involving only customary broker's
commissions. However, these limitations are not
applicable if the securities are acquired in a merger,
consolidation, reorganization, or acquisition of
assets. It should be noted that investment companies
incur certain expenses such as management fees, and
therefore any investment by the Equity Funds in shares
of another investment company would be subject to such
duplicate expenses.
Except with respect to borrowing money, if a percentage
limitation is adhered to at the time of investment, a later
increase or decrease in percentage resulting from any change
in value or net assets will not result in a violation of
such restriction.
The Equity Funds did not borrow money or pledge securities
in excess of 5% of their respective net assets during the
past fiscal year, and do not intend to borrow money in
excess of 5% of the value of their respective net assets or
invest more than 5% of their respective total assets in
securities of foreign issuers during the coming fiscal year.
For purposes of their policies and limitations, the Equity
Funds consider certificates of deposit and demand and time
deposits issued by a U.S. branch of a domestic bank or
savings and loan having capital, surplus, and undivided
profits in excess of $100,000,000 at the time of investment
to be "cash items."
To comply with registration requirements in certain states,
each Equity Fund: (1) will limit the aggregate value of the
assets underlying covered call options or put options
written by an Equity Fund to not more than 25% of its net
assets, (2) will limit the premiums paid for options
purchased by an Equity Fund to 5% of its net assets, (3)
will limit the margin deposits on futures contracts entered
into by an Equity Fund to 5% of its net assets, and (4) will
limit investments in warrants to 5% of its net assets. No
more than 2% will be in warrants which are listed on the New
York or American Stock Exchanges. Also, to comply with
certain state restrictions, each Equity Fund will limit its
investment in restricted securities to 5% of total assets.
(If state requirements change, these restrictions may be
revised without shareholder notification.)
The Shawmut Funds Management
Officers and Trustees are listed with their addresses,
present positions with The Shawmut Funds, and principal
occupations.

John F. Donahue@*
Federated Investors Tower
Pittsburgh, Pennsylvania
Chairman and Trustee
Chairman and Trustee, Federated Investors, Federated
Advisers, Federated Management, and Federated Research;
Chairman and Director, Federated Research Corp.; Chairman,
Passport Research, Ltd.; Director, AEtna Life and Casualty
Company; Chief Executive Officer and Director, Trustee, or
Managing General Partner of the Funds. Mr. Donahue is the
father of J. Christopher Donahue , Vice President of the
Trust.

Thomas G. Bigley
28th Floor
One Oxford Centre
Pittsburgh, Pennsylvania
Trustee
Director, Oberg Manufacturing Co.; Chairman of the Board,
Children's Hospital of Pittsburgh; Director, Trustee, or
Managing General Partner of the Funds; formerly, Senior
Partner, Ernst & Young LLP.

John T. Conroy, Jr.
Wood/IPC Commercial Department
John R. Wood and Associates, Inc., Realtors
3255 Tamiami Trail North
Naples, Florida
Trustee
President, Investment Properties Corporation; Senior Vice-
President, John R. Wood and Associates, Inc., Realtors;
President, Northgate Village Development Corporation;
Partner or Trustee in private real estate ventures in
Southwest Florida; Director, Trustee, or Managing General
Partner of the Funds; formerly, President, Naples Property
Management, Inc.

William J. Copeland
One PNC Plaza - 23rd Floor
Pittsburgh, Pennsylvania
Trustee
Director and Member of the Executive Committee, Michael
Baker, Inc.; Director, Trustee, or Managing General Partner
of the Funds; formerly, Vice Chairman and Director, PNC
Bank, N.A., and PNC Bank Corp. and Director, Ryan Homes,
Inc.

James E. Dowd
571 Hayward Mill Road
Concord, Massachusetts
Trustee
Attorney-at-law; Director, The Emerging Germany Fund, Inc.;
Director, Trustee, or Managing General Partner of the Funds;
formerly, Director, Blue Cross of Massachusetts, Inc.

Lawrence D. Ellis, M.D.
3471 Fifth Avenue, Suite 1111
Pittsburgh, Pennsylvania
Trustee
Hematologist, Oncologist, and Internist, Presbyterian and
Montefiore Hospitals; Professor of Medicine and Trustee,
University of Pittsburgh; Director of Corporate Health,
University of Pittsburgh Medical Center; Director, Trustee,
or Managing General Partner of the Funds.

Edward L. Flaherty, Jr.@
Two Gateway Center-Suite 674
Pittsburgh, Pennsylvania
Trustee
Attorney-at-law; Partner, Henny, Koeheba, Meyer and
Flaherty; Director, Eat'N Park Restaurants, Inc., and
Statewide Settlement Agency, Inc.; Director, Trustee, or
Managing General Partner of the Funds; formerly, Counsel,
Horizon Financial, F.A., Western Region.

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

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

Gregor F. Meyer
Two Gateway Center-Suite 674
Pittsburgh, Pennsylvania
Trustee
Attorney-at-law; Partner, Henny, Koeheba, Meyer and
Flaherty; Chairman, Meritcare, Inc.; Director, Eat'N Park
Restaurants, Inc.; Director, Trustee, or Managing General
Partner of the Funds; formerly, Vice Chairman, Horizon
Financial, F.A.

Wesley W. Posvar
1202 Cathedral of Learning
University of Pittsburgh
Pittsburgh, Pennsylvania
Trustee
Professor, Foreign Policy and Management Consultant;
Trustee, Carnegie Endowment for International Peace, RAND
Corporation, Online Computer Library Center, Inc., and U.S.
Space Foundation; Chairman, Czecho Slovak Management Center;
Director, Trustee, or Managing General Partner of the Funds;
President Emeritus, University of Pittsburgh; formerly,
Chairman, National Advisory Council for Environmental Policy
and Technology.

Marjorie P. Smuts
4905 Bayard Street
Pittsburgh, Pennsylvania
Trustee
Public relations/marketing consultant; Director, Trustee, or
Managing General Partner of the Funds.

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

Richard B. Fisher
Federated Investors Tower
Pittsburgh, Pennsylvania
Vice President
Executive Vice President and Trustee, Federated Investors;
Director, Federated Research Corp.; Chairman and Director,
Federated Securities Corp.; President or Vice President of
some of the Funds; Director or Trustee of some of the Funds.

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

Jeffrey W. Sterling
Federated Investors Tower
Pittsburgh, Pennsylvania
Vice President and Assistant Treasurer
Vice President, Federated Administrative Services; Vice
President and Assistant Treasurer of some of the Funds.

* This Trustee is deemed to be an "interested person" as
defined in the Investment Company Act of 1940, as amended.
@ Member of the Executive Committee. The Executive Committee
of the Board of Trustees handles the responsibilities of the
Board of Trustees between meetings of the Board.
The Funds
"The Funds" and "Funds" mean the following investment
companies: American Leaders Fund, Inc.; Annuity Management
Series; Arrow Funds; Automated Cash Management Trust;
Automated Government Money Trust; California Municipal Cash
Trust; Cash Trust Series II; Cash Trust Series, Inc.; DG
Investor Series; Edward D. Jones & Co. Daily Passport Cash
Trust; Federated ARMs Fund; Federated Exchange Fund, Ltd.;
Federated GNMA Trust; Federated Government Trust; Federated
Growth Trust; Federated High Yield Trust; Federated Income
Securities Trust; Federated Income Trust; Federated Index
Trust; Federated Institutional Trust; Federated Intermediate
Government Trust; Federated Master Trust; Federated
Municipal Trust; Federated Short-Intermediate Government
Trust; Federated Short-Term U.S. Government Trust; Federated
Stock Trust; Federated Tax-Free Trust; Federated U.S.
Government Bond Fund; First Priority Funds; Fixed Income
Securities, Inc.; Fortress Adjustable Rate U.S. Government
Fund, Inc.; Fortress Municipal Income Fund, Inc.; Fortress
Utility Fund, Inc.; Fund for U.S. Government Securities,
Inc.; Government Income Securities, Inc.; High Yield Cash
Trust; Insight Institutional Series, Inc.; Insurance
Management Series; Intermediate Municipal Trust;
International Series, Inc.; Investment Series Funds, Inc.;
Investment Series Trust; Liberty Equity Income Fund, Inc.;
Liberty High Income Bond Fund, Inc.; Liberty Municipal
Securities Fund, Inc.; Liberty U.S. Government Money Market
Trust; Liberty Term Trust, Inc. - 1999; Liberty Utility
Fund, Inc.; Liquid Cash Trust; Managed Series Trust; The
Medalist Funds: Money Market Management, Inc.; Money Market
Obligations Trust; Money Market Trust; Municipal Securities
Income Trust; New York Municipal Cash Trust; 111 Corcoran
Funds; Peachtree Funds; The Planters Funds; Portage Funds;
RIMCO Monument Funds; Short-Term Municipal Trust; Star
Funds; The Starburst Funds; The Starburst Funds II; Stock
and Bond Fund, Inc.; Sunburst Funds; Targeted Duration
Trust; Tax-Free Instruments Trust; Trademark Funds; Trust
for Financial Institutions; Trust For Government Cash
Reserves; Trust for Short-Term U.S. Government Securities;
Trust for U.S. Treasury Obligations; and World Investment
Series, Inc.
Equity Funds Ownership
Officers and Trustees own less than 1% of an Equity Funds'
outstanding shares.
As of December 12, 1994, the following shareholder of record
owned 5% or more of the Shares of an Equity Fund: Olsen &
Co. owned approximately 301,547 shares (95.20%) of the Trust
Shares of the Quantitative Equity Fund; J. Kyle Muller and
Ann C. Muller owned approximately 10,020 shares (15.02%),
and Science Center of Connecticut Inc. owned approximately
7,007 shares (10.51%) of the Investment Shares of the
Quantitative Equity Fund; Olsen & Co. owned approximately
1,540,598 shares (100%) of the Trust Shares of the Growth
Equity Fund; Olsen & Co. owned approximately 14,089,293
shares (100%) of the Trust Shares of the Growth and Income
Equity Fund; and Olsen & Co. owned approximately 9,146,775
shares (100%) of the Trust Shares of the Small
Capitalization Equity Fund.
Trustee Liability
The Trust's Declaration of Trust provides that the Trustees
will not be liable for errors of judgment or mistakes of
fact or law. However, they are not protected against any
liability to which they would otherwise be subject by reason
of willful misfeasance, bad faith, gross negligence, or
reckless disregard of the duties involved in the conduct of
their office.
Investment Advisory Services
Adviser to the Equity Funds
The Equity Funds' investment adviser is Shawmut Bank, N.A.
(the "Adviser"). The Adviser shall not be liable to the
Trust, the Equity Funds, or any shareholder of the Equity
Funds for any losses that may be sustained in the purchase,
holding, or sale of any security, or for anything done or
omitted by it, except acts or omissions involving willful
misfeasance, bad faith, gross negligence, or reckless
disregard of the duties imposed upon it by its contract with
the Trust.
Because of the internal controls maintained by Shawmut Bank,
N.A., to restrict the flow of non-public information, an
Equity Fund's investments are typically made without any
knowledge of Shawmut Bank, N.A.'s., or its affiliates'
lending relationships with an issuer.
Advisory Fees
For its advisory services, the Adviser receives an annual
investment advisory fee as described in the combined
prospectus.
During the fiscal year ended October 31, 1994, the Adviser
earned the following advisory fees: Growth Equity Fund,
$239,796, of which $119,898 was voluntarily waived; Growth
and Income Equity Fund, $1,720,866, of which $344,173 was
voluntarily waived; and Small Capitalization Equity Fund,
$1,180,502, of which $295,126 was voluntarily waived. For
the period from December 14, 1992 (date of initial public
investment), to October 31, 1993, the Adviser earned the
following advisory fees: Growth Equity Fund, $222,953, of
which $75,986 was voluntarily waived; Growth and Income
Equity Fund, $1,191,845, of which $319,550 was voluntarily
waived; and Small Capitalization Equity Fund, $817,430, of
which $230,774 was voluntarily waived.
During the period from August 4, 1994 (date of initial
public investment) to October 31, 1994, the Quantitative
Equity Fund's adviser earned $8,318 in investment advisory
fees, all of which was voluntarily waived.
Sub-Adviser to the Quantitative Equity Fund
The sub-adviser to the Quantitative Equity Fund is Marque
Millennium Group Limited (the "Sub-Adviser"). As is the case
with the Adviser, the Sub-Adviser shall not be liable to the
Trust, the Quantitative Equity Fund, or any shareholder of
the Quantitative Equity Fund for any losses that may be
sustained in the purchase, holding, or sale of any security
or for anything done or omitted by it, except acts or
omissions involving willful misfeasance, bad faith, gross
negligence, or reckless disregard of the duties imposed upon
it by its contact with the Adviser.
Sub-Advisory Fees
For its services, Marque Millennium Group Limited, as Sub-
Adviser to the Quantitative Equity Fund, receives an annual
fee, payable by the Adviser, as described in the prospectus.
During the period from August 4, 1994 (date of initial
public investment) to October 31, 1994, the Quantitative
Equity Fund's sub-adviser earned $4,159 in sub-advisory
fees, all of which was voluntarily waived.
State Expense Limitations
The Adviser has undertaken to comply with the expense
limitations established by certain states for
investment companies whose shares are registered for
sale in those states. If the Equity Funds' normal
operating expenses (including the investment advisory
fee, but not including brokerage commissions, interest,
taxes, and extraordinary expenses) exceed 2 1/2% per
year of the first $30 million of average net assets, 2%
per year of the next $70 million of average net assets,
and 1 1/2% per year of the remaining average net
assets, the Adviser will reimburse the Equity Funds for
its expenses over the limitation.
If the Equity Funds' monthly projected operating
expenses exceed this limitation, the investment
advisory fee paid will be reduced by the amount of the
excess, subject to an annual adjustment. If the expense
limitation is exceeded, the amount to be reimbursed by
the Adviser will be limited, in any single fiscal year,
by the amount of the investment advisory fee.
This arrangement is not part of the advisory contract
and may be amended or rescinded in the future.
Administrative Services
Federated Administrative Services, a subsidiary of Federated
Investors, provides administrative personnel and services to
the Equity Funds for the fee set forth in the prospectus.
For the fiscal year ended October 31, 1994, Federated
Administrative Services earned the following administrative
fees: Growth Equity Fund, $50,000; Growth and Income Equity
Fund, $184,829; Small Capitalization Equity Fund, $126,698.
For the period from December 14, 1992 (date of initial
public investment) to October 31, 1993, Federated
Administrative Services earned the following administrative
fees: Growth Equity Fund, $28,063; Growth and Income Equity
Fund, $149,519; Small Capitalization Equity Fund, $102,587.
During the period from August 4, 1994 (date of initial
public investment) to October 31, 1994, Federated
Administrative Services earned $17,808 in administrative
fees from the Quantitative Equity Fund.
Shawmut Bank, N.A., serves as custodian to the Equity Funds.
As compensation for its services, the custodian receives a
fee based upon a sliding scale ranging from a minimum of
.011% to a maximum of .02%, plus certain transaction costs.
For the fiscal year ended October 31, 1994, the Equity
Funds' custodian earned the following fees: Growth Equity
Fund, $12,000, all of which was voluntarily waived; Growth
and Income Equity Fund, $34,400, all of which was
voluntarily waived; Small Capitalization Equity Fund,
$23,598, all of which was voluntarily waived. For the period
from December 14, 1992 (date of initial public investment)
to October 31, 1993, the Equity Funds' custodian earned the
following fees: Growth Equity Fund, $4,900, all of which was
voluntarily waived; Growth and Income Equity Fund, $10,719,
all of which was voluntarily waived; Small Capitalization
Equity Fund, $7,827, all of which was voluntarily waived.
During the period from August 4, 1994 (date of initial
public investment) to October 31, 1994, the custodian earned
the following fee: Quantitative Equity Fund, $5,000, all of
which was voluntarily waived.
Brokerage Transactions
It is the Equity Funds' policy with respect to the selection
of brokers and dealers in the purchase and sale of
securities to obtain the "best net realized price" on each
transaction. The Equity Funds conducts business only with
financially sound brokers or dealers on that basis.
Brokerage commission is, however, only one element in
determining "best net realized price." The Adviser may also
select brokers and dealers who offer research and other
services. These services may be furnished directly to the
Equity Funds or to the Adviser and may include:
oadvice as to the advisability of investing in
securities;
osecurity analysis and reports;
oeconomic studies;
oindustry studies;
oreceipt of quotations for portfolio evaluations; and
osimilar services.
The Adviser and its affiliates exercise reasonable business
judgment in selecting brokers who offer brokerage and
research services to execute securities transactions. They
determine in good faith that commissions charged by such
persons are reasonable in relationship to the value of the
brokerage and research services provided.
Research services provided by brokers may be used by the
Adviser for other accounts. To the extent that receipt of
these services may supplant services for which the Adviser
or its affiliates might otherwise have paid, it would tend
to reduce their expenses.
For the fiscal year ended October 31, 1994, the Growth
Equity Fund, Growth and Income Equity Fund, and Small
Capitalization Equity Fund paid $57,244, $384,037, and
$89,793, respectively, in brokerage commissions on brokerage
transactions.
For the period from August 4, 1994 (date of initial public
investment), to October 31, 1994, the Quantitative Equity
Fund paid $2,325 in brokerage commissions on brokerage
transactions.
Purchasing Shares
Shares are sold at their net asset value plus a sales load
(Investment Shares only) on days on which the New York Stock
Exchange and the Federal Reserve Wire System are open for
business. The procedure for purchasing Shares of the Equity
Funds is explained in the respective prospectuses under
"Investing in Trust Shares" or "Investing in Investment
Shares."
Distribution Plan (Investment Shares)
With respect to the Investment Shares class of the Equity
Funds, the Trust has adopted a Plan pursuant to Rule 12b-1
which was promulgated by the Securities and Exchange
Commission pursuant to the Investment Company Act of 1940.
The Plan permits the payment of fees to administrators
(including broker/dealers and depository institutions such
as commercial banks and savings and loan associations) for
distribution and administrative services. The Plan is
designed to stimulate administrators to provide distribution
and administrative support services to the Equity Funds and
their shareholders. The administrative services are provided
by a representative who has knowledge of the shareholder's
particular circumstances and goals, and include, but are not
limited to: communicating account openings; communicating
account closings; entering purchase transactions; entering
redemption transactions; providing or arranging to provide
accounting support for all transactions, wiring funds and
receiving funds for Share purchases and redemptions,
confirming and reconciling all transactions, reviewing the
activity in Equity Funds accounts, and providing training
and supervision of broker personnel; posting and reinvesting
dividends to Equity Funds accounts or arranging for this
service to be performed by the Equity Funds' transfer agent;
and maintaining and distributing current copies of
prospectuses and shareholder reports to the beneficial
owners of shares of the Equity Funds and prospective
shareholders.
By adopting the Plan, the Trustees expect that the Equity
Funds will be able to achieve a more predictable flow of
cash for investment purposes and to meet redemptions. This
will facilitate more efficient portfolio management and
assist the Equity Funds in seeking to achieve its investment
objectives. By identifying potential investors whose needs
are served by the Equity Funds' objective, and properly
servicing these accounts, the Equity Funds may be able to
curb sharp fluctuations in rates of redemptions and sales.
Other benefits which the Equity Funds hopes to achieve
through the Plan include, but are not limited to, the
following: (1) an efficient and effective administrative
system; (2) a more efficient use of shareholder assets by
having them rapidly invested in the Equity Funds, through an
automatic transfer of funds from a demand deposit account to
an investment account, with a minimum of delay and
administrative detail; and (3) an efficient and reliable
shareholder records system and prompt responses to
shareholder requests and inquiries concerning their
accounts.
For the fiscal year ended October 31, 1994, brokers earned
the following fees pursuant to the Plan: Growth Equity Fund,
$26,500, of which $13,250 was voluntarily waived; Growth and
Income Equity Fund, $96,587, of which $48,294 was
voluntarily waived; and Small Capitalization Equity Fund,
$89,974, of which $44,987 was voluntarily waived. For the
period from December 14, 1992 (date of initial public
investment) to October 31, 1993, brokers earned the
following fees pursuant to the Plan: Growth Equity Fund,
$8,860, of which $4,431 was voluntarily waived; Growth and
Income Equity Fund, $33,658, of which $16,829 was
voluntarily waived; and Small Capitalization Equity Fund,
$29,532, of which $14,766 was voluntarily waived.
During the period from August 4, 1994 (date of initial
public investment) to October 31, 1994, brokers earned $241,
of which $125 was voluntarily waived, pursuant to the Plan
for Quantitative Equity Fund.
Conversion to Federal Funds
It is the Equity Funds' policy to be as fully invested as
possible so that maximum interest may be earned. To this
end, all payments from shareholders must be in federal funds
or be converted into federal funds. Shawmut Bank, N.A., on
behalf of its customers, acts as the shareholder's agent in
depositing checks and converting them to federal funds.
Purchases through the distributor are converted to federal
funds by the Equity Funds' transfer agent who, in turn,
purchases the Shares of the appropriate Equity Fund on
behalf of the shareholder.
Determining Net Asset Value
The net asset value generally changes each day. The days on
which net asset value is calculated by the Equity Funds are
described in the respective prospectuses for Trust Shares
and Investment Shares.
Determining Market Value of Securities
Market values of the Equity Funds' portfolio securities are
determined as follows:
ofor equity securities, according to the last sale price
on a national securities exchange, if available;
oin the absence of recorded sales for equity securities,
according to the mean between the last closing bid and
asked prices;
ofor bonds and other fixed income securities, at the
last sale price on a national securities exchange if
available, otherwise as determined by an independent
pricing service;
ofor short-term obligations, according to the mean
between bid and asked prices as furnished by an
independent pricing service or for short-term
obligations with maturities of 60 days or less at the
time of purchase, at amortized cost; or
ofor all other securities, at fair value as determined
in good faith by the Trustees.
Prices provided by independent pricing services may be
determined without relying exclusively on quoted prices and
may reflect: institutional trading in similar groups of
securities, yield, quality, coupon rate, maturity, type of
issue, trading characteristics, and other market data.
The Equity Funds will value stock index futures contracts,
options on stock and stock indices, and put options on stock
index futures and financial futures at their market values
established by the exchanges at the close of option trading
on such exchanges unless the Trustees determines in good
faith that another method of valuing option positions is
necessary.
Exchange Privilege
Requirements for Exchange
Shareholders using the exchange privilege must exchange
Shares having a net asset value of at least $1,000. Before
the exchange, the shareholder must receive a prospectus of
the fund for which the exchange is being made. Further
information on the exchange privilege and prospectuses may
be obtained by calling Shawmut Bank, N.A.
Making an Exchange
Instructions for exchanges may be given in writing or by
telephone. Written instructions may require a signature
guarantee.
Redeeming Shares
The Equity Funds redeems Shares at the next computed net
asset value after the redemption requests are received.
Redemption procedures are explained in the respective
prospectuses under "Redeeming Trust Shares" or "Redeeming
Investment Shares."
Redemption in Kind
Although the Trust intends to redeem shares in cash, it
reserves the right under certain circumstances to pay the
redemption price in whole or in part by a distribution of
securities from the Equity Funds' portfolio. Redemption in
kind will be made in conformity with applicable Securities
and Exchange Commission rules, taking such securities at the
same value employed in determining net asset value and
selecting the securities in a manner the Trustees determine
to be fair and equitable.
The Trust has elected to be governed by Rule 18f-1 of the
Investment Company Act of 1940 under which the Trust is
obligated to redeem shares for any one shareholder in cash
only up to the lesser of $250,000 or 1% of the respective
class's net asset value during any 90-day period.
Tax Status
The Equity Funds' Tax Status
The Equity Funds will pay no federal income tax because the
Equity Funds expect to meet the requirements of Subchapter M
of the Internal Revenue Code applicable to regulated
investment companies and to receive the special tax
treatment afforded to such companies. To qualify for this
treatment, the Equity Funds must, among other requirements:
oderive at least 90% of its gross income from dividends,
interest, and gains from the sale of securities;
oderive less than 30% of its gross income from the sale
of securities held less than three months;
oinvest in securities within certain statutory limits;
and
odistribute to its shareholders at least 90% of its net
income earned during the year.
Shareholders' Tax Status
Shareholders are subject to federal income tax on dividends
received as cash or additional Shares.
Capital Gains
Capital gains experienced by the Equity Funds could result
in an increase in dividends. Capital losses could result in
a decrease in dividends. The Equity Funds will distribute
net long-term capital gains at least once every 12 months.
Total Return
The average annual total return for Investment Shares of the
Growth Equity Fund, Growth and Income Equity Fund, and Small
Capitalization Equity Fund for the fiscal year ended October
31, 1994 were (0.33%), 4.71%, and (2.45%), respectively. The
average annual total return for Investment Shares of the
Growth Equity Fund, Growth and Income Equity Fund, and Small
Capitalization Equity Fund for the period from February 12,
1993 (date of initial public investment) to October 31, 1994
were 2.60%, 6.39%, and 2.29%, respectively.
The average annual total return for the Trust Shares of the
Growth Equity Fund, Growth and Income Equity Fund, and Small
Capitalization Equity Fund for the fiscal year ended October
31, 1994 were 4.16%, 9.45%, and 1.86%, respectively. The
average annual total return for the Trust Shares of the
Growth Equity Fund, Growth and Income Equity Fund, and Small
Capitalization Equity Fund for the period from December 14,
1992 (date of initial public investment) to October 31, 1994
were 4.89%, 9.67%, and 7.27%.
The average annual total return for both classes of Shares
of the Equity Funds is the average compounded rate of return
for a given period that would equate a $1,000 initial
investment to the ending redeemable value of that
investment. The ending redeemable value is computed by
multiplying the number of Shares owned at the end of the
period by the offering price per Share at the end of the
period. The number of Shares owned at the end of the period
is based on the number of Shares purchased at the beginning
of the period with $1,000, less any applicable sales load
(Investment Shares only), adjusted over the period by any
additional Shares, assuming the quarterly reinvestment of
all dividends and distributions.
The cumulative total return for Investment Shares of the
Quantitative Equity Fund for the period from August 4, 1994
(date of initial public investment) to October 31, 1994, was
(3.11)%. The cumulative total return for Trust Shares of the
Quantitative Equity Fund for the period from August 4, 1994
(date of initial public investment) to October 31, 1994, was
0.94%. Cumulative total return reflects the Quantitative
Equity Fund's total performance over a specific period of
time. This total return assumes and is reduced by the
payment of a maximum sales load (Investment Shares only).
The Quantitative Equity Fund's total returns are
representative of approximately three months of activity
since the Quantitative Equity Fund's date of initial public
investment.
Yield
The thirty-day yield for Investment Shares of the Growth
Equity Fund, Growth and Income Equity Fund, Small
Capitalization Equity Fund, and Quantitative Equity Fund for
the period ending October 31, 1994, were 0.20%, 1.88%,
(0.16)%, and 2.19%, respectively. The thirty-day yield for
Trust Shares of the Growth Equity Fund, Growth and Income
Equity Fund, Small Capitalization Equity Fund, and
Quantitative Equity Fund for the same period were 0.45%,
2.20%, 0.08%, and 2.44%, respectively.
The yield for both classes of Shares of the Equity Funds is
determined by dividing the net investment income per share
(as defined by the Securities and Exchange Commission)
earned by the Equity Funds over a thirty-day period by the
maximum offering price per Share on the last day of the
period. This value is annualized using semi-annual
compounding. This means that the amount of income generated
during the thirty-day period is assumed to be generated each
month over a twelve-month period and is reinvested every six
months. The yield does not necessarily reflect income
actually earned by the Shares because of certain adjustments
required by the Securities and Exchange Commission and,
therefore, may not correlate to the dividends or other
distributions paid to shareholders.
To the extent that financial institutions and broker/dealers
charge fees in connection with services provided in
conjunction with an investment in the Equity Funds,
performance will be reduced for those shareholders paying
those fees.
Performance Comparisons
The performance of both classes of Shares depends upon such
variables as:
oportfolio quality;
oaverage portfolio maturity;
otype of instruments in which the portfolio is invested;
ochanges in interest rates and market value of portfolio
securities;
ochanges in an Equity Fund's or either class of Shares'
expenses;
othe relative amount of cash flow; and
ovarious other factors.
Either class of shares' performance fluctuates on a daily
basis largely because net earnings and offering price per
Share fluctuate daily. Both net earnings and offering price
per Share are factors in the computation of yield and total
return.
Investors may use financial publications and/or indices to
obtain a more complete view of an Equity Fund's performance.
When comparing performance, investors should consider all
relevant factors, such as the composition of any index used,
prevailing market conditions, portfolio compositions of
other funds, and methods used to value portfolio securities
and compute offering price. The financial publications
and/or indices which the Equity Funds use in advertising may
include:
oLipper Analytical Services, Inc., ranks funds in
various fund categories by making comparative
calculations using total return. Total return assumes
the reinvestment of all capital gains distributions and
income dividends and takes into account any change in
net asset value over a specified period of time. From
time to time, the Equity Funds will quote its Lipper
ranking in the "growth funds" category in advertising
and sales literature.
oDow Jones Industrial Average ("DJIA") represents share
prices of selected blue chip industrial corporations as
well as public utility and transportation companies.
The DJIA indicates daily changes in the average price
of stocks in any of its categories. It also reports
total sales for each group of industries. Because it
represents the top corporations of America, the DJIA's
index movement are leading economic indicators for the
stock market as a whole.
oStandard & Poor's Daily Stock Price Index of 500 Common
Stocks, a composite index of common stocks in industry,
transportation, and financial and public utility
companies, compares total returns of funds whose
portfolios are invested primarily in common stocks. In
addition, the Standard & Poor's index assumes
reinvestment of all dividends paid by stocks listed on
its index. Taxes due on any of these distributions are
not included, nor are brokerage or other fees
calculated in the Standard & Poor's figures.
The Equity Funds may also advertise the performance of such
indices and the types of securities in which it invests as
compared to the rate of inflation.
Advertisements and other sales literature for both classes
of Shares may quote total returns which are calculated on
non-standardized base periods. These total returns also
represent the historic change in the value of an investment
in either class of Shares based on quarterly reinvestment of
dividends over a specified period of time.
Financial Statements
The financial statements for the fiscal year ended October
31, 1994, are incorporated herein by reference to the Annual
Report of the Trust dated October 31, 1994 (File Nos. 33-
48933 and 811-58437). A copy of the Annual Report may be
obtained without charge by contacting the Trust at the
address listed on the back cover of the respective
prospectus.
Appendix
Standard & Poor's Ratings Group Long Term Debt Rating
Definitions
AAA-Debt rated "AAA" has the highest rating assigned by
Standard & Poor's Ratings Group. Capacity to pay interest
and repay principal is extremely strong.
AA-Debt rated "AA" has a very strong capacity to pay
interest and repay principal and differs from the higher
rated issues only in small degree.
A-Debt rated "A" has a strong capacity to pay interest and
repay principal although it is somewhat more susceptible to
the adverse effects of changes in circumstances and economic
conditions than debt in higher rated categories.
BBB-Debt rated "BBB" is regarded as having an adequate
capacity to pay interest and repay principal. Whereas it
normally exhibits adequate protection parameters, adverse
economic conditions or changing circumstances are more
likely to lead to a weakened capacity to pay interest and
repay principal for debt in this category than in higher
rated categories.
BB-Debt rated "BB" has less near-term vulnerability to
default than other speculative issues. However, it faces
major ongoing uncertainties or exposure to adverse business,
financial, or economic conditions which could lead to
inadequate capacity to meet timely interest and principal
payments. The "BB" rating category is also used for debt
subordinated to senior debt that is assigned an actual or
implied "BBB" rating.
B-Debt rated "B" has a greater vulnerability to default but
currently has the capacity to meet interest payments and
principal repayments. Adverse business, financial, or
economic conditions will likely impair capacity or
willingness to pay interest and repay principal. The "B"
rating category is also used for debt subordinated to senior
debt that is assigned an actual or implied "BB" rating.
Moody's Investors Service, Inc., Corporate Bond Rating
Definitions
Aaa-Bonds which are rated "Aaa" are judged to be of the best
quality. They carry the smallest degree of investment risk
and are generally referred to as "gilt edged." Interest
payments are protected by a large or by an exceptionally
stable margin and principal is secure. While the various
protective elements are likely to change, such changes as
can be visualized are most unlikely to impair the
fundamentally strong position of such issues.
Aa-Bonds which are rated "Aa" are judged to be of high
quality by all standards. Together with the "Aaa" group,
they comprise what are generally known as high-grade bonds.
They are rated lower than the best bonds because margins of
protection may not be as large as in "Aaa" securities or
fluctuation of protective elements may be of greater
amplitude or there may be other elements present which make
the long-term risks appear somewhat larger than in "Aaa"
securities.
A-Bonds which are rated "A" possess many favorable
investment attributes and are to be considered as upper
medium-grade obligations. Factors giving security to
principal and interest are considered adequate, but elements
may be present which suggest a susceptibility to impairment
some time in the future.
Baa-Bonds which are rated "Baa" are considered as medium-
grade obligations, i.e., they are neither highly protected
nor poorly secured. Interest payments and principal security
appear adequate for the present but certain protective
elements may be lacking or may be characteristically
unreliable over any great length of time. Such bonds lack
outstanding investment characteristics and in fact have
speculative characteristics as well.
Ba-Bonds which are "Ba" are judged to have speculative
elements; their future cannot be considered as well-assured.
Often the protection of interest and principal payments may
be very moderate and thereby not well safeguarded during
both good and bad times over the future. Uncertainty of
position characterizes bonds in this class.
B-Bonds which are rated "B" generally lack characteristics
of the desirable investment. Assurance of interest and
principal payments or of maintenance of other terms of the
contract over any long period of time may be small.
Fitch Investors Service, Inc., Investment Grade Bond Rating
Definitions
AAA-Bonds considered to be investment grade and of the
highest credit quality. The obligor has an exceptionally
strong ability to pay interest and repay principal, which is
unlikely to be affected by reasonably foreseeable events.
AA-Bonds considered to be investment grade and of very high
credit quality. The obligor's ability to pay interest and
repay principal is very strong, although not quite as strong
as bonds rated "AAA". Because bonds rated in the "AAA" and
"AA" categories are not significantly vulnerable to
foreseeable future developments, short-term debt of these
issuers is generally rated "F-1+".
A-Bonds considered to be investment grade and of high credit
quality. The obligor's ability to pay interest and repay
principal is considered to be strong, but may be more
vulnerable to adverse changes in economic conditions and
circumstances than bonds with higher ratings.
BBB-Bonds considered to be investment grade and of
satisfactory credit quality. The obligor's ability to pay
interest and repay principal is considered to be adequate.
Adverse changes in economic conditions and circumstances,
however, are more likely to have adverse impact on these
bonds, and therefore impair timely payment. The likelihood
that the ratings of these bonds will fall below investment
grade is higher than for bonds with higher ratings.
BB-Bonds are considered speculative. The obligor's ability
to pay interest and repay principal may be affected over
time by adverse economic changes. However, business and
financial alternatives can be identified which could assist
the obligor in satisfying its debt service requirements.
B-Bonds are considered highly speculative. While bonds in
this class are currently meeting debt service requirements,
the probability of continued timely payment of principal and
interest reflects the obligor's limited margin of safety and
the need for reasonable business and economic activity
throughout the life of the issue.
Standard & Poor's Ratings Group Commercial Paper Rating
Definitions
A-1-This designation indicates that the degree of safety
regarding timely payment is strong. Those issues determined
to possess extremely strong safety characteristics are
denoted with a plus (+) sign designation.
A-2-Capacity for timely payment on issues with this
designation is strong. However, the relative degree of
safety is not as high as for issues designated A-1.
Moody's Investors Service, Inc., Commercial Paper Rating
Definitions
P-1-Issuers rated Prime-1 (or related supporting
institutions) have a superior capacity for repayment of
short-term promissory obligations. Prime-1 repayment
capacity will normally be evidenced by the following
characteristics: Leading market positions in well
established industries; High rates of return on funds
employed; Conservative capitalization structures with
moderate reliance on debt and ample asset protection; Broad
margins in earning coverage of fixed financial charges and
high internal cash generation; and Well established access
to a range of financial markets and assured sources of
alternate liquidity.
P-2-Issuers rated Prime-2 (or related supporting
institutions) have a strong capacity for repayment of short-
term promissory obligations. This will normally be evidenced
by many of the characteristics cited above but to a lesser
degree. Earnings trends and coverage ratios, while sound,
will be more subject to variation. Capitalization
characteristics, while still appropriate, may be more
affected by external conditions. Ample alternate liquidity
is maintained.
Fitch Investors Service, Inc., Short-Term Debt Rating
Definitions
F-1+-Exceptionally Strong Credit Quality. Issues assigned
this rating are regarded as having the strongest degree of
assurance for timely payment.
F-1-Very Strong Credit Quality. Issues assigned this rating
reflect an assurance of timely payment only slightly less in
degree than issues rated F-1+.
F-2-Good Credit Quality. Issues carrying this rating have a
satisfactory degree of assurance for timely payment, but the
margin of safety is not as great as for issues assigned F-1+
and F-1 ratings.

