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. 12 X
and/or
REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT OF
1940 X
Amendment No. 13 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:
X immediately upon filing pursuant to paragraph (b)
on _______________ pursuant to paragraph (b)
60 days after filing pursuant to paragraph (a)
on 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 and 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), and (11) Biltmore Quantitative Equity
Fund, relates only to one of the portfolios, Biltmore Prime
Cash Management 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 (1-11) Cover Page.
Item 2. Synopsis (1-11) Summary of Fund
Expenses.
Item 3. Condensed Financial
Information (1-10) Financial Highlights.
Item 4. General Description of
Registrant (1-11) General Information;
Investment Objective;
Investment Policies; Investment
Limitations; Regulatory
Compliance; (7,8,10) Investment
Risks; (1,2,4,5) Investment
Considerations; (3,5) Debt
Considerations; (1) Equity
Investment Considerations; (11)
Portfolio Turnover.
Item 5. Management of the Fund (1-11) The Biltmore Funds
Information; Management of The
Trust; Distribution of
(Institutional/Investment)
Shares; (7-9, Investment Shares
only) Distribution Plan; (1-
4,6,11) (7-10, Investment
Shares only) Administrative
Arrangements; (1-4, 6,11)
Shareholder Servicing
Arrangements; (1-11)
Administration of the Fund;
Legal Counsel; Independent
Auditors; Expenses of the Fund
(and Institutional/ Investment
Shares).
Item 6. Capital Stock and Other
Securities (1-11) Dividends; Capital
Gains; Shareholder Information;
Voting Rights; Massachusetts
Partnership Law; Federal
Income Tax; (8) State and Local
Taxes; (1) Effect of Banking
Laws; (7,8,9) Other Classes of
Shares.
Item 7. Purchase of Securities Being
Offered (1-11) Net Asset Value;
Investing in (the
Fund/Institutional/Investment)
Shares; Share Purchases; (1-
6,11) Through Wachovia
Brokerage Service; By Mail; By
Wire; Through the Trust
Divisions of The Wachovia
Banks;
(7-10) Through The Wachovia
Banks; (7-10) Via a Sweep
Account; (1-11) Minimum
Investment Required; What
Shares Cost; (1-6,11) 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; (7-10)
Exchanges.
Item 8. Redemption or Repurchase (1-11) Redeeming
(Institutional/Investment)
Shares; By Telephone (1-6,11)
(7-10, Investment Shares Only);
Through Wachovia Brokerage
Service; By Mail; Accounts With
Low Balances; (7-10) Redemption
In Kind; (1-4,6,11) Systematic
Withdrawal Program.
Item 9. Pending Legal Proceedings None.
PART B. INFORMATION REQUIRED IN A STATEMENT OF ADDITIONAL
INFORMATION.
Item 10. Cover Page (1-11) Cover Page.
Item 11. Table of Contents (1-11) Table of Contents.
Item 12. General Information and
History (1-11) General Information
About the Fund.
Item 13. Investment Objectives and
Policies (1-11) Investment Objective and
Policies; Investment
Limitations; (8) Investment
Risks.
Item 14. Management of the Fund (1-11) The Biltmore Funds
Management.
Item 15. Control Persons and Principal
Holders of Securities Not Applicable.
Item 16. Investment Advisory and Other
Services (1-11) Investment Advisory
Services; Administrative
Services; (1-6,11)
Administrative Arrangements.
Item 17. Brokerage Allocation (1-11) Brokerage Transactions.
Item 18. Capital Stock and Other
Securities Not Applicable
Item 19. Purchase, Redemption and
Pricing of Securities Being
Offered (1-11) Purchasing (Fund)/
(Institutional/Investment)
Shares; Determining Net Asset
Value; Redeeming
(Institutional/Investment)
Shares; (1-6,11) Redemption in
Kind; Determining Market Value
of Securities.
Item 20. Tax Status (1-11) Tax Status.
Item 21. Underwriters (7,8,10, Investment Shares
only) Distribution Plan.
Item 22. Calculation of Performance
Data (1-10) Effective Yield; (1-11)
Yield; (8) Tax-Equivalent
Yield, (1-6,11) Total Return;
(1-11) Performance Comparisons;
(4,6) Duration; (11) Standard &
Poor's Corporation.
Item 23. Financial Statements (1-10) Filed in Part A; (11) to
be filed by amendment.
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%
- -----------------------------------------------------------------------------------------------
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
-------------------------------------------------------------------------------- ---------------
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
-------------------------------------------------------------------------------- ---------------
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
PROSPECTUS
The Institutional Shares of Biltmore Prime Cash Management 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).
AN INVESTMENT IN THE FUND IS NEITHER INSURED NOR GUARANTEED BY THE U.S.
