PRIME CASH
MANAGEMENT
FUND
Institutional Shares
Semi-Annual Report
and
Supplement to
Prospectus dated
January 31, 1994
[LOGO]
Federated Securities Corp.,
is the distributor of the fund.
G00236-01-IS (6/94)
823-22
BILTMORE PRIME CASH MANAGEMENT FUND
(A PORTFOLIO OF THE BILTMORE FUNDS)
INSTITUTIONAL SHARES
- --------------------------------------------------------------------------------
SEMI-ANNUAL REPORT AND SUPPLEMENT TO PROSPECTUS DATED JANUARY 31, 1994
A. Please insert the following "Financial Highlights" table as page 2 of the
Prospectus, following the "Summary of Fund Expenses" and before the
section entitled "General Information." In addition, please add the
heading "Financial Highlights" to the Table of Contents on page I of the
Prospectus following the heading "Summary of Fund Expenses."
BILTMORE PRIME CASH MANAGEMENT FUND
FINANCIAL HIGHLIGHTS--INSTITUTIONAL SHARES
- --------------------------------------------------------------------------------
(FOR A SHARE OUTSTANDING THROUGHOUT THE PERIOD)
<TABLE>
<CAPTION>
PERIOD ENDED
MAY 31, 1994*
<S> <C>
NET ASSET VALUE, BEGINNING OF PERIOD $ 1.00
- -----------------------------------------------------------------------------------------------
INCOME FROM INVESTMENT OPERATIONS
- -----------------------------------------------------------------------------------------------
Net investment income 0.02
- ----------------------------------------------------------------------------------------------- -----------------
LESS DISTRIBUTIONS
- -----------------------------------------------------------------------------------------------
Dividends to shareholders from net investment income (0.02)
- ----------------------------------------------------------------------------------------------- -----------------
NET ASSET VALUE, END OF PERIOD $ 1.00
- ----------------------------------------------------------------------------------------------- -----------------
TOTAL RETURN** 1.66%
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RATIOS TO AVERAGE NET ASSETS
- -----------------------------------------------------------------------------------------------
Expenses 0.18%(a)
- -----------------------------------------------------------------------------------------------
Net investment income 3.48%(a)
- -----------------------------------------------------------------------------------------------
Expense waiver/reimbursement (b) 0.29%(a)
- -----------------------------------------------------------------------------------------------
SUPPLEMENTAL DATA
- -----------------------------------------------------------------------------------------------
Net assets, end of period (000 omitted) $523,298
- -----------------------------------------------------------------------------------------------
</TABLE>
* Reflects operations for the period from December 2, 1993 (date of initial
public offering) to May 31, 1994.
** Based on net asset value which does not reflect the sales load or contingent
deferred sales charge, if applicable.
(a) Computed on an annualized basis.
(b) This voluntary expense decrease is reflected in both the expense and net
investment income ratios shown above (Note 4).
(See Notes which are an integral part of the Financial Statements)
B. Please replace the references to "The South Carolina National Bank," which
appear on page 2 of the Prospectus, in the "General Information" section,
and on page 7 of the Prospectus, in the "Adviser's Background"
sub-section, with "Wachovia Bank of South Carolina, N.A."
C. Please delete the section entitled "Administrative Services" on page 8 of
the Prospectus and replace it with the following:
"ADMINISTRATIVE SERVICES. Federated Administrative Services, Pittsburgh,
Pennsylvania, a subsidiary of Federated Investors, provides the Fund with the
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 NET
MAXIMUM ASSETS OF THE BILTMORE FUNDS AND
ADMINISTRATIVE FEE THE BILTMORE MUNICIPAL FUNDS
<C> <S>
0.15 of 1% on the first $250 million
0.125 of 1% on the next $250 million
0.100 of 1% on the next $250 million
0.075 of 1% on assets 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."
D. Please delete the third sentence of the first paragraph under the
sub-section entitled "Voting Rights", on page 12 of the Prospectus and
replace it with the following:
"As of May 31, 1994, the Wachovia Banks and their various affiliates and
subsidiaries, acting in various capacities for numerous accounts, were the owner
of record of approximately 523,300,495 Institutional Shares (99.99%) of the
Fund, and, therefore, may, for certain purposes, be deemed to control the Fund
and be able to affect the outcome of certain matters presented for a vote of
shareholders."
