1933 Act File No. 33-44590
1940 Act File No. 811-6504
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form N-1A
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 X
Pre-Effective Amendment No.
Post-Effective Amendment No. 14 X
and/or
REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT OF 1940 X
Amendment No. 15 X
THE BILTMORE FUNDS
(Exact Name of Registrant as Specified in Charter)
Federated Investors Tower, Pittsburgh, Pennsylvania 15222-3779
(Address of Principal Executive Offices)
(412) 288-1900
(Registrant's Telephone Number)
John W. McGonigle, Esquire,
Federated Investors Tower,
Pittsburgh, Pennsylvania 15222-3779
(Name and Address of Agent for Service)
It is proposed that this filing will become effective:
immediately upon filing pursuant to paragraph (b)
on _________________ pursuant to paragraph (b)
60 days after filing pursuant to paragraph (a)
x on December 10, 1994 pursuant to paragraph (a) of Rule 485.
Registrant has filed with the Securities and Exchange Commission a
declaration pursuant to Rule 24f-2 under the Investment Company Act of
1940, and:
x filed the Notice required by that Rule on January 18, 1994; or
intends to file the Notice required by that Rule on or about
____________; or
during the most recent fiscal year did not sell any securities pursuant
to Rule 24f-2 under the Investment Company Act of 1940, and, pursuant to
Rule 24f-2(b)(2), need not file the Notice.
Copies to:
Donald W. Smith, Esquire Alan C. Porter, Esquire
Kirkpatrick & Lockhart Piper & Marbury
1800 M. Street, N.W. 1200 Nineteenth Street, N.W.
Washington, D.C. 20036-5891 Washington, D.C. 20036-2430
CROSS REFERENCE SHEET
This Amendment to the Registration Statement of THE BILTMORE FUNDS
which is comprised of eleven portfolios: (1) Biltmore Balanced Fund, (2)
Biltmore Equity Fund, (3) Biltmore Equity Index Fund, (4) Biltmore Fixed
Income Fund, (5) Biltmore Special Values Fund, (6) Biltmore Short-Term
Fixed Income Fund, (7) Biltmore Money Market Fund (Institutional and
Investment Shares); (8) Biltmore Tax-Free Money Market Fund (Institutional
and Investment Shares); (9) Biltmore U.S. Treasury Money Market Fund
(Institutional and Investment Shares), (10) Biltmore Prime Cash Management
Fund (Institutional Shares), (11) Biltmore Quantitative Equity Fund, and
(12) Biltmore Emerging Markets Fund, relates only to one of the portfolios,
Biltmore Emerging Markets Fund, and is comprised of the following:
PART A. INFORMATION REQUIRED IN A PROSPECTUS.
Prospectus Heading
(Rule 404(c) Cross Reference)
Item 1. Cover Page (1-12) Cover Page.
Item 2. Synopsis (1-12) Summary of Fund Expenses.
Item 3. Condensed Financial
Information (1-11) Financial Highlights.
Item 4. General Description of
Registrant (1-12) General Information; Investment
Objective; Investment Policies;
Investment Limitations; (7-10)
Regulatory Compliance; (1,2,4,5)
Investment Risks; (3,5) Investment
Considerations; Debt Considerations;
(1) Equity Investment Considerations;
(12) Risk Characteristics of Foreign
Securities; Risk Characteristics of
Emerging Markets; Appendix; (11)
Portfolio Turnover.
Item 5. Management of the Fund (1-12) The Biltmore Funds Information;
Management of The Trust; Distribution
of (Institutional/Investment) Shares;
(7-9, Investment Shares only)
Distribution Plan; (1-4,6,11,12) and
(7-10, Investment Shares only)
Administrative Arrangements; (1-4,
6,11,12) Shareholder Servicing
Arrangements; (1-12) Administration of
the Fund; Legal Services; Independent
Auditors; Expenses of the Fund (and
Institutional/ Investment Shares); (1-
6,11,12) Brokerage Transactions.
Item 6. Capital Stock and Other
Securities (1-12) Dividends; Capital Gains;
Shareholder Information;
Voting Rights; Massachusetts
Partnership Law; Tax Information; (8)
State and Local Taxes; (1-12) Effect
of Banking Laws; (7,8,9) Other Classes
of Shares.
Item 7. Purchase of Securities Being
Offered (1-12) Net Asset Value; Investing in
(the Fund/Institutional/Investment)
Shares; Share Purchases; (1-6,11)
Through Wachovia Brokerage Service; By
Mail; By Wire; (12) Through Authorized
Broker-Dealers; Through Wachovia
Securities, Inc.; (1-6,11,12) Through
the Trust Divisions of The Wachovia
Banks;
(7-10) Through The Wachovia Banks; (7-
10) Via a Sweep Account; (1-12)
Minimum Investment Required; What
Shares Cost; (1-6,11,12) Sales Charge
Reallowance, Reducing the Sales
Charge, Quantity Discounts and
Accumulated Purchases, Letter of
Intent, Reinvestment Privilege,
Concurrent Purchases, Systematic
Investment Program; (1-6,11)
Exchanging Securities for Fund Shares;
Exchange Privilege; (1-11)
Certificates and Confirmations; (12)
Subaccounting Services; (7-10)
Exchanges.
Item 8. Redemption or Repurchase (1-12) Redeeming
(Institutional/Investment) Shares; By
Telephone; (1-6,11) and (7-10,
Investment Shares Only) Through
Wachovia Brokerage Service; By Mail;
(7-10, Investment Shares Only) Through
the Wachovia Banks; Through Service
Organizations; (1-6, 11,12 and 7-10,
Investment Shares Only) Accounts With
Low Balances; (7-10, (7-10) Redemption
In Kind; (1-4,6,12) Systematic
Withdrawal Program.
Item 9. Pending Legal Proceedings None.
PART B. INFORMATION REQUIRED IN A STATEMENT OF ADDITIONAL INFORMATION.
Item 10. Cover Page (1-12) Cover Page.
Item 11. Table of Contents (1-12) Table of Contents.
Item 12. General Information and
History (1-12) General Information About the
Fund.
Item 13. Investment Objectives and
Policies (1-12) Investment Objective and
Policies; Investment Limitations; (8)
Investment Risks.
Item 14. Management of the Fund (1-12) The Biltmore Funds Management.
Item 15. Control Persons and Principal
Holders of Securities Not Applicable.
Item 16. Investment Advisory and Other
Services (1-12) Investment Advisory Services;
Administrative Services; (1-6,11)
Administrative Arrangements.
Item 17. Brokerage Allocation (1-12) Brokerage Transactions.
Item 18. Capital Stock and Other
Securities Not Applicable
Item 19. Purchase, Redemption and
Pricing of Securities Being
Offered (1-12) Purchasing (Fund)/
(Institutional/Investment) Shares;
Determining Net Asset Value; Redeeming
(Institutional/Investment) Shares; (1-
6,11,12) Redemption in Kind;
Determining Market Value of
Securities.
Item 20. Tax Status (1-12) Tax Status.
Item 21. Underwriters (7,8,10, Investment Shares only)
Distribution Plan.
Item 22. Calculation of Performance
Data (1-10) Effective Yield; (1-12) Yield;
(8) Tax-Equivalent Yield, (1-6,11,12)
Total Return; (1-12) Performance
Comparisons; (4,6) Duration; (11)
Standard & Poor's Corporation.
Item 23. Financial Statements (1-11) Filed in Part A; (12) to be
filed by amendment.
SUBJECT TO COMPLETION, PRELIMINARY PROSPECTUS DATED
OCTOBER 10, 1994
BILTMORE EMERGING MARKETS FUND
(A PORTFOLIO OF THE BILTMORE FUNDS)
PROSPECTUS
The shares of Biltmore Emerging Markets Fund (the "Fund") offered by
this prospectus represent interests in a diversified portfolio of
securities, which is one of a series of investment portfolios in The
Biltmore Funds (the "Trust"), an open-end management investment
company (a mutual fund).
The investment objective of the Fund is to produce long-term capital
appreciation. The Fund pursues this objective by investing primarily
in a professionally managed and diversified portfolio of securities
of issuers and companies located in countries having emerging
markets.
INVESTMENTS IN EMERGING MARKETS CAN INVOLVE SIGNIFICANT RISKS AND THE
FUND IS DESIGNED FOR AGGRESSIVE INVESTORS.
THE INVESTMENT COMPANY SHARES OFFERED BY THIS PROSPECTUS ARE
NOT DEPOSITS OR OBLIGATIONS OF, OR ENDORSED OR GUARANTEED BY,
WACHOVIA BANK OF NORTH CAROLINA, N.A. OR ITS AFFILIATES OR
SUBSIDIARIES, AND ARE NOT INSURED BY THE FEDERAL DEPOSIT
INSURANCE CORPORATION (THE "FDIC"), THE FEDERAL RESERVE BOARD,
OR ANY OTHER GOVERNMENT AGENCY. INVESTMENT IN THESE SHARES
INVOLVES INVESTMENT RISKS, INCLUDING THE POSSIBLE LOSS OF
PRINCIPAL.
This prospectus contains the information you should read and know
before you invest in the Fund. Keep this prospectus for future
reference.
The Fund has also filed a Statement of Additional Information dated
December , 1994 with the Securities and Exchange Commission. The
information contained in the Statement of Additional Information is
incorporated by reference into this prospectus. To request a copy of
the Statement of Additional Information free of charge, obtain other
information, or make inquiries about the Fund, call or write
The Biltmore Shareholder Servicing Center, 1-800-994-4414, 101
Greystone Boulevard, Room 108, Columbia, South Carolina 29226.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION
NOR HAS THE SECURITIES AND EXCHANGE COMMISSION OR ANY STATE
SECURITIES COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY OF THIS
PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
Prospectus dated December , 1994
INFORMATION CONTAINED HEREIN IS SUBJECT TO COMPLETION OR AMENDMENT. A
REGISTRATION STATEMENT RELATING TO THESE SECURITIES HAS BEEN FILED WITH THE
SECURITIES AND EXCHANGE COMMISSION. THESE SECURITIES MAY NOT BE SOLD NOR MAY
OFFERS TO BUY BE ACCEPTED PRIOR TO THE TIME THE REGISTRATION STATEMENT BECOMES
EFFECTIVE. THIS PROSPECTUS SHALL NOT CONSTITUTE AN OFFER TO SELL OR THE
SOLICITATION OF AN OFFER TO BUY NOR SHALL THERE BE ANY SALE OF THESE SECURITIES
IN ANY STATE IN WHICH SUCH OFFER, SOLICITATION OR SALE WOULD BE UNLAWFUL PRIOR
TO REGISTRATION OR QUALIFICATION UNDER THE SECURITIES LAWS OF ANY SUCH STATE.
TABLE OF CONTENTS
- --------------------------------------------------------------------------------
SUMMARY OF FUND EXPENSES 1
- ------------------------------------------------------
GENERAL INFORMATION 2
- ------------------------------------------------------
INVESTMENT INFORMATION 2
- ------------------------------------------------------
Investment Objective 2
Investment Policies 2
Investment Process 3
Acceptable Investments 4
Risk Characteristics of Foreign Securities 4
Risk Characteristics of Emerging Markets 5
Corporate Obligations 6
Investing in Securities of Other
Investment Companies 7
U.S. Government Obligations 7
Forward Foreign Currency Exchange
Contracts 8
Put and Call Options 8
Futures Contracts and Options on Futures 9
Stock Index Futures and Options 9
Restricted and Illiquid Securities 10
Temporary Investments 10
Repurchase Agreements 10
When-Issued and Delayed
Delivery Transactions 10
Lending of Portfolio Securities 11
Investment Limitation 11
THE BILTMORE FUNDS INFORMATION 11
- ------------------------------------------------------
Management of the Trust 11
Board of Trustees 11
Investment Adviser 11
Advisory Fees 11
Adviser's Background 12
Distribution of Shares 12
Administrative Arrangements 12
Shareholder Servicing Arrangements 13
Administration of the Fund 13
Administrative Services 13
Custodian 13
Transfer Agent, Dividend Disbursing
Agent, and Portfolio Recordkeeper 14
Legal Services 14
Independent Auditors 14
Brokerage Transactions 14
Expenses of the Fund 14
NET ASSET VALUE 14
- ------------------------------------------------------
INVESTING IN THE FUND 14
- ------------------------------------------------------
Share Purchases 14
Through Wachovia Securities, Inc. 15
By Mail 15
By Wire 15
Through Authorized Broker/Dealers 15
Minimum Investment Required 16
What Shares Cost 16
Purchases at Net Asset Value 16
Sales Charge Reallowance 16
Reducing the Sales Charge 17
Quantity Discounts and Accumulated
Purchases 17
Letter of Intent 17
Reinvestment Privilege 17
Concurrent Purchases 18
Systematic Investment Program 18
Certificates and Confirmations 18
Subaccounting Services 18
Dividends 19
Capital Gains 19
Exchange Privilege 19
Exchange by Telephone 20
REDEEMING SHARES 20
- ------------------------------------------------------
By Telephone 20
By Mail 21
Signatures 21
Systematic Withdrawal Program 21
Accounts with Low Balances 22
SHAREHOLDER INFORMATION 22
- ------------------------------------------------------
Voting Rights 22
Massachusetts Business Trusts 22
EFFECT OF BANKING LAWS 22
- ------------------------------------------------------
TAX INFORMATION 23
- ------------------------------------------------------
PERFORMANCE INFORMATION 24
- ------------------------------------------------------
APPENDIX 25
- ------------------------------------------------------
ADDRESSES Inside Back Cover
- ------------------------------------------------------
SUMMARY OF FUND EXPENSES
- --------------------------------------------------------------------------------
<TABLE>
<S> <C> <C>
SHAREHOLDER TRANSACTION EXPENSES
Maximum Sales Load Imposed on Purchases (as a percentage of offering price)................................. 4.50%
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 Fees (as a percentage of amount redeemed, if applicable)......................................... None
Exchange Fee................................................................................................ None
ANNUAL FUND OPERATING EXPENSES*
(As a percentage of projected average net assets)
Management Fee ............................................................................................ 1.00%
12b-1 Fees.................................................................................................. None
Other Expenses.............................................................................................. 0.80%
Shareholder Servicing Agent Fee (1).......................................................... 0.00%
Total Fund Operating Expenses .................................................................... 1.80%
</TABLE>
(1) The Fund has no present intention of paying or accruing the shareholder
servicing agent fee during the fiscal year ending November 30, 1995. If the
Fund were paying or accruing the shareholder servicing agent fee, the Fund
would be able to pay up to 0.25 of 1% of the Fund's average daily net
assets for the shareholder servicing agent fee. See "The Biltmore Funds
Information."
* Total Fund Operating Expenses in the table above are estimated based on
average expenses expected to be incurred during the period ending November 30,
1995. During the course of this period, expenses may be more or less than the
average amount shown.
THE PURPOSE OF THIS TABLE IS TO ASSIST AN INVESTOR IN UNDERSTANDING THE
VARIOUS COSTS AND EXPENSES THAT A SHAREHOLDER OF THE FUND WILL BEAR, EITHER
DIRECTLY OR INDIRECTLY. FOR MORE COMPLETE DESCRIPTIONS OF THE VARIOUS COSTS AND
EXPENSES, SEE "THE BILTMORE FUNDS INFORMATION" AND "INVESTING IN THE FUND."
<TABLE>
<CAPTION>
EXAMPLE 1 year 3 years
<S> <C> <C>
You would pay the following expenses on a $1,000 investment, assuming (1) 5% annual return; (2)
redemption at the end of each time period; and (3) payment of the maximum sales load. As noted
in the table above, the Fund charges no redemption fees........................................ $62 $99
</TABLE>
THE ABOVE EXAMPLE SHOULD NOT BE CONSIDERED A REPRESENTATION OF PAST OR
FUTURE EXPENSES. ACTUAL EXPENSES MAY BE GREATER OR LESS THAN THOSE SHOWN. THIS
EXAMPLE IS BASED ON ESTIMATED DATA FOR THE FUND'S FISCAL YEAR ENDING NOVEMBER
30, 1995.
GENERAL INFORMATION
- --------------------------------------------------------------------------------
The Biltmore Funds was established as a Massachusetts business trust under a
Declaration of Trust dated November 19, 1991. The Declaration of Trust permits
the Trust to offer separate series of shares of beneficial interest representing
interests in separate portfolios of securities. This prospectus relates only to
one portfolio, Biltmore Emerging Markets Fund. The shares in any portfolio may
be offered in separate classes. As of the date of this prospectus, the Board of
Trustees (the "Trustees") has not established classes of shares of the Fund.
The Fund is designed for institutions, pension plans and individuals as a
convenient means of accumulating an interest in a professionally managed,
diversified portfolio of securities of issuers and companies located in
countries having emerging markets. A minimum initial investment of $250 is
required. This amount may be waived from time to time. For further information,
Trust customers of the Wachovia Banks may telephone their account officer.
Except as otherwise noted in this prospectus, shares are currently sold at net
asset value plus an applicable sales charge and are redeemed at net asset value.
The other portfolios in the Trust are Biltmore Balanced Fund, Biltmore Equity
Fund, Biltmore Equity Index Fund, Biltmore Fixed Income Fund, Biltmore Money
Market Fund (Institutional Shares and Investment Shares), Biltmore Prime Cash
Management Fund (Institutional Shares), Biltmore Quantitative Equity Fund,
Biltmore Short-Term Fixed Income Fund, Biltmore Special Values Fund, Biltmore
Tax-Free Money Market Fund (Institutional Shares and Investment Shares), and
Biltmore U.S. Treasury Money Market Fund (Institutional Shares and Investment
Shares) (collectively, hereinafter referred to as the "Funds").
INVESTMENT INFORMATION
- --------------------------------------------------------------------------------
INVESTMENT OBJECTIVE
The investment objective of the Fund is to produce long-term capital
appreciation. 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. The investment objective cannot be changed without
the approval of shareholders. Unless indicated otherwise, the investment
policies described below may be changed by the Trustees without the approval of
shareholders. Shareholders will be notified before any material change in these
policies becomes effective.
INVESTMENT POLICIES
The Fund pursues its investment objective by investing primarily in a
professionally managed and diversified portfolio of securities of issuers and
companies located in countries having emerging markets. Under normal market
conditions, the Fund intends to invest at least 65% of its total assets in
securities of emerging market issuers. Although the Fund will focus its
investment on the common stocks of emerging market companies, the Fund may also
invest in other securities, including debt securities.
Many investments in emerging markets can be considered speculative, and
therefore may offer higher income potential than the developed markets of the
world. Investments in emerging markets can involve significant risks and the
Fund is designed for aggressive investors.
In managing the Fund's portfolio, the Fund's adviser, Wachovia Investment
Management Group (the "Adviser") considers countries having emerging markets to
be all countries that are generally considered to be developing or emerging
countries by the International Bank for Reconstruction and Development (more
commonly known as the World Bank) and the International Finance Corporation, as
well as countries that are classified by the United Nations or otherwise
regarded by their authorities as developing. The Adviser will consider the
following securities as permissible investments for the Fund:
(i) securities of companies the principal securities trading market for
which is an emerging market country, as described above;
(ii) securities, traded in any market, of companies or issuers that
derive 50% or more of their total revenue from either goods or
services produced in such emerging market countries or sales made in
such emerging market countries; or
(iii) securities of companies organized under the laws of, and with a
principal office in, an emerging market country.
INVESTMENT PROCESS. To select equity securities for the Fund, the Adviser,
while focusing on broad diversification of emerging market countries, initially
identifies those emerging market countries that, in the Adviser's judgment, have
made, or are currently making, progress toward improving their economies and
market environments through financial and/or political reform, and which are
likely to produce premium returns. The Adviser then classifies, via a
disciplined allocation process, the emerging market countries that it has
identified into one of two categories (or "Tiers"): Tier 1 is comprised of the
most established and liquid of emerging market countries, while Tier 2
represents those emerging market countries which are less established, smaller,
and less liquid than those in Tier 1.
In constructing the Fund's investment portfolio, the Adviser normally gives the
Tier 1 emerging market countries a greater weighting than is afforded to the
Tier 2 emerging market countries. Within each Tier, each emerging market country
is equally-weighted and then its weight is adjusted to reflect the Adviser's
investment judgments regarding the particular country. The Adviser will consider
economic factors, political conditions and currency and market valuation levels,
in deciding upon which emerging market countries to include in the portfolio and
how those countries should be classified and weighted.
The number of emerging market countries represented in the Fund's portfolio will
vary over time. It is the Adviser's intention that the Fund remain broadly
diversified across many emerging market countries, companies, and geographic
regions. Under normal market conditions, the Adviser expects to invest in the
securities of issuers located in a minimum of six different emerging market
countries, with no more than 30% of the Fund's total assets invested in any one
country.
In selecting securities in each emerging market country for purchase by the
Fund, the Adviser will focus on the most prominent and largest capitalized
companies. The Adviser will seek to construct the Fund's investment portfolio in
a manner that maintains adequate liquidity for trading purposes, and will
attempt to utilize the low historical correlation of returns among emerging
market countries to moderate the portfolio's volatility, wherever feasible.
Nonetheless, investing in the Fund entails a substantial degree of risk. Because
of the special risks associated with investing in emerging markets, an
investment in the Fund should be considered speculative. Investors are strongly
advised to carefully consider the special risks involved in emerging markets,
which are in addition to the usual risks of investing in developed markets
around the world.
ACCEPTABLE INVESTMENTS. The Fund's investments will emphasize common stocks of
foreign companies located in emerging market countries. The Fund's permissible
investments may also include, but will not be limited to:
.preferred stocks of foreign companies;
.convertible securities and warrants of foreign companies;
.investments in American Depository Receipts ("ADRs") of foreign countries
traded on the New York Stock Exchange or in over-the-counter markets, and
investments in European Depository Receipts ("EDRs," sometimes also
referred to as Continental Depositary Receipts), which are receipts
issued in Europe, typically by foreign banks and trust companies, that
evidence ownership of either foreign or domestic underlying securities;
.fixed income obligations of foreign governments, supranational entities
and corporate debt obligations denominated in currencies other than U.S.
dollars, rated B or better at the time of purchase by Moody's Investors
Service, Inc. ("Moody's") or Standard & Poor's Ratings Group ("S&P")
(obligations rated below BBB by S&P or Baa by Moody's are commonly known
as "junk bonds"). (If a security's rating is reduced below the required
minimum after the Fund has purchased it, the Fund is not required to sell
the security, but may consider doing so.);
.U.S. equity and debt securities;
.restricted and illiquid securities;
.securities of other investment companies, including closed-end investment
companies; and
.securities issued or guaranteed by the U.S. government, its agencies, or
instrumentalities.
In addition, the Fund may enter into foreign currency transactions and
repurchase agreements, borrow money, lend portfolio securities, and engage
in when-issued and delayed delivery transactions. The Fund is also
permitted to invest in call options on securities and securities indexes,
futures, and options on futures, for hedging purposes. The Fund may
maintain reserves in foreign or U.S. money market instruments.
RISK CHARACTERISTICS OF FOREIGN SECURITIES. The Fund has the ability to
purchase securities in any emerging market country. Accordingly,
shareholders should carefully consider the substantial risks involved in
investing in securities issued by companies and governments of foreign
nations, which are in addition to the usual risks inherent in domestic
investments. These risks are often heightened for investments in developing
or emerging markets and countries. There is a possibility of expropriation,
nationalization or confiscatory taxation, taxation of income earned in
foreign nations (including, for example, withholding taxes on interest and
dividends) or other taxes imposed with respect to investments in foreign
nations, foreign exchange controls (which may include suspension of the
ability to transfer currency from a given country and repatriation of
investments), default in foreign government securities, political or social
instability or diplomatic developments which could adversely affect
investment in securities of issuers in foreign nations. In addition, there
is often less publicly available information about foreign issuers than
those in the United States. Emerging market companies are not generally
subject to uniform accounting, auditing and financial reporting standards,
and auditing practices and requirements may not be comparable to those
applicable to U.S. companies. Further, the Fund may encounter difficulties
or be unable to pursue legal remedies and obtain judgments in foreign
courts. These risks may be intensified in the case of investments in
emerging market countries.
Because the Fund's securities will generally be denominated in foreign
currencies, the value of such securities to the Fund will be affected by
changes in currency exchange rates and in exchange control regulations, and
costs will be incurred in connection with conversion between currencies. A
change in the value of a foreign currency against the U.S. dollar will
result in corresponding change in the U.S. dollar value of the Fund's
securities denominated in the currency. Such changes will also affect the
Fund's income and distributions to shareholders. The Fund may be affected,
either favorably or unfavorably, by the fluctuations in the relative rates
of exchange between the currencies of different nations, and the Fund
therefore may engage in certain hedging strategies. Such strategies involve
certain investment risks and transaction costs to which the Fund might not
otherwise be subject. These risks include dependence on the Adviser's
ability to predict movements in exchange rates, and imperfect movements
between exchange rates and currency hedges.
RISK CHARACTERISTICS OF EMERGING MARKETS. Brokerage commissions, fees for
custodial services, and other costs relating to investments in emerging
market countries are generally greater than in the United States. Such
markets have different clearance and settlement procedures, and in certain
markets, there have been occasions when settlements have been unable to
keep pace with the volume of securities transactions, making it difficult
to effect certain transactions. The inability of the Fund to make intended
security purchases due to settlement problems could cause the Fund to miss
attractive investment opportunities. Inability to sell a portfolio security
due to settlement problems could result in either losses to the Fund, if
the value of the portfolio security subsequently declines, or, if the Fund
has entered into a contract to sell the security, could result in possible
claims against the Fund.
In certain emerging market countries, there is less government supervision
and regulation of business and industry practices, stock exchanges,
brokers, and listed companies than in the United States. The economies of
emerging market countries may be predominently based on a few industries
and may be highly vulnerable to change in local or global trade conditions.
The securities markets of many of the countries in which the Fund may
invest also may be smaller, less liquid, and subject to greater price
volatility than those in the United States. Some emerging market countries
also may have fixed or managed currencies which are not free-floating
against the U.S. dollar. Further, certain emerging market country
currencies may not be internationally traded. Certain of these currencies
have experienced a steady devaluation relative to the U.S. dollar. Any
devaluations in the currencies in which the Fund's portfolio securities are
denominated may have a detrimental impact on the Fund. Finally, many
emerging market countries have experienced substantial, and in some
periods, extremely high, rates of inflation for many years. Inflation and
rapid fluctuations in inflation rates have had, and may continue to have,
negative effects on the economies for individual emerging market countries.
Moreover, the economies of individual emerging market countries may differ
favorably or unfavorably from the U.S. economy in such respects as the rate
of growth of domestic product, inflation, capital reinvestment, resource
self-sufficiency and balance of payments position.
By itself, an investment in the Fund does not constitute a balanced
investment plan. Investors should be willing to assume a higher degree of
risk and accept a higher level of volatility than is generally associated
with investment in more developed markets.
CORPORATE OBLIGATIONS. The Fund may invest in preferred stocks, bonds,
notes, and debentures of corporate issuers located in countries with
emerging markets. These obligations will be rated, at the time of purchase,
B or better by Moody's or S&P, or, if unrated, will be of comparable
quality as determined by the Adviser. In addition, the Fund may invest in
convertible securities, which are fixed income securities that may be
exchanged or converted into a predetermined number of shares 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 investment
characteristics of each convertible security vary widely, which allows
convertible securities to be employed for different investment objectives.
Convertible bonds and convertible preferred stocks 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 stock provide a stable stream of income
with generally higher yields than common stock, but lower than
non-convertible securities of similar quality.
The Fund will exchange or convert the convertible securities held in its
portfolio into shares of the underlying common stock in instances in which,
in the Adviser's opinion, the investment characteristics of the underlying
common shares will assist the Fund in achieving its investment objective.
Otherwise, the Fund will hold or trade the convertible securities. In
selecting convertible securities for the Fund, the 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 Adviser considers numerous factors,
including the economic and political outlook, the value of the security
relative to other investment alternatives, trends in the determination of
the issuer's profits, and the issuer's management capability and practices.
RISKS. From time to time, the Fund's portfolio may consist of
lower-rated (i.e., rated below BBB by S&P or Baa by Moody's) debt
obligations which are commonly referred to as "junk bonds." A
description of the rating categories is contained in the Appendix to
this prospectus. Lower-rated securities will usually offer higher
yields than higher-rated securities. However, there is more risk
associated with these investments. These lower-rated bonds may be more
susceptible to real or perceived adverse economic conditions than
investment grade bonds. These lower-rated bonds are regarded as
predominantly speculative with regard to each issuer's continuing
ability to make principal and interest payments. In addition, the
secondary trading market for lower-rated bonds may be less liquid than
the market for investment grade bonds. As a result of these factors,
lower-rated securities tend to have more price volatility and carry
more risk to principal than higher-rated securities. The Adviser will
endeavor to limit these risks through diversifying the portfolio and
through careful credit analysis of individual issuers. Purchasers
should carefully assess the risks associated with an investment in the
Fund.
Many corporate debt obligations, including many lower-rated bonds,
permit the issuers to call the security and thereby redeem their
obligations earlier than the stated maturity dates. Issuers are more
likely to call bonds during periods of declining interest rates. In
these cases, if the Fund owns a bond which is called, the Fund will
receive its return of principal earlier than expected and would likely
be required to reinvest the proceeds at lower interest rates, thus
reducing income to the Fund.
INVESTING IN SECURITIES OF OTHER INVESTMENT COMPANIES. The Fund may invest
in the securities of other investment companies, but it will not own more
than 3% of the total outstanding voting stock of any investment company,
invest more than 5% of its total assets in any one investment company, or
invest more than 10% of its total assets in investment companies in
general. Due to restrictions on direct investment by foreign entities in
certain emerging market countries, investment in other investment companies
may be the most practical or only manner in which the Fund can invest in
securities markets of certain emerging countries. Such investments may
involve the payment of substantial premiums above the net asset value of
such issuers' portfolio securities, and are constrained by market
availability. There can be no assurance that investment companies for
investing in certain emerging market countries will be available for
investment. The Fund will invest in such funds when, in the Adviser's
judgment, the potential benefits of such investment justify the payment of
any applicable premium or sales charge.
U.S. GOVERNMENT OBLIGATIONS. These securities include, but are not limited
to:
.direct obligations of the U.S. Treasury, such as U.S. Treasury bills,
notes, and bonds; and
.notes, bonds and discount notes of U.S. government agencies or
instrumentalities.
Some of these obligations, such as Government National Mortgage Association
mortgage-backed securities, 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 agencies and instrumentalities are
supported by:
.the issuer's right to borrow an amount limited to a specific line of
credit from the U.S. Treasury;
.the discretionary authority of the U.S. government to purchase certain
obligations of an agency or instrumentality; or
.the credit of the agency or instrumentality.
FORWARD FOREIGN CURRENCY EXCHANGE CONTRACTS. A forward foreign currency
exchange contract ("forward contract") is an obligation to purchase or sell
an amount of a particular currency at a specific price and on a future date
agreed upon by the parties. Generally, no commission charges or deposits
are involved. At the time the Fund enters into a forward contract, Fund
assets with a value equal to the Fund's obligation under the forward
contract are segregated on the Fund's records and are maintained until the
forward contract has been settled. The Fund will not enter into a forward
contract with a term of more than one year. The Fund will generally enter
into a forward contract to provide the proper currency to settle a
securities transaction at the time the transaction occurs ("trade date").
The period between the trade date and settlement date will vary between 24
hours and 30 days, depending upon local custom.
The Fund may also protect against the decline of a particular foreign
currency by entering into a forward contract to sell an amount of that
currency approximating the value of all or a portion of the Fund's assets
denominated in that currency ("hedging"). The success of this type of
short-term hedging strategy is highly uncertain due to the difficulties of
predicting short-term currency market movements and of precisely matching
forward contract amounts and the constantly changing value of the
securities involved. Although the Adviser will consider the likelihood of
changes in currency values when making investment decisions, the Adviser
believes that it is important to be able to enter into forward contracts
when it believes the interest of the Fund will be served. The Fund will not
enter into forward contracts for hedging purposes in a particular currency
in an amount in excess of the Fund's assets denominated in that currency.
No more than 30% of the Fund's assets will be committed to forward
contracts for hedging purposes at any time. (This restriction does not
include forward contracts entered into to settle securities transactions.)
PUT AND CALL OPTIONS. The Fund may purchase put options on its portfolio
securities. These options will be used only as a hedge to attempt to
protect securities which the Fund holds against decreases in value. The
Fund may purchase these put options as long as they are listed on a
recognized options exchange and the underlying stocks are held in its
portfolio. The Fund may also write call options on securities either held
in its portfolio or which it has the right to obtain without payment of
further consideration or for which it has segregated cash in the amount of
any additional consideration. The call options which the Fund writes and
sells must be listed on a recognized options exchange. Writing of calls by
the Fund is intended to generate income for the Fund and thereby protect
against price movements in particular securities in the Fund's portfolio.
Prior to exercise or expiration, an option position can only be terminated
by entering into a closing purchase or sale transaction. This requires a
secondary market on an exchange which may or may not exist for any
particular call or put option at any specific time. The absence of a liquid
secondary market also may limit the Fund's ability to dispose of the
securities underlying an option. The inability to close options also could
have an adverse impact on the Fund's ability to effectively hedge its
portfolio. These instruments may not be available with regard to the
securities of certain emerging markets in which the Fund may invest.
FUTURES CONTRACTS AND OPTIONS ON FUTURES. The Fund may purchase and sell
financial futures and stock index futures contracts to hedge all or a
portion of its portfolio against changes in the price of its portfolio
securities, but will not engage in futures transactions for speculative
purposes. The Fund may also write call options and purchase put options on
financial futures and stock index futures contracts as a hedge to attempt
to protect securities in its portfolio against decreases in value. The Fund
may not purchase or sell futures contracts or related options if
immediately thereafter the sum of the amount of margin deposits on the
Fund's existing futures positions and premiums paid for related options
would exceed 5% of the market value of the Fund's total assets. These
instruments may not be available with regard to the securities of certain
emerging markets in which the Fund may invest.
RISKS. When the Fund writes a call option, the Fund risks not
participating in any rise in the value of the underlying security. In
addition, when the Fund uses futures and options on futures as hedging
devices, there is a risk that the prices of the securities subject to
the futures contracts may not correlate perfectly with the prices of
the securities in the Fund's portfolio. This may cause the futures
contract and any related options to react differently than the
portfolio securities to market changes. In addition, in the event the
Adviser is incorrect in its expectations about the events, the Fund may
lose money on the futures contract or option. It is not certain that a
secondary market for positions in futures contracts or options will
exist at all times. Although the Adviser will consider liquidity before
entering into option transactions, there is no assurance that a liquid
secondary market will exist for any particular futures contract or
option at any particular time. The Fund's ability to establish and
close out futures and options positions depends on this secondary
market.
STOCK INDEX FUTURES AND OPTIONS. The Fund may utilize stock index futures
contracts, options, and options on futures contracts, subject to the
limitation that the value of these futures contracts and options will not
exceed 20% of the Fund's total assets. Also, the Fund will not purchase
options to the extent that more than 5% of the value of the Fund's total
assets would be invested in premiums on open put option positions. These
futures contracts and options will be used to handle cash flows into and
out of the Fund and to potentially reduce transactional costs, since
transactional costs associated with futures and options contracts can be
lower than costs stemming from direct investment in stocks. These
instruments may not be available with regard to the securities of certain
emerging markets in which the Fund may invest.
These are several risks accompanying the utilization of futures contracts
to effectively anticipate market movements. First, positions in futures
contracts may be closed only on an exchange or broad of trade that
furnishes a secondary market for such contracts. While the Fund plans 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.
The effective use of futures and options as hedging techniques depends on
the correlation between their prices and the behavior of the Fund's
portfolio securities, as well as the Adviser's ability to accurately
predict the direction of stock prices, interest rates and other relevant
economic factors. In addition, daily limits on the fluctuation of futures
or options prices could cause the Fund to be unable to timely liquidate its
futures or options position and cause it to suffer greater losses than
would otherwise be the case. In this regard, the Fund may be unable to
anticipate the extent of its losses from futures transactions.
RESTRICTED AND ILLIQUID SECURITIES. The Fund may invest in restricted
securities. Restricted securities are any securities in which the Fund may
otherwise invest pursuant to its investment objective and policies, but
which are subject to restrictions on resale under federal securities laws.
To the extent that these securities are not determined to be liquid, the
Fund will limit its purchase of these securities, together with other
securities considered to be illiquid, to 15% of its net assets.
TEMPORARY INVESTMENTS. From time to time on a temporary basis, or when the
Adviser determines that market conditions call for a temporary defensive
posture, the Fund may invest in:
.certificates of deposit, demand and time deposits, savings shares,
bankers' acceptances, and other instruments of domestic and foreign
banks and savings and loans, which institutions have capital,
surplus, and undivided profits over $100 million, or if the
principal amount of the instrument is insured in full by the Bank
Insurance Fund ("BIF"), or by the Savings Association Insurance
Fund ("SAIF"), both of which are administered by the FDIC;
.securities issued and/or guaranteed as to payment of principal and
interest by the U.S. government, its agencies, or
instrumentalities;
.commercial paper (including Canadian Commercial Paper and
Europaper) rated A-1 or better by S&P, or Prime-1 by Moody's, or,
if unrated, of comparable quality to the Fund's acceptable
investments as determined by the Adviser; and
.repurchase agreements.
The Fund may invest in certain temporary investments denominated in
currencies other than U.S. dollars.
REPURCHASE AGREEMENTS. The securities in which the 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 the 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 Fund, the Fund could receive less than the repurchase price on any sale
of such securities.
WHEN-ISSUED AND DELAYED DELIVERY TRANSACTIONS. The Fund may purchase securities
on a when-issued or delayed delivery basis. These transactions are arrangements
in which the Fund purchases securities with payment and delivery scheduled for a
future time. The seller's failure to complete these transactions may cause the
Fund to miss a price or yield considered to be advantageous. Settlement dates
may be a month or more after entering into these transactions, and the market
values of the securities purchased may vary from the purchase prices.
Accordingly, the Fund may pay more or less than the market value of the
securities on the settlement date. The Fund may not be able to engage in these
types of transactions with regard to the securities of certain emerging markets
in which the Fund may invest.
The Fund may dispose of a commitment prior to settlement if the Adviser deems it
appropriate to do so. In addition, the Fund 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 Fund may realize short-term profits or losses upon the sale of such
commitments.
LENDING OF PORTFOLIO SECURITIES. In order to generate additional income, as a
matter of fundamental policy the Fund may lend portfolio securities on a
short-term or long-term basis, or both, to broker/dealers, banks, or other
institutional borrowers of securities. The Fund will only enter into loan
arrangements with broker/dealers, banks, or other institutions which the 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. The Fund may not be able
to engage in these types of transactions with regard to the securities of
certain emerging markets in which the Fund may invest.
INVESTMENT LIMITATION
The Fund will not:
.borrow money directly or through reverse repurchase agreements
(arrangements in which the Fund sells a portfolio instrument for a
percentage of its cash value with an agreement to buy it back on a set
date) or pledge securities except, under certain circumstances, the Fund
may borrow up to one-third of the value of its total assets and pledge
assets to secure such borrowings.
The above investment limitation cannot be changed without shareholder approval.
THE BILTMORE FUNDS INFORMATION
- --------------------------------------------------------------------------------
MANAGEMENT OF THE TRUST
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.
INVESTMENT ADVISER. Pursuant to an investment advisory contract with the Trust
on behalf of the Fund, investment decisions for the Fund are made by Wachovia
Investment Management Group (the "Adviser"), a business unit of Wachovia Bank of
North Carolina, N.A., subject to direction by the Trustees. The Adviser
continually conducts investment research and supervision of investments for the
Fund and is responsible for the purchase or sale of portfolio instruments, for
which it receives an annual fee from the assets of the Fund.
ADVISORY FEES. The Adviser receives an annual investment advisory fee
equal to 1.00% of the Fund's average daily net assets. The investment
advisory contract provides that such fee shall be accrued and paid daily.
The Adviser has undertaken to reimburse the Fund for operating expenses in
excess of limitations established by certain states. The Adviser may
voluntarily choose to waive a portion of its fee or reimburse the Fund for
certain other expenses of the Fund but reserves the right to terminate such
waiver or reimbursement at any time at its sole discretion.
ADVISER'S BACKGROUND. Wachovia Bank of North Carolina, N.A. is a direct,
wholly-owned subsidiary of Wachovia Corporation, a registered bank holding
company headquartered in Winston-Salem, North Carolina and Atlanta,
Georgia. Through offices in eight states, Wachovia Corporation and its
subsidiaries provide a broad range of financial services to individuals and
businesses.
Wachovia Bank of North Carolina, N.A., a national banking association,
offers financial services that include, but are not limited to, commercial
and consumer loans, corporate, institutional, and personal trust services,
demand and time deposit accounts, letters of credit and international
financial services.
The Adviser employs an experienced staff of professional investment
analysts, portfolio managers and traders. The Adviser uses fundamental
analysis and other investment management disciplines to identify investment
opportunities. Wachovia Bank of North Carolina, N.A., together with its
affiliates, Wachovia Bank of Georgia, N.A. and Wachovia Bank of South
Carolina, N.A. (formerly known as The South Carolina National Bank)
(collectively, the "Wachovia Banks") have been managing trust assets for
over 100 years, with approximately $16.6 billion in managed assets as of
June 30, 1994. Wachovia Investment Management Group has served as
investment adviser to The Biltmore Funds since March 9, 1992. Wachovia Bank
of North Carolina, N.A., also serves as investment adviser of the North
Carolina Municipal Bond Fund, a portfolio of The Biltmore Municipal Funds,
another investment company.
The Fund's portfolio managers are B. Scott Sadler and Timothy L. Swanson. Mr.
Sadler and Mr. Swanson have managed the Fund since its inception in December,
1994.
Mr. Swanson, who joined Wachovia Bank of North Carolina, N.A. in 1991, is
responsible for managing personal trust investment portfolios. Mr. Swanson is a
graduate of Wake Forest University with a bachelor's degree in mathematical
economics, and of the University of Rochester with a master's degree in
economics.
Mr. Sadler, who joined Wachovia Bank of North Carolina, N.A. in 1987, is also
responsible for managing personal trust portfolios. He is a graduate of the
University of Virginia's McIntire School of Commerce with a bachelor's degree in
economics. Mr. Sadler is a Chartered Financial Analyst.
DISTRIBUTION OF SHARES
Federated Securities Corp. is the distributor (the "Distributor") for shares of
the Fund. It is a Pennsylvania corporation organized on November 14, 1969, and
is the distributor for a number of investment companies. Federated Securities
Corp. is a subsidiary of Federated Investors.
ADMINISTRATIVE ARRANGEMENTS
The Distributor may pay financial institutions and other financial service
providers, such as banks, fiduciaries, custodians for public funds, investment
advisers, and broker/dealers a fee based upon the average net asset value of
shares of their customers for providing administrative services. This fee, if
paid, will be reimbursed by the Adviser and not the Fund.
SHAREHOLDER SERVICING ARRANGEMENTS
Federated Administrative Services, Pittsburgh, Pennsylvania, a subsidiary of
Federated Investors, is the Fund's shareholder servicing agent (the "Shareholder
Servicing Agent"). The Fund may pay the Shareholder Servicing Agent a fee based
on the average daily net asset value of shares for which it provides shareholder
services. These shareholder services include, but are not limited to,
distributing prospectuses and other information, providing shareholder
assistance and communicating or facilitating purchases and redemptions of
shares. This fee will be computed at an annual rate equal to 0.25 of 1% of the
Fund's average daily net assets for which the Shareholder Servicing Agent
provides services; however, the Shareholder Servicing Agent may choose
voluntarily to waive all or a portion of its fee at any time or pay all or some
of its fees to financial institutions or other financial service providers.