GOVERNMENT. THE FUND ATTEMPTS TO MAINTAIN A STABLE NET ASSET VALUE OF $1.00 PER
SHARE; THERE CAN BE NO ASSURANCE THAT THE FUND WILL BE ABLE TO DO SO.
The Fund is a money market fund which invests in money market instruments to
provide current income consistent with stability of principal and liquidity.
THE 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 ("FDIC"), THE FEDERAL RESERVE BOARD, OR ANY OTHER GOVERNMENT AGENCY.
This prospectus contains the information you should read and know before you
invest in Institutional Shares of the Fund. Keep this prospectus for future
reference.
The Fund has also filed a Statement of Additional Information for Institutional
Shares, dated January 31, 1994, with the Securities and Exchange Commission. The
information contained in the Statement of Additional Information is incorporated
by reference into this prospectus. You may request a copy of the Statement of
Additional Information free of charge, purchase Institutional Shares, or obtain
other information about the Fund by writing to the Fund or by calling your
Wachovia Bank (as defined herein) account officer.
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 January 31, 1994
TABLE OF CONTENTS
- --------------------------------------------------------------------------------
SUMMARY OF FUND EXPENSES 1
- ------------------------------------------------------
GENERAL INFORMATION 2
- ------------------------------------------------------
INVESTMENT INFORMATION 2
- ------------------------------------------------------
Investment Objective 2
Investment Policies 2
Acceptable Investments 2
Variable Rate Demand Notes 3
Bank Instruments 3
Short-Term Credit Facilities 3
Ratings 3
Repurchase Agreements 4
Credit Enhancement 4
Demand Features 4
Restricted and Illiquid Securities 4
When-Issued and Delayed Delivery
Transactions 5
Investing in Securities of
Other Investment Companies 5
Concentration of Investments 5
Lending of Portfolio Securities 5
Investment Risks 6
Investment Limitations 6
Regulatory Compliance 6
THE BILTMORE FUNDS INFORMATION 7
- ------------------------------------------------------
Management of the Trust 7
Board of Trustees 7
Investment Adviser 7
Advisory Fees 7
Adviser's Background 7
Distribution of Institutional Shares 7
Administration of the Fund 8
Administrative Services 8
Custodian 8
Transfer Agent, Dividend Disbursing
Agent, and Portfolio Accounting
Services 8
Legal Services 8
Independent Auditors 8
Expenses of the Fund
and Institutional Shares 9
NET ASSET VALUE 9
- ------------------------------------------------------
INVESTING IN INSTITUTIONAL SHARES 9
- ------------------------------------------------------
Share Purchases 9
Through the Wachovia Banks 9
Via a Sweep Account 10
Minimum Investment Required 10
What Shares Cost 10
Certificates and Confirmations 10
Dividends 10
Capital Gains 11
EXCHANGES 11
- ------------------------------------------------------
REDEEMING INSTITUTIONAL SHARES 12
- ------------------------------------------------------
By Telephone 12
SHAREHOLDER INFORMATION 12
- ------------------------------------------------------
Voting Rights 12
Massachusetts Business Trusts 13
EFFECT OF BANKING LAWS 13
- ------------------------------------------------------
TAX INFORMATION 14
- ------------------------------------------------------
PERFORMANCE INFORMATION 14
- ------------------------------------------------------
ADDRESSES 15
- ------------------------------------------------------
SUMMARY OF FUND EXPENSES
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SHAREHOLDER TRANSACTION EXPENSES
<S> <C>
Maximum Sales Load Imposed on Purchases
(as a percentage of offering price)................................................................... None
Maximum Sales Load Imposed on Reinvested Dividends
(as a percentage of offering price)................................................................... None
Deferred Sales Load (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
<CAPTION>
ANNUAL FUND OPERATING EXPENSES*
(As a percentage of projected average net assets)
<S> <C>
Management Fee (after waiver)(1)........................................................................ 0.08%
12b-1 Fees.............................................................................................. None
Other Expenses (after waiver)(2)........................................................................ 0.10%
Total Fund Operating Expenses (after waivers)(3)............................................... 0.18%
</TABLE>
(1) The estimated management fee has been reduced to reflect the anticipated
voluntary waiver by the investment adviser. The adviser can terminate this
voluntary waiver at any time at its sole discretion. The maximum management
fee is 0.30%.
(2) Other Expenses are estimated to be 0.15% absent the anticipated voluntary
waiver by the administrator. The administrator may terminate this voluntary
waiver at any time at its sole discretion.
(3) Total Fund Operating Expenses are estimated to be 0.45% absent the
anticipated voluntary waivers described above in notes 1 and 2.