E. Please insert the following financial statements at the end of the
Prospectus beginning on page 15. In addition, please add the heading
"Financial Statements" to the Table of Contents on page I of the
Prospectus immediately before "Addresses."
BILTMORE PRIME CASH MANAGEMENT FUND
PORTFOLIO OF INVESTMENTS
MAY 31, 1994
(UNAUDITED)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT VALUE
<C> <S> <C>
- -------------- -------------------------------------------------------------------------------- ---------------
*COMMERCIAL PAPER--45.9%
- ------------------------------------------------------------------------------------------------
BANKING--3.4%
--------------------------------------------------------------------------------
$ 10,000,000 ABN Amro North America, 3.66%, 6/10/94 $ 9,990,850
--------------------------------------------------------------------------------
8,000,000 NationsBank Corp., 3.82%, 6/17/94 7,986,418
-------------------------------------------------------------------------------- ---------------
Total 17,977,268
-------------------------------------------------------------------------------- ---------------
PHARMACEUTICALS & HEALTH CARE--2.3%
--------------------------------------------------------------------------------
12,000,000 SmithKline Beecham Corp., 4.44%, 8/15/94 11,889,000
-------------------------------------------------------------------------------- ---------------
FINANCE--7.6%
--------------------------------------------------------------------------------
10,000,000 BASF Corp., 3.80%, 6/22/94 9,977,833
--------------------------------------------------------------------------------
10,000,000 Hanson Finance, 3.90%, 7/5/94 9,963,167
--------------------------------------------------------------------------------
20,000,000 MCA Funding Corp., 3.98%, 8/16/94 19,831,956
-------------------------------------------------------------------------------- ---------------
Total 39,772,956
-------------------------------------------------------------------------------- ---------------
FINANCE-AUTOMOTIVE--3.4%
--------------------------------------------------------------------------------
18,000,000 Ford Motor Credit Corp., 4.32%, 6/10/94 17,980,560
-------------------------------------------------------------------------------- ---------------
FINANCE-COMMERCIAL--7.7%
--------------------------------------------------------------------------------
20,000,000 General Electric Capital Corp., 3.52%-3.85%, 6/6/94-8/15/94 19,991,979
--------------------------------------------------------------------------------
20,000,000 Commercial Credit Corp., 3.85%, 6/6/94 19,989,306
-------------------------------------------------------------------------------- ---------------
Total 39,981,285
-------------------------------------------------------------------------------- ---------------
FINANCE-FOOD & BEVERAGE--3.4%
--------------------------------------------------------------------------------
18,000,000 Bass Finance, 3.82%, 6/20/94 17,963,710
-------------------------------------------------------------------------------- ---------------
FINANCE-TELECOMMUNICATIONS--3.8%
--------------------------------------------------------------------------------
20,000,000 Bellsouth Capital Funding Corp., 3.75%, 6/22/94 19,956,250
-------------------------------------------------------------------------------- ---------------
FOOD & BEVERAGE--9.5%
--------------------------------------------------------------------------------
20,000,000 Coca-Cola Co., 4.00%-4.31%, 7/19/94-11/28/94 19,813,800
--------------------------------------------------------------------------------
10,000,000 McDonalds Corp., 4.25%, 6/1/94 10,000,000
--------------------------------------------------------------------------------
20,000,000 Sara Lee Corp., 3.75%, 6/6/94 19,989,583
-------------------------------------------------------------------------------- ---------------
Total 49,803,383
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INSURANCE--3.8%
--------------------------------------------------------------------------------
20,000,000 American General Finance Corp., 4.33%, 6/10/94 19,978,350
-------------------------------------------------------------------------------- ---------------
PUBLISHING--1.0%
--------------------------------------------------------------------------------
5,000,000 Reed Publishing, 3.85%, 6/2/94 4,999,465
-------------------------------------------------------------------------------- ---------------
TOTAL COMMERCIAL PAPER 240,302,227
-------------------------------------------------------------------------------- ---------------