820482206
820482883
820482305
820482875
820482701
820482834
820482750
820482768
3120919B (12/94)

SHAWMUT
INCOME FUNDS
PROSPECTUS
INVESTMENT SHARES

LIMITED TERM INCOME
INTERMEDIATE GOVERNMENT INCOME
FIXED INCOME
CONNECTICUT INTERMEDIATE
MUNICIPAL INCOME
MASSACHUSETTS INTERMEDIATE
MUNICIPAL INCOME

December 31, 1994

SHAWMUT LIMITED TERM INCOME FUND
SHAWMUT INTERMEDIATE GOVERNMENT
INCOME FUND
SHAWMUT FIXED INCOME FUND
SHAWMUT CONNECTICUT INTERMEDIATE
MUNICIPAL INCOME FUND
SHAWMUT MASSACHUSETTS INTERMEDIATE
The Shawmut Income Funds MUNICIPAL INCOME FUND
Investment Shares--Combined Prospectus

The shares offered by this prospectus represent interests in Investment Shares
of the income portfolios (collectively, the "Income Funds" or individually, as
appropriate in context, the "Fund") of The Shawmut Funds (the "Trust"), an
open-end management investment company (a mutual fund). In addition to the
Income Funds, the Trust consists of the following separate investment
portfolios, each having distinct investment objectives and policies:

<TABLE>
<S> <C>
EQUITY FUNDS MONEY MARKET FUNDS
Shawmut Growth and Income Equity Fund Shawmut Prime Money Market Fund
Shawmut Growth Equity Fund Shawmut Connecticut Municipal Money
Shawmut Small Capitalization Equity Fund Market Fund
Shawmut Quantitative Equity Fund Shawmut Massachusetts Municipal Money
Market Fund
</TABLE>

This combined prospectus contains the information you should read and know
before you invest in the Income Funds. Keep this prospectus for future
reference. The Income Funds have also filed a Combined Statement of Additional
Information for Trust Shares and Investment Shares dated December 31, 1994,
with the Securities and Exchange Commission. The information contained in the
Combined Statement of Additional Information is incorporated by reference into
this prospectus. You may request a copy of the Combined Statement of Additional
Information free of charge, obtain other information, or make inquiries about
the Income Funds by writing or calling the Trust.

ALTHOUGH INCOME FUNDS MAY PAY HIGHER RATES THAN BANK DEPOSITS, THEIR NET ASSET
VALUES ARE SENSITIVE TO INTEREST RATE MOVEMENT AND A RISE IN INTEREST RATES CAN
RESULT IN A DECLINE IN THE VALUE OF YOUR INVESTMENT.

THE SHARES OFFERED BY THIS PROSPECTUS ARE NOT DEPOSITS OR OBLIGATIONS OF
SHAWMUT BANK, ARE NOT ENDORSED OR GUARANTEED BY SHAWMUT BANK, AND ARE NOT
INSURED BY THE FEDERAL DEPOSIT INSURANCE CORPORATION, AND THE FEDERAL RESERVE
BOARD OR ANY OTHER GOVERNMENT AGENCY. INVESTMENT IN THESE SHARES INVOLVES
INVESTMENT RISKS, INCLUDING FLUCTUATIONS IN VALUE AND EARNINGS AND THE POSSIBLE
LOSS OF PRINCIPAL INVESTED.

INVESTMENT SHARES OF THE SHAWMUT FUNDS ARE AVAILABLE THROUGH REGISTERED
REPRESENTATIVES OF SHAWMUT BROKERAGE, INC., OR OTHER BROKERS, MEMBER NASD/SIPC,
SHAWMUT BROKERAGE, INC. IS AN AFFILIATE OF SHAWMUT BANK.

Prospectus dated December 31, 1994

Table of Contents
- --------------------------------------------------------------------------------

SYNOPSIS..................................................................... 2
- --------------------------------------------------------------------------------

EXPENSE SUMMARY.............................................................. 3
- --------------------------------------------------------------------------------

FINANCIAL HIGHLIGHTS......................................................... 4
- --------------------------------------------------------------------------------

GENERAL INFORMATION.......................................................... 6
- --------------------------------------------------------------------------------

THE SHAWMUT PORTFOLIOS....................................................... 6
- --------------------------------------------------------------------------------

OBJECTIVES AND POLICIES...................................................... 6
- --------------------------------------------------------------------------------

INVESTMENTS, STRATEGIES, AND RISKS........................................... 11
- --------------------------------------------------------------------------------

ADMINISTRATION............................................................... 19
- --------------------------------------------------------------------------------

NET ASSET VALUE.............................................................. 22
- --------------------------------------------------------------------------------

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

EXCHANGE PRIVILEGE........................................................... 26
- --------------------------------------------------------------------------------

REDEEMING SHARES............................................................. 27
- --------------------------------------------------------------------------------

SHAREHOLDER INFORMATION...................................................... 29
- --------------------------------------------------------------------------------

EFFECT OF BANKING LAWS....................................................... 30
- --------------------------------------------------------------------------------

TAX INFORMATION.............................................................. 31
- --------------------------------------------------------------------------------

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

PERFORMANCE INFORMATION...................................................... 32
- --------------------------------------------------------------------------------

Synopsis
INVESTMENT OBJECTIVES

The Shawmut Funds offer you a convenient, affordable way to participate in
separate, professionally managed portfolios of securities. This prospectus
relates only to the Income Funds of the Trust.

INCOME FUNDS

SHAWMUT LIMITED TERM INCOME FUND

("Limited Term Income Fund") seeks current income consistent with low principal
volatility and total return by investing in a portfolio of income-producing
securities with a term limited to a dollar-weighted average maturity of three
years or less.

SHAWMUT INTERMEDIATE GOVERNMENT INCOME FUND

("Intermediate Government Income Fund") seeks current income consistent with
total return by investing in a portfolio consisting primarily of U.S.
government securities with a dollar-weighted average maturity of between three
and ten years.

SHAWMUT FIXED INCOME FUND

("Fixed Income Fund") seeks current income consistent with total return by
investing in income-producing securities consisting primarily of
investment-grade notes and bonds and U.S. government securities.

SHAWMUT CONNECTICUT INTERMEDIATE MUNICIPAL INCOME FUND

("Connecticut Intermediate Municipal Income Fund") seeks current income which
is exempt from federal regular income tax and Connecticut state income tax by
investing primarily in Connecticut municipal securities, including securities
of states, territories, and possessions of the United States which are not
issued by or on behalf of Connecticut or its political subdivisions and
financing authorities, but which are exempt from Connecticut state income tax.

SHAWMUT MASSACHUSETTS INTERMEDIATE MUNICIPAL INCOME FUND

("Massachusetts Intermediate Municipal Income Fund") seeks current income which
is exempt from federal regular income tax and income taxes imposed by the
Commonwealth of Massachusetts by investing primarily in Massachusetts municipal
securities, including securities of states, territories, and possessions of the
United States which are not issued by or on behalf of Massachusetts or its
political subdivisions and financing authorities, but which are exempt from
Massachusetts state income tax.

BUYING SHARES

FUND MANAGEMENT

The Income Funds' investment adviser is Shawmut Bank, N.A., which makes
investment decisions for the Income Funds.

SHAREHOLDER SERVICES

When you become a shareholder, you can easily obtain information about your
account by calling 1-800-SHAWMUT.

THE SHAWMUT INCOME FUNDS
Expense Summary
Investment Shares
<TABLE>
<CAPTION>
PORTFOLIOS
CONNECTICUT
LIMITED INTERMEDIATE INTERMEDIATE
TERM GOVERNMENT FIXED MUNICIPAL
INCOME INCOME INCOME INCOME
FUND FUND FUND FUND*
<S> <C> <C> <C> <C>
SHAREHOLDER TRANSACTION EXPENSES
Maximum Sales Load Imposed on Purchases
(as a percentage of offering price) 2.00% 2.00% 2.00% 2.00%
Maximum Sales Load Imposed on Reinvested
Dividends
(as a percentage of offering price) None None None None
Contingent Deferred Sales Charge (as a percentage
of original
purchase price or redemption proceeds as
applicable) None None None None
Redemption Fee (as a percentage of amount
redeemed, if applicable) None None None None
Exchange Fee None None None None
ANNUAL INVESTMENT SHARES OPERATING EXPENSES
(As a percentage of average net assets)
Management Fee (after waivers)(1) 0.60% 0.60% 0.60% 0.00%
12b-1 Fees(2) 0.25% 0.25% 0.25% 0.00%
Total Other Expenses (after waivers
and reimbursements)(3) 0.43% 0.41% 0.34% 0.48%
Total Investment Shares Operating Expenses (after
waivers
and reimbursements)(4) 1.28% 1.26% 1.19% 0.48%

<CAPTION>
MASSACHUSETTS
INTERMEDIATE
MUNICIPAL
INCOME
FUND*
<S> <C>
SHAREHOLDER TRANSACTION EXPENSES
Maximum Sales Load Imposed on Purchases
(as a percentage of offering price) 2.00%
Maximum Sales Load Imposed on Reinvested
Dividends
(as a percentage of offering price) None
Contingent Deferred Sales Charge (as a percentage
of original
purchase price or redemption proceeds as
applicable) None
Redemption Fee (as a percentage of amount
redeemed, if applicable) None
Exchange Fee None
ANNUAL INVESTMENT SHARES OPERATING EXPENSES
(As a percentage of average net assets)
Management Fee (after waivers)(1) 0.00%
12b-1 Fees(2) 0.00%
Total Other Expenses (after waivers
and reimbursements)(3) 0.51%
Total Investment Shares Operating Expenses (after
waivers
and reimbursements)(4) 0.51%
</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 is 0.70% for
Connecticut Intermediate Municipal Income Fund and Massachusetts
Intermediate Municipal Income Fund; and 0.80% for Fixed Income Fund,
Intermediate Government Income Fund, and Limited Term Income Fund.

(2) The 12b-1 fee has been reduced to reflect the voluntary waiver by the
distributor. As of the date of this prospectus, neither the Connecticut
Intermediate Municipal Income Fund nor the Massachusetts Intermediate
Municipal Income Fund intend to accrue or pay 12b-1 fees until either a
separate class of shares has been created for certain fiduciary investors
for these portfolios or a determination is made that such investors will be
subject to the 12b-1 fees. The Income Funds can pay up to 0.50% as a 12b-1
fee to the distributor.

(3) Other expenses have been reduced to reflect the voluntary waiver by the
custodian for all funds; and reimbursement by the adviser for the
Connecticut Intermediate Municipal Income Fund and the Massachusetts
Municipal Income Fund.

(4) Absent the voluntary waivers and reimbursements explained in the above
footnotes, the Investment Shares Operating Expenses are 3.09% for the
Connecticut Intermediate Municipal Income Fund; 4.21% for the Massachusetts
Intermediate Municipal Income Fund; 1.68% for the Fixed Income Fund; 1.74%
for the Intermediate Government Income Fund; and 1.76% for the Limited Term
Income Fund.

*Connecticut Intermediate Municipal Income Fund and Massachusetts Intermediate
Municipal Income Fund currently sell their shares without class designation.
Purchasers of either the Trust Shares or Investment Shares of the other
Shawmut Funds may purchase shares of Connecticut Intermediate Municipal Income
Fund and Massachusetts Intermediate Municipal Income Fund.

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. As noted in the
table above, the Income Funds charge no contingent deferred sales charge.

<TABLE>
<CAPTION>
1 Year 3 Years 5 Years 10 Years
<S> <C> <C> <C> <C>
Limited Term Income Fund........................................................ $33 $60 $89 $171
Intermediate Government Income Fund............................................. $33 $59 $88 $169
Fixed Income Fund............................................................... $32 $57 $84 $161
Connecticut Intermediate Municipal Income Fund.................................. $25 $35 $46 $ 79
Massachusetts Intermediate Municipal Income Fund................................ $25 $36 $48 $ 83
</TABLE>

THE ABOVE EXAMPLES SHOULD NOT BE CONSIDERED A REPRESENTATION OF PAST OR FUTURE
EXPENSES. ACTUAL EXPENSES MAY BE GREATER OR LESS THAN THOSE SHOWN.