* Since the Fund does not have an operating history, the percentages indicated
as Annual Fund Operating Expenses are based on the Fund's projected fees and
estimated expenses for the fiscal year ending November 30, 1994. The table
should not be considered a representation of past or future expenses. Actual
expenses may be greater or less than those shown in this table.
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 and
(2) redemption at the end of each time period. As noted in the table above, the Fund charges no
redemption fees................................................................................ $2 $6
</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, 1994.
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. The shares in any one portfolio
may be offered in separate classes. As of the date of this prospectus, the Board
of Trustees (the "Trustees") has established one class of shares of Biltmore
Prime Cash Management Fund (the "Fund"), Institutional Shares. This prospectus
relates only to Institutional Shares of the Fund.
Institutional Shares are offered only for purchase through the bank subsidiaries
of Wachovia Corporation: Wachovia Bank of North Carolina, N.A., the Wachovia
Bank of Georgia, N.A., The South Carolina National Bank, and their affiliates
(collectively, the "Wachovia Banks"). Institutional Shares are offered only to
accounts held by the Wachovia Banks in a fiduciary, agency, custodial, or
similar capacity. The Fund offers a convenient means of accumulating an interest
in a professionally managed, diversified portfolio limited to money market
instruments maturing in 397 days or less. A minimum initial investment of $5
million is required.
The Fund attempts to stabilize the value of a share at $1.00. Institutional
Shares are currently sold and redeemed at that price.
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 and Investment Shares), Biltmore Quantitative Equity
Fund, Biltmore Short-Term Fixed Income Fund, Biltmore Special Values Fund,
Biltmore Tax-Free Money Market Fund (Institutional and Investment Shares), and
Biltmore U.S. Treasury Money Market Fund (Institutional and Investment Shares).
INVESTMENT INFORMATION
- --------------------------------------------------------------------------------
INVESTMENT OBJECTIVE
The investment objective of the Fund is to provide current income consistent
with stability of principal and liquidity. The investment objective cannot be
changed without approval of shareholders. While there is no assurance that the
Fund will achieve its investment objective, it endeavors to do so by following
the investment policies described in this prospectus.
INVESTMENT POLICIES
The Fund pursues its investment objective by investing in a portfolio of money
market instruments maturing in 397 days or less. The average maturity of money
market instruments in the Fund's portfolio, computed on a dollar-weighted basis,
will be 90 days or less.
Unless indicated otherwise, the investment policies may be changed by the
Trustees without the approval of shareholders. Shareholders will be notified
before any material changes in these policies become effective.
ACCEPTABLE INVESTMENTS. The Fund invests in high quality money market
instruments that are rated in the highest short-term rating categories by one
or more nationally recognized statistical rating organizations ("NRSROs") or
are of comparable quality to securities having such ratings. Examples of these
instruments include, but are not limited to:
obligations issued or guaranteed as to payment of principal and interest
by the U.S. government, its agencies and instrumentalities;
commercial paper (including U.S. dollar denominated Eurodollar commercial
paper ("Europaper") );
certificates of deposit, demand and time deposits, and bankers'
acceptances ("Bank Instruments");
corporate debt obligations, including bonds, notes, and debentures; and
repurchase agreements.
The Fund invests only in instruments denominated and payable in U.S. dollars.
For further discussion of the instruments described above and rating categories,
consult the Fund's Combined Statement of Additional Information.
VARIABLE RATE DEMAND NOTES. Variable rate demand notes are long-term
corporate debt instruments that have variable or floating interest rates
and provide the Fund with the right to tender the security for repurchase
at its stated principal amount plus accrued interest. Such securities
typically bear interest at a rate that is intended to cause the securities
to trade at par. The interest rate may float or be adjusted at regular
intervals (ranging from daily to annually), and is normally based on an
interest rate index or published interest rate. Most variable rate demand
notes allow the Fund to demand the repurchase of the security on not more
than seven days prior notice. Other notes only permit the Fund to tender
the security at the time of each interest rate adjustment or at other fixed
intervals. See "Demand Features." The Fund treats variable rate demand
notes as maturing on the later of the date of the next interest rate
adjustment or the date on which the Fund may next tender the security for
repurchase.
BANK INSTRUMENTS. The Fund only invests in U.S. and foreign bank
instruments either issued by an institution having capital, surplus and
undivided profits over $100 million or insured by the Bank Insurance Fund
("BIF") which is administered by the FDIC. Bank instruments may include
Eurodollar Certificates of Deposit ("ECDs"), Yankee Certificates of Deposit
("Yankee CDs") and Eurodollar Time Deposits ("ETDs"). The Fund will treat
securities credit enhanced with a bank's irrevocable letter of credit or
unconditional guaranty as bank instruments.