CERTIFICATES OF DEPOSITS--25.0%
- ------------------------------------------------------------------------------------------------
13,000,000 ABN Amro North America, 3.95%, 6/6/94 12,999,275
--------------------------------------------------------------------------------
10,000,000 Bank of New York, 4.08%, 9/30/94 9,990,080
--------------------------------------------------------------------------------
18,000,000 CIBC, New York, 3.76%-3.95%, 6/6/94-6/22/94 17,996,515
--------------------------------------------------------------------------------
14,000,000 First Alabama Bank, 4.00%, 6/2/94 14,000,000
--------------------------------------------------------------------------------
15,000,000 First Union National Bank, 4.28%, 6/17/94 15,000,000
--------------------------------------------------------------------------------
20,000,000 Nat West, 3.93%, 6/30/94 20,001,590
--------------------------------------------------------------------------------
23,000,000 Rabobank, 3.67%-5.09%, 11/14/94-12/22/94 23,002,818
--------------------------------------------------------------------------------
18,000,000 Societe Generale, 3.80%-4.66%, 6/6/94-8/15/94 18,001,198
-------------------------------------------------------------------------------- ---------------
TOTAL CERTIFICATES OF DEPOSITS 130,991,476
-------------------------------------------------------------------------------- ---------------
TIME DEPOSITS--7.2%
- ------------------------------------------------------------------------------------------------
15,000,000 Bank of New York, 5.00%, 11/15/94 15,000,000
--------------------------------------------------------------------------------
5,000,000 Barclays Bank, PLC, Nassau, 3.44%, 8/29/94 5,000,000
--------------------------------------------------------------------------------
7,500,000 NationsBank, Charlotte, 3.375%, 7/29/94 7,500,000
--------------------------------------------------------------------------------
5,000,000 NBD Bank, Canada, 3.31%, 6/30/94 5,000,000
--------------------------------------------------------------------------------
5,000,000 SouthTrust Bank of Alabama, 3.31%, 6/17/94 5,000,000
-------------------------------------------------------------------------------- ---------------
TOTAL TIME DEPOSITS 37,500,000
-------------------------------------------------------------------------------- ---------------
NOTES--11.8%
- ------------------------------------------------------------------------------------------------
8,000,000 CIT Group Holdings, Inc., 4.36%, 1/24/95 7,998,885
--------------------------------------------------------------------------------
5,000,000 NBD Bank, N.A., 3.29%, 6/20/94 4,999,885
--------------------------------------------------------------------------------
20,000,000 PNC Bank, Kentucky, 4.38%, 5/5/95 19,992,592
--------------------------------------------------------------------------------
15,000,000 Pepsico, Inc., Medium Term Note, 4.405%, 4/13/95 15,000,000
--------------------------------------------------------------------------------
14,000,000 Trust Co. Bank, Atlanta, 3.65%, 11/15/94 13,918,531
-------------------------------------------------------------------------------- ---------------
TOTAL NOTES 61,909,893
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U.S. GOVERNMENT OBLIGATIONS--5.7%
- ------------------------------------------------------------------------------------------------
U.S. TREASURY BILLS
--------------------------------------------------------------------------------
30,000,000 6/30/94-6/1/95 29,574,572
-------------------------------------------------------------------------------- ---------------
**REPURCHASE AGREEMENT--5.2%
- ------------------------------------------------------------------------------------------------
27,140,223 BZW Securities Inc., 4.20%, dated 5/31/94, due 6/1/94 (Note 2B) 27,140,223
-------------------------------------------------------------------------------- ---------------
TOTAL INVESTMENTS, AT AMORTIZED COST $ 527,418,391\
-------------------------------------------------------------------------------- ---------------
</TABLE>
* Each issue shows the rate of discount at the time of purchase for discount
issues, or the coupon for interest bearing issues.
** The repurchase agreement is fully collateralized by U.S. government and/or
agency obligations based on market prices at the date of the portfolio.
\ Also represents cost for federal tax purposes.
Note: The categories of investments are shown as a percentage of net assets
($523,298,151) at
May 31, 1994.