The information set forth in the foregoing table and example relates only to
Investment Shares of the Income Funds. Fixed Income Fund, Intermediate
Government Income Fund, and Limited Term Income Fund also offer another class of
shares called Trust Shares. Trust Shares and Investment Shares are subject to
certain of the same expenses; however, Investment Shares are subject to a 12b-1
fee of up to .50 of 1% of average net assets. See "Other Classes of Shares."

SHAWMUT INCOME FUNDS
Financial Highlights

(FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD)

The following table has been audited by Price Waterhouse LLP, the Income Funds'
independent accountants whose report thereon dated December 16, 1994, is
included in the Annual Report of the Shawmut Funds for the fiscal year ended
October 31, 1994, which is incorporated by reference into the Statement of
Additional Information. This table should be read in conjunction with the
Income Funds' financial statements and notes thereto, which may be obtained
from the Income Funds.

<TABLE>
<CAPTION>
DISTRIBUTIONS
NET REALIZED DIVIDENDS TO
AND TO SHAREHOLDERS
NET ASSET UNREALIZED TOTAL SHAREHOLDERS FROM NET
YEAR ENDED VALUE, NET GAIN/(LOSS) FROM FROM NET REALIZED GAIN
OCTOBER BEGINNING INVESTMENT ON INVESTMENT INVESTMENT ON INVESTMENT
31, OF PERIOD INCOME INVESTMENTS OPERATIONS INCOME TRANSACTIONS
<S> <C> <C> <C> <C> <C> <C>
<CAPTION>
INVESTMENT SHARES
LIMITED TERM INCOME FUND
<S> <C> <C> <C> <C> <C> <C>
1993* $10.09 0.34 (0.09) 0.25 (0.34) --
1994 $10.00 0.49 (0.58) (0.09) (0.46) --
<CAPTION>
INTERMEDIATE GOVERNMENT INCOME FUND
<S> <C> <C> <C> <C> <C> <C>
1993* $10.18 0.37 0.08 0.45 (0.37) --
1994 $10.26 0.52 (0.92) (0.40) (0.49) --
<CAPTION>
FIXED INCOME FUND
<S> <C> <C> <C> <C> <C> <C>
1993* $10.23 0.40 0.31 0.71 (0.39) --
1994 $10.55 0.59 (1.21) (0.62) (0.56) (0.05)
<CAPTION>
CONNECTICUT INTERMEDIATE MUNICIPAL INCOME FUND++
<S> <C> <C> <C> <C> <C> <C>
1993** $10.00 0.13 0.24 0.37 (0.13) --
1994 $10.24 0.42 (0.93) (0.51) (0.40) (0.01)
<CAPTION>
MASSACHUSETTS INTERMEDIATE MUNICIPAL INCOME FUND++
<S> <C> <C> <C> <C> <C> <C>
1993** $10.00 0.14 0.29 0.43 (0.13) --
1994 $10.30 0.42 (0.99) (0.57) (0.42) --
<CAPTION>

TRUST SHARES
<S> <C> <C> <C> <C> <C> <C>
LIMITED TERM INCOME FUND
1993*** $10.00 0.49 -- 0.49 (0.49) --
1994 $10.00 0.52 (0.59) (0.07) (0.48) --
INTERMEDIATE GOVERNMENT INCOME FUND
1993*** $10.00 0.52 0.26 0.78 (0.52) --
1994 $10.26 0.54 (0.92) (0.38) (0.51) --
FIXED INCOME FUND
1993*** $10.00 0.55 0.55 1.10 (0.55) --
1994 $10.55 0.62 (1.22) (0.60) (0.58) (0.05)
CONNECTICUT INTERMEDIATE MUNICIPAL INCOME FUND++
1993** $10.00 0.13 0.24 0.37 (0.13) --
1994 $10.24 0.42 (0.93) (0.51) (0.40) (0.01)
MASSACHUSETTS INTERMEDIATE MUNICIPAL INCOME FUND++
1993** $10.00 0.14 0.29 0.43 (0.13) --
1994 $10.30 0.42 (0.99) (0.57) (0.42) --
</TABLE>

* For the period from February 12, 1993 (date of initial public offering) to
October 31, 1993.

** For the period from June 17, 1993 (date of initial public investment) to
October 31, 1993.

*** For the period from December 14, 1992 (date of initial public investment)
to October 31, 1993.

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

++ Connecticut Intermediate Municipal Income Fund and Massachusetts
Intermediate
Municipal Income Fund sell their shares without class designation.

<TABLE>
<CAPTION>
NET ASSET NET NET ASSETS, PORTFOLIO
TOTAL VALUE, END TOTAL INVESTMENT EXPENSE WAIVER/ END OF PERIOD TURNOVER
DISTRIBUTIONS OF PERIOD RETURN+ EXPENSES INCOME REIMBURSEMENT(B) (000 OMITTED) RATE
<S> <C> <C> <C> <C> <C> <C> <C>
(0.34) $ 10.00 2.57% 1.13%(a) 5.07%(a) 0.48%(a) $ 3,859 53%
(0.46) $ 9.45 (0.96%) 1.28% 5.01% 0.48% $ 7,219 144%
(0.37) $ 10.26 4.45% 1.15%(a) 5.41%(a) 0.50%(a) $ 13,812 30%
(0.49) $ 9.37 (3.99%) 1.26% 5.29% 0.48% $ 11,032 84%
(0.39) $ 10.55 7.02% 1.12%(a) 5.61%(a) 0.48%(a) $ 9,550 33%
(0.61) $ 9.32 (6.08%) 1.19% 5.95% 0.49% $ 8,414 73%
(0.13) $ 10.24 3.75% 0.50%(a) 3.80%(a) 2.33%(a) $ 7,288 8%
(0.41) $ 9.32 (5.17%) 0.48% 4.23% 2.61% $ 8,002 59%
(0.13) $ 10.30 4.35% 0.50%(a) 4.07%(a) 3.57%(a) $ 4,009 0%
(0.42) $ 9.31 (5.71%) 0.51% 4.35% 3.70% $ 6,568 41%

(0.49) $ 10.00 5.02% 0.88%(a) 5.54%(a) 0.23%(a) $ 66,998 53%
(0.48) $ 9.45 (0.69%) 1.03% 5.26% 0.23% $ 55,187 144%
(0.52) $ 10.26 7.97% 0.88%(a) 5.83%(a) 0.26%(a) $ 62,399 30%
(0.51) $ 9.37 (3.75%) 1.01% 5.54% 0.23% $ 57,551 84%
(0.55) $ 10.55 11.26% 0.85%(a) 6.06%(a) 0.22%(a) $ 92,485 33%
(0.63) $ 9.32 (5.85%) 0.94% 6.20% 0.24% $ 82,468 73%
(0.13) $ 10.24 3.75% 0.50%(a) 3.80%(a) 2.33%(a) $ 7,288 8%
(0.41) $ 9.32 (5.17%) 0.48% 4.23% 2.61% $ 8,002 59%
(0.13) $ 10.30 4.35% 0.50%(a) 4.07%(a) 3.57%(a) $ 4,009 0%
(0.42) $ 9.31 (5.71%) 0.51% 4.35% 3.70% $ 6,568 41%
</TABLE>

(a) Computed on an annualized basis.

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

(See Notes which are an integral part of the Financial Statements)

Further information about the Income Funds is contained in the Trust's
Combined Annual Report dated October 31, 1994, which can be obtained free of
charge.

GENERAL INFORMATION

The Trust was established as a Massachusetts business trust under a
Declaration of Trust dated July 16, 1992. The Declaration of Trust permits the
Trust to offer separate series of shares 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 Board of Trustees
(the "Trustees") has established two classes of shares of several of the
Income Funds, known as Trust Shares and Investment Shares. This prospectus
relates only to Investment Shares of the Income Funds that offer separate
classes of shares. Investment Shares are sold primarily to financial
institutions that rely upon the distribution services provided by the
distributor in the marketing of Investment Shares, as well as to retail
customers of such institutions.

A minimum initial investment of $1,000 may be required. Subsequent investments
must be in amounts of at least $100, as described in this prospectus in the
section entitled "Minimum Investment Required," or $50 for participants in the
Systematic Investment Program. Investment Shares are currently sold at net
asset value with a sales charge imposed by the Income Funds, as described in
this prospectus.

THE SHAWMUT PORTFOLIOS

The shareholders of the Income Funds are shareholders of The Shawmut Funds,
which currently consist of Shawmut Connecticut Intermediate Municipal Income
Fund, Shawmut Connecticut Municipal Money Market Fund, Shawmut Fixed Income
Fund, Shawmut Growth and Income Equity Fund, Shawmut Growth Equity Fund,
Shawmut Intermediate Government Income Fund, Shawmut Limited Term Income Fund,
Shawmut Massachusetts Intermediate Municipal Income Fund, Shawmut
Massachusetts Municipal Money Market Fund, Shawmut Prime Money Market Fund,
Shawmut Quantitative Equity Fund, and Shawmut Small Capitalization Equity
Fund. Shareholders in the Income Funds have easy access to the other
portfolios of The Shawmut Funds through an exchange program. The Shawmut Funds
are advised by Shawmut Bank, N.A., and distributed by Federated Securities
Corp.

OBJECTIVES AND POLICIES
LIMITED TERM INCOME FUND

INVESTMENT OBJECTIVE

The investment objective of the Limited Term Income Fund is current income
consistent with low principal volatility and total return. The investment
objective cannot be changed without approval of shareholders. While there is no
assurance that the Limited Term Income Fund will achieve its investment
objective, it endeavors to do so by following the investment policies described
in this prospectus.

INVESTMENT POLICIES

THE LIMITED TERM INCOME FUND PURSUES ITS INVESTMENT OBJECTIVE BY INVESTING
PRIMARILY IN A PORTFOLIO OF INVESTMENT GRADE BONDS AND NOTES AND U.S.
GOVERNMENT SECURITIES.

The Limited Term Income Fund will maintain a dollar-weighted average maturity
of three years or less. For purposes of computing average maturity, the Limited
Term Income Fund considers the market accepted average life of the assets of
the Limited Term Income Fund. Market accepted average life considers the
anticipated prepayment or call of underlying securities that might influence
stated maturity. The investment policies described above may be changed by the
Trustees
without shareholder approval. Shareholders will be notified before any material
change in these investment policies becomes effective.

ACCEPTABLE INVESTMENTS

Under normal circumstances, the Limited Term Income Fund will invest at least
65% of the total value of its assets in income producing securities. The
securities in which the Limited Term Income Fund invests include, but are not
limited to:

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

obligations of U.S. government agencies or instrumentalities such as Federal
Home Loan Banks, Federal National Mortgage Association, Government National
Mortgage Association, Federal Farm Credit Banks, Student Loan Marketing
Association, or Federal Home Loan Mortgage Corporation;

domestic issues of corporate debt obligations having floating or fixed rates
of interest and rated in one of the five highest categories by a nationally
recognized statistical rating organization rated Aaa, Aa, A, Baa, or Ba by
Moody's Investors Service, Inc. ("Moody's") or AAA, AA, A, BBB, or BB by
Standard & Poor's Ratings Group ("Standard & Poor's") or Fitch's Investors
Service, Inc. ("Fitch"), or which are of comparable quality in the judgment
of the adviser;

commercial paper rated Prime-1 or Prime-2 by Moody's, A-1 or A-2 by
Standard & Poor's, or F-1 or F-2 by Fitch;

asset-backed securities rated BBB or higher by a nationally recognized
statistical rating organization, which may include, but are not limited
to, interests in pools of receivables such as motor vehicle installment
purchase obligations and credit card receivables, and mortgage-related
asset-backed securities;

repurchase agreements collateralized by eligible investments; and

certain derivative securities.

INTERMEDIATE GOVERNMENT INCOME FUND

INVESTMENT OBJECTIVE

The investment objective of the Intermediate Government Income Fund is current
income consistent with total return. The investment objective cannot be changed
without approval of shareholders. While there is no assurance that the
Intermediate Government Income Fund will achieve its investment objective, it
endeavors to do so by following the investment policies described in this
prospectus.

INVESTMENT POLICIES

THE INTERMEDIATE GOVERNMENT INCOME FUND PURSUES ITS INVESTMENT OBJECTIVE BY
INVESTING IN A PORTFOLIO OF INVESTMENT GRADE BONDS AND NOTES AND U.S.
GOVERNMENT SECURITIES.

The Intermediate Government Income Fund will maintain a dollar-weighted average
maturity of between three to ten years. For purposes of computing average
maturity, the Intermediate Government Income Fund considers the market accepted
average life of the assets of the Intermediate Government Income Fund. Market
accepted average life considers the anticipated prepayment or call of
underlying securities that might influence stated maturity. The investment
policies described above may be changed by the Trustees without the approval of
shareholders. Shareholders will be notified before any material change in these
investment policies becomes effective.

ACCEPTABLE INVESTMENTS

Under normal circumstances, the Intermediate Government Income Fund will invest
at least 65% of the total value of its assets in U.S. government securities.
The securities in which the Intermediate Government Income Fund invests
include, but are not limited to:

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

domestic issues of corporate debt obligations having floating or fixed rates
of interest and rated in one of the five highest categories by a nationally
recognized statistical rating organization rated Aaa, Aa, A, Baa, or Ba by
Moody's or AAA, AA, A, BBB, or BB by Standard & Poor's or Fitch, or which
are of comparable quality in the judgment of the adviser;

asset-backed securities rated BBB or higher by a nationally recognized
statistical rating organization, which may include, but are not limited to,
interests in pools of receivables such as motor vehicle installment
purchase obligations and credit card receivables, and mortgage-related
asset-backed securities;

repurchase agreements collateralized by eligible investments; and

certain derivative securities.

FIXED INCOME FUND

INVESTMENT OBJECTIVE

The investment objective of the Fixed Income Fund is current income consistent
with total return. The investment objective cannot be changed without approval
of shareholders. While there is no assurance that the Fixed Income Fund will
achieve its investment objective, it endeavors to do so by following the
investment policies described in this prospectus.

INVESTMENT POLICIES

THE FIXED INCOME FUND PURSUES ITS INVESTMENT OBJECTIVE BY INVESTING PRIMARILY
IN A PORTFOLIO OF INVESTMENT GRADE NOTES AND BONDS AND U.S. GOVERNMENT
SECURITIES.

The investment policies described above may be changed by the Trustees without
shareholder approval. Shareholders will be notified before any material change
in these policies becomes effective.

ACCEPTABLE INVESTMENTS

Under normal circumstances, the Fixed Income Fund will invest at least 65% of
the total value of its assets in fixed income securities. The securities in
which the Fixed Income Fund invests include, but are not limited to:

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

obligations of U.S. government agencies or instrumentalities such as Federal
Home Loan Banks, Federal National Mortgage Association, Government National
Mortgage Association, Federal Farm Credit Land Banks, Student Loan Marketing
Association, or Federal Home Loan Mortgage Corporation;

domestic issues of corporate debt obligations having floating or fixed rates
of interest and rated in one of the five highest categories by a nationally
recognized statistical rating organization rated Aaa, Aa, A, Baa, or Ba by
Moody's or
AAA, AA, A, BBB, or BB by Standard & Poor's or Fitch, or which are of
comparable quality in the judgment of the adviser;

commercial paper rated Prime-1 or Prime-2 by Moody's, A-1 or A-2 by
Standard & Poor's, or F-1 or F-2 by Fitch;

repurchase agreements collateralized by eligible investments; and

certain derivative securities.

CONNECTICUT INTERMEDIATE MUNICIPAL INCOME FUND

INVESTMENT OBJECTIVE

The investment objective of the Connecticut Intermediate Municipal Income Fund
is current income which is exempt from federal regular income tax and
Connecticut state income tax. The investment objective cannot be changed
without approval of shareholders. While there is no assurance that the
Connecticut Intermediate Municipal Income Fund will achieve its investment
objective, it endeavors to do so by following the investment policies described
in this prospectus.

INVESTMENT POLICIES

THE CONNECTICUT INTERMEDIATE MUNICIPAL INCOME FUND PURSUES ITS INVESTMENT
OBJECTIVE BY INVESTING PRIMARILY IN A PORTFOLIO OF CONNECTICUT MUNICIPAL
SECURITIES.

The investment policies may be changed by the Trustees without the approval of
shareholders.

Shareholders will be notified before any material change in these investment
policies becomes effective. As a matter of investment policy, which may not be
changed without shareholder approval, the Connecticut Intermediate Municipal
Income Fund will invest its assets so that, under normal circumstances, at
least 80% of its annual interest income is exempt from federal regular income
tax or that at least 80% of the total value of its assets are invested in
obligations the interest income from which is exempt from federal regular
income tax.

ACCEPTABLE INVESTMENTS

Under normal circumstances, the Connecticut Intermediate Municipal Income Fund
will invest its assets so that at least 65% of the value of its total assets
will be invested in debt obligations issued by or on behalf of the State of
Connecticut and its political subdivisions and financing authorities, and
obligations of other 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 regular income tax and Connecticut
state income tax imposed upon non-corporate taxpayers ("Connecticut Municipal
Securities"). The Connecticut Intermediate Municipal Income Fund will maintain
a dollar-weighted average maturity of between three to ten years. The
Connecticut Municipal Securities in which the Connecticut Intermediate
Municipal Income Fund invests are subject to the following quality standards:

rated Baa or above by Moody's or BBB or above by Standard & Poor's or Fitch. A
description of the rating categories is contained in the Appendix to the
Combined Statement of Additional Information; or

insured by a municipal bond insurance company which is rated Aaa by Moody's
or AAA by Standard & Poor's or Fitch; or

guaranteed at the time of purchase by the U.S. government as to the payment
of principal and interest; or

fully collateralized by an escrow of U.S. government securities; or

unrated if determined to be of comparable quality to one of the foregoing
rating categories by the Connecticut Intermediate Municipal Income Fund's
investment adviser; or

are appropriately rated derivative securities.

MASSACHUSETTS INTERMEDIATE MUNICIPAL INCOME FUND

INVESTMENT OBJECTIVE

The investment objective of the Massachusetts Intermediate Municipal Income
Fund is current income which is exempt from federal regular income tax and
income taxes imposed by the Commonwealth of Massachusetts. The investment
objective cannot be changed without approval of shareholders. While there is no
assurance that the Massachusetts Intermediate Municipal Income Fund will
achieve its investment objective, it endeavors to do so by following the
investment policies described in this prospectus.

INVESTMENT POLICIES

THE MASSACHUSETTS INTERMEDIATE MUNICIPAL INCOME FUND PURSUES ITS INVESTMENT
OBJECTIVE BY INVESTING PRIMARILY IN A PORTFOLIO OF MASSACHUSETTS MUNICIPAL
SECURITIES.

The investment policies described above may be changed by the Trustees without
the approval of shareholders. Shareholders will be notified before any material
change in these investment policies becomes effective. As a matter of
investment policy, which may not be changed without shareholder approval, the
Massachusetts Intermediate Municipal Income Fund will invest its assets so
that, under normal circumstances, at least 80% of its annual interest income is
exempt from federal regular income tax or that at least 80% of the total value
of its assets are invested in obligations the interest income from which is
exempt from federal regular income tax.

ACCEPTABLE INVESTMENTS

Under normal circumstances, the Massachusetts Intermediate Municipal Income
Fund will invest its assets so that at least 65% of the value of its total
assets will be invested in debt obligations issued by or on behalf of the
Commonwealth of Massachusetts and its political subdivisions and financing
authorities, and obligations of other 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 regular income
tax and Massachusetts state income tax imposed upon non-corporate taxpayers
("Massachusetts Municipal Securities"). The Massachusetts Intermediate
Municipal Income Fund will maintain a dollar-weighted average maturity of
between three to ten years. The Massachusetts Municipal Securities in which the
Massachusetts Intermediate Municipal Income Fund invests are subject to the
following quality standards:

rated Baa or above by Moody's or BBB or above by Standard & Poor's or Fitch. A
description of the rating categories is contained in the Appendix to the
Statement of Additional Information; or

insured by a municipal bond insurance company which is rated Aaa by Moody's
or AAA by Standard & Poor's or Fitch; or

guaranteed at the time of purchase by the U.S. government as to the payment
of principal and interest; or

fully collateralized by an escrow of U.S. government securities; or

unrated if determined to be of comparable quality to one of the foregoing
rating categories by the Fund's investment adviser; or

are appropriately rated derivative securities.

INVESTMENTS, STRATEGIES, AND RISKS

U.S. GOVERNMENT SECURITIES. Some obligations issued or guaranteed by agencies
or instrumentalities of the U.S. government, such as Government National
Mortgage Association participation certificates, are backed by the full faith
and credit of the U.S. Treasury. No assurances can be given that the U.S.
government will provide financial support to other agencies or
instrumentalities, since it is not obligated to do so. These instrumentalities
are supported by:

the issuer's right to borrow an amount limited to a specific line of credit
from the U.S. Treasury;

discretionary authority of the U.S. government to purchase certain
obligations of an agency or instrumentality; or

the credit of the agency or instrumentality.

CORPORATE DEBT OBLIGATIONS. The Fixed Income Fund, Intermediate Government
Income Fund, and Limited Term Income Fund may invest in corporate debt
obligations, including corporate bonds, notes, and debentures, which may
have floating or fixed rates of interest. Fixed Income Fund, Intermediate
Government Income Fund, and Limited Term Income Fund will not invest in
corporate debt obligations that are rated lower than Baa by Moody's or BBB
by Standard & Poor's or Fitch, except that each of these Funds may invest up
to 10% of the value of their respective total assets in corporate debt
obligations rated "Ba" or "BB" so long as not more than 1% of each
respective Fund's total assets is invested in the Ba-rated or BB-rated
obligations of a single issuer. Bonds rated Baa by Moody's or BBB by
Standard & Poor's or Fitch are considered medium grade obligations and are
regarded as having an adequate capacity to pay interest and repay principal.
They are neither highly protected nor poorly secured, but lack outstanding
investment characteristics and in fact have speculative characteristics as
well. Debt rated Ba by Moody's or BB by Standard & Poor's or Fitch are
judged to have speculative elements; their future can not be considered as
well assured. They face major ongoing uncertainties or exposure to adverse
business, financial, or economic conditions which could lead to inadequate
capacity to meet timely interest and principal payments. The rating may also
be used for debt subordinated to senior debt that is assigned an actual or
implied "Baa" or "BBB" rating, and may include obligations convertible into
equity investments. If a security loses its rating or has its rating reduced
after the Fund has purchased it, the Fund is not required to sell or
otherwise dispose of the security, but may consider doing so. If ratings
made by Moody's or Standard & Poor's change because of changes in those
organizations or in their ratings systems, the Fund will attempt to obtain
comparable ratings as substitute standards in accordance with the investment
policies of the Fund.

FLOATING RATE CORPORATE DEBT OBLIGATIONS. Fixed Income Fund, Intermediate
Government Income Fund, and Limited Term Income Fund expect to invest in
floating rate corporate debt obligations. Floating rate securities are
generally offered at an initial interest rate which is at or above
prevailing market rates. The interest rate paid on these securities is then
reset periodically (commonly every 90 days) to an increment over some
predetermined interest rate index. Commonly utilized indices include the
three-month Treasury bill rate, the 180-day Treasury bill rate, the one-
month or three-month London Interbank Offered Rate (LIBOR), the prime rate
of a bank, the commercial paper rates, or the longer-term rates on U.S.
Treasury securities.

FIXED RATE CORPORATE DEBT OBLIGATIONS. Fixed Income Fund, Intermediate
Government Income Fund, and Limited Term Income Fund may also invest in
fixed rate securities, including fixed rate securities with short-term
characteristics. Fixed rate securities with short-term characteristics are
long-term debt obligations, but are treated in the market as having short
maturities because call features of the securities may make them callable
within a short period of time. A fixed rate security with short-term
characteristics would include a fixed
income security priced close to call or redemption price or a fixed income
security approaching maturity, where the expectation of call or redemption
is high.

