THE BLANCHARD GROUP OF FUNDS
BLANCHARD GLOBAL GROWTH FUND
BLANCHARD PRECIOUS METALS FUND, INC.
BLANCHARD 100% TREASURY MONEY MARKET FUND
BLANCHARD SHORT-TERM GLOBAL INCOME FUND
BLANCHARD AMERICAN EQUITY FUND
BLANCHARD FLEXIBLE INCOME FUND
BLANCHARD SHORT-TERM BOND FUND
BLANCHARD FLEXIBLE TAX-FREE BOND FUND
BLANCHARD WORLDWIDE EMERGING MARKETS FUND
SUPPLEMENT TO PROSPECTUS DATED AUGUST 31, 1994, AS SUPPLEMENTED ON JANUARY
1, 1995
On July 12, 1995, as a result of the acquisition by subsidiaries of
Signet Banking Corporation ("SBC") of certain assets of Sheffield Management
Company ("SMC") and Sheffield Investments, Inc. ("SII"), the following
actions were taken: (i) Virtus Capital Management, Inc. ("VCM"), a wholly-
owned subsidiary of SBC, replaced SMC as overall investment manager to
Blanchard Funds and Blanchard Precious Metals Fund, Inc. (collectively, the
"Funds"); (ii) VCM entered into new sub-advisory agreements with each
current sub-adviser of each Fund (with the exception of Blanchard 100%
Treasury Money Market Fund, Blanchard Capital Growth Fund and Blanchard
Growth & Income Fund); (iii) Federated Securities Corp. replaced SII as the
Funds' distributor; (iv) Federated Administrative Services ("FAS") was
engaged to provided administrative services to the Funds; and (i) Federated
Securities Corp. entered into new distribution plans with each Fund (other
than Blanchard 100% Treasury Money Market Fund). No changes in the advisory
fees, sub-advisory fees or distribution plan fees will occur as a result of
these actions, and the acquisition agreement requires all parties to avoid
the imposition of any unfair burden on the Fund.
Accordingly, please make the following changes to the Prospectus:
1. On the front and back cover pages of the Prospectus, please change the
address of the Blanchard Group of Funds to the following:
"Federated Investors Tower, Pittsburgh, Pennsylvania 15222-3779."
2. In the first paragraph on the front cover page of the Prospectus; the
section "The Funds, Objectives and Policies" appearing on pages 10 through
26 of the Prospectus; the section "Portfolio Advisory Services" appearing on
page 27 through 32 of the Prospectus; and the section "Brokerage Allocation"
appearing on page 37 of the prospectus, please delete each reference to SMC
and replace it with VCM;
3. Please insert the following paragraph after the third paragraph on the
front cover page of the Prospectus:
"Investment products offered through Signet Financial Services, Inc. are not
deposits, obligations of, or guaranteed by Signet Bank, and are not insured
by FDIC or any Federal agency. In addition, they involve risk, including
possible loss of principal invested. Member NASD."
4. On page 3 of the prospectus under the sub-heading "Fund Management"
please delete the first and second paragraphs and replace them with the
following:
"Virtus Capital Management, Inc. ("VCM") provides the overall investment
advisory services necessary for the Funds' operations. VCM selected,
continually monitors and evaluates the Funds' Portfolio advisers. The
Portfolio Advisers are responsible for the selection of each Fund's
portfolio investments.
VCM receives monthly compensation from each Fund based on the amount of
assets under management. VCM, not the Fund, pays the fees of each Portfolio
Adviser pursuant to a sub-advisory agreement. See 'Management of the Funds
and Portfolio Advisory Services.' "
5. Under the sub-heading "How to Invest and Redeem" on page 3 of the
prospectus, please delete the reference to SII and replace it with Federated
Securities Corp.
6. Please delete footnote 1 to the Fee Table on page 5 of the prospectus
and replace it with the following:
"1. VCM has conditioned its right to receive a portion of any earned but
deferred fees and expenses based upon these Funds reaching and maintaining a
certain level of net assets. See 'Management of the Funds.' "
7. In the footnotes to the tables in the Financial Highlights section
appearing on pages 6 through 9 of the Prospectus, please delete each
reference to "Manager" and "Distributor" and replace them with "Sheffield
Management Company" and "Sheffield Investments, Inc.", respectively.