ADMINISTRATION OF THE FUND
ADMINISTRATIVE SERVICES. Federated Administrative Services, provides the Fund
with certain administrative personnel and services necessary to operate the
Fund. Such services include the preparation of filings with the Securities and
Exchange Commission and other regulatory authorities, assistance with respect to
meetings of the Trustees, shareholder servicing and accounting services, and
other administrative services. Federated Administrative Services provides these
at an annual rate, computed and payable daily, as specified below:
<TABLE>
<CAPTION>
AVERAGE AGGREGATE DAILY
MAXIMUM NET ASSETS OF THE TRUST
ADMINISTRATIVE FEE AND THE BILTMORE MUNICIPAL FUNDS
<C> <S>
0.150 of 1% of the first $250 million
0.125 of 1% of the next $250 million
0.100 of 1% of the next $250 million
0.075 of 1% in excess of $750 million
</TABLE>
The administrative fee received during any fiscal year for the Fund and each of
the other portfolios of The Biltmore Funds shall aggregate at least $75,000.
Federated Administrative Services may choose voluntarily to waive or reimburse a
portion of its fee at any time.
CUSTODIAN. Wachovia Bank of North Carolina, N.A., Winston-Salem, North
Carolina, is custodian (the "Custodian") for the securities and cash of the
Fund. Under the Custodian Agreement, the Custodian holds the Fund's portfolio
securities in safekeeping and keeps all necessary records and documents relating
to its duties. For the services to be provided to the Trust pursuant to the
Custodian Agreement, the Trust pays the Custodian an annual fee based upon the
average daily net assets of the Fund and payable monthly. The Custodian will
also charge transaction fees and out-of-pocket expenses.
Foreign securities purchased by the Fund are held by foreign banks participating
in a network coordinated by J.P. Morgan. All expenses incurred through this
network are paid by the Fund.
TRANSFER AGENT, DIVIDEND DISBURSING AGENT AND PORTFOLIO RECORDKEEPER. Federated
Services Company is transfer agent (the "Transfer Agent") for the shares of the
Fund, and dividend disbursing agent for the Fund. Federated Services Company
also provides certain accounting and recordkeeping services with respect to the
Fund's portfolio investments.
LEGAL SERVICES. Legal services for the Fund are provided by Kirkpatrick &
Lockhart, Washington, D.C. Piper & Marbury, Washington, D.C., serves as counsel
to the independent Trustees.
INDEPENDENT AUDITORS. The independent auditors are Ernst & Young LLP,
Pittsburgh, Pennsylvania.
BROKERAGE TRANSACTIONS
When selecting brokers and dealers to handle the purchase and sale of portfolio
instruments, the Adviser looks for prompt execution of the order at a favorable
price. In working with dealers, the Adviser will generally utilize those who are
recognized dealers in specific portfolio instruments, except when a better price
and execution of the order can be obtained elsewhere. In selecting among firms
believed to meet these criteria, the Adviser may give consideration to those
firms which have sold or are selling shares of the Fund and other funds
distributed by Federated Securities Corp. The Adviser makes decisions on
portfolio transactions and selects brokers and dealers subject to review by the
Trustees.
EXPENSES OF THE FUND
The Fund pays all of its own expenses and its allocable share of Trust expenses.
These expenses include, but are not limited to, the costs of: organizing the
Trust and continuing its existence; Trustees' fees; investment advisory and
administrative services; printing prospectuses and other Fund documents for
shareholders; registering the Trust, the Fund and shares of the Fund; taxes and
commissions; issuing, purchasing, repurchasing, and redeeming shares; fees for
custodian, transfer agent, dividend disbursing agent, shareholder servicing
agents, and registrars; printing, mailing, auditing, accounting, and legal
expenses; reports to shareholders and government agencies; meetings of Trustees
and shareholders and proxy solicitations therefor; insurance premiums;
association membership dues; and such nonrecurring and extraordinary items as
may arise. However, the Adviser may voluntarily waive and/ or reimburse some
expenses.
NET ASSET VALUE
- --------------------------------------------------------------------------------
The Fund's net asset value per share fluctuates. It is determined by dividing
the sum of the market value of all securities and other assets, less
liabilities, by the number of shares outstanding.
INVESTING IN THE FUND
- --------------------------------------------------------------------------------
SHARE PURCHASES
Fund shares are sold on days on which the New York Stock Exchange and the
Federal Reserve Wire System are open for business. Shares may be purchased
through the Trust Divisions of the Wachovia Banks, Wachovia Securities, Inc. or
authorized broker/dealers which have a sales agreement with the Distributor. All
purchase orders must be transmitted to the Fund by 5:00 p.m. (Eastern time).
Texas residents must purchase shares through Federated Securities Corp. at
1-800-618-8573. In connection with the sale of shares, the Distributor may from
time to time offer certain items of nominal value to any shareholder or
investor. The Fund and the Distributor reserve the right to reject any purchase
request.
THROUGH THE TRUST DIVISIONS OF THE WACHOVIA BANKS. Trust customers of the
Wachovia Banks may place an order to purchase shares of the Fund by telephoning,
sending written instructions, or placing the order in person with their account
officer in accordance with the procedures established by the Wachovia Banks and
as set forth in the relevant account agreement.
Payment may be made to the Wachovia Banks by check, by wire of federal funds, or
by debiting a customer's account with the Wachovia Banks. Purchase orders must
normally be received by the Wachovia Banks by 3:00 p.m. (Eastern time), in order
for shares to be purchased at that day's price. It is the responsibility of the
Wachovia Banks to transmit orders promptly to the Fund. Shares of the Fund
cannot be purchased by wire on any day on which the Wachovia Banks, the New York
Stock Exchange and the Federal Reserve Wire System are not open for business.
THROUGH WACHOVIA SECURITIES, INC. Customers of Wachovia Securities, Inc.,
Wachovia Brokerage Service or Wachovia Investments may place an order to
purchase shares by telephoning The Biltmore Shareholder Servicing Center at
1-800-994-4414, sending written instructions, or placing an order in person.
Payment may be made by check, by wire of federal funds (the customer's bank
sends money to the Fund's bank through the Federal Reserve Wire System) or by
debiting a customer's account at Wachovia Securities, Inc. Purchase orders must
normally be communicated to Wachovia Securities, Inc. before 3:30 p.m. (Eastern
time). Wachovia Securities, Inc., a wholly-owned subsidiary of Wachovia
Corporation, is a registered broker/dealer and member of the National
Association of Securities Dealers, Inc. Wachovia Brokerage Service and Wachovia
Investments are business units of Wachovia Securities, Inc.
BY MAIL. To purchase shares of the Fund through Wachovia Securities, Inc. by
mail, send a check made payable to Biltmore Emerging Markets Fund to The
Biltmore Shareholder Servicing Center, 101 Greystone Boulevard, Room 108,
Columbia, South Carolina 29226. Orders by mail are considered received after
payment by check is converted by Wachovia Securities, Inc. into federal funds.
This is normally the next business day after Wachovia Securities, Inc. receives
the check.
BY WIRE. To purchase shares of the Fund through Wachovia Securities, Inc. by
wire, wire funds as follows:
Wachovia Securities, Inc.
ABA Number 0531-00494
Credit: 8735-001342
Further credit to: Biltmore Emerging Markets Fund
Re: (Customer name and brokerage account number)
Shares of the Fund cannot be purchased by wire on any day on which the Wachovia
Banks, the New York Stock Exchange and the Federal Reserve Wire System are not
open for business.
THROUGH AUTHORIZED BROKER/DEALERS. An investor may place an order through
authorized brokers and dealers to purchase shares of the Fund. Shares will be
purchased at the public offering price next determined after the Fund receives
the purchase request. Purchase requests through registered broker/dealers must
normally be received by the broker/dealer and transmitted to the Fund before
3:30 p.m. (Eastern time) in order for shares to be purchased at that day's
public offering price.
MINIMUM INVESTMENT REQUIRED
The minimum initial investment in shares of the Fund is $250. This amount may be
waived from time to time. Subsequent investments may be in amounts of $100 or
more.
WHAT SHARES COST
Fund shares are sold at their net asset value next determined after an order is
received, plus a sales charge as follows:
<TABLE>
<CAPTION>
SALES CHARGE AS SALES CHARGE AS
A PERCENTAGE OF A PERCENTAGE OF
AMOUNT OF TRANSACTION PUBLIC OFFERING PRICE NET AMOUNT INVESTED
<S> <C> <C>
Less than $100,000 4.50% 4.71%
$100,000 but less than $250,000 3.75% 3.90%
$250,000 but less than $500,000 2.50% 2.56%
$500,000 but less than $750,000 2.00% 2.04%
$750,000 but less than $1 million 1.00% 1.01%
$1 million or more 0.25% 0.25%
</TABLE>
The net asset value is determined at or after the close of the New York Stock
Exchange, Monday through Friday, except on: (i) days on which there are not
sufficient changes in the value of the 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)
the following holidays: New Year's Day, Martin Luther King Day, Presidents' Day,
Good Friday, Memorial Day, Independence Day, Labor Day, Columbus Day, Veterans'
Day, Thanksgiving Day and Christmas Day.
PURCHASES AT NET ASSET VALUE. Shares of the Fund may be purchased at net asset
value, without a sales charge, by investment advisers registered under the
Investment Advisers Act of 1940 purchasing on behalf of their clients, and by
the Wachovia Banks for funds which are held in a fiduciary, agency, custodial,
or similar capacity. Trustees, officers, directors and retired directors,
advisory board members, employees and retired employees of the Fund and the
Wachovia Banks, the spouses and children under the age of 21 of such persons,
and any trusts, pension profit-sharing plans and individual retirement accounts
operated for such persons, may purchase shares of the Fund at net asset value.
In addition, trustees, officers, directors and employees of the Distributor and
its affiliates, and any bank or investment dealer who has a sales agreement with
the Distributor relating to the Fund, may also purchase shares at their net
asset value.
SALES CHARGE REALLOWANCE. For shares sold with a sales charge, the Wachovia
Banks or an affiliated broker or a dealer will receive up to 90% of the
applicable sales charge for purchases of Fund shares made directly through the
Wachovia Banks or such broker or dealer. Any portion of the sales charge which
is not paid to a dealer will be retained by the Distributor.
The sales charge for shares sold other than through Wachovia Securities, Inc.,
the Wachovia Banks or registered broker/dealers will be retained by the
Distributor. However, the Distributor, at its sole discretion, may 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 Fund. Such payments will be predicated upon the amount of shares
of the Fund that are sold by the dealers.
REDUCING THE SALES CHARGE. The sales charge can be reduced on the purchase of
shares of the Fund 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 in this
prospectus under the section entitled "What Shares Cost," larger purchases
reduce the sales charge paid. The Fund will combine purchases made on the same
day by the investor, the investor's spouse, and the investor's children under
age 21 when it calculates the sales charge.
If an additional purchase of shares of the Fund is made, the Fund will consider
the previous purchases still invested in the Fund. For example, if a shareholder
already owns shares having a current value at the public offering price of
$90,000 and then purchases $10,000 more at the current public offering price,
the sales charge of the additional purchase according to the schedule now in
effect would be 3.75%, not 4.50%.
To receive the sales charge reduction, the Wachovia Banks, Wachovia Securities,
Inc. or the Distributor must be notified by the shareholder at the time the
purchase is made that Fund shares are already owned or that purchases are being
combined. The Fund will reduce the sales charge after it confirms the purchases.
LETTER OF INTENT. If a shareholder intends to purchase shares of the Fund equal
in value to at least $100,000 over the next 13 months, the sales charge may be
reduced by signing a letter of intent to that effect. This letter of intent
includes a provision for a sales charge adjustment depending on the amount
actually purchased within the 13-month period and a provision for the Custodian
to hold 4.50% of the total amount intended to be purchased in escrow (in shares
of the Fund) until such purchase is completed.
The 4.50% 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 escrowed shares may be
redeemed in order to realize the difference in the sales charge.
This letter of intent will not obligate the shareholder to purchase shares, but
if the shareholder does, each purchase during the period will be at the sales
charge 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.
REINVESTMENT PRIVILEGE. If shares in the Fund have been redeemed, the
shareholder has a one-time right, within 90 days, to reinvest the redemption
proceeds in the Fund at the next-determined net asset value without any sales
charge. The Wachovia Banks, Wachovia Securities, Inc. or the Distributor must be
notified by the shareholder in writing or by his financial institution of the
reinvestment in order to eliminate a sales charge. If the shareholder redeems
his shares in the Fund, there may be tax consequences.
CONCURRENT PURCHASES. For purposes of qualifying for a sales charge reduction,
a shareholder has the privilege of combining concurrent purchases of two or more
of the Funds and the portfolios in The Biltmore Municipal Funds, the purchase
price of which includes a sales charge. For example, if a shareholder
concurrently invested $70,000 in one of the other Funds with a sales charge, and
$40,000 in another fund of the Trust with a sales charge, the sales charge would
be reduced.
To receive this sales charge reduction, the Wachovia Banks, Wachovia Securities,
Inc. or the Distributor must be notified by the agent placing the order at the
time the concurrent purchases are made. The sales charge will be reduced after
the purchase is confirmed.
SYSTEMATIC INVESTMENT PROGRAM
Once a Fund account has been opened, shareholders may add to their investment on
a regular basis in a minimum amount of $100. Under this program, funds may be
automatically withdrawn periodically from the shareholder's checking account and
invested in Fund shares at the net asset value next determined after an order is
received by the Fund, plus the applicable sales charge. A shareholder may apply
for participation in this program through Wachovia Banks, Wachovia Securities,
Inc. or through the Distributor.
CERTIFICATES AND CONFIRMATIONS
As the transfer agent, Federated Services Company maintains a share account for
each shareholder of record. Share certificates are not issued unless requested
in writing to the Fund.
Detailed confirmations of each purchase or redemption are sent to each
shareholder of record. Annual statements are sent to report dividends paid
during the year.
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 may
charge a fee based on the level of subaccounting services rendered. Institutions
holding shares of the Fund 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 Fund 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.
DIVIDENDS
Dividends are declared and paid annually to all shareholders invested in the
Fund on the record date. Unless shareholders request cash payments by writing to
the Fund, dividends are automatically reinvested in additional shares of the
Fund on the payment dates at the ex-dividend date net asset value without a
sales charge.
CAPITAL GAINS
Capital gains, when realized by the Fund, will be distributed at least once
every 12 months.
EXCHANGE PRIVILEGE
All shareholders of the Fund are shareholders of the Trust. The Trust currently
consists of the Funds, as previously defined in the "General Information"
section of this prospectus. The Funds are advised by Wachovia Investment
Management Group and distributed by Federated Securities Corp.
Shareholders of the Fund have easy access to the other Funds comprising the
Trust, to the three portfolios of The Biltmore Municipal Funds (Georgia
Municipal Bond Fund, North Carolina Municipal Bond Fund, and South Carolina
Municipal Bond Fund), and to the International Equity Fund (a mutual fund
advised by Fiduciary International, Inc.) (hereinafter collectively referred to
as, the "Participating Funds") through a telephone exchange program. Shares of
the Participating Funds may be exchanged for shares of the Fund at net asset
value without a sales charge (if a sales charge was previously paid). The
exchange privilege is available to shareholders residing in any state in which
the shares being acquired may be legally sold. Prior to any exchange, the
shareholder should review a copy of the current prospectus of the Participating
Fund into which an exchange is to be effected. Shareholders contemplating
exchanges into The Biltmore Municipal Funds should consult their tax advisers,
since the tax advantages of each portfolio of The Biltmore Municipal Funds may
vary.
Shareholders using this privilege must exchange shares having a net asset value
at least equal to the minimum investment of the Participating Fund into which
they are exchanging. Shareholders who desire to automatically exchange shares of
a predetermined amount on a monthly, quarterly, or annual basis may take
advantage of a systematic exchange privilege. A shareholder may obtain further
information on these exchange privileges by calling the Fund, Wachovia
Securities, Inc., or in the case of customers of the Wachovia Banks, the
shareholder's account officer.
Shares of the Participating Funds with a sales charge may be exchanged at net
asset value for shares of other Participating Funds with an equal sales charge
or no sales charge. Exchanges are made at net asset value, plus the difference
between the sales charge already paid on the Fund's shares and any sales charge
of the Participating Fund into which the shares are to be exchanged, if higher.
Shares of Participating Funds with no sales charge acquired by direct purchase
or reinvestment of dividends on such shares may be exchanged for shares of
Participating Funds at net asset value.
Upon receipt of proper instructions and all necessary supporting documents,
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.
EXCHANGE BY TELEPHONE. Instructions for exchanges between Participating Funds
may be given by telephone to Wachovia Securities, Inc. Trust customers should
contact their account officer. 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 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 banks, brokers, and other financial institutions
during times of drastic economic or market changes. If a shareholder cannot
contact his bank, broker, or financial institution by telephone, it is
recommended that an exchange request be made in writing and sent by overnight
mail. If reasonable procedures are not followed by the Fund, it may be liable
for losses due to unauthorized or fraudulent telephone instructions.
REDEEMING SHARES
- --------------------------------------------------------------------------------
The Fund redeems shares at their net asset value next determined after the Fund
receives the redemption request. Redemptions will be made on days on which the
Fund computes its net asset value. Telephone or written requests for redemptions
must be received in proper form and can be made through the Wachovia Banks,
Wachovia Securities, Inc., or directly to the Fund.
BY TELEPHONE. A shareholder may redeem shares of the Fund by calling the
Wachovia Banks (call toll-free 1-800-763-7277) to request the redemption.
Telephone redemption instructions may be recorded. Shares will be redeemed at
the net asset value next determined after the Fund receives the redemption
request from the Wachovia Banks. Redemption requests made through the Wachovia
Banks must be received by the Wachovia Banks before 3:00 p.m. (Eastern time) in
order for shares to be redeemed at that day's net asset value. The Wachovia
Banks are responsible for promptly submitting redemption requests and providing
proper written redemption instructions to the Fund. Registered broker/dealers
may charge customary fees and commissions for this service. If reasonable
procedures are not followed by the Fund, it may be liable for unauthorized or
fraudulent telephone instructions.
A shareholder who is a customer of Wachovia Securities, Inc. and who has
completed a telephone redemption authorization form, may redeem shares of the
Fund by phone by calling The Biltmore Shareholder Servicing Center at
1-800-994-4414. A shareholder who is a customer of the Wachovia Banks and whose
account agreement with the Wachovia Banks permits telephone redemption may
redeem shares of the Fund by telephoning his account officer. An authorization
permitting the Wachovia Banks to accept telephone requests is included as part
of a shareholder's account agreement. Shares will be redeemed at the net asset
value next determined after the Fund receives the redemption request. Redemption
requests must be received by 4:00 p.m. (Eastern time) in order for shares to be
redeemed at that day's net asset value. In no event will proceeds be credited
more than seven days after a proper request for redemption has been received. In
the event of drastic economic or market changes, a shareholder may experience
difficulty in redeeming by telephone. If such a case should occur, another
method of redemption should be considered.
BY MAIL. A shareholder may redeem Fund shares by sending a written request to
the Wachovia Banks. The written request should include the shareholder's name,
the Fund 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 to the Fund.
Shareholders should call the Wachovia Banks for assistance in redeeming by mail.
A shareholder who is a customer of Wachovia Securities, Inc. may redeem shares
by sending a written request to Wachovia Securities, Inc. The written request
should include the shareholder's name and address, the Fund name, the brokerage
account number, and the share or dollar amount requested. Shareholders should
call Wachovia Securities, Inc. for assistance in redeeming by mail. Normally, a
check for the proceeds is mailed within five business days, but in no event more
than seven days, after receipt of a proper written redemption request.
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 Fund, or a redemption payable other than to the shareholder of record, must
have signatures on written redemption requests guaranteed by:
.a trust company or commercial bank whose deposits are insured by the BIF;
.a member firm 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 SAIF; or
.any other "eligible guarantor institution," as defined in the Securities
Exchange Act of 1934.
The Fund does not accept signatures guaranteed by a notary public.
The Fund and the Transfer Agent have adopted standards for accepting signature
guarantees from the above institutions. The Fund may elect in the future to
limit eligible signature guarantors to institutions that are members of a
signature guarantee program. The Fund and the Transfer Agent reserve the right
to amend these standards at any time without notice.
SYSTEMATIC WITHDRAWAL PROGRAM
Shareholders who desire to receive payments of a predetermined amount may take
advantage of the Systematic Withdrawal Program. Under this program, shares are
redeemed to provide for monthly or quarterly withdrawal payments in an amount
directed by the shareholder. Shareholders may redeem by periodic withdrawal
payments in a minimum amount of $100. Depending upon the amount of the
withdrawal payments, the amount of dividends paid and capital gains
distributions with respect to shares, and the fluctuation of net asset value of
shares redeemed under this program, redemptions may reduce, and eventually
deplete, the shareholder's investment in the Fund. For this reason, payments
under this program should not be considered as yield or income on the
shareholder's investment in the Fund. To be eligible to participate in this
program, a shareholder must have an account value of at least $10,000. A
shareholder may apply for participation in this program through his financial
institution. Due to the fact that shares are sold with a sales charge, it is not
advisable for shareholders to be purchasing shares while participating in this
program.
ACCOUNTS WITH LOW BALANCES
Due to the high cost of maintaining accounts with low balances, the Fund may
redeem shares in any account and pay the proceeds to the shareholder if the
account balance falls below the required minimum value of $250 due to
shareholder redemptions. This requirement does not apply, however, if the
balance falls below $250 because of changes in the Fund's net asset value.
Before shares are redeemed to close an account, the shareholder is notified in
writing and allowed 30 days to purchase additional shares to meet the minimum
requirement.
SHAREHOLDER INFORMATION
- --------------------------------------------------------------------------------
VOTING RIGHTS
Each share of the Fund gives the shareholder one vote in Trustee elections and
other matters submitted to shareholders for vote. All shares of each Fund in the
Trust have equal voting rights, except that in matters affecting only a
particular Fund, only shares of that Fund 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 the Fund's operation and for the election of Trustees
under certain circumstances.
Trustees may be removed by the Trustees or shareholders at a special meeting. A
special meeting of the shareholders shall be called by the Trustees upon the
written request of shareholders owning at least 10% of the Trust's outstanding
shares.
MASSACHUSETTS BUSINESS TRUSTS
Under certain circumstances, shareholders may be held personally liable under
Massachusetts law for acts or obligations of the Trust. To protect shareholders,
the Trust has filed legal documents with Massachusetts that expressly disclaim
the liability of shareholders for such acts or obligations of the Trust. These
documents require notice of this disclaimer to be given in each agreement,
obligation, or instrument the Trust or the Trustees enter into or sign on behalf
of the Fund. In the unlikely event a shareholder is held personally liable for
the Trust's obligations on behalf of the Fund, the Trust is required by its
Declaration of Trust to use the property of the 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 Fund for any act or obligation of the
Trust on behalf of the Fund. Therefore, financial loss resulting from liability
as a shareholder of the Fund will occur only if the Trust cannot meet its
obligations to indemnify shareholders and pay judgments against them from the
assets of the Fund.
EFFECT OF BANKING LAWS
- --------------------------------------------------------------------------------
The Glass-Steagall Act and other banking laws and regulations presently prohibit
a bank holding company registered under the Bank Holding Company Act of 1956 or
any bank or non-bank affiliate thereof from sponsoring, organizing, controlling
or distributing the shares of a registered, open-end investment company
continuously engaged in the issuance of its shares, and prohibit banks generally
from issuing, underwriting or distributing most securities. However, such
banking laws and regulations do not prohibit such a holding company or its bank
and non-bank affiliates generally from acting as investment adviser, transfer
agent or custodian to such an investment company or from purchasing shares of
such a company as agent for and upon the order of their customer. The Fund's
investment adviser, Wachovia Investment Management Group, and its affiliate
banks, are subject to such banking laws and regulations.
The Adviser believes, based on the advice of its counsel, that it may perform
the services for the Fund contemplated by its investment advisory contract and
the Custodian 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 present or future statutes and
regulations, could prevent the Adviser from continuing to perform all or a part
of the above services for its customers and/or the Fund. If it were prohibited
from engaging in these customer-related activities, the Trustees would consider
alternative service providers and means of continuing available investment
services. In such event, changes in the operation of the Fund may occur,
including the possible termination of any automatic or other Fund share
investment and redemption services then being provided by the Adviser. It is not
expected that existing Fund shareholders would suffer any adverse financial
consequences (if another adviser with equivalent abilities to the Adviser is
found) as a result of any of these occurrences.
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.
TAX INFORMATION
- --------------------------------------------------------------------------------
The Fund expects to pay no federal income tax because it intends to meet
requirements of the Internal Revenue Code applicable to regulated investment
companies and to receive the special tax treatment afforded to such companies.
The 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
Trust's other portfolios will not be combined for tax purposes with those
realized by the Fund.
Unless otherwise exempt, shareholders are subject to federal income tax on any
dividends and other distributions, including capital gains distributions,
received. This applies whether dividends and distributions are received in cash
or as additional shares. The Fund will provide shareholders with tax information
for reporting purposes. Shareholders are urged to consult their own tax advisers
regarding the status of their accounts under state and local tax laws.
PERFORMANCE INFORMATION
- --------------------------------------------------------------------------------
From time to time the Fund advertises its total return and yield.
Total return represents the change, over a specified period of time, in the
value of an investment in the Fund after reinvesting all income and capital gain
distributions. It is calculated by dividing that change by the initial
investment and is expressed as a percentage.
The yield of the Fund is calculated by dividing the net investment income per
share (as defined by the Securities and Exchange Commission) earned by the Fund
over a thirty-day period by the maximum offering price per share of the Fund on
the last day of the period. This number is then annualized using semi-annual
compounding. The yield does not necessarily reflect income actually earned by
the Fund and, therefore, may not correlate to the dividends or other
distributions paid to shareholders.
The performance information reflects the effect of the maximum sales load which,
if excluded, would increase the total return and yield.
From time to time, the Fund may advertise its performance using certain
financial publications and/or compare its performance to certain indices.
Advertisements and other sales literature for the Fund may quote performance
information which does not reflect the effect of a sales load.
APPENDIX
- --------------------------------------------------------------------------------
STANDARD & POOR'S RATINGS GROUP CORPORATE BOND RATINGS
AAA--Debt rated "AAA" has the highest rating assigned by S&P. 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, B, CCC, CC--Debt rated "BB", "B", "CCC" and "CC" is regarded, on balance, as
predominantly speculative with respect to capacity to pay interest and repay
principal in accordance with the terms of the obligation. "BB" indicates the
lowest degree of speculation and "CC" the highest degree of speculation. While
such debt will likely have some quality and protective characteristics, these
are outweighed by large uncertainties of major risk exposures to adverse
conditions.
C--The rating "C" is reserved for income bonds on which no interest is being
paid.
D--Debt rated "D" is in default, and payment of interest and/or repayment of
principal is in arrears.
MOODY'S INVESTORS SERVICE, INC., CORPORATE BOND RATINGS
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 sometime 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 rated "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.
Caa--Bonds which are rated "Caa" are of poor standing. Such issues may be in
default or there may be present elements of danger with respect to principal or
interest.
Ca--Bonds which are rated "Ca" represent obligations which are speculative in a
high degree. Such issues are often in default or have other marked shortcomings.
C--Bonds which are rated "C" are the lowest rated class of bonds and issues so
rated can be regarded as having extremely poor prospects of ever attaining any
real investment standing.
ADDRESSES
- --------------------------------------------------------------------------------
<TABLE>
<S> <C> <C>
Biltmore Emerging Markets Fund Federated Investors Tower
Pittsburgh, Pennsylvania 15222-3779
- ---------------------------------------------------------------------------------------------------------------------
Distributor
Federated Securities Corp. Federated Investors Tower
Pittsburgh, Pennsylvania 15222-3779
- ---------------------------------------------------------------------------------------------------------------------
Investment Adviser
Wachovia Investment 301 North Main Street
Management Group Winston-Salem, North Carolina 27150
- ---------------------------------------------------------------------------------------------------------------------
Custodian
Wachovia Bank of Wachovia Trust Operations
North Carolina, N.A. 301 North Main Street
Winston-Salem, North Carolina 27150
- ---------------------------------------------------------------------------------------------------------------------
Transfer Agent, Dividend Disbursing Agent, and
Portfolio Recordkeeper
Federated Services Company Federated Investors Tower
Pittsburgh, Pennsylvania 15222-3779
- ---------------------------------------------------------------------------------------------------------------------
Counsel to The Biltmore Funds
Kirkpatrick & Lockhart 1800 M Street, N.W.
Washington, D.C. 20036-5891
- ---------------------------------------------------------------------------------------------------------------------
Counsel to the Independent Trustees
Piper & Marbury 1200 Nineteenth Street, N.W.
Washington, D.C. 20036-2430
- ---------------------------------------------------------------------------------------------------------------------
Independent Auditors
Ernst & Young LLP One Oxford Centre
Pittsburgh, Pennsylvania 15219
- ---------------------------------------------------------------------------------------------------------------------
The Biltmore Shareholder Servicing Center 101 Greystone Boulevard
Room 108
Columbia, South Carolina 29226
- ---------------------------------------------------------------------------------------------------------------------
</TABLE>
BILTMORE EMERGING
MARKETS FUND
PROSPECTUS
A Diversified Portfolio
of The Biltmore Funds
An Open-End, Management
Investment Company
December , 1994
[LOGO OF BILTMORE FUNDS]
G00481-01
SUBJECT TO COMPLETION, PRELIMINARY STATEMENT OF ADDITIONAL INFORMATION
DATED OCTOBER 10, 1994
BILTMORE EMERGING MARKETS FUND
(A PORTFOLIO OF THE BILTMORE FUNDS)
STATEMENT OF ADDITIONAL INFORMATION
This Statement of Additional Information should be read with the
prospectus of Biltmore Emerging Markets Fund (the "Fund") of The
Biltmore Funds (the "Trust"), dated December , 1994. This Statement
is not a prospectus itself. To receive a copy of the prospectus, write
the Fund or call The Biltmore Shareholder Servicing Center toll-free
1-800-994-4414.
FEDERATED INVESTORS TOWER
PITTSBURGH, PENNSYLVANIA 15222-3779
Statement dated December , 1994
FEDERATED SECURITIES CORP.
---------------------------------------------------------
Distributor
A subsidiary of FEDERATED INVESTORS
INFORMATION CONTAINED HEREIN IS SUBJECT TO COMPLETION OR AMENDMENT. A
REGISTRATION STATEMENT RELATING TO THESE SECURITIES HAS BEEN FILED WITH THE
SECURITIES AND EXCHANGE COMMISSION. THESE SECURITIES MAY NOT BE SOLD NOR MAY ANY
OFFERS TO BUY BE ACCEPTED PRIOR TO THE TIME THE REGISTRATION STATEMENT BECOMES
EFFECTIVE. THIS STATEMENT OF ADDITIONAL INFORMATION DOES NOT CONSTITUTE A
PROSPECTUS.
TABLE OF CONTENTS
- --------------------------------------------------------------------------------
GENERAL INFORMATION ABOUT THE FUND 1
- ---------------------------------------------------------------
INVESTMENT OBJECTIVE AND POLICIES 1
- ---------------------------------------------------------------
Types of Investments 1
Convertible Securities 1
Warrants 1
Sovereign Debt Obligations 1
Futures and Options Transactions 2
Futures Contracts 2
Put Options on Financial Futures Contracts 2
Call Options on Financial Futures Contracts 2
Foreign Currency Transactions 3
"Margin" in Futures Transactions 5
Restricted and Illiquid Securities 5
When-Issued and Delayed
Delivery Transactions 5
Repurchase Agreements 5
Reverse Repurchase Agreements 6
Lending of Portfolio Securities 6
Investment Limitations 6
THE BILTMORE FUNDS MANAGEMENT 8
- ---------------------------------------------------------------
Officers and Trustees 8
Fund Ownership 9
Trustee Liability 10
INVESTMENT ADVISORY SERVICES 10
- ---------------------------------------------------------------
Adviser to the Fund 10
Advisory Fees 10
ADMINISTRATIVE SERVICES 10
- ---------------------------------------------------------------
BROKERAGE TRANSACTIONS 10
- ---------------------------------------------------------------
Portfolio Turnover 11
PURCHASING FUND SHARES 11
- ---------------------------------------------------------------
Conversion to Federal Funds 11
DETERMINING NET ASSET VALUE 11
- ---------------------------------------------------------------
DETERMINING MARKET VALUE OF SECURITIES 11
- ---------------------------------------------------------------
Trading in Foreign Securities 12
REDEEMING FUND SHARES 12
- ---------------------------------------------------------------
Redemption in Kind 12
TAX STATUS 12
- ---------------------------------------------------------------
The Fund's Tax Status 12
Shareholders' Tax Status 12
Capital Gains 12
TOTAL RETURN 13
- ---------------------------------------------------------------
YIELD 13
- ---------------------------------------------------------------
PERFORMANCE COMPARISONS 13
- ---------------------------------------------------------------
GENERAL INFORMATION ABOUT THE FUND
- --------------------------------------------------------------------------------
The Fund is a portfolio in The Biltmore Funds (the "Trust"). The Trust was
established as a Massachusetts business trust under a Declaration of Trust dated
November 19, 1991.
INVESTMENT OBJECTIVE AND POLICIES
- --------------------------------------------------------------------------------
The Fund's investment objective is to produce long-term capital appreciation.
The objective cannot be changed without approval of shareholders. Unless
otherwise indicated, the investment policies described below may be changed by
the Board of Trustees ("Trustees") without shareholder approval. Shareholders
will be notified before any material change in these policies becomes effective.
TYPES OF INVESTMENTS
The Fund invests principally in a professionally managed and diversified
portfolio of securities of issuers and companies located in countries having
emerging markets. Although the Fund may invest in other securities and in money
market instruments, it is the Fund's policy, under normal market conditions, to
invest at least 65% its assets in securities of countries of emerging markets.
CONVERTIBLE SECURITIES
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 stock provide a stable stream of income
with generally higher yields than common stock, but lower than non-convertible
securities of similar quality.
The Fund will exchange or convert the convertible securities held in its
portfolio into shares of the underlying common stock in instances in which, in
the Adviser's opinion, the investment characteristics of the underlying common
shares will assist the Fund in achieving its investment objective. Otherwise,
the Fund will hold or trade the convertible securities. In selecting convertible
securities for the Fund, the 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
Adviser considers numerous factors, including the economic and political
outlook, the value of the security relative to other investment alternatives,
trends in the determination of the issuer's profits, and the issuer's management
capability and practices.
WARRANTS
Warrants are basically options to purchase common stock at a specific price
(usually at a premium above the market value of the optioned common stock at
issuance) valid for a specific period of time. Warrants may have a life ranging
from less than a year to twenty years or may be perpetual. However, most
warrants have expiration dates after which they are worthless. In addition, if
the market price of the common stock does not exceed the warrant's exercise
price during the life of the warrant, the warrant will expire as worthless.
Warrants have no voting rights, pay no dividends, and have no right with respect
to the assets of the corporation issuing them. The percentage increase or
decrease in the market price of the warrant may tend to be greater than the
percentage increase or decrease in the market price of the optioned common
stock.
SOVEREIGN DEBT OBLIGATIONS
The Fund may purchase sovereign debt instruments issued or guaranteed by foreign
governments or their agencies, including debt of Latin American nations or other
developing countries. Sovereign debt may be in the form of conventional
securities or other types of debt instruments, such as loans or loan
participations. Sovereign debt of developing countries may involve a high degree
of risk, and may be in default or present the risk of default. Governmental
entities responsible for repayment of the debt may be unable or unwilling to
repay principal and interest when due, and may require renegotiation or
rescheduling of debt payments. In addition, prospects for repayment of principal
and interest may depend on political as well as economic factors. The Fund may
also invest in debt obligations of supranational entities, which include
international organizations designed or supported by governmental entities to
promote economic reconstruction or development, and international banking
institutions and related government agencies. Examples of these include, but are
not limited to, the International Bank for Reconstruction and Development (World
Bank), European Investment Bank and InterAmerican Development Bank.
FUTURES AND OPTIONS TRANSACTIONS
As a means of reducing fluctuations in the net asset value of shares of the
Fund, the Fund may attempt to hedge its portfolio by buying and selling
financial futures contracts and stock index futures contracts, buying put
options on portfolio securities and listed put options on futures contracts, and
writing call options on futures contracts. The Fund may also write covered call
options on portfolio securities to attempt to increase its current income.
The Fund will maintain its positions in securities, options and segregated cash
subject to puts and calls until the options are exercised, closed, or have
expired. An option position on financial futures contracts may be closed out
over-the-counter or on a nationally-recognized exchange which provides a
secondary market for options of the same series.
In addition to purchasing put options and writing call options as described in
the prospectus, the Fund may purchase and write over-the-counter options on
portfolio securities in negotiated transactions with the buyers or writers of
the options when options on the portfolio securities held by the Fund are not
traded on an exchange. The Fund purchases and writes options only with
investment dealers and other financial institutions (such as commercial banks or
savings and loan associations) deemed creditworthy by the Fund's adviser.
Over-the-counter options are two party contracts with price and terms negotiated
between buyer and seller. In contrast, exchange-traded options are third party
contracts with standardized strike prices and expiration dates and are purchased
from a clearing corporation. Exchange-traded options have a continuous liquid
market while over-the-counter options may not.
The Fund may also write call options and purchase put options on financial
futures and stock index futures contracts as a hedge to attempt to protect
securities in its portfolio against decreases in value.
FUTURES CONTRACTS
A futures contract is a firm commitment by two parties: the seller, who agrees
to make delivery of the specific type of security called for in the contract
("going short") and the buyer, who agrees to take delivery of the security
("going long") at a certain time in the future.
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, contracts are closed out prior to their expiration.
PUT OPTIONS ON FINANCIAL FUTURES CONTRACTS
The Fund may purchase listed put options on financial futures contracts. Unlike
entering directly into a futures contract, which requires the purchaser to buy a
financial instrument on a set date at a specified price, the purchase of a put
option on a futures contract entitles (but does not obligate) its purchaser to
decide on or before a future date whether to assume a short position at the
specified price.
Generally, if the hedged portfolio securities decrease in value during the term
of an option, the related futures contracts will also decrease in value and the
option will increase in value. In such an event, the Fund will normally close
out its option by selling an identical option. If the hedge is successful, the
proceeds received by the Fund upon the sale of the second option will be large
enough to offset both the premium paid by the Fund for the original option plus
the decrease in value of the hedged securities.
Alternatively, the Fund may exercise its put option to close out the position.
To do so, it would simultaneously enter into a futures contract of the type
underlying the option (for a price less than the strike price of the option) and
exercise the option. The Fund would then deliver the futures contract in return
for payment of the strike price. If the Fund neither closes out nor exercises an
option, the option will expire on the date provided in the option contract, and
only the premium paid for the contract will be lost.
CALL OPTIONS ON FINANCIAL FUTURES CONTRACTS
In addition to purchasing put options on futures, the Fund may write listed call
options on futures contracts to hedge its portfolio. When the Fund writes a call
option on a futures contract, it is undertaking the obligation of assuming a
short futures position (selling a futures contract) at the fixed strike price at
any time during the life of the option if the option is exercised. As stock
prices fall, causing the prices of futures to go down, the Fund's obligation
under a call option on a future (to sell a futures contract) costs less to
fulfill, causing the value of the Fund's call option position to increase.
In other words, as the underlying futures price goes down below the strike
price, the buyer of the option has no reason to exercise the call, so that the
Fund keeps the premium received for the option. This premium can substantially
offset the drop in value of the Fund's fixed income or indexed portfolio which
is occurring as interest rates rise.
Prior to the expiration of a call written by the Fund, or exercise of it by the
buyer, the Fund may close out the option by buying an identical option. If the
hedge is successful, the cost of the second option will be less than the premium
received by the Fund for the initial option. The net premium income of the Fund
will then substantially offset the decrease in value of the hedged securities.
The Fund will not maintain open positions in futures contracts it has sold or
call options it has written on futures contracts if, in the aggregate, the value
of the open positions (marked to market) exceeds the current market value of its
securities portfolio, plus or minus the unrealized gain or loss on those open
positions, adjusted for the correlation of volatility between the hedged
securities and the futures contracts. If this limitation is exceeded at any
time, the Fund will take prompt action to close out a sufficient number of open
contracts to bring its open futures and options positions within this
limitation.
FOREIGN CURRENCY TRANSACTIONS
CURRENCY RISKS
The exchange rates between the U.S. dollar and foreign currencies are a
function of such factors as supply and demand in the currency exchange
markets, international balances of payments, governmental intervention,
speculation and other economic and political conditions. Although the
Fund values its assets daily in U.S. dollars, the Fund may not convert
its holdings to U.S. dollars daily. The Fund may incur conversion costs
when it converts its holdings to another currency. Foreign exchange
dealers may realize a profit on the difference between the price at which
the Fund buys and sells currencies.
The Fund will engage in foreign currency exchange transactions in
connection with its portfolio investments. The Fund will conduct its
foreign currency exchange transactions either on a spot (i.e., cash)
basis at the spot rate prevailing in the foreign currency exchange market
or through forward contracts to purchase or sell foreign currencies.
FORWARD FOREIGN CURRENCY EXCHANGE CONTRACTS
The Fund may enter into forward foreign currency exchange contracts in
order to protect against possible loss resulting from an adverse change
in the relationship between the U.S. dollar and a foreign currency
involved in an underlying transaction. However, forward foreign currency
exchange contracts may limit potential gains which could result from a
positive change in such currency relationships. The Fund's adviser
believes that it is important to have the flexibility to enter into
forward currency exchange contracts whenever it determines that it is in
the Fund's best interest to do so. The Fund will not speculate in foreign
currency exchange.
The Fund will not enter into forward foreign currency exchange contracts
or maintain a net exposure in such contracts when it would be obligated
to deliver an amount of foreign currency in excess of the value of its
portfolio securities or other assets denominated in that currency or, in
the case of a "cross-hedge" denominated in a currency or currencies that
the Fund's adviser believes will tend to be closely correlated with that
currency with regard to price movements. Generally, the Fund will not
enter into a forward foreign currency exchange contract with a term
longer that one year.
FOREIGN CURRENCY OPTIONS
A foreign currency option provides the option buyer with the right to buy
or sell a stated amount of foreign currency at the exercise price on a
specified date or during the option period. The owner of a call option
has the right, but not the obligation, to buy the currency. Conversely,
the owner of a put option has the right, but not the obligation, to sell
the currency.
When the option is exercised, the seller (i.e., writer) of the option is
obligated to fulfill the terms of the sold option. However, either the
seller or the buyer may, in the secondary market, close its position
during the option period at any time prior to expiration.
A call option on a foreign security generally rises in value if the
underlying currency appreciates in value, and a put option on a foreign
currency generally falls in value if the underlying currency depreciates
in value. Although purchasing a foreign currency option can protect the
Fund against an adverse movement in the value of a foreign currency, the
option will not limit the movement in the value of such currency. For
example, if the Fund was holding securities denominated in a foreign
currency that was appreciating and had purchased a foreign currency to
put a hedge against a decline in the value of the currency, the Fund
would not have to exercise its put option. Likewise, if the Fund were to
enter into a contract to purchase a security denominated in foreign
currency and, in conjunction with that purchase, were to purchase a
foreign currency call option to hedge against a rise in value of the
currency, and if the value of the currency instead depreciated between
the date of purchase and the settlement date, the Fund would not have to
exercise its call. Instead, the Fund could acquire in the spot market
the amount of foreign currency needed for settlement.
SPECIAL RISKS ASSOCIATED WITH FOREIGN CURRENCY OPTIONS
Buyers and sellers of foreign currency options are subject to the same
risks that apply to options generally. In addition, there are certain
additional risks associated with foreign currency options. The markets in
foreign currency options are relatively new, and the Fund's ability to
establish and close out positions on such options is subject to the
maintenance of a liquid secondary market. Although the Fund will not
purchase or write such options unless and until, in the opinion of the
Fund's adviser, the market for them has developed sufficiently to ensure
that the risks in connection with such options are not greater than the
risks in connection with the underlying currency, there can be no
assurance that a liquid secondary market will exist for a particular
option at any specific time.
In addition, options on foreign currencies are affected by all of those
factors that influence foreign exchange rates and investments generally.