ASSET-BACKED SECURITIES. Fixed Income Fund, Intermediate Government Income
Fund, and Limited Term Income Fund may also invest in asset-backed
securities which are created by the grouping of certain governmental,
government related, and private loans, receivables and other lender assets,
including vehicle installment purchase obligations and credit card
receivables, into pools. Interests in these pools are sold as individual
securities and are not backed or guaranteed by the U.S. government. These
securities differ from other forms of debt securities, which normally
provide for periodic payment of interest in fixed amounts with principal
paid at maturity or specified call dates. Asset-backed securities, however,
provide periodic payments which generally consist of both interest and
principal payments. The estimated average life of an asset-backed security
and the average maturity of a portfolio including such assets varies with
the prepayment experience with respect to the underlying debt instruments.
The credit characteristics of asset-backed securities also differ in a
number of respects from those of traditional debt securities.

The credit quality of most asset-backed securities depends primarily upon
the credit quality of the assets underlying such securities, how well the
entity issuing the securities is insulated from the credit risk of the
originator or any other affiliated entities, and the amount and quality of
any credit support provided to such securities. Fixed Income Fund,
Intermediate Government Income Fund, and Limited Term Income Fund will not
invest in asset-backed securities that are rated lower than Baa by Moody's
or BBB by Standard & Poor's or Fitch.

Fixed Income Fund, Intermediate Government Income Fund, and Limited Term
Income Fund may also invest in mortgage-related asset-backed securities
which are issued by private entities such as investment banking firms and
companies related to the construction industry. The mortgage-related
securities in which Fixed Income Fund, Intermediate Government Income Fund,
and Limited Term Income 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; (iii) privately issued
securities in which the proceeds of the issuance are invested in mortgage-
backed securities and payment of the principal and interest is supported by
the credit of any agency or instrumentality of the U.S. government; or (iv)
other privately issued securities in which the proceeds of the issuance are
invested in mortgage-backed securities and payment of the principal and
interest is guaranteed or supported by the credit of a non-governmental
entity, including corporations. 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 Fixed Income Fund,
Intermediate Government Income Fund, and Limited Term Income Fund as income,
and the capital portion will be reinvested.

While mortgage-related securities generally entail less risk of a decline
during periods of rapidly rising interest rates, mortgage-related securities
may also have less potential for capital appreciation than other similar
investments (e.g., investments with comparable maturities) because as
interest rates decline, the likelihood increases that mortgages will be
prepaid. Furthermore, if mortgage-related securities are purchased at a
premium, mortgage foreclosures and unscheduled principal payments may result
in some loss of a holder's investment to the extent of the premium paid.
Conversely, if mortgage-related securities are purchased at a discount, both
a scheduled payment of principal and an unscheduled prepayment of principal
would increase current and total returns and would accelerate the
recognition of income, which would be taxed as ordinary income when
distributed to shareholders.

TEMPORARY INVESTMENTS. In such proportions as, in the judgment of its
investment adviser, prevailing market conditions warrant, Fixed Income Fund,
Intermediate Government Income Fund, and Limited Term Income Fund may, for
temporary defensive purposes, invest in:

short-term money market instruments rated in one of the top two rating
categories by a nationally recognized statistical rating organization;

securities issued and/or guaranteed as to payment of principal and
interest by the U.S. government, its agencies, or instrumentalities; and

repurchase agreements.

LENDING OF PORTFOLIO SECURITIES. In order to generate additional income,
the Income Funds may lend portfolio securities, on a short-term or
long-term basis or both, up to one-third of the value of its total assets
to broker/dealers, banks, or other institutional borrowers of securities.
The Income Funds 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
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 Income Funds on a timely basis and the Income
Funds 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.

DERIVATIVE SECURITIES. Each of the Income Funds may invest up to 20% of
the market value of each Income Fund's total assets in the derivative
securities described below.

OPTIONS AND FUTURES CONTRACTS. The Income Funds may buy and sell options
and futures contracts to manage their respective individual exposure to
changing interest rates, security prices, and currency exchange rates.
Some options and futures strategies, including selling futures, buying
puts, and writing calls, tend to hedge the Income Funds' respective
investments against price fluctuations. Other strategies, including
buying futures, writing puts, and buying calls, tend to increase market
exposure. Options and futures may be combined with each other or with
forward contracts in order to adjust the risk and return characteristics
of the overall strategy. The Income Funds may invest in options and
futures based on any type of security, index, or currency, including
options and futures traded on foreign exchanges and options not traded on
exchanges.

Options and futures can be volatile investments, and involve certain
risks. If the investment adviser applies a hedge at an inappropriate time
or judges market conditions incorrectly, options and futures may lower an
Income Fund's individual return. An Income Fund could also experience
losses if the prices of its options and futures positions were poorly
correlated with its other investments, or if it could not close out its
positions because of an illiquid secondary market.

Each of the Income Funds will not hedge more than 20% of their respective
total assets by selling futures, buying puts, and writing calls under
normal conditions. In addition, each of the Income Funds will not buy
futures or write puts whose underlying value exceeds 20% of their
respective total assets, and the Income Funds will not buy calls with a
value exceeding 5% of their respective total assets.

INDEXED SECURITIES. The Income Funds may invest in indexed securities,
sold by brokers or dealers or other financial institutions (such as
commercial banks) deemed creditworthy by the Income Fund's adviser, whose
value is linked to foreign currencies, interest rates, commodities,
indices, or other financial indicators. Most indexed securities are short
to intermediate term fixed-income securities whose values at maturity or
whose interest rates rise or fall according to the change in one or more
specified underlying instruments. Indexed securities may be positively or
negatively indexed
(i.e., their value may increase or decrease if the underlying instrument
appreciates), and may have return characteristics similar to direct
investments in the underlying instrument or to one or more options on the
underlying instrument. Indexed securities may be more volatile than the
underlying instrument itself. Each of the Income Funds intends to invest
not more than 5% of the market value of total assets in indexed
securities.

SWAP AGREEMENTS. As one way of managing its exposure to different types
of investments, each of the Income Funds may enter into interest rate
swaps, currency swaps, and other types of swap agreements such as caps,
collars, and floors. Depending on how they are used, swap agreements
may increase
or decrease the overall volatility of the Income Fund's investments, its
share price and yield.

Swap agreements are sophisticated hedging instruments that typically
involve a small investment of cash relative to the magnitude of risks
assumed. As a result, swaps can be highly volatile and may have a
considerable impact on an Income Fund's performance. Swap agreements are
subject to risks related to the counterparty's ability to perform, and
may decline in value if the counterparty's creditworthiness deteriorates.
An Income Fund may also suffer losses if it is unable to terminate
outstanding swap agreements to reduce its exposure through offsetting
transactions. When an Income Fund enters into a swap agreement, assets of
the Income Funds equal to the value of the swap agreement will be
segregated by the Income Funds. Each of the Income Funds intends to
invest not more than 5% of the market value of the Income Funds' total
assets in swap agreements.

REPURCHASE AGREEMENTS. The U.S. government securities and other
securities in which each Income Fund invests 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 an Income 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 an Income Fund, the Income Fund could
receive less than the repurchase price on any sale of such securities.

RESTRICTED AND ILLIQUID SECURITIES. The Income Funds intend to invest in
restricted securities. Restricted securities are any securities in which
each Income Fund may otherwise invest pursuant to its investment
objective and policies but which are subject to restriction on resale
under federal securities law. However, each Income Fund will limit
investments in illiquid securities, including certain restricted
securities not determined by the Trustees to be liquid, non-negotiable
fixed time deposits with maturities over seven days, over-the-counter
options, and repurchase agreements providing for settlement in more than
seven days after notice, to 15% of its net assets.

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

The Income Funds may dispose of a commitment prior to settlement if the
adviser deems it appropriate to do so. In addition, the Income Funds may
enter into 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 Income Funds may realize
short-term profits or losses upon the sale of such commitments.

INVESTING IN SECURITIES OF OTHER INVESTMENT COMPANIES. The Income Funds
may invest in the securities of other investment companies, but they will
not, respectively, own more than 3% of the total outstanding voting stock
of any investment company, invest more than 5% of their respective assets
in any one investment company, or invest more than 10% of their
respective total assets in investment companies in general. The Income
Funds will invest in other investment companies primarily for the purpose
of investing its short-term cash which has not yet been invested in other
portfolio instruments. However, from time to time, on a temporary basis,
each of the Income Funds may invest exclusively in one other investment
company managed similarly to the appropriate Fund. Shareholders should
realize that, when one of the Income Funds invests in other investment
companies, certain fund expenses, such as custodian fees and
administrative fees, may be duplicated. The adviser will waive its
investment advisory fee on assets invested in securities of other
investment companies.

The following acceptable investments apply only to the CONNECTICUT
INTERMEDIATE MUNICIPAL INCOME FUND and MASSACHUSETTS INTERMEDIATE
MUNICIPAL INCOME FUND (referred to jointly as the
"Connecticut/Massachusetts Intermediate Municipal Income Funds"):

PARTICIPATION INTERESTS. The Connecticut/Massachusetts Intermediate
Municipal Income Funds may purchase interests in Connecticut and
Massachusetts Municipal Securities, (collectively referred to as
"Municipal Securities"), respectively, 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 Connecticut/Massachusetts
Intermediate Municipal Income Funds to treat the income from the
investment as exempt from federal regular income tax. The
Connecticut/Massachusetts Intermediate Municipal Income Funds invest 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.

MUNICIPAL LEASES. The Connecticut/Massachusetts Intermediate Municipal
Income Funds may invest in municipal leases. Municipal leases are
obligations issued by state and local governments or authorities to
finance the acquisition of equipment and facilities and may be considered
to be illiquid. They may take the form of a lease, an installment
purchase contract, a conditional sales contract, or a participation
certificate in any of the above.

VARIABLE RATE DEMAND NOTES. Variable rate demand notes are long-term
Municipal Securities that have variable or floating interest rates and
provide the Connecticut/Massachusetts Intermediate Municipal Income Funds
with the right to tender the security for repurchase at its stated
principal amount plus accrued interest. The interest rate may float or be
adjusted at regular intervals (ranging from daily to annually) and is
normally based on a municipal interest index or another published
interest rate or interest rate index. Most variable rate demand notes
allow the Connecticut/Massachusetts Intermediate Municipal Income Funds
to demand the repurchase of the security on not more than seven days
prior notice. Other notes only permit the Connecticut/Massachusetts
Intermediate Municipal Income Funds to tender the security at the time of
each interest rate adjustment or at other fixed intervals. The
Connecticut/Massachusetts Intermediate Municipal Income Funds treat
variable rate demand notes as maturing on the later of the date of the
next interest adjustment or the date on which the
Connecticut/Massachusetts Intermediate Municipal Income Funds may next
tender the security for repurchase.

TENDER OPTION BONDS AND ZERO COUPON SECURITIES. The
Connecticut/Massachusetts Intermediate Municipal Income Funds may
purchase tender option bonds and similar securities. A tender option bond
generally has a long maturity and bears interest at a fixed rate
substantially higher than prevailing short-term tax-exempt rates, and is
coupled with an agreement by a third party, such as a bank,
broker/dealer, or other financial institution, pursuant to which such
institution grants the security holders the option, usually upon not more
than seven days notice or at periodic intervals, to tender their
securities to the institution and receive the face value of the security.
In providing the option, the financial institution receives a fee that
reduces the fixed rate of the underlying bond and results in the
Connecticut/Massachusetts Intermediate Municipal Income Funds effectively
receiving a demand obligation that bears interest at the prevailing
short-term tax exempt rate. The Connecticut/Massachusetts Intermediate
Municipal Income Funds' adviser will monitor, on an ongoing basis, the
creditworthiness of the issuer of the tender option bond, the financial
institution providing the option, and any custodian holding the
underlying long-term bond. The bankruptcy, receivership, or default of
any of the parties to the tender option bond will adversely affect the
quality and marketability of the security.

The Connecticut/Massachusetts Intermediate Municipal Income Funds may
also invest in zero coupon securities, which are debt securities issued
or sold at a discount from their face value. These securities do not
entitle the holder to any periodic payments of interest prior to
maturity. The discount from face value of these securities depends upon
various factors, including: the time remaining until maturity or cash
payment date, prevailing interest rates, the liquidity of the security,
and the perceived credit quality of the issuer. Zero coupon securities
may also take the form of debt securities that have been stripped of
their unmatured interest coupons. The market value of zero coupon
securities is generally
more volatile, and is more likely to react to changes in interest rates,
than the market value of interest-bearing securities with similar
maturities and credit qualities.

SYNTHETIC BOND DERIVATIVES. The Connecticut/Massachusetts Intermediate
Municipal Income Funds may invest its assets in derivative securities
that provide the Connecticut/Massachusetts Intermediate Municipal Income
Funds with tax-exempt income. These securities are formed when an
investment bank acquires all or part of a fixed rate municipal bond and
divides it into two classes of variable rate securities. One of these
classes of securities provides investors with a source of short-term,
variable rate, tax-exempt income that is determined through an auction
mechanism. The other class of security is sold as a residual rate
security, which has a long duration and also offers a source of
tax-exempt income. There is an inverse relationship between the rate of
interest income paid between the two classes of securities. This means
that the holder of the short-term security may receive interest income
that is greater than, or less than, the coupon rate of the underlying
fixed rate bond, and that the holder of the residual security would, for
the same period, receive a rate of return that is less than, or greater
than, as the case may be, the bond's coupon rate.

TEMPORARY INVESTMENTS. The Connecticut/Massachusetts Intermediate
Municipal Income Funds normally invest their assets so that at least 80%
of their annual interest income is exempt from federal regular income tax
or that at least 80% of the total value of their assets is invested in
obligations the interest income from which is exempt from federal regular
income tax. At least 65% of the value of the Connecticut Intermediate
Municipal Income Fund's total assets will be invested in Connecticut
Municipal Securities. At least 65% of the value of Massachusetts
Intermediate Municipal Income Fund's total assets will be invested in
Massachusetts Municipal Securities.

However, from time to time on a temporary basis, when the investment
adviser determines that market conditions call for a temporary defensive
posture, the Connecticut/Massachusetts Intermediate Municipal Income
Funds may invest in short-term tax-exempt or taxable temporary
investments. These temporary investments include: shares of similarly
managed mutual funds; notes issued by or on behalf of municipal or
corporate issuers; 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 the organization selling the
Connecticut/Massachusetts Intermediate Municipal Income Funds a bond or
temporary investment agrees at the time of sale to repurchase it at a
mutually agreed upon time and price).

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.

Although the Connecticut/Massachusetts Intermediate Municipal Income
Funds are permitted to make taxable, temporary investments, there is no
current intention of generating income that is not predominantly exempt
from federal regular income tax or state income tax.

CONNECTICUT AND MASSACHUSETTS MUNICIPAL SECURITIES. Connecticut and
Massachusetts Municipal Securities are generally issued to finance public
works, such as airports, bridges, highways, housing, health-related
entities, transportation-related projects, educational programs, water
and pollution control, 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.

Connecticut and Massachusetts 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.

MUNICIPAL BOND INSURANCE. The Connecticut/Massachusetts Intermediate
Municipal Income Funds may purchase Connecticut and Massachusetts
Municipal Securities covered by insurance which guarantees the timely
payment of principal at maturity and interest on such securities. These
insured Connecticut and Massachusetts Municipal Securities are either
(1) covered by an insurance policy applicable to a particular security,
whether obtained by the issuer of the security or by a third party
("Issuer-Obtained Insurance") or (2) insured under master insurance
policies issued by municipal bond insurers, which may be purchased by the
Connecticut/Massachusetts Intermediate Municipal Income Funds.

The Connecticut/Massachusetts Intermediate Municipal Income Funds may
require or obtain municipal bond insurance when purchasing or holding
specific Connecticut and Massachusetts Municipal Securities when, in the
opinion of the Connecticut/Massachusetts Intermediate Municipal Income
Funds' investment adviser, such insurance would benefit the Connecticut/
Massachusetts Intermediate Municipal Income Funds, for example, through
improvement of portfolio quality or increased liquidity of certain
securities.

Issuer-Obtained Insurance policies are noncancellable and continue in
force as long as the Connecticut and Massachusetts Municipal Securities
are outstanding and their respective insurers remain in business. If a
Connecticut or Massachusetts Municipal Security is covered by
Issuer-Obtained Insurance, then such security need not be insured by the
policies purchased by the Connecticut/Massachusetts Intermediate
Municipal Income Funds.

The Connecticut/Massachusetts Intermediate Municipal Income Funds may
purchase two types of policies issued by municipal bond insurers. One
type of policy covers certain Connecticut and Massachusetts Municipal
Securities only during the period in which they are in the
Connecticut/Massachusetts Intermediate Municipal Income Funds'
portfolios. In the event that a Connecticut or Massachusetts Municipal
Security covered by such a policy is sold from the
Connecticut/Massachusetts Intermediate Municipal Income Funds, the
insurer of the relevant policy will be liable only for those payments of
interest and principal which are due and owing at the time of sale.

The other type of policy covers Connecticut and Massachusetts Municipal
Securities not only while they remain in the Connecticut/Massachusetts
Intermediate Municipal Income Funds' portfolios, but also until their
final maturity even if they are sold out of the Connecticut/Massachusetts
Intermediate Municipal Income Funds' portfolios, so that the coverage may
benefit all subsequent holders of those Connecticut and Massachusetts
Municipal Securities. The Connecticut/ Massachusetts Intermediate
Municipal Income Funds will obtain insurance which covers Connecticut and
Massachusetts Municipal Securities until final maturity even after they
are sold out of the Connecticut/Massachusetts Intermediate Municipal
Income Funds' portfolios only if, in the judgment of the investment
adviser, the Connecticut/Massachusetts Intermediate Municipal Income
Funds would receive net proceeds from the sale of those securities, after
deducting the cost of such permanent insurance and related fees,
significantly in excess of the proceeds it would receive if such
Connecticut and Massachusetts Municipal Securities were sold without
insurance. Payments received from municipal bond insurers may not be
tax-exempt income to shareholders of the Connecticut/Massachusetts
Intermediate Municipal Income Funds.

The premiums for the policies are paid by the Connecticut/Massachusetts
Intermediate Municipal Income Funds and the yield on the
Connecticut/Massachusetts Intermediate Municipal Income Funds' portfolios
are reduced thereby. Premiums for the policies are paid by the
Connecticut/Massachusetts Intermediate Municipal Income Funds monthly,
and are adjusted for purchases and sales of Connecticut and Massachusetts
Municipal Securities during the month.

CONNECTICUT AND MASSACHUSETTS INVESTMENT RISKS. Yields on Connecticut
and Massachusetts Municipal Securities depend on a variety of factors,
including: the general conditions of the short-term municipal note market
and of the municipal bond market; the size and maturity of the particular
offering; the maturity of the obligations; and the rating of the issue.
Further, any adverse economic conditions or developments affecting the
State of Connecticut and the Commonwealth of Massachusetts or their
municipalities could impact the Connecticut/Massachusetts Intermediate
Municipal Income Funds' portfolios. The ability of the
Connecticut/Massachusetts Intermediate Municipal Income Funds to achieve
their investment objectives also depends on the continuing ability of the
issuers of Connecticut and Massachusetts Municipal Securities and demand
features, or the credit enhancers of either, to meet their obligations
for the payment of interest and principal when due.

Investing in Connecticut and Massachusetts Municipal Securities which
meet the Connecticut/Massachusetts Intermediate Municipal Income Funds'
quality standards may not be possible if the State of Connecticut and the
Commonwealth of Massachusetts or their municipalities do not maintain
their current credit ratings. An expanded discussion of the current
economic risks associated with the purchase of Connecticut or
Massachusetts Municipal Securities is contained in the Combined Statement
of Additional Information.

NON-DIVERSIFICATION. The Connecticut/Massachusetts Intermediate
Municipal Income Funds are non-diversified investment portfolios. As
such, there is no limit on the percentage of assets which can be invested
in any single issuer. An investment in the Connecticut/Massachusetts
Intermediate Municipal Income Funds, therefore, will entail greater risk
than would exist in a diversified investment portfolio because the higher
percentage of investments among fewer issuers may result in greater
fluctuation in the total market value of the Connecticut/Massachusetts
Intermediate Municipal Income Funds' portfolios. Any economic, political,
or regulatory developments affecting the value of the securities in the
Connecticut/Massachusetts Intermediate Municipal Income Funds' portfolios
will have a greater impact on the total value of the portfolios than
would be the case if the portfolios were diversified among more issuers.

The Connecticut/Massachusetts Intermediate Municipal Income Funds intend
to comply with Subchapter M of the Internal Revenue Code. This
undertaking requires that at the end of each quarter of the taxable year,
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; beyond that, no more than 25% of their respective
total assets are invested in the securities of a single issuer.

INVESTMENT LIMITATIONS

THE INCOME FUNDS FOLLOW A NUMBER OF GUIDELINES IN MANAGING THEIR
PORTFOLIOS IN ORDER TO LIMIT INVESTMENT RISKS.

FIXED INCOME FUND, INTERMEDIATE GOVERNMENT INCOME FUND, AND LIMITED TERM
INCOME FUND WILL NOT:

borrow money directly or through reverse repurchase agreements
(arrangements in which the Income Funds sell a portfolio instrument for
a percentage of its cash value with an arrangement to buy it back on a
set date) or pledge securities except, under certain circumstances,
Fixed Income Fund, Intermediate Government Income Fund, and Limited Term
Income Fund may borrow up to one-third of the value of their total
individual fund assets and pledge up to 10% of the value of their total
individual fund assets to secure such borrowings;

with respect to 75% of the value of their respective total assets,
invest more than 5% in securities of one issuer other than cash, cash
items or securities issued or guaranteed by the government of the
United States, its agencies, or instrumentalities and repurchase
agreements collateralized by such securities, or acquire more than 10%
of the outstanding voting securities of any one issuer; or

invest more than 10% of their respective total assets in securities
subject to restrictions on resale under the Securities Act of 1933
(except for commercial paper issued under Section 4(2) of the
Securities Act of 1933 and certain other securities which meet the
criteria for liquidity as established by the Trustees).

THE CONNECTICUT/MASSACHUSETTS INTERMEDIATE MUNICIPAL INCOME 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 arrangement to buy it back on a
set date) or pledge securities except, under certain circumstances,
the Connecticut/Massachusetts Intermediate Municipal Income Funds may
borrow up to one-third of the value of their respective total assets
and pledge up to 10% of the value of those assets to secure such
borrowings; or

invest more than 5% of their respective total assets in industrial
development bonds when the payment of principal and interest is the
responsibility of companies (or guarantors, where applicable) with
less than three years of continuous operations, including the
operation of any predecessor.

ADMINISTRATION

MANAGEMENT OF THE SHAWMUT FUNDS

BOARD OF TRUSTEES

THE SHAWMUT FUNDS ARE MANAGED BY A BOARD OF TRUSTEES.

INVESTMENT ADVISER

PURSUANT TO AN INVESTMENT ADVISORY CONTRACT WITH THE TRUST, INVESTMENT
DECISIONS FOR THE INCOME FUNDS ARE MADE BY SHAWMUT BANK, N.A. (THE "ADVISER"),
SUBJECT TO DIRECTION BY THE TRUSTEES.

The Adviser continually conducts investment research and supervision for the
Income Funds and is responsible for the purchase or sale of portfolio
instruments, for which it receives an annual fee from the respective assets of
the Income Funds.

ADVISORY FEES

The Adviser receives an annual investment advisory fee equal to .80 of 1% of
Shawmut Fixed Income Fund's, Shawmut Intermediate Government Income Fund's, and
Shawmut Limited Term Income Fund's average daily net assets and .70 of 1% of
Shawmut Connecticut Intermediate Municipal Income Fund's and Shawmut
Massachusetts Intermediate Municipal Income Fund's average daily net assets.
The fee paid by the Income Funds, while higher than the advisory fee paid by
other mutual funds in general, is comparable to fees paid by mutual funds with
similar objectives and policies. The Adviser has undertaken to waive a portion
of its advisory fee, up to the amount of the advisory fee, to reimburse each of
the Income Funds for operating expenses in excess of limitations established by
certain states. The Adviser may further voluntarily waive a portion of its fee
or reimburse the Income Funds for certain operating expenses. The Adviser can
terminate such voluntary waiver or reimbursement policy with any of the Income
Funds at any time at its sole discretion.

ADVISER'S BACKGROUND

SHAWMUT BANK, N.A., A NATIONAL BANKING ASSOCIATION, AND ITS AFFILIATES HAVE
MANAGED COMMINGLED FUNDS FOR OVER FIFTY YEARS. AS OF OCTOBER 31, 1994, SHAWMUT
NATIONAL CORPORATION, THROUGH ITS SUBSIDIARIES INCLUDING SHAWMUT BANK, N.A.,
MANAGED MORE THAN $15 BILLION IN TOTAL ASSETS. SHAWMUT BANK, N.A. HAS SERVED AS
AN ADVISER TO MUTUAL FUNDS SINCE THE INCEPTION OF THE SHAWMUT FUNDS ON DECEMBER
1, 1992.