8. On page 26 of the Prospectus and continuing on page 27, please delete
the heading "The Manager and the Management Agreements," the sub-headings
"The Manager," and "The Management Agreements" and the paragraphs
thereunder, but not including the fee schedule and replace with the
following:
"MANAGEMENT OF THE FUNDS
BOARD OF TRUSTEES/DIRECTORS. The Board of Trustees and the Board of
Directors (the 'Boards' or the 'Board Members') are responsible for managing
the business affairs of the Funds and for exercising all of the powers of
the Funds except those reserved for the shareholders. The Executive
Committee of the Boards handle the Boards' responsibilities between meetings
of the Boards.
INVESTMENT ADVISER. VCM is responsible for managing the Funds and overseeing
the investment of their assets, subject at all times to the supervision of
the Board Members. In addition, VCM selects, monitors and evaluates the
Portfolio Advisers. VCM will review the Portfolio Advisers' performance
records periodically, and will make changes if necessary, subject to Board
Member and Shareholder approval.
ADVISORY FEES. VCM receives an annual investment advisory fee at annual
rates equal to percentages of the relevant Fund's average net assets as
follows:
Blanchard Global Growth Fund- 1.00% of the first $150 million of average
daily net assets, .875% of the Fund's average daily net assets in excess of
$150 million but not exceeding $300 million and .75% of the Fund' average
daily net assets in excess of $300 million. Blanchard 100% Treasury Money
Market Fund- .50% of the first $500 million of the Fund's average daily net
assets, .475% of the Fund's average daily net assets in excess of $500
million but not exceeding $1 billion, plus .45% of the Fund's average daily
net assets in excess of $1 billion; Blanchard Short-Term Global Income Fund-
.75%; Blanchard American Equity Fund- 1.10%; Blanchard Precious Metals Fund,
Inc.- 1% of the first $150 million of the Fund's average daily net assets,
.875% of the Fund's average daily net assets in excess of $150 million but
not exceeding $300 million and .75% of the Fund's average daily net assets
in excess of $300 million. Blanchard Flexible Income Fund- .75%; Blanchard
Short-Term Bond Fund- .75%; Blanchard Flexible Tax-Free Bond Fund- .75% and
Blanchard Worldwide Emerging Markets Fund- 1.25%.
The portion of the fee based upon the average daily net assets of the Fund
shall be accrued daily at the rate of 1/365th of the applicable percentage
applied to the daily net assets of the Fund.
The investment advisory contract provides for the voluntary waiver of
expenses by VCM from time to time. VCM can terminate this voluntary waiver
of expenses at any time with respect to a Fund at its sole discretion. VCM
has also undertaken to reimburse the Funds for operating expenses in excess
of limitations established by certain states.
VCM'S BACKGROUND. Virtus Capital Management, Inc., a Maryland corporation
formed in 1995, is a wholly owned subsidiary of Signet Banking Corporation.
Signet Banking Corporation is a multi-state, multi-bank holding company
which has provided investment management services since 1956. VCM, which is
a registered investment adviser, manages, in addition to the Funds, The
Virtus Funds, three equity common trust funds with $39 million in assets and
three fixed income common trust funds with $221 million in assets.
For the fiscal year ended April 30, 1994 the prior manager received from
each Fund a monthly fee at the following annual rates: BFIF, BSTBF, BSTGIF
and BFTFBF each paid the prior manager .75% of their average daily net
assets; BWEMF paid the prior manager 1.25% of its average daily net assets;
BPMF paid the prior manager 1.00% of its average daily net assets; BAEF paid
the prior manager 1.10% of its average daily net assets; BGGF paid the prior
manager 1.00% of its average daily net assets; and BTMMF paid the prior
manager .50% of its average daily net assets. Some of these fees are higher
than the fees charged by many investment companies because of the complexity
of managing these types of Funds.
VCM has conditioned its right to receive a portion of any earned but
deferred fees from BFIF and BSTBF and to receive reimbursement for absorbed
expenses (measured on a rolling two-year period, starting from the date the
portion of the fee is deferred and/or the expenses are absorbed) upon theses
Funds reaching and then maintaining the following specified levels of net
assets for a period of 30 continuous days (excluding assets exchanged into a
Fund after June 1, 1993 from other funds in the Blanchard Group of Funds),
provided that such reimbursement would not cause the Fund's expenses in such
year to exceed 1.75%.
9. On page 32 of the prospectus, please delete the first sentence of the
paragraph under the heading "How to Invest" and replace it with the
following:
"You may purchase shares of any Fund from Federated Securities Corp., the
Funds' principal Distributor."