The value of a foreign currency option depends upon the value of the
underlying currency relative to the U.S. dollar. As a result, the price
of the option position may vary with changes in the value of either or
both currencies and may have no relationship to the investment merits of
a foreign security. Because foreign currency transactions occurring in
the interbank market involve substantially larger amounts than those that
may be involved in the use of foreign currency options, investors may be
disadvantaged by having to deal in an odd market lot (generally
consisting of transactions of less than $1 million) for the underlying
foreign currencies at prices that are less favorable than for round lots.
There is no systematic reporting of last sale information for foreign
currencies or any regulatory requirement that quotations available
through dealers or other market sources be firm or revised on a timely
basis. Available quotation information is generally representative of
very large transactions in the interbank market and thus may not reflect
relatively smaller transactions (i.e., less than $1 million) where rates
may be less favorable. The interbank market in foreign currencies is a
global, around-the-clock market. To the extent that the U.S. option
markets are closed while the markets for the underlying currencies remain
open, significant price and rate movements may take place in the
underlying markets that cannot be reflected in the options markets until
they reopen.
FOREIGN CURRENCY FUTURES TRANSACTIONS
By using foreign currency futures contracts and options on such
contracts, the Fund may be able to achieve many of the same objectives as
it would through the use of forward foreign currency exchange contracts.
The Fund may be able to achieve these objectives possibly more
effectively and at a lower cost by using futures transactions instead of
forward foreign currency exchange contracts.
SPECIAL RISKS ASSOCIATED WITH FOREIGN CURRENCY FUTURES CONTRACTS AND
RELATED OPTIONS
Buyers and sellers of foreign currency futures contracts are subject to
the same risks that apply to the use of futures generally. In addition,
there are risks associated with foreign currency futures contracts and
their use as a hedging device similar to those associated with options on
futures currencies, as described above.
Options on foreign currency futures contracts may involve certain
additional risks. Trading options on foreign currency futures contracts
is relatively new. The ability to establish and close out positions on
such options is subject to the maintenance of a liquid secondary market.
To reduce this risk, the Fund will not purchase or write options on
foreign currency futures contracts unless and until, in the opinion of
the Fund's adviser, the market for such options has developed
sufficiently that the risks in connection with such options are not
greater than the risks in connection with transactions in the underlying
foreign currency futures contracts. Compared to the purchase or sale of
foreign currency futures contracts, the purchase of call or put options
on futures contracts involves less potential risk to the Fund because the
maximum amount at risk is the premium paid for the option (plus
transaction costs). However, there may be circumstances when the purchase
of a call or put option on a futures contract would result in a loss,
such as when there is no movement in the price of the underlying currency
or futures contract.
"MARGIN" IN FUTURES TRANSACTIONS
Unlike the purchase or sale of a security, the Fund does not pay or receive
money upon the purchase or sale of a futures contract. Rather, the Fund is
required to deposit an amount of "initial margin" in cash or U.S. Treasury bills
with its custodian (or the broker, if legally permitted). The nature of initial
margin in futures transactions is different from that of margin in securities
transactions in that initial margin in futures transactions does not involve the
borrowing of funds by the Fund to finance the transactions. Initial margin is in
the nature of a performance bond or good faith deposit on the contract which is
returned to the Fund upon termination of the futures contract, assuming all
contractual obligations have been satisfied.
A futures contract held by the Fund is valued daily at the official settlement
price or the exchange on which it is traded. Each day the Fund pays or receives
cash, called "variation margin," equal to the daily change in value of the
futures contract. This process is known as "marking to market." Variation margin
does not represent a borrowing or loan by the Fund but is instead settlement
between the Fund and the broker of the amount one would owe the other if the
futures contract expired. In computing its daily net asset value, the Fund will
mark to market its open futures positions.
The Fund is also required to deposit and maintain margin when it writes call
options on futures contracts.
The Fund will comply with the following restrictions when purchasing and selling
futures contracts. First, the Fund will not participate in futures transactions
if the sum of its initial margin deposits on open contracts will exceed 5% of
the market value of the Fund's total assets, after taking into account the
unrealized profits and losses on those contracts it has entered into. Second,
the Fund will not enter into these contracts for speculative purposes. Third,
since the Fund does not constitute a commodity pool, it will not market itself
as such, nor serve as a vehicle for trading in the commodities futures or
commodity options markets. Connected with this, the Fund will disclose to all
prospective investors, the limitations on its futures and option transactions,
and make clear that these transactions are entered into only for bona fide
hedging purposes, or other permissible purposes pursuant to regulations
promulgated by the Commodity Futures Trading Commission ("CFTC"). Finally,
because the Fund will submit to the CFTC special calls for information, the Fund
will not register as a commodities pool operator.
RESTRICTED AND ILLIQUID 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 Fund, believes that the Staff of the SEC has
left the question of determining the liquidity of all restricted securities for
determination to the Trustees. The Trustees consider the following criteria in
determining the liquidity of certain restricted securities:
.the frequency of trades and quotes for the security;
.the number of dealers willing to purchase or sell the security and the number
of other potential buyers;
.dealer undertakings to make a market in the security; and
.the nature of the security and the nature of the marketplace trades.
WHEN-ISSUED AND DELAYED DELIVERY TRANSACTIONS
These transactions are made to secure what is considered to be an advantageous
price and yield for the Fund. No fees or other expenses, other than normal
transaction costs, are incurred. However, liquid assets of the Fund sufficient
to make payment for the securities to be purchased are segregated on the Fund's
records at the trade date. These assets are marked to market daily and are
maintained until the transaction has been settled. The Fund does 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.
REPURCHASE AGREEMENTS
The 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
Fund, the 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 the Fund might be delayed
pending court action. The Fund believes that, under the regular procedures
normally in effect for custody of the Fund's portfolio securities subject to
repurchase agreements, a court of competent jurisdiction would rule in favor of
the Fund and allow retention or disposition of such securities. The Fund will
only enter into repurchase agreements with banks and other recognized financial
institutions, such as broker/dealers, which are deemed by the Fund's adviser to
be creditworthy pursuant to guidelines established by the Trustees.
REVERSE REPURCHASE AGREEMENTS
The Fund may also enter into reverse repurchase agreements. These transactions
are similar to borrowing cash. In a reverse repurchase agreement, the 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 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 the 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 Fund will be
able to avoid selling portfolio instruments at a disadvantageous time.
When effecting reverse repurchase agreements, liquid assets of the 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 the 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 the Fund. During the time
portfolio securities are on loan, the borrower pays the Fund any dividends or
interest paid on such securities. Loans are subject to termination at the option
of the Fund or the borrower. The Fund 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.
INVESTMENT LIMITATIONS
SELLING SHORT AND BUYING ON MARGIN
The Fund will not sell any securities short or purchase any securities on
margin, other than in connection with buying stock index futures
contracts, put options on stock index futures, put options on financial
futures and portfolio securities, and writing covered call options, 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
Fund 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 Fund will not issue senior securities, except that the Fund 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.
The Fund 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 Fund to meet redemption requests when the liquidation of portfolio
securities is deemed to be inconvenient or disadvantageous. The Fund will
not purchase any securities while borrowings in excess of 5% of its total
assets are outstanding.
PLEDGING ASSETS
The Fund will not mortgage, pledge, or hypothecate any assets except to
secure permitted borrowings. For purposes of this limitation, the
following will not be deemed to be pledges of the 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.
INVESTING IN REAL ESTATE
The 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 Fund will not purchase or sell commodities, commodity contracts, or
commodity futures contracts. However, the Fund may purchase put options
on stock index futures, put options on financial futures, stock index
futures contracts, and put options on portfolio securities, and may write
covered call options.
UNDERWRITING
The 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 which the Fund may purchase
pursuant to its investment objective, policies, and limitations.
DIVERSIFICATION OF INVESTMENTS
With respect to securities comprising 75% of the value of its total
assets, the Fund 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 its total assets would be invested in the
securities of that issuer or if it would own more than 10% of the
outstanding voting securities of any one issuer.
CONCENTRATION OF INVESTMENTS
The Fund will not invest 25% or more of the value of its total assets in
any one industry. However, the Fund may invest 25% or more of the value
of its 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.
LENDING CASH OR SECURITIES
The Fund will not lend any of its assets, except portfolio securities.
This shall not prevent the Fund from purchasing or holding money market
instruments, repurchase agreements, obligations of the U.S. government,
its agencies or instrumentalities, bonds, debentures, notes, 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
The Fund will not invest more than 5% 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
The 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 Fund will not purchase interests in oil, gas, or other mineral
exploration or development programs or leases, except it may invest in
the securities of issuers which invest in or sponsor such programs.
INVESTING IN NEW ISSUERS
The Fund 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 Fund will not purchase or retain the securities of any issuer if the
officers and Trustees of the Trust or the Fund's 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 Fund will not purchase securities of a company for purpose of
exercising control or management.
INVESTING IN WARRANTS
The Fund will not invest more than 5% of its net assets in warrants,
including those acquired in units or attached to other securities. To
comply with certain state restrictions, the Fund will limit its
investment in such warrants not listed on the New York or American Stock
Exchanges to 2% of its net assets. (If state restrictions change, this
latter restriction may be revised without notice to shareholders.) For
purposes of this investment restriction, warrants acquired by the Fund in
units with or attached to securities may be deemed to be without value.
INVESTING IN OPTIONS
The Fund will not purchase put or call options on securities or futures
contracts if more than 5% of the value of the Fund's total assets would
be invested in premiums on open option positions.
WRITING COVERED CALL OPTIONS
The Fund will not write call options on securities unless the securities
are held in the Fund's portfolio or unless the Fund is entitled to them
in deliverable form without further payment or after segregating cash in
the amount of any further payment.
ARBITRAGE TRANSACTIONS
The Fund will not enter into transactions for the purpose of engaging in
arbitrage.
INVESTING IN SECURITIES OF OTHER INVESTMENT COMPANIES
The Fund will limit its 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 its total assets in any one
investment company, and will invest no more than 10% of its total assets
in investment companies in general. The Fund will purchase securities of
closed-end investment companies 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. While it is the
Fund's policy to waive its investment advisory fees on Fund assets
invested in securities of other open-end investment companies, it should
be noted that investment companies incur certain expenses, such as
custodian and transfer agent fees, and therefore, any investment by the
Fund in shares of another investment company would be subject to such
duplicate expenses. The Fund would, however, continue to pay its own
investment advisory fees and other expenses with respect to its
investments in shares of closed-end companies.
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 Fund does not intend to borrow money or pledge securities in excess of 5% of
the value of its net assets during the coming fiscal year.
For purposes of its policies and limitations, the Fund considers 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, the Fund (1) will
limit the margin deposits on futures contracts entered into by the Fund to 5% of
its net assets, (2) will limit the aggregate value of the assets underlying
covered call options or put options written by the Fund to not more than 25% of
its net assets, and (3) will limit the premiums paid for options purchased by
the Fund to 5% of its net assets. (If state requirements change, these
restrictions may be revised without shareholder notification.)
THE BILTMORE FUNDS MANAGEMENT
- --------------------------------------------------------------------------------
OFFICERS AND TRUSTEES
Officers and Trustees of the Trust are listed with their principal occupations
during the past five years and their present positions. Each of the Trustees
and officers listed below holds an identical position with The Biltmore
Municipal Funds, another investment company. Except as listed below, none of
the Trustees or officers are affiliated with Wachovia Bank of North Carolina,
N.A., Federated Investors, Federated Securities Corp., Federated Services
Company or Federated Administrative Services.
- --------------------------------------------------------------------------------
James A. Hanley
Trustee
Retired; Vice President and Treasurer, Abbott Laboratories (health care
products) until 1992.
- --------------------------------------------------------------------------------
Malcolm T. Hopkins
Trustee
Private investor and consultant; Director, The Columbia Gas System, Inc.
(integrated natural gas production, transmission and distribution); Director,
MAPCO, Inc. (diversified energy); Director, Metropolitan Series Funds, Inc. and
MetLife Portfolios, Inc. (investment companies); Director, Kinder-Care Learning
Centers, Inc. (child care); and Director, U.S. Home Corp. (residential builders
and land development).
- --------------------------------------------------------------------------------
Samuel E. Hudgins
Trustee
President, Percival, Hudgins & Company Inc. (investment bankers/financial
consultants); Director, Atlantic American Corporation (insurance holding
company); Director, Bankers Fidelity Life Insurance Company; Director and Vice
Chairman, Leath Furniture, Inc. (retail furniture); President, Atlantic American
Corporation until 1988; Director, Vice Chairman and Chief Executive Officer,
Rhodes, Inc. (retail furniture) until 1988; Chairman and Director, Atlantic
American Life Insurance Co., Georgia Casualty & Surety Company, and Bankers
Fidelity Life Insurance until 1988.
- --------------------------------------------------------------------------------
J. Berkley Ingram, Jr.
Trustee
Real estate investor and partner; Director, VF Corporation (apparel company).
- --------------------------------------------------------------------------------
D. Dean Kaylor
Trustee
Retired; Executive Vice President and Chief Financial Officer, NBD Bank, N.A.
and NBD Bancorp, Inc. (bank and bank-holding company) until 1990.
- --------------------------------------------------------------------------------
John W. McGonigle
President and Treasurer
Vice President, Secretary, General Counsel, and Trustee, Federated Investors;
Vice President, Secretary, and Trustee, Federated Advisers, Federated
Management, and Federated Research; Trustee, Federated Services Company;
Executive Vice President, Secretary, and Trustee, Federated Administrative
Services; Executive Vice President and Director, Federated Securities Corp.
- --------------------------------------------------------------------------------
Ronald M. Petnuch
Vice President and Assistant Treasurer
Vice President, Federated Administrative Services; formerly, Associate Corporate
Counsel, Federated Investors; Vice President and Assistant Treasurer for certain
investment companies for which Federated Securities Corp. is the
principal distributor.
- --------------------------------------------------------------------------------
Joseph M. Huber
Secretary
Corporate Counsel, Federated Investors.
- --------------------------------------------------------------------------------
The address of the Trustees and officers of the Trust is Federated Investors
Tower, Pittsburgh, Pennsylvania 15222-3779.
FUND OWNERSHIP
Officers and Trustees own less than 1% of the Fund's outstanding shares.
TRUSTEE LIABILITY
The Trust's Declaration of Trust provides that the Trustees are not 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 FUND
The Fund's investment adviser is Wachovia Investment Management Group (the
"Adviser"). The Adviser is a business unit of Wachovia Bank of North Carolina,
N.A., which is a wholly-owned subsidiary of Wachovia Corporation of North
Carolina, a wholly-owned subsidiary of Wachovia Corporation.
The Adviser shall not be liable to the Trust, the Fund or any shareholder of the
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 contract with the Trust.
ADVISORY FEES
For its advisory services, the Adviser receives an annual investment advisory
fee as described in the prospectus.
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 Fund's 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 waive its fee
or reimburse the Fund for its expenses over the limitation.
If the Fund's 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.
ADMINISTRATIVE SERVICES
- --------------------------------------------------------------------------------
Federated Administrative Services ("FAS'), a subsidiary of Federated Investors,
provides administrative personnel and services to the Fund for a fee as
described in the prospectus.
TRANSFER AGENT AND DIVIDEND DISBURSING AGENT
Federated Services Company serves as transfer agent and dividend disbursing
agent for the Fund. The fee is based on the size, type, and number of accounts
and transactions made by shareholders.
Federated Services Company also maintains the Trust's accounting records. The
fee is based on the level of the Fund's average net assets for the period plus
out-of-pocket expenses.
BROKERAGE TRANSACTIONS
- --------------------------------------------------------------------------------
The Adviser may select brokers and dealers who offer brokerage and research
services. These services may be furnished directly to the Fund or to the Adviser
and may include:
.advice as to the advisability of investing in securities;
.security analysis and reports;
.economic studies;
.industry studies;
.receipt of quotations for portfolio evaluations; and
.similar 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. The Fund will normally trade its securities in
the home country of the foreign issuer, since the best available market for
foreign securities is often in such country. Brokerage commissions in certain
foreign countries are often higher than in the United States and may be fixed,
unlike in the United States, where commissions are negotiated.
Research services provided by brokers and dealers may be used by the Adviser in
advising the Fund and 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 expenses. The Fund has no
obligation to deal with any broker or group of brokers in the execution of
portfolio transactions.
Some of the Adviser's other clients have investment objectives and programs
similar to that of the Fund. Occasionally, the Adviser may make recommendations
to other clients which result in their purchasing or selling securities
simultaneously with the Fund. Consequently, the demand for securities being
purchased or the supply of securities being sold may increase, and this could
have an adverse effect on the price of those securities. It is the Adviser's
policy not to favor one client over another in making recommendations or in
placing orders. If two or more of the Adviser's clients are purchasing a given
security on the same day from the same broker or dealer, the Adviser may average
the price of the transactions and allocate the average among the clients
participating in the transaction.
PORTFOLIO TURNOVER
The Fund will not attempt to set or meet a portfolio turnover rate since any
turnover would be incidental to transactions undertaken in an attempt to achieve
the Fund's investment objective. Securities in its portfolio will be sold
whenever the Adviser believes it is appropriate to do so in light of the Fund's
investment objective, without regard to the length of time a particular security
may have been held. Transactions for the Fund's portfolio will be based only
upon investment considerations and will not be limited by any other
considerations when the Adviser deems it appropriate to make changes in the
Fund's portfolio. For the period ending November 30, 1995, the Adviser does not
expect the Fund's portfolio turnover to exceed 100%.
PURCHASING FUND SHARES
- --------------------------------------------------------------------------------
Shares of the Fund are sold at net asset value plus an applicable sales charge
on days on which the New York Stock Exchange, the Wachovia Banks (as such term
is defined in the prospectus) and the Federal Reserve Wire System are open for
business. The procedure for purchasing shares of the Fund is explained in the
prospectus under "Investing in the Fund."
CONVERSION TO FEDERAL FUNDS
It is the Fund's 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. The Wachovia Banks act as the
shareholders' agent in depositing checks and converting them to federal funds.
DETERMINING NET ASSET VALUE
- --------------------------------------------------------------------------------
Net asset value generally changes each day. The days on which net asset value is
calculated by the Fund are described in the prospectus.
DETERMINING MARKET VALUE OF SECURITIES
- --------------------------------------------------------------------------------
The market value of the Fund's portfolio securities are determined as follows:
.for equity securities, according to the last sale price on a national
securities exchange, if available;
.in the absence of recorded sales for listed equity securities, according to the
mean between the last closing bid and asked prices;
.for unlisted equity securities, the latest bid prices;
.for bonds and other fixed income securities, as determined by an independent
pricing service;
.for 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 remaining maturities of 60 days or less at the time of purchase at
amortized cost;
.for 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 Fund will value futures contracts, options and put options on financial
futures at their market values established by the exchanges at the close of
option trading on such exchanges, unless the Trustees determine in good faith
that another method of valuing option positions is necessary.
TRADING IN FOREIGN SECURITIES
Trading in foreign securities may be completed at times which vary from the
closing of the New York Stock Exchange. In computing its net asset value, the
Fund values foreign securities at the latest closing price on the exchange on
which the securities are traded immediately prior to the closing of the New York
Stock Exchange. Certain foreign currency exchange rates may also be determined
at the latest rate prior to the closing of the New York Stock Exchange. Foreign
securities quoted in foreign currencies are translated into U.S. dollars at
current rates. Occasionally, events that affect these values and exchange rates
may occur between the times at which they are determined and the closing of the
New York Stock Exchange. If such events materially affect the value of portfolio
securities, these securities may be valued at their fair value as determined in
good faith by the Trustees, although the actual calculation may be done by
others.
REDEEMING FUND SHARES
- --------------------------------------------------------------------------------
The Fund redeems shares at the next computed net asset value after the Fund
receives the redemption request. Redemption procedures are explained in the
prospectus under "Redeeming Shares."
REDEMPTION IN KIND
Although the Fund 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 Fund's portfolio. To the extent available,
such securities will be readily marketable.
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.
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 transaction costs.
The Fund has elected to be governed by Rule 18f-1 under the Investment Company
Act of 1940, which obligates the Fund to redeem shares for any one shareholder
in cash only up to the lesser of $250,000 or 1% of the Fund's net asset value
during any 90-day period.
TAX STATUS
- --------------------------------------------------------------------------------
THE FUND'S TAX STATUS
The Fund expects to pay no federal income tax because it intends 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 Fund must, among other
requirements:
.derive at least 90% of its gross income from dividends, interest, and gains
from the sale of securities;
.derive less than 30% of its gross income from the sale of securities held less
than three months;
.invest in securities within certain statutory limits; and
.distribute 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. The dividends received deduction for corporations will apply
to ordinary income distributions to the extent the distribution represents
amounts that would qualify for the dividends received deduction to the Fund if
the Fund were a regular corporation, and to the extent designated by the Fund as
so qualifying. These dividends, and any short-term capital gains, are taxable as
ordinary income.
CAPITAL GAINS
Long-term capital gains distributed to shareholders will be treated as long-term
capital gains regardless of how long shareholders have held shares.
TOTAL RETURN
- --------------------------------------------------------------------------------
The average annual total return for the Fund 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 net asset value 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, adjusted
over the period by any additional shares, assuming the reinvestment of all
dividends and distributions.
YIELD
- --------------------------------------------------------------------------------
The yield for the Fund is determined by dividing the net investment income per
share (as defined by the Securities and Exchange Commission) earned by the Fund
over a thirty-day period by the maximum offering price per share of the Fund on
the last day of the period. This value is then 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 12-month period
and is reinvested every six months. The yield does not necessarily reflect
income actually earned by the Fund 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 Fund,
the performance will be reduced for those shareholders paying those fees.
PERFORMANCE COMPARISONS
- --------------------------------------------------------------------------------
The Fund's performance depends upon such variables as:
.stock market fluctuations;
.portfolio quality;
.average portfolio maturity;
.type of instruments in which the portfolio is invested;
.changes in interest rates and market value of portfolio securities;
.changes in the Fund's expenses;
.the relative amount of Fund cash flow; and
.various other factors.
The Fund's performance fluctuates on a daily basis largely because net earnings
and offering price per share fluctuate daily. Both net earnings and net asset
value 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 the 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 Fund uses in advertising may include:
.LIPPER 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 maximum offering price over a specific period of
time.
.EUROPE, AUSTRALIA, AND FAR EAST ("EAFE") is a market capitalization weighted
foreign securities index, which is widely used to measure the performance of
European, Australian, New Zealand and Far Eastern stock markets. The index
covers approximately 1,020 companies drawn from 18 countries in the above
regions. The index values its securities daily in both U.S. dollars and local
currency and calculates total returns monthly. EAFE U.S. dollar total return is
a net dividend figure less Luxembourg withholding tax. The EAFE is monitored by
Capital International, S.A., Geneva, Switzerland.
.INTERNATIONAL FINANCE CORPORATION ("IFC") EMERGING MARKET INDICES are market
capitalization-weighted foreign securities indices, which are used to measure
the performance of emerging markets (as defined by the World Bank) in Europe,
Asia, Latin America, and the Middle East/Africa. The IFC calculates both a
"Global" and an "Investable" version of its index. The "Global" version
includes companies and countries with regard to their access to foreign
investors. The "Investable" Index adjusts company and market weights to reflect
their accessibility to foreign investors. The IFC Global Index currently covers
approximately 1,200 securities in 25 markets; the IFC Investable Index
currently covers approximately 900 securities in 24 markets. Both indices are
presently calculated local currency and in US dollars, without dividends and
with gross dividends reinvested (e.g., before withholding taxes). The IFC is a
subsidiary of the World Bank, and has been collecting data on emerging markets
since 1975.
.MORGAN STANLEY CAPITAL INTERNATIONAL ("MSCI") EMERGING MARKETS INDICES are
market capitalization-weighted foreign securities indices, which are used to
measure the performance of emerging markets (as defined by the World Bank) in
Europe, Asia, Latin America, and the Middle East/Africa. MSCI calculates a
"Global" and a "Free" version of its index. The "Global" version includes
companies and countries without regards to their access to foreign investors.
The "Free" Index adjusts company and market weights to reflect their
assessibility to foreign investors. The MSCI Global Index currently covers
approximately 630 securities in 20 markets; the MSCI Free Index currently
covers approximately 560 securities in 19 markets. Both indices are presently
calculated in local currency and in US dollars, without dividends and with
gross dividends reinvested (e.g., before withholding taxes).
.MORNINGSTAR, INC., an independent rating service, is the publisher of the
bi-weekly Mutual Fund Values. Mutual Fund Values rates more than 1,000
NASDQ-listed mutual funds of all types, according to their risk-adjusted
returns. The maximum rating is five stars, and ratings are effective for two
weeks.
Advertisements and other sales literature for the Fund 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 the Fund based on
the annual reinvestment of dividends over a specified period of time.
Advertisements may quote performance information which does not reflect the
effect of the sales load.
G00481-02 (12/94)
PART C. OTHER INFORMATION.
Item 24. Financial Statements and Exhibits:
(a) Financial Statements (1-11) Filed in Part A.
(b) Exhibits:
(1) Conformed copy of Declaration of Trust of the Registrant
and Amendments 1-6 thereto;+
(2) Copy of By-Laws of the Registrant;(1)
(i) Amended By-Laws of the Registrant;(2)
(3) Not applicable;
(4) Not Applicable;
(5) Conformed copy of Investment Advisory Contract of the
Registrant and Exhibits A-I thereto;+
(i) Conformed Copy of Sub-Advisory Agreement of the
Registrant; (10)
(ii) Form of Exhibit J to Investment Advisory Contract
to add Biltmore Emerging Markets Fund to the
present Investment Advisory Contract;+
+ All exhibits have been electronically filed.
(1) Response is incorporated by reference to Registrant's Initial Registration
Statement on Form N-1A filed December 18, 1991. (File Nos. 33-44590 and
811-6504)
(2) Response is incorporated by reference to Registrant's Pre-Effective
Amendment No. 1 on form N-1A filed March 6, 1992. (File Nos. 33-44590 and
811-6504)
(3) Response is incorporated by reference to Registrant's Post-Effective
Amendment No. 1 on Form N-1A filed May 12, 1992. (File Nos. 33-44590 and
811-6504).
(5) Response is incorporated by reference to Registrant's Post-Effective
Amendment No. 4 on form N-1A filed September 29, 1992. (File Nos. 33-
44590 and 811-6504)
(6) Response is incorporated by reference to Registrant's Post-Effective
Amendment No. 5 on form N-1A filed December 2, 1992 (File Nos. 33-44590
and 811-6504)
(8) Response is incorporated by reference to Registrant's Post-Effective
Amendment No. 10 on form N-1A filed January 11, 1994 (File Nos. 33-44590
and 811-6504)
(9) Response is incorporated by reference to Registrant's Post-Effective
Amendment No. on form N-1A filed January 28, 1994. (File Nos. 33-44590 and
811-6504)
(10) Response is incorporated by reference to Registrant's Post-Effective
Amendment No. 12 on Form N-1A filed June 29, 1994. (File Nos. 33-44590
and 811-6504)
(6) Conformed copy of Distributor's Contract of the Registrant and
Exhibits A-G thereto;+
(i) Form of Exhibit H to Distributor's Contract of the
Registrant to add Biltmore Emerging Markets Fund;+
(7) Not applicable;
(8) Conformed copy of Custodian Agreement of the Registrant and
Exhibits A-D thereto;+
(9) (i) Conformed copy of Portfolio Accounting
and Shareholder Recordkeeping Agreement of the
Registrant and Schedules A, and H thereto;+
(ii) Copy of Schedule I to Portfolio Accounting and
Shareholder Recordkeeping Agreement of the
Registrant; +
(iii) Copy of Exhibit F to Transfer Agency and Service
Agreement of the Registrant;(3)
(iv) Conformed Copy of Schedule G to Transfer Agency
and Service Agreement of the Registrant;(8)
(v) Conformed Copy of Sub-Transfer Agency and Service
Agreement;(7)
(vi) Conformed Copy of Administrative Services
Agreement of the Registrant through and including
copies of exhibits A-D and Amendment 1 thereto;+
( vii) Form of Exhibit E to Administrative Services
Agreement of the Registrant;+
(viii) Conformed Copy of Shareholder Services
Plan; (7)
(ix) Conformed Copy of Exhibit A to Shareholder
Services Plan of the Registrant and Amendment
No.1 thereto; +
(x) Copy of Amendment No. 2 to Shareholder Services
Plan of the Registrant;+
(xi) Copy of Shareholder Services Agreement; (8)
(xii) Copy of Exhibit A to Shareholder Services
Agreement of the Registrant;+
(10) Copy of Opinion and Consent of Counsel as to
legality of shares being registered; +
(11) Not applicable;
(12) Not applicable;
(13) Conformed copy of Initial Capital Understanding;(2)
+ All exhibits have been electronically filed.
(2) Response is incorporated by reference to Registrant's Pre-Effective
Amendment No. 1 on form N-1A filed March 6, 1992. (File Nos. 33-44590 and
811-6504)
(3) Response is incorporated by reference to Registrant's Post-Effective
Amendment No. 1 on Form N-1A filed May 12, 1992. (File Nos. 33-44590 and
811-6504).
(6) Response is incorporated by reference to Registrant's Post-Effective
Amendment No. 5 on form N-1A filed December 2, 1992 (File Nos. 33-44590
and 811-6504)
(8) Response is incorporated by reference to Registrant's Post-Effective
Amendment No. 10 on form N-1A filed January 11, 1994 (File Nos. 33-44590
and 811-6504)
(15) (i) Conformed copy of Distribution Plan and
Exhibits A-B thereto;+
(ii)Copy of Dealer Agreement; (6)
(iii) Copy of Exhibit to Dealer Agreement;(6)
(iv) Copy of Rule 12b-1 Agreement;(2)
(v) Copy of Exhibits A and B to 12b-1
Agreement;(6)
(16) (i) Schedule for Computation of Fund
Performance Data, Biltmore Money Market
Fund (5);
(ii) Schedule for Computation of Fund Performance
Data, Biltmore Prime Cash Management Fund
(10);
(iii) Copy of Schedule for Computation of Fund
Performance Data, Biltmore Equity Fund (7);
(iv) Copy of Schedule for Computation of Fund
Performance Data, Biltmore Fixed Income Fund
(7);
(v) Copy of Schedule for Computation of Fund
Performance Data, Biltmore Equity Index Fund
(7);
(vi) Copy of Schedule for Computation of Fund
Performance Data, Biltmore Short-Term
Fixed Income Fund (7);
(vii) Copy of Schedule for Computation of Fund
Performance Data, Biltmore Special Values
Fund (7);
(viii)Copy of Schedule for Computation of Fund
Performance Data, Biltmore Balanced
Fund (7);
(ix) Copy of Schedule for Computation of Fund
Performance Data, Biltmore Quantitative
Equity Fund (11);
(17) Not Applicable (Financial Data Schedule);
(18) Power of Attorney(8);
Item 25. Persons Controlled by or Under Common Control with Registrant
None
+ All exhibits have been electronically filed.
(5) Response is incorporated by reference to Registrant's Post-Effective
Amendment No. 4 on form N-1A filed September 29, 1992. (File Nos.
33-44590 and 811-6504)
(7) Response is incorporated by reference to Registrant's Post-Effective
Amendment No. 8 on form N-1A filed July 29, 1993 (File Nos. 33-44590 and
811-6504)
(8) Response is incorporated by reference to Registrant's Post-Effective
Amendment No. 11 on form N-1A filed January 28, 1994. (File Nos. 33-44590
and 811-6504)
(10) Response is incorporated by reference to Registrant's Post-Effective
Amendment No. 12 on Form N-1A filed June 29, 1994. (File Nos. 33-44590
and 811-6504)
(11) Response is incorporated by reference to Registrant's Post-Effective
Amendment No. 13 on Form N-1A filed July 26, 1994. (File Nos. 33-44590
and 811-6504)
Item 26. Number of Holders of Securities:
Number of Record Holders
Title of Class as of September 23, 1994
Shares of beneficial interest
(no par value)
Biltmore Balanced Fund 438
Biltmore Equity Fund 563
Biltmore Equity Index Fund 211
Biltmore Fixed Income Fund 390
Biltmore Special Values Fund 97
Biltmore Short-Term Fixed Income Fund 226
Biltmore Money Market Fund
(Investment Shares) 8
Biltmore Money Market Fund
(Institutional Shares) 3
Biltmore Tax-Free Money Market Fund
(Investment Shares) 7
Biltmore Tax-Free Money Market Fund
(Institutional Shares) 3
Biltmore U.S. Treasury Money Market Fund
(Investment Shares) 7
Biltmore U.S. Treasury Money Market Fund
(Institutional Shares) 3
Biltmore Prime Cash Management Fund 4
Biltmore Quantitative Equity Fund 139
Item 27. Indemnification: (2)
Item 28. Business and Other Connections of Investment Adviser:
(a) For a description of the other business of the investment
adviser, see the section entitled "The Biltmore Funds
Information - Management of the Trust" in Part A. The Officers
of the investment adviser are: Chairman of the Board, L. M.
Baker, Jr.; President and Chief Executive Officer, J. Walter
McDowell; Chief Financial Officer and Executive Vice President,
Robert F. McCoy; Chief Loan Administration Officer and
Executive Vice President, Robert L. Alphin; Executive Vice
President, Hugh M. Durden; Executive Vice President, Mickey W.
Dry; Executive Vice President, Walter E. Leonard, Jr.; and
Executive Vice President, Richard B. Roberts. The business
address of each of the Officers of the investment adviser is
Wachovia Bank of North Carolina, N.A., 310 North Main Street,
Winston-Salem, N.C. 27150.
The Directors of the investment adviser are listed below with
their occupations: L.M. Baker, Jr., President and Chief
Executive Officer, Wachovia Corporation, Chairman, Wachovia
Bank of North Carolina, N.A.; H.C. Bissell, Chairman of the
Board and Chief Executive Officer, The Bissell Companies, Inc.;
Bert Collins, President and Chief Executive Officer, North
Carolina Mutual Life Insurence Company; Felton J. Capel,
Chairman of the Board and President, Century Associates of
North Carolina; Richard L. Daugherty, North Carolina Senior
Executive and Vice President, IBM Corporation; Estell C. Lee,
Chairman of
(2) Response is incorporated by reference to Registrant's Pre-Effective
Amendment No. 1 on form N-1A filed March 6, 1992. (File No. 33-44590)
the Board and President, The Lee Company; John G. Medlin, Jr.,
Chairman of the Board, Wachovia Corporation; David J. Whichard
II, Chairman, The Daily Reflector; John C. Whitaker, Jr.,
Chairman of the Board and Chief Executive Officer, Inmar
Enterprises, Inc.; Herbert Brenner, President, Brenner
Companies, Inc.; William Cavanaugh, III, President and Chief
Operating Officer, Carolina Power and Light Company; J. Walter
McDowell, President and Chief Executive Officer, Wachovia Bank
of North Carolina, N.A.; John F. Ward, Senior Vice President,
Sara Laee Corporation; Anderson D. Warlick, President and Chief
Operating Officer, Parkdale Mills, Inc.; Wyndham Robertson,
Vice President for Communications, University of North
Carolina.
Item 29. Principal Underwriters:
(a) Federated Securities Corp., the Distributor for shares of the
Registrant, also acts as principal underwriter for the
following open-end investment companies: Alexander Hamilton
Funds; American Leaders Fund, Inc.; Annuity Management Series;
Automated Cash Management Trust; Automated Government Money
Trust; BayFunds; The Biltmore Funds; The Biltmore Municipal
Funds; California Municipal Cash Trust; Cash Trust Series,
Inc.; Cash Trust Series II; 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; First Union Funds;
Fixed Income Securities, Inc.; Fortress Adjustable Rate U.S.
Government Fund, Inc.; Fortress Municipal Income Fund, Inc.;
Fortress Utility Fund, Inc.; Fountain Square Funds; Fund for
U.S. Government Securities, Inc.; Government Income Securities,
Inc.; High Yield Cash Trust; Independence One Mutual Funds;
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 Utility Fund, Inc.;
Liquid Cash Trust; Managed Series Trust; Mark Twain Funds;
Marshall Funds, Inc.; Money Market Management, Inc.; The
Medalist Funds; Money Market Obligations Trust; Money Market
Trust; The Monitor Funds; Municipal Securities Income Trust;
New York Municipal Cash Trust; 111 Corcoran Funds; Peachtree
Funds; The Planters Funds; Portage Funds; RIMCO Monument Funds;
The Shawmut Funds; Short-Term Municipal Trust; SouthTrust
Vulcan Funds; Star Funds; The Starburst Funds; The Starburst
Funds II; Stock and Bond Fund, Inc.; Sunburst Funds; Targeted
Duration Trust; Tax-Free Instruments Trust; Tower Mutual Funds;
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; Vision
Fiduciary Funds, Inc.; Vision Group of Funds, Inc.; and World
Investment Series, Inc.
Federated Securities Corp. also acts as principal underwriter
for the following closed-end investment company: Liberty Term
Trust, Inc.- 1999.
(b)
(1) (2) (3)
Name and Principal Positions and Offices Positions and Offices
Business Address With Underwriter With Registrant
Richard B. Fisher Director, Chairman, Chief --
Federated Investors Tower Executive Officer, Chief
Pittsburgh, PA 15222-3779 Operating Officer, and
Asst. Treasurer, Federated
Securities Corp.
Edward C. Gonzales Director, Executive Vice --
Federated Investors Tower President, and Treasurer,
Pittsburgh, PA 15222-3779 Federated Securities
Corp.
John W. McGonigle Director, Executive Vice President and
Federated Investors Tower President, and Assistant Treasurer
Pittsburgh, PA 15222-3779 Secretary, Federated
Securities Corp.
John A. Staley, IV Executive Vice President --
Federated Investors Tower and Assistant Secretary,
Pittsburgh, PA 15222-3779 Federated Securities Corp.
John B. Fisher President-Institutional Sales, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779
James F. Getz President-Broker/Dealer, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779
Mark R. Gensheimer Executive Vice President of --
Federated Investors Tower Bank/Trust
Pittsburgh, PA 15222-3779 Federated Securities Corp.
Mark W. Bloss Senior Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779
Theodore Fadool, Jr. Senior Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779
Bryant R. Fisher Senior Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779
Christopher T. Fives Senior Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779
James S. Hamilton Senior Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779
James M. Heaton Senior Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779
H. Joseph Kennedy Senior Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779
Keith Nixon Senior Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779
Timothy C. Pillion Senior Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779
James R. Ball Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779
Richard W. Boyd Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779
Jane E. Broeren-Lambesis Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779
Mary J. Combs Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779
R. Edmond Connell, Jr. Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779
Laura M. Deger Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779
Jill Ehrenfeld Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779
Mark D. Fisher Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779
Joseph D. Gibbons Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779
David C. Glabicki Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779
Richard C. Gonzales Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779
Scott A. Hutton Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779
William J. Kerns Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779
William E. Kugler Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779
Dennis M. Laffey Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779
Mark J. Miehl Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779
J. Michael Miller Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779
R. Jeffrey Niss Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779
Michael P. O'Brien Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779
Solon A. Person, IV Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779
Robert F. Phillips Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779
Eugene B. Reed Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779
Paul V. Riordan Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779
Charles A. Robison Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779
David W. Spears Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779
Jeffrey A. Stewart Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779
Thomas E. Territ Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779
William C. Tustin Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779
Richard B. Watts Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779
Philip C. Hetzel Assistant Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779
Ernest L. Linane Assistant Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779
S. Elliott Cohan Secretary, Federated Assistant
Federated Investors Tower Securities Corp. Secretary
Pittsburgh, PA 15222-3779
(c) Not applicable.
Item 30. Location of Accounts and Records:
Registrant Federated Investors Tower
Pittsburgh, PA 15222-3779
Federated Services Company Federated Investors Tower
("Transfer Agent, Dividend Pittsburgh, PA 15222-3779
Disbursing Agent and Portfolio
Recordkeeper")
Federated Administrative Services Federated Investors Tower
("Administrator") Pittsburgh, PA 15222-3779
Wachovia Investment Management Group 301 North Main Street
("Adviser") Winston-Salem, NC 21750
Twin Capital Management, Inc. 3244 Washington Road
("Sub-Adviser" to Biltmore Washington Road
Quantitative Equity Fund only) McMurrary, PA 15315-3153
Wachovia Bank of North Carolina Wachovia Trust Operations
("Custodian") 301 North Main Street
Winston-Salem, NC 21750
Item 31. Management Services: Not applicable.
Item 32. Undertakings:
Registrant hereby undertakes to comply with the provisions of
Section 16(c) of the 1940 Act with respect to the removal of
Trustees and the calling of special shareholder meetings by
shareholders on behalf of each of its portfolios.
Registrant hereby undertakes to furnish each person to whom a
prospectus is delivered with a copy of the Registrant's latest
annual report to shareholders upon request and without charge.
Registrant hereby undertakes to file a post-effective amendment on
behalf of Biltmore Emerging Markets Fund, a portfolio of The
Biltmore Funds, using financial statements for Biltmore Emerging
Markets Fund, which need not be certified, within four to six months
from the date of this Post-Effective Amendment No. 14.
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933 and the
Investment Company Act of 1940, the Registrant, THE BILTMORE FUNDS, has
duly caused this Amendment to its Registration Statement to be signed on
its behalf by the undersigned, thereunto duly authorized, all in the City
of Pittsburgh and Commonwealth of Pennsylvania, on the 6th day of October,
1994.
THE BILTMORE FUNDS
BY: /s/Mark A. Sheehan
Mark A. Sheehan, Assistant Secretary
Attorney in Fact for John W. McGonigle
October 6, 1994
Pursuant to the requirements of the Securities Act of 1933, this
Amendment to its Registration Statement has been signed below by the
following person in the capacity and on the date indicated:
NAME TITLE DATE
By: /s/Mark A. Sheehan
Mark A. Sheehan Attorney In Fact October 6, 1994
ASSISTANT SECRETARY For the Persons
Listed Below
NAME TITLE
John W. McGonigle* President and Treasurer
James A. Hanley* Trustee
Malcolm T. Hopkins* Trustee
Samuel E. Hudgins* Trustee
J. Berkley Ingram, Jr.* Trustee
D. Dean Kaylor* Trustee
* By Power of Attorney
[dectru1]biltmore Author PJG
-1-
Form N-1A Exhibit No. (1)
Regulation S-K Exhibit No. 3(a)
The Biltmore Funds
(Formerly, the Winvest Funds)
Amended and Restated
Declaration of Trust
TABLE OF CONTENTS
Page
ARTICLE I. NAMES AND DEFINITIONS ............................. 1
Section 1. Name .......................................... 1
Section 2. Definitions ................................... 1
ARTICLE II. PURPOSE OF TRUST .................................. 2
ARTICLE III. BENEFICIAL INTEREST................................ 2
Section 1. Shares of Beneficial Interest ................. 2
Section 2. Ownership of Shares ........................... 2
Section 3. Investment in the Trust ....................... 3
Section 4. No Pre-emptive Rights ......................... 3
Section 5. Establishment and Designation of Series
or Class ................................... 3
ARTICLE IV. THE TRUSTEES ...................................... 5
Section 1. Management of the Trust ....................... 5
Section 2. Election of Trustees at Meeting of
Shareholders ............................... 5
Section 3. Term of Office of Trustees .................... 6
Section 4. Termination of Service and Appointment
of Trustees ................................ 6
Section 5. Number of Trustees ............................ 6
Section 6. Effect of Death, Resignation, etc. of a
Trustee .................................... 6
Section 7. Ownership of Assets ........................... 6
ARTICLE V. POWERS OF THE TRUSTEES ............................ 7
Section 1. Powers ........................................ 7
Section 2. Principal Transactions ........................ 9
Section 3. Trustees and Officers as Shareholders.......... 9
Section 4. Parties to Contract ........................... 9
-i-
Page
ARTICLE VI. TRUSTEES' EXPENSES AND COMPENSATION ............... 10
Section 1. Trustee Reimbursement ........................ 10
Section 2. Trustee Compensation ......................... 10
ARTICLE VII. INVESTMENT ADVISER, ADMINISTRATIVE SERVICES,
PRINCIPAL UNDERWRITER AND
TRANSFER AGENT ......................... 11
Section 1. Investment Adviser ........................... 11
Section 2. Administrative Services ...................... 11
Section 3. Principal Underwriter ........................ 11
Section 4. Transfer Agent ............................... 12
ARTICLE VIII. SHAREHOLDERS' VOTING POWERS AND MEETINGS .......... 12
Section 1. Voting Powers ................................ 12
Section 2. Meetings ..................................... 12
Section 3. Quorum and Required Vote ..................... 13
Section 4. Additional Provisions ........................ 13
ARTICLE IX. CUSTODIAN ......................................... 13
ARTICLE X. DISTRIBUTIONS AND REDEMPTIONS ..................... 13
Section 1. Distributions ................................ 13
Section 2. Redemptions and Repurchases .................. 14
Section 3. Net Asset Value of Shares .................... 15
Section 4. Suspension of the Right of Redemption......... 15
Section 5. Trust's Right to Redeem Shares ............... 15
ARTICLE XI. LIMITATION OF LIABILITY AND INDEMNIFICATION ....... 15
Section 1. Limitation of Personal Liability and
Indemnification of Shareholders ............ 15
Section 2. Limitation of Personal Liability of
Trustees, Officers, Employees or
Agents of the Trust ........................ 16
Section 3. Express Exculpatory Clauses and
Instruments ................................ 16
-ii-
Page
ARTICLE XII. MISCELLANEOUS...................................... 17
Section 1. Trust is not a Partnership ................... 17
Section 2. Trustee Action Binding, Expert Advice,
No Bond or Surety .......................... 17
Section 3. Establishment of Record Dates ................ 17
Section 4. Termination of Trust ......................... 18
Section 5. Offices of the Trust, Filing of Copies,
Headings, Counterparts ..................... 18
Section 6. Applicable Law ............................... 18
Section 7. Amendments -- General ........................ 19
Section 8. Amendments -- Series and Classes.............. 19
Section 9. Use of Name .................................. 20
-iii-
AMENDED AND RESTATED
DECLARATION OF TRUST
The Biltmore Funds
Dated February 24, 1992
FEDERATED INVESTORS TOWER
PITTSBURGH, PA 15222-3779
AMENDED AND RESTATED DECLARATION OF TRUST made February 24, 1992, by
James A. Hanley, Malcolm T. Hopkins, Samuel E. Hudgins, J. Berkley Ingram,
and D. Dean Kaylor.