SHORT-TERM CREDIT FACILITIES. Demand notes are short-term borrowing
arrangements between a corporation and an institutional lender (such as the
Fund) payable upon demand by either party. The notice period for demand
typically ranges from one to seven days, and the party may demand full or
partial payment. The Fund may also enter into, or acquire participations
in, short-term revolving credit facilities with corporate borrowers. Demand
notes and other short-term credit arrangements usually provide for floating
or variable rates of interest.
RATINGS. An NRSRO's highest rating category is determined without regard for
sub-categories and gradations. For example, securities rated A-1+ or A-1 by
Standard & Poor's Corporation ("S&P"), Prime-1 by Moody's Investors Service,
Inc. ("Moody's"), or F-1 (+ or -) by Fitch Investors Service, Inc. ("Fitch")
are all considered rated in the highest short-term rating category. The Fund
will follow applicable regulations in determining whether a security rated by
more than one NRSRO can be treated as being in the highest short-term rating
category; currently, such securities must be rated by two NRSROs in their
highest rating category. See "Regulatory Compliance."
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. The Fund or its
custodian will take possession of the securities subject to repurchase
agreements, and these securities will be 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.
CREDIT ENHANCEMENT. Certain of the Fund's acceptable investments may have been
credit enhanced by a guaranty, letter of credit or insurance. The Fund typically
evaluates the credit quality and ratings of credit enhanced securities based
upon the financial condition and ratings of the party providing the credit
enhancement (the "credit enhancer"), rather than the issuer. Generally, the Fund
will not treat credit enhanced securities as having been issued by the credit
enhancer for diversification purposes. However, under certain circumstances
applicable regulations may require the Fund to treat the securities as having
been issued by both the issuer and the credit enhancer. The bankruptcy,
receivership or default of the credit enhancer will adversely affect the quality
and marketability of the underlying security.
DEMAND FEATURES. The Fund may acquire securities that are subject to puts and
standby commitments ("demand features") to purchase the securities at their
principal amount (usually with accrued interest) within a fixed period (usually
seven days) following a demand by the Fund. The demand feature may be issued by
the issuer of the underlying securities, a dealer in the securities or by
another third party, and may not be transferred separately from the underlying
security. The Fund uses these arrangements to provide the Fund with liquidity
and not to protect against changes in the market value of the underlying
securities. The bankruptcy, receivership or default by the issuer of the demand
feature, or a default on the underlying security or other event that terminates
the demand feature before its exercise, will adversely affect the liquidity of
the underlying security. Demand features that are exercisable even after a
payment default on the underlying security may be treated as a form of credit
enhancement.
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 law. However,
the Fund will limit investments in illiquid securities, including certain
restricted securities not determined by the Trustees to be liquid,
non-negotiable time deposits, and repurchase agreements providing for
settlement in more than seven days after notice, to 10% of its net assets.
The Fund may invest in commercial paper issued in reliance on the exemption from
registration afforded by Section 4(2) of the Securities Act of 1933. Section
4(2) commercial paper is restricted as to disposition under federal securities
law, and is generally sold to institutional investors, such as the Fund, who
agree that they are purchasing the paper for investment purposes and not with a
view to public distribution. Any resale by the purchaser must be in an exempt
transaction. Section 4(2) commercial paper is normally resold to other
institutional investors like the Fund through or with the assistance of the
issuer or investment dealers who make a market in Section 4(2) commercial paper,
thus providing liquidity. The Fund believes that Section 4(2) commercial paper
and possibly certain other restricted securities which meet the criteria for
liquidity established by the Trustees are quite liquid. The Fund intends,
therefore, to treat the restricted securities which meet the criteria for
liquidity established by the Trustees, including Section 4(2) commercial paper,
as determined by the Fund's investment adviser, as liquid and not subject to the
investment limitation applicable to illiquid securities. In addition, because
Section 4(2) commercial paper is liquid, the Fund intends to not subject such
paper to the limitation applicable to restricted securities.
WHEN-ISSUED AND DELAYED DELIVERY TRANSACTIONS. The Fund may purchase short-term
U.S. government obligations 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 Fund engages in
when-issued and delayed delivery transactions only for the purpose of acquiring
portfolio securities consistent with the Fund's investment objective and
policies and not for investment leverage. In when-issued and delayed delivery
transactions, the Fund relies on the seller to complete the transaction. The
seller's failure to complete the transaction may cause the Fund to miss a price
or yield considered to be advantageous.
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. The Fund will only
invest in other investment companies that are money market funds having
investment objectives and policies similar to its own and primarily for the
purpose of investing short-term cash which has not yet been invested in other
portfolio instruments. The Fund's investment adviser will waive its advisory fee
on assets invested in securities of open-end investment companies.