Shawmut Bank, N.A., a national banking association, along with Shawmut Bank
Connecticut, National Association and Shawmut Bank NH, are the principal
subsidiaries of Shawmut National Corporation, a super-regional bank holding
company formed on February 29, 1988, and based in southern New England. Shawmut
National Corporation serves consumers through its network of banking offices
with a full range of deposit and lending products, as well as investment
services. As part of their regular banking operations, Shawmut Bank may make
loans to public companies. Thus, it may be possible, from time to time, for the
Income Funds to hold or acquire the securities of issuers which are also
lending clients of Shawmut Bank. The lending relationship will not be a factor
in the selection of securities. The principal executive offices of the
investment adviser are located at One Federal Street, Boston, Massachusetts
02211.

Robert W. Gleason Jr. has been the portfolio manager of Connecticut
Intermediate Municipal Income Fund and Massachusetts Intermediate Municipal
Income Fund since their inception in June 1993. Mr. Gleason joined a
predecessor to Shawmut Bank, in July 1976 and has been a Vice President and
portfolio manager since 1985. Mr. Gleason received his B.A. degree in Business
Administration from Colby College, followed by studies at New York University
and Columbia University Graduate Schools of Business Administration. Mr.
Gleason has been participating in investment portfolio management for over 38
years.

Maximiliaan J. Brenninkmeyer has been the portfolio manager of Fixed Income
Fund since its inception in December 1992. Mr. Brenninkmeyer is a Vice
President of Shawmut Bank, the Fixed Income Fund's Adviser. Mr. Brenninkmeyer
has been with Shawmut Bank for 22 years. He is a Chartered Financial Analyst
and holds a M.S. from Bentley College and a B.A. from the College of the Holy
Cross.

Michael M. Spencer has been the portfolio manager of Intermediate Government
Income Fund since April 1993. Mr. Spencer joined Shawmut Bank in 1985 as an
investment officer and has been a Vice President of the Intermediate Government
Income Fund's Adviser since 1989. Mr. Spencer is a Chartered Financial Analyst
and received his B.A. from the University of Notre Dame.

Perry J. Vieth has been the portfolio manager of Limited Term Income Fund since
April, 1994. Mr. Vieth is a Vice President of Shawmut Bank. His
responsibilities include the management of investment accounts and providing
expertise on derivative securities. Mr. Vieth received his J.D. from the
University of Notre Dame and his undergraduate degree from Marquette
University. Prior to joining Shawmut Bank, Mr. Vieth was a Vice President and
Interest Rate Risk Manager for Fuji Securities, Inc. and Chicago Research &
Trading Group, a global derivatives specialist. He also practiced securities
and corporate law for nearly five years prior to becoming actively involved in
the financial market.

DISTRIBUTION OF INCOME FUNDS' SHARES

FEDERATED SECURITIES CORP. IS THE PRINCIPAL DISTRIBUTOR FOR INVESTMENT SHARES.

DISTRIBUTION PLAN. Under the distribution plan adopted in accordance with
Investment Company Act Rule 12b-1 (the "Plan"), each of the Income Funds will
pay to the distributor an amount computed at an annual rate of up to .50 of 1%
of the average daily net asset value of the Investment Shares of each of the
Income Funds, to finance any activity which is principally intended to result
in the sale of Investment Shares subject to the Plan.

The distributor may, from time to time and for such periods as it deems
appropriate, voluntarily reduce its compensation under the Plan.

The distributor may select financial institutions such as banks, fiduciaries,
custodians for public funds, investment advisers, and broker/dealers
("brokers") to provide distribution and/or administrative services as agents
for their clients or customers who own Investment Shares of the Income Funds.
Administrative services may include, but are not limited to, the following
functions: providing office space, equipment, telephone facilities, and various
clerical, supervisory, computer, and other personnel 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;
assisting clients in changing dividend options, account designations, and
addresses; and providing such other services as may reasonably be requested.

The Plan is a "compensation" type plan. As such, the Income Funds make no
payments to the distributor except as described above. Therefore, the Income
Funds do not pay for unreimbursed expenses of the distributor, including
amounts expended by the distributor in excess of amounts received by it from
the Income Funds, interest, carrying, or other financing charges in connection
with excess amounts expended, or the distributor's overhead expenses. However,
the distributor may be able to recover such amounts or may earn a profit from
future payments made by the Income Funds under the Plan.

OTHER PAYMENTS TO FINANCIAL INSTITUTIONS. The distributor may also pay
financial institutions a fee based on the average net asset value of shares of
their customers invested in an Income Fund for providing administrative
services. This fee is in addition to the amounts paid under the distribution
plan for administrative services, and, if paid, will be reimbursed by the
Adviser and not an Income Fund.

An Income Fund's investment adviser or its affiliates may also offer to pay a
fee from their own assets to financial institutions as financial assistance for
providing substantial marketing and sales support The support may include
sponsoring sales, educational and training seminars for their employees,
providing sales literature, and engineering computer software programs that
emphasize the attributes of an Income Fund. Such assistance will be predicated
upon the amount of shares the dealer sells or may sell, and/or upon the type
and nature of sales or operational support furnished by the financial
institution. These payments will be made by an Income Fund's investment adviser
and will not be made from the assets of an Income Fund.

ADMINISTRATION OF THE INCOME FUNDS

ADMINISTRATIVE SERVICES. Federated Administrative Services ("FAS"), Federated
Investors Tower, Pittsburgh, Pennsylvania 15222-3779, a subsidiary of Federated
Investors, provides the Income Funds with certain administrative personnel and
services necessary to operate the Income Funds, such as legal and accounting
services. FAS provides these at an annual rate as specified below:

The administrative fee received by FAS during any fiscal year shall be at
least $50,000 for each of the Income Funds. FAS may voluntarily choose to
waive a portion of its fee.

CUSTODIAN. Shawmut Bank, N.A., One Federal Street, Boston, Massachusetts,
02211 is custodian for the securities and cash of the Income Funds. Under the
Custodian Agreement, Shawmut Bank, N.A., holds the Income Funds' portfolio
securities in safekeeping and keeps all necessary records and documents
relating to its duties.

TRANSFER AGENT, DIVIDEND DISBURSING AGENT, AND PORTFOLIO ACCOUNTING
SERVICES. Federated Services Company, Federated Investors Tower, Pittsburgh,
Pennsylvania 15222-3779 is transfer agent and dividend disbursing agent for
the Income Funds. It also provides certain accounting and recordkeeping
services with respect to each of the Income Funds' portfolio investments.

LEGAL COUNSEL. Legal counsel is provided by Houston, Houston & Donnelly, 2510
Centre City Tower, Pittsburgh, Pennsylvania 15222 and Dickstein, Shapiro &
Morin, L.L.P., 2101 L Street, N.W., Washington, DC 20037.

INDEPENDENT ACCOUNTANTS. The independent accountants for the Income Funds are
Price Waterhouse LLP, 160 Federal Street, Boston, Massachusetts 02110.

NET ASSET VALUE

THE TERM "NET ASSET VALUE" REFERS TO THE VALUE OF ONE INCOME FUND SHARE.

Each Income Fund's net asset value per Investment Share fluctuates. The net
asset value for Investment Shares is determined by adding the interest of the
Investment Shares in the market value of all securities and other assets of an
Income Fund, subtracting the interest of the Investment Shares in the
liabilities of an Income Fund and those attributable to Investment Shares, and
dividing the remainder by the total number of Investment Shares outstanding.
The net asset value for Investment Shares of an Income Fund may differ from
that of Trust 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

YOU CAN BUY INVESTMENT SHARES BY FEDERAL RESERVE WIRE, MAIL, OR TRANSFER, AS
EXPLAINED BELOW.

Investment Shares of the Income Funds are sold by the distributor on days on
which the New York Stock Exchange and Federal Reserve Wire System are open for
business. Shares of the Income Funds may also be purchased in branches of
Shawmut Bank, N.A., Shawmut Bank Connecticut, National Association, Shawmut
Bank NH, and their affiliates (collectively, "Shawmut Bank"), from certain
brokers which have offices located in branches of Shawmut Bank under lease
agreements with Shawmut Bank. Offices of the brokers located in branches of
Shawmut Bank are open on days on which each of Shawmut Bank and the New York
Stock Exchange and Federal Reserve Wire System are open for business. Call
1-800-SHAWMUT for the name and telephone number of the broker located in the
Shawmut Bank branch nearest you. Texas residents must purchase, exchange, and
redeem Investment Shares through Federated Securities Corp. at 1-800-356-2805.
The Income Funds reserve the right to reject any purchase request.

THROUGH A BROKER. An investor may call a broker to receive information and to
place an order to purchase Investment Shares. Call 1-800-SHAWMUT to speak with
a broker, or for referral to a broker serving your area. Orders placed through
a broker are considered received when payment is converted to federal funds and
the applicable Income Fund is notified of the purchase order. The completion of
the purchase transaction will generally occur within one business day after a
broker receives a purchase order. Purchase orders must be received by a broker
before 4:00 p.m. (Eastern time) and must be transmitted by a broker to the
applicable Income Fund before 5:00 p.m. (Eastern time) in order for Investment
Shares to be purchased at that day's public offering price.

Payment may be made by either check, wire transfer of federal funds, or federal
funds deposited into a deposit account established by the shareholder at
Shawmut Bank. Payment is normally made through debit to the deposit account no
later than the business day following the conversion of a check into federal
funds. In addition, Investment Shares may be purchased through other brokers or
dealers who have sales agreements with the Income Funds' distributor.

DIRECTLY FROM THE INCOME FUNDS. An investor may place an order to purchase
Investment Shares directly from the Income Funds. To do so call 1-800-SHAWMUT
to request a new account form. Once received complete and sign the form;
enclose a check made payable to Shawmut Connecticut Intermediate Municipal
Income Fund, Shawmut Fixed Income Fund, Shawmut Intermediate Government Income
Fund, Shawmut Limited Term Income Fund, or Shawmut Massachusetts Intermediate
Municipal Income Fund--Investment Shares (as appropriate); and mail both to The
Shawmut Funds, c/o Transfer Agency, 1001 Liberty Avenue, Pittsburgh,
Pennsylvania 15222-3779. The order is considered received after the check is
converted into federal funds and the transfer agent establishes a shareholder
account for the investor. This is generally the next business day after the
Fund receives the check.

MINIMUM INVESTMENT REQUIRED

THE MINIMUM INITIAL INVESTMENT IS $1,000, OR $500 IN THE CASE OF RETIREMENT
PLAN ACCOUNTS.

The minimum initial investment in Investment Shares by an investor is $1,000,
or $500 in the case of retirement plan accounts. Subsequent investments by
participants in the Systematic Investment Program, as described this
prospectus, or by retirement plan accounts, must be in amounts of at least $50.
Subsequent investments by all other investors must be in amounts of at least
$100. The Income Funds may waive the initial minimum investment for employees
of Shawmut Bank and its affiliates, from time to time.

WHAT SHARES COST

INVESTMENT SHARES ARE SOLD AT THEIR NET ASSET VALUE NEXT DETERMINED AFTER AN
ORDER IS RECEIVED, PLUS A SALES LOAD.

The net asset value is determined at the close of the New York Stock Exchange,
normally 4:00 p.m. (Eastern time), Monday through Friday, except on: (i) days
on which there are not sufficient changes in the value of an Income Fund's
portfolio securities that its net asset value might be materially affected;
(ii) days during which no shares are tendered for redemption and no orders to
purchase shares are received; or (iii) on the following holidays: New Year's
Day, Presidents' Day, Good Friday, Memorial Day, Independence Day, Labor Day,
Thanksgiving Day, and Christmas Day.

Investment Shares of the Income Funds are sold at their net asset value next
determined after an order is received, plus a sales load, as follows:

SALES
LOAD AS A SALES
PERCENTAGE LOAD AS A
OF PUBLIC PERCENTAGE OF
OFFERING NET AMOUNT

Less than $50,000......................... 2.00% 2.04%
$50,000 but less than $100,000.......... 1.75% 1.78%
$100,000 but less than $250,000.......... 1.50% 1.52%
$250,000 but less than $500,000.......... 1.25% 1.27%
$500,000 but less than $1 million....... 1.00% 1.01%
$1 million but less than $3 million...... 0.75% 0.76%
$3 million or more........................ 0.50% 0.50%

PURCHASES AT NET ASSET VALUE. Investment Shares of the Income Funds may be
purchased at net asset value, without a sales load, by Trustees, Directors, and
employees (and their spouses and children under age 21) of The Shawmut Funds,
Shawmut Bank, the brokers, Marque Millenium Group Limited, 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 Income
Funds.

SALES CHARGE REALLOWANCE. For sales of Investment Shares of the Income Funds,
a broker will normally receive up to 85% of the applicable sales load. Any
portion of the sales load which is not paid to a broker will be retained by the
distributor. Other brokers or dealers who sell Investment Shares, if any, will
also normally receive up to 85% of the applicable sales load, with the unpaid
portion being retained by the distributor.

REDUCING THE SALES LOAD

The sales load can be reduced on the purchase of Investment Shares through:

quantity discounts and accumulated purchases;

signing a 13-month letter of intent;

using the reinvestment privilege; or

concurrent purchases.

QUANTITY DISCOUNTS AND ACCUMULATED PURCHASES. As shown in the table above,
larger purchases reduce the sales load paid. The Income Funds will combine
purchases made on the same day by the investor, his spouse, and his
children under age 21 when it calculates the sales load paid by an
individual investor.

If an additional purchase of Investment Shares is made, each Income Fund
will consider the previous purchases still invested in any of The Shawmut
Funds, the purchase price of which includes a sales load. For example, if a
shareholder already owns Investment Shares having a current net asset value
of $30,000, and he purchases $20,000 or more of an Income Fund at the
current net asset value, the sales load on the additional purchase of an
Income Fund according to the schedule now in effect, would be 1.75% instead
of 2.00%.

To receive this sales load reduction, a broker or the distributor must be
notified by the shareholder in writing at the time the purchase is made
that Investment Shares are already owned or that purchases are being
combined. Each Income Fund will reduce the sales load after it confirms the
purchases.

LETTER OF INTENT. If a shareholder intends to purchase at least $50,000 of
Investment Shares in the Income Funds over the next 13 months, the sales
load may be reduced by signing a letter of intent to that effect. This
letter of intent includes a provision for a sales load adjustment depending
on the amount actually purchased within the 13-month period and a provision
for the custodian to hold up to 2.00% of the total amount intended to be
purchased in escrow (in Investment Shares) until such purchase is
completed.

REINVESTMENT PRIVILEGE. If Investment Shares in any of the Income Funds
have been redeemed, the shareholder has a one-time right, within 30 days,
to reinvest the redemption proceeds at the next-determined net asset value
without any sales load. A broker or the distributor must be notified by the
shareholder in writing of the reinvestment in order to eliminate a sales
load. If the shareholder redeems Investment Shares, there may be tax
consequences, and exercise of the reinvestment privilege may result in
additional tax considerations. Shareholders contemplating such transactions
should consult their own tax advisers.

CONCURRENT PURCHASES. For purposes of qualifying for a sales load
reduction, a shareholder has the privilege of combining concurrent
purchases of two or more funds in the Trust, the purchase price of which
includes a sales load. For example, if a shareholder concurrently invests
$30,000 in one of the funds in the Trust with a sales load and $20,000 in
any of the Income Funds, the sales load would be reduced as described in
the section entitled "What Shares Cost."

SYSTEMATIC INVESTMENT PROGRAM

Once an account in an Income Fund has been opened, shareholders may add to
their investment on a regular basis in a minimum amount of $50. Under this
program, funds may be automatically withdrawn periodically from the
shareholder's checking account and invested in Investment Shares at the net
asset value next determined after an order is received by the Income Fund,
plus the applicable sales load. A shareholder may apply for participation
in this program through a broker or the distributor.

SUBACCOUNTING SERVICES

CERTIFICATES AND CONFIRMATIONS

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

DIVIDENDS

Dividends are declared and paid monthly to all shareholders invested in
each Income Fund on the record date.

CAPITAL GAINS

Capital gains realized by an Income Fund, if any, will be distributed to
that Income Fund's shareholders at least once every 12 months.

EXCHANGE PRIVILEGE

EXCHANGING SHARES. Shareholders may exchange Investment Shares, with a minimum
net asset value of $1,000, except retirement plan accounts, which must have a
minimum net asset value of $500, for shares of the same designated class of
other funds advised by Shawmut Bank. Shares of funds with a sales load may be
exchanged at net asset value for shares of other funds with an equal sales
load, a lower sales load, or no sales load. Shares of funds with no sales load,
or a lower sales load, acquired by direct purchase or reinvestment of dividends
on such shares may be exchanged for shares of funds with a sales load, or a
higher sales load, at net asset value, plus the applicable sales load or
additional incremental sales load, as the case may be, imposed by the fund
shares being purchased.

When an exchange is made from a fund with a sales load to a fund with no sales
load, the shares exchanged and additional shares which have been purchased by
reinvesting dividends on such shares retain the character of the exchanged
shares for purposes of exercising further exchange privileges; thus, an
exchange of such shares for shares of a fund with a sales load would be a net
asset value.

Exchanges are subject to the minimum initial purchase requirements of such fund
being acquired. Prior to any exchange, the shareholder must receive a copy of
the current prospectus of the class of the fund into which an exchange is to be
effected.

The exchange privilege is available to shareholders residing in any state in
which the fund shares being acquired may legally be sold. Upon receipt of
proper instructions and all necessary supporting documents, Investment Shares
submitted for exchange will be redeemed at the next-determined net asset value.
Written exchange instructions may require a signature guarantee. 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 exchange privilege may be modified or terminated at any time.
Shareholders will be notified of the modification or termination of the
exchange privilege. A shareholder may obtain further information on the
exchange privilege by calling a broker.

EXCHANGE-BY-TELEPHONE. Instructions for exchanges between participating funds
which are part of the Trust may be given by calling a broker or by calling the
Income Funds. Call 1-800-SHAWMUT to speak with a broker, or for referral to a
broker serving your area. To utilize the exchange-by-telephone service, a
shareholder must complete an authorization form permitting a Shawmut Fund to
honor telephone instructions. The authorization is included in the shareholder
account application. Investment Shares may be exchanged by telephone only
between fund accounts having identical shareholder registrations. Exchange
instructions given by telephone may be electronically recorded.

Telephone exchange instructions must be received before 4:00 p.m. (Eastern
time) for Investment 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 may have
difficulty in making exchanges by telephone through a broker or the Income
Funds during times of drastic economic or market changes. If a shareholder
cannot contact a broker or the Income Funds by telephone, it is recommended
that an exchange request be made in writing and sent by overnight mail to The
Shawmut Funds, c/o Transfer Agency, 1001 Liberty Avenue, Pittsburgh,
Pennsylvania 15222-3779.

If reasonable procedures are not followed by the Income Funds, they may be
liable for losses due to unauthorized or fraudulent telephone instructions.

REDEEMING SHARES

YOU CAN REDEEM INVESTMENT SHARES BY MAIL OR TELEPHONE. TO ENSURE YOUR SHARES
ARE REDEEMED EXPEDITIOUSLY, PLEASE FOLLOW THE PROCEDURES EXPLAINED BELOW.

The Income Funds redeem Investment Shares at their net asset value next
determined after Federated Services Company receives the redemption request.
Redemptions will be made on days on which the Income Funds compute their net
asset value. Requests for redemptions can be made by telephone or in writing by
contacting your broker or directly from the Income Funds. Redemption requests
received prior to 4:00 p.m. (Eastern time) will be effected on the same
business day.

THROUGH A BROKER

Shareholders may redeem Investment Shares by calling their broker to request
the redemption. Investment Shares will be redeemed at the net asset value next
determined after Federated Services Company receives the redemption request. A
broker is responsible for promptly submitting redemption requests and for
maintaining proper written records of redemption instructions received from the
Income Funds' shareholders. In order to effect a redemption on the same
business day as a request, a broker is responsible for the timely transmission
of the redemption request to the appropriate Income Fund.

Before a broker may request redemption by telephone on behalf of a shareholder,
an authorization form permitting the Income Funds to accept redemption requests
by telephone must first be completed. This authorization is included in
shareholder account application. Redemption instructions given by telephone may
be electronically recorded. In the event of drastic economic or market changes,
a shareholder may experience difficulty in redeeming by telephone. If such a
case should occur, it is recommended that a redemption request be made in
writing and sent by overnight mail to The Shawmut Funds, c/o Transfer Agency,
1001 Liberty Avenue, Pittsburgh, Pennsylvania 15222-3779.

If reasonable procedures are not followed by the Income Funds, they may be
liable for losses due to unauthorized or fraudulent telephone instructions.

DIRECTLY FROM THE INCOME FUNDS

BY MAIL. A shareholder may redeem Investment Shares by sending a written
request to The Shawmut Funds, c/o Transfer Agency, 1001 Liberty Avenue,
Pittsburgh, Pennsylvania 15222-3779. The written request should include the
shareholder's name, the Income Funds' name and class of shares name, 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. Shareholders should call
the Income Funds for assistance in redeeming by mail.

SIGNATURES. 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 the Income Funds, 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 the Bank
Insurance Fund, which is administered by the Federal Deposit Insurance
Corporation ("FDIC");

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

a savings bank or savings and loan association whose deposits are insured by
the Savings Association Insurance Fund, which is administered by the FDIC;
or

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

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

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

RECEIVING PAYMENT

Redemption payments will generally be made directly to the shareholder's
account maintained by an investor with Shawmut Bank. This deposit is
normally made within one business day, but in no event more than seven
days, after the redemption request, provided the transfer agent has
received payment from the shareholder. The net asset value of Investment
Shares redeemed is determined, and dividends, if any, are paid up to and
including, the day prior to the day that a redemption request is processed.
Pursuant to instructions from a broker, redemption proceeds may be
transferred from a shareholder account by check or by wire.

BY CHECK. Normally, a check for the proceeds is mailed within one business
day, but in no event more than seven days, after receipt of a proper
redemption request, provided the transfer agent has received payment for
Investment Shares from the shareholder.

ACCOUNTS WITH LOW BALANCES

Due to the high cost of maintaining accounts with low balances, the Income
Funds may redeem shares in any account and pay the proceeds to the
shareholder if the account balance falls below a required minimum of
$1,000, or $500 in the case of retirement plan accounts. This requirement
does not apply, however, if the balance falls below $1,000 or $500,
respectively, because of changes in an Income 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.

SYSTEMATIC WITHDRAWAL PROGRAM

Shareholders who desire to receive payments of a predetermined amount may
take advantage of the Systematic Withdrawal Program. Under this program,
Investment Shares are redeemed to provide for periodic withdrawal payments
in an amount directed by the shareholder. Depending on the amount of the
withdrawal payments, the amount of dividends paid and capital gains
distributions with respect to Investment Shares, and the fluctuation of the
net asset value of Investment Shares redeemed under this program,
redemptions may reduce, and eventually deplete, the shareholder's
investment in the Income Funds. For this reason, payments under this
program should not be considered as yield or income on the shareholder's
investment in the Income Funds' Investment Shares. 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 a broker. Because Investment Shares are sold with a sales load, it
is not advisable for shareholders to be purchasing Investment Shares of the
Income Funds while participating in this program.

REDEMPTION IN KIND

The Income Funds are obligated to redeem Investment Shares solely in cash
up to $250,000 or 1% of the net asset value of shares of each Income Fund,
whichever is less, for any one shareholder within a 90-day period.

Any redemption beyond this amount will also be in cash unless the Trustees
determine that further cash payments will have a material adverse effect on
remaining shareholders. In such a case, the Income Funds will pay all or a
portion of the remainder of the redemption in portfolio instruments, valued
in the same way as an Income Fund determines net asset value. The portfolio
instruments will be selected in a manner that the Trustees deem fair and
equitable.

SHAREHOLDER INFORMATION

VOTING RIGHTS

EACH INVESTMENT SHARE OF AN INCOME FUND GIVES THE SHAREHOLDER ONE VOTE IN
TRUSTEE ELECTIONS AND OTHER MATTERS SUBMITTED TO SHAREHOLDERS OF THE TRUST FOR
VOTE.

All shares 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 Trust or an Income Fund's
operation and for the election of Trustees under certain circumstances.