WHEREAS, the Trustees desire to establish a trust fund for the investment
and reinvestment of funds contributed thereto;
NOW, THEREFORE, the Trustees declare that all money and property
contributed to the trust fund hereunder shall be held and managed under this
Amended and Restated Declaration of Trust (hereinafter referred to as the
"Declaration of Trust") IN TRUST as herein set forth below.
ARTICLE I
NAMES AND DEFINITIONS
Section 1. Name.
This Trust shall be known as The Biltmore Funds
Section 2. Definitions.
Wherever used herein, unless otherwise required by the context or
specifically provided:
(a) The terms "Affiliated Person," "Assignment," "Commission,"
"Interested Person," "Majority Shareholder Vote" (the 67% or 50%
requirement of Section 2(a)(42) of the 1940 Act, whichever may be
applicable) and "Principal Underwriter" shall have the meanings given
them in the 1940 Act, as amended from time to time;
(b) The "Trust" refers to The Biltmore Funds.
(c) "Class" refers to a class of Shares established and designated
under or in accordance with the provisions of Article III;
(d) "Series" refers to a series of Shares established and
designated under or in accordance with the provisions of Article III;
(e) "Series Company" refers to the form of a registered open-end
investment company described in Section 18(f)(2) of the 1940 Act or in
any successor statutory provision;
(f) "Shareholder" means a record owner of Shares of any Series or
Class;
(g) The "Trustees" refer to the individual Trustees in their
capacity as Trustees hereunder of the Trust and their successor or
successors for the time being in office as such Trustees;
(h) "Shares" means the equal proportionate units of interest into
which the beneficial interest in the Trust shall be divided from time to
time, or if more than one Series or Class of Shares is authorized by
the Trustees, the equal proportionate units into which each Series or
Class of Shares shall be divided from time to time and includes
fractions of Shares as well as whole Shares; and
(i) The "1940 Act" refers to the Investment Company Act of 1940,
and the Rules and Regulations thereunder, (including any exemptions
granted thereunder) as amended from time to time.
ARTICLE II
PURPOSE OF TRUST
The purpose of this Trust is to provide investors a continuous source of
managed investments by investing primarily in securities (including options)
and also in debt instruments, commodities, commodity contracts and options
thereon.
ARTICLE III
BENEFICIAL INTEREST
Section 1. Shares of Beneficial Interest.
The beneficial interest in the Trust shall at all times be divided
into transferable Shares, without par value. Subject to the provisions
of Section 5 of this Article III, each Share shall have voting rights as
provided in Article VIII hereof, and holders of the Shares of any Series
shall be entitled to receive dividends, when and as declared with
respect thereto in the manner provided in Article X, Section 1 hereof.
The Shares of any Series may be issued in two or more Classes, as the
Trustees may authorize pursuant to Article XII, Section 8 hereof.
Unless the Trustees have authorized the issuance of Shares of a Series
in two or more Classes, each Share of a Series shall represent an equal
proportionate interest in the assets and liabilities of the Series with
each other Share of the same Series, none having priority or preference
over another. If the Trustees have authorized the issuance of Shares of
a Series in two or more Classes, then the Classes may have such
variations as to dividend, redemption, and voting rights, net asset
values, expenses borne by the Classes, and other matters as the Trustees
have authorized provided that each Share of a Class shall represent an
equal proportionate interest in the assets and liabilities of the Class
with each other Share of the same Class, none having priority or
preference over another. The number of Shares authorized shall be
unlimited. The Trustees may from time to time divide or combine the
Shares of any Series or Class into a greater or lesser number without
thereby changing the proportionate beneficial interests in the Series or
Class.
Section 2. Ownership of Shares.
The ownership of Shares shall be recorded in the books of the Trust
or a transfer agent which books shall be maintained separately for the
Shares of each Series or Class. The Trustees may make such rules as
they consider appropriate for the transfer of Shares and similar
matters. The record books of the Trust or any transfer agent, as the
case may be, shall be conclusive as to who are the Shareholders of each
Series or Class and as to the number of Shares of each Series or Class
held from time to time by each.
Section 3. Investment in the Trust.
The Trustees shall accept investments in the Trust from such persons
and on such terms as they may from time to time authorize. After the
date of the initial contribution of capital (which shall occur prior to
the initial public offering of Shares), the number of Shares to
represent the initial contribution shall be considered as outstanding
and the amount received by the Trustees on account of the contribution
shall be treated as an asset of the Trust to be allocated among any
Series or Classes in the manner described in Section 5(a) of this
Article. Subsequent to such initial contribution of capital, Shares
(including Shares which may have been redeemed or repurchased by the
Trust) may be issued or sold at a price which will net the relevant
Series or Class, as the case may be, before paying any taxes in
connection with such issue or sale, not less than the net asset value
(as defined in Article X, Section 3) thereof; provided, however, that
the Trustees may in their discretion impose a sales charge upon
investments in the Trust.
Section 4. No Pre-emptive Rights.
Shareholders shall have no pre-emptive or other right to subscribe
to any additional Shares or other securities issued by the Trust.
Section 5. Establishment and Designation of Series or Class.
Without limiting the authority of the Trustees set forth in Article
XII, Section 8, inter alia, to establish and designate any additional
series or class or to modify the rights and preferences of any existing
Series or Class, the initial series shall be, and are established and
designated as, Biltmore U.S. Government Money Market Fund, Biltmore U.S.
Treasury Money Market Fund, Biltmore Tax-Free Money Market Fund, and
Biltmore Money Market Fund.
Shares of any Series or Class established in this Section 5 shall
have the following relative rights and preferences:
(a) Assets belonging to Series or Class. All consideration
received by the Trust for the issue or sale of Shares of a
particular Series or Class, together with all assets in which such
consideration is invested or reinvested, all income, earnings,
profits, and proceeds thereof from whatever source derived,
including, without limitation, any proceeds derived from the sale,
exchange or liquidation of such assets, and any funds or payments
derived from any reinvestment of such proceeds in whatever form the
same may be, shall irrevocably belong to that Series or Class for
all purposes, subject only to the rights of creditors, and shall be
so recorded upon the books of account of the Trust. Such
consideration, assets, income, earnings, profits and proceeds
thereof, from whatever source derived, including, without
limitation, any proceeds derived from the sale, exchange or
liquidation of such assets, and any funds or payments derived from
any reinvestment of such proceeds, in whatever form the same may be,
are herein referred to as "assets belonging to" that Series or
Class. In the event that there are any assets, income, earnings,
profits and proceeds thereof, funds or payments which are not
readily identifiable as belonging to any particular Series or Class
(collectively "General Assets"), the Trustees shall allocate such
General Assets to, between or among any one or more of the Series or
Classes established and designated from time to time in such manner
and on such basis as they, in their sole discretion, deem fair and
equitable, and any General Assets so allocated to a particular
Series or Class shall belong to that Series or Class. Each such
allocation by the Trustees shall be conclusive and binding upon the
Shareholders of all Series or Classes for all purposes.
(b) Liabilities Belonging to Series or Class. The assets
belonging to each particular Series or Class shall be charged with
the liabilities of the Trust in respect to that Series or Class and
all expenses, costs, charges and reserves attributable to that
Series or Class, and any general liabilities of the Trust which are
not readily identifiable as belonging to any particular Series or
Class shall be allocated and charged by the Trustees to and among
any one or more of the Series or Classes established and designated
from time to time in such manner and on such basis as the Trustees
in their sole discretion deem fair and equitable. The liabilities,
expenses, costs, charges and reserves so charged to a Series or
Class are herein referred to as "liabilities belonging to" that
Series or Class. Each allocation of liabilities belonging to a
Series or class by the Trustees shall be conclusive and binding upon
the Shareholders of all Series or Classes for all purposes.
(c) Dividends, Distributions, Redemptions, Repurchases and
Indemnification. Notwithstanding any other provisions of this
Declaration, including, without limitation, Article X, no dividend
or distribution (including, without limitation, any distribution
paid upon termination of the Trust or of any Series or Class) with
respect to, nor any redemption or repurchase of the Shares of any
Series or Class shall be effected by the Trust other than from the
assets belonging to such Series or Class, nor except as specifically
provided in Section 1 of Article XI hereof, shall any Shareholder of
any particular Series or Class otherwise have any right or claim
against the assets belonging to any other Series or Class except to
the extent that such Shareholder has such a right or claim hereunder
as a Shareholder of such other Series or Class.
(d) Voting. Notwithstanding any of the other provisions of
this Declaration, including, without limitation, Section 1 of
Article VIII, only Shareholders of a particular Series or Class
shall be entitled to vote on any matters affecting such Series or
Class. Except with respect to matters as to which any particular
Series or Class is affected, all of the Shares of each Series or
Class shall, on matters as to which such Series or Class is entitled
to vote, vote with other Series or Classes so entitled as a single
class. Notwithstanding the foregoing, with respect to matters which
would otherwise be voted on by two or more Series or Classes as a
single class, the Trustees may, in their sole discretion, submit
such matters to the Shareholders of any or all such Series or
Classes, separately.
(e) Fraction. Any fractional Share of a Series or Class shall
carry proportionately all the rights and obligations of a whole
Share of that Series or Class, including rights with respect to
voting, receipt of dividends and distributions, redemption of Shares
and termination of the Trust or of any Series or Class.
(f) Exchange Privilege. The Trustees shall have the authority
to provide that the holders of Shares of any Series or Class shall
have the right to exchange said Shares for Shares of one or more
other Series or Classes in accordance with such requirements and
procedures as may be established by the Trustees.
(g) Combination of Series or Classes. The Trustees shall have
the authority, without the approval of the Shareholders of any
Series or Class, unless otherwise required by applicable law, to
combine the assets and liabilities belonging to a single Series or
Class with the assets and liabilities of one or more other Series or
Classes.
(h) Elimination of Series or Classes. At any time that there
are no Shares outstanding of any particular Series or Class
previously established and designated, the Trustees may amend this
Declaration of Trust to abolish that Series or Class and to rescind
the establishment and designation thereof.
ARTICLE IV
THE TRUSTEES
Section 1. Management of the Trust.
The business and affairs of the Trust shall be managed by the
Trustees, and they shall have all powers necessary and desirable to
carry out that responsibility. A Trustee shall not be required to be a
Shareholder of the Trust.
Section 2. Election of Trustees at Meeting of Shareholders.
On a date fixed by the Trustees, which shall be subsequent to the
initial public offering of Shares, the Shareholders shall elect
Trustees. The number of Trustees shall be determined by the Trustees
pursuant to Article IV, Section 5. Until such election, the Trustees
shall be James A. Hanley, Malcolm T. Hopkins, Samuel E. Hudgins, J.
Berkley Ingram, and D. Dean Kaylor or such other persons as may be
hereafter appointed pursuant to Section 4 of this Article IV.
Section 3. Term of Office of Trustees.
The Trustees shall hold office during the lifetime of this Trust,
and until its termination as hereinafter provided; except (a) no Trustee
shall serve beyond the age of seventy-two (72); (b) that any Trustee may
resign his office at any time by written instrument signed by him and
delivered to the other Trustees, which shall take effect upon such
delivery or upon such later date as is specified therein; (c) that any
Trustee may be removed at any time by written instrument signed by at
least two-thirds of the number of Trustees prior to such removal,
specifying the date when such removal shall become effective; (d) that
any Trustee who requests in writing to be retired or who has become
mentally or physically incapacitated may be retired by written
instrument signed by a majority of the other Trustees, specifying the
date of his retirement; and (e) a Trustee may be removed at any special
meeting of Shareholders of the Trust by a vote of two-thirds of the
outstanding Shares.
Section 4. Termination of Service and Appointment of Trustees.
In case of the death, resignation, retirement, expiration of term of
office, removal or mental or physical incapacity of any of the Trustees,
or in case a vacancy shall, by reason of an increase in number, or for
any other reason, exist, the remaining Trustees shall fill such vacancy
by appointing such other person as they in their discretion shall see
fit. Such appointment shall be effected by the signing of a written
instrument by a majority of the Trustees in office. An appointment of a
Trustee may be made by the Trustees then in office in anticipation of a
vacancy to occur by reason of retirement, resignation or increase in
number of Trustees effective at a later date, provided that said
appointment shall become effective only at or after the effective date
of said retirement, resignation or increase in number of Trustees. As
soon as any Trustee so appointed shall have accepted this Trust, the
trust estate shall vest in the new Trustee or Trustees, together with
the continuing Trustees, without any further act or conveyance, and he
shall be deemed a Trustee hereunder. Any appointment authorized by this
Section 4 is subject to the provisions of Section 16(a) of the 1940 Act.
Section 5. Number of Trustees.
The number of Trustees, not less than three (3) nor more than twenty
(20) serving hereunder at any time, shall be determined by the Trustees
themselves.
Whenever a vacancy in the Board of Trustees shall occur, until such
vacancy is filled or while any Trustee is physically or mentally
incapacitated, the other Trustees shall have all the powers hereunder
and the certificate signed by a majority of the other Trustees of such
vacancy, absence or incapacity, shall be conclusive, provided, however,
that no vacancy which reduces the number of Trustees below three (3)
shall remain unfilled for a period longer than six calendar months.
Section 6. Effect of Death, Resignation, etc. of a Trustee.
The death, resignation, retirement, removal, expiration of term of
office, or mental or physical incapacity of the Trustees, or any one of
them, shall not operate to annul the Trust or to revoke any existing
agency created pursuant to the terms of this Declaration of Trust.
Section 7. Ownership of Assets.
The assets belonging to each Series or Class shall be held separate
and apart from any assets now or hereafter held in any capacity other
than as Trustee hereunder by the Trustees or any successor Trustee. All
of the assets belonging to each Series or Class or owned by the Trust
shall at all times be considered as vested in the Trustees. No
Shareholder shall be deemed to have a severable ownership interest in
any individual asset belonging to any Series or Class or owned by the
Trust or any right of partition or possession thereof, but each
Shareholder shall have a proportionate undivided beneficial interest in
a Series or Class.
ARTICLE V
POWERS OF THE TRUSTEES
Section 1. Powers.
The Trustees in all instances shall act as principals, and are and
shall be free from the control of the Shareholders. The Trustees shall
have full power and authority to do any and all acts and to make and
execute any and all contracts and instruments that they may consider
necessary or appropriate in connection with the management of the Trust
or a Series or Class. The Trustees shall not be bound or limited by
present or future laws or customs in regard to trust investments, but
shall have full authority and power to make any and all investments
which they, in their uncontrolled discretion, shall deem proper to
accomplish the purpose of this Trust. Without limiting the foregoing,
the Trustees shall have the following specific powers and authority,
subject to any applicable limitation in this Declaration of Trust or in
the By-Laws of the Trust:
(a) To buy, and invest funds in their hands in securities
including, but not limited to, common stocks, preferred stocks,
bonds, debentures, warrants and rights to purchase securities,
options, certificates of beneficial interest, money market
instruments, notes or other evidences of indebtedness issued by any
corporation, trust or association, domestic or foreign, or issued or
guaranteed by the United States of America or any agency or
instrumentality thereof, by the government of any foreign country,
by any State of the United States, or by any political subdivision
or agency or instrumentality of any State or foreign country, or in
"when-issued" or "delayed-delivery" contracts for any such
securities, or in any repurchase agreement or reverse repurchase
agreement, or in debt instruments, commodities, commodity contracts
and options thereon, or to retain assets belonging to each and every
Series or Class in cash, and from time to time to change the
investments of the assets belonging to each Series or Class;
(b) To adopt By-Laws of the Trust not inconsistent with the
Declaration of Trust providing for the conduct of the business of
the Trust and to amend and repeal them to the extent that they do
not reserve that right to the Shareholders;
(c) To Elect and remove such officers of the Trust and appoint
and terminate such agents of the Trust as they consider appropriate;
(d) To appoint or otherwise engage a bank or trust company as
custodian of any assets belonging to any Series or Class subject to
any conditions set forth in this Declaration of Trust or in the By-
Laws;
(e) To appoint or otherwise engage transfer agents, dividend
disbursing agents, Shareholder servicing agents, investment
advisers, sub-investment advisers, principal underwriters,
administrative service agents, and such other agents as the Trustees
may from time to time appoint or otherwise engage;
(f) To provide for the distribution of any Shares of any
Series or Class either through a principal underwriter in the manner
hereinafter provided for or by the Trust itself, or both;
(g) To set record dates in the manner hereinafter provided
for;
(h) To delegate such authority as they consider desirable to a
committee or committees composed of Trustees, including without
limitation, an Executive Committee, or to any officers of the Trust
and to any agent, custodian or underwriter;
(i) To sell or exchange any or all of the assets belonging to
one or more Series or Classes, subject to the provisions of Article
XII, Section 4(b) hereof;
(j) To vote or give assent, or exercise any rights of
ownership, with respect to stock or other securities or property;
and to execute and deliver powers of attorney to such person or
persons as the Trustees shall deem proper, granting to such person
or persons such power and discretion with relation to securities or
property as the Trustees shall deem proper;
(k) To exercise powers and rights of subscription or otherwise
which in any manner arise out of ownership of securities;
(l) To hold any security or property in a form not indicating
any trust, whether in bearer, unregistered or other negotiable form;
or either in its own name or in the name of a custodian or a nominee
or nominees, subject in either case to proper safeguards according
to the usual practice of Massachusetts trust companies or investment
companies;
(m) To consent to or participate in any plan for the
reorganization, consolidation or merger of any corporation or
concern, any security of which belongs to any Series or Class; to
consent to any contract, lease, mortgage, purchase, or sale of
property by such corporation or concern, and to pay calls or
subscriptions with respect to any security which belongs to any
Series or Class;
(n) To engage in and to prosecute, compound, compromise,
abandon, or adjust, by arbitration, or otherwise, any actions,
suits, proceedings, disputes, claims, demands, and things relating
to the Trust, and out of the assets belonging to any Series or Class
to pay, or to satisfy, any debts, claims or expenses incurred in
connection therewith, including those of litigation, upon any
evidence that the Trustees may deem sufficient (such powers shall
include without limitation any actions, suits, proceedings,
disputes, claims, demands and things relating to the Trust wherein
any of the Trustees may be named individually and the subject matter
of which arises by reason of business for or on behalf of the
Trust);
(o) To make distributions of income and of capital gains to
Shareholders;
(p) To borrow money;
(q) From time to time to issue and sell the Shares of any
Series or Class either for cash or for property whenever and in such
amounts as the Trustees may deem desirable, but subject to the
limitation set forth in Section 3 of Article III.
(r) To purchase insurance of any kind, including, without
limitation, insurance on behalf of any person who is or was a
Trustee, Officer, employee or agent of the Trust, or is or was
serving at the request of the Trust as a Trustee, Director, Officer,
agent or employee of another corporation, partnership, joint
venture, trust or other enterprise against any liability asserted
against him and incurred by him in any such capacity or arising out
of his status as such.
(s) To sell, exchange, lend, pledge, mortgage, hypothecate,
lease, or write options with respect to or otherwise deal in any
property rights relating to any or all of the assets belonging to
any Series or Class.
The Trustees shall have all of the powers set forth in this Section 1
with respect to all assets and liabilities of each Series and Class.
Section 2. Principal Transactions.
The Trustees shall not cause the Trust on behalf of any Series or
Class to buy any securities (other than Shares) from or sell any
securities (other than Shares) to, or lend any assets belonging to any
Series or Class to any Trustee or officer or employee of the Trust or
any firm of which any such Trustee or officer is a member acting as
principal unless permitted by the 1940 Act, but the Trust may employ any
such other party or any such person or firm or company in which any such
person is an interested person in any capacity not prohibited by the
1940 Act.
Section 3. Trustees and Officers as Shareholders.
Any Trustee, officer or other agent of the Trust or any Series or
Class may acquire, own and dispose of Shares of any Series or Class to
the same extent as if he were not a Trustee, officer or agent; and the
Trustees may issue and sell or cause to be issued or sold Shares of any
Series or Class to and buy such Shares from any such person or any firm
or company in which he is an interested person subject only to the
general limitations herein contained as to the sale and purchase of such
Shares; and all subject to any restrictions which may be contained in
the By-Laws.
Section 4. Parties to Contract.
The Trustees may enter into any contract of the character described
in Article VII or in Article IX hereof or any other capacity not
prohibited by the 1940 Act with any corporation, firm, trust or
association, although one or more of the shareholders, Trustees,
officers, employees or agents of the Trust or any Series or Class or
their affiliates may be an officer, director, trustee, shareholder or
interested person of such other party to the contract, and no such
contract shall be invalidated or rendered voidable by reason of the
existence of any such relationship, nor shall any person holding such
relationship be liable merely by reason of such relationship for any
loss or expense to the Trust or any Series or Class under or by reason
of said contract or accountable for any profit realized directly or
indirectly therefrom, in the absence of actual fraud. The same person
(including a firm, corporation, trust or association) may be the other
party to contracts entered into pursuant to Article VII or Article IX or
any other capacity not prohibited by the 1940 Act, and any individual
may be financially interested or otherwise an interested person of
persons who are parties to any or all of the contracts mentioned in this
Section 4.
ARTICLE VI
TRUSTEES' EXPENSES AND COMPENSATION
Section 1. Trustee Reimbursement.
The Trustees shall be reimbursed from the assets belonging to each
particular Series or Class for all of such Trustees' expenses as such
expenses are allocated to and among any one or more of the Series or
Classes pursuant to Article III, Section 5(b), including, without
limitation, expenses of organizing the Trust or any Series or Class and
continuing its or their existence; fees and expenses of Trustees and
Officers of the Trust; fees for investment advisory services,
administrative services and principal underwriting services provided for
in Article VII, Sections 1, 2 and 3; fees and expenses of preparing and
printing Registration Statements under the Securities Act of 1933 and
the 1940 Act and any amendments thereto; expenses of registering and
qualifying the Trust and any Series or Class and the Shares of any
Series or Class under federal and state laws and regulations; expenses
of preparing, printing and distributing prospectuses and any amendments
thereto sent to shareholders, underwriters, broker-dealers and to
investors who may be considering the purchase of Shares; expenses of
registering, licensing or other authorization of the Trust or any Series
or Class as a broker-dealer and of its or their officers as agents and
salesmen under federal and state laws and regulations; interest
expenses, taxes, fees and commissions of every kind; expenses of issue
(including cost of share certificates), purchases, repurchases and
redemptions of Shares, including expenses attributable to a program of
periodic issue; charges and expenses of custodians, transfer agents,
dividend disbursing agents, Shareholder servicing agents and registrars;
printing and mailing costs; auditing, accounting and legal expenses;
reports to Shareholders and governmental officers and commissions;
expenses of meetings of Shareholders and proxy solicitations therefor;
insurance expenses; association membership dues and nonrecurring items
as may arise, including all losses and liabilities by them incurred in
administering the Trust and any Series or Class, including expenses
incurred in connection with litigation, proceedings and claims and the
obligations of the Trust under Article XI hereof and the By-Laws to
indemnify its Trustees, Officers, employees, shareholders and agents,
and any contract obligation to indemnify principal underwriters under
Section 3 of Article VII; and for the payment of such expenses,
disbursements, losses and liabilities, the Trustees shall have a lien on
the assets belonging to each Series or Class prior to any rights or
interests of the Shareholders of any Series or Class. This section
shall not preclude the Trust from directly paying any of the
aforementioned fees and expenses.
Section 2. Trustee Compensation.
The Trustees shall be entitled to compensation from the Trust from
the assets belonging to any Series or Class for their respective
services as Trustees, to be determined from time to time by vote of the
Trustees, and the Trustees shall also determine the compensation of all
Officers, consultants and agents whom they may elect or appoint. The
Trust may pay out of the assets belonging to any Series or Class any
Trustee or any corporation, firm, trust or other entity of which a
Trustee is an interested person for services rendered in any capacity
not prohibited by the 1940 Act, and such payments shall not be deemed
compensation for services as a Trustee under the first sentence of this
Section 2 of Article VI.
ARTICLE VII
INVESTMENT ADVISER, ADMINISTRATIVE SERVICES,
PRINCIPAL UNDERWRITER AND TRANSFER_AGENT
Section 1. Investment Adviser.
Subject to a Majority Shareholder Vote by the relevant Series or
Class, the Trustees may in their discretion from time to time enter into
an investment advisory contract whereby the other party to such contract
shall undertake to furnish the Trustees investment advisory services for
such Series or Class upon such terms and conditions and for such
compensation as the Trustees may in their discretion determine. Subject
to a Majority Shareholder Vote by the relevant Series or Class, the
investment adviser may enter into a sub-investment advisory contract to
receive investment advice and/or statistical and factual information
from the sub-investment adviser for such Series or Class upon such terms
and conditions and for such compensation as the Trustees, in their
discretion, may agree. Notwithstanding any provisions of this
Declaration of Trust, the Trustees may authorize the investment adviser
or sub-investment adviser or any person furnishing administrative
personnel and services as set forth in Article VII, Section 2 (subject
to such general or specific instructions as the Trustees may from time
to time adopt) to effect purchases, sales or exchanges of portfolio
securities belonging to a Series or Class on behalf of the Trustees or
may authorize any officer or Trustee to effect such purchases, sales, or
exchanges pursuant to recommendations of the investment adviser (and all
without further action by the Trustees). Any such purchases, sales and
exchanges shall be deemed to have been authorized by the Trustees. The
Trustees may also authorize the investment adviser to determine what
firms shall be employed to effect transactions in securities for the
account of a Series or Class and to determine what firms shall
participate in any such transactions or shall share in commissions or
fees charged in connection with such transactions.
Section 2. Administrative Services.
The Trustees may in their discretion from time to time contract for
administrative personnel and services whereby the other party shall
agree to provide the Trustees administrative personnel and services to
operate the Trust or a Series or Class on a daily basis, on such terms
and conditions as the Trustees may in their discretion determine. Such
services may be provided by one or more entities.
Section 3. Principal Underwriter.
The Trustees may in their discretion from time to time enter into an
exclusive or nonexclusive contract or contracts providing for the sale
of the Shares of a Series or Class to net such Series or Class not less
than the amount provided in Article III, Section 3 hereof, whereby a
Series or Class may either agree to sell the Shares to the other party
to the contract or appoint such other party its sales agent for such
shares. In either case, the contract shall be on such terms and
conditions (including indemnification of principal underwriters
allowable under applicable law and regulation) as the Trustees may in
their discretion determine not inconsistent with the provisions of this
Article VII; and such contract may also provide for the repurchase or
sale of Shares of a Series or Class by such other party as principal or
as agent of the Trust and may provide that the other party may maintain
a market for shares of a Series or Class.
Section 4. Transfer Agent.
The Trustees may in their discretion from time to time enter into
transfer agency and shareholder services contracts whereby the other
party shall undertake to furnish a transfer agency and shareholder
services. The contracts shall be on such terms and conditions as the
Trustees may in their discretion determine not inconsistent with the
provisions of this Declaration of Trust or of the By-Laws. Such
services may be provided by one or more entities.
ARTICLE VIII
SHAREHOLDERS' VOTING POWERS AND MEETINGS
Section 1. Voting Powers.
Subject to the provisions set forth in Article III, Section 5(d),
the shareholders shall have power to vote, (i) for the election of
Trustees as provided in Article IV, Section 2; (ii) for the removal of
Trustees as provided in Article IV, Section 3(d); (iii) with respect to
any investment adviser or sub-investment adviser as provided in Article
VII, Section 1; (iv) with respect to the amendment of this Declaration
of Trust as provided in Article XII, Section 7; (v) to the same extent
as the shareholders of a Massachusetts business corporation as to
whether or not a court action, proceeding or claim should be brought or
maintained derivatively or as a class action on behalf of the Trust or
the Shareholders; and (vi) with respect to such additional matters
relating to the Trust as may be required by law, by this Declaration of
Trust, or the By-Laws of the Trust or any regulation of the Trust or the
Commission or any State, or as the Trustees may consider desirable.
Each whole Share shall be entitled to one vote as to any matter on which
it is entitled to vote, and each fractional Share shall be entitled to a
proportionate fractional vote. There shall be no cumulative voting in
the election of Trustees. Shares may be voted in person or by proxy.
Until Shares of a Series or Class are issued, the Trustees may exercise
all rights of Shareholders of such Series or Class with respect to
matters affecting such Series or Class, and may take any action with
respect to the Trust or such Series or Class required or permitted by
law, this Declaration of Trust or any By-Laws of the Trust to be taken
by Shareholders.
Section 2. Meetings.
A Shareholders meeting shall be held as specified in Section 2 of
Article IV at the principal office of the Trust or such other place as
the Trustees may designate. Special meetings of the Shareholders may be
called by the Trustees or the Chief Executive Officer of the Trust and
shall be called by the Trustees upon the written request of Shareholders
owning at least one-tenth of the outstanding Shares of all Series and
Classes entitled to vote. Shareholders shall be entitled to at least
fifteen days' notice of any meeting.
Section 3. Quorum and Required Vote.
Except as otherwise provided by law, to constitute a quorum for the
transaction of any business at any meeting of Shareholders there must be
present, in person or by proxy, holders of more than fifty percent of
the total number of outstanding Shares of all Series and Classes
entitled to vote at such meeting. When any one or more Series or
Classes is entitled to vote as a single Series or Class, more than fifty
percent of the shares of each such Series or Class entitled to vote
shall constitute a quorum at a Shareholder's meeting of that Series or
Class. If a quorum shall not be present for the purpose of any vote
that may properly come before the meeting, the Shares present in person
or by proxy and entitled to vote at such meeting on such matter may, by
plurality vote, adjourn the meeting from time to time to such place and
time without further notice than by announcement to be given at the
meeting until a quorum entitled to vote on such matter shall be present,
whereupon any such matter may be voted upon at the meeting as though
held when originally convened. Subject to any applicable requirement of
law or of this Declaration of Trust or the By-Laws, a plurality of the
votes cast shall elect a Trustee, and all other matters shall be decided
by a majority of the votes cast and entitled to vote thereon.
Section 4. Additional Provisions.
The By-Laws may include further provisions for Shareholders' votes
and meetings and related matters.
ARTICLE IX
CUSTODIAN
The Trustees may, in their discretion, from time to time enter into
contracts providing for custodial and accounting services to the Trust or any
Series or Class. The contracts shall be on the terms and conditions as the
Trustees may in their discretion determine not inconsistent with the
provisions of this Declaration of Trust or of the By-Laws. Such services may
be provided by one or more entities, including one or more sub-custodians.
ARTICLE X
DISTRIBUTIONS AND REDEMPTIONS
Section 1. Distributions.
(a) The Trustees may from time to time declare and pay
dividends to the Shareholders of any Series or Class, and the amount
of such dividends and the payment of them shall be wholly in the
discretion of the Trustees. Such dividends may be accrued and
automatically reinvested in additional Shares (or fractions thereof)
of the relevant Series or Class or paid in cash or additional Shares
of such Series or Class, all upon such terms and conditions as the
Trustees may prescribe.
(b) The Trustees may distribute in respect of any fiscal year
as dividends and as capital gains distributions, respectively,
amounts sufficient to enable any Series or Class to qualify as a
regulated investment company to avoid any liability for federal
income taxes in respect of that year.
c) The decision of the Trustees as to what constitutes income
and what constitutes principal shall be final, and except as
specifically provided herein the decision of the Trustees as to what
expenses and charges of any Series or Class shall be charged against
principal and what against the income shall be final. Any income
not distributed in any year may be permitted to accumulate and as
long as not distributed may be invested from time to time in the
same manner as the principal funds of any Series or Class.
(d) All dividends and distributions on Shares of a particular
Series or Class shall be distributed pro rata to the holders of that
Series or Class in proportion to the number of Shares of that Series
or Class held by such holders and recorded on the books of the Trust
or its transfer agent at the date and time of record established for
that payment.
Section 2. Redemptions and Repurchases.
(a) In case any Shareholder of record of any Series or Class
at any time desires to dispose of Shares of such Series or Class
recorded in his name, he may deposit a written request (or such
other form of request as the Trustees may from time to time
authorize) requesting that the Trust purchase his Shares, together
with such other instruments or authorizations to effect the transfer
as the Trustees may from time to time require, at the office of the
Transfer Agent, and the Trust shall purchase his Shares out of
assets belonging to such Series or Class. The purchase price shall
be the net asset value of his shares reduced by any redemption
charge as the Trustees from time to time may determine.
Payment for such Shares shall be made by the Trust to the
Shareholder of record within that time period required under the
1940 Act after the request (and, if required, such other instruments
or authorizations of transfer) is deposited, subject to the right of
the Trustees to postpone the date of payment pursuant to Section 4
of this Article X. If the redemption is postponed beyond the date
on which it would normally occur by reason of a declaration by the
Trustees suspending the right of redemption pursuant to Section 4 of
this Article X, the right of the Shareholder to have his Shares
purchased by the Trust shall be similarly suspended, and he may
withdraw his request (or such other instruments or authorizations of
transfer) from deposit if he so elects; or, if he does not so elect,
the purchase price shall be the net asset value of his Shares
determined next after termination of such suspension (reduced by any
redemption charge), and payment therefor shall be made within the
time period required under the 1940 Act.
(b) The Trust may purchase Shares of a Series or Class by
agreement with the owner thereof at a purchase price not exceeding
the net asset value per Share (reduced by any redemption charge)
determined (1) next after the purchase or contract of purchase is
made or (2) at some later time.
(c) The Trust may pay the purchase price (reduced by any
redemption charge) in whole or in part by a distribution in kind of
securities from the portfolio of the relevant Series or Class,
taking such securities at the same value employed in determining net
asset value, and selecting the securities in such manner as the
Trustees may deem fair and equitable.
Section 3. Net Asset Value of Shares.
The net asset value of each Share of a Series or Class outstanding
shall be determined at such time or times as may be determined by or on
behalf of the Trustees. The power and duty to determine net asset value
may be delegated by the Trustees from time to time to one or more of the
Trustees or Officers of the Trust, to the other party to any contract
entered into pursuant to Section 1 or 2 of Article VII or to the
custodian or to a transfer agent or other person designated by the
Trustees.
The net asset value of each Share of a Series or Class as of any
particular time shall be the quotient (adjusted to the nearer cent)
obtained by dividing the value, as of such time, of the net assets
belonging to such Series or Class (i.e., the value of the assets
belonging to such Series or Class less the liabilities belonging to such
Series or Class exclusive of capital and surplus) by the total number of
Shares outstanding of the Series or Class at such time in accordance
with the requirements of the 1940 Act and applicable provisions of the
By-Laws of the Trust in conformity with generally accepted accounting
practices and principles.
The Trustees may declare a suspension of the determination of net
asset value for the whole or any part of any period in accordance with
the 1940 Act.
Section 4. Suspension of the Right of Redemption.
The Trustees may declare a suspension of the right of redemption or
postpone the date of payment for the whole or any part of any period in
accordance with the 1940 Act.
Section 5. Trust's Right to Redeem Shares.
The Trust shall have the right to cause the redemption of Shares of
any Series or Class in any Shareholder's account for their then current
net asset value and promptly make payment to the shareholder (which
payment may be reduced by any applicable redemption charge), if at any
time the total investment in the account does not have a minimum dollar
value determined from time to time by the Trustees in their sole
discretion.
ARTICLE XI
LIMITATION OF LIABILITY AND INDEMNIFICATION
Section 1. Limitation of Personal Liability and Indemnification of
Shareholders.
The Trustees, officers, employees or agents of the Trust shall have
no power to bind any Shareholder of any Series or Class personally or to
call upon such Shareholder for the payment of any sum of money or
assessment whatsoever, other than such as the Shareholder may at any
time agree to pay by way of subscription to any Shares or otherwise.
No Shareholder or former Shareholder of any Series or Class shall be
liable solely by reason of his being or having been a Shareholder for
any debt, claim, action, demand, suit, proceeding, judgment, decree,
liability or obligation of any kind, against, or with respect to the
Trust or any Series or Class arising out of any action taken or omitted
for or on behalf of the Trust or such Series or Class, and the Trust or
such Series or Class shall be solely liable therefor and resort shall be
had solely to the property of the relevant Series or Class of the Trust
for the payment or performance thereof.
Each Shareholder or former Shareholder of any Series or Class (or
their heirs, executors, administrators or other legal representatives
or, in case of a corporate entity, its corporate or general successor)
shall be entitled to be indemnified and reimbursed by the Trust to the
full extent of such liability and the costs of any litigation or other
proceedings in which such liability shall have been determined,
including, without limitation, the fees and disbursements of counsel if,
contrary to the provisions hereof, such Shareholder or former
Shareholder of such Series or Class shall be held to be personally
liable. Such indemnification and reimbursement shall come exclusively
from the assets of the relevant Series or Class.
The Trust shall, upon request by a Shareholder or former
Shareholder, assume the defense of any claim made against any
Shareholder for any act or obligation of the Trust or any Series or
Class and satisfy any judgment thereon.
Section 2. Limitation of Personal Liability of Trustees, Officers,
Employees or Agents of the Trust.
No Trustee, officer, employee or agent of the Trust shall have the
power to bind any other Trustee, officer, employee or agent of the Trust
personally. The Trustees, officers, employees or agents of the Trust
incurring any debts, liabilities or obligations, or in taking or
omitting any other actions for or in connection with the Trust are, and
each shall be deemed to be, acting as Trustee, officer, employee or
agent of the Trust and not in his own individual capacity.
Trustees and officers of the Trust shall be liable for their willful
misfeasance, bad faith, gross negligence or reckless disregard of the
duties involved in the conduct of the office of Trustee or officer, as
the case may be, and for nothing else.
Section 3. Express Exculpatory Clauses and Instruments.
The Trustees shall use every reasonable means to assure that all
persons having dealings with the Trust or any Series or Class shall be
informed that the property of the Shareholders and the Trustees,
officers, employees and agents of the Trust or any Series or Class shall
not be subject to claims against or obligations of the Trust or any
other Series or Class to any extent whatsoever. The Trustees shall
cause to be inserted in any written agreement, undertaking or obligation
made or issued on behalf of the Trust or any Series or Class (including
certificates for Shares of any Series or Class) an appropriate reference
to the provisions of this Declaration, providing that neither the
Shareholders, the Trustees, the officers, the employees nor any agent of
the Trust or any Series or Class shall be liable thereunder, and that
the other parties to such instrument shall look solely to the assets
belonging to the relevant Series or Class for the payment of any claim
thereunder or for the performance thereof; but the omission of such
provisions from any such instrument shall not render any Shareholder,
Trustee, officer, employee or agent liable, nor shall the Trustee, or
any officer, agent or employee of the Trust or any Series or Class be
liable to anyone for such omission. If, notwithstanding this provision,
any Shareholder, Trustee, officer, employee or agent shall be held
liable to any other person by reason of the omission of such provision
from any such agreement, undertaking or obligation, the Shareholder,
Trustee, officer, employee or agent shall be indemnified and reimbursed
by the Trust.
ARTICLE XII
MISCELLANEOUS
Section 1. Trust is not a Partnership.
It is hereby expressly declared that a trust and not a partnership
is created hereby.
Section 2. Trustee Action Binding, Expert Advice, No Bond or Surety.
The exercise by the Trustees of their powers and discretions
hereunder shall be binding upon everyone interested. Subject to the
provisions of Article XI, the Trustees shall not be liable for errors of
judgment or mistakes of fact or law. The Trustees may take advice of
counsel or other experts with respect to the meaning and operation of
this Declaration of Trust, and subject to the provisions of Article XI,
shall be under no liability for any act or omission in accordance with
such advice or for failing to follow such advice. The Trustees shall
not be required to give any bond as such, nor any surety if a bond is
required.
Section 3. Establishment of Record Dates.
The Trustees may close the Share transfer books of the Trust
maintained with respect to any Series or Class for a period not
exceeding sixty (60) days preceding the date of any meeting of
Shareholders of the Trust or any Series or Class, or the date for the
payment of any dividend or the making of any distribution to
Shareholders, or the date for the allotment of rights, or the date when
any change or conversion or exchange of Shares of any Series or Class
shall go into effect; or in lieu of closing the Share transfer books as
aforesaid, the Trustees may fix in advance a date, not exceeding sixty
(60) days preceding the date of any meeting of Shareholders of the Trust
or any Series or Class, or the date for the payment of any dividend or
the making of any distribution to Shareholders of any Series or Class,
or the date for the allotment of rights, or the date when any change or
conversion or exchange of Shares of any Series or Class shall go into
effect, or the last day on which the consent or dissent of Shareholders
of any Series or Class may be effectively expressed for any purpose, as
a record date for the determination of the Shareholders entitled to
notice of, and, to vote at, any such meeting and any adjournment
thereof, or entitled to receive payment of any such dividend or
distribution, or to any such allotment of rights, or to exercise the
rights in respect of any such change, conversion or exchange of shares,
or to exercise the right to give such consent or dissent, and in such
case such Shareholders and only such Shareholders as shall be
Shareholders of record on the date so fixed shall be entitled to such
notice of, and to vote at, such meeting, or to receive payment of such
dividend or distribution, or to receive such allotment or rights, or to
exercise such rights, as the case may be, notwithstanding, after such
date fixed aforesaid, any transfer of any Shares on the books of the
Trust maintained with respect to any Series or Class. Nothing in the
foregoing sentence shall be construed as precluding the Trustees from
setting different record dates for different Series or Classes.
Section 4. Termination of Trust.
(a) This Trust shall continue without limitation of time but
subject to the provisions of paragraphs (b), (c) and (d) of this
Section 4.
(b) The Trustees may, by majority action, with the approval of
a majority shareholder vote of the outstanding Shares of each Series
or Class entitled to vote and voting separately by Series or Class,
sell and convey the assets of the Trust or any Series or Class to
another trust, corporation, partnership or association. Upon making
provision for the payment of all liabilities, by assumption or
otherwise, the Trustees shall distribute the remaining proceeds
belonging to each Series or Class ratably among the holders of the
Shares of that Series or Class then outstanding.
(c) Subject to a Majority Shareholder Vote by such Series or
Class, the Trustees may at any time sell and convert into money all
the assets of the Trust or any Series or Class. Upon making
provision for the payment of all outstanding obligations, taxes and
other liabilities, accrued or contingent, belonging to each Series
or Class, the Trustees shall distribute the remaining assets
belonging to each Series or Class ratably among the holders of the
outstanding Shares of that Series or Class.