CONCENTRATION OF INVESTMENTS. The Fund may invest more than 25% of the value of
its total assets in cash or certain money market instruments (including
instruments issued by a U.S. branch of a domestic bank having capital, surplus,
and undivided profits in excess of $100,000,000 at the time of investment),
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 OF PORTFOLIO SECURITIES. In order to generate additional income,
the Fund may lend its portfolio securities on a short-term basis to
broker/dealers, banks, or other institutional borrowers of securities. The Fund
will limit the amount of portfolio securities it may lend to not more than
one-third of its total assets. The Fund will only enter into loan arrangements
with broker/dealers, banks, or other institutions which the investment adviser
has determined are creditworthy under guidelines established by the Trustees,
where loaned securities are marked to market daily and where the Fund receives
collateral equal to at least 100% of the value of the securities loaned.
INVESTMENT RISKS
ECDs, ETDs, Yankee CDs, and Europaper are subject to somewhat different risks
than domestic obligations of domestic issuers. Examples of these risks include
international economic and political developments, foreign governmental
restrictions that may adversely affect the payment of principal or interest,
foreign withholding or other taxes on interest income, difficulties in obtaining
or enforcing a judgment against the issuing bank, and the possible impact of
interruptions in the flow of international currency transactions. Different
risks may also exist for ECDs, ETDs, and Yankee CDs because the banks issuing
these instruments, or their domestic or foreign branches, are not necessarily
subject to the same regulatory requirements that apply to domestic banks, such
as reserve requirements, loan limitations, examinations, accounting, auditing,
and recordkeeping, and the public availability of information. These factors
will be carefully considered by the Fund's adviser in selecting investments for
the Fund.
INVESTMENT LIMITATIONS
The Fund will not:
borrow money directly or through reverse repurchase agreements
(arrangements in which the Fund sells a money market instrument for a
percentage of its cash value with an agreement to buy it back on a set
date) except, under certain circumstances, the Fund may borrow up to one-
third of the value of its total assets; nor
with respect to 75% of the value of its total assets, invest more than 5%
of the value of its total assets in securities of 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 U.S. government securities).
The above investment limitations cannot be changed without shareholder approval.
REGULATORY COMPLIANCE
The Fund may follow non-fundamental operational policies that are more
restrictive than its fundamental investment limitations, as set forth in this
prospectus and the Statement of Additional Information, in order to comply with
applicable laws and regulations, including the provisions of and regulations
under the Investment Company Act of 1940, as amended. The Fund will invest more
than 5% of its assets in any one issuer only under the circumstances permitted
by Rule 2a-7. The Fund will also determine the effective maturity of its
investments, as well as its ability to consider a security as having received
the requisite short-term ratings by NRSROs, according to Rule 2a-7. The Fund may
change these operational policies to reflect changes in the laws and regulations
without the approval of its shareholders.
THE BILTMORE FUNDS INFORMATION
- --------------------------------------------------------------------------------
MANAGEMENT OF THE TRUST
BOARD OF TRUSTEES. The Board of Trustees is 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,
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 0.30 of 1% 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. is a national banking association,
which offers a broad range of financial services, including commercial and
consumer loans, corporate, institutional, and personal trust services,
demand and time deposit accounts, letters of credit and international
financial services.
Wachovia Investment Management Group 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 The South Carolina National Bank have been managing trust assets for
over 100 years with approximately $18 billion in managed assets as of
September 30, 1993. Wachovia Investment Management Group has served as
investment adviser to The Biltmore Funds since March 9, 1992.
DISTRIBUTION OF INSTITUTIONAL SHARES
Federated Securities Corp. is 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.
ADMINISTRATION OF THE FUND
ADMINISTRATIVE SERVICES. Federated Administrative Services, a subsidiary of
Federated Investors, provides the Fund with certain administrative personnel and
services necessary to operate the Fund and the separate classes. 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 as specified below, reduced by certain of the fees paid by the Trust
to Federated Services Company for transfer agent, dividend disbursing agent, and
portfolio accounting services:
<TABLE>
<CAPTION>
MAXIMUM AVERAGE AGGREGATE DAILY
ADMINISTRATIVE FEE NET ASSETS OF THE TRUST
<C> <S>
.145 of 1% of the first $400 million
.120 of 1% of the next $300 million
.095 of 1% of the next $300 million
.070 of 1% in excess of $1 billion
</TABLE>
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 for the securities and cash of the Fund. Under the
Custodian Agreement, Wachovia Bank of North Carolina, N.A. holds the Fund's
portfolio securities in safekeeping and keeps all necessary records and
documents relating to its duties. For the services provided to the Trust
pursuant to the Custodian Agreement, the Trust pays Wachovia Bank of North
Carolina, N.A. an annual fee calculated based upon the average daily net assets
of the Fund and payable monthly as follows:
<TABLE>
<CAPTION>
MAXIMUM AVERAGE AGGREGATE DAILY
CUSTODIAN FEE NET ASSETS OF THE FUND
<C> <S>
0.02 of 1% $0 to $250 million
0.015 of 1% $250 million to $500 million
0.01 of 1% over $500 million
</TABLE>
The Custodian will also charge transaction fees and out-of-pocket expenses.