As of December 12, 1994, Wornat Leasing, acting in various capacities for
various accounts, was the owner of record of 362,318 shares (47.67%) of
Investment Shares of Limited Term Income Fund. As of December 12, 1994, Olsen &
Co., acting in various capacities for various accounts, was the owner of record
of 210,970 shares (26.20%) of Connecticut Intermediate Municipal Income Fund
and 221,527 shares (32.24%) of Massachusetts Intermediate Municipal Income
Fund.

MASSACHUSETTS PARTNERSHIP LAW

Under certain circumstances, shareholders may be held personally liable as
partners under Massachusetts law for acts or obligations of the Trust on behalf
of an Income Fund. To protect shareholders of an Income Fund, the Trust has
filed legal documents with Massachusetts that expressly disclaim the liability
of shareholders of an Income Fund for 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 on
behalf of an Income Fund.

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

EFFECT OF BANKING LAWS

Shawmut Bank believes, based upon the advice of its counsel, that it may
perform the services for the Income Funds 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 Shawmut Bank from continuing to perform all or a
part of the above services for its customers and/or the Income Funds. 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 the Income
Funds may occur, including possible termination of any automatic or other
Income Fund share investment and redemption services then being provided by
Shawmut Bank. It is not expected that existing shareholders would suffer any
adverse financial consequences (if another adviser with equivalent abilities
to Shawmut Bank is found) as a result of any of these occurrences.

TAX INFORMATION

FEDERAL INCOME TAX

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

Each Income Fund will be treated as a single, separate entity for federal
income tax purposes so that income (including capital gains) and losses
realized by The Shawmut Funds' other portfolios will not be combined for tax
purposes with those realized by each Income Fund.

Shareholders are urged to consult their own tax advisers regarding the status
of their accounts under state and local tax laws.

OTHER CLASSES OF SHARES

Fixed Income Fund, Intermediate Government Income Fund, and Limited Term
Income Fund all offer a separate class of shares known as Trust Shares. Trust
Shares are sold primarily to accounts for which Shawmut Bank, N.A., or its
affiliates, act in a fiduciary or agency capacity. Trust Shares are sold at
net asset value, without a sales load, and without a Rule 12b-1 Plan.
Investments in Trust Shares are subject to a minimum initial investment of
$1,000.

The amount of dividends payable to Trust Shares will exceed that of 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 shares.

PERFORMANCE INFORMATION

FROM TIME TO TIME THE INCOME FUNDS ADVERTISE THEIR TOTAL RETURN YIELD AND
TAX-EQUIVALENT YIELD FOR INVESTMENT SHARES.

The yields of Investment Shares of the Income Funds are calculated by dividing
the net investment income per Investment Share (as defined by the Securities
and Exchange Commission) earned by the Income Funds over a thirty-day period by
the maximum offering price per Investment Share 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 Investment Shares and,
therefore, may not correlate to the dividends or other distributions paid to
shareholders.

The tax-equivalent yield for the Connecticut/Massachusetts Intermediate
Municipal Income Funds is calculated similarly to the yield but is adjusted to
reflect the taxable yield that the Connecticut/Massachusetts Intermediate
Municipal Income Funds would have had to earn to equal its actual yield,
assuming a 32.50% and 40.00% combined federal and state tax rate for
Connecticut and Massachusetts, respectively and assuming that income is 100%
tax-exempt.

Total return, yield and tax-equivalent-yield will be calculated separately for
Trust Shares and Investment Shares. Because Investment Shares are subject to a
sales load and a 12b-1 fee, the total return, yield and tax-equivalent-yield
for Trust Shares, for the same period, will exceed that of Investment Shares.

The performance information for Investment Shares reflects the effect of the
maximum sales load which, if excluded would increase the total return, yield
and tax-equivalent-yield.

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

Further information about the performance of the Income Funds is contained in
the Trust's Combined Annual Report dated October 31, 1994, which can be
obtained free of charge.

INVESTMENT ADVISER
Shawmut Bank, N.A.
One Federal Street
Boston, MA 02211

ADMINISTRATOR
Federated Administrative Services
Federated Investors Tower
Pittsburgh, PA 15222-3779

CUSTODIAN
Shawmut Bank, N.A.
One Federal Street
Boston, MA 02211

TRANSFER AGENT
Federated Services Company
Federated Investors Tower
Pittsburgh, PA 15222-3779

DISTRIBUTOR
Federated Securities Corporation
Federated Investors Tower
Pittsburgh, PA 15222-3779

LEGAL COUNSEL
Dickstein, Shapiro & Morin, L.L.P.
2101 L Street, N.W.
Washington, D.C. 20037

Houston, Houston & Donnelly
2510 Centre City Tower
Pittsburgh, PA 15222

SHAWMUT
MONEY MARKET FUNDS

PRIME MONEY MARKET
CONNECTICUT MUNICIPAL MONEY MARKET
MASSACHUSETTS MUNICIPAL MONEY MARKET

SHAWMUT EQUITY FUNDS

GROWTH AND INCOME EQUITY
GROWTH EQUITY
SMALL CAPITALIZATION EQUITY
QUANTITATIVE EQUITY

CALL 1-800-SHAWMUT
FOR MORE INFORMATION ON THE
SHAWMUT FAMILY OF FUNDS

820482107
820482404
820482503
820482818
820482826
3120920A-R (12/94)

SHAWMUT
INCOME FUNDS
PROSPECTUS

TRUST SHARES

LIMITED TERM INCOME
INTERMEDIATE GOVERNMENT INCOME
FIXED INCOME
CONNECTICUT INTERMEDIATE
MUNICIPAL INCOME
MASSACHUSETTS INTERMEDIATE
MUNICIPAL INCOME

December 31, 1994

The shares offered by this prospectus represent interests in Trust Shares of
the income portfolios (collectively, the "Income Funds" or individually, as
appropriate in context, the "Fund") of The Shawmut Funds (the "Trust"), an
open-end management investment company (a mutual fund). In addition to the
Income Funds, the Trust consists of the following separate investment
portfolios, each having distinct investment objectives and policies:

EQUITY FUNDS MONEY MARKET FUNDS
Shawmut Growth and Income
Equity Fund Shawmut Prime Money Market Fund
Shawmut Growth Equity Fund Shawmut Connecticut Municipal Money Market Fund
Shawmut Small Capitalization
Equity Fund Shawmut Massachusetts Municipal Money Market Fund
Shawmut Quantitative Equity
Fund

Prospectus dated December 31, 1994

Table of Contents

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

SYNOPSIS..................................................................... 2
- --------------------------------------------------------------------------------

EXPENSE SUMMARY.............................................................. 3
- --------------------------------------------------------------------------------

FINANCIAL HIGHLIGHTS......................................................... 4
- --------------------------------------------------------------------------------

GENERAL INFORMATION.......................................................... 6
- --------------------------------------------------------------------------------

THE SHAWMUT PORTFOLIOS....................................................... 6
- --------------------------------------------------------------------------------

OBJECTIVES AND POLICIES...................................................... 6
- --------------------------------------------------------------------------------

INVESTMENTS, STRATEGIES, AND RISKS........................................... 10
- --------------------------------------------------------------------------------

ADMINISTRATION............................................................... 18
- --------------------------------------------------------------------------------

NET ASSET VALUE.............................................................. 22
- --------------------------------------------------------------------------------

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

EXCHANGE PRIVILEGE........................................................... 24
- --------------------------------------------------------------------------------

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

SHAREHOLDER INFORMATION...................................................... 26
- --------------------------------------------------------------------------------

EFFECT OF BANKING LAWS....................................................... 27
- --------------------------------------------------------------------------------

TAX INFORMATION.............................................................. 27
- --------------------------------------------------------------------------------

OTHER CLASSES OF SHARES...................................................... 28
- --------------------------------------------------------------------------------

PERFORMANCE INFORMATION...................................................... 28
- --------------------------------------------------------------------------------

Synopsis
INVESTMENT OBJECTIVES

The Shawmut Funds offer you a convenient, affordable way to participate in
separate, professionally managed portfolios of securities. This prospectus
relates only to the Income Funds of the Trust.

INCOME FUNDS

SHAWMUT LIMITED TERM INCOME FUND

SHAWMUT INTERMEDIATE GOVERNMENT INCOME FUND

SHAWMUT FIXED INCOME FUND

SHAWMUT CONNECTICUT INTERMEDIATE MUNICIPAL INCOME FUND

SHAWMUT MASSACHUSETTS INTERMEDIATE MUNICIPAL INCOME FUND

BUYING SHARES

A minimum initial investment of $1,000 may be required. Subsequent investments
must be in amounts of at least $100, as described in this prospectus in the
section entitled "Minimum Investment Required." Trust Shares are currently sold
at net asset value and are redeemed at net asset value without a sales load.

FUND MANAGEMENT

The Income Funds' investment adviser is Shawmut Bank, N.A., which makes
investment decisions for the Income Funds.

SHAREHOLDER SERVICES

When you become a shareholder, you can easily obtain information about your
account by calling your Shawmut Bank trust officer.

THE SHAWMUT INCOME FUNDS
Expense Summary
Trust Shares
<TABLE>
<CAPTION>
PORTFOLIOS
LIMITED INTERMEDIATE CONNECTICUT MASSACHUSETTS
TERM GOVERNMENT FIXED INTERMEDIATE INTERMEDIATE
INCOME INCOME INCOME MUNICIPAL MUNICIPAL
FUND FUND FUND INCOME FUND** INCOME FUND**
<S> <C> <C> <C> <C> <C>
SHAREHOLDER TRANSACTION EXPENSES
Maximum Sales Load Imposed on Purchases
(as a percentage of offering price) None None None None* None*
Maximum Sales Load Imposed on Reinvested
Dividends (as a percentage of offering price) None None None None None
Contingent Deferred Sales Charge (as a percentage
of original purchase price or redemption
proceeds as applicable) None None None None None
Redemption Fee (as a percentage of amount
redeemed,
if applicable) None None None None None
Exchange Fee None None None None None
ANNUAL TRUST SHARES OPERATING EXPENSES
(As a percentage of average net assets)
Management Fee (after waivers)(1) 0.60% 0.60% 0.60% 0.00% 0.00%
12b-1 Fees(2) None None None 0.00% 0.00%
Total Other Expenses (after waivers and
reimbursements)(3) 0.43% 0.41% 0.34% 0.48% 0.51%
Total Trust Shares Operating Expenses (after
waivers and reimbursements)(4) 1.03% 1.01% 0.94% 0.48% 0.51%
</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 is 0.70% for the
Connecticut Intermediate Municipal Income Fund and Massachusetts
Intermediate Municipal Income Fund; 0.80% for Fixed Income Fund,
Intermediate Government Income Fund, and Limited Term Income Fund.

(2) As of the date of this prospectus, the Connecticut Intermediate Muncipal
Income Fund and the Massachusetts Intermediate Municipal Income Fund are not
paying or accruing 12b-1 fees. The Connecticut Intermediate Municipal Income
Fund and Massachusetts Intermediate Municipal Income Fund do not intend to
accrue or pay 12b-1 fees until either a separate class of shares has been
created for certain fiduciaries investors or a determination is made that
such investors will be subject to 12b-1 fees.

(4) Absent the voluntary waivers and reimbursements explained in the above
footnotes, the Trust Shares Operating Expenses are 3.09% for the Connecticut
Intermediate Municipal Income Fund; 4.21% for the Massachusetts Intermediate
Municipal Income Fund; 1.18% for the Fixed Income Fund; 1.24% for the
Intermediate Government Income Fund; and 1.26% for the Limited Term Income
Fund.

* Shares of these funds purchased by or for accounts in which the trust
department of Shawmut Bank, N.A., or its affiliates, serve in a fiduciary or
agency capacity are sold without a sales load. Other purchasers pay a sales
load of up to 2.00% of the public offering price, as described in the Income
Funds--Investment Shares prospectus.

** Connecticut Intermediate Municipal Income Fund and Massachusetts
Intermediate Municipal Income Fund sell their shares without class
designation. Purchasers of either the Trust Shares or Investment Shares of
the other Shawmut Funds may purchase shares of Connecticut Intermediate
Municipal Income Fund and Massachusetts Intermediate Municipal Income Fund.

1 Year 3 Years 5 Years 10 Years
Limited Term Income Fund... $11 $33 $57 $126
Intermediate Government
Income Fund................ $10 $32 $56 $124
Fixed Income Fund.......... $10 $30 $52 $115
Connecticut Intermediate
Municipal Income Fund...... $ 5 $15 $27 $ 60
Massachusetts Intermediate
Municipal Income Fund...... $ 5 $16 $29 $ 64

THE ABOVE EXAMPLES SHOULD NOT BE CONSIDERED A REPRESENTATION OF PAST OR FUTURE
EXPENSES. ACTUAL EXPENSES MAY BE GREATER OR LESS THAN THOSE SHOWN.

The information set forth in the foregoing table and example relates only to
Trust Shares of the Income Funds. Fixed Income Fund, Intermediate Government
Income Fund, and Limited Term Income Fund also offer another class of shares
called Investment Shares. Trust Shares and Investment Shares are subject to
certain of the same expenses; however, Investment Shares are subject to a 12b-1
fee of up to .50 of 1% of average net assets. See "Other Classes of Shares."
SHAWMUT INCOME FUNDS
Financial Highlights

(FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD)

The following table has been audited by Price Waterhouse LLP, the Income Funds'
independent accountants whose report thereon dated December 16, 1994, is
included in the Annual Report of The Shawmut Funds for the fiscal year ended
October 31, 1994, which is incorporated by reference into the Statement of
Additional Information. This table should be read in conjunction with the
Income Funds' financial statements and notes thereto, which may be obtained
from the Income Funds.

<CAPTION>
INVESTMENT SHARES
LIMITED TERM INCOME FUND
<S> <C> <C> <C> <C> <C> <C>
1993** $10.09 0.34 (0.09) 0.25 (0.34) --
1994 $10.00 0.49 (0.58) (0.09) (0.46) --
<CAPTION>
INTERMEDIATE GOVERNMENT INCOME FUND
<S> <C> <C> <C> <C> <C> <C>
1993** $10.18 0.37 0.08 0.45 (0.37) --
1994 $10.26 0.52 (0.92) (0.40) (0.49) --
<CAPTION>
FIXED INCOME FUND
<S> <C> <C> <C> <C> <C> <C>
1993** $10.23 0.40 0.31 0.71 (0.39) --
1994 $10.55 0.59 (1.21) (0.62) (0.56) (0.05)
<CAPTION>
CONNECTICUT INTERMEDIATE MUNICIPAL INCOME FUND++
<S> <C> <C> <C> <C> <C> <C>
1993*** $10.00 0.13 0.24 0.37 (0.13) --
1994 $10.24 0.42 (0.93) (0.51) (0.40) (0.01)
<CAPTION>
MASSACHUSETTS INTERMEDIATE MUNICIPAL INCOME FUND++
<S> <C> <C> <C> <C> <C> <C>
1993*** $10.00 0.14 0.29 0.43 (0.13) --
1994 $10.30 0.42 (0.99) (0.57) (0.42) --
<CAPTION>

TRUST SHARES
<S> <C> <C> <C> <C> <C> <C>
LIMITED TERM INCOME FUND
1993* $10.00 0.49 -- 0.49 (0.49) --
1994 $10.00 0.52 (0.59) (0.07) (0.48) --
INTERMEDIATE GOVERNMENT INCOME FUND
1993* $10.00 0.52 0.26 0.78 (0.52) --
1994 $10.26 0.54 (0.92) (0.38) (0.51) --
FIXED INCOME FUND
1993* $10.00 0.55 0.55 1.10 (0.55) --
1994 $10.55 0.61 (1.21) (0.60) (0.58) (0.05)
CONNECTICUT INTERMEDIATE MUNICIPAL INCOME FUND++
1993*** $10.00 0.13 0.24 0.37 (0.13) --
1994 $10.24 0.42 (0.93) (0.51) (0.40) (0.01)
MASSACHUSETTS INTERMEDIATE MUNICIPAL INCOME FUND++
1993*** $10.00 0.14 0.29 0.43 (0.13) --
1994 $10.30 0.42 (0.99) (0.57) (0.42) --
</TABLE>

* For the period from December 14, 1992 (date of initial public investment)
to October 31, 1993.

** For the period from February 12, 1993 (date of initial public offering) to
October 31, 1993.

*** For the period from June 17, 1993 (date of initial public investment) to
October 31, 1993.

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

++ Connecticut Intermediate Municipal Income Fund and Massachusetts
Intermediate Municipal Income Fund sell their shares without class
designation.

<TABLE>
<CAPTION>
NET ASSET NET NET ASSETS, PORTFOLIO
TOTAL VALUE, END TOTAL INVESTMENT EXPENSE WAIVER/ END OF PERIOD TURNOVER
DISTRIBUTIONS OF PERIOD RETURN+ EXPENSES INCOME REIMBURSEMENT(B) (000 OMITTED) RATE
<S> <C> <C> <C> <C> <C> <C> <C>
(0.34) $ 10.00 2.57% 1.13%(a) 5.07%(a) 0.48%(a) $ 3,859 53%
(0.46) $ 9.45 (0.96%) 1.28% 5.01% 0.48% $ 7,219 144%
(0.37) $ 10.26 4.45% 1.15%(a) 5.41%(a) 0.50%(a) $ 13,812 30%
(0.49) $ 9.37 (3.99%) 1.26% 5.29% 0.48% $ 11,032 84%
(0.39) $ 10.55 7.02% 1.12%(a) 5.61%(a) 0.48%(a) $ 9,550 33%
(0.61) $ 9.32 (6.08%) 1.19% 5.95% 0.49% $ 8,414 73%
(0.13) $ 10.24 3.75% 0.50%(a) 3.80%(a) 2.33%(a) $ 7,288 8%
(0.41) $ 9.32 (5.17%) 0.48% 4.23% 2.61% $ 8,002 59%
(0.13) $ 10.30 4.35% 0.50%(a) 4.07%(a) 3.57%(a) $ 4,009 0%
(0.42) $ 9.31 (5.71%) 0.51% 4.35% 3.70% $ 6,568 41%

(a) Computed on an annualized basis.

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

(See Notes which are an integral part of the Financial Statements)

Further information about the Income Funds' performance is contained in the
Trust's Combined Annual Report dated October 31, 1994, which can be obtained
free of charge.

GENERAL INFORMATION

The Trust was established as a Massachusetts business trust under a
Declaration of Trust dated July 16, 1992. The Declaration of Trust permits the
Trust to offer separate series of shares 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 Board of Trustees
(the "Trustees") has established two classes of shares of several of the
Income Funds, known as Trust Shares and Investment Shares. This prospectus
relates only to Trust Shares of the Income Funds that offer separate classes
of shares. Trust Shares are sold primarily to accounts for which Shawmut Bank,
N.A., or its affiliates, act in a fiduciary or agency capacity.

A minimum initial investment of $1,000 may be required. Subsequent investments
must be in amounts of at least $100, as described in this prospectus in the
section entitled "Minimum Investment Required." Trust Shares are currently
sold at net asset value and are redeemed at net asset value without a sales
charge imposed by the Income Funds.

THE SHAWMUT PORTFOLIOS

OBJECTIVES AND POLICIES

LIMITED TERM INCOME FUND

INVESTMENT OBJECTIVE

INVESTMENT POLICIES

THE LIMITED TERM INCOME FUND PURSUES ITS INVESTMENT OBJECTIVE BY INVESTING
PRIMARILY IN A PORTFOLIO OF INVESTMENT GRADE BONDS AND NOTES AND U.S.
GOVERNMENT SECURITIES.

The Limited Term Income Fund will maintain a dollar-weighted average maturity
of three years or less. For purposes of computing average maturity, the Limited
Term Income Fund considers the market accepted average life of the assets of
the Limited Term Income Fund. Market accepted average life considers the
anticipated prepayment or call of underlying securities that might influence
stated maturity. The investment policies described above may be changed by the
Trustees without shareholder approval. Shareholders will be notified before any
material change in these investment policies becomes effective.

ACCEPTABLE INVESTMENTS

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

domestic issues of corporate debt obligations having floating or fixed rates
of interest and rated in one of the five highest categories by a nationally
recognized statistical rating organization (rated Aaa, Aa, A, Baa, or Ba by
Moody's Investors Service, Inc. ("Moody's") or AAA, AA, A, BBB, or BB by
Standard & Poor's Ratings Group ("Standard & Poor's") or Fitch Investors
Service, Inc. ("Fitch")), or which are of comparable quality in the judgment
of the adviser;

commercial paper rated Prime-1 or Prime-2 by Moody's, A-1 or A-2 by
Standard & Poor's, or F-1 or F-2 by Fitch;

repurchase agreements collateralized by eligible investments; and

certain derivative securities.

INTERMEDIATE GOVERNMENT FUND

INVESTMENT OBJECTIVE

INVESTMENT POLICIES

THE INTERMEDIATE GOVERNMENT INCOME FUND PURSUES ITS INVESTMENT OBJECTIVE BY
INVESTING IN A PORTFOLIO OF INVESTMENT GRADE BONDS AND NOTES AND U.S.
GOVERNMENT SECURITIES.

ACCEPTABLE INVESTMENTS

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

domestic issues of corporate debt obligations having floating or fixed rates
of interest and rated in one of the five highest categories by a nationally
recognized statistical rating organization (rated Aaa, Aa, A, Baa, or Ba by
Moody's or AAA, AA, A, BBB, or BB by Standard & Poor's or Fitch), or which
are of comparable quality in the judgment of the adviser;

asset-backed securities rated BBB or higher by a nationally recognized
statistical rating organization, which may include, but are not limited to,
interests in pools of receivables such as motor vehicle installment
purchase obligations and credit card receivables, and mortgage-related
asset-backed securities;

repurchase agreements collateralized by eligible investments; and

certain derivative securities.

FIXED INCOME FUND

INVESTMENT OBJECTIVE

INVESTMENT POLICIES

THE FIXED INCOME FUND PURSUES ITS INVESTMENT OBJECTIVE BY INVESTING PRIMARILY
IN A PORTFOLIO OF INVESTMENT GRADE NOTES AND BONDS AND U.S. GOVERNMENT
SECURITIES.

The investment policies described above may be changed by the Trustees without
shareholder approval. Shareholders will be notified before any material change
in these policies becomes effective.

ACCEPTABLE INVESTMENTS

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

obligations of U.S. government agencies or instrumentalities such as Federal
Home Loan Banks, Federal National Mortgage Association, Government National
Mortgage Association, Federal Farm Credit Land Banks, Student Loan Marketing
Association, or Federal Home Loan Mortgage Corporation;

domestic issues of corporate debt obligations having floating or fixed rates
of interest and rated in one of the five highest categories by a nationally
recognized statistical rating organization (rated Aaa, Aa, A, Baa, or Ba by
Moody's or AAA, AA, A, BBB, or BB by Standard & Poor's or Fitch), or which
are of comparable quality in the judgment of the adviser;

commercial paper rated Prime-1 or Prime-2 by Moody's, A-1 or A-2 by
Standard & Poor's, or F-1 or F-2 by Fitch;

repurchase agreements collateralized by eligible investments; and

certain derivative securities.

CONNECTICUT INTERMEDIATE MUNICIPAL INCOME FUND

INVESTMENT OBJECTIVE

INVESTMENT POLICIES

THE CONNECTICUT INTERMEDIATE MUNICIPAL INCOME FUND PURSUES ITS INVESTMENT
OBJECTIVE BY INVESTING PRIMARILY IN A PORTFOLIO OF CONNECTICUT MUNICIPAL
SECURITIES.

The investment policies may be changed by the Trustees without the approval of
shareholders. Shareholders will be notified before any material change in these
investment policies becomes effective. As a matter of investment policy, which
may not be changed without shareholder approval, the Connecticut Intermediate
Municipal Income Fund will invest its assets so that, under normal
circumstances, at least 80% of its annual interest income is exempt from
federal regular income tax or that at least 80% of the total value of its
assets are invested in obligations the interest income from which is exempt
from federal regular income tax.

ACCEPTABLE INVESTMENTS

insured by a municipal bond insurance company, which is rated Aaa by Moody's
or AAA by Standard & Poor's or Fitch; or

guaranteed at the time of purchase by the U.S. government as to the payment
of principal and interest; or

fully collateralized by an escrow of U.S. government securities; or

unrated if determined to be of comparable quality to one of the foregoing
rating categories by the Fund's investment adviser; or

are appropriately rated derivative securities.