10. On page 37 of the prospectus and continuing on page 38, please delete
the heading "Distribution Agreements and Marketing Plans," the sub-headings
"Distribution Agreements" and "Marketing Plans" and the paragraphs
thereunder and replace with the following:
"DISTRIBUTION OF SHARES OF THE FUNDS
Federated Securities Corp. is the principal distributor for shares of the
Funds. It is a Pennsylvania corporation organized on November 14, 1969, and
is the principal distributor for a number of investment companies. Federated
Securities Corp. is a subsidiary of Federated Investors.
DISTRIBUTION PLAN. According to the provisions of a distribution plan
adopted pursuant to Investment Company Act Rule 12b-1, the distributor may
select brokers and dealers to provide distribution and administrative
services as to shares of the Funds. The distributor may also select
administrators (including financial institutions, fiduciaries, custodians
for public funds and investment advisers) to provide administrative
services. Administrative services may include, but are not limited to, the
following functions: providing office space, equipment, telephone
facilities, and various personnel including clerical, supervisory, and
computer, as necessary or beneficial to establish and maintain shareholder
accounts and records; processing purchase and redemption transactions and
automatic investments of client account cash balances; answering routine
client inquiries regarding shares; assisting clients in changing dividend
options, account designations and addresses; and providing such other
services as each Fund reasonably requests for its shares.
Brokers, dealers, and administrators will receive fees based upon shares
owned by their clients or customers. The schedules of such fees and the
basis upon which such fees will be paid will be determined from time to time
by the Board of Trustees, provided that for any period the total amount of
fees representing an expense to the Trust shall not exceed an annual rate of
.25 of 1% of the average daily net assets of shares of BSTGIF, BFIF, BSTBF
and BFTFBF; .50 of 1% of the average daily net assets of shares of BGIF,
BCGF, BWEMF and BAEF; and .75 of 1% of the average daily net assets of
shares of BGGF and BPMF held in the accounts during the period for which the
brokers, dealers, and administrators provide services. Any fees paid by the
distributor with respect to shares of a Fund pursuant to the distribution
plan will be reimbursed by the Trust from the assets of the shares of that
Fund.
The distributor will, periodically, uniformly offer to pay cash or
promotional incentives in the form of trips to sales seminars at luxury
resorts, tickets or other items to all dealers selling shares of the Funds.
Such payments will be predicated upon the account of shares of the Funds
that are sold by the dealer. Such payments, if made, will be in addition to
amounts paid under the distribution plan and will not be an expense of a
Fund.
ADMINISTRATIVE ARRANGEMENTS. The distributor may pay financial institutions
a fee based upon the average net asset value of shares of their customers
invested in the Trust for providing administrative services. This fee, if
paid, will be reimbursed by VCM and not the Trust.
GLASS-STEAGALL ACT. The Glass-Steagall act prohibits a depository
institution (such as a commercial bank or a savings and loan association)
from being an underwriter or distributor of most securities. In the event
the Glass-Steagall Act is deemed to prohibit depository institutions from
acting in the administrative capacities described above or should Congress
relax current restrictions on depository institutions, the Board of Trustee
will consider appropriate changes in the administrative services.
State securities laws governing the ability of depository institutions to
act as underwriters or distributors of securities may differ from
interpretations given to the Glass-Steagall Act and, therefore, banks and
financial institutions may be required to register as dealers pursuant to
state law.
ADMINISTRATIVE SERVICES. Federated Administrative Services, a subsidiary of
Federated Investors, provides the Funds with certain administrative
personnel and services necessary to operate each Fund. Such services include
shareholder servicing and certain legal and accounting services. Federated
Administrative Services provides these at an annual rate as specified below:
Maximum Average Aggregate Daily Net
Administrative Fee Assets of the Trust/Corporation
.150 of 1% on the first $250 million
.125 of 1% on the next $250 million
.100 of 1% on the next $250 million
.075 of 1% on assets in excess of $750 million
The administrative fee received during any fiscal year shall be at least
$75,000 per Fund. Federated Administrative services may voluntarily waive a
portion of its fee.