TRANSFER AGENT, DIVIDEND DISBURSING AGENT, AND PORTFOLIO ACCOUNTING SERVICES.
Federated Services Company, Pittsburgh, PA, a subsidiary of Federated
Investors, is 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 disinterested Trustees.
INDEPENDENT AUDITORS. The independent auditors are Ernst & Young, Pittsburgh,
Pennsylvania.
EXPENSES OF THE FUND AND INSTITUTIONAL SHARES
Holders of Institutional Shares pay their allocable portion of Fund and Trust
expenses. The Trust expenses for which holders of Institutional Shares pay their
allocable share include, but are not limited to: the cost of organizing the
Trust and continuing its existence; registering the Trust; Trustees' fees;
auditors' fees; the cost of meetings of Trustees; legal fees of the Trust;
association membership dues and such non-recurring and extraordinary items as
may arise.
The Fund's expenses for which holders of shares pay their allocable portion
include, but are not limited to: registering the Fund and shares of the Fund
under state and federal law; investment advisory services, taxes and
commissions; custodian fees; insurance premiums; auditors' fees; and such non-
recurring and extraordinary items as may arise.
The Fund's expenses for which holders of Institutional Shares pay their
allocable portion would be limited to: transfer agent fees as identified by the
transfer agent as attributable to holders of Institutional Shares; printing and
postage expenses related to preparing and distributing materials such as
shareholder reports, prospectuses and proxies to current shareholders;
registration fees paid to the Securities and Exchange Commission and
registration fees paid to states; expenses related to administrative personnel
and services as required to support holders of Institutional Shares; legal fees
relating solely to Institutional Shares; and Trustees' fees incurred as a result
of issues relating solely to Institutional Shares.
NET ASSET VALUE
- --------------------------------------------------------------------------------
The Fund attempts to stabilize the net asset value of Institutional Shares at
$1.00 by valuing the portfolio securities using the amortized cost method. The
net asset value per share is determined by adding the interest of the
Institutional Shares in the value of all securities and other assets of the
Fund, subtracting the interest of the Institutional Shares in the liabilities of
the Fund and those attributable to Institutional Shares, and dividing the
remainder by the total number of Institutional Shares outstanding. The Fund, of
course, cannot guarantee that its net asset value will always remain at $1.00
per share.
INVESTING IN INSTITUTIONAL SHARES
- --------------------------------------------------------------------------------
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. Institutional Shares may be
purchased by or through the Wachovia Banks. Texas residents must purchase,
exchange, and redeem shares through Federated Securities Corp. at
1-800-618-8573. The Fund and the distributor reserve the right to reject any
purchase request.
THROUGH THE WACHOVIA BANKS. To place an order to purchase Institutional Shares
of the Fund, customers of the Wachovia Banks may telephone, send written
instructions, or place 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, federal funds, or by
debiting a customer's account with the Wachovia Banks. Orders are considered
received after payment by check is converted into federal funds and received by
the Wachovia Banks, normally the next business day. When payment is made with
federal funds, the order is considered received when federal funds are received
by the Wachovia Banks or available in the customer's account. Purchase orders
must be communicated to the Wachovia Banks by 11:00 a.m. (Eastern time) and
payment by federal funds must be received by the Wachovia Banks before 4:00 p.m.
(Eastern time) on the same day as the order to earn dividends for that day.
Institutional Shares cannot be purchased on days on which Wachovia Bank of North
Carolina, N.A., the New York Stock Exchange and the Federal Reserve Wire System
are not open for business.
VIA A SWEEP ACCOUNT. If you are investing in the Fund as part of a Wachovia
Bank sweep account program, automatic purchases and redemptions will be made by
the Wachovia Banks on your behalf pursuant to the sweep agreement you signed as
part of your trust account with the Wachovia Banks.
MINIMUM INVESTMENT REQUIRED
The minimum initial investment in the Fund is $5 million. This amount may be
waived from time to time.
WHAT SHARES COST
Institutional Shares are sold at their net asset value next determined after an
order is received. There is no sales charge imposed by the Fund.
The net asset value is determined at 12:00 noon and 4:00 p.m. (Eastern time),
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.
CERTIFICATES AND CONFIRMATIONS
As transfer agent for the Fund, Federated Services Company maintains a share
account for each shareholder of record. Share certificates are not issued.