MASSACHUSETTS INTERMEDIATE MUNICIPAL INCOME FUND

INVESTMENT OBJECTIVE

The investment objective of the Massachusetts Intermediate Municipal Income
Fund is current income which is exempt from federal regular income tax and
income taxes imposed by the Commonwealth of Massachusetts. The investment
objective cannot be changed without approval of shareholders. While there is no
assurance that the Massachusetts
Intermediate Municipal Income Fund will achieve its investment objective, it
endeavors to do so by following the investment policies described in this
prospectus.

INVESTMENT POLICIES

THE MASSACHUSETTS INTERMEDIATE MUNICIPAL INCOME FUND PURSUES ITS INVESTMENT
OBJECTIVE BY INVESTING PRIMARILY IN A PORTFOLIO OF MASSACHUSETTS MUNICIPAL
SECURITIES.

ACCEPTABLE INVESTMENTS

rated Baa or above by Moody's or BBB or above by Standard & Poor's or Fitch. A
description of the rating categories is contained in the Appendix to the
Statement of Additional Information; or

insured by a municipal bond insurance company which is rated Aaa by Moody's
or AAA by Standard & Poor's or Fitch; or

guaranteed at the time of purchase by the U.S. government as to the payment
of principal and interest; or

fully collateralized by an escrow of U.S. government securities; or

unrated if determined to be of comparable quality to one of the foregoing
rating categories by the Fund's investment adviser; or

are appropriately rated derivative securities.

INVESTMENTS, STRATEGIES, AND RISKS

the issuer's right to borrow an amount limited to a specific line of credit
from the U.S. Treasury;

discretionary authority of the U.S. government to purchase certain
obligations of an agency or instrumentality; or

the credit of the agency or instrumentality.

CORPORATE DEBT OBLIGATIONS. The Fixed Income Fund, Intermediate Government
Income Fund, and Limited Term Income Fund may invest in corporate debt
obligations, including corporate bonds, notes, and debentures, which may have
floating or fixed rates of interest. Fixed Income Fund, Intermediate Government
Income Fund, and Limited Term Income Fund will not invest in corporate debt
obligations that are rated lower than Baa by Moody's or BBB by Standard &
Poor's or Fitch, except that each of these Funds may invest up to 10% of the
value of their respective total assets in corporate debt obligations rated "Ba"
or "BB" so long as not more than 1% of each respective Fund's total assets is
invested in the Ba-rated or BB-rated obligations of a single issuer. Bonds
rated Baa by Moody's or BBB by Standard & Poor's or Fitch are considered medium
grade obligations and are regarded as having an adequate capacity to pay
interest and repay principal. They are neither highly protected nor poorly
secured, but lack outstanding investment characteristics and in fact have
speculative characteristics as well. Debt rated Ba by Moody's or BB by Standard
& Poor's or Fitch are judged to have speculative elements, their future cannot
be considered as well assured. They face major ongoing uncertainties or
exposure to adverse business, financial, or economic conditions which could
lead to inadequate capacity to meet timely interest and principal payments. The
rating may also be used for debt subordinated to senior debt that is assigned
an actual or implied "Baa" or "BBB"-rating, and may include obligations
convertible into equity investments. If a security loses its rating or has its
rating reduced after the Fund has purchased it, the Fund is not required to
sell or otherwise dispose of the security, but may consider doing so. If
ratings made by Moody's or Standard & Poor's change because of changes in those
organizations or in their ratings systems, the Fund will attempt to obtain
comparable ratings as substitute standards in accordance with the investment
policies of the Fund.

FIXED RATE CORPORATE DEBT OBLIGATIONS. Fixed Income Fund, Intermediate
Government Income Fund, and Limited Term Income Fund may also invest in
fixed rate securities, including fixed rate securities with short-term
characteristics. Fixed rate securities with short-term characteristics are
long-term debt obligations, but are treated in the market as having short
maturities because call features of the securities may make them callable
within a short period of time. A fixed rate security with short-term
characteristics would include a fixed income security priced close to call
or redemption price or a fixed income security approaching maturity, where
the expectation of call or redemption is high.

ASSET-BACKED SECURITIES. Fixed Income Fund, Intermediate Government Income
Fund and Limited Term Income Fund may also invest in asset-backed securities
which are created by the grouping of certain governmental, government-related,
and private loans, receivables and other lender assets, including vehicle
installment purchase obligations and credit card receivables, into pools.
Interests in these pools are sold as individual securities and are not backed
or guaranteed by the U.S. government. These securities differ from other forms
of debt securities, which normally provide for periodic payment of interest in
fixed amounts with principal paid at maturity or specified call dates.
Asset-backed securities, however, provide periodic payments which generally
consist of both interest and principal payments. The estimated average life of
an asset-backed security and the average maturity of a portfolio including such
assets varies with the prepayment experience with respect to the underlying
debt instruments. The credit characteristics of asset-backed securities also
differ in a number of respects from those of traditional debt securities.

The credit quality of most asset-backed securities depends primarily upon the
credit quality of the assets underlying such securities, how well the entity
issuing the securities is insulated from the credit risk of the originator or
any other affiliated entities, and the amount and quality of any credit support
provided to such securities. Fixed Income Fund, Intermediate Government Income
Fund, and Limited Term Income Fund will not invest in asset-backed securities
that are rated lower than Baa by Moody's or BBB by Standard & Poor's or Fitch.

Fixed Income Fund, Intermediate Government Income Fund, and Limited Term Income
Fund may also invest in mortgage-related asset-backed securities which are
issued by private entities such as investment banking firms and companies
related to the construction industry. The mortgage-related securities in which
Fixed Income Fund, Intermediate Government Income Fund, and Limited Term Income
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;
(iii) privately issued securities in which the proceeds of the issuance are
invested in mortgage-backed securities and payment of the principal and
interest is supported by the credit of any agency or instrumentality of the
U.S. government; or (iv) other privately issued securities in which the
proceeds of the issuance are invested in mortgage-backed securities and payment
of the principal and interest is guaranteed or supported by the credit of a
non-governmental entity, including corporations. 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 Fixed
Income Fund, Intermediate Government Income Fund, and Limited Term Income Fund
as income, and the capital portion will be reinvested.

While mortgage-related securities generally entail less risk of a decline
during periods of rapidly rising interest rates, mortgage-related securities
may also have less potential for capital appreciation than other similar
investments (e.g., investments with comparable maturities) because as interest
rates decline, the likelihood increases that mortgages will be prepaid.
Furthermore, if mortgage-related securities are purchased at a premium,
mortgage foreclosures and unscheduled principal payments may result in some
loss of a holder's principal investment to the extent of the premium paid.
Conversely, if mortgage-related securities are purchased at a discount, both a
scheduled payment of principal and an unscheduled prepayment of principal would
increase current and total returns and would accelerate the recognition of
income, which would be taxed as ordinary income when distributed to
shareholders.

short-term money market instruments rated in one of the top two rating
categories by or nationally recognized statistical rating organization;

securities issued and/or guaranteed as to payment of principal and interest
by the U.S. government, its agencies, or instrumentalities; and

repurchase agreements.

LENDING OF PORTFOLIO SECURITIES. In order to generate additional income, the
Income Funds may lend portfolio securities, on a short-term or long-term basis
or both, up to one-third of the value of its total assets to broker/dealers,
banks, or other institutional borrowers of securities. The Income Funds 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 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 Income Funds on a timely basis and the Income Funds
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.

DERIVATIVE SECURITIES. Each of each Income Funds may invest up to 20% of the
market value of each Fund's total assets in the derivative securities
described below.

OPTIONS AND FUTURES CONTRACTS. The Income Funds may buy and sell options
and futures contracts to manage their respective individual exposure to
changing interest rates, security prices, and currency exchange rates. Some
options
and futures strategies, including selling futures, buying puts, and writing
calls, tend to hedge the Income Funds' respective investments against price
fluctuations. Other strategies, including buying futures, writing puts, and
buying calls, tend to increase market exposure. Options and futures may be
combined with each other or with forward contracts in order to adjust the
risk and return characteristics of the overall strategy. The Income Funds
may invest in options and futures based on any type of security, index, or
currency, including options and futures traded on foreign exchanges and
options not traded on exchanges.

Options and futures can be volatile investments, and involve certain risks.
If the investment adviser applies a hedge at an inappropriate time or judges
market conditions incorrectly, options and futures may lower an Income
Fund's individual return. An Income Fund could also experience losses if the
prices of its options and futures positions were poorly correlated with its
other investments, or if it could not close out its positions because of an
illiquid secondary market.

Each of the Income Funds will not hedge more than 20% of their respective
total assets by selling futures, buying puts, and writing calls under normal
conditions. In addition, each of the Income Funds will not buy futures or
write puts whose underlying value exceeds 20% of their respective total
assets, and the Income Funds will not buy calls with a value exceeding 5% of
their respective total assets.

INDEXED SECURITIES. The Income Funds may invest in indexed securities, sold
by brokers or dealers or other financial institutions (such as commercial
banks) deemed creditworthy by the Income Fund's adviser, whose value is
linked to foreign currencies, interest rates, commodities, indices, or other
financial indicators. Most indexed securities are short to intermediate term
fixed-income securities whose values at maturity or whose interest rates
rise or fall according to the change in one or more specified underlying
instruments. Indexed securities may be positively or negatively indexed
(i.e., their value may increase or decrease if the underlying instrument
appreciates), and may have return characteristics similar to direct
investments in the underlying instrument or to one or more options on the
underlying instrument. Indexed securities may be more volatile than the
underlying instrument itself. Each of the Income Funds intends to invest not
more than 5% of the market value of its total assets in indexed securities.

SWAP AGREEMENTS. As one way of managing its exposure to different types of
investments, each of the Income Funds may enter into interest rate swaps,
currency swaps, and other types of swap agreements such as caps, collars,
and floors. Depending on how they are used, swap agreements may increase or
decrease the overall volatility of the Income Fund's investments, its share
price and yield.

Swap agreements are sophisticated hedging instruments that typically involve
a small investment of cash relative to the magnitude of risks assumed. As a
result, swaps can be highly volatile and may have a considerable impact on
an Income Fund's performance. Swap agreements are subject to risks related
to the counterparty's ability to perform, and may decline in value if the
counterparty's creditworthiness deteriorates. An Income Fund may also suffer
losses if it is unable to terminate outstanding swap agreements to reduce
its exposure through offsetting transactions. When an Income Fund enters
into a swap agreement, assets of the Income Funds equal to the value of the
swap agreement will be segregated by the Income Fund. Each of the Income
Funds intends to invest not more than 5% of the market value of the Income
Funds' total assets in swap agreements.

REPURCHASE AGREEMENTS. The U.S. government securities and other securities
in which each Income Fund invests 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 an Income 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
the Income Funds, the Income Funds could receive less than the repurchase
price on any sale of such securities.

RESTRICTED AND ILLIQUID SECURITIES. The Income Funds intend to invest in
restricted securities. Restricted securities are any securities in which
each Income Fund may otherwise invest pursuant to its investment objective
and policies but which are subject to restriction on resale under
federal securities law.
However, each Income Fund will limit investments in illiquid securities,
including certain restricted securities not determined by the Trustees to be
liquid, non-negotiable fixed time deposits with maturities over seven days,
over-the-counter options, and repurchase agreements providing for settlement
in more than seven days after notice, to 15% of its net assets.

WHEN-ISSUED AND DELAYED DELIVERY TRANSACTIONS.__The Income Funds may
purchase securities on a when-issued or delayed delivery basis. These
transactions are arrangements in which the Income Funds purchase securities
with payment and delivery scheduled for a future time. The seller's failure
to complete these transactions may cause the Income Funds 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 marked values of the
securities purchased may vary from the purchase prices. Accordingly, the
Income Funds may pay more/less than the market value of the securities on
the settlement date.

The Income Funds may dispose of a commitment prior to settlement if the
adviser deems it appropriate to do so. In addition, the Income Funds may
enter into 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 Income Funds may realize
short-term profits or losses upon the sale of such commitments.

INVESTING IN SECURITIES OF OTHER INVESTMENT COMPANIES. The Income Funds may
invest in the securities of other investment companies, but they will not,
respectively, own more than 3% of the total outstanding voting stock of any
investment company, invest more than 5% of their respective total assets in
any one investment company, or invest more than 10% of their respective
total assets in investment companies in general. The Income Funds will
invest in other investment companies primarily for the purpose of investing
its short-term cash which has not yet been invested in other portfolio
instruments. However, from time to time, on a temporary basis, each of the
Income Funds may invest exclusively in one other investment company managed
similarly to the appropriate Fund. Shareholders should realize that, when
one of the Income Funds invests in other investment companies, certain fund
expenses, such as custodian fees and administrative fees, may be duplicated.
The adviser will waive its investment advisory fee on assets invested in
securities of other investment companies.

The following acceptable investments apply only to the CONNECTICUT
INTERMEDIATE MUNICIPAL INCOME FUND and MASSACHUSETTS INTERMEDIATE MUNICIPAL
INCOME FUND (referred to jointly as the "Connecticut/Massachusetts
Intermediate Municipal Income Funds"):

PARTICIPATION INTERESTS. The Connecticut/Massachusetts Intermediate
Municipal Income Funds may purchase interests in Connecticut and
Massachusetts Municipal Securities, (collectively referred to as "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 Connecticut/Massachusetts Intermediate Municipal Income Funds to
treat the income from the investment as exempt from federal regular income
tax. The Connecticut/ Massachusetts Intermediate Municipal Income Funds
invest 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.

MUNICIPAL LEASES. The Connecticut/Massachusetts Intermediate Municipal
Income Funds may invest in municipal leases. Municipal leases are
obligations issued by state and local governments or authorities to finance
the acquisition of equipment and facilities and may be considered to be
illiquid. They may take the form of a lease, an installment purchase
contract, a conditional sales contract, or a participation certificate in
any of the above.

VARIABLE RATE DEMAND NOTES. Variable rate demand notes are long-term
Municipal Securities that have variable or floating interest rates and
provide the Connecticut/Massachusetts Intermediate Municipal Income Funds
with the right to tender the security for repurchase at its stated principal
amount plus accrued interest. The interest rate may float or be adjusted at
regular intervals (ranging from daily to annually) and is normally based on
a municipal interest index or
another published interest rate or interest rate index. Most variable rate
demand notes allow the Connecticut/Massachusetts Intermediate Municipal
Income Funds to demand the repurchase of the security on not more than seven
days prior notice. Other notes only permit the Connecticut/Massachusetts
Intermediate Municipal Income Funds to tender the security at the time of
each interest rate adjustment or at other fixed intervals. The
Connecticut/Massachusetts Intermediate Municipal Income Funds treat variable
rate demand notes as maturing on the later of the date of the next interest
adjustment or the date on which the Connecticut/Massachusetts Intermediate
Municipal Income Funds may next tender the security for repurchase.

TENDER OPTION BONDS AND ZERO COUPON SECURITIES. The
Connecticut/Massachusetts Intermediate Municipal Income Funds may purchase
tender option bonds and similar securities. A tender option bond generally
has a long maturity and bears interest at a fixed rate substantially higher
than prevailing short-term tax-exempt rates, and is coupled with an
agreement by a third party, such as a bank, broker/dealer, or other
financial institution, pursuant to which such institution grants the
security holders the option, usually upon not more than seven days notice or
at periodic intervals, to tender their securities to the institution and
receive the face value of the security. In providing the option, the
financial institution receives a fee that reduces the fixed rate of the
underlying bond and results in the Connecticut/Massachusetts Intermediate
Municipal Income Funds effectively receiving a demand obligation that bears
interest at the prevailing short-term tax exempt rate. The
Connecticut/Massachusetts Intermediate Municipal Income Funds' adviser will
monitor, on an ongoing basis, the creditworthiness of the issuer of the
tender option bond, the financial institution providing the option, and any
custodian holding the underlying long-term bond. The bankruptcy,
receivership, or default of any of the parties to the tender option bond
will adversely affect the quality and marketability of the security.

The Connecticut/Massachusetts Intermediate Municipal Income Funds may also
invest in zero coupon securities, which are debt securities issued or sold
at a discount from their face value. These securities do not entitle the
holder to any periodic payments of interest prior to maturity. The discount
from face value of these securities depends upon various factors, including:
the time remaining until maturity or cash payment date, prevailing interest
rates, the liquidity of the security, and the perceived credit quality of
the issuer. Zero coupon securities may also take the form of debt securities
that have been stripped of their unmatured interest coupons. The market
value of zero coupon securities is generally more volatile, and is more
likely to react to changes in interest rates, than the market value of
interest-bearing securities with similar maturities and credit qualities.

SYNTHETIC BOND DERIVATIVES. The Connecticut/Massachusetts Intermediate
Municipal Income Funds may invest its assets in derivative securities that
provide the Connecticut/Massachusetts Intermediate Municipal Income Funds
with tax-exempt income. These securities are formed when an investment bank
acquires all or part of a fixed rate municipal bond and divides it into two
classes of variable rate securities. One of these classes of securities
provides investors with a source of short-term, variable rate, tax-exempt
income that is determined through an auction mechanism. The other class of
security is sold as a residual rate security, which has a long duration and
also offers a source of tax-exempt income. There is an inverse relationship
between the rate of interest income paid between the two classes of
securities. This means that the holder of the short-term security may
receive interest income that is greater than, or less than, the coupon rate
of the underlying fixed rate bond, and that the holder of the residual
security would, for the same period, receive a rate of return that is less
than, or greater than, as the case may be, the bond's coupon rate.

TEMPORARY INVESTMENTS. The Connecticut/Massachusetts Intermediate Municipal
Income Funds normally invest their assets so that at least 80% of their
annual interest income is exempt from federal regular income tax or that at
least 80% of the total value of their assets are invested in obligations the
interest income from which is exempt from federal regular income tax. At
least 65% of the value of the Connecticut Intermediate Municipal Income
Fund's total assets will be invested in Connecticut Municipal Securities. At
least 65% of the value of Massachusetts Intermediate Municipal Income Fund's
total assets will be invested in Massachusetts Municipal Securities.

However, from time to time on a temporary basis, when the investment adviser
determines that market conditions call for a temporary defensive posture,
the Connecticut/Massachusetts Intermediate Municipal Income Funds may invest
in short-term tax-exempt or taxable temporary investments. These temporary
investments include: shares of similarly managed mutual funds; notes issued
by or on behalf of municipal or corporate issuers; 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 the organization selling the
Connecticut/Massachusetts Intermediate Municipal Income Funds a bond or
temporary investment agrees at the time of sale to repurchase it at a
mutually agreed upon time and price).

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.

Although the Connecticut/Massachusetts Intermediate Municipal Income Funds
are permitted to make taxable, temporary investments, there is no current
intention of generating income that is not predominantly exempt from federal
regular income tax or state income tax.

CONNECTICUT AND MASSACHUSETTS MUNICIPAL SECURITIES. Connecticut and
Massachusetts Municipal Securities are generally issued to finance public
works, such as airports, bridges, highways, housing, health-related
entities, transportation-related projects, educational programs, water and
pollution control, 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.

Connecticut and Massachusetts 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.

MUNICIPAL BOND INSURANCE. The Connecticut/Massachusetts Intermediate
Municipal Income Funds may purchase Connecticut and Massachusetts Municipal
Securities covered by insurance which guarantees the timely payment of
principal at maturity and interest on such securities. These insured
Connecticut and Massachusetts Municipal Securities are either (1) covered by
an insurance policy applicable to a particular security, whether obtained by
the issuer of the security or by a third party ("Issuer-Obtained Insurance")
or (2) insured under master insurance policies issued by municipal bond
insurers, which may be purchased by the Connecticut/Massachusetts
Intermediate Municipal Income Funds.

The Connecticut/Massachusetts Intermediate Municipal Income Funds may
require or obtain municipal bond insurance when purchasing or holding
specific Connecticut and Massachusetts Municipal Securities when, in the
opinion of the Connecticut/Massachusetts Intermediate Municipal Income
Funds' investment adviser, such insurance would benefit the
Connecticut/Massachusetts Intermediate Municipal Income Funds, for example,
through improvement of portfolio quality or increased liquidity of certain
securities.

Issuer-Obtained Insurance policies are noncancellable and continue in force
as long as the Connecticut and Massachusetts Municipal Securities are
outstanding and their respective insurers remain in business. If a
Connecticut or Massachusetts Municipal Security is covered by
Issuer-Obtained Insurance, then such security need not be insured by the
policies purchased by the Connecticut/Massachusetts Intermediate Municipal
Income Funds.

The Connecticut/Massachusetts Intermediate Municipal Income Funds may
purchase two types of policies issued by municipal bond insurers. One type
of policy covers certain Connecticut and Massachusetts Municipal Securities
only during the period in which they are in the Connecticut/Massachusetts
Intermediate Municipal Income Funds' portfolios. In the event that a
Connecticut or Massachusetts Municipal Security covered by such a policy is
sold from the Connecticut/Massachusetts Intermediate Municipal Income Funds,
the insurer of the relevant policy will be liable only for those payments of
interest and principal which are due and owing at the time of sale.

The other type of policy covers Connecticut and Massachusetts Municipal
Securities not only while they remain in the Connecticut/Massachusetts
Intermediate Municipal Income Funds' portfolios, but also until their final
maturity even if they are sold out of the Connecticut/Massachusetts
Intermediate Municipal Income Funds' portfolios, so that the coverage may
benefit all subsequent holders of those Connecticut and Massachusetts
Municipal Securities. The Connecticut/Massachusetts Intermediate Municipal
Income Funds will obtain insurance which covers Connecticut and
Massachusetts Municipal Securities until final maturity even after they are
sold out of the Connecticut/Massachusetts Intermediate Municipal Income
Funds' portfolios only if, in the judgment of the investment adviser, the
Connecticut/ Massachusetts Intermediate Municipal Income Funds would receive
net proceeds from the sale of those securities, after deducting the cost of
such permanent insurance and related fees, significantly in excess of the
proceeds it would receive if such Connecticut and Massachusetts Municipal
Securities were sold without insurance. Payments received from municipal
bond insurers may not be tax-exempt income to shareholders of the
Connecticut/Massachusetts Intermediate Municipal Income Funds.

The premiums for the policies are paid by the Connecticut/Massachusetts
Intermediate Municipal Income Funds and the yield on the
Connecticut/Massachusetts Intermediate Municipal Income Funds' portfolios
are reduced thereby. Premiums for the policies are paid by the
Connecticut/Massachusetts Intermediate Municipal Income Funds monthly, and
are adjusted for purchases and sales of Connecticut and Massachusetts
Municipal Securities during the month.

CONNECTICUT AND MASSACHUSETTS INVESTMENT RISKS. Yields on Connecticut and
Massachusetts Municipal Securities depend on a variety of factors,
including: the general conditions of the short-term municipal note market
and of the municipal bond market; the size and maturity of the particular
offering; the maturity of the obligations; and the rating of the issue.
Further, any adverse economic conditions or developments affecting the State
of Connecticut and the Commonwealth of Massachusetts or their municipalities
could impact the Connecticut/Massachusetts Intermediate Municipal Income
Funds' portfolios. The ability of the Connecticut/Massachusetts Intermediate
Municipal Income Funds to achieve their investment objectives also depends
on the continuing ability of the issuers of Connecticut and Massachusetts
Municipal Securities and demand features, or the credit enhancers of either,
to meet their obligations for the payment of interest and principal when
due.

Investing in Connecticut and Massachusetts Municipal Securities which meet
the Connecticut/ Massachusetts Intermediate Municipal Income Funds' quality
standards may not be possible if the State of Connecticut and the
Commonwealth of Massachusetts or their municipalities do not maintain their
current credit ratings. An expanded discussion of the current economic risks
associated with the purchase of Connecticut or Massachusetts Municipal
Securities is contained in the Combined Statement of Additional Information.

NON-DIVERSIFICATION. The Connecticut/Massachusetts Intermediate Municipal
Income Funds are non-diversified investment portfolios. As such, there is no
limit on the percentage of assets which can be invested in any single
issuer. An investment in the Connecticut/Massachusetts Intermediate
Municipal Income Funds, therefore, will entail greater risk than would exist
in a diversified investment portfolio because the higher percentage of
investments among fewer
issuers may result in greater fluctuation in the total market value of the
Connecticut/Massachusetts Intermediate Municipal Income Funds' portfolios.
Any economic, political, or regulatory developments affecting the value of
the securities in the Connecticut/Massachusetts Intermediate Municipal
Income Funds' portfolios will have a greater impact on the total value of
the portfolios than would be the case if the portfolios were diversified
among more issuers.