(See Notes which are an integral part of the Financial Statements)
BILTMORE PRIME CASH MANAGEMENT FUND
STATEMENT OF ASSETS AND LIABILITIES
MAY 31, 1994
(UNAUDITED)
- --------------------------------------------------------------------------------
<TABLE>
<S> <C> <C>
ASSETS:
- ------------------------------------------------------------------------------------------------
Investments in securities at amortized cost and value (Notes 2A and 2B) $ 527,418,391
- ------------------------------------------------------------------------------------------------
Interest receivable 1,384,417
- ------------------------------------------------------------------------------------------------ ---------------
Total assets 528,802,808
- ------------------------------------------------------------------------------------------------
LIABILITIES:
- ------------------------------------------------------------------------------------------------
Payable for investments purchased $ 3,797,778
- ---------------------------------------------------------------------------------
Dividends payable 1,662,879
- ---------------------------------------------------------------------------------
Accrued expenses 44,000
- --------------------------------------------------------------------------------- -------------
Total liabilities 5,504,657
- ------------------------------------------------------------------------------------------------ ---------------
NET ASSETS for 523,300,495 shares of beneficial interest outstanding $ 523,298,151
- ------------------------------------------------------------------------------------------------ ---------------
NET ASSETS CONSIST OF:
- ------------------------------------------------------------------------------------------------
Paid-in capital $ 523,300,495
- ------------------------------------------------------------------------------------------------
Accumulated net realized loss on investments (2,344)
- ------------------------------------------------------------------------------------------------ ---------------
Total $ 523,298,151
- ------------------------------------------------------------------------------------------------ ---------------
NET ASSET VALUE, Offering Price, and Redemption Proceeds Per Share
Institutional Shares ($523,298,151 / 523,300,495 shares of beneficial interest outstanding)
$1.00
- ------------------------------------------------------------------------------------------------ ---------------
</TABLE>
(See Notes which are an integral part of the Financial Statements)
BILTMORE PRIME CASH MANAGEMENT FUND
STATEMENT OF OPERATIONS
PERIOD ENDED MAY 31, 1994*
(UNAUDITED)
- --------------------------------------------------------------------------------
<TABLE>
<S> <C> <C> <C>
INVESTMENT INCOME:
- ---------------------------------------------------------------------------------------------------
Interest income (Note 2C) $ 5,757,342
- ---------------------------------------------------------------------------------------------------
EXPENSES:
- ---------------------------------------------------------------------------------------------------
Investment advisory fee (Note 4) $ 471,720
- --------------------------------------------------------------------------------------
Trustees' Fees 6,658
- --------------------------------------------------------------------------------------
Administrative personnel and services fee (Note 4) 165,590
- --------------------------------------------------------------------------------------
Custodian fees (Note 4) 29,135
- --------------------------------------------------------------------------------------
Transfer and dividend disbursing agent fees and expenses (Note 4) 8,514
- --------------------------------------------------------------------------------------
Legal fees 5,257
- --------------------------------------------------------------------------------------
Printing and postage 9,200
- --------------------------------------------------------------------------------------
Portfolio accounting fees (Note 4) 23,488
- --------------------------------------------------------------------------------------
Insurance premiums 4,206
- --------------------------------------------------------------------------------------
Miscellaneous 14,831
- -------------------------------------------------------------------------------------- -----------
Total expenses 738,599
- --------------------------------------------------------------------------------------
Deduct--
- --------------------------------------------------------------------------------------
Waiver of investment advisory fee (Note 4) $ 345,928
- -------------------------------------------------------------------------
Waiver of administrative personnel and services fee (Note 4) 86,931
- -------------------------------------------------------------------------
Reimbursement of other operating expenses by the Administrator (Note 4) 22,708 455,567
- ------------------------------------------------------------------------- ----------- -----------
Net expenses 283,032
- --------------------------------------------------------------------------------------------------- -------------
Net investment income 5,474,310
- --------------------------------------------------------------------------------------------------- -------------
Net realized gain (loss) on investment transactions (2,344)
- --------------------------------------------------------------------------------------------------- -------------
Change in net assets from operations $ 5,471,966
- --------------------------------------------------------------------------------------------------- -------------
</TABLE>
*For the period from December 2, 1993 (date of initial public offering) to May
31, 1994.