(d) Upon completion of the distribution of the remaining
proceeds of the remaining assets as provided in paragraphs (b) and
(c), the Trust or the applicable Series or Class shall terminate and
the Trustees shall be discharged of any and all further liabilities
and duties hereunder or with respect thereto and the right, title
and interest of all parties shall be canceled and discharged.
Section 5. Offices of the Trust, Filing of Copies, Headings,
Counterparts.
The Trust shall maintain a usual place of business in Massachusetts,
which, initially, shall be c/o Donnelly, Conroy & Gelhaar, 176 Federal
Street, Boston, Massachusetts 02110, and shall continue to maintain an
office at such address unless changed by the Trustees to another
location in Massachusetts. The Trust may maintain other offices as the
Trustees may from time to time determine. The original or a copy of
this instrument and of each declaration of trust supplemental hereto
shall be kept at the office of the Trust where it may be inspected by
any Shareholder. A copy of this instrument and of each supplemental
declaration of trust shall be filed by the Trustees with the
Massachusetts Secretary of State and the Boston City Clerk, as well as
any other governmental office where such filing may from time to time be
required. Headings are placed herein for convenience of reference only
and in case of any conflict, the text of this instrument, rather than
the headings shall control. This instrument may be executed in any
number of counterparts each of which shall be deemed an original.
Section 6. Applicable Law.
The Trust set forth in this instrument is created under and is to be
governed by and construed and administered according to the laws of The
Commonwealth of Massachusetts. The Trust shall be of the type commonly
called a Massachusetts business trust, and without limiting the
provisions hereof, the Trust may exercise all powers which are
ordinarily exercised by such a trust.
Section 7. Amendments -- General.
All rights granted to the Shareholders under this Declaration of
Trust are granted subject to the reservation of the right to amend this
Declaration of Trust as herein provided, except that no amendment shall
repeal the limitations on personal liability of any Shareholder or
Trustee or repeal the prohibition of assessment upon the Shareholders
without the express consent of each Shareholder or Trustee involved.
Subject to the foregoing, the provisions of this Declaration of Trust
(whether or not related to the rights of Shareholders) may be amended at
any time, so long as such amendment does not adversely affect the rights
of any Shareholder with respect to which such amendment is or purports
to be applicable and so long as such amendment is not in contravention
of applicable law, including the 1940 Act, by an instrument in writing
signed by a majority of the then Trustees (or by an officer of the Trust
pursuant to the vote of a majority of such Trustees). Any amendment to
this Declaration of Trust that adversely affects the rights of
Shareholders may be adopted at any time by an instrument signed in
writing by a majority of the then Trustees (or by any officer of the
Trust pursuant to the vote of a majority of such Trustees) when
authorized to do so by the vote of the Shareholders holding a majority
of the Shares entitled to vote. Subject to the foregoing, any such
amendment shall be effective as provided in the instrument containing
the terms of such amendment or, if there is no provision therein with
respect to effectiveness, upon the execution of such instrument and of a
certificate (which may be a part of such instrument) executed by a
Trustee or officer to the effect that such amendment has been duly
adopted. Copies of the amendment to this Declaration of Trust shall be
filed as specified in Section 5 of this Article XII. A restated
Declaration of Trust, integrating into a single instrument all of the
provisions of the Declaration of Trust which are then in effect and
operative, may be executed from time to time by a majority of the
Trustees and shall be effective upon filing as specified in Section 5.
Section 8. Amendments -- Series.
The establishment and designation of any series or class of Shares
in addition to those established and designated in Section 5 of
Article III hereof shall be effective upon the execution by a
majority of the then Trustees of an amendment to this Declaration of
Trust, taking the form of a complete restatement or otherwise,
setting forth such establishment and designation and the relative
rights and preferences of any such Series or Class, or as otherwise
provided in such instrument.
Without limiting the generality of the foregoing, the Declaration of
the Trust may be amended to:
(a) create one or more Series or Classes of Shares (in
addition to any Series or Classes already existing or otherwise)
with such rights and preferences and such eligibility requirements
for investment therein as the Trustees shall determine and
reclassify any or all outstanding Shares as Shares of particular
Series or Classes in accordance with such eligibility requirements;
(b) combine two or more Series or Classes of Shares into a
single Series or Class on such terms and conditions as the Trustees
shall determine;
(c) change or eliminate any eligibility requirements for
investment in Shares of any Series or Class, including without
limitation the power to provide for the issue of Shares of any
Series or Class in connection with any merger or consolidation of
the Trust with another trust or company or any acquisition by the
Trust of part or all of the assets of another trust or company;
(d) change the designation of any Series or Class of Shares;
(e) change the method of allocating dividends among the
various Series and Classes of Shares;
(f) allocate any specific assets or liabilities of the Trust
or any specific items of income or expense of the Trust to one or
more Series and Classes of Shares;
(g) specifically allocate assets to any or all Series or
Classes of Shares or create one or more additional Series or Classes
of Shares which are preferred over all other Series or Classes of
Shares in respect of assets specifically allocated thereto or any
dividends paid by the Trust with respect to any net income, however
determined, earned from the investment and reinvestment of any
assets so allocated or otherwise and provide for any special voting
or other rights with respect to such Series or Classes.
Section 9. Use of Name.
The Trust acknowledges that Wachovia Bank of North Carolina, N.A.
has reserved the right to grant the non-exclusive use of the name "The
Biltmore Funds" or any derivative thereof to any other investment
company, investment company portfolio, investment adviser, distributor,
or other business enterprise, and to withdraw from the Trust or one or
more Series or Classes any right to the use of the name "The Biltmore
Funds".
IN WITNESS WHEREOF, the undersigned have executed this instrument the day
and year first above written.
/s/ James A. Hanley /s/ J. Berkley Ingram
James A. Hanley J. Berkley Ingram
/s/ Malcolm T. Hopkins /s/ Samuel E. Hudgins
Malcolm T. Hopkins Samuel E. Hudgins
/s/ D. Dean Kaylor
D. Dean Kaylor
COMMONWEALTH OF PENNSYLVANIA )
: ss:
COUNTY OF ALLEGHENY )
I hereby certify that on February 24, 1992, before me, the subscriber, a
Notary Public of the Commonwealth of Pennsylvania, in for the County of
Allegheny, personally appeared JAMES A. HANLEY, MALCOLM T. HOPKINS, SAMUEL E.
HUDGINS, J. BERKLEY INGRAM, and D. DEAN KAYLOR who acknowledged the foregoing
Amended and Restated Declaration of Trust to be their act.
Witness my hand and notarial seal the day and year above written.
/s/ Elaine T. Polens
Notary Public
BILTMORE FUNDS
Amendment No. 1
to
DECLARATION OF TRUST
dated February 24, 1992
THIS Declaration of Trust is amended as follows:
A. Strike Section 5 of Article III from the Declaration of Trust and
substitute in its place the following:
"Section 5. Establishment and Designation of Series or Class.
Without limiting the authority of the Trustees set forth in Article
XII, Section 8, inter alia, to establish and designate any additional
Series or Class, or to modify the rights and preferences of any
existing Series or Class, the initial Series shall be, and are
established and designated as: Biltmore U.S. Government Money Market
Fund, Biltmore U.S. Treasury Money Market Fund, Biltmore Tax-Free
Money Market Fund, Biltmore Money Market Fund, and Biltmore Prime
Cash Management Fund."
The undersigned Secretary of the Biltmore Funds hereby certifies that the
above-stated amendment is a true and correct Amendment to the Declaration of
Trust, as adopted by the Board of Trustees on May 5, 1992.
WITNESS the due execution hereof this 26th day of May, 1992.
/s/ Peter J. Germain
Peter J. Germain, Secretary
THE BILTMORE FUNDS
Amendment No. 3
to the
AMENDED AND RESTATED DECLARATION OF TRUST
dated February 24, 1992
THIS Declaration of Trust is amended as follows:
A. Strike Section 5 of Article III from the Declaration of Trust and
substitute in its place the following:
"Section 5. Establishment and Designation of Series or Class.
Without limiting the authority of the Trustees set forth in Article
XII, Section 8, inter alia, to establish and designate any additional
Series or Class, or to modify the rights and preferences of any
existing Series or Class, Biltmore U.S. Government Money Market Fund
Institutional Shares, Investment Shares; Biltmore U.S. Treasury Money
Market Fund Institutional Shares, Investment Shares; Biltmore Tax-
Free Money Market Fund Institutional Shares, Investment Shares;
Biltmore Money Market Fund Institutional Shares, Investment Shares;
and Biltmore Prime Cash Management Fund Institutional Shares shall
be, and are established and designated as, Series and Classes of the
Trust."
The undersigned Secretary of the Biltmore Funds hereby certifies that the
above-stated amendment is a true and correct Amendment to the Declaration of
Trust, as adopted by the Board of Trustees on November 5, 1992.
WITNESS the due execution hereof this 5th day of November, 1992.
/s/ Peter J. Germain
Peter J. Germain
Secretary
THE BILTMORE FUNDS
Amendment No. 4
to the
AMENDED AND RESTATED DECLARATION OF TRUST
dated February 24, 1992
THIS Declaration of Trust is amended as follows:
A. Strike Section 5 of Article III from the Declaration of Trust and
substitute in its place the following:
"Section 5. Establishment and Designation of Series or Class.
Without limiting the authority of the Trustees set forth in Article
XII, Section 8, inter alia, to establish and designate any additional
Series or Class, or to modify the rights and preferences of any
existing Series or Class, Biltmore U.S. Treasury Money Market Fund
Institutional Shares, Investment Shares; Biltmore Tax-Free Money
Market Fund Institutional Shares, Investment Shares; Biltmore Money
Market Fund Institutional Shares, Investment Shares; Biltmore Prime
Cash Management Fund Institutional Shares; Biltmore Balanced Fund;
Biltmore Equity Fund; Biltmore Equity Index Fund; Biltmore Fixed
Income Fund; Biltmore Special Values Fund; and Biltmore Short-Term
Fixed Income Fund shall be, and are established and designated as,
Series and Classes of the Trust."
The undersigned Secretary of The Biltmore Funds hereby certifies that the
above-stated amendment is a true and correct Amendment to the Declaration of
Trust, as adopted by the Board of Trustees on March 3, 1993.
WITNESS the due execution hereof this 25th day of March, 1993.
/s/ Peter J. Germain
Peter J. Germain
Secretary
THE BILTMORE FUNDS
Amendment No. 5
to the
AMENDED AND RESTATED DECLARATION OF TRUST
dated February 24, 1992
THIS Declaration of Trust is amended as follows:
A. Strike Section 5 of Article III from the Declaration of Trust
and substitute in its place the following:
"Section 5. Establishment and Designation of Series or Class.
Without limiting the authority of the Trustees set forth in
Article XII, Section 8, inter alia, to establish and designate any
additional Series or Class, or to modify the rights and
preferences of any existing Series or Class, Biltmore U.S.
Treasury Money Market Fund Institutional Shares,
Investment Shares; Biltmore Tax-Free Money Market Fund
Institutional Shares, Investment Shares; Biltmore Money
Market Fund Institutional Shares, Investment Shares;
Biltmore Prime Cash Management Fund Institutional Shares;
Biltmore Balanced Fund; Biltmore Equity Fund; Biltmore
Equity Index Fund; Biltmore Fixed Income Fund; Biltmore
Special Values Fund; Biltmore Short-Term Fixed Income
Fund; and Biltmore Quantitative Equity Fund shall be, and are
established and designated as, Series and Classes of the Trust."
The undersigned Assistant Secretary of The Biltmore Funds hereby
certifies that the above-stated amendment is a true and correct Amendment to
the Declaration of Trust, as adopted by the Board of Trustees on December 9,
1993.
WITNESS the due execution hereof this 13th day of December, 1993.
/s/ Mark A. Sheehan
Mark A. Sheehan
Assistant Secretary
THE BILTMORE FUNDS
Amendment No. 6
to the
AMENDED AND RESTATED DECLARATION OF TRUST
dated February 24, 1992
THIS Declaration of Trust is amended as follows:
A. Strike the first paragraph of Section 5 of Article III from the
Declaration of Trust and substitute in its place the following:
"Section 5. Establishment and Designation of Series or Class.
Without limiting the authority of the Trustees set forth in
Article XII, Section 8, inter alia, to establish and designate any
additional Series or Class, or to modify the rights and
preferences of any existing Series or Class the Series and Classes
of the Trust are established and designated as:
Biltmore Balanced Fund
Biltmore Emerging Markets Fund
Biltmore Equity Fund
Biltmore Equity Index Fund
Biltmore Fixed Income Fund
Biltmore Money Market Fund
Institutional Shares
Investment Shares
Biltmore Prime Cash Management Fund
Institutional Shares
Biltmore Quantitative Equity Fund
Biltmore Short-Term Fixed Income Fund
Biltmore Special Values Fund
Biltmore Tax-Free Money Market Fund
Institutional Shares
Investment Shares
Biltmore U.S. Treasury Money Market Fund
Institutional Shares
Investment Shares"
The undersigned Assistant Secretary of The Biltmore Funds hereby
certifies that the above-stated amendment is a true and correct Amendment to
the Declaration of Trust, as adopted by the Board of Trustees on the 23rd day
of September, 1994.
WITNESS the due execution hereof this 23rd day of September, 1994.
/s/ Mark A. Sheehan
Mark A. Sheehan
Assistant Secretary
Form N-1A Exhibit No. 5
Regulation S-K Exhibit No. 10
INVESTMENT ADVISORY CONTRACT
This Investment Advisory Contract is made as of this 9th day of March,
1992, between The Biltmore Funds, a Massachusetts business trust (the
"Trust"), and WACHOVIA BANK OF NORTH CAROLINA, N.A. (the "Adviser").
WHEREAS, the Trust is a Massachusetts business trust, consisting of one
or more series ("Portfolios"), which operates as an open-end management
investment company and will so register under the Investment Company Act of
1940, as amended ("1940 Act"); and
WHEREAS, the Adviser is engaged in the business of rendering investment
advisory and management services;
WHEREAS, the Trust desires to retain the Adviser as investment adviser
to those of its Portfolios which are identified in an exhibit hereto, and the
Adviser is willing to render such services;
NOW, THEREFORE, in consideration of the premises and mutual covenants
set forth herein, the parties hereto agree as follows:
1. Appointment of Adviser; Services and Duties.
(a) The Trust hereby appoints the Adviser as investment adviser for
each of the Portfolios of the Trust which executes an exhibit to this
Contract, and the Adviser accepts the appointments. Subject to the direction
of the Trustees of the Trust, the Adviser shall provide investment research
and supervision of the investments of such Portfolios and conduct a
continuous program of investment evaluation and of appropriate investment,
sale or other disposition and reinvestment of the Portfolios' assets.
(b) The Adviser shall direct the investments of each such Portfolio
subject to and in accordance with the Portfolio's investment objective,
policies, limitations and other provisions contained in the Portfolio's
prospectus and statement of additional information, as amended from time to
time, the Trust's Declaration of Trust and By-Laws, and any other directions
and policies which the Trustees of the Trust may issue to the Adviser from
time to time.
(c) The Adviser shall provide to Federated Administrative Services
("FAS"), or arrange for the provision of, such information as FAS reasonably
requests that is necessary to enable FAS to monitor the sale of Trust shares
and ensure Trust shares are properly and duly registered with applicable
state securities authorities.
2. Execution and Allocation of Brokerage.
(a) The Adviser, subject to the control and direction of the
Trustees, shall have authority and discretion to select brokers and dealers
to execute portfolio transaction for each Portfolio, and to select the
markets on or in which the transactions will be executed. In acting pursuant
to this paragraph 2, the Adviser will place orders through such brokers or
dealers in conformity with the policies with respect to portfolio
transactions set forth in the applicable Portfolio's prospectus and statement
of additional information. It is understood that neither the Trust nor the
Adviser will adopt a formula for allocation of each Portfolio's brokerage.
It is understood that the Adviser may, to the extent permitted by applicable
laws and regulations, aggregate securities to be sold or purchased for a
Portfolio and for other clients in order to obtain the most favorable price
and efficient execution. In that event, allocation of the securities
purchased or sold, as well as expenses incurred in the transaction, will be
made by the Adviser in the manner it considers to be the most equitable and
consistent with its fiduciary obligations to the Trust and to its other
clients. The Adviser shall provide such reports as the Trustees may
reasonably request with respect to each Portfolio's total brokerage and
portfolio transaction activities and the manner in which that business was
allocated.
(b) The Adviser agrees that in placing orders with brokers and
dealers, it will attempt to obtain the best net results in terms of price and
execution; provided that, on behalf of any Portfolio, the Adviser may, in its
discretion, purchase and sell portfolio securities to and from brokers and
dealers who provide research, analysis, advice and similar services, and the
Adviser may pay to those brokers and dealers, in return for research and
analysis, a higher commission or spread than may be charged by other brokers
and dealers, subject to the Adviser determining in good faith that such
commission or spread is reasonable in terms either of the particular
transaction or of the overall responsibility of the Adviser to such Portfolio
and its other clients and that the total commissions or spreads paid by such
Portfolio will be reasonable in relation to the benefits to the Portfolio
over the long term. In no instance will portfolio securities be purchased
from or sold to the Adviser, or any affiliated person thereof, except in
accordance with the federal securities laws and the rules, regulations and
orders thereunder.
(c) The Trust hereby authorizes the Adviser and any entity or person
associated with the Adviser which is a member of a national securities
exchange to effect any transaction on such exchange for the account of any
Portfolio, which transaction is permitted by Section 11(a) of the Securities
Exchange Act of 1934 and Rule 11a2-2(T) thereunder, and the Trust hereby
consents to the retention of compensation by the Adviser or any person or
entity associated with the Adviser for such transactions in accordance with
Rule 11a2-2(T)(a)(2)(iv).
3. Records. The Adviser shall create and maintain all necessary books
and records in accordance with all applicable laws, rules and regulations,
including but not limited to records required by Section 31(a) of the 1940
Act and the rules thereunder, as the same may be amended from time to time,
pertaining to the investment advisory services performed by it and not
otherwise created and maintained by another party pursuant to contract with
the Trust. Where applicable, such records shall be maintained by the Adviser
for the periods and in the places required by Rule 31a-2 under the 1940 Act.
The books and records pertaining to the Trust which are in the possession of
the Adviser shall be the property of the Trust. The Trust, or the Trust's
authorized representatives, shall have access to such books and records at
all times during the Adviser's normal business hours. Upon the reasonable
request of the Trust, copies of any such books and records shall be provided
promptly by the Adviser to the Trust or the Trust's authorized
representatives.
4. Activities and Affiliates of the Adviser.
(a) The services furnished by the Adviser hereunder to the Trust are
not to be deemed exclusive, the Adviser being free to render services to
others and engage in other activities, provided, however, that such other
services and activities do not, during the term of this Agreement, interfere,
in a material manner, with the Adviser's ability to meet all of its
obligations with respect to rendering services to the Trust hereunder.
(b) The Trust acknowledges that the Adviser or one or more of its
affiliated persons may have investment responsibilities or render investment
advice to or perform other investment advisory services for other individuals
or entities and that the Adviser, its affiliated persons or any of its or
their directors, officers, agents or employees may buy, sell or trade in
securities for its or their respective accounts ("Affiliated Accounts").
Subject to the provisions of paragraph 2, the Trust agrees that the Adviser
or its affiliated persons may give advice or exercise investment
responsibility and take such other action with respect to Affiliated Accounts
which may differ from the advice given or the timing or nature of action with
respect to a Portfolio of the Trust, provided that the Adviser acts in good
faith. The Trust acknowledges that one or more of the Affiliated Accounts
may at any time hold, acquire, increase, decrease, dispose of or otherwise
deal with positions in investments in which a Portfolio may have an interest.
The Adviser shall have no obligation to recommend for a Portfolio a position
in any investment which an Affiliated Account may acquire, and the Trust
shall have no first refusal, co-investment or other rights in respect of any
such investment, either for its Portfolios or otherwise.
(c) Subject to and in accordance with the Trust's Declaration of
Trust and By-Laws, as currently in effect and as amended from time to time,
the 1940 Act and the rules thereunder, and the Banking Act of 1933, it is
understood that Trustees, officers, agents and shareholders of the Trust are
or may be interested in the Adviser or its affiliated persons as directors,
officers, agents or shareholders of the Adviser or its affiliated persons;
that directors, officers, agents and shareholders of the Adviser or its
affiliated persons are or may be interested in the Trust as trustees,
officers, agents, shareholders or otherwise; that the Adviser or its
affiliated persons may be interested in the Trust as shareholders or
otherwise; and that the effect of any such interests shall be governed by
said Declaration of Trust, By-Laws and the 1940 Act and the rules thereunder.
5. Expenses. The Adviser shall be responsible for expenses incurred in
providing office space, equipment and personnel as may be necessary or
convenient to provide investment advisory services to the Trust. Each
Portfolio shall pay or cause to be paid all of its own expenses and its
allocable share of Trust expenses, including, without limitation, the
expenses of organizing the Trust and continuing its existence; fees and
expenses of Trustees and officers of the Trust; fees for administrative
services; fees and expenses of preparing and printing its Registration
Statements under the Securities Act of 1933 and the 1940 Act and any
amendments thereto; expenses of registering and qualifying the Trust, the
Portfolios, and shares ("Shares") of the Portfolios under federal and state
laws and regulations; expenses of preparing, printing, and distributing
prospectuses (and any amendments thereto) to existing shareholders; interest
expense, taxes, fees, and commissions of every kind; expenses of issue
(including cost of Share certificates), purchase, repurchase, and redemption
of Shares, including expenses attributable to a program of periodic issue;
charges and expenses of custodians, transfer agents, dividend disbursing
agents, shareholder servicing agents, and registrars; printing and mailing
costs, auditing, accounting, and legal expenses; reports to shareholders and
governmental officers and commissions; expenses of meetings of Trustees and
shareholders and proxy solicitations therefor; insurance expenses;
association membership dues and such nonrecurring items as may arise,
including all losses and liabilities incurred in administering the Trust and
the Portfolios. Each Portfolio will also pay its allocable share of such
extraordinary expenses as may arise including expenses incurred in connection
with litigation, proceedings, and claims and the legal obligations of the
Trust to indemnify its officers and Trustees and agents with respect thereto.
6. Compensation.
(a) The Trust shall pay to the Adviser, for all services rendered to
each Portfolio by the Adviser hereunder, the fees set forth in the exhibits
attached hereto. If applicable, for purposes of calculating such fees, the
value of each Portfolio's net assets shall be determined pursuant to the
applicable provisions of the Portfolio's prospectus and statement of
additional information, the Trust's Declaration of trust and By-laws and the
1940 Act.
(b) The Adviser agrees to reimburse the Trust or to waive all or part
of its advisory fee, with the same frequency with which the advisory fee is
paid to the Adviser, to the extent the annual operating expenses of any
Portfolio or class thereof exceeds the highest applicable expense limitation
established pursuant to the statutes or regulations of any jurisdiction in
which the Shares of the Portfolios are qualified or registered for offer and
sale.
(c) The Adviser may from time to time and for such periods as it
deems appropriate reduce its compensation from a Portfolio (and, if
appropriate, assume expenses of one or more of the Portfolios or classes
thereof) to the extent the expenses of any Portfolio or a class thereof
exceed such lower expense limitation as the Adviser may, by notice to the
Portfolio, voluntarily declare to be effective.
(d) To the extent the Adviser has reimbursed the Trust or waived all
or part of its advisory fee, the Trust agrees to reimburse the Adviser if so
requested by the Adviser, provided that such reimbursement does not cause the
annual operating expenses of any Portfolio or class thereof to exceed the
highest applicable expense limitation established pursuant to the statutes or
regulations of any jurisdiction in which the Shares of the Portfolios are
qualified or registered for offer and sale.
7. Effective Date; Term. This Contract shall begin for each Portfolio
as of the date of execution of the applicable exhibit and shall continue in
effect with respect to each Portfolio initially set forth on an exhibit (and
any subsequent Portfolios added pursuant to an exhibit during the initial
term of this contract) for two years from the date of this contract set forth
above, provided that this Contract has first been approved by a vote of a
majority of (a) those Trustees who are not parties to this Contract or
interested persons of any such party, cast in person at a meeting called for
the purpose of voting on such approval and (b) the Portfolio's outstanding
voting securities. Thereafter, this Contract shall continue for successive
periods of one year, subject to the provisions for termination and all of the
other terms and conditions hereof, but only so long as such continuance is
specifically approved at least annually (a) by the vote of a majority of the
Trustees who are not parties to this Contract or interested persons of any
such party, cast in person at a meeting called for the purpose of voting on
such approval and (b) by the Board of Trustees or with respect to any given
Series by vote of a majority of the outstanding voting securities. If a
Portfolio is added after the first approval by the Trustees as described
above, this Contract will be effective as to that Portfolio upon execution of
the applicable exhibit and will continue in effect until the next annual
approval of this Contract by the Trustees and thereafter for successive
periods of one year, subject to approval as described above.
8. Termination. Notwithstanding any provision in this Contract, it may
be terminated at any time with respect to any Portfolio, without the payment
of any penalty, by the Trustees of the Trust or by a vote of the majority of
the outstanding voting securities of that Portfolio on sixty (60) days'
written notice to the Adviser, or by the Adviser on sixty (60) days' written
notice to the Trust. Termination of this Contract with respect to any given
Portfolio shall in no way affect the continued validity of this Contract or
the performance thereunder with respect to any other Portfolio. This
Contract will terminate automatically in the event of its assignment.
9. Assignment. This Contract may not be assigned by the Adviser and
shall automatically terminate in the event of any assignment. The Adviser
shall notify the Trust in writing in advance of any proposed change of
control of the Adviser to enable the Trust to take the steps necessary to
enter into a new advisory contract.
10. Liabilities of the Adviser.
(a) Except as provided below, in the absence of willful misfeasance,
bad faith, gross negligence, or reckless disregard of the obligations or
duties under this Contract on the part of the Adviser, the Adviser shall not
be liable to the Trust or to any of the Portfolios or to any shareholder for
any act or omission in the course of or connected in any way with rendering
services or for any losses that may be sustained in the purchase, holding, or
sale of any security or the making of any investment for or on behalf of the
Trust.
(b) No provision of this Contract shall be construed to protect any
Trustee or officer of the Trust, or the Adviser, from liability in violation
of Sections 17(h), 17(i) or 36(b) of the 1940 Act.
11. Amendment. This Contract may be amended at any time by agreement of
the parties provided that the amendment shall be approved both by the vote of
a majority of the Trustees of the Trust, including a majority of the Trustees
who are not parties to this Contract or interested persons of any such party
to this Contract (other than as Trustees of the Trust) cast in person at a
meeting called for that purpose, and, where required by the 1940 Act, on
behalf of a Portfolio by a majority of the outstanding voting securities of
such Portfolio.
12. Limitation of Liability. The Adviser is expressly put on notice of
the limitation of liability as set forth in the Trust's Declaration of Trust
and agrees that the obligations assumed by the Trust or any Portfolio
pursuant to this Agreement shall be limited in any case to the Trust and its
assets and that the Adviser shall not seek satisfaction of any such
obligations from the Shareholders of the Trust, the Trustees, officers,
employees or agents of the Trust, or any of them.
13. Definitions. As used in this Contract, the terms "affiliated
person," "assignment," "control," "interested person" and "vote of a majority
of the outstanding voting securities" shall have the meanings set forth in
the 1940 Act and the rules and regulations thereunder, subject to any
applicable orders of exemption issued by the Securities and Exchange
Commission.
14. Governing law. This Contract shall be construed in accordance with
and governed by the laws of the State of North Carolina, provided, however,
that nothing herein shall be construed in a manner inconsistent with the 1940
Act or any rule or regulation promulgated by the Securities and Exchange
Commission thereunder.
EXHIBIT A
to the
Investment Advisory Contract
Biltmore U.S. Government Money Market Fund
Biltmore Money Market Fund
Biltmore Tax-Free Money Market Fund
Biltmore U.S. Treasury Money Market Fund
For all services rendered by the Adviser hereunder, the above-named
Portfolio(s) of the Trust shall pay to the Adviser and the Adviser agrees to
accept as full compensation for all services rendered hereunder, an annual
investment advisory fee equal to 0.50% of the average daily net assets of the
Portfolio(s).
The portion of the fees based upon the average daily net assets of the
Portfolio(s) shall be accrued daily at the annual rate of 0.50% applied to
the daily net assets of the Portfolio(s).
The advisory fee so accrued shall be paid to the Adviser daily.
Witness the due execution hereof this 9th day of March, 1992.
Attest: Wachovia Bank of North Carolina, N.A.
/s/J. Vanderberry By: /s/H. Vernon Winters
Secretary Sr. Vice President
Attest: The Biltmore Funds
/s/Peter J. Germain By: /s/John W. McGonigle
Secretary President
EXHIBIT B
to the
Investment Advisory Contract
Biltmore Prime Cash Management Fund
For all services rendered by the Adviser hereunder, the above-named
Portfolio of the Trust shall pay to the Adviser and the Adviser agrees to
accept as full compensation for all services rendered hereunder, an annual
investment advisory fee equal to 0.30% of the average daily net assets of the
Portfolio.
The portion of the fees based upon the average daily net assets of the
Portfolio shall be accrued daily at the annual rate of 0.30% applied to the
daily net assets of the Portfolio.
The advisory fee so accrued shall be paid to the Adviser daily.
Witness the due execution hereof this 12th day of June, 1992.
Attest: Wachovia Bank of North Carolina, N.A.
/s/J. Vanderberry By: /s/H. Vernon Winters
Secretary Senior Vice President
Attest: The Biltmore Funds
/s/Peter J. Germain By: /s/John W. McGonigle
Secretary President
EXHIBIT C
to the
Investment Advisory Contract
Biltmore Balanced Fund
For all services rendered by the Adviser hereunder, the above-named
Portfolio of the Trust shall pay to the Adviser and the Adviser agrees to
accept as full compensation for all services rendered hereunder, an annual
investment advisory fee equal to 0.70% of the average daily net assets of the
Portfolio.
The portion of the fees based upon the average daily net assets of the
Portfolio shall be accrued daily at the annual rate of 0.70% applied to the
daily net assets of the Portfolio.
The advisory fee so accrued shall be paid to the Adviser daily.
Witness the due execution hereof this 3rd day of April, 1993.
Attest: Wachovia Bank of North Carolina,N.A.
/s/ James G. Vanderberry By: /s/ H. Vernon Winters
Secretary Vice President
Attest: The Biltmore Funds
/s/ Peter J. Germain By: /s/ Ronald M. Petnuch
Secretary Vice President
EXHIBIT D
to the
Investment Advisory Contract
Biltmore Equity Fund
For all services rendered by the Adviser hereunder, the above-named
Portfolio of the Trust shall pay to the Adviser and the Adviser agrees to
accept as full compensation for all services rendered hereunder, an annual
investment advisory fee equal to 0.70% of the average daily net assets of the
Portfolio.
The portion of the fees based upon the average daily net assets of the
Portfolio shall be accrued daily at the annual rate of 0.70% applied to the
daily net assets of the Portfolio.
The advisory fee so accrued shall be paid to the Adviser daily.
Witness the due execution hereof this 3rd day of April, 1993.
Attest: Wachovia Bank of North Carolina,N.A.
/s/ James G. Vanderberry By: /s/ H. Vernon Winters
Secretary Vice President
Attest: The Biltmore Funds
/s/ Peter J. Germain By: /s/ Ronald M. Petnuch
Secretary Vice President
EXHIBIT E
to the
Investment Advisory Contract
Biltmore Equity Index Fund
For all services rendered by the Adviser hereunder, the above-named
Portfolio of the Trust shall pay to the Adviser and the Adviser agrees to
accept as full compensation for all services rendered hereunder, an annual
investment advisory fee equal to 0.30% of the average daily net assets of the
Portfolio.
The portion of the fees based upon the average daily net assets of the
Portfolio shall be accrued daily at the annual rate of 0.30% applied to the
daily net assets of the Portfolio.
The advisory fee so accrued shall be paid to the Adviser daily.
Witness the due execution hereof this 3rd day of April, 1993.
Attest: Wachovia Bank of North Carolina,N.A.
/s/ James G. Vanderberry By: /s/ H. Vernon Winters
Secretary Vice President
Attest: The Biltmore Funds
/s/ Peter J. Germain By: /s/ Ronald M. Petnuch
Secretary Vice President
EXHIBIT F
to the
Investment Advisory Contract
Biltmore Fixed Income Fund
For all services rendered by the Adviser hereunder, the above-named
Portfolio of the Trust shall pay to the Adviser and the Adviser agrees to
accept as full compensation for all services rendered hereunder, an annual
investment advisory fee equal to 0.60% of the average daily net assets of the
Portfolio.
The portion of the fees based upon the average daily net assets of the
Portfolio shall be accrued daily at the annual rate of 0.60% applied to the
daily net assets of the Portfolio.
The advisory fee so accrued shall be paid to the Adviser daily.
Witness the due execution hereof this 3rd day of April, 1993.
Attest: Wachovia Bank of North Carolina, N.A.
/s/ James G. Vanderberry By: H. Vernon Winters
Secretary Vice President
Attest: The Biltmore Funds
/s/ Peter J. Germain By: /s/ Ronald M. Petnuch
Secretary Vice President
EXHIBIT G
to the
Investment Advisory Contract
Biltmore Short-Term Fixed Income Fund
For all services rendered by the Adviser hereunder, the above-named
Portfolio of the Trust shall pay to the Adviser and the Adviser agrees to
accept as full compensation for all services rendered hereunder, an annual
investment advisory fee equal to 0.55% of the average daily net assets of the
Portfolio.
The portion of the fees based upon the average daily net assets of the
Portfolio shall be accrued daily at the annual rate of 0.55% applied to the
daily net assets of the Portfolio.
The advisory fee so accrued shall be paid to the Adviser daily.
Witness the due execution hereof this 3rd day of April, 1993.
Attest: Wachovia Bank of North Carolina, N.A.
/s/ James G. Vanderberry By: /s/ H. Vernon Winters
Secretary Vice President
Attest: The Biltmore Funds
/s/ Peter J. Germain By: /s/ Ronald M. Petnuch
Secretary Vice President
EXHIBIT H
to the
Investment Advisory Contract
Biltmore Special Values Fund
For all services rendered by the Adviser hereunder, the above-named
Portfolio of the Trust shall pay to the Adviser and the Adviser agrees to
accept as full compensation for all services rendered hereunder, an annual
investment advisory fee equal to 0.80% of the average daily net assets of the
Portfolio.
The portion of the fees based upon the average daily net assets of the
Portfolio shall be accrued daily at the annual rate of 0.80% applied to the
daily net assets of the Portfolio.
The advisory fee so accrued shall be paid to the Adviser daily.
Witness the due execution hereof this 3rd day of April, 1993.
Attest: Wachovia Bank of North Carolina,N.A.
/s/ James G. Vanderberry By: /s/ H. Vernon Winters
Secretary Vice President
Attest: The Biltmore Funds
/s/ Peter J. Germain By: /s/ Ronald M. Petnuch
Secretary Vice President
EXHIBIT I
to the
Investment Advisory Contract
Biltmore Quantitative Equity Fund
For all services rendered by the Adviser hereunder, the above-named
Portfolio of the Trust shall pay to the Adviser and the Adviser agrees to
accept as full compensation for all services rendered hereunder, an annual
investment advisory fee equal to 0.70% of the average daily net assets of the
Portfolio.
The portion of the fees based upon the average daily net assets of the
Portfolio shall be accrued daily at the annual rate of 0.70% applied to the
daily net assets of the Portfolio.
The advisory fee so accrued shall be paid to the Adviser daily.
Witness the due execution hereof this 1st day of January, 1994.
Attest: Wachovia Bank of North Carolina,
N.A.
By: /s/ James G. Vanderberry By: /s/ H. Vernon Winters
Secretary Sr. Vice President
Attest: The Biltmore Funds
/s/ Joseph M. Huber By: /s/ Ronald M. Petnuch
Secretary Vice President
Form N-1A Exhibit No. 5(ii)
Regulation S-K Exhibit No. 10(i)
EXHIBIT J
to the
Investment Advisory Contract
Biltmore Emerging Markets Fund
For all services rendered by the Adviser hereunder, the above-named
Portfolio of the Trust shall pay to the Adviser and the Adviser agrees to
accept as full compensation for all services rendered hereunder, an annual
investment advisory fee equal to _____% of the average daily net assets of
the Portfolio.
The portion of the fees based upon the average daily net assets of the
Portfolio shall be accrued daily at the annual rate of ___% applied to the
daily net assets of the Portfolio.
The advisory fee so accrued shall be paid to the Adviser daily.
Witness the due execution hereof this ___ day of ________, 1994.
Attest: Wachovia Bank of North Carolina,
N.A.
By: By:
Secretary Sr. Vice President
Attest: The Biltmore Funds
By: By:
Secretary Vice President
Form N-1A Exhibit No. 6
Regulation S-K Exhibit No. 1
DISTRIBUTION AGREEMENT
This Distribution Agreement is made as of this 9th day of March, 1992,
between The Biltmore Funds, a Massachusetts business trust, (herein called
the "Trust") and FEDERATED SECURITIES CORP., Pennsylvania corporation (herein
called "FSC").
In consideration of the mutual covenants hereinafter contained, it is
hereby agreed by and between the parties hereto as follows:
1. The Trust hereby appoints FSC as its agent to sell and distribute
shares of the Trust which may be offered in one or more series (the
"Portfolios") or classes (the "Classes") of shares (the "Shares") as
described and set forth on one or more exhibits to this Agreement, at the
current public offering price thereof as described and set forth in the
current prospectus and statement of additional information ("Prospectus") of
the applicable Portfolio. FSC hereby accepts such appointment and agrees to
provide such other services for the Trust, if any, and accept such
compensation from the Trust, if any, as set forth in the applicable exhibit
to this Agreement. FSC shall have the right to sell such Shares as are
authorized for issue and registered under the Securities Act of 1933, as
amended ("1933 Act") and applicable state securities laws. The rights
granted to FSC shall be nonexclusive in that the Trust reserves the right to
sell its shares to investors on applications received and accepted by the
Trust. Further, the Trust reserves the right to issue shares in connection
with (a) the merger or consolidation, or acquisition by the Trust through
purchase or otherwise, with any other investment company, trust or personal
holding company and (b) a pro rata distribution directly to the holders of
shares in the nature of a stock dividend or split-up.
2. The sale of any Shares may be suspended without prior notice whenever
in the judgment of the Trust it is in its best interest to do so. In the
event the sale of any Shares is suspended, no further orders for Shares shall
be processed by FSC except such unconditional orders placed with FSC before
it had knowledge of the suspension. In addition, the Trust and FSC reserve
the right to reject any purchase order.
3. In consideration of these rights granted to FSC, FSC agrees to use
all reasonable efforts, consistent with its other business, to secure
purchasers for Shares. This shall not prevent FSC from entering into like
arrangements with other issuers. FSC agrees to use all reasonable efforts to
ensure that taxpayer identification numbers provided for record shareholders
of the Trust are correct.
4. Neither FSC nor any other person is authorized by the Trust to give
any information or to make any representation relative to any Shares other
than those contained in the Registration Statement, Prospectuses filed with
the Securities and Exchange Commission, as the same may be amended from time
to time, or in any supplemental information to said Prospectuses approved by
the Trust. FSC agrees that any other information or representations other
than those specified above which it or any broker or other person who
purchases Shares through FSC may make in connection with the offer or sale of
Shares, shall be made entirely without liability on the part of the Trust.
No person, other than FSC, is authorized to act as agent for the Trust for
any purpose. FSC agrees that in offering or selling Shares as agent of the
Trust, it will, in all respects, duly conform to all applicable state and
federal laws and the rules and regulations of the National Association of
Securities Dealers, Inc., including its Rules of Fair Practice and any
applicable filing and approval requirements for sales literature. FSC will
submit to the Trust, with a copy to its counsel, copies of all sales
literature before using the same and will not use such sales literature if
disapproved by the Trust or the appropriate regulatory authorities, if
applicable.
5. (a) The Trust shall pay all fees and expenses in connection with the
preparation, setting in type and filing of any Registration Statement,
Prospectus under the 1933 Act and any amendments thereto for the issue of its
shares, in connection with the registration and qualification of Shares for
sale in the various states in which the Board of Trustees of the Trust shall
determine it advisable to qualify such Shares for sales, registering the
Trust or Portfolio as a broker or dealer or any officer of the Trust as agent
or salesperson in any state, of preparing, setting in type, printing and
mailing any report or other communication to shareholders of the Trust in
their capacity as such, and of preparing, setting in type, printing and
mailing Prospectuses and any supplements thereto sent to existing
shareholders.
(b) FSC may in its sole discretion pay such expenses as it deems
reasonable for distribution including printing and distributing Prospectuses
and reports prepared for its use in connection with the offering of the
Shares for sale to the public, any other literature used in connection with
such offering, and advertising and marketing materials in connection with
such offering.
6. This Agreement shall continue in effect for one year from the date of
its execution (or in the case of a Portfolio or Class that is added to the
Trust following the date of such execution, the date that the applicable
exhibit with respect to such Portfolio or Class is added hereto) and
thereafter for successive periods of one year only if such continuance is
approved at least annually by (i) either the vote of a majority of the
Trustees of the Trust, or by the vote of a majority of the outstanding voting
securities of the applicable Portfolio or Class, and (ii) the vote of a
majority of those Trustees of the Trust who are not parties to this Agreement
or interested persons of any party and who have no direct or indirect
financial interest in the operation of any Plan of Distribution relating to
the Trust or in any agreements related to such Plan ("Disinterested
Trustees"), cast in person at a meeting called for the purpose of voting on
the approval.
7. This Agreement may be terminated with regard to a particular
Portfolio or Class at any time, without the payment of any penalty, by the
Trust by the vote of a majority of the Disinterested Trustees or by a
majority of the outstanding voting securities of the particular Portfolio or
Class on not more than sixty (60) days' written notice to FSC. This
Agreement may be terminated with regard to a particular Portfolio or Class by
FSC on sixty (60) days' written notice to the Trust.
8. This Agreement may not be assigned by FSC and shall automatically
terminate in the event of an assignment by FSC as defined in the Investment
Company Act of 1940, as amended (the "1940 Act"), provided, however, that FSC
may employ such other person, persons, corporation or corporations as it
shall determine in order to assist it in carrying out its duties under this
Agreement; provided, however, that FSC shall be fully responsible to the
Trust for the acts and omissions of any such person or corporation as it is
for its own acts and omissions.
9. This Agreement may be amended at any time by mutual agreement in
writing of all the parties hereto, provided that such amendment is approved
by (i) the Trustees of the Trust or by a majority of the outstanding voting
securities of the particular Class and (ii) by a vote of a majority of the
Disinterested Trustees, cast in person at a meeting called for the purpose of
voting on the amendment.
10. This Agreement shall be construed in accordance with and governed by
the laws of the State of Pennsylvania; provided, however, that nothing herein
shall be construed in a manner inconsistent with the 1940 Act or any rule or
regulation promulgated by the Securities and Exchange Commission thereunder.
11. (a) Subject to the conditions set forth below, the Trust agrees to
indemnify and hold harmless FSC and each person, if any, who controls FSC
within the meaning of Section 15 of the 1933 Act and Section 20 of the
Securities Exchange Act of 1934, as amended ("1934 Act"), against any and all
loss, liability, claim, damage or expense whatsoever (including the
reasonable cost of investigating or defending any alleged loss, liability,
damages, claim or expense and reasonable counsel fees incurred in connection
therewith) arising by reason of any person acquiring any Shares, based upon
the 1933 Act or any other statute or common law, alleging any wrongful act of
the Trust or any of its employees or representatives, or based upon any
untrue statement or alleged untrue statement of a material fact contained in
the Registration Statement, Prospectuses, shareholder reports or other
information filed or made public by the Trust (as from time to time amended
and supplemented) or the omission or alleged omission therefrom of a material
fact required to be stated therein or necessary to make the statements
therein not misleading, unless such statement or omission was made in
reliance upon and in conformity with written information furnished to the
Trust by or on behalf of FSC or any person who controls FSC within the
meaning of Section 15 of the 1933 Act and Section 20 of the 1934 Act
expressly for use in the Registration Statement, Prospectuses, shareholder
reports or other information filed or made public by the Trust or any
amendment or supplement thereof.