11. On page 42 of the prospectus under the sub-heading "All Funds" please
add the following as the final paragraph:
"The Code of Ethics of the Investment Adviser and the Funds prohibits all
affiliated personnel from engaging in personal investment activities which
compete with or attempt to take advantage of the Funds' planned portfolio
transactions. the objective of the Code of Ethics of both the Funds and
Investment Adviser is that their operations be carried out for the exclusive
benefit of the Funds' shareholders. Both organizations maintain careful
monitoring of compliance with the Code of Ethics."
July 12, 1995
FEDERATED SECURITIES CORP.
Distributor
A subsidiary of Federated Investors
Federated Investors Tower
Pittsburgh, PA 15222-3779
(7/95)
THE BLANCHARD GROUP OF FUNDS
BLANCHARD PRECIOUS METALS FUND, INC.
SUPPLEMENT TO STATEMENT OF ADDITIONAL INFORMATION DATED AUGUST 31, 1994
On July 12, 1995, as a result of acquisition by subsidiaries of Signet
Banking Corporation ("SBC") of certain assets of Sheffield Management
Company ("SMC") and Sheffield Investments, Inc. ("SII"), the following
actions were taken: (i) Virtus Capital Management, Inc. ("VCM"), a wholly-
owned subsidiary of SBC, replaced SMC as overall investment manager to
Blanchard Funds and Blanchard Precious Metals Fund, Inc. (collectively, the
"Funds"); (ii) VCM entered into new sub-advisory agreements with each
current sub-adviser of each Fund (with the exception of Blanchard 100%
Treasury Money Market Fund, Blanchard Capital Growth Fund and Blanchard
Growth & Income Fund); (iii) Federated Securities Corp. replaced SII as the
Funds' distributor; (iv) Federated Administrative Services ("FAS") was
engaged to provided administrative services to the Funds; and (i) Federated
Securities Corp. entered into new distribution plans with each Fund (other
than Blanchard 100% Treasury Money Market Fund). No changes in the advisory
fees, sub-advisory fees or distribution plan fees will occur as a result of
these actions, and the acquisition agreement requires all parties to avoid
the imposition of any unfair burden on the Fund.
Accordingly, please make the following changes to the Statement of
Additional Information:
1. On page 1 of the Statement of Additional Information, please change the
address of the Blanchard Group of Funds to the following:
"Federated Investors Tower, Pittsburgh, Pennsylvania 15222-3779."
2. Throughout the Statement of Additional Information, please delete each
reference to Sheffield Management Company or SMC and replace with Virtus
Capital Management, Inc. or VCM, as the case may be.
3. Throughout the Statement of Additional Information, please delete each
reference to Sheffield Investments, Inc. and replace with Federated
Securities Corp.
4. On page 36 of the Statement of Additional Information, please delete the
heading "The Fund's Directors and Executive Officers" and the paragraphs
thereunder and replace with the following:
"THE MANAGEMENT OF THE FUND
Officers and Trustees are listed with their ages, addresses, principal
occupations, and present positions, including any affiliation with Virtus
Capital Management, Inc., Signet Trust
Company, Federated Investors, Federated Securities Corp., Federated Services
Company, and Federated Administrative Services or the Funds (as defined
below).
John F. Donahue, 70 (1)(2)
Federated Investors Tower
Pittsburgh, PA Chairman and Trustee/Director of
Blanchard Funds and Blanchard
Precious Metals Fund, Inc.;
Chairman and Trustee of The Virtus
Funds; 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.
Thomas G. Bigley, 61
28th Floor
One Oxford Centre
Pittsburgh, PA Trustee/Director of the Blanchard
Funds and Blanchard Precious
Metals Fund, Inc.; Trustee of the
Virtus Funds; 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., 57 (3)
Wood/IPC Commercial Department
John R. Wood and Associates, Inc., Realtors
3255 Tamiami Trail North
Naples, FL Trustee/Director of the Blanchard
Funds and Blanchard Precious
Metals Fund, Inc.; Trustee of the
Virtus Funds; 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, 76 (3)
One PNC Plaza - 23rd Floor
Pittsburgh, PA Trustee/Director of the Blanchard
Funds and Blanchard Precious
Metals Fund, Inc.; Trustee of the
Virtus Funds; 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, 72 (3)
571 Hayward Mill Road
Concord, MA Trustee/Director of the Blanchard
Funds and Blanchard Precious
Metals Fund, Inc.; Trustee of the
Virtus Funds; 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., 62 (1)
3471 Fifth Avenue, Suite 1111
Pittsburgh, PA Trustee/Director of the Blanchard
Funds and Blanchard Precious
Metals Fund, Inc.; Trustee of the
Virtus Funds; Hematologist,
Oncologist, and Internist,
Presbyterian and Montefiore
Hospitals; Professor of Medicine
and Member, Board of Trustees,
University of Pittsburgh; Medical
Director, University of Pittsburgh
Medical Center - Downtown; Member,
Board of Directors, University of
Pittsburgh Medical Center;
Director, Trustee, or Managing
General Partner of the Funds.