(See Notes which are an integral part of the Financial Statements)
BILTMORE PRIME CASH MANAGEMENT FUND
STATEMENT OF CHANGES IN NET ASSETS
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PERIOD ENDED
MAY 31, 1994*
(UNAUDITED)
<S> <C>
INCREASE (DECREASE) IN NET ASSETS:
- ---------------------------------------------------------------------------------------------
OPERATIONS--
- ---------------------------------------------------------------------------------------------
Net investment income $ 5,474,310
- ---------------------------------------------------------------------------------------------
Net realized gain (loss) on investment transactions--($2,344 net loss,
as computed for federal tax purposes) (Note 2D) (2,344)
- --------------------------------------------------------------------------------------------- -------------------
Change in net assets resulting from operations 5,471,966
- --------------------------------------------------------------------------------------------- -------------------
DISTRIBUTIONS TO SHAREHOLDERS (NOTE 2C)--
- ---------------------------------------------------------------------------------------------
Dividends to shareholders from net investment income (5,474,310)
- --------------------------------------------------------------------------------------------- -------------------
FUND SHARE (PRINCIPAL) TRANSACTIONS (NOTE 3)--
- ---------------------------------------------------------------------------------------------
Net proceeds from sale of shares 720,285,339
- ---------------------------------------------------------------------------------------------
Cost of shares redeemed (196,984,844)
- --------------------------------------------------------------------------------------------- -------------------
Change in net assets from Fund share transactions 523,300,495
- --------------------------------------------------------------------------------------------- -------------------
Change in net assets 523,298,151
- ---------------------------------------------------------------------------------------------
NET ASSETS:
- ---------------------------------------------------------------------------------------------
Beginning of period --
- --------------------------------------------------------------------------------------------- -------------------
End of period $ 523,298,151
- --------------------------------------------------------------------------------------------- -------------------
</TABLE>
* For the period from December 2, 1993 (date of initial public offering) to May
31, 1994.
(See Notes which are an integral part of the Financial Statements)
BILTMORE PRIME CASH MANAGEMENT FUND
NOTES TO FINANCIAL STATEMENTS
MAY 31, 1994
(UNAUDITED)
- --------------------------------------------------------------------------------
(1) ORGANIZATION
The Biltmore Funds (the "Trust") is registered under the Investment Company Act
of 1940, as amended, as an open-end, management investment company. The Trust
consists of eleven diversified portfolios. Only the financial statements of the
Biltmore Prime Cash Management Fund (the "Fund") are included herein. The
financial statements of the other portfolios are presented separately. The
assets of each portfolio are segregated, and a shareholder's interest is limited
to the portfolio in which shares are held. The Fund presently offers one class
of shares, Institutional Shares.
(2) SIGNIFICANT ACCOUNTING POLICIES
The following is a summary of significant accounting policies consistently
followed by the Fund in the preparation of its financial statements. These
policies are in conformity with generally accepted accounting principles (GAAP).
A. INVESTMENT VALUATIONS--The Fund's use of the amortized cost method to value
its portfolio securities is in accordance with Rule 2a-7 under the
Investment Company Act of 1940, as amended.
B. REPURCHASE AGREEMENTS--It is the policy of the Fund to require the
custodian bank to take possession, to have legally segregated in the
Federal Reserve Book Entry System or to have segregated within the
custodian bank's vault, all securities held as collateral in support of
repurchase agreement investments. Additionally, procedures have been
established by the Fund to monitor, on a daily basis, the market value of
each repurchase agreement's underlying collateral to ensure the value at
least equals the principal amount of the repurchase agreement, including
accrued interest.
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 Board of Trustees ("Trustees"). Risks may arise from the potential
inability of counterparties to honor the terms of the repurchase agreement.
Accordingly, the Fund could receive less than the repurchase price on the
sale of collateral securities.
C. INVESTMENT INCOME, EXPENSES AND DISTRIBUTIONS--Interest income and expenses
are accrued daily. Bond premium and discount are amortized as required by
the Internal Revenue Code, as amended ("Code"). Distributions to
shareholders are recorded on the ex-dividend date.
D. FEDERAL TAXES--It is the Fund's policy to comply with the provisions of the
Code applicable to regulated investment companies and to distribute to
shareholders each year substantially all of its taxable income.
Accordingly, no provisions for federal tax are necessary.
E. WHEN-ISSUED AND DELAYED DELIVERY TRANSACTIONS--The Fund may engage in
when-issued or delayed delivery transactions. The Fund records when-issued
securities on the trade date and maintains security positions such that
sufficient liquid assets will be available to make payment for the
securities purchased. Securities purchased on a when-issued or delayed
delivery basis are marked to market daily and begin earning interest on the
settlement date.