If any action is brought against FSC or any controlling person
thereof with respect to which indemnity may be sought against the Trust
pursuant to the foregoing paragraph, FSC shall promptly notify the Trust in
writing of the institution of such action and, provided such notice has been
given, the Trust shall assume the defense of such action, including the
employment of counsel selected by the Trust and payment of expenses. FSC or
any such controlling person thereof shall have the right to employ separate
counsel in any such case, but the fees and expenses of such counsel shall be
at the expense of FSC or such controlling person unless the employment of
such counsel shall have been authorized in writing by the Trust in connection
with the defense of such action or the Trust shall not have employed counsel
to have charge of the defense of such action, in any of which events such
fees and expenses shall be borne by the Trust. Anything in this paragraph to
the contrary notwithstanding, the Trust shall not be liable for any
settlement of any such claim or action effected without its written consent.
The Trust agrees promptly to notify FSC of the commencement of any litigation
or proceedings against the Trust or any of its officers or Trustees or
controlling persons in connection with the issuance or sale of Shares or in
connection with the Registration Statement, Prospectuses, shareholder reports
or other information filed or made public by the Trust.
(b) FSC agrees to indemnify and hold harmless the Trust, each of its
Trustees, each of its officers and each other person, if any, who controls
the Trust within the meaning of Section 15 of the 1933 Act, against any loss,
liability, damages, claim or expense (including the reasonable cost of
investigating or defending any alleged loss, liability, damages, claim or
expense and reasonable counsel fees incurred in connection therewith) arising
by reason of any person acquiring any Shares, based upon the 1933 Act or any
other statute or common law, alleging any wrongful act of FSC or any of its
employees or representatives, or based upon any untrue statement or alleged
untrue statement of a material fact contained in the Registration Statement,
Prospectuses, shareholder reports or other information filed or made public
by the Trust (as from time to time amended and supplemented) or the omission
or alleged omission therefrom of a material fact required to be stated
therein or necessary to make the statements therein not misleading, insofar
as such statements or omissions were made in reliance upon, and in conformity
with, information furnished in writing to the Trust by or on behalf of FSC or
any person who controls FSC within the meaning of Section 15 of the 1933 Act
and Section 20 of the 1934 Act expressly for use in the Registration
Statement, any Prospectus, any shareholder report or other information filed
or made public by the Trust, or any amendment or supplement thereof, or
arising out of any information or representations other than those specified
in Section 3 of this Agreement by it or any broker or other person who
purchases Shares through FSC. In case any action shall be brought against
the Trust or any other person so indemnified based on the foregoing as
described in this subsection (b), and with respect to which indemnity may be
sought against FSC, FSC shall have the rights and duties given to the Trust,
and the Trust and each other person so indemnified shall have the rights and
duties given to FSC by the provisions of subsection (a) above.
(c) Nothing herein contained shall be deemed to protect any person
against liability to the Trust or its shareholders to which such person would
otherwise be subject by reason of willful misfeasance, bad faith or gross
negligence by FSC in the performance of its duties or by reason of the
reckless disregard by FSC of its obligations and duties under this Agreement.
12. FSC is expressly put on notice of the limitation of liability as set
forth in the Declaration of Trust and agrees that the obligations assumed by
the Trust pursuant to this Agreement shall be limited in any case to the
Trust and its assets and that FSC shall not seek satisfaction of any such
obligations from the shareholders of the Trust, the Trustees, officers,
employees or agents of the Trust, or any of them.
13. FSC agrees to adopt compliance standards as to when each Class of
Shares may be sold to particular investors.
14. As used in this Agreement the terms "vote of a majority of the
outstanding voting securities" and "interested person" shall have the
respective meanings specified in the 1940 Act and the rules enacted
thereunder as now in effect or as hereafter amended.
EXHIBIT A
The Biltmore Funds
Biltmore Money Market Fund (Institutional Shares)
Biltmore Tax-Free Money Market Fund (Institutional Shares)
Biltmore U.S. Government Money Market Fund (Institutional Shares)
Biltmore U.S. Treasury Money Market Fund (Institutional Shares)
In consideration of the mutual covenants set forth in the Distribution
Agreement dated March 9, 1992 between The Biltmore Funds and Federated
Securities Corp., The Biltmore Funds executes and delivers this Exhibit on
behalf of the Portfolios with respect to the separate Classes thereof first
set forth in this Exhibit.
Witness the due execution hereof this 9th day of March, 1992.
The Biltmore Funds
Attest: /s/Peter J. Germain By: /s/John W. McGonigle
Its: Secretary Its: President
FEDERATED SECURITIES CORP.
Attest: /s/S. Elliott Cohan By: /s/Richard B. Fisher
Its: Secretary Its: President
EXHIBIT B
The Biltmore Funds
Biltmore Money Market Fund (Investment Shares)
Biltmore U.S. Government Money Market Fund (Investment Shares)
Biltmore Tax-Free Money Market Fund (Investment Shares)
The following provisions are hereby incorporated and made part of the
Distribution Agreement dated the 9th day of March, 1992, between The Biltmore
Funds and Federated Securities Corp. with respect to the Classes of the
Portfolios set forth above:
1. The Trust hereby appoints FSC to engage in activities principally
intended to result in the sale of shares of the Classes. Pursuant to this
appointment FSC is authorized to select a group of brokers ("Brokers") to
sell shares of the above-listed Classes ("Shares"), at the current offering
price thereof as described and set forth in the Prospectuses of the Trust,
and to render administrative support services to the Trust and its
shareholders. In addition, FSC is authorized to select a group of
Administrators ("Administrators") to render administrative support services
to the Trust and its shareholders of the above-listed Classes.
2. Administrative support services may include, but are not limited to,
the following functions: (1) account openings: the Broker or Administrator
communicates account openings via computer terminals located on the Broker or
Administrator's premises, through a toll-free telephone number or otherwise;
(2) account closings: the Broker or Administrator similarly communicates
account closings; (3) purchase transactions: the Broker or Administrator
similarly communicates purchase transactions; (4) redemption transactions:
the Broker or Administrator similarly communicates redemption transactions;
(5) transmittal of funds: the Broker or Administrator wires funds and
receives funds for Trust share purchases and redemptions; (6) reconciliation
activities: the Broker or Administrator confirms and reconciles all
transactions and reviews the activity in the Trust's accounts; (7) training:
the Broker or Administrator provides training and supervision of its
personnel; (8) interest posting: the Broker or Administrator posts and
reinvests dividends and other distributions to shareholders; (9) prospectus
and shareholder reports: the Broker or Administrator maintains and
distributes current copies of prospectuses, statements of additional
information and shareholder reports; (10) advertisements: the Broker or
Administrator advertises the availability of its services and products; (11)
design services: the Broker or Administrator provides assistance in the
design of materials to send to customers and in the the development of
methods of making such materials accessible to customers; (12) consultation
services: the Broker or Administrator provides information about the product
needs of customers; and (13) information services: the Broker or
Administrator responds to customers' and potential customers' questions about
the Trust.
3. During the term of this Agreement, the Trust may in its discretion,
but is not obligated to, pay FSC for services pursuant to this Agreement, a
monthly fee computed at an annual rate not to exceed 0.40% of the average
aggregate net asset value of the Portfolios of the Trust listed above, held
during the month. For the month in which this Agreement becomes effective or
terminates, there shall be an appropriate proration of any fee payable on the
basis of the number of days that the Agreement is in effect during the month.
4. FSC will enter into separate written agreements with various firms to
provide certain of the services in Paragraph One herein. FSC, in its sole
discretion, may pay Brokers and Administrators a periodic fee in respect of
Shares owned from time to time by their clients or customers. The schedules
of such fees and the basis upon which such fees will be paid shall be
determined from time to time by FSC in its sole discretion.
5. FSC will prepare reports to the Board of Trustees of the Trust on a
quarterly basis showing amounts paid to the various firms and the purpose for
such payments.
In consideration of the mutual covenants set forth in the Distribution
Agreement dated March 9, 1992 between The Biltmore Funds and Federated
Securities Corp., The Biltmore Funds executes and delivers this Exhibit on
behalf of the Portfolios with respect to the separate Classes thereof first
set forth in this Exhibit.
Witness the due execution hereof this 9th day of March, 1992.
The Biltmore Funds
Attest: /s/ Peter J. Germain By: /s/ John W. McGonigle
Its: Secretary Its: President
FEDERATED SECURITIES CORP.
Attest: /s/ S. Elliott Cohan By: /s/ Richard B. Fisher
Its: Secretary Its: President
EXHIBIT C
The Biltmore Funds
DISTRIBUTION AGREEMENT
Biltmore Prime Cash Management Fund
In consideration of the mutual covenants set forth in the Distribution
Agreement dated March 9, 1992 between The Biltmore Funds and Federated
Securities Corp., The Biltmore Funds executes and delivers this Exhibit on
behalf of the Portfolios thereof first set forth in this Exhibit.
Witness the due execution hereof this 12th day of June, 1992.
The Biltmore Funds
Attest: /s/Peter J. Germain By: /s/John W. McGonigle
Its: Secretary Its: President
FEDERATED SECURITIES CORP.
Attest: /s/S. Elliott Cohan By: /s/Richard B. Fisher
Its: Secretary Its: President
EXHIBIT D
The Biltmore Funds
Biltmore U.S. Treasury Money Market Fund (Investment Shares)
The following provisions are hereby incorporated and made part of the
Distribution Agreement dated the 9th day of March, 1992, between The Biltmore
Funds and Federated Securities Corp. with respect to the Classes of the
Portfolios set forth above:
1. The Trust hereby appoints FSC to engage in activities principally
intended to result in the sale of shares of the Classes. Pursuant to this
appointment FSC is authorized to select a group of brokers ("Brokers") to
sell shares of the above-listed Classes ("Shares"), at the current offering
price thereof as described and set forth in the Prospectuses of the Trust,
and to render administrative support services to the Trust and its
shareholders. In addition, FSC is authorized to select a group of
Administrators ("Administrators") to render administrative support services
to the Trust and its shareholders of the above-listed Classes.
2. Administrative support services may include, but are not limited to,
the following functions: (1) account openings: the Broker or Administrator
communicates account openings via computer terminals located on the Broker or
Administrator's premises, through a toll-free telephone number or otherwise;
(2) account closings: the Broker or Administrator similarly communicates
account closings; (3) purchase transactions: the Broker or Administrator
similarly communicates purchase transactions; (4) redemption transactions:
the Broker or Administrator similarly communicates redemption transactions;
(5) transmittal of funds: the Broker or Administrator wires funds and
receives funds for Trust share purchases and redemptions; (6) reconciliation
activities: the Broker or Administrator confirms and reconciles all
transactions and reviews the activity in the Trust's accounts; (7) training:
the Broker or Administrator provides training and supervision of its
personnel; (8) interest posting: the Broker or Administrator posts and
reinvests dividends and other distributions to shareholders; (9) prospectus
and shareholder reports: the Broker or Administrator maintains and
distributes current copies of prospectuses, statements of additional
information and shareholder reports; (10) advertisements: the Broker or
Administrator advertises the availability of its services and products; (11)
design services: the Broker or Administrator provides assistance in the
design of materials to send to customers and in the the development of
methods of making such materials accessible to customers; (12) consultation
services: the Broker or Administrator provides information about the product
needs of customers; and (13) information services: the Broker or
Administrator responds to customers' and potential customers' questions about
the Trust.
3. During the term of this Agreement, the Trust may in its discretion,
but is not obligated to, pay FSC for services pursuant to this Agreement, a
monthly fee computed at an annual rate not to exceed 0.40% of the average
aggregate net asset value of the Portfolios of the Trust listed above, held
during the month. For the month in which this Agreement becomes effective or
terminates, there shall be an appropriate proration of any fee payable on the
basis of the number of days that the Agreement is in effect during the month.
4. FSC will enter into separate written agreements with various firms to
provide certain of the services in Paragraph One herein. FSC, in its sole
discretion, may pay Brokers and Administrators a periodic fee in respect of
Shares owned from time to time by their clients or customers. The schedules
of such fees and the basis upon which such fees will be paid shall be
determined from time to time by FSC in its sole discretion.
5. FSC will prepare reports to the Board of Trustees of the Trust on a
quarterly basis showing amounts paid to the various firms and the purpose for
such payments.
In consideration of the mutual covenants set forth in the Distribution
Agreement dated March 9, 1992 between The Biltmore Funds and Federated
Securities Corp., The Biltmore Funds executes and delivers this Exhibit on
behalf of the Portfolios with respect to the separate Classes thereof first
set forth in this Exhibit.
Witness the due execution hereof this 31st day of January, 1993.
The Biltmore Funds
Attest: /s/Peter J. Germain By: /s/John W. McGonigle
Its: Secretary Its: President
FEDERATED SECURITIES CORP.
Attest: /s/S. Elliott Cohan By: /s/ John A. Staley, IV
Executive Vice
Its: Secretary Its: President
EXHIBIT E
The Biltmore Funds
Biltmore Balanced Fund
Biltmore Equity Fund
Biltmore Equity Index Fund
Biltmore Fixed Income Fund
Biltmore Short-Term Fixed Income Fund
In consideration of the mutual covenants set forth in the Distribution
Agreement (the "Agreement") dated March 9, 1992 between The Biltmore Funds
and Federated Securities Corp., ("FSC"), The Biltmore Funds executes and
delivers this Exhibit on behalf of the Portfolios first set forth in this
Exhibit.
FSC shall retain the initial sales charge, if any, on purchases of
shares of the above Portfolios as set forth in The Biltmore Funds'
Registration Statement. FSC is authorized to collect the gross proceeds
derived from the sale of such shares, remit the net asset value thereof to
the applicable Portfolio upon receipt of the proceeds and retain the initial
sales charge, if any.
FSC may reallow any or all of the initial sales charges which it is paid
under the Agreement to such brokers and other financial institutions as FSC
may from time to time determine.
Witness the due execution hereof this 3rd day of April, 1993.
The Biltmore Funds
Attest: /s/ Peter J. Germain By: /s/ John W. McGonigle
Its: Secretary Its: President
FEDERATED SECURITIES CORP.
Attest: /s/ S. Elliott Cohan By: /s/ E. C. Gonzales
Executive Vice
Its: Secretary Its: President
EXHIBIT F
The Biltmore Funds
Biltmore Special Values Fund
In consideration of the mutual covenants set forth in the Distribution
Agreement dated March 9, 1992 between The Biltmore Funds and Federated
Securities Corp., The Biltmore Funds executes and delivers this Exhibit on
behalf of the Portfolio first set forth in this Exhibit.
Witness the due execution hereof this 3rd day of April, 1993.
The Biltmore Funds
Attest: /s/ Peter J. Germain By: /s/ John W. McGonigle
Its: Secretary Its: President
FEDERATED SECURITIES CORP.
Attest: /s/ S. Elliott Cohan By: /s/ E. C. Gonzales
Its: Secretary Its: Executive Vice President
EXHIBIT G
to the
Distribution Agreement
Biltmore Quantitative Equity Fund
In consideration of the mutual covenants set forth in the Distribution
Agreement (the "Agreement") dated March 9, 1992 between The Biltmore Funds
and Federated Securities Corp. ("FSC"), The Biltmore Funds executes and
delivers this Exhibit on behalf of the Portfolios first set forth in this
Exhibit.
FSC shall retain the initial sales charge, if any, on purchases of
shares of the above Portfolios as set forth in The Biltmore Funds'
Registration Statement. FSC is authorized to collect the gross proceeds
derived from the sale of such shares, remit the net asset value thereof to
the applicable Portfolio upon receipt of the proceeds and retain the initial
sales charge, if any.
FSC may reallow any or all of the initial sales charges which it is
paid under the Agreement to such brokers and other financial institutions as
FSC may from time to time determine.
Witness the due execution hereof this 1st day of January, 1994.
Attest: The Biltmore Funds
/s/ Joseph M. Huber By: /s/ John W. McGonigle
Secretary President
Attest: Federated Securities Corp.
/s/ S. Elliott Cohan By: /s/ Edward C. Gonzales
Secretary Executive Vice President
Form N-1A Exhibit No. 6(i)
Regulation S-K Exhibit No. 1(i)
EXHIBIT H
to the
Distribution Agreement
Biltmore Emerging Markets Fund
In consideration of the mutual covenants set forth in the Distribution
Agreement (the "Agreement") dated March 9, 1992 between The Biltmore Funds
and Federated Securities Corp. ("FSC"), The Biltmore Funds executes and
delivers this Exhibit on behalf of the Portfolios first set forth in this
Exhibit.
FSC shall retain the initial sales charge, if any, on purchases of
shares of the above Portfolios as set forth in The Biltmore Funds'
Registration Statement. FSC is authorized to collect the gross proceeds
derived from the sale of such shares, remit the net asset value thereof to
the applicable Portfolio upon receipt of the proceeds and retain the initial
sales charge, if any.
FSC may reallow any or all of the initial sales charges which it is
paid under the Agreement to such brokers and other financial institutions as
FSC may from time to time determine.
Witness the due execution hereof this ___ day of _______, 1994.
Attest: The Biltmore Funds
By:
Secretary President
Attest: Federated Securities Corp.
By:
Secretary Executive Vice President
-1-
Form N-1A Exhibit No.8
Regulation S-K Exhibit No. 10(ii)
CUSTODY AGREEMENT
THIS AGREEMENT, is made effective as of March 9, 1992, by and
between The Biltmore Funds (the "Trust"), a business trust organized
under the laws of the Commonwealth of Massachusetts and Wachovia Bank of
North Carolina, N.A. a banking company organized under the laws of the
State of North Carolina (the "Custodian").
WITNESSETH:
WHEREAS, the Trust is an open-end management series investment
company registered under the Investment Company Act of 1940, as amended
(the "1940 Act"); and
WHEREAS, the Trust desires to retain the Custodian to serve as the
Trust's custodian to its existing series: Biltmore U.S. Government Money
Market Fund, Biltmore U.S. Treasury Money Market Fund, Biltmore Tax-Free
Money Market Fund, and Biltmore Money Market Fund (such series, together
with all other series subsequently established by the Trust and made
subject to this Agreement in accordance with Section 3.22 being herein
referred to as the "Funds") and the Custodian is willing to furnish such
services;
NOW THEREFORE, in consideration of the mutual agreements herein
made, the Trust and the Custodian hereby agree as follows:
ARTICLE I
CERTAIN DEFINITIONS
Whenever used in this Agreement, the following words and phrases,
unless the context otherwise requires, shall have the following meanings:
1.1 "Authorized Person" means any Officer or other person duly
authorized by resolution of the Board of Trustees to give Proper
Instructions on behalf of the Funds and named in Exhibit B hereto or in
such resolutions of the Board of Trustees, certified by an Officer, as
may be received by the Custodian from time to time. The Trust will
provide the Custodian with authenticated specimen signatures of each
Authorized Person.
1.2 "Board of Trustees" means the Trustees from time to time
serving under the Trust's Agreement and Amended and Restated Declaration
of Trust, dated Feberuary 24, 1992, as from time to time amended.
1.3 "Securities System" means a federal book-entry system as
provided in Subpart O of Treasury Circular No. 300, CFR 306, in Subpart B
of 31 CFR Part 350, or in such book-entry regulations of federal agencies
as are substantially in the form of such Subpart O, the Depository Trust
Company ("DTC"), Participants Trust Company and (provided that Custodian
shall have received a copy of a resolution of the Board of Trustees,
certified by an Officer, specifically approving the use of such clearing
agency as a depository for the Funds) any other clearing agency
registered with the Securities and Exchange Commission ("SEC") under
Section 17A of the Securities Exchange Act of 1934 ("1934 Act"), which
acts as a system for the central handling of Securities where all
securities of any particular class or series of an issuer deposited
within the system are treated as fungible and may be transferred or
pledged by bookkeeping entry without physical delivery of the Securities.
1.4 "Business Day" means any day recognized as a settlement day by
The New York Stock Exchange, Inc. and any other day for which the Trust
computes the net asset value of a Fund.
1.5 "NASD" means The National Association of Securities Dealers,
Inc.
1.6 "Officer" means the Chairman, President, any Vice President,
the Secretary, any Assistant Secretary, the Treasurer, or any Assistant
Treasurer of the Trust.
1.7 "Fund Custody Account" means any of the accounts in the name of
the Trust, which are provided for in Section 3.2 below.
1.8 "Proper Instructions" means:
(i) a writing (including, without limitation, a facsimile
transmission or tested telex) constituting a request, direction,
instruction or certification signed or initiated by or on behalf of
a Fund by one or more Authorized Persons or reasonably believed by
the Custodian to have been signed by such Authorized Persons;
(ii) a telephonic or other oral communication by one or more
Authorized Persons or reasonably believed by the Custodian to have
been communicated by such Authorized Persons; or
(iii) communications transmitted electronically through the
Institutional Delivery System (IDS), or any other similar electronic
instruction system acceptable to Custodian and approved by
resolutions of the Board of Trustees, a copy of which, certified by
an Officer, shall have been delivered to the Custodian.
The Trust shall cause all Proper Instructions in the form of oral
communications to be promptly confirmed in writing, as specified in
clause (i) of this paragraph. In the event that an oral communication is
not so confirmed, or in the event that a written confirmation differs
from the related oral communication, the Trust will hold the Custodian
harmless and without liability for any claims or losses in connection
with such oral communication. Proper Instructions may be in the form of
standing instructions. In respect of trades reported on the Trust's
behalf through DTC, instructions from DTC (whether in a DTC report or
otherwise), shall be Proper Instructions.
1.9 "Securities" include, without limitation, common and preferred
stocks, bonds, call options, put options, debentures, notes, bank
certificates of deposit, bankers' acceptances, mortgage-backed
securities, other money market instruments or other obligations, and any
certificates, receipts, warrants or other instruments or documents
representing rights to receive, purchase or subscribe for the same, or
evidencing or representing any other rights or interests therein, or any
similar property or assets that the Custodian has the facilities to clear
and to service.
1.10 "Shares" means, with respect to a Fund, the units of
beneficial interest issued by the Trust on account of such Fund.
ARTICLE II
APPOINTMENT OF CUSTODIAN
2.1 Appointment. The Trust hereby constitutes and appoints the
Custodian as custodian for the term and subject to the provisions of this
Agreement.
2.2 Acceptance. The Custodian hereby accepts appointment as such
custodian and agrees to perform the duties thereof as hereinafter set
forth.
ARTICLE III
CUSTODY OF CASH AND SECURITIES
3.1 Segregation. All Securities and non-cash property held by the
Custodian for the account of a Fund, except Securities maintained in a
Securities System pursuant to Section 3.6 herein, shall be physically
segregated from other Securities and non-cash property in the possession
of the Custodian (including the Securities and non-cash property of
another Fund) and shall be identified as subject to this Agreement.
3.2 Fund Custody Accounts. As to each Fund, the Custodian shall
open and maintain in its trust department a custody account or accounts
in the name of the Trust coupled with the name of such Fund, subject only
to draft or order of the Custodian, in which the Custodian shall enter
and carry all Securities, cash and other assets of such Fund which are
delivered to it.
3.3 Appointment of Sub-custodians. In its discretion, the
Custodian may appoint, and at any time remove, any domestic bank or trust
company, which has been approved by the Board of Trustees and is
qualified to act as a custodian under the 1940 Act, as sub-custodian to
hold Securities and cash of the Funds and to carry out such other
provisions of this Agreement as it may determine, and may also open and
maintain one or more banking accounts with such a bank or trust company
(any such accounts to be in the name of the Custodian on behalf of its
customers and subject only to its draft or order pursuant to the terms of
this Agreement), provided, however, that the Custodian shall have no more
or less responsibility or liability to the Trust on account of any
actions or omissions of such Sub-custodian so employed than any such sub-
custodian has to the Custodian.
3.4 Appointment of Agents. The Custodian may at any time or times
in its discretion appoint (and may at any time remove) any other bank or
trust company which is itself qualified under the Investment Company Act
of 1940, as amended, to act as a custodian, as its agent to carry out
such of the provisions of this Article 2 as the Custodian may from time
to time direct; provided, however, that the appointment of any agent
shall not relieve the Custodian of its responsibilities or liabilities
hereunder.
3.5 Delivery of Assets to Custodian. The Trust shall deliver, or
cause to be delivered, to the Custodian all of the Funds' Securities,
cash and other assets, including (a) all payment of income, payments of
principal and capital distributions received by the Funds with respect to
such Securities, cash or other assets owned by the Funds at any time
during the period of this Agreement, and (b) all cash received by the
Funds for the issuance, at any time during such period, of Shares. The
Custodian shall not be responsible for such Securities, cash or other
assets until actually received by it.
3.6 Securities Systems. The Custodian may deposit and/or maintain
Securities of the Funds in a Securities System, subject to the following
provisions:
(a) Prior to a deposit of Securities of the Funds in any Securities
System, the Trust shall deliver to the Custodian a
resolution of the Board of Trustees, certified by an
Officer, authorizing and instructing the Custodian on an
on-going basis to deposit in such Securities System all
Securities eligible for deposit therein and to make use
of such Securities System to the extent possible and
practical in connection with its performance hereunder,
including, without limitation, in connection with
settlements of purchases and sales of Securities, loans
of Securities, and deliveries and returns of collateral
consisting
of Securities. So long as such Securities System shall
continue to be employed for the deposit of Securities of the
Funds, the Trust shall annually re-adopt such resolution and
deliver a copy thereof, certified by an Officer, to the
Custodian.
(b) Securities of the Funds kept in a Securities System shall be
kept in an account ("Depository Account") of the Custodian in
such Securities System which includes only assets held by the
Custodian as a fiduciary, custodian or otherwise for customers.
(c) The records of the Custodian with respect to Securities of a
Fund maintained in a Securities System shall, by book-entry,
identify such Securities as belonging to such Fund.
(d) If Securities purchased by a Fund are to be held in a
Securities System, the Custodian shall pay for such Securities
upon (i) receipt of advice from the Securities System that such
Securities have been transferred to the Depository Account, and
(ii) the making of any entry on the records of the Custodian to
reflect such payment and transfer for the account of such Fund.
If Securities sold by a Fund are held in a Securities System,
the Custodian shall transfer such Securities upon (i) receipt
of advice from the Securities System that payment for such
Securities has been transferred to the Depository Account, and
(ii) the making of an entry on the records of the custodian to
reflect such transfer and payment for the account of such Fund.
(e) Upon request, the Custodian shall provide the Trust with copies
of any report (obtained by the Custodian from a Securities
System in which Securities of the Funds are kept) on the
internal accounting controls and procedures for safeguarding
Securities deposited in such Securities System.
(f) Anything to the contrary in this Agreement notwithstanding, the
Custodian shall not be liable to the Trust for any loss or
damage to a Fund resulting from the use by the Custodian of a
Securities System, unless such loss or damage is caused by or
results from the negligence or willful misconduct on the part
of Custodian or its agents or any of its (or their) employees,
provided, however, that in the event of any such loss or damage
the Custodian shall take reasonable steps to enforce
effectively such rights as it may have against the Securities
System. At its election, the Trust shall be subrogated to the
rights of the Custodian with respect to any claim against a
Securities System or any other person for any loss or damage to
the Funds arising from the use of such Securities System, if
and to the extent that the Funds have not been made whole for
any such loss or damage.
3.7 Collection of Income. Subject to the provisions of Section
3.15, the Custodian shall collect on a timely basis all income and other
payments with respect to registered securities held hereunder to which
each Fund shall be entitled either by law or pursuant to custom in the
securities business, and shall collect on a timely basis all income and
other payments with respect to bearer securities if, on the date of
payment by the issuer, such securities are held by the custodian or its
agent thereof and shall credit some income, as collected, to each Fund's
custodian account. Without limiting the generality of the foregoing, the
Custodian shall detach and present for payment all coupons and other
income items requiring presentation as and when they become due and shall
collect interest when due on securities held hereunder. The collection
of income due the Funds on Securities loaned pursuant to the provisions
of Section 3.9(j) shall be the responsibility of the Trust. The
Custodian will have no duty or responsibility in connection therewith,
other than to provide the Trust with such information or data as may be
necessary to assist the Trust in arranging for the timely delivery to the
Custodian of the income of which each Fund is properly entitled.
The Custodian shall promptly notify the Trust whenever income due on
Securities is not collected in due course and will provide the Trust with
monthly reports of the status of past due income. Except as set forth
herein, the Custodian shall not be required to enforce collection, by
legal means or otherwise, of any money or property due and payable with
respect to Securities held for a Fund if such Securities are in default
or payment is not made after due demand or presentation.
3.8 Disbursement of Moneys from Fund Custody Accounts.
Upon receipt of Proper Instructions, the Custodian shall disburse moneys
from a Fund Custody Account but only in the following cases:
(a) For the purchase of Securities for the Fund but only (i) in the
case of Securities (other than options on Securities, futures
contracts and options on future contracts), against the
delivery to the Custodian (or any sub-custodian or agent
appointed pursuant to Sections 3.3 and 3.4, respectively,
above) of such Securities to be registered as provided in
Section 3.15 below in proper form for transfer, or if the
purchase of such Securities is effected through a Securities
System, in accordance with the conditions set forth in Section
3.6 above; (ii) in the case of options on Securities, against
delivery to the Custodian (or such sub-custodian) of such
receipts as are required by the customs prevailing among
dealers in such options; (iii) in the case of futures contracts
and options on futures contracts, against delivery to the
Custodian (or such sub-custodian) of evidence of title thereto
in favor of the Fund or any nominee referred to in Section 3.15
below; and (iv) in the case of repurchase or reverse repurchase
agreements entered into between the Trust and any other party,
against delivery of the purchased Securities either in
certificate form or through an entry crediting the Custodian's
account at a Securities System with such Securities;
(b) In connection with the conversion, exchange or surrender, as
set forth in Section 3.9(f) below, of Securities owned by the
Fund;
(c) For the payment of any dividends or capital gain distributions
declared by the Fund;
(d) In payment of the redemption price of Shares as provided in
Section 5.1 below;
(e) For the payment of any expense or liability incurred by the
Fund, including but not limited to the following payments for
the account of the Fund: interest; taxes; administration,
investment management, investment advisory, accounting,
auditing, transfer agent, custodian, trustee and legal fees;
and other operating expenses of the Fund; in all cases, whether
or not such expenses are to be in whole or in part capitalized
or treated as deferred expenses;
(f) For transfer in accordance with the provisions of any agreement
among the Trust, the Custodian and a broker- dealer registered
under the 1934 Act and a member of the NASD, relating to
compliance with rules of The Options Clearing Corporation and
of any registered national securities exchange (or of any
similar organization or organizations) regarding escrow or
other arrangements in connection with transactions by the Fund;
(g) For transfer in accordance with the provisions of any agreement
among the Trust, the Custodian, and a futures commission
merchant registered under the Commodity Exchange Act, relating
to compliance with the rules of the Commodity Futures Trading
Commission and/or any contract market (or any similar
organization or organizations) regarding account deposits in
connection with transactions by the Fund;
(h) For the funding of any uncertificated time deposit or other
interest-bearing account with any banking institution
(including the Custodian), which deposit or account has a term
of one year or less; and
(i) For any other proper purposes, but only upon receipt, in
addition to Proper Instructions, of a copy of a resolution of
the Board of Trustees, certified by an Officer, specifying the
amount and purpose of such payment, declaring such purpose to
be a proper corporate purpose, and naming the person or persons
to whom such payment is to be made.
3.9 Delivery of Securities from Fund Custody Accounts.
Upon receipt of Proper Instructions, the Custodian shall release and
delivery Securities from a Fund Custody Account but only in the following
cases:
(a) Upon the sale of Securities for the account of the Fund but
only against receipt of payment therefor;
(b) In the case of a sale effected through a Securities System, in
accordance with the provisions of Section 3.6 above;
(c) To an Offeror's depository agent in connection with tender or
other similar offers for Securities of the Fund;
(d) To the issuer thereof or its agent when such securities are
called, redeemed, retired, or otherwise become payable;
provided that, in any such case, the cash or other
consideration is to be delivered to the Custodian;
(e) To the issuer thereof or its agent (i) for transfer into the
name of the Fund, the Custodian or any sub- custodian or agent
appointed pursuant to Sections 3.3 and 3.4, respectively,
above, or of any nominee or nominees of any of the foregoing,
or (ii) for exchange for a different number of certificates or
other evidence representing the same aggregate face amount or
number of units; provided that, in any such case, the new
Securities are to be delivered to the Custodian;
(f) To the broker selling Securities or its clearing agent, for
examination in accordance with the "street delivery" custom;
provided that in any such case, the Custodian shall have no
responsibility or liability for any loss arising from the
delivery of such securities prior to receiving payment for such
securities except as may arise from the Custodian's own
negligence or willful misconduct;
(g) For exchange or conversion pursuant to any plan of merger,
consolidation, recapitalization, readjustment of the
securities, reorganization or readjustment of the issuer of
such Securities, or pursuant to any deposit agreement,
including surrender or receipt of underlying Securities in
connection with the issuance or cancellation of depository
receipts; provided that, in any such case, the new Securities
and cash, if any, are to be delivered to the Custodian;
(h) Upon receipt of payment therefor pursuant to any repurchase or
reverse repurchase agreement entered into by a Fund;
(i) In the case of warrants, rights or similar Securities, upon the
exercise thereof, the surrender thereof in the exercise of such
warrants, rights or similar securities or the surrender of
interim receipts or temporary securities; provided that, in any
such case, the new Securities and cash, if any, are to be
delivered to the Custodian;
(j) For delivery in connection with any loans of Securities of the
Fund, but only against receipt of such collateral as the Trust
shall have specified to the Custodian in Proper Instructions;
except that in connection with any loans for which collateral
is to be credited to the Custodian's account in the book-entry
system authorized by the U.S. Department of the Treasury, the
Custodian will not be held liable or responsible for the
delivery of securities owned by the Fund prior to the receipt
of such collateral;
(k) For delivery as security in connection with any borrowings by
the Fund requiring a pledge of assets by such Fund, but only
against receipt by the Custodian of the amounts borrowed;
(l) Pursuant to any authorized plan of liquidation, reorganization,
merger, consolidation or recapitalization of the Trust or a
Fund;
(m) For delivery in accordance with the provisions of any agreement
among the Trust on behalf of a Fund, the Custodian and a broker-
dealer registered under the 1934 Act and a member of the NASD,
relating to compliance with the rules of The Options Clearing
Corporation and of any registered national securities exchange
(or of any similar organization or organizations) regarding
escrow or other arrangements in connection with transactions by
the Fund;
(n) For delivery in accordance with the provisions of any agreement
among the Trust on behalf of a Fund, the Custodian, and a
futures commission merchant registered under the Commodity
Exchange Act, relating to compliance with the rules of the
Commodity Futures Trading commission and/or any contract market
(or any similar organization or organizations) regarding
account deposits in connection with transactions by the Fund;
or
(o) Upon receipt of instructions from the transfer agent for a
Fund, for delivery to such transfer agent or to the holders of
Shares in connection with distributions in kind, in
satisfaction of requests by holders of Shares for repurchase
redemption;
(p) For any other proper corporate purposes, but only upon receipt,
in addition to Proper Instructions, of a copy of a resolution
of the Board of Trustees, certified by an Officer, specifying
the Securities to be delivered, setting forth the purpose for
which such delivery is to be made, declaring such purpose to be
a proper corporate purpose, and naming the person or persons to
whom delivery of such Securities shall be made.
3.10 Bank Accounts. The Custodian may open and maintain a separate
bank account or accounts in the name of each Fund, subject only to draft
or order by the Custodian acting pursuant to the terms of this Agreement,
and shall hold in such account or accounts, subject to the provisions
hereof, all cash received by it from or for the account of each Fund,
other than cash maintained in a joint repurchase account with other
affiliated funds or by a particular Fund in a bank account established
and used in accordance with Rule 17f-3 under the 1940 Act. Funds held by
the Custodian for a Fund may be deposited by it to its credit as
Custodian in the Banking Department of the Custodian or in such other
banks or trust companies as it may in its discretion deem necessary or
desirable; provided, however, that every such bank or trust company shall
be qualified to act as a custodian under the 1940 Act and that each such
bank or trust company and the funds to be deposited with each such bank
or trust company shall be approved by the vote of a majority of the Board
of Trustees of the Trust. Such funds shall be deposited by the Custodian
in its capacity as Custodian for the Fund and shall be withdrawable by
the Custodian only in that capacity. If requested by the Trust, the
Custodian shall furnish the Trust, not later than twenty (20) days after
the last business day of each month, an internal reconciliation of the
closing balance as of that day in all accounts described in this section
to the balance shown on the daily cash report for that day rendered to
the Trust.
3.11 Payments for Shares. The Custodian shall make such
arrangements with the transfer agent of each Fund, as will enable the
Custodian to receive the cash consideration due to each Fund and will
deposit into each Fund's Custody Account such payments as are received
from the transfer agent. The Custodian will provide timely notification
to the Trust and the transfer agent of any receipt by it of payments for
Shares of the respective Fund.
3.12 Availability of Federal Funds. Upon mutual agreement between
the Trust and the Custodian, the Custodian shall make federal funds
available to the Funds as of specified times agreed upon from time to
time by the Trust and the Custodian in the amount of checks, clearing
house funds, and other non-federal funds received in payment for Shares
of the Funds which are deposited into the Funds' Custody Accounts.
3.13 Actions Not Requiring Proper Instructions. The Custodian may,
in its discretion and without express authority from the Trust or any
Fund:
(a) Make payments to itself or others for minor expenses of
handling Securities or other similar items relating to its
duties under this Agreement, provided that all such payments
shall be accounted for to the Fund;
(b) Endorse for collection, in the name of the Fund, checks, drafts
and other negotiable instruments;
(c) Surrender interim receipts or Securities in temporary form for
Securities in definitive form; and
(d) In general, and except as otherwise directed in Proper
Instructions, attend to all non-discretionary details in
connection with sale, exchange, substitution, purchase,
transfer and other dealings with Securities and assets of the
Fund.
3.14 Ownership Certificates for Tax Purposes. The Custodian shall
execute any necessary declarations certificates of ownership under the
federal income tax laws or the laws or regulations of any other taxing
authority now or hereafter in effect, and prepare and submit reports to
the Internal Revenue Service ("IRS") and to the Trust at such time, in
such manner and containing such information as is prescribed by the IRS.
3.15 Registration and Transfer of Securities. All Securities held
for a Fund that are issued or issuable only in bearer form shall be held
by the Custodian in that form, provided that any such Securities shall be
held in a Securities System if eligible therefor. All other Securities
held for a Fund may be registered in the name of such Fund, the
Custodian, or any sub- custodian or agent appointed pursuant to Sections
3.3 and 3.4, respectively, above, or in the name of any nominee of any of
them, or in the name of a Securities System or any nominee thereof. All
securities accepted by the Custodian on behalf of the Fund under the
terms of this Agreement shall be in "street name" or other good delivery
form. If, however, the Fund directs the Custodian to maintain securities
in "street name", the Custodian shall utilize its best efforts only to
timely collect income due the Fund on such securities and to notify the
Fund on a best efforts basis only of relevant corporate actions
including, without limitation, pendency of calls, maturities, tender or
exchange offers. The Trust shall furnish to the Custodian appropriate
instruments to enable the Custodian to hold or deliver in proper form for
transfer, or to register in the name of any of the nominees hereinabove
referred to or in the name of a Securities System, any Securities
registered in the name of a Fund.
3.16 Records. The Custodian shall create and maintain all records
relating to its activities and obligations under this Contract in such
manner as will meet the obligations of the Fund under the 1940 Act, with
particular attention to Section 31 thereof and Rules 31a-1 and 31a-2
thereunder. All such records shall be the property of the Fund and shall
at all times during the regular business hours of the Custodian be open
for inspection by duly authorized officers, employees or agents of the
Fund and employees and agents of the SEC. The Custodian shall, at the
Fund's request, supply the Fund with a tabulation of securities owned by
the Fund and held by the Custodian and shall, when requested to do so by
the Fund and for such compensation as shall be agreed upon between the
Fund and the Custodian, include certificate numbers in such tabulations.
3.17 Fund Reports by Custodian. The Custodian shall furnish the
Trust with a daily activity statement by Fund and a summary of all
transfers to or from each Fund Custody Account on the day following such
transfers. At least monthly and from time to time, the Custodian shall
furnish the Trust with a detailed statement, by Fund, of the Securities
and moneys held for the Funds under this Agreement.
3.18 Other Reports by Custodian. The Custodian shall provide the
Trust, at such times as the Trust may reasonably require, with reports by
independent public accountants for each Fund on the accounting system,
internal accounting control and procedures for safeguarding securities,
future contracts and options on future contracts including securities
deposited and/or maintained in a Securities System, relating to the
services provided by the Custodian for the Fund under this Agreement;
such reports shall be of sufficient scope and in sufficient detail as may
reasonably be required by the Trust to provide reasonable assurance that
any material inadequacies would be disclosed by such examination, and, if
there are no such inadequacies, the reports shall so state.
3.19 Proxies and Other Materials. The Custodian shall cause all
proxies relating to Securities which are not registered in the name of a
Fund, to be promptly executed by the registered holder of such
Securities, without indication of the manner in which such proxies are to
be voted, and shall promptly deliver to the trust such proxies, all proxy
soliciting materials and all notices to such Securities.
3.20 Information on Corporate Actions. Subject to the provisions of
Section 3.15, the Custodian shall transmit promptly to the Trust all
written information (including, without limitation, pendency of calls and
maturities of securities and expirations of rights in connection
therewith and notices of exercise of call and put options written by the
Trust, on behalf of a Fund and the maturity of futures contracts
purchased or sold by the Trust on behalf of a Fund) received by the
Custodian from issuers of the Securities being held for the Funds. With
respect to tender or exchange offers, the Custodian shall transmit
promptly to the Trust all written information received by the Custodian
from the issuers of the Securities whose tender or exchange offer is
sought from the party (or his agents) making the tender offer. If the
Trust on behalf of a Fund desires to take action with respect to any
tender offer, exchange offer, or any other similar transaction, the Trust
shall notify the Custodian at least three business days prior to the date
on which the Custodian is to take such action.
3.22 Additional Series. In the event that the Trust establishes one
or more series in addition to and with respect to which it desires to
have the Custodian render services as Custodian under the terms set forth
in this Agreement, it shall so notify the Custodian in writing, and if
the Custodian shall agree in writing to provide such services, such
series shall become a Fund hereunder, subject to such fees as the parties
may agree.
ARTICLE IV
PURCHASE AND SALE OF INVESTMENTS OF THE FUND
4.1 Purchase of Securities. Promptly upon each purchase of
Securities for a Fund, Proper Instructions shall be delivered to the
Custodian, specifying (a) the Fund for which the purchase was made, (b)
the name of the issuer or writer of such Securities, and the title or
other description thereof, (c) the number of shares, principal amount
(and accrued interest if any) or other units purchased, (d) the date of
purchase and settlement, (e) the purchase price per unit, (f) the total
amount payable upon such purchase, and (g) the name of the person to whom
such amount is payable. The Custodian shall, upon receipt of such
Securities purchased by a Fund, pay out of the moneys held for the Fund
in the relevant Fund Custody Account the total amount specified in such
Proper Instructions to the person named therein. The Custodian shall not
be under any obligation to pay out moneys to cover the cost of a purchase
of Securities for a Fund, if in the relevant Fund Custody Account there
is insufficient cash available to the Fund for which such purchase was
made.
4.2 Liability for Payment in Advance of Receipt of
Securities Purchased. Except as provided in this Agreement, in any and
every case where payment for the purchase of Securities for a Fund is
made by the Custodian in advance of receipt of the securities purchased
but in the absence of Proper Instructions to so pay in advance, the
Custodian shall be liable to the Trust, on behalf of the Fund, for such
Securities to the same extent as if the Securities had been received by
the Custodian.