Edward L. Flaherty, Jr., 70 (1)(3)
Two Gateway Center - Suite 674
Pittsburgh, PA Trustee/Director of the Blanchard
Funds and Blanchard Precious
Metals Fund, Inc.; Trustee of the
Virtus Funds; Attorney-at-law;
Partner, Henny, Kochuba, 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, 64 (1)
Federated Investor Tower
Pittsburgh, PA President, Treasurer and
Trustee/Director of the Blanchard
Funds and Blanchard Precious
Metals Fund, Inc.; President,
Treasurer and Trustee of The
Virtus Funds; 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, 53
225 Franklin Street
Boston, MA Trustee/Director of the Blanchard
Funds and Blanchard Precious
Metals Fund, Inc.; Trustee of The
Virtus Funds; 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, 68
Two Gateway Center - Suite 674
Pittsburgh, PA Trustee/Director of the Blanchard
Funds and Blanchard Precious
Metals Fund, Inc.; Trustee of The
Virtus Funds; Attorney-at-law;
Partner, Henny, Kochuba, 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.
John E. Murray, Jr., J.D., S.J.D., 62
[MAILING ADDRESS
CITY, STATE & ZIP CODE] Trustee/Director of the Blanchard
Funds and Blanchard Precious
Metals Fund, Inc.; Trustee of The
Virtus Funds; President, Law
Professor, Duquesne University;
Consulting Partner, Mollica,
Murray and Hogue; Director,
Trustee or Managing General
Partner of the Funds.
Wesley W. Posvar, 69
1202 Cathedral of Learning
University of Pittsburgh
Pittsburgh, PA Trustee/Director of the Blanchard
Funds and Blanchard Precious
Metals Fund, Inc.; Trustee of The
Virtus Funds; 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, 59
4905 Bayard Street
Pittsburgh, PA Trustee/Director of the Blanchard
Funds and Blanchard Precious
Metals Fund, Inc.; Trustee of The
Virtus Funds; Public
relations/marketing consultant;
Director, Trustee, or Managing
General Partner of the Funds.
(1)This Trustee is deemed to be an "interested person" as defined in the
Investment Company Act of 1940, as amended.
(2)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.
(3)Member of the Audit Committee. The Audit Committee is responsible for
reviewing compliance with all internal controls and all regulations
related to the financial reporting process.
The Funds
As referred to in the list of Trustees and Officers, "Funds" includes 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-Term U.S. Government Trust;
Federated Stock Trust; Federated Tax-Free Trust; Federated U.S. Government
Bond Fund; Federated U.S. Government Securities Fund: 1-3 Years; 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; Money Market Management, Inc.;
Money Market Obligations Trust; Money Market Trust; Municipal Securities
Income Trust; Newpoint Funds; New York Municipal Cash Trust; 111 Corcoran
Funds; Peachtree Funds; The Planters Funds; RIMCO Monument Funds; The
Shawmut Funds; Short-Term Municipal Trust; Star Funds; The Starburst Funds;
The Starburst Funds II; Stock and Bond Fund, Inc.; Sunburst Funds; Targeted
Duration Trust; Tax-Free Instruments Trust; Trademark Funds; Trust for
Financial Institutions; Trust For Government Cash Reserves; Trust for Short-
Term U.S. Government Securities; Trust for U.S. Treasury Obligations; and
World Investment Series, Inc.
Fund Ownership
As of June 30, 1995, Officers and Trustees own less than 1% of the
outstanding shares of each Fund.
To the best knowledge of the FUND, as of June 30, 1995, no shareholder owned
5% or more of the outstanding shares of the FUND.