F. OTHER--Investment transactions are accounted for on the trade date.
(3) SHARES OF BENEFICIAL INTEREST
The Declaration of Trust permits the Trustees to issue an unlimited number of
full and fractional shares of beneficial interest (without par value). At May
31, 1994, capital paid-in aggregated $523,300,495. Transactions in Fund shares
were as follows:
<TABLE>
<CAPTION>
PERIOD ENDED
INSTITUTIONAL SHARES MAY 31, 1994*
<S> <C>
Shares sold 720,285,339
- -----------------------------------------------------------------------------------------------
Shares redeemed (196,984,844)
- ----------------------------------------------------------------------------------------------- -----------------
Net change resulting from Fund share transactions 523,300,495
- ----------------------------------------------------------------------------------------------- -----------------
</TABLE>
* For the period from December 2, 1993 (date of initial public offering) to May
31, 1994.
(4) INVESTMENT ADVISORY FEE AND OTHER TRANSACTIONS WITH AFFILIATES
INVESTMENT ADVISORY FEE--Wachovia Investment Management Group, the Fund's
investment adviser ("Adviser"), receives for its services an annual investment
advisory fee equal to 0.30 of 1% of the Fund's average daily net assets. Adviser
may voluntarily choose to waive a portion of its fee. Adviser can modify or
terminate this voluntary waiver at any time at its sole discretion.
ADMINISTRATIVE FEE--Federated Administrative Services ("FAS") provides the Fund
with certain administrative personnel and services. The fee is based on the
level of average aggregate net assets of the Trust and The Biltmore Municipal
Funds for the period. FAS may voluntarily choose to waive a portion of its fee
and reimburse certain operating expenses of the Fund.
ORGANIZATIONAL EXPENSES--Organizational expenses incurred by the Fund will be
borne initially by FAS and are estimated at $35,156. The Fund has agreed to
reimburse FAS for the organizational expenses during the five-year period
following the date the Fund's registration statement first became effective.
TRANSFER AND DIVIDEND DISBURSING AGENT, ACCOUNTING AND CUSTODY FEES--Federated
Services Company ("FServ") serves as transfer and dividend disbursing agent for
the the Fund. The fee is based on the size, type and number of accounts and
transactions made by shareholders.
Fserv also maintains the Fund'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.
Wachovia Bank of North Carolina, N.A. is the Fund's custodian. The fee is based
on the level of the Fund's average net assets for the period, plus out-of-pocket
expenses.
Certain of the Officers of the Trust are Officers and Trustees of FAS and FServ.
BILTMORE PRIME CASH MANAGEMENT FUND
(A Portfolio of The Biltmore Funds)
Institutional Shares
- --------------------------------------------------------------------------------
SUPPLEMENT TO STATEMENT OF ADDITIONAL INFORMATION DATED JANUARY 31, 1994
A. Please replace the second paragraph of the section entitled "Fund
Ownership" on page 5 of the Statement of Additional Information with
the following:
"As of May 31, 1994, the following shareholders of record owned 5% or
more of the outstanding Institutional Shares of the Fund: the
Wachovia Banks and their various affiliates and subsidiaries, owned
approximately 523,300,495 Institutional Shares (99.99%)."
B. Please insert the following as the last paragraph in the sub-section
entitled "Advisory Fees" under the main section entitled "Investment
Advisory Services" on page 5 of the Statement of Additional
Information:
"During the period from December 2, 1993 (date of initial public
investment) through May 31, 1994, the Adviser earned $471,720, of
which $345,928 were voluntarily waived."
C. Please delete the first paragraph under the section entitled
"Administrative Services" on page 5 of the Statement of Additional
Information and insert the following:
"Federated Administrative Services, which is a subsidiary of Federated
Investors, provides administrative personnel and services to the Fund
for the fees set forth in the Prospectus."
D. Please insert the following information as the second paragraph under
the section entitled "Administrative Services" on page 5 of the
Statement of Additional Information:
"During the period from December 2, 1993 (date of initial public
investment) through May 31, 1994, the Fund incurred administrative
service costs of $165,590, of which $86,931 were voluntarily waived
and $22,708 was reimbursed for other operating expenses."
E. Please insert the following information as the first paragraph under
the section entitled "Yield" on page 8 of the Statement of Additional
Information:
"The Fund's yield for the seven-day period ended May 31, 1994 was
4.01%."
F. Please insert the following information as the first paragraph under
the section entitled "Effective Yield" on page 9 of the Statement of
Additional Information:
"The Fund's effective yield for the seven-day period ended May 31, 1994
was 4.09%."
May 31, 1994
G00236-01-IS (6/94)