Federated Services Company provides the Wachovia Banks, as shareholders of
record, with detailed statements on a monthly basis that include account
balances, information on each purchase or redemption, and a report of dividends
paid during the month. These statements will serve as confirmations of all
transactions in the shareholders' account for the statement period.
Investors purchasing through the Wachovia Banks will receive account statements
from those institutions periodically as required by the relevant account
agreement.
DIVIDENDS
Dividends are declared daily and paid monthly. Dividends will be reinvested on
payment dates in additional Institutional Shares of the Fund unless cash
payments are requested by writing to the Wachovia Banks.
CAPITAL GAINS
Capital gains, if any, could result in an increase in dividends. Capital losses
could result in a decrease in dividends. If for some extraordinary reason the
Fund realizes net long-term capital gains, it will distribute them at least once
every 12 months.
EXCHANGES
- --------------------------------------------------------------------------------
A shareholder may exchange Institutional Shares of one fund for Institutional
Shares of any other fund that does not assess a sales charge on the basis of
their respective net asset values by calling or writing to his account officer
at the Wachovia Banks. Telephone exchange instructions may be recorded. If
reasonable procedures are not followed by the Fund, it may be liable for losses
due to unauthorized or fraudulent telephone instructions. Institutional Shares
purchased by check are eligible for exchange after the purchase check has
cleared, which could take up to ten calendar days. The exchange feature applies
to Institutional Shares of each fund that does not assess a sales charge as of
the effective offering date of each fund's Institutional Shares.
Orders to exchange Institutional Shares of one fund for Institutional Shares of
any of the other Biltmore Funds that do not assess a sales charge will be
executed by redeeming the Institutional Shares owned at net asset value next
determined after receipt of the order and purchasing Institutional Shares of any
such other Biltmore Funds at the net asset value determined after the proceeds
from such redemption become available. Orders for exchanges received by the Fund
after 12:00 noon but prior to 4:00 p.m. (Eastern time) on any day the Trust is
open for business will be executed at the price determined at 4:00 p.m. (Eastern
time) that day. Orders for exchanges received after 4:00 p.m. (Eastern time) on
any business day will be executed at the price determined at 12:00 noon (Eastern
time) on the next business day.
An excessive number of exchanges may be disadvantageous to the Trust. Therefore
the Trust, in addition to its right to reject any exchange, reserves the right
to modify or terminate the exchange privilege of any shareholder, provided the
shareholder is given 60 days' written notice.
An exchange order must comply with the requirements for a redemption and
purchase order and must specify the dollar value or number of shares to be
exchanged. Exchanges are subject to the minimum initial investment requirement
imposed by the relevant account agreement. An exchange constitutes a sale for
federal income tax purposes.
This privilege is available to shareholders resident in any state in which the
fund shares being acquired may be sold. Before the exchange, a shareholder
should review a prospectus of the fund for which the exchange is being made.
REDEEMING INSTITUTIONAL SHARES
- --------------------------------------------------------------------------------
The Fund redeems shares at their net asset value next determined after the
Wachovia Banks receive the redemption request. Redemptions will be made on days
on which the Fund computes its net asset value. Requests for redemption can be
made in person, by telephone, or by writing to your account officer. If at any
time the Fund shall determine it necessary to terminate or modify any of these
methods of redemption, shareholders would be promptly notified.
BY TELEPHONE
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. For calls received by the
Wachovia Banks before 11:00 a.m. (Eastern time) proceeds will normally be wired
the same day to the shareholder's account at the Wachovia Banks or a check will
be sent to the address of record. Those shares will not be entitled to the
dividend declared that day. For calls received by the Wachovia Banks after 11:00
a.m. (Eastern time) proceeds will normally be wired or a check mailed the
following business day. Those shares will be entitled to the dividend declared
on the day the redemption request was received. In no event will proceeds be
wired or a check mailed 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.
An authorization permitting the Wachovia Banks to accept telephone requests is
included as part of your account agreement. Telephone redemption instructions
may be recorded. If reasonable procedures are not followed by the Fund, it may
be liable for losses due to unauthorized or fraudulent telephone instructions.
SHAREHOLDER INFORMATION
- --------------------------------------------------------------------------------
VOTING RIGHTS
Each Institutional Share of the Fund gives the shareholder one vote in Trustee
elections and other matters submitted to shareholders for vote. All shares of
all classes of each fund in the Trust have equal voting rights, except that in
matters affecting only a particular fund or class, only shares of that fund or
class are entitled to vote. As of January 7, 1994, Wachovia Brokerage Services,
Winston-Salem, North Carolina, acting in various capacities for numerous
accounts, was the owner of record of approximately 178,109,218 Institutional
Shares (100%) 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.