Officers and Trustees Compensation
NAME, POSITION AGGREGATE TOTAL COMPENSATION
WITH THE FUND COMPENSATION PAID TO THE TRUSTEES FROM
FROM THE FUND+ THE FUND AND THE FUND
COMPLEX*
John F. Donahue, $ -0- $0 for the Fund Complex
Chairman and Trustee
Thomas G. Bigley, Trustee $ -0- $489.00 the Fund Complex
John T. Conroy, Jr., Trustee $ -0- $2,001.50 for the Fund Complex
William J. Copeland, Trustee $ -0- $2,001.50 for the Fund Complex
James E. Dowd, Trustee $ -0- $2,001.50 for the Fund Complex
Lawrence D. Ellis, M.D., Trustee $ -0-$1,816.00 for the Fund
Complex
Edward L. Flaherty, Jr., Trustee $ -0-$2,001.50 for the Fund
Complex
Edward C. Gonzales, President $ -0- $ -0- for the Fund Complex
and Trustee
Peter E. Madden, Trustee $ -0- $1,517.50 for the Fund Complex
Gregor F. Meyer, Trustee $ -0- $1,816.00 for the Fund Complex
John E. Murray, Jr., Trustee $ -0- $-0- for the Fund Complex
Wesley W. Posvar, Trustee $ -0- $1,816.00 for the Fund Complex
Marjorie P. Smuts, Trustee $ -0- $1,816.00 for the Fund Complex
* Fund Complex = Blanchard Funds, Blanchard Precious Metals Fund, Inc.
and the Virtus Funds
INVESTMENT ADVISORY SERVICES
Advisor to the Fund
The Fund's investment adviser is Virtus Capital Management, Inv. ("VCM"),
which is a division of Signet Trust Company, a wholly-owned subsidiary of
Signet Banking Corporation. Because
of the internal controls maintained by Signet to restrict the flow of non-
public information, FUND investments are typically made without any
knowledge of Signet Bank's or its affiliates' lending relationship with an
issuer.
The adviser shall not be liable to the Trust, a Fund, or any shareholder of
the Funds for any losses that may be sustained in the purchase, holding, or
sale of any security or for
anything done or omitted by it, except acts or omissions involving willful
misfeasance, bad faith, gross negligence, or reckless disregard of the
duties imposed upon it by its contract with the Trust.
Advisory Fees
For its services, VCM receives an annual investment advisory fee as described
in the prospectus. For the fiscal years ended April 30, 1994, 1993,
and 1992, the aggregate amounts paid or accrued by the Fund to the prior
manager under the then existing management agreement were $602,610, $227,978
and $256,761, respectively. The prior manager was not required to reimburse
the Fund for any expenses during the years ended April 30, 1994, 1993 and
1992.
ADMINISTRATIVE SERVICES
Federated Administrative Services, which is a subsidiary of Federated
Investors, provides administrative personnel and services to the Funds for
the fees set forth in the prospectus.
DISTRIBUTION PLAN
The Trust has adopted a Plan for Shares of the Fund pursuant to Rule 12b-1
which was promulgated by the Securities and Exchange Commission pursuant
to the Investment Company Act of 1940. The Plan provides that the Funds'
Distributor shall act as the
Distributor of shares, and it permits the payment of fees to brokers and
dealers for distribution and administrative services and to administrators
for administrative services. The Plan is designed to (i) stimulate brokers
and dealers to provide distribution and administrative support services to
the Fund and its shareholders and (ii) stimulate administrators to render
administrative support services to the Fund and its shareholders. These
services are to be provided by a representative who has knowledge of the
shareholders' particular circumstances and goals, and include, but are not
limited to: providing office space, equipment, telephone facilities, and
various personnel including clerical, supervisory, and computer, as
necessary or beneficial to establish and maintain shareholder accounts and
records; processing purchase and redemption transactions and automatic
investments of client account cash balances; answering routine client
inquiries regarding the Funds; assisting clients in changing dividend
options, account designations, and addresses; and providing such other
services as the Trust reasonably requests.
Other benefits which the Fund 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 assets of shareholders by having them rapidly invested in
the Fund with a minimum of delay and administrative detail; and (3) an
efficient and reliable records system for shareholders and prompt responses
to shareholder requests and inquiries concerning their accounts.
By adopting the Plan, the then Board of Trustees expected that the Fund 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 Fund in
seeking to achieve its investment objectives. By identifying potential
investors in shares whose needs are served by the Fund's objectives, and
properly servicing these account, the Fund may be able to curb sharp
fluctuations in rates of redemptions and sales."
July 12, 1995
FEDERATED SECURITIES CORP.
Distributor
A subsidiary of Federated Investors
Federated Investors Tower
Pittsburgh, PA 15222-3779
(7/95)