4.3 Sale of Securities. Promptly upon each sale of Securities by a
Fund, Proper Instructions shall be delivered to the Custodian, specifying
(a) the Fund for which the sale was made, (b) the name of the issuer or
writer of such Securities, and the title or other description thereof,
(c) the number of shares, principal amount (and accrued interest, if
any), or other units sold, (d) the date of sale and settlement (e) the
sale price per unit, (f) the total amount payable upon such sale, and (g)
the person to whom such Securities are to be delivered. Upon receipt of
the total amount payable to the Fund as specified in such Proper
Instructions, the Custodian shall deliver such Securities to the person
specified in such Proper Instructions. Subject to the foregoing, the
Custodian may accept payment in such form as shall be satisfactory to it,
and may deliver Securities and arrange for payment in accordance with the
customs prevailing among dealers in Securities.
4.4 Payment for Securities Sold. In its sole discretion and from
time to time, the Custodian may credit the relevant Fund Custody Account,
prior to actual receipt of final payment thereof, with (i) proceeds from
the sale of Securities which it has been instructed to deliver against
payment, (ii) proceeds from the redemption of Securities or other assets
of the Fund, and (iii) income from cash, Securities or other assets of
the Fund. Any such credit shall be conditional upon actual receipt by
Custodian of final payment and may be reversed if final payment is not
actually received in full. The Custodian may, in its sole discretion and
from time to time, permit a Fund to use funds so credited to its Fund
Custody Account in anticipation of actual receipt of final payment. Any
such funds shall be repayable immediately upon demand made by the
Custodian at any time prior to the actual receipt of all final payments
in anticipation of which funds were credited to the Fund Custody Account.
4.5 Advances by Custodian for Settlement. The Custodian may, in
its sole discretion and from time to time, advance funds to the Trust to
facilitate the settlement of a Fund's transactions in its Fund Custody
Account. Any such advance shall be repayable immediately upon demand
made by Custodian.
ARTICLE V
REDEMPTION OF FUND SHARES
5.1 Transfer of Funds. From such funds as may be available for the
purpose in the relevant Fund Custody Account, and upon receipt of Proper
Instructions specifying that the funds are required to redeem Shares of a
Fund, the Custodian shall wire each amount specified in such Proper
Instructions to or through such bank as the Trust may designate with
respect to such amount in such Proper Instructions.
5.2 No Duty Regarding Paying Banks. The Custodian shall not be
under any obligation to effect payment or distribution by any bank
designated in Proper Instructions given pursuant to Section 5.1 above of
any amount paid by the Custodian to such bank in accordance with such
Proper Instructions.
ARTICLE VI
SEGREGATED ACCOUNTS
Upon receipt of Proper Instructions, the Custodian shall establish
and maintain a segregated account or accounts for and on behalf of a
Fund, into which account or accounts may be transferred cash and/or
Securities, including Securities maintained in a Depository Account,
(a) in accordance with the provisions of any agreement among the
Trust on behalf of a Fund, the Custodian and a broker-dealer
registered under the 1934 Act and a member of the NASD (or any
futures commission merchant registered under the Commodity
Exchange Act), relating to compliance with the rules of The
Options Clearing Corporation and of any registered national
securities exchange (or the Commodity Futures Trading
commission or any registered contract market), or of any
similar organization or organizations, regarding escrow or
other arrangements in connection with transactions by a Fund,
(b) for purposes of segregating cash or Securities in connection
with securities options purchased or written by the Trust, on
behalf of a Fund or in connection with financial futures
contracts (or options thereon) purchased or sold by a Fund,
(c) which constitute collateral for loans of Securities made by a
Fund,
(d) for purposes of compliance by the Funds with requirements under
the 1940 Act for the maintenance of segregated accounts by
registered investment companies in connection with reverse
repurchase agreements, and when-issued, delayed delivery and
firm commitment transactions, and other similar transactions,
and
(e) for other proper corporate purposes, but only upon receipt of,
in addition of Proper Instructions, a certified copy of a
resolution of the Board of Trustees, certified by an Officer,
setting forth the purpose of purposes of such segregated
account and declaring such purposes to be proper corporate
purposes.
Each segregated account established under this Article VI shall be
established and maintained for a single Fund only. All Proper
Instructions relating to a segregated account shall specify the Fund
involved.
ARTICLE VII
CONCERNING THE CUSTODIAN
7.1 Standard of Care. The Custodian shall be held to a standard of
reasonable care in carrying out the provisions of this Agreement. The
Custodian shall be entitled to rely on and may act upon advice of counsel
(who may be counsel for the Trust) on all matters, and shall be without
liability for any action reasonably taken or omitted pursuant to such
advice. Subject to the limitations set forth in this Agreement, the
Custodian shall be kept indemnified by the Trust and be without liability
for any action taken or omitted to be taken by it in carrying out the
terms and provisions of this Agreement in accordance with the above
standards.
7.2 No Responsibility for Title. So long as and to the extent that
it is in the exercise of reasonable care, the Custodian shall not be
responsible for the title, validity or genuineness of any property or
evidence of title thereto received for delivered by it pursuant to this
Agreement.
7.3 Reliance Upon Documents and Instructions. The Custodian shall
be entitled to rely upon any certificate, notice or other instrument in
writing received by it and reasonably believed by it to be genuine. The
Custodian shall be entitled to rely upon any Proper Instructions actually
received by it pursuant to this Agreement.
7.4 Express Duties Only. The Custodian shall have no duties or
obligations whatsoever except such duties and obligations as are
specifically set forth in this Agreement, and no covenant or obligation
shall be implied in this Agreement against the Custodian.
7.5 Co-operation. The Custodian shall cooperate with and supply
necessary information, by Fund, to the entity or entities appointed by
the Trust to keep the books of account of the Funds and/or compute the
value of the assets of the Funds. The Custodian shall take all such
reasonable actions as the Trust may from time to time request to enable
the Trust to obtain, from year to year, favorable opinions from the
Trust's independent accountants with respect to the Custodian's
activities hereunder in connection with (a) the preparation of the
Trust's report on Form N-1A and Form N-SAR and any other reports required
by the Securities and Exchange Commission, and (b) the fulfillment by the
Trust of any other requirements of the SEC.
ARTICLE VIII
INDEMNIFICATION
8.1 Indemnification. The Trust shall indemnify and hold harmless
the Custodian, any sub-custodian appointed pursuant to Section 3.3 above,
or any agent, and any nominee of the Custodian or of such sub-custodian
from and against any loss, damage, cost, expense (including attorneys'
fees and disbursements), liability (including, without limitation,
liability arising under the Securities Act of 1933, the 1934 Act, the
1940 Act, and any state securities and/or banking laws) or claim arising
directly or indirectly (a) from the fact that Securities are registered
in the name of any such nominee, or (b) from any action or inaction by
the Custodian or such sub-custodian (i) at the request or direction of or
in reliance on the advice of the Trust, or (ii) upon Proper Instructions,
or (c) generally, from the performance of its obligations under this
Agreement or any sub-custody agreement with a sub-custodian appointed
pursuant to Section 3.3 above or, in the case of any such sub-custodian,
from the performance of its obligations under such sub-custody agreement,
provided that neither the Custodian nor any such sub-custodian shall be
indemnified and held harmless from and against any such loss, damage,
cost, expense, liability or claim arising from the Custodian's or such
sub-custodian's failure to act in accordance with the standard of
reasonable care set forth in Section 7.1.
8.2 Indemnity to be Provided. If the Trust requests the Custodian
to take any action with respect to Securities, which action involves the
payment of money or which action may, in the opinion of the Custodian,
result in the Custodian or its nominee becoming liable for the payment of
money or incurring liability of some other form, the Custodian shall not
be required to take such action until the Trust shall have provided
indemnity therefor to the Custodian in an amount and form satisfactory to
the Custodian.
8.3 Security. If the Custodian advances cash or Securities to a
Fund for any purpose, either at the Trust's request or as otherwise
contemplated in this Agreement, or in the event that the Custodian or its
nominee incurs, in connection with its performance under this Agreement,
any loss, damage, cost expense (including attorneys' fees and
disbursements), liability or claim (except such as may arise from its or
its nominee's negligence, bad faith and willful misconduct), then, in any
such event, any property at any time held for the account of such Fund
shall be security therefor, and should such Fund fail promptly to repay
or indemnify the Custodian, the Custodian shall be entitled to utilize
available cash of such Fund and to dispose of other assets of such Fund
to the extent necessary to obtain reimbursement or indemnification.
ARTICLE IX
EFFECTIVE PERIOD; TERMINATION
9.1 Effective Period. This Agreement shall become effective as of
its execution and shall continue in full force and effect until
terminated as hereinafter provided.
9.2 Termination. Either party hereto may terminate this Agreement,
with respect to one or more Funds, by giving to the other party a notice
in writing specifying the date of such termination, which shall be not
less than ninety (90) days after the date of the giving of such notice.
The notice shall specify the Funds to which the termination relates
("Terminated Funds"). If a successor custodian for one or more Terminated
Funds shall have been appointed by the Board of Trustees, the Custodian
shall, upon receipt of a notice of acceptance by the successor custodian,
on such specified date of termination (a) deliver directly to the
successor custodian all Securities (other than Securities held in a
Securities System) and cash then owned by the Terminated Funds and held
by the Custodian as custodian, and (b) transfer any Securities held in a
Securities System to an account of or for the benefit of the Funds at the
successor custodian, provided that the Trust on behalf of the Terminated
Funds shall have paid to the Custodian all fees, expenses and other
amounts to the payment or reimbursement of which it shall then be
entitled. Upon such delivery and transfer, the Custodian shall be
relieved of all obligations under this Agreement with respect to the
Terminated Funds. The Trust may at any time immediately terminate this
Agreement in the event of the appointment of a conservator or receiver
for the Custodian by regulatory authorities in the State of North
Carolina or upon the happening of a like event at the direction of an
appropriate regulatory agency or court of competent jurisdiction.
9.3 Failure to Appoint Successor Custodian. If a successor
custodian is not designated by the Trust on or before the date of
termination specified pursuant to Section 9.2 above, then the Custodian
shall have the right to deliver to a bank or trust company of its own
selection, which is (a) a "Bank" as defined in the 1940 Act, (b) has
aggregate capital, surplus and undivided profits as shown on its then
most recent published report of not less than $25 million, and (c) is
doing business in New York, New York, all Securities, cash and other
property held by Custodian under this Agreement and to transfer to an
account of or for the identified Funds at such bank or trust company all
Securities of the Funds held in a Securities System. Upon such delivery
and transfer, such bank or trust company shall be the successor custodian
for the Terminated Funds under this Agreement and the Custodian shall be
relieved of all obligations with respect to such Funds under this
Agreement. If, after reasonable inquiry, Custodian cannot find a
successor custodian as contemplated in this Section 9.3, then Custodian
shall have the right to deliver to the Trust all Securities and cash of
the Terminated Funds and to transfer any Securities held in a Securities
System to an account of or for the Trust. Thereafter, the Trust shall be
deemed to be its own custodian with respect to the Securities, cash and
other assets of the Terminated Funds and the Custodian shall be relieved
of all obligations under this Agreement.
9.4 Continuing Obligations. Nothing contained in this Article IX
shall be construed to excuse the Trust from payment of all charges due
and payable to the Custodian. The provisions of section 13.2,
"References to Custodian", Article VII, "Concerning the Custodian" and
Article VIII, "Indemnification" shall survive the termination or
expiration of this Agreement for any reason.
ARTICLE X
COMPENSATION OF CUSTODIAN
The Custodian shall be entitled to compensation as agreed upon from
time to time by the Trust and the Custodian. The fees and other charges
in effect on the date hereof and applicable to the Funds are set forth in
Exhibit C attached hereto.
ARTICLE XI
LIMITATION OF LIABILITY
It is expressly agreed that the obligations of the Trust hereunder
shall not be binding upon any of the Trustees, shareholders, nominees,
officers, agents or employees of the Trust personally, but shall bind
only the trust property of the Trust as provided in the Trust's Agreement
and Amended and Restated Declaration of Trust, dated February 24, 1992,
as from time to time amended. The execution and delivery of this
Agreement have been authorized by the Trustees, and this Agreement has
been signed and delivered by an authorized officer of the Trust, acting
as such, and neither such authorization by the Trustees nor such
execution and delivery by such officer shall be deemed to have been made
by any of them individually or to impose any liability on any of them
personally, but shall bind only the trust property of the Trust as
provided in the above-mentioned Agreement and Declaration of Trust.
ARTICLE XII
NOTICES
Unless otherwise specified herein, all demands, notices,
instructions, and other communications to be given hereunder shall be in
writing and shall be sent or delivered to The receipt at the address set
forth after its name herein below:
To the Trust:
The Biltmore Funds
Federated Investors Tower
Pittsburgh, PA 15222-3779
Attention: Secretary
To the Custodian:
Wachovia Bank of North Carolina, N.A.
301 North Main Street
Winston-Salem, NC 27150
Attn: Robert S. Kniejski
Telephone: 919/770-6172
Facsimile: 919/770-5758
or at such other address as either party shall have provided to the other
by notice given in accordance with this Article XII. Writing shall
include transmission by or through teletype, facsimile, central
processing unit connection, on-line terminal and magnetic tape.
ARTICLE XIII
MISCELLANEOUS
13.1 Governing Law. This Agreement shall be governed by and
construed in accordance with the laws of the State of North Carolina.
13.2 References to Custodian. The Trust shall not circulate any
printed matter which contains any reference to Custodian without the
prior written approval of Custodian, excepting printed matter contained
in the prospectus or statement of additional information for a Fund and
such other printed matter as merely identifies Custodian as custodian for
a Fund. The Trust shall submit printed matter requiring approval to
Custodian in draft form, allowing sufficient time for review by Custodian
and its counsel prior to any deadline for printing.
13.3 No Waiver. No failure by either party hereto to exercise, and
no delay by such party in exercising, any right hereunder shall operate
as a waiver thereof. The exercise by either party hereto of any right
hereunder shall not preclude the exercise of any other right, and the
remedies provided herein are cumulative and not exclusive of any remedies
provided at law or in equity.
13.4 Amendments. This Agreement cannot be changed orally and no
amendment to this Agreement shall be effective unless evidenced by an
instrument in writing executed by the parties hereto.
13.5 Counterparts. This Agreement may be executed in one or more
counterparts, and by the parties hereto on separate counterparts, each of
which shall be deemed an original but all of which together shall
constitute but one and the same instrument.
13.6 Severability. If any provision of this Agreement shall be
invalid, illegal or unenforceable in any respect under any applicable
law, the validity, legality and enforceability of the remaining
provisions shall not be affected or impaired thereby.
13.7 Successors and Assigns. This Agreement shall be binding upon
and shall inure to the benefit of the parties hereto and their respective
successors and assigns; provided, however, that this Agreement shall not
be assignable by either party hereto without the written consent of the
other party hereto.
13.8 Headings. The headings of sections in this Agreement are for
convenience of reference only and shall not affect the meaning or
construction of any provision of this Agreement.
IN WITNESS WHEREOF, each of the parties hereto has caused this
Agreement to be executed an delivered in its name and on its behalf by
its representatives thereunto duly authorized, all as of the day and year
first above written.
ATTEST: The Biltmore Funds
/s/ Peter J. Germain By:/s/ John W. McGonigle
Secretary President
ATTEST: Wachovia Bank of
North Carolina, N.A.
/s/ James G. Vanderberry By:_/s/ James Ferguson _
Secretary Vice President
EXHIBIT A
to the
Custody Agreement
The Biltmore Funds
FUNDS
The Biltmore Funds (the "Trust") consists of the following portfolios
(the "Funds") effective as of the dates set forth below:
Biltmore U.S. Government Money Market Fund March 9, 1992
Biltmore U.S. Treasury Money Market Fund March 9, 1992
Biltmore Tax-Free Money Market Fund March 9, 1992
Biltmore Money Market Fund March 9, 1992
Biltmore Prime Cash Management Fund June 11, 1992
EXHIBIT B
to the
CUSTODY AGREEMENT
THE BILTMORE FUNDS
Biltmore Money Market Fund
Institutional Shares/Investment Shares
Biltmore Prime Cash Management Fund
Insitional Shares
Biltmore Tax-Free Money Market Fund
Institutional Shares/Investment Shares
Biltmore U.S. Government Money Market Fund
Institutional Shares/Investment Shares
Biltmore U.S. Treasury Money Market Fund
Institional Shares
the ("Trust")
I, H. Veron Winters, an Officer of Wachovia Investment Management,
hereby request that the following individuals be authorized to give
proper instructions to the Custodian of the Trust.
/s/ H. Vernon Winters
H. Veron Winters
Chief Investment Officer
Name, Title
H. Vernon Winters, Signature: /s/ H. Veron Winters
Senior Vice President;
Group Executive Manager;
Chief Investment Officer of
Wachovia Investment Management
Michael J. Tierney, Signature: /s/ Michael J. Tierney
Senior Vice President;
Manager of Trust Investments
Samuel M. Gibbs II, Signature: /s/ Samuel M. Gibbs, II
Senior Vice President;
Senior Portfolio Manager;
and Manager of Fixed-Income
Portfolio Management
Patti J. Kiser, Signature: /s/ Patti J. Kiser
Assistant Vice President;
Portfolio Manager Short-Term
Investments
R. Emery Pike, Signature: /s/ R. Emery Pike
Vice President;
Portfolio Manager
Michael Holt, Signature: /s/ Michael Holt
Vice President; Portfolio
Manager Tax-Free Securities
H. Frederick Nelson, Signature: /s/ H. Frederick Nelson
Vice President;
Portfolio Manager
Doris M. Styron, Signature: /s/ Doris M. Styron
Assistant Vice President
EXHIBIT C
to the
Custody Agreement
The Biltmore Funds
COMPENSATION
For the services to be provided to the Trust pursuant to the Custody
Agreement, the Trust share pay the custodian an annual fee calculated
based upon the average daily net assets of each series and payable
monthly as follows:
$0 to $250 million - 2.0 b.p.
$250 million to 500 million - 1.5 b.p.
Over $500 million - 1.0 b.p.
Transaction Fees
$12.00 DTC Transaction
12.00 Federal Reserve Book Entry Transaction
25.00 Physical Transaction, Non-Fed/Non-DTC
Transaction
10.00 Wire Transfers
Out of pocket expenses including telephone, legal, postage and
insurance, telex, telecopier, supplies, stationery and forms.
EXHIBIT D
to the
Custody Agreement
The Biltmore Funds
FUNDS
The Biltmore Funds (the "Trust") consists of the following
portfolios (the "Funds") effective as of the dates set forth
below:
Biltmore U.S. Government Money Market Fund March 9, 1992
Biltmore U.S. Treasury Money Market Fund March 9, 1992
Biltmore Tax-Free Money Market Fund March 9, 1992
Biltmore Money Market Fund March 9, 1992
Biltmore Prime Cash Management Fund June 12, 1992
-1-
Form N-1A Exhibit No.9(i)
Regulation S-K Exhibit No. 10(iii)
PORTFOLIO ACCOUNTING
AND
SHAREHOLDER RECORDKEEPING AGREEMENT
This Portfolio Accounting and Shareholder Recordkeeping Agreement is
made as of this 9th day of March, 1992, by and between The Biltmore Funds, a
Massachusetts business trust (herein called the "Trust"), and FEDERATED
SERVICES COMPANY, a Delaware business trust (herein called "Services").
WHEREAS, the Trust is a Massachusetts business trust, consisting of
one or more series which are or hereafter may be established ("Portfolios"),
which operates as an open-end management investment company and is registered
under the Investment Company Act of 1940, as amended (the "1940 Act");
WHEREAS, the Trust intends to authorize and issue shares of beneficial
interest of each Portfolio ("Shares");
WHEREAS, the Trust wishes to retain Services to provide certain
portfolio accounting and recordkeeping services for the Portfolios, including
any classes of shares issued by any Portfolio ("Classes") and Services
desires to accept such retention;
WHEREAS, the Trust desires to appoint Services as its transfer agent,
dividend disbursing agent, and agent in connection with certain other
activities with respect to the Portfolios, and Services desires to accept
such appointment;
NOW THEREFORE, in consideration of the premises and mutual covenants
herein contained, the parties hereto agree as follows:
SECTION ONE: Portfolio Accounting.
1.1. Appointment. The Trust hereby appoints Services, and Services
agrees, to provide certain pricing and bookkeeping services to the Portfolios
for the period and on the terms set forth in this Agreement.
1.2. Services and Duties. Subject to the supervision and control of the
Trust's Board of Trustees, Services will assist the Trust, the Portfolios,
and/or the Classes with regard to portfolio accounting and in connection
therewith undertakes to do the following specific services:
A. Valuing the assets of each Portfolio and determining the net asset
value per share of the outstanding Shares of each Portfolio and its Classes,
at the time and in the manner from time to time determined by the Board of
Trustees of the Trust and as set forth in each Portfolio's prospectus and
statement of additional information ("Prospectus");
B. Calculating the net income of each Portfolio, if any;
C. Calculating capital gains or losses for each Portfolio from the
sale or disposition of assets, if any;
D. Maintaining the general ledger and other accounts, books and
financial records of the Trust, including for each Portfolio and Class, as
required under Section 31(a) of the 1940 Act and the rules thereunder in
connection with the services provided by Services;
E. Performing the following accounting functions on a daily basis:
(1) Journalizing each Portfolio's investment, capital share and
income and expense activities;
(2) Reconciling cash and investment balances of each Portfolio
with the Custodian;
(3) Maintaining individual ledgers for investment securities;
(4) Maintaining historical tax lots for each investment
security;
(5) Calculating various contractual expenses (e.g., advisory and
custody fees).
(6) Obtaining security market quotes from services approved by
the Adviser, or if such quotes are unavailable, then
obtaining such prices from the Adviser, and in either case
calculating the market value of each Portfolio's
investments, and transmitting a copy of the portfolio
valuation to the Adviser;
F. Preparing quarterly financial statements, to include the following
items:
Schedule of Investments
Statement of Assets and Liabilities
Statement of Operations
Statement of Changes in Net Assets
Cash Statement
Schedule of Capital Gains and Losses
G. Preparing monthly security transactions listings;
H. Preparing quarterly broker security transactions summaries;
I. At the request of the Trust, preparing or assisting with the
preparation of various reports or other financial documents required by
federal, state and other applicable laws and regulations, including but not
limited to providing financial data required in connection with the Trust's
semi-annual reports on Form N-SAR, annual and semi-annual shareholder
reports, proxy statements and registration statements; and
J. Such other similar services as may be reasonably requested by the
Trust.
1.3. Compensation and Allocation of Expenses.
A. For the performance by Services pursuant to Section One of this
Agreement and in consideration of the additional duties described in Section
Three of this Agreement, the Trust agrees to compensate Services in
accordance with the fees set forth in Schedule B hereto.
B. In addition to the fee paid pursuant to Schedule C, the Trust
agrees to reimburse Services for out-of-pocket expenses incurred by Services
for the items set out in Schedule B hereto.
C. Services will bill each Portfolio separately as soon as
practicable after the end of each calendar month, and said billings will be
detailed in accordance with Schedule B and Schedule C. The Trust will
promptly pay to Services the amount of such billing.
D. Any compensation agreed to hereunder may be adjusted from time to
time by attaching hereto a revised Schedule B or Schedule C dated and signed
by a duly authorized officer of the Trust and a duly authorized officer of
Services.
E. The fee for the period from the effective date of application of
this Agreement with respect to a Portfolio to the end of the initial month
shall be prorated according to the proportion that such period bears to the
full month period. Upon any termination of this Agreement before the end of
any month, the fee for such period shall be prorated according to the
proportion which such period bears to the full month period. For purposes of
determining fees payable to Services, the value of the Portfolio's net assets
shall be computed at the time and in the manner specified in each Portfolio's
Prospectus.
SECTION TWO: Shareholder Recordkeeping.
2.1. Terms of Appointment. Subject to the terms and conditions set forth
in this Agreement, the Trust hereby employs and appoints Services to act as,
and Services agrees to act as, transfer agent for each Portfolio's Shares,
dividend disbursing agent, and agent in connection with any accumulation,
open- account or similar plans provided to the shareholders of any Portfolio
("Shareholders"), including without limitation any periodic investment plan
or periodic withdrawal program.
Proper Instructions as used throughout Section Two of this Agreement
means a writing signed or initialed by one or more person or persons as the
Board of Trustees shall have from time to time authorized. Each such writing
shall set forth the specific transaction or type of transaction involved.
Oral instructions will be considered Proper Instructions if Services
reasonably believes them to have been given by a person previously authorized
in Proper Instructions with respect to the transaction involved. The Trust
and Services shall cause all oral instructions to be confirmed in writing.
Proper Instructions may include communications effected directly between
electro-mechanical or electronic devices provided that the Trust and Services
are satisfied that such procedures afford adequate safeguards for a
Portfolio's assets. Proper Instructions may only be amended in writing.
2.2. Duties of Services. Services agrees that it will perform the
following services in accordance with Proper Instructions as may be provided
from time to time by the Trust as to any Portfolio:
A. General.
Services will establish one or more accounts with the Custodian
for the deposit of funds received or disbursed in connection with
its activities hereunder.
B. Purchases.
(1) Services shall receive orders and payment for the purchase
of shares and, if such purchase orders comply with the
procedures as may be described in the appropriate
Portfolio's Prospectus or set forth in Proper Instructions,
promptly deliver payment and appropriate documentation
therefor to the Custodian. Services shall notify the Trust
and the Custodian on a daily basis of the total amount of
orders and payments so delivered.
(2) Pursuant to purchase orders and in accordance with the
Portfolio's current Prospectus, Services shall compute and
issue the appropriate number of shares and hold such shares
in the appropriate Shareholder accounts.
(3) If a Shareholder or its agent requests a certificate and if
it is the practice of the Trust to issue certificates,
Services, as Transfer Agent, shall countersign and mail by
first class mail, a certificate to the Shareholder at his
address as set forth on the transfer books of the Portfolio,
subject to any Proper Instructions regarding the delivery of
certificates.
(4) In the event that any check or other order for the purchase
of Shares of the Portfolio is returned unpaid for any
reason, Services shall debit the Share account of the
Shareholder by the number of Shares that had been credited
to his account upon receipt of the check or other order,
promptly mail a debit advice to the Shareholder, and notify
the Trust of its action. In the event that the amount paid
for such Shares exceeds proceeds of the redemption of such
Shares plus the amount of any dividends paid with respect to
such Shares, Services will receive reimbursement of such
excess from the Portfolio or its distributor.
C. Distribution.
(1) Upon notification by the Trust of the declaration of any
distribution to Shareholders, Services shall act as Dividend
Disbursing Agent for each Portfolio in accordance with the
provisions of the Trust's Declaration of Trust, the then
current Prospectus of the applicable Portfolio and
instructions in proper form by Shareholders, and as such
shall prepare and mail or credit income, capital gain, or
any other payments to Shareholders. With respect to
distributions payable in cash, on or before the payment date
of any such distribution, Services shall notify the
Custodian of the estimated amount required and request the
Custodian to make available sufficient funds for the cash
amount to be paid out. Services shall reconcile the amounts
so requested and the amounts actually received with the
Custodian on a daily basis. With respect to distributions
payable in additional shares, Services shall make
appropriate credits to the Shareholder's account and deliver
certificates where requested and applicable; and
(2) Services shall maintain records of account for each
Portfolio and advise the Trust and its Shareholders as to
the foregoing.
D. Redemptions and Transfers.
(1) Services shall receive redemption requests and redemption
directions and, if such redemption requests comply with the
procedures as may be described in the appropriate
Portfolio's Prospectus or set forth in Proper Instructions,
deliver the appropriate instructions therefor to the
Custodian.
(2) At the appropriate time as and when it receives monies paid
to it by the Custodian with respect to any redemption,
Services shall pay over or cause to be paid over in the
appropriate manner such monies as instructed by the
redeeming Shareholders, pursuant to procedures described in
the then current Prospectus of the Portfolio.
(3) If any such certificate or request for redemption does not
comply with the procedures for redemption approved by the
Trust, Services shall promptly notify the Shareholder and
the Trust of such fact, together with the reason therefor,
and shall effect such redemption at the price applicable to
the date and time of receipt of documents complying with
said procedures.
(4) Services shall effect transfers of Shares by the registered
owners thereof.
(5) Services shall identify and process abandoned accounts and
uncashed checks for state escheat requirements on an annual
basis and report such actions to the Trust.
E. Recordkeeping.
(1) Services shall record the issuance of shares of the
Portfolio and maintain pursuant to applicable Rules of the
Securities and Exchange Commission a record of the total
number of shares of the Portfolio which are authorized,
based upon data provided to it by the Trust, and issued and
outstanding. Services shall also provide the Trust on a
regular basis or upon reasonable request with the total
number of Shares which are authorized and issued and
outstanding, but shall have no obligation when recording the
issuance of Shares, except as otherwise set forth herein, to
monitor the issuance of such shares or to take cognizance of
any laws relating to the issuer or sale of such Shares,
which functions shall be the sole responsibility of the
Trust.
(2) Services shall establish and maintain records pursuant to
applicable Rules of the Securities and Exchange Commission
relating to the services to be performed hereunder in the
form and manner as agreed to by the Trust to include a
record for each Shareholder's account of the following:
(a) Name, address and tax identifying number (and whether
such number has been certified);
(b) Number of Shares held;
(c) Historical information regarding the account, including
dividends paid and date and price for all transactions;
(d) Any stop or restraining order placed against the
account;
(e) Information with respect to withholdings in the case of
a foreign account or an account for which withholding
is required by the Internal Revenue Code;
(f) Any dividend reinvestment order, plan application,
dividend address and correspondence relating to the
current maintenance of the account;
(g) Certificate numbers and denominations for any
Shareholder holding certificates;
(h) Any information required in order for Services to
perform the calculations contemplated or required by
this Agreement.
F. Confirmations/Reports.
(1) Services shall furnish periodically to the Trust, as well as
to the appropriate agent of the Trust designated by the
Trust for the receipt of such information, the following
information:
(a) A copy of the transaction register;
(b) Dividend and reinvestment blotters;
(c) The total number of Shares issued and outstanding in
each state for "blue sky" purposes as determined
according to Proper Instructions delivered from time to
time by the Trust to Services;
(d) Shareholder lists and statistical information;
(e) Payments to third parties relating to distribution
agreements, allocations of sales loads, redemption
fees, or other transaction- or sales-related payments;
(f) Such other information as may be agreed upon from time
to time.
(2) Services shall prepare in the appropriate form, file with
the Internal Revenue Service and appropriate state agencies,
and, if required, mail to Shareholders, such notices for
reporting dividends and distributions paid as are required
to be so filed and mailed and shall withhold such sums as
are required to be withheld under applicable federal and
state income tax laws, rules and regulations.
(3) In addition to and not in lieu of the services set forth
above, Services shall:
(a) Perform all of the customary services of a transfer
agent, dividend disbursing agent and, as relevant,
agent in connection with accumulation, open- account or
similar plans (including without limitation any
periodic investment plan or periodic withdrawal
program), including but not limited to: maintaining all
Shareholder accounts, preparing Shareholder meeting
lists, mailing proxies, receiving and tabulating
proxies, mailing Shareholder reports and prospectuses
to current Shareholders, withholding taxes on accounts
subject to back-up or other withholding (including non-
resident alien accounts), preparing and filing reports
on U.S. Treasury Department Form 1099 and other
appropriate forms required with respect to dividends
and distributions by federal authorities for all
Shareholders, preparing and mailing confirmation forms
and statements of account to Shareholders for all
purchases and redemptions of Shares and other
confirmable transactions in Shareholder accounts,
preparing and mailing activity statements for
Shareholders, and providing Shareholder account
information; and
(b) provide a system which will enable the Trust to monitor
to total number of Shares of each Portfolio sold in
each state ("blue sky reporting"). The Trust shall by
Proper Instructions (i) identify to Services those
transactions and assets to be treated as exempt from
the blue sky reporting for each state and (ii) verify
the classification of transactions for each state on
the system prior to activation and thereafter
monitoring the daily activity for each state. The
responsibility of Services for each Portfolio's blue
sky state registration status is solely limited to the
recording of the initial classification of transactions
or accounts with regard to blue sky compliance and the
reporting of such transactions and accounts to the
Trust as provided above.
G. Other Duties.
(1) Services shall answer correspondence from Shareholders
relating to their Share accounts and such other
correspondence as may from time to time be addressed to
Services;
(2) Services shall mail proxy cards and other material supplied
to it by the Trust in connection with Shareholder Meetings
of each Portfolio; receive, examine and tabulate returned
proxies; and certify the vote of the Shareholders;
(3) Services shall establish and maintain facilities and
procedures for safekeeping of stock certificates, check
forms and facsimile signature imprinting devices, if any;
and for the preparation or use, and for keeping account of,
such certificates, forms and services.
(4) In case of the loss or destruction of any certificate
representing Shares, no new certificate shall be issued in
lieu thereof, unless there shall first have been furnished
an appropriate bond of indemnity issued by a surety company
approved by the Trust and Services.
2.3. Duties of the Trust.
A. Compliance. The Trust assumes full responsibility for the
preparation, contents and distribution of each Prospectus of the Portfolio
and for complying with all applicable requirements of the Securities Act of
1933, as amended (the "1933 Act"), the 1940 Act, and any laws, rules and
regulations of government authorities having jurisdiction.
B. Share Certificates. The Trust shall supply Services with a
sufficient supply of blank Share certificates and from time to time shall
renew such supply upon request of Services. Such blank Share certificates
shall be properly signed, manually or by facsimile, if authorized by the
Trust and shall bear the seal of the Trust or facsimile thereof; and
notwithstanding the death, resignation or removal of any officer of the Trust
authorized to sign certificates, Services may continue to countersign
certificates which bear the manual or facsimile signature of such officer
until otherwise directed by the Trust.
C. Distributions. The Trust shall promptly inform Services of the
declaration of any dividend or distribution on account of any Portfolio's
shares.
2.4. Fees and Expenses.
A. For performance by Services pursuant to Section Two of this
Agreement and in consideration of the additional duties described in Section
Three of this Agreement, the Trust agrees to pay Services an annual
maintenance fee for each Shareholder account as set out in Schedule D hereto.
B. In addition to the fee paid pursuant to Schedule D, the Trust
agrees to reimburse Services for out-of-pocket expenses or advances incurred
by Services for the items set out in Schedule E hereto.
C. Services will bill each Portfolio separately with respect to fees
and reimbursable expenses on a timely basis, generally within 15 days
following the end of the month in which the fees and expenses have been
incurred. Classes of Portfolios are treated as separate portfolios for
purposes of determining out-of-pocket costs. The Trust will promptly pay to
Services the amount of such billing.
D. Any compensation agreed to hereunder may be adjusted from time to
time by attaching hereto a revised Schedule D or Schedule E dated and signed
by a duly authorized officer of the Trust and a duly authorized officer of
Services.
SECTION THREE: Additional Duties.
3.1. Records.
A. Services shall create and maintain all necessary books and records
in accordance with all applicable laws, rules and regulations, including but
not limited to records required by Section 31(a) of the 1940 Act and the
rules thereunder, as the same may be amended from time to time, pertaining to
the services performed by it and not otherwise created and maintained by
another party pursuant to contract with the Trust. The Trust, or the Trust's
authorized representatives, shall have access to such books and records at
all times during Services's normal business hours. Upon the reasonable
request of the Trust, copies of any such books and records shall be provided
by Services to the Trust or the Trust's authorized representatives.
B. The books and records pertaining to the Trust which are in the
possession of Services and which are either (1) required to be maintained by
Rule 31a-1 of the 1940 Act or (2) created in connection with the services
described in Section One of this Agreement shall be the property of the
Trust.
C. Where applicable, the books and records pertaining to the Trust
which are in the possession of Services shall be maintained by Services for
the periods and in the places required by Rule 31a-2 under the 1940 Act.
D. In the case of records not within the scope of Section above,
Services may, at its option at any time, and shall forthwith upon the Trust's
demand, turn over to the Trust and cease to retain in Service's files,
records and documents created and maintained by Services pursuant to this
Agreement, which are no longer needed by Services in performance of its
services or for its protection. If not so turned over to the Trust, such
records and documents will be retained by Services for six years from the
year of creation, during the first two of which such documents will be in
readily accessible form. At the end of the six year period, such records and
documents will either be turned over to the Trust or destroyed in accordance
with Proper Instructions as described in Section Two of this Agreement.
E. Services agrees, on behalf of itself and its employees, to treat
confidentially and as proprietary information of the Trust all records and
other information relative to the Trust (other than Records or material
produced in connection with an Examination or inspection by the Securities
and Exchange Commission or other Regulatory body, or material produced in
compliance with an order by a court of competent jurisdiction) and its prior,
present or potential Shareholders, and not to use such records and
information for any purpose other than performance of its responsibilities
and duties hereunder, except, after prior notification to and approval in
writing by the Trust, which approval shall not be unreasonably withheld and
may not be withheld by the Trust where Services may be exposed to civil or
criminal contempt proceedings for failure to comply, when requested to
divulge such information by duly constituted authorities, or when so
requested by the Trust.
3.2. Cooperation with Accountants. Services shall cooperate with the
Fund's independent public accountants and shall take all reasonable action in
the performance of its obligations under this Agreement to assure that the
necessary information is made available to such accountants for the
expression of their opinion as such may be required by the Trust from time to
time.
3.3. Equipment Failures. In the event of equipment failures beyond
Services' control, Services shall, at no additional expense to the Trust,
take reasonable steps to minimize service interruptions. Services shall as
soon as is practicable after the date of this Agreement enter into and shall
maintain in effect with appropriate parties one or more agreements making
reasonable provision for emergency use of electronic data processing
equipment to the extent appropriate equipment is available.
SECTION FOUR: General Provisions.
4.1. Documents.
A. In connection with the appointment of Services under this
Agreement, the Trust shall file with Services the following documents:
(1) A copy of the Declaration of Trust and By- Laws of the Trust
and all amendments thereto;
(2) A copy of the resolution of the Board of Trustees of the
Trust authorizing this Agreement;
(3) Specimens of all forms of outstanding Share certificates of
the Portfolios in the forms approved by the Board of the
Trustees of the Trust with a certificate of the Secretary of
the Trust as to such approval;
(4) All account application forms and other documents relating
to Shareholders' accounts; and
(5) A copy of each Portfolio's current Prospectus.
B. The Trust will also furnish from time to time the following
documents:
(1) Each resolution of the Board of Trustees of the Trust
authorizing the original issuance of each Portfolio's
Shares;
(2) Each Registration Statement filed with the Securities and
Exchange Commission and amendments thereof and orders
relating thereto in effect with respect to the sale of
Shares of any Portfolio;
(3) A certified copy of each amendment to the governing document
and the By-Laws of the Trust;
(4) Certified copies of each vote of the Board authorizing
officers to give Proper Instructions to the Transfer Agent;
(5) Specimens of all new Share certificates representing Shares
of any Portfolio, accompanied by Board resolutions approving
such forms;
(6) Such other certificates, documents or opinions which
Services may, in its discretion, deem necessary or
appropriate in the proper performance of its duties; and
(7) Revisions to the Prospectus of any Portfolio.
4.2. Representations and Warranties.
A. Representations and Warranties of Services. Services represents
and warrants to the Trust that:
(1) It is a business trust duly organized and existing and in
good standing under the laws of the Commonwealth of
Massachusetts.
(2) It is duly qualified to carry on its business in the State
of Delaware.
(3) It is empowered under applicable laws and by its charter and
by-laws to enter into and perform this Agreement.
(4) All requisite corporate proceedings have been taken to
authorize it to enter into and perform this Agreement.
(5) It has and will continue to have access to the necessary
facilities, equipment and personnel to perform its duties
and obligations under this Agreement.
(6) It is in compliance with federal securities law requirements
and in good standing as a transfer agent.
B. Representations and Warranties of the Trust. The Trust represents
and warrants to Services that:
(1) It is a business trust duly organized and existing and in
good standing under the laws of the Commonwealth of
Massachuetts.
(2) It is empowered under applicable laws and by its Declaration
of Trust and By-Laws to enter into and perform this
Agreement.
(3) All requisite corporate proceedings have been taken to
authorize it to enter into and perform this Agreement.
(4) It is an open-end investment company registered under the
1940 Act.
(5) A registration statement under the 1933 Act will be
effective, and appropriate state securities law filings have
been made and will continue to be made, with respect to all
Shares of each Portfolio being offered for sale.
4.3. Expenses of the Trust and of Services.
A. Services shall not be required to pay any of the following
expenses incurred by the Trust, the Portfolios, or the Classes: custodial
expenses; membership dues in the Investment Company Institute or any similar
organization; investment advisory expenses; costs of printing and mailing
stock certificates, Prospectuses, reports and notices; interest on borrowed
money; brokerage commissions; taxes and fees payable to Federal, state and
other governmental agencies; fees of Trustees of the Trust who are not
affiliated with Services; outside auditing expenses; outside legal expenses;
cost of pricing services; or other expenses not specified in this Section
which may be properly payable by the Trust.
B. Services in its sole discretion may from time to time employ or
associate with itself such person or persons as Services may believe to be
particularly suited to assist it in performing services under this Agreement.
Such person or persons may be officers and employees who are employed by both
Services and the Trust. The compensation of such person or persons shall be
paid by Services and no obligation shall be incurred on behalf of the Trust,
the Portfolios, or the Classes in such respect.
4.4. Standard of Care/Indemnification.
A. Standard of Care. Services shall be held to a standard of
reasonable care in carrying out the provisions of this Agreement; provided,
however that Services shall be held to any higher standard of care which
would be imposed upon Services by any applicable law or regulation even
though such stated standard of care was not part of this Agreement.
B. Indemnification by Trust. Services shall not be responsible for
and the Trust shall indemnify and hold Services harmless against any and all
losses, damages, costs, charges, counsel fees, payments, expenses and
liability arising out of or attributable to:
(1) The Trust's refusal or failure to comply with the terms of
this Agreement, or which arise out of the Trust's lack of
good faith, gross negligence or willful misconduct or which
arise out of the breach of any representation or warranty of
the Trust hereunder.
(2) The reliance on or use by Services or its agents or
subcontractors of information, records and documents in
proper form which
(a) are received by Services or its agents or
subcontractors and furnished to it by or on behalf of
the Trust, its Shareholders or investors regarding the
purchase, redemption or transfer of shares and
Shareholder account information, or
(b) have been prepared and/or maintained by the Trust or
its affiliates or any other person or firm on behalf of
the Trust.
(3) The reliance on, or the carrying out by Services or its
agents or subcontractors of Proper Instructions of the
Trust.
(4) The offer or sale of Shares in violation of any requirement
under the federal securities laws or regulations or the
securities laws or regulations of any state that such Shares
by registered in such state or in violation of any stop
order or other determination or ruling by any federal agency
or any state with respect to the offer or sale of such
Shares in such state.
Provided, however, that Services shall not be protected by this Section from
liability for any act or omission resulting from Services's lack of good
faith, negligence, willful misconduct, or failure to meet the standard of
care set forth in Section above.
C. Indemnification by Services. Services shall indemnify and hold
each Portfolio harmless from and against any and all losses, damages, costs,
charges, counsel fees, payments, expenses and liability arising out of or
attributed to any action or failure or omission to act by Services as a
result of Services's lack of good faith, negligence, willful misconduct, or
failure to meet the standard of care set forth in Section above.
D. Reliance. At any time Services may apply to any officer of the
Trust for instructions, and may consult with legal counsel with respect to
any matter arising in connection with the services to be performed by
Services under this Agreement, and Services and its agents or subcontractors
shall not be liable and shall be indemnified by the appropriate Portfolio for
any action reasonably taken or omitted by it in reliance upon such
instructions or upon the opinion of such counsel provided such action is not
in violation of applicable Federal or state laws or regulations. Services,
its agents and subcontractors shall be protected and indemnified in
recognizing stock certificates which are reasonably believed to bear the
proper manual or facsimile signatures of the officer of the Trust, and the
proper countersignature of any former transfer agent or registrar, or of a co-
transfer agent or co-registrar.
E. Notification. In order that the indemnification provisions
contained in this Section shall apply, upon the assertion of a claim for
which either party may be required to indemnify the other, the party seeking
indemnification shall promptly notify the other party of such assertion in
writing, and shall keep the other party advised with respect to all
developments concerning such claims. Provided such notice has been given,
the indemnitor shall assume the defense of such action, including the
employment of counsel selected by the indemnitor and payment of expenses.
The indemnitee shall have the right to employ separate counsel in any such
case, but the fees and expenses of such counsel shall be at the expense of
the indemnitee unless the employment of such counsel shall have been
authorized in writing by the indemnitor in connection with the defense of
such action or the indemnitor shall not have employed counsel to have charge
of the defense of such action, in any of which events such fees and expenses
shall be borne by the indemnitor. Anything in this Section to the contrary
notwithstanding, the indemnitor shall not be liable for any settlement of any
such claim or action effected without its written consent. The Trust and
Services each agrees promptly to notify the other party of the commencement
of any litigation or proceedings against them or any of their officers or
Trustees in connection with the services that are the subject of this
Agreement.
4.5. Termination of Agreement. This Agreement may be terminated by either
party upon sixty (60) days written notice to the other. Should the Trust
exercise its rights to terminate, all out-of-pocket expenses associated with
the movement of records and materials will be borne by the appropriate
Portfolio. Additionally, the Trust and Services each reserves the right to
charge for any other reasonable expenses associated with such termination.
4.6. Amendment. This Agreement may be amended or modified by a written
agreement executed by both parties and authorized or approved by a resolution
of the Trustees of the Trust.
4.7. Interpretive and Additional Provisions. In connection with the
operation of this Agreement, Services and the Trust may from time to time
agree on such provisions interpretive of or in addition to the provisions of
this Agreement as may in their joint opinion by consistent with the general
tenor of this Agreement. Any such interpretive or additional provisions
shall be in a writing signed by both parties and shall be annexed hereto,
provided that no such interpretive or additional provisions shall contravene
any applicable Federal or state regulations or any provision of the Trust's
Declaration of Trust. No interpretive or additional provisions made as
provided in the preceding sentence shall be deemed to be an amendment of this
Agreement.
4.8. Notice to the Trust or Services. Notices of any kind to be given to
the Trust hereunder by Services shall be in writing and shall be duly given
if delivered to the Trust at the following address: The Biltmore Funds,
Federated Investors Tower, Pittsburgh, PA 15222, Attention: Jeannette Fisher-
Garber. Notices of any kind to be given to Services hereunder by the Trust
shall be in writing and shall be duly given if delivered to Services at
Federated Investors Tower, Pittsburgh, PA 15222-3779, Attention: President.
4.9. Notice to Adviser
4.10. Counterparts. This Agreement may be executed in two or more
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.
4.11. Limitation of Liability. Services is expressly put on notice of the
limitation of liability as set forth in the Trust's Declaration of Trust and
agrees that the obligations assumed by the Trust pursuant to this Agreement
shall be limited in any case to the Trust and its assets and that Services
shall not seek satisfaction of any such obligations from the Shareholders of
the Trust, the Trustees, officers, employees or agents of the Trust, or any
of them.
4.12. Assignment. Except as provided below, neither this Agreement nor
any rights or obligations hereunder may be assigned by either party without
the written consent of the other party.
A. This Agreement shall inure to the benefit of and be binding upon
the parties and their respective permitted successors and assigns.
B. Services may without further consent on the part of the Trust
subcontract for the performance of the services described in Section Two of
this Agreement with (A) Boston Financial Data Services, Inc., a Massachusetts
Trust ("BFDS"), which is fully registered as a transfer agent pursuant to
Section 17A(c)(1) of the Securities Exchange Act of 1934, or any succeeding
statute ("Section 17A(c)(1)"), or (B) a BFDS subsidiary duly registered as a
transfer agent pursuant to Section 17A(c)(1), or (C) a BFDS affiliate;
provided, however, that Services shall be as fully responsible to the Trust
for the acts and omissions of any subcontractor as it is for its own acts and
omissions.
4.13. Miscellaneous. This Agreement constitutes the entire agreement
between the parties hereto and supersedes any prior agreement with respect to
the subject hereof whether oral or written. The captions in this Agreement
are included for convenience of reference only and in no way define or
delimit any of the provisions hereof or otherwise affect their construction
or effect. If any provision of this Agreement shall be held or made invalid
by a court or regulatory agency decision, statute, rule or otherwise, the
remainder of this Agreement shall not be affected thereby. This Agreement
shall be governed by Pennsylvania law; provided, however, that nothing herein
shall be construed in a manner inconsistent with the 1940 Act or any rule or
regulation promulgated by the Securities and Exchange Commission thereunder.
IN WITNESS WHEREOF, the parties hereto have caused this instrument to
be executed by their officers designated below as of the day and year first
above written.
The Biltmore Funds
Attest: /s/Peter J. Germain By: /s/John W. McGonigle
Its: Secretary Its: President
FEDERATED SERVICES COMPANY
Attest: /s/Joseph M. Huber By: /s/Ronald L. Cavanaugh, Sr.
Its: Assistant Secretary Its: Vice President
Schedule A
Portfolio Accounting
and
Shareholder Recordkeeping Agreement
between
The Biltmore Funds
and
FEDERATED SERVICES COMPANY
The Biltmore Funds (the "Trust") consists of the following portfolios
(the "Portfolios") which are subject to this Agreement initially effective as
of the dates set forth below and to be subsequently renewed annually on March
9th of each year:
Name Date
Biltmore U.S. Government Money Market Fund March 9, 1992
Biltmore Money Market Fund March 9, 1992
Biltmore Tax-Free Money Market Fund March 9, 1992
Biltmore U.S. Treasury Money Market Fund March 9, 1992
Schedule H
Portfolio Accounting
and
Shareholder Recordkeeping Agreement
between
The Biltmore Funds
and
FEDERATED SERVICES COMPANY
The Biltmore Funds (the "Trust") consists of the following portfolios
(the "Portfolios") which are subject to this Agreement initially effective as
of the dates set forth below and to be subsequently renewed annually by March
9th of each year:
Name Date
Biltmore Money Market Fund March 9, 1992
Biltmore Tax-Free Money Market Fund March 9, 1992
Biltmore U.S. Treasury Money Market Fund March 9, 1992
Biltmore Prime Cash Management Fund June 11, 1992
Biltmore Balanced Fund April 3, 1993
Biltmore Equity Fund April 3, 1993
Biltmore Equity Index Fund April 3, 1993
Biltmore Fixed Income Fund April 3, 1993
Biltmore Short-Term Fixed Income Fund April 3, 1993
Biltmore Special Values Fund April 3, 1993
Biltmore Quantitative Equity Fund December 9, 1993
-1-
Form N-1A Exhibit No.9(ii)
Regulation S-K Exhibit No. 10(iv)
Schedule I
Portfolio Accounting
and
Shareholder Recordkeeping Agreement
between
The Biltmore Funds
and
FEDERATED SERVICES COMPANY
The Biltmore Funds (the "Trust") consists of the following portfolios
(the "Portfolios") which are subject to this Agreement initially effective as
of the dates set forth below and to be subsequently renewed annually by March
9th of each year:
Name Date
Biltmore Money Market Fund March 9, 1992
Biltmore Tax-Free Money Market Fund March 9, 1992
Biltmore U.S. Treasury Money Market Fund March 9, 1992
Biltmore Prime Cash Management Fund June 11, 1992
Biltmore Balanced Fund April 3, 1993
Biltmore Equity Fund April 3, 1993
Biltmore Equity Index Fund April 3, 1993
Biltmore Fixed Income Fund April 3, 1993
Biltmore Short-Term Fixed Income Fund April 3, 1993
Biltmore Special Values Fund April 3, 1993
Biltmore Quantitative Equity Fund December 9, 1993
Biltmore Emerging Markets Fund __________, 1994
1
Form N-1A Exhibit No.9(vi)
Regulation S-K Exhibit No. 10(v)
ADMINISTRATIVE SERVICES AGREEMENT
This Administrative Services Agreement is made as of this 9th day of
March, 1992, between The Biltmore Funds, a Massachusetts business trust (the
"Trust"), and FEDERATED ADMINISTRATIVE SERVICES, a Delaware business trust
("FAS").
WHEREAS, the Trust is a Massachusetts business trust, consisting of
one or more series ("Portfolios"), which operates as an open-end management
investment company and will so register under the Investment Company Act of
1940, as amended ("1940 Act"); and
WHEREAS, the Trust desires to retain FAS as its Administrator to
provide it with administrative services, and FAS is willing to render such
services;
NOW, THEREFORE, in consideration of the premises and mutual covenants
set forth herein, the parties hereto agree as follows:
1. Appointment of Administrator. The Trust hereby appoints FAS as
Administrator of the Trust on the terms and conditions set forth in this
Agreement; and FAS hereby accepts such appointment and agrees to perform the
services and duties set forth in Section 2 of this Agreement in consideration
of the compensation provided for in Section 5 of this Agreement.
2. Services and Duties. As Administrator, and subject to the
supervision and control of the Trust's Board of Trustees, FAS will perform,
and will provide facilities, equipment, and personnel to carry out the
following administrative services for operation of the business and affairs
of the Trust and each of its Portfolios:
(a) prepare, file, and maintain the Trust's governing
documents, including the Declaration of Trust, the By-laws,
minutes of meetings of Trustees and shareholders, and proxy
statements for meetings of shareholders;
(b) with the approval of the Trust's counsel and cooperation
from the Trust's investment adviser (the "Adviser") and
other relevant parties, prepare and disseminate materials
for meetings of the Board of Trustees;
(c) prepare and file with the Securities and Exchange
Commission and the appropriate state securities authorities
the registration statements for the Trust and the Trust's
shares and all amendments thereto, reports to regulatory
authorities and shareholders, prospectuses, proxy
statements, and such other documents as may be necessary or
convenient to enable the Trust to make a continuous
offering of its shares;
(d) with the cooperation and assistance of the Trust's
investment adviser, monitor sales of each Portfolio's
shares and ensure that such shares are properly and duly
registered with the Securities and Exchange Commission and
applicable state securities authorities;
(e) coordinate the layout and printing of publicly disseminated
prospectuses and reports;
(f) calculate performance data of each Portfolio for
dissemination to information services covering the
investment company industry, for sales literature of the
Trust and other appropriate purposes;
(g) determine the amount of and supervise the declaration of
dividends and other distributions to shareholders as
necessary to, among other things, maintain the
qualification of each Portfolio as a regulated investment
company under the Internal Revenue Code of 1986, as
amended, or any successor statute, and prepare and
distribute to appropriate parties notices announcing the
declaration of dividends and other distributions to
shareholders;
(h) prepare and monitor an expense budget for each Portfolio,
including setting and revising accruals for each category
of expenses and notifying trust management of any proposed
adjustments;
(i) prepare monthly financial statements, to include the
following items:
Schedule of Investments
Statement of Assets and Liabilities
Statement of Operations
Statement of Changes in Net Assets
Cash Statement
Schedule of Capital Gains and Losses
(j) prepare and file each Portfolio's tax returns, arrange for
and supervise independent auditors as appropriate and take
all reasonable action in the performance of its obligations
under this Agreement to assure that the necessary
information is made available to such accountants for the
expression of their opinion as such may be required by the
Trust from time to time;
(k) prepare, negotiate, and administer contracts on behalf of
the Trust with, among others, the Adviser, the Trust's
custodian (the "Custodian"), the Trust's distributor (the
"Distributor"), and the Trust's transfer agent (the
"Transfer Agent");
(l) examine and review the operations of the Custodian and the
Transfer Agent;
(m) prepare and deliver such documents as the Trust may be
required to deliver by contract with the Transfer Agent,
Distributor, Custodian or Adviser;
(n) perform internal audit examinations in accordance with a
charter developed by FAS with the approval of the Trust's
counsel, including periodic reviewing and testing of each
Portfolio's compliance with the investment restrictions and
limitations imposed by the 1940 Act and state Blue Sky laws
and the applicable regulations thereunder, the fundamental
and non-fundamental investment policies and limitations set
forth in each Portfolio's prospectus and statement of
additional information, and the investment restrictions and
limitations necessary for each Portfolio to qualify as a
regulated investment company under the Internal Revenue
Code ("Code") or any successor statute;
(o) assist with the design, development, and operation of the
Trust;
(p) provide individuals reasonably acceptable to the Trust's
Board of Trustees for nomination, appointment, or election
as officers of the Trust, who will be responsible for the
management of certain of the Trust's affairs as determined
by the Trust's Board of Trustees; and
(q) advise the Trust and its Board of Trustees on matters
concerning the Trust and its affairs.
The foregoing, along with any additional services that FAS shall agree
in writing to perform for the Trust hereunder, shall hereafter be referred to
as "Administrative Services." Administrative Services shall not include any
duties, functions, or services to be performed for the Trust by the Adviser,
Distributor, Custodian, or Transfer Agent pursuant to their agreements with
the Trust.
3. Records. FAS shall create and maintain all necessary books and
records in accordance with all applicable laws, rules and regulations,
including but not limited to records required by Section 31(a) of the 1940
Act and the rules thereunder, as the same may be amended from time to time,
pertaining to the Administrative Services performed by it and not otherwise
created and maintained by another party pursuant to contract with the Trust.
Where applicable, such records shall be maintained by FAS for the periods and
in the places required by Rule 31a-2 under the 1940 Act. The books and
records pertaining to the Trust which are in the possession of FAS shall be
the property of the Trust. The Trust, or the Trust's authorized
representatives, shall have access to such books and records at all times
during FAS's normal business hours. Upon the reasonable request of the
Trust, copies of any such books and records shall be provided promptly by FAS
to the Trust or the Trust's authorized representatives.
4. Expenses. FAS shall be responsible for expenses incurred in
providing office space, equipment, and personnel as may be necessary or
convenient to provide Administrative Services to the Trust, including the
compensation of FAS employees who serve as officers of the Trust. The Trust
shall be responsible for all other expenses incurred by FAS on behalf of the
Trust, including without limitation postage and courier expenses, printing
expenses, travel expenses, registration fees, filing fees, fees of outside
counsel and independent auditors, insurance premiums, fees payable to
trustees who are not interested persons of the Trust, and trade association
dues.
5. Compensation. For the Administrative Services provided to each
Portfolio of the Trust which is or hereafter may be established, the Trust
hereby agrees to pay from the assets of the applicable Portfolio and FAS
hereby agrees to accept as full compensation for its services rendered
hereunder an Administrative Services fee at an annual rate, computed and
payable daily, as specified below:
Maximum Administrative Aggregate Daily Net Assets
Fee of the Trust
.145% on the first $400 million
.120% on the next $300 million
.095% on the next $300 million
.070% on assets in excess of
$1 billion
provided, however, that the administrative services fee payable by the Trust
to FAS in any month will be reduced in an amount equal to the aggregate of
all fees paid by the Trust to Federated Services Company pursuant to the
Portfolio Recordkeeping and Shareholder Recordkeeping Agreement, or any
successor Portfolio Accounting Agent or Transfer Agent pursuant to a similar
agreement with the Trust (other than out-of-pocket expenses payable under
such agreement) for those accounts for which Wachovia Bank of North Carolina,
N.A., or its affiliates or subsidiaries, or any other financial institution
maintains records for beneficial owners of the Trust's shares; provided
further that a minimum annual fee for any Portfolio, other than the
Portfolios listed on Exhibit A hereto, may be established by FAS in an amount
not to exceed $75,000 computed on an annualized basis. With respect to
Portfolios subject to such minimum, the Trust shall have the right to appoint
another administrator if FAS insists on assessing the minimum fee over the
objection of the Trust.
6. Confidentiality. FAS agrees, on behalf of itself and its
employees, to treat confidentially and as proprietary information of the
Trust all records and other information relative to the Trust and its prior,
present or potential shareholders, and not to use such records and
information for any purpose other than performance of its responsibilities
and duties hereunder, except, after prior notification to and approval in
writing by the Trust, which approval shall not be unreasonably withheld and
may not be withheld where FAS may be exposed to civil or criminal contempt
proceedings for failure to comply, when request to divulge such information
by duly constituted authorities, or when so requested by the Trust.
Notwithstanding the foregoing, FAS may provide records required to be
maintained under Section 3 of this Agreement to the Securities and Exchange
Commission or state securities regulators without prior approval.
7. Responsibility of Administrator.
(a) FAS shall not be liable for any error of judgment or mistake
of law or for any loss suffered by the Trust in connection with the matters
to which this Agreement relates, except a loss resulting from willful
misfeasance, bad faith or gross negligence on its part in the performance of
its duties or from reckless disregard by it of its obligations and duties
under this Agreement. FAS shall be entitled to rely on and may act upon
advice of the Trust's counsel or other counsel reasonably acceptable to the
Trust's counsel on all matters, and shall be without liability for any action
reasonably taken or omitted pursuant to such advice. Any person, even though
also an officer, trustee, employee or agent of FAS, who may be or become an
officer, employee or agent of the Trust, shall be deemed, when rendering
services to the Trust or acting on any business of the Trust (other than
services or business in connection with the duties of FAS hereunder) to be
rendering such services to or acting solely for the Trust and not as an
officer, trustee, employee or agent or one under the control or direction of
FAS even though paid by FAS.
(b) Subject to the conditions set forth below, the Trust agrees
to indemnify and hold harmless FAS against any and all loss, liability,
claim, damage or expense whatsoever (including the reasonable cost of
investigating or defending any alleged loss, liability, damages, claim or
expense and reasonable counsel fees incurred in connection therewith) arising
by reason of any action taken or thing done by FAS in performing
Administrative Services if not resulting from FAS's willful misfeasance, bad
faith or gross negligence on its part in the performance of its duties or
from reckless disregard by it of its obligations and duties under this
Agreement.
If any action is brought against FAS to which indemnity may be sought
against the Trust pursuant to the foregoing paragraph, FAS shall promptly
notify the Trust in writing of the institution of such action and, provided
such notice has been given, the Trust shall assume the defense of such
action, including the employment of counsel selected by the Trust and payment
of expenses. FAS shall have the right to employ separate counsel in any such
case, but the fees and expenses of such counsel shall be at the expense of
FAS unless the employment of such counsel shall have been authorized in
writing by the Trust in connection with the defense of such action or the
Trust shall not have employed counsel to have charge of the defense of such
action, in any of which events such fees and expenses shall be borne by the
Trust. Anything in this paragraph to the contrary notwithstanding, the Trust
shall not be liable for any settlement of any such claim or action effected
without its written consent. The Trust agrees promptly to notify FAS of the
commencement of any litigation or proceedings against the Trust or any of its
officers or Trustees in connection with the Administrative Services.
(c) FAS agrees to indemnify and hold harmless the Trust, each of
its Trustees and each of its officers against any loss, liability, damages,
claim or expense (including the reasonable cost of investigating or defending
any alleged loss, liability, damages, claim or expense and reasonable counsel
fees incurred in connection therewith) arising by reason of any action taken
or thing done by FAS in performing Administrative Services if resulting from
FAS's willful misfeasance, bad faith or gross negligence on its part in the
performance of its duties or from reckless disregard by it of its obligations
and duties under this Agreement. In case any action shall be brought against
the Trust or any other person so indemnified based on the foregoing as
described in this subsection (c), and with respect to which indemnity may be
sought against FAS, FAS shall have the rights and duties given to the Trust,
and the Trust and each other person so indemnified shall have the rights and
duties given to FAS by the provisions of subsection (b) above.
8. Duration and Termination.
(a) This Agreement shall be effective on the date hereof, and
extend for a period of five years provided that such five year period shall
be deemed to have commenced on November 30, 1990 and shall end on November
30, 1995.
(b) Thereafter, this Agreement shall be automatically renewed
each year for an additional term of one year provided that either party may
terminate this Agreement at any time after the initial term by at least six
months written notice to the other without regard to such one year term.
(c) Notwithstanding the foregoing, this Agreement may be
terminated at any time by either party in the event of a material breach by
the other party involving gross negligence, willful misfeasance, bad faith,
or a reckless of its obligations and duties under this Agreement and such
breach shall have remained unremedied for sixty days or more after receipt of
written specification thereof and there has been a final determination by an
arbitrator, selected and acting pursuant to the rules of the American
Arbitration Association, that a breach, as specified herein, has occurred and
remained unremedied for sixty days or more after notice. Any such
termination shall not affect the rights and obligations of the parties under
Section 7 hereof.
(d) Upon the termination of this Agreement, the Trust shall pay
to FAS such compensation as may be payable prior to the effective date of
such termination. In the event that the Trust designates a successor to any
of FAS's obligations hereunder, FAS shall, at the expense and direction of
the Trust, transfer to such successor all relevant books, records and other
data established or maintained by FAS under the foregoing provisions.
9. Amendment. This Agreement may be amended or modified by a written
agreement executed by both parties and authorized or approved by a resolution
of the Trustees of the Trust.
10. Limitation of Liability. FAS is expressly put on notice of the
limitation of liability as set forth in the Declaration of Trust and agrees
that the obligations assumed by the Trust pursuant to this Agreement shall be
limited in any case to the Trust and its assets and that FAS shall not seek
satisfaction of any such obligations from the shareholders of the Trust, the
Trustees, officers, employees or agents of the Trust, or any of them.
11. Notices. Notices of any kind to be given to the Trust hereunder
by FAS shall be in writing and shall be duly given if delivered to the Trust
and to its Adviser at the following address: Wachovia Bank of North Carolina,
N.A., Attn: Robert S. Kniejski, 301 North Main Street, Winston-Salem, NC
27150. Notices of any kind to be given to FAS hereunder by the Trust shall
be in writing and shall be duly given if delivered to FAS at Federated
Investors Tower, Pittsburgh, PA 15222-3779, Attention: President.
12. Counterparts. This Agreement may be executed in two or more
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.
13. Miscellaneous. The captions in this Agreement are included for
convenience of reference only and in no way define or delimit any of the
provisions hereof or otherwise affect their construction or effect. If any
provision of this Agreement shall be held or made invalid by a court or
regulatory agency decision, statute, rule or otherwise, the remainder of this
Agreement shall not be affected thereby. Subject to the provisions of
Section 5, hereof, this Agreement shall be binding upon and shall inure to
the benefit of the parties hereto and their respective successors. This
Agreement shall be governed by Pennsylvania law; provided, however, that
nothing herein shall be construed in a manner inconsistent with the 1940 Act
or any rule or regulation promulgated by the Securities and Exchange
Commission thereunder.
IN WITNESS WHEREOF, the parties hereto have caused this instrument to
be executed by their officers designated below as of the day and year first
above written.
The Biltmore Funds
Attest: /s/Peter J. Germain By: /s/John W. McGonigle
Its: Secretary Its: President
FEDERATED ADMINISTRATIVE SERVICES
Attest: /s/John W. McGonigle By: /s/ J. Christopher Donahue
Its: Secretary Its: President
EXHIBIT A
to the
Administrative Services Agreement
The Administrative Services Agreement dated the 9th day of March, 1992
between The Biltmore Funds and FEDERATED ADMINISTRATIVE SERVICES shall apply
to the following Portfolios:
Biltmore Money Market Fund
(Investment Shares)
(Institutional Shares)
Biltmore U.S. Government Money Market Fund
(Investment Shares)
(Institutional Shares)
Biltmore Tax-Free Money Market Fund
(Investment Shares)
(Institutional Shares)
Biltmore U.S. Treasury Money Market Fund
(Institutional Shares)
EXHIBIT B
to the
Administrative Services Agreement
The Administrative Services Agreement dated March 9, 1992 between The
Biltmore Funds and FEDERATED ADMINISTRATIVE SERVICES shall apply to the
following Portfolios effective as of the dates set forth below:
Biltmore Money Market Fund March 9, 1992
(Investment Shares)
(Institutional Shares)
Biltmore U.S. Government Money Market Fund March 9, 1992
(Investment Shares)
(Institutional Shares)
Biltmore Tax-Free Money Market Fund March 9, 1992
(Investment Shares)
(Institutional Shares)
Biltmore U.S. Treasury Money Market Fund March 9, 1992
(Institutional Shares)
Biltmore Prime Cash Management Fund June 12, 1992
(Institutional Shares)
EXHIBIT C
to the
Administrative Services Agreement
The Administrative Services Agreement dated March 9, 1992 between The
Biltmore Funds and FEDERATED ADMINISTRATIVE SERVICES shall apply to the
following Portfolios effective as of the dates set forth below:
Biltmore Money Market Fund March 9, 1992
(Investment Shares)
(Institutional Shares)
Biltmore Tax-Free Money Market Fund March 9, 1992
(Investment Shares)
(Institutional Shares)
Biltmore U.S. Treasury Money Market Fund March 9, 1992
(Institutional Shares)
(Investment Shares)
Biltmore Prime Cash Management Fund June 11, 1992
(Institutional Shares)
Biltmore Balanced Fund April 3, 1993
Biltmore Equity Fund April 3, 1993
Biltmore Equity Index Fund April 3, 1993
Biltmore Fixed Income Fund April 3, 1993
Biltmore Short-Term Fixed Income Fund April 3, 1993
Biltmore Special Values Fund April 3, 1993
EXHIBIT D
to the
Administrative Services Agreement
The Administrative Services Agreement dated March 9, 1992 between The
Biltmore Funds and FEDERATED ADMINISTRATIVE SERVICES shall apply to the
following Portfolios effective as of the dates set forth below:
Biltmore Money Market Fund March 9, 1992
(Investment Shares)
(Institutional Shares)
Biltmore Tax-Free Money Market Fund March 9, 1992
(Investment Shares)
(Institutional Shares)
Biltmore U.S. Treasury Money Market Fund March 9, 1992
(Institutional Shares)
(Investment Shares)
Biltmore Prime Cash Management Fund June 11, 1992
(Institutional Shares)
Biltmore Balanced Fund April 3, 1993
Biltmore Equity Fund April 3, 1993
Biltmore Equity Index Fund April 3, 1993
Biltmore Fixed Income Fund April 3, 1993
Biltmore Short-Term Fixed Income Fund April 3, 1993
Biltmore Special Values Fund April 3, 1993
Biltmore Quantitative Equity Fund December 9, 1993
Amendment No. 1
to
Administrative Services Agreement
This Amendment No. 1 to Administrative Services Agreement is made and
entered into as of the 1st day of June, 1994 by and between The Biltmore
Funds, a Massachusetts business trust (the "Trust") and Federated
Administrative Services, a Delaware business trust ("FAS").
WHEREAS, the Trust and FAS entered into an Administrative Services
Agreement dated as of March 9, 1992 ( the "Agreement" ) ; and
WHEREAS, the Trust and FAS desire to amend the Agreement in certain
respects.
NOW THEREFORE, the parties, intending to be legally bound, agree as
follows:
1. Paragraph 5 of the Agreement provides:
5. Compensation. For the Administrative Services
provided to each Portfolio of the Trust which is or hereafter
may be established, the Trust hereby agrees to pay from the
assets of the applicable Portfolio and FAS hereby agrees to
accept as full compensation for its services rendered hereunder
an Administrative Services fee at an annual rate, computed and
payable daily, as specified below:
Maximum
Administrative Aggregate Daily Net Assets
Fee of
the Trust
.145% on the first $400
million
.120% on the next $300
million
.095% on the next $300
million
.070% on assets in excess of
$1 billion
provided, however, that the administrative services fee payable
by the Trust to FAS in any month will be reduced in an amount
equal to the aggregate of all fees paid by the Trust to
Federated Services Company pursuant to the Portfolio
Recordkeeping and Shareholder Recordkeeping Agreement, or any
successor Portfolio Accounting Agent or Transfer Agent pursuant
to a similar agreement with the Trust (other than out-of-pocket
expenses payable under such agreement) for those accounts for
which Wachovia Bank of North Carolina, N.A., or its affiliates
or subsidiaries, or any other financial institution maintains
records for beneficial owners of the Trust's shares; provided
further that a minimum annual fee for any Portfolio, other than
the Portfolios listed on Exhibit A hereto, may be established by
FAS in an amount not to exceed $75,000 computed on an annualized
basis. With respect to Portfolios subject to such minimum, the
Trust shall have the right to appoint another administrator if
FAS insists on assessing the minimum fee over the objection of
the Trust.
2. Paragraph 5 of the Agreement is amended by deleting the paragraph in
its entirety and inserting in lieu thereof the following:
5. Compensation. For the Administrative Services
provided to each Portfolio of the Trust which is or hereafter
may be established, the Trust hereby agrees to pay from the
assets of the applicable Portfolio and FAS hereby agrees to
accept as full compensation for its services rendered hereunder
an Administrative Services fee at an annual rate, computed and
payable daily, as specified below:
Average Aggregate Daily
Net
Maximum Administrative Assets of The Biltmore
Funds
Fee and The Biltmore
Municipal Funds
.15% on the first $250
million
.125% on the next $250
million
100% on the next
$250 million
.075% on assets in excess
of
$750 million
However, in no event shall the administrative fee received
during any year of this Agreement be less than, or be paid at a
rate less than would aggregate $75,000 per portfolio .
3. The Trust and FAS hereby ratify and confirm all of the terms,
conditions and provisions of the Administrative Services Agreement, as
herein amended, as remaining, in full force and effect.
WITNESS the above due execution hereof as of the day and year first
above written.
THE BILTMORE FUNDS
By: /s/ John W. McGonigle
Its: President
FEDERATED ADMINISTRATIVE
SERVICES
By: /s/ James J. Dolan
Its: President
1
Form N-1A Exhibit No.9(vii)
Regulation S-K Exhibit No. 10(vi)
EXHIBIT E
to the
Administrative Services Agreement
The Administrative Services Agreement dated March 9, 1992 between The
Biltmore Funds and FEDERATED ADMINISTRATIVE SERVICES shall apply to the
following Portfolios effective as of the dates set forth below:
Biltmore Money Market Fund March 9, 1992
(Investment Shares)
(Institutional Shares)
Biltmore Tax-Free Money Market Fund March 9, 1992
(Investment Shares)
(Institutional Shares)
Biltmore U.S. Treasury Money Market Fund March 9, 1992
(Institutional Shares)
(Investment Shares)
Biltmore Prime Cash Management Fund June 11, 1992
(Institutional Shares)
Biltmore Balanced Fund April 3, 1993
Biltmore Equity Fund April 3, 1993
Biltmore Equity Index Fund April 3, 1993
Biltmore Fixed Income Fund April 3, 1993
Biltmore Short-Term Fixed Income Fund April 3, 1993
Biltmore Special Values Fund April 3, 1993
Biltmore Quantitative Equity Fund December 9, 1993
Biltmore Emerging Markets Fund __________, 1994
Form N-1A Exhibit No.9(ix)
Regulation S-K Exhibit No. 10(vii)
EXHIBIT A
TO THE
SHAREHOLDER SERVICES PLAN
The Biltmore Funds
Biltmore Balanced Fund
Biltmore Equity Fund
Biltmore Equity Index Fund
Biltmore Fixed Income Fund
Biltmore Short-Term Fixed Income Fund
This Plan is adopted by The Biltmore Funds with respect to the Funds of
the Trust set forth above.
In compensation for the services provided pursuant to this Plan,
Providers will be paid a monthly fee computed at the annual rate not to
exceed 0.25 of 1% of the average aggregate net asset value of the shares of
each of the Funds listed above and held during the month.
Witness the due execution hereof this 3rd day of April, 1993.
THE BILTMORE FUNDS
By: /s/ John W. McGonigle
President
Amendment No. 1
to
EXHIBIT A
of the
Shareholder Services Plan
THE BILTMORE FUNDS
Biltmore Balanced Fund
Biltmore Equity Fund
Biltmore Equity Index Fund
Biltmore Fixed Income Fund
Biltmore Short-Term Fixed Income Fund
Biltmore Quantitative Equity Fund
This Plan is adopted by The Biltmore Funds with respect to the Funds of
the Trust set forth above.
In compensation for the services provided pursuant to this Plan,
Providers will be paid a monthly fee computed at the annual rate not to
exceed 0.25 of 1% of the average aggregate net asset value of the shares of
each of the Funds listed above and held during the month.
Witness the due execution hereof this 1st day of January, 1994.
The Biltmore Funds
By: /s/ John W. McGonigle
President
Form N-1A Exhibit No.9(x)
Regulation S-K Exhibit No. 10(viii)
Amendment No. 2
to
EXHIBIT A
of the
Shareholder Services Plan
THE BILTMORE FUNDS
Biltmore Balanced Fund
Biltmore Equity Fund
Biltmore Equity Index Fund
Biltmore Fixed Income Fund
Biltmore Short-Term Fixed Income Fund
Biltmore Quantitative Equity Fund
Biltmore Emerging Markets Fund
This Plan is adopted by The Biltmore Funds with respect to the Funds of
the Trust set forth above.
In compensation for the services provided pursuant to this Plan,
Providers will be paid a monthly fee computed at the annual rate not to
exceed ___ of ___% of the average aggregate net asset value of the shares of
each of the Funds listed above and held during the month.
Witness the due execution hereof this ___ day of __________, 1994.
The Biltmore Funds
By:
President
Form N-1A Exhibit No.9(xii)
Regulation S-K Exhibit No. 10(ix)
EXHIBIT A
to
SHAREHOLDER SERVICES AGREEMENT
with
The Biltmore Funds
Funds covered by this Agreement:
Biltmore Balanced Fund
Biltmore Equity Fund
Biltmore Equity Index Fund
Biltmore Fixed Income Fund
Biltmore Short-Term Fixed Income Fund
Biltmore Quantitative Equity Fund
Biltmore Emerging Markets Fund
(Collectively, the "Funds")
Shareholder Service Fees
1. During the term of this Agreement, the Funds will pay Provider a
quarterly fee. This fee will be computed at the annual rate of .25% of the
average net asset value of shares of the Funds held during the quarter in
accounts for which the Provider provides Services under this Agreement, so
long as the average net asset value of Shares in the Funds during the quarter
equals or exceeds such minimum amount as the Funds shall from time to time
determine and communicate in writing to the Provider.
2. For the quarterly period in which the Shareholder Services Agreement
becomes effective or terminates, there shall be an appropriate proration of
any fee payable on the basis of the number of days that this Agreement is in
effect during the quarter.
KIRKPATRICK & LOCKHART
The Biltmore Funds
March 3, 1992
Page 1
Form N-1A Exhibit (10)
Regulation S-K Exhibit No. 5
KIRKPATRICK & LOCKHART
SOUTH LOBBY - 9TH FLOOR
<TABLE>
<S> <C> <C>
53 STATE STREET 1800 M STREET, N.W. 100 CHOPIN PLAZA - SUIT 2000
BOSTON, MASSACHUSETTS 02109-2809 MIAMI, FLORIDA 33131-2305
(617) 227-6000 WASHINGTON, D.C. 20036-5891 (305) 374-8112
240 NORTH THIRD STREET (202) 778-9000 1500 OLIVER BUILDING
HARRISBURG, PENNSYLVANIA 17101-1503 PITTSBURGH, PENNSYLVANIA 15222-5379
(717) 231-4500 TELEX 440209 KL DC UI (412) 355-6500
TELECOPIER (202) 778-9100
</TABLE>
--
DONALD W. SMITH
(202) 778-9079
March 3, 1992
The Biltmore Funds
Federated Investors Tower
Pittsburgh, PA 15222-3779
Dear Sir or Madam:
The Biltmore Funds ("Trust"), formerly named the Winvest Funds, is an
unicorporated voluntary association established under the laws of the
Commonwealth of Massachusetts by Declaration of Trust dated November 19, 1991,
as amended and restated on March 3, 1992. You have requested our opinion
regarding certain matters in connection with the Trust's issuance of shares of
beneficial interest.
We have, as counsel, participated in various business and other
proceedings relating to the Trust. We have examined copies, either certified
or otherwise proved to be genuine, of its Declaration of Trust, as amended,
and By-Laws, as now in effect, the minutes of meetings of its trustees and
other documents relating to its organization and operation, and we are
generally familiar with its business affairs. Based upon the foregoing, it is
our opinion that the shares of beneficial interest of the Trust, which are
currently being registered, may be legally and validly issued from time to
time in accordance with the Trust's Amended and restated Declaration of Trust
and By-Laws and subject to compliance with the Securities Act of 1933, as
amended, the Investment Company Act of 1940, as amended, and applicable state
laws regulating the offer and sale of securities, and, when so issued and
sold, will be legally issued, fully paid and nonassessable by the Trust.
The Trust is an entity of the type commonly known as a "Massachusetts
business trust." Under Massachusetts law, shareholders could, under certain
circumstances, be held personally liable for the obligations of the Trust.
However, the Declaration of Trust provides that each written agreement,
undertaking or obligation made or issued on behalf of the Trust or any series
or class thereof shall state that the shareholders shall not be liable
thereunder and that the other parties to such instrument shall look solely to
the assets belonging to the relevant series or class for the payment of any
claim thereunder or for the performance thereof. The Declaration of Trust
further provides that the omission of such provisions from any such instrument
shall not render any shareholder liable. It also provides: (i) for
indemnification from the assets of the relevant series or class of the Trust
of any shareholder or former shareholder held liable by reason of his being or
having been a shareholder for any debt, claim, action, demand, suit,
proceeding, judgment, decree, liability or obligation of any kind against or
with respect to the Trust or any series or class arising out of any action
taken or omitted for or on behalf of the Trust, and (ii) for the Trust, upon
request by the shareholder, to assume the defense of any claim against the
shareholder for any act or obligation of the Trust or any series or class and
satisfy any judgment thereon. Thus, the risk of a shareholder incurring
financial loss on account of shareholder liability is limited to circumstances
in which the Trust or series or class thereof would be unable to meet its
obligations.
We hereby consent to this opinion accompanying Pre-Effective Amendment
No. 1 which you are about to file with the Securities and Exchange Commission.
We also consent to the reference to our firm under the caption "Legal Counsel"
in each prospectus of the Trust's series and classes included as part of the
Trust's registration statement.
Very truly yours,
KIRKPATRICK & LOCKHART
By: /s/Donald W. Smith
Donald W. Smith
-1-
Form N-1A Exhibit No.15(i)
Regulation S-K Exhibit No. 1(ii)
PLAN OF DISTRIBUTION
This Plan ("Plan") is adopted as of this 9th day of March, 1992, by the
Board of Trustees of The Biltmore Funds, a Massachusetts business trust (the
"Trust"), with respect to certain classes of shares ("Classes") of the
portfolios of the Trust (the "Portfolios") set forth in exhibits hereto.
1. This Plan is adopted pursuant to Rule 12b-1 under the Investment
Company Act of 1940, as amended (the "Act") so as to allow the Trust to make
payments as contemplated herein, in conjunction with the distribution of
shares of the Classes ("Shares").
2. This Plan is designed to finance activities of Federated Securities
Corporation ("FSC") principally intended to result in the sale of Shares
including: (a) providing incentives to broker/dealers ("Brokers") to sell
Shares and to provide administrative support services to the Portfolios and
their shareholders with respect to the Classes; (b) compensating other
participating financial institutions and other persons ("Administrators") for
providing administrative support services to the Portfolios and their
shareholders with respect to the Classes; and (c) paying for the costs
incurred in conjunction with advertising and marketing of Shares including
expenses of preparing, printing and distributing prospectuses and sales
literature to prospective shareholders, Brokers or Administrators and (d)
other costs incurred in the implementation and operation of the Plan. In
compensation for services provided pursuant to this Plan, FSC will be paid a
fee in respect of the following classes set forth on the applicable exhibit.
3. Any payment to FSC in accordance with this Plan will be made
pursuant to the "Distribution Agreement" entered into by the Trust and FSC.
Any payments made by FSC to Brokers and Administrators with funds received as
compensation under this Plan will be made pursuant to a "Rule 12b-1
Agreement" entered into by FSC and Broker or Administrator.
4. FSC has the right (i) to select, in its sole discretion, the
Brokers and Administrators to participate in the Plan and (ii) to terminate
without cause and in its sole discretion any Rule 12b-1 Agreement.
5. Quarterly in each year that this Plan remains in effect, FSC shall
prepare and furnish to the Board of Trustees of the Trust, and the Board of
Trustees shall review, a written report of the amounts expended under the
Plan and the purpose for which such expenditures were made.
6. This Plan shall become effective with respect to each Class (i)
after approval by majority votes of: (a) the Trust's Board of Trustees, cast
in person at a meeting called for the purpose of voting on the Plan; (b) the
Trustees who are not interested persons of the Trust within the meaning of
Section 2(a)(19) of the Act and who have no direct or indirect financial
interest in the operation of the Plan or in any agreements related to the
Plan ("Disinterested Trustees"), cast in person at a meeting called for the
purpose of voting on the Plan and (c) the outstanding voting securities of
the particular Class, as defined in Section 2(a)(42) of the Act and (ii) upon
execution of an exhibit adopting this Plan with respect to such Class.
7. This Plan shall remain in effect with respect to each Class
presently set forth on an exhibit and any subsequent Classes added pursuant
to an exhibit during the initial year of this Plan for the period of one year
from the date set forth above and may be continued thereafter if this Plan is
approved with respect to each Class at least annually by a majority of the
Trust's Board of Trustees and a majority of the Disinterested Trustees, cast
in person at a meeting called for the purpose of voting on such Plan. If
this Plan is adopted with respect to a Class after the first annual approval
by the Trustees as described above, this Plan will be effective as to that
Class upon execution of the applicable exhibit pursuant to the provisions of
paragraph 6(ii) above and will continue in effect until the next annual
approval of this Plan by the Trustees and thereafter for successive periods
of one year subject to approval as described above.
8. All material amendments to this Plan must be approved by a vote of
the Board of Trustees of the Trust and of the Disinterested Trustees, cast in
person at a meeting called for the purpose of voting on it.
9. This Plan may not be amended in order to increase materially the
costs which a Class may bear for distribution pursuant to the Plan without
being approved by a majority vote of the outstanding voting securities of
that Class as defined in Section 2(a)(42) of the Act.
10. This Plan may be terminated with respect to a particular Class at
any time by: (a) a majority vote of the Disinterested Trustees; (b) a vote
of a majority of the outstanding voting securities of the particular Class as
defined in Section 2(a)(42) of the Act or (c) FSC on 60 days notice to the
Trust.
11. While this Plan shall be in effect, the nomination of persons to
serve as Trustees who are not interested persons of the Trust within the
meaning of Section 2(a)(19) of the Act shall be committed to the discretion
of the Disinterested Trustees then in office.
12. All agreements with any person relating to the implementation of
this Plan shall be in writing and any agreement related to this Plan shall be
subject to termination, without penalty, pursuant to the provisions of
Paragraph 10 herein.
13. This Plan shall be construed in accordance with and governed by the
laws of the State of North Carolina; provided, however, that nothing herein
shall be construed in a manner inconsistent with the Act or any rule or
regulation promulgated by the Securities and Exchange Commission thereunder.
EXHIBIT A
to the
Plan of Distribution
The Biltmore Funds
Biltmore Money Market Fund
(Investment Shares)
Biltmore U.S. Government Money Market Fund
(Investment Shares)
Biltmore Tax-Free Money Market Fund
(Investment Shares)
This Plan is adopted by The Biltmore Funds with respect to the Class of
Shares of the Portfolios of the Trust set forth above.
In compensation for the services provided pursuant to this Plan, FSC
will be paid a monthly fee computed at the annual rate of 0.40 of 1% of the
average aggregate net asset value of the Investment Shares of each Portfolio
of the Trust held during the month.
Witness the due execution hereof this 9th day of March, 1992.
The Biltmore Funds
By: /s/ John W. McGonigle
President
EXHIBIT B
to the
Plan of Distribution
The Biltmore Funds
Biltmore U.S. Treasury Money Market Fund
(Investment Shares)
This Plan is adopted by The Biltmore Funds with respect to the Class of
Shares of the Portfolios of the Trust set forth above.
In compensation for the services provided pursuant to this Plan, FSC
will be paid a monthly fee computed at the annual rate of 0.40 of 1% of the
average aggregate net asset value of the Investment Shares of each Portfolio
of the Trust held during the month.
Witness the due execution hereof this 31st day of January, 1993.
The Biltmore Funds
By: /s/ John W. McGonigle
President