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 the 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 advisory and custody agreements
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.
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 will 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 will be subject to federal income tax on
any dividends and other distributions received. This applies whether dividends
and distributions are received in cash or as additional shares.
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 yield and effective yield for
Institutional Shares.
The yield of Institutional Shares represents the annualized rate of income
earned on an investment in Institutional Shares over a seven-day period. It is
the annualized dividends earned during the period on the investment shown as a
percentage of the investment. The effective yield is calculated similarly to the
yield but, when annualized, the income earned by an investment in Institutional
Shares is assumed to be reinvested daily. The effective yield will be slightly
higher than the yield because of the compounding effect of this assumed
reinvestment.
Advertisements and other sales literature may also refer to total return. Total
return represents the change, over a specified period of time, in the value of
an investment in Institutional Shares after reinvesting all distributions. It is
calculated by dividing that change by the initial investment and is expressed as
a percentage.
From time to time, the Fund may advertise its performance using certain
financial publications and/or compare its performance to certain indices.
ADDRESSES
- --------------------------------------------------------------------------------
<TABLE>
<S> <C> <C>
Biltmore Prime Cash Management Fund
Institutional Shares Federated Investors Tower
Pittsburgh, Pennsylvania 15222-3779
- ---------------------------------------------------------------------------------------------------------------------
Distributor
Federated Securities Corp. Federated Investors Tower
Pittsburgh, Pennsylvania 15222-3779
- ---------------------------------------------------------------------------------------------------------------------
Investment Adviser
Wachovia Investment Management Group 301 North Main Street
Winston-Salem, N.C. 27150
- ---------------------------------------------------------------------------------------------------------------------
Custodian
Wachovia Bank of North Carolina, N.A. Wachovia Trust Operations
301 North Main Street
Winston-Salem, N.C. 27150
- ---------------------------------------------------------------------------------------------------------------------
Transfer Agent, Dividend Disbursing Agent, and
Portfolio Accounting Services
Federated Services Company Federated Investors Tower
Pittsburgh, Pennsylvania 15222-3779
- ---------------------------------------------------------------------------------------------------------------------
Legal Counsel
Kirkpatrick & Lockhart 1800 M Street, N.W.
Washington, D.C. 20036-5891
- ---------------------------------------------------------------------------------------------------------------------
Legal Counsel
Piper & Marbury 1200 Nineteenth Street, N.W.
Washington, D.C. 20036-2430
- ---------------------------------------------------------------------------------------------------------------------
Independent Auditors
Ernst & Young One Oxford Centre
Pittsburgh, Pennsylvania 15219
- ---------------------------------------------------------------------------------------------------------------------
</TABLE>
BILTMORE
Prime Cash
Management Fund
Institutional Shares
January 31, 1994
Wachovia Investment Management Group
Investment Adviser
301 North Main Street
Winston-Salem, NC 27150
FEDERATED SECURITIES CORP.
DISTRIBUTOR
2051406A-IS (1/94)
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)
BILTMORE PRIME CASH MANAGEMENT FUND
(A PORTFOLIO OF THE BILTMORE FUNDS)
INSTITUTIONAL SHARES
STATEMENT OF ADDITIONAL INFORMATION
This Statement of Additional Information should be read with the
prospectus for Institutional Shares of Biltmore Prime Cash Management
Fund (the "Fund"), dated January 31, 1994. This Statement is not a
prospectus itself. To receive a copy of the prospectus, write to
Biltmore Prime Cash Management Fund or call your Wachovia Bank account
officer.
FEDERATED INVESTORS TOWER
PITTSBURGH, PENNSYLVANIA 15222-3779
Statement dated January 31, 1994
FEDERATED SECURITIES CORP.
--------------------------------------------------
Distributor
A subsidiary of FEDERATED INVESTORS
TABLE OF CONTENTS
- --------------------------------------------------------------------------------
GENERAL INFORMATION ABOUT THE FUND 1
- ---------------------------------------------------------------
INVESTMENT OBJECTIVE AND POLICIES 1
- ---------------------------------------------------------------
Types of Investments 1
When-Issued and Delayed
Delivery Transactions 1
Reverse Repurchase Agreements 2
Investment Limitations 2
THE BILTMORE FUNDS MANAGEMENT 4
- ---------------------------------------------------------------
Officers and Trustees 4
Fund Ownership 5
Trustee Liability 5
INVESTMENT ADVISORY SERVICES 5
- ---------------------------------------------------------------
Adviser to the Fund 5
Advisory Fees 5
ADMINISTRATIVE SERVICES 5
- ---------------------------------------------------------------
BROKERAGE TRANSACTIONS 5
- ---------------------------------------------------------------
PURCHASING INSTITUTIONAL SHARES 6
- ---