The Connecticut/Massachusetts Intermediate Municipal Income Funds intend to
comply with Subchapter M of the Internal Revenue Code. This undertaking
requires that at the end of each quarter of the taxable year, 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;
beyond that, no more than 25% of their respective total assets are invested
in the securities of a single issuer.

INVESTMENT LIMITATIONS

THE INCOME FUNDS FOLLOW A NUMBER OF GUIDELINES IN MANAGING THEIR PORTFOLIOS IN
ORDER TO LIMIT INVESTMENT RISKS.

FIXED INCOME FUND, INTERMEDIATE GOVERNMENT INCOME FUND, AND LIMITED TERM INCOME
FUND WILL NOT:

borrow money directly or through reverse repurchase agreements (arrangements
in which the Income Funds sell a portfolio instrument for a percentage of its
cash value with an arrangement to buy it back on a set date) or pledge
securities except, under certain circumstances, Fixed Income Fund,
Intermediate Government Income Fund, and Limited Term Income Fund may borrow
up to one-third of the value of their total individual fund assets and pledge
up to 10% of the value of their total individual fund assets to secure such
borrowings;

with respect to 75% of the value of their respective total assets, invest
more than 5% in securities of one issuer other than cash, cash items or
securities issued or guaranteed by the government of the United States, its
agencies, or instrumentalities and repurchase agreements collateralized by
such securities, or acquire more than 10% of the outstanding voting
securities of any one issuer; or

invest more than 10% of their respective total assets in securities subject
to restrictions on resale under the Securities Act of 1933 (except for
commercial paper issued under Section 4(2) of the Securities Act of 1933 and
certain other securities which meet the criteria for liquidity as
established by the Trustees).

THE CONNECTICUT/MASSACHUSETTS INTERMEDIATE MUNICIPAL INCOME 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 arrangement to buy it back on a set date) or pledge securities
except, under certain circumstances, the Connecticut/Massachusetts
Intermediate Municipal Income Funds may borrow up to one-third of the value of
their respective total assets and pledge up to 10% of the value of those
assets to secure such borrowings; or

invest more than 5% of their respective total assets in industrial
development bonds when the payment of principal and interest is the
responsibility of companies (or guarantors, where applicable) with less than
three years of continuous operations, including the operation of any
predecessor.

ADMINISTRATION

MANAGEMENT OF THE SHAWMUT FUNDS

BOARD OF TRUSTEES

THE SHAWMUT FUNDS ARE MANAGED BY A BOARD OF TRUSTEES.

INVESTMENT ADVISER

PURSUANT TO AN INVESTMENT ADVISORY CONTRACT WITH THE TRUST, INVESTMENT
DECISIONS FOR THE INCOME FUNDS ARE MADE BY SHAWMUT BANK, N.A. (THE "ADVISER"),
SUBJECT TO DIRECTION BY THE TRUSTEES.

ADVISORY FEES

ADVISER'S BACKGROUND

SHAWMUT BANK, N.A., A NATIONAL BANKING ASSOCIATION, AND ITS AFFILIATES HAVE
MANAGED COMMINGLED FUNDS FOR OVER FIFTY YEARS. AS OF OCTOBER 31, 1994, SHAWMUT
NATIONAL CORPORATION, THROUGH ITS SUBSIDIARIES INCLUDING SHAWMUT BANK, N.A.,
MANAGED MORE THAN $15 BILLION IN TOTAL ASSETS. SHAWMUT BANK, N.A., HAS SERVED
AS AN ADVISER TO MUTUAL FUNDS SINCE THE INCEPTION DATE OF THE SHAWMUT FUNDS ON
DECEMBER 1, 1992.

Robert W. Gleason Jr. has been the portfolio manager of Connecticut
Intermediate Municipal Income Fund and Massachusetts Intermediate Municipal
Income Fund since their inception in June, 1993. Mr. Gleason joined a
predecessor to Shawmut Bank, in July, 1976 and has been a Vice President and
portfolio manager since 1985. Mr. Gleason received his B.A. degree in Business
Administration from Colby College, followed by studies at New York University
and Columbia University Graduate Schools of Business Administration. Mr.
Gleason has been participating in investment portfolio management for over 38
years.

Maximiliaan J. Brenninkmeyer has been the portfolio manager of Fixed Income
Fund since its inception in December, 1992. Mr. Brenninkmeyer is a Vice
President of Shawmut Bank, the Fixed Income Fund's Adviser. He is a Chartered
Financial Analyst and holds a M.S. from Bentley College and a B.A. from the
College of the Holy Cross.

Michael M. Spencer has been the portfolio manager of Intermediate Government
Income Fund since April, 1993. Mr. Spencer joined Shawmut Bank in 1985 as an
investment officer and has been a Vice President of the Intermediate Government
Income Fund's Adviser since 1989. Mr. Spencer is a Chartered Financial Analyst
and received his B.A. from the University of Notre Dame.

DISTRIBUTION OF TRUST SHARES

FEDERATED SECURITIES CORP. IS THE PRINCIPAL DISTRIBUTOR FOR TRUST SHARES.

DISTRIBUTION PLAN.__Under the distribution plan adopted in accordance with
Investment Company Act Rule 12b-1 (the "Plan"), the Connecticut Intermediate
Municipal Income Fund and the Massachusetts Intermediate Municipal Income Fund
will pay to the distributor an amount computed at an annual rate of up to .50
of 1% of the average daily net asset value of the Connecticut Intermediate
Municipal Income Fund and Massachusetts Intermediate Municipal Income Fund to
finance any activity which is principally intended to result in the sale of
shares subject to the Plan.

The distributor may, from time to time and for such periods as its deems
appropriate, voluntarily reduce its compensation under the Plan.

The distributor may select financial institutions such as banks, fiduciaries,
custodians for public funds, investment advisers, and broker/dealers
("brokers") 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 clerical, supervisory, computer, and other
personnel 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; assisting clients in changing dividend options, account
designations, and addresses; and providing such other services as may be
reasonably be requested.

The distributor will pay financial institutions a fee based upon the 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 distributor.

The Plan is a "compensation" type plan. As such the Connecticut Intermediate
Municipal Income Fund and Massachusetts Intermediate Municipal Income Fund
make no payments to the distributor except as described above. Therefore, the
Connecticut Intermediate Municipal Income Fund and Massachusetts Intermediate
Municipal Income Fund do not pay for unreimbursed expenses of the distributor
including amounts expended by the distributor in excess of amounts received by
it from the Connecticut Intermediate Municipal Income Fund and Massachusetts
Intermediate Municipal Income Fund, including interest, carrying or other
financing charges in connection with excess amounts expended, or the
distributor's overhead expenses. However, the distributor may be able to
recover such amounts or may earn a profit from future payments made by the
Connecticut Intermediate Municipal Income Fund and Massachusetts Intermediate
Municipal Income Fund under the Plan.

As of the date of this prospectus, the Connecticut Intermediate Municipal
Income Fund and Massachusetts Intermediate Municipal Income Fund are not
paying or accruing 12b-1 fees. The Connecticut Intermediate Municipal Income
Fund and Massachusetts Intermediate Municipal Income Fund do not intend to
accrue or pay 12b-1 fees until either a separate class
of shares has been created for certain fiduciary investors or a determination
is made that such investors will be subject to 12b-1 fees.

OTHER PAYMENTS TO FINANCIAL INSTITUTIONS.__The distributor may also pay
financial institutions a fee based on the average net asset value of shares of
their customers invested in an Income Fund for providing administrative
services. This fee is in addition to the amounts paid under the distribution
plan for administrative services, and, if paid, will be reimbursed by the
Adviser and not an Income Fund.

An Income Fund's investment adviser or its affiliates may also offer to pay a
fee from their own assets to financial institutions as financial assistance
for providing substantial marketing and sales support. The support may include
sponsoring sales, educational and training seminars for their employees,
providing sales literature, and engineering computer software programs that
emphasize the attributes of an Income Fund. Such assistance will be predicted
upon the amount of shares the dealer sells or may sell, and/or upon the type
and nature of sales or operational support furnished by the financial
institution. These payments will be made by an Income Fund's investment
adviser and will not be made from the assets of an Income Fund.

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 Trustees will consider appropriate changes in the
services.

ADMINISTRATIVE SERVICES. Federated Administrative Services ("FAS"), Federated
Investors Tower, Pittsburgh, Pennsylvania 15222-3779, a subsidiary of Federated
Investors, provides the Income Funds with certain administrative personnel and
services necessary to operate the Income Funds, such as legal and accounting
services. FAS provides these at an annual rate as specified below:

<TABLE>
<S> <C>
MAXIMUM
ADMINISTRATIVE AVERAGE AGGREGATED DAILY
FEE NET ASSETS OF THE TRUST
.150 of 1% First $250 million
.125 of 1% Next $250 million
.100 of 1% Next $250 million
.075 of 1% Over $750 million
</TABLE>

The administrative fee received by FAS during any fiscal year shall be at
least $50,000 for each of the Income Funds. FAS may voluntarily choose to
waive a portion of its fee.

CUSTODIAN. Shawmut Bank, N.A., One Federal Street, Boston, Massachusetts
02211, is custodian for the securities and cash of the Income Funds. Under the
Custodian Agreement, Shawmut Bank, N.A., holds the Income Funds' portfolio
securities in safekeeping and keeps all necessary records and documents
relating to its duties.

TRANSFER AGENT, DIVIDEND DISBURSING AGENT, AND PORTFOLIO ACCOUNTING
SERVICES. Federated Services Company, Federated Investors Tower, Pittsburgh,
Pennsylvania 15222-3779, is transfer agent and dividend disbursing agent for
the Income Funds. It also provides certain accounting and recordkeeping
services with respect to each of the Income Funds' portfolio investments.

INDEPENDENT ACCOUNTANTS. The independent accountants for the Income Funds are
Price Waterhouse LLP, 160 Federal Street, Boston, Massachusetts 02110.

NET ASSET VALUE

THE TERM "NET ASSET VALUE" REFERS TO THE VALUE OF ONE INCOME FUND SHARE.

Each Income Fund's net asset value per Trust share fluctuates. The net asset
value for Trust Shares is determined by adding the interest of the Trust
Shares in the market value of all securities and other assets of an Income
Fund, subtracting the interest of the Trust Shares in the liabilities of an
Income Fund and those attributable to Trust Shares, and dividing the remainder
by the total number of Trust Shares outstanding. The net asset value for Trust
Shares of an Income Fund may differ from 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

YOU CAN BUY TRUST SHARES BY FEDERAL RESERVE WIRE, MAIL, OR TRANSFER, AS
EXPLAINED BELOW.

Trust Shares of the Income Funds are sold by the distributor on days on which
the New York Stock Exchange and Federal Reserve Wire System are open for
business. Trust Shares of the Income Funds may also be purchased through
Shawmut Bank, N.A., Shawmut Bank Connecticut, National Association, Shawmut
Bank NH, or their affiliates (collectively, "Shawmut Bank") on days on which
both Shawmut Bank and the New York Stock Exchange and Federal Wire Reserve
System are open for business. Texas residents must purchase, exchange, and
redeem Trust Shares through Federated Securities Corp. at 1-800-356-2805. The
Income Funds reserve the right to reject any purchase request.

THROUGH SHAWMUT BANK. An investor may call their Shawmut Bank trust officer to
receive information and to place an order to purchase Shares. Shawmut Bank will
purchase Trust Shares on behalf of investors and maintain all records relating
to the Trust Shares. Through its trust accounting systems, Shawmut Bank
provides shareholders of Trust Shares with detailed periodic statements that
integrate information regarding investments in the Income Funds with other
Shawmut Bank investment services.

Orders placed through Shawmut Bank are considered received when payment is
converted to federal funds and the applicable Income Fund is notified of the
purchase order. The completion of the purchase transaction will generally occur
within one business day after Shawmut Bank receives a purchase order. Purchase
orders must be received by Shawmut Bank before 4:00 p.m. (Eastern time) and
must be transmitted by Shawmut Bank to the applicable Income Fund before 5:00
p.m. (Eastern time) in order for Trust Shares to be purchased at that day's
public offering price.

DIRECTLY FROM THE DISTRIBUTOR. An investor may place an order to purchase
Trust Shares directly from the distributor. To do so: complete and sign the new
account form available from the Income Funds; complete an application for the
establishment of a trust account with Shawmut Bank; enclose a check made
payable to the full name of your desired portfolio (see the cover of the
prospectus)--Trust Shares (as appropriate); and mail both to The Shawmut Funds,
Attention: Vice President, Securities Operations, OF0501, One Federal Street,
Boston, Massachusetts 02211. The order is considered received after a trust
account is established and the check is converted by Shawmut Bank into federal
funds. This is generally the next business day after Shawmut Bank receives the
check.

To purchase Trust Shares of the Income Funds by wire, call 1-800-SHAWMUT. All
information needed will be taken over the telephone, and the order is
considered received when Shawmut Bank receives payment by wire. To request
additional information concerning purchases by wire, please contact Federated
Securities Corp., the Income Funds' distributor, at 1-800-356-2805. Shares
cannot be purchased by wire on any day which both Shawmut Bank and the New York
Stock Exchange and Federal Reserve Wire System are not open for business.

MINIMUM INVESTMENT REQUIRED

THE MINIMUM INITIAL INVESTMENT IS $1,000.

The minimum initial investment in Trust Shares by an investor is $1,000.
Subsequent investments must be in amounts of at least $100. The Income Funds
may waive the initial minimum investment for employees of Shawmut Bank and its
affiliates, from time to time.

WHAT SHARES COST

SHARES ARE SOLD AT THEIR NET ASSET VALUE NEXT DETERMINED AFTER AN ORDER IS
RECEIVED. THERE IS NO SALES LOAD IMPOSED BY THE INCOME FUNDS UPON THE PURCHASE
OF TRUST SHARES.

The net asset value is determined at the close of the New York Stock Exchange,
normally 4:00 p.m. (Eastern time), Monday through Friday, except on: (i) days
on which there are not sufficient changes in the value of an Income Fund's
portfolio securities that its net asset value might be materially affected;
(ii) days during which no shares are tendered for redemption and no orders to
purchase shares are received; or (iii) on the following holidays: New Year's
Day, Presidents' Day, Good Friday, Memorial Day, Independence Day, Labor Day,
Thanksgiving Day, and Christmas Day.

Shares of the Connecticut/Massachusetts Intermediate Municipal Income Funds are
sold at their net asset value next determined after an order is received
without a sales load, to or for accounts in which the trust department of
Shawmut Bank serves in a fiduciary or agency capacity. Other purchasers may pay
a sales load of up to 2.00% of the public offering price, as described in the
Income Funds--Investment Shares prospectus.

SUBACCOUNTING SERVICES

Institutions are encouraged to open single master accounts. However, certain
institutions may wish to use the transfer agent's subaccounting system to
minimize their internal recordkeeping requirements. The transfer agent charges
a fee based on the level of subaccounting services rendered. Certain
institutions holding Trust Shares in a fiduciary, agency, custodial, or similar
capacity may charge or pass through subaccounting fees as part of or in
addition to normal trust or agency account fees. They may also charge fees for
other services provided which may be related to the ownership of Trust Shares.
This prospectus should, therefore, be read together with any agreement between
the customer and the institution with regard to the services provided, the fees
charged for those services, and any restrictions and limitations imposed.

CERTIFICATES AND CONFIRMATIONS

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

DIVIDENDS

Dividends are declared and paid monthly to all shareholders invested in each
Income Fund on the record date.

CAPITAL GAINS

Capital gains realized by an Income Fund, if any, will be distributed to that
Income Fund's shareholder at least once every 12 months.

EXCHANGE PRIVILEGE

EXCHANGING SHARES. Shareholders may exchange Trust Shares, with a minimum net
asset value of $1,000, for shares of the same designated class of other funds
advised by Shawmut Bank.

The exchange privilege is available to shareholders residing in any state in
which the fund shares being acquired may legally be sold. Upon receipt of
proper instructions and all necessary supporting documents, Trust Shares
submitted for exchange will be redeemed at the next-determined net asset value.
Written exchange instructions may require a signature guarantee. 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 exchange privilege may be modified or terminated at any time.
Shareholders will be notified of the modification or termination of the
exchange privilege. A shareholder may obtain further information on the
exchange privilege by calling their trust officer at Shawmut Bank.

EXCHANGE-BY-TELEPHONE. Instructions for exchanges between participating funds
which are part of the Trust may be given by telephone to their trust officer at
Shawmut Bank. To utilize the exchange-by-telephone service, a shareholder must
complete an authorization form permitting Shawmut Bank to instruct the Income
Funds to honor telephone instructions. The authorization is included in Shawmut
Bank's trust account documentation. Trust Shares may be exchanged by telephone
only between trust accounts having identical registrations. Exchange
instructions given by telephone may be electronically recorded.

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

If reasonable procedures are not followed by the Income Funds, they may be
liable for losses due to fraudulent or unauthorized telephone instructions.

REDEEMING SHARES

YOU CAN REDEEM TRUST SHARES BY MAIL OR TELEPHONE. TO ENSURE YOUR SHARES ARE
REDEEMED EXPEDITIOUSLY, PLEASE FOLLOW THE PROCEDURES EXPLAINED BELOW.

The Income Funds redeem Trust Shares at their net asset value next determined
after Federated Services Company receives the redemption request. Redemptions
will be made on days on which the Income Funds compute their net asset value.
Requests for redemptions can be made by telephone or in writing by contacting
a Shawmut Bank trust officer. Redemption requests received prior to 4:00 p.m.
(Eastern time) will be effected on the same business day.

THROUGH SHAWMUT BANK

Shareholders may redeem Trust Shares by calling their Shawmut Bank trust
officer to request the redemption. Trust Shares will be redeemed at the net
asset value next determined after Federated Services Company receives the
redemption request. Shawmut Bank is responsible for promptly submitting
redemption requests and for maintaining proper written records of redemption
instructions received from the Income Funds' shareholders. In order to effect a
redemption on the same business day as a request, Shawmut Bank is responsible
for the timely transmission of the redemption request to the appropriate Income
Fund.

Before Shawmut Bank may request redemption by telephone on behalf of a
shareholder, an authorization form permitting the Income Funds to accept
redemption requests by telephone must first be completed. This authorization is
included in Shawmut Bank's trust account documentation. Redemption instructions
given by telephone may be electronically recorded. In the event of drastic
economic or market changes, a shareholder may experience difficulty in
redeeming by telephone. If such a case should occur, it is recommended that a
redemption request be made in writing and sent by overnight mail to Shawmut
Bank, Attention: Vice President, Securities Operation, OF0501, One Federal
Street, Boston, Massachusetts 02211.

If reasonable procedures are not followed by the Income Funds, they may be
liable for losses due to fraudulent or unauthorized telephone instructions.

DIRECTLY FROM THE INCOME FUNDS

BY MAIL. A shareholder may redeem Trust Shares by sending a written request to
Federated Services Company. If Shares are purchased by Shawmut Bank on behalf
of a trust customer, only Shawmut Bank, as the shareholder of record, can
request a redemption from Federated Services Company. The written request
should include the shareholder's name, the Income Funds' name and class of
shares name, 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. Shareholders
should call the Income Funds for assistance in redeeming by mail.

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

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

a savings bank or savings and loan association whose deposits are insured by
the Savings Association Insurance Fund, which is administered by the FDIC;
or

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

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

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

RECEIVING PAYMENT

Redemption payments will generally be made directly to the trust account
maintained by an investor with Shawmut Bank. This deposit is normally made
within one business day, but in no event more than seven days, after the
redemption request, provided the transfer agent has received payment from the
shareholder. The net asset value of Trust Shares redeemed is determined, and
dividends, if any, are paid up to and including, the day prior to the day that
a redemption request is processed. Pursuant to instructions from Shawmut Bank,
redemption proceeds may be transferred from a shareholder account by check or
by wire.

BY CHECK. Normally, a check for the proceeds is mailed within one business
day, but in no event more than seven days, after receipt of a proper redemption
request provided the transfer agent has received payment for Trust Shares from
the shareholder.

BY WIRE. Requests to wire proceeds from redemptions received before 4:00 p.m.
(Eastern time) will be honored the following business day after Shawmut Bank
receives proper instructions.

ACCOUNTS WITH LOW BALANCES

Due to the high cost of maintaining accounts with low balances, the Income
Funds may redeem shares in any account and pay the proceeds to the shareholder
if the account balance falls below a required minimum of $1,000. This
requirement does not apply, however, if the balance falls below $1,000 because
of changes in an Income Fund's net asset value.

Before shares are redeemed to close an account, the shareholder is notified in
writing and allowed 30 days to purchase additional shares to meet the minimum
requirement.

REDEMPTION IN KIND

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

Any redemption beyond this amount will also be in cash unless the Trustees
determine that further cash payments will have a material adverse effect on
remaining shareholders. In such a case, the Income Funds will pay all or a
portion of the remainder of the redemption in portfolio instruments, valued in
the same way as an Income Fund determines net asset value. The portfolio
instruments will be selected in a manner that the Trustees deem fair and
equitable.

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

SHAREHOLDER INFORMATION

VOTING RIGHTS

EACH TRUST SHARE OF AN INCOME FUND GIVES THE SHAREHOLDER ONE VOTE IN TRUSTEE
ELECTIONS AND OTHER MATTERS SUBMITTED TO SHAREHOLDERS OF THE TRUST FOR VOTE.

All shares 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 Trust or an Income Fund's
operation and for the election of Trustees under certain circumstances.

As of December 12, 1994, Olsen & Co., acting in various capacities for various
accounts, was the owner of record of 210,970 shares (26.20%) of Connecticut
Intermediate Municipal Income Fund; 221,527 shares (32.24%) of Massachusetts
Intermediate Municipal Income Fund; 5,752,056 shares (100%) of Trust Shares of
Limited Term Income Fund; 6,045,290 shares (100%) of Trust Shares of
Intermediate Government Income Fund; and 8,543,585 shares (100%) of Trust
Shares of Fixed Income Fund.

MASSACHUSETTS PARTNERSHIP LAW

Under certain circumstances, shareholders may be held personally liable as
partners under Massachusetts law for acts or obligations of the Trust on behalf
of an Income Fund. To protect shareholders of an Income Fund, the Trust has
filed legal documents with Massachusetts that expressly disclaim the liability
of shareholders of a Income Fund for 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 on
behalf of an Income Fund.

EFFECT OF BANKING LAWS

TAX INFORMATION

FEDERAL INCOME TAX

Shareholders are urged to consult their own tax advisers regarding the status
of their accounts under state and local tax laws.

OTHER CLASSES OF SHARES

Fixed Income Fund, Intermediate Government Income Fund, and Limited Term
Income Fund all offer a separate class of shares known as Investment Shares.
Investment Shares are sold primarily to financial institutions that rely upon
the distribution services provided by the distributor in the marketing of
Investment Shares, as well as to retail customers of such institutions.
Investment Shares are sold at net asset value plus a sales charge. Investments
in Investment Shares are subject to a minimum initial investment of $1,000.

Investment Shares are distributed pursuant to 12b-1 Plans adopted by the Trust
whereby the distributor is paid a fee of up to .50 of 1% of the Investment
Shares' average daily net assets.

The amount of dividends payable to Trust Shares will exceed that of 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 shares.

PERFORMANCE INFORMATION

FROM TIME TO TIME THE INCOME FUNDS ADVERTISE THEIR TOTAL RETURN, YIELD AND
TAX-EQUIVALENT YIELD FOR TRUST SHARES.

Total return represents the change, over a specified period of time, in the
value of an investment in Trust Shares 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 yields of Trust Shares of the Income Funds are calculated by dividing the
net investment income per share (as defined by the Securities and Exchange
Commission) earned by the Income Funds over a thirty-day period by the maximum
offering price per Trust Share 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 Trust Shares and, therefore, may not
correlate to the dividends or other distributions paid to shareholders.

The tax-equivalent yield for the Connecticut/Massachusetts Intermediate
Municipal Income Funds is calculated similarly to the yield but is adjusted to
reflect the taxable yield that the Connecticut/Massachusetts Intermediate
Municipal Income Funds would have had to equal its actual yield, assuming a
32.50% and 40.00% combined federal and state tax rate for Connecticut and
Massachusetts, respectively and assuming that income is 100% tax-exempt.

Total return, yield and tax-equivalent yield will be calculated separately for
Trust Shares and Investment Shares. Because Investment Shares are subject to a
sales load and a 12b-1 fee, the total return, yield on tax equivalent yield
for Trust Shares, for the same period, will exceed that of Investment Shares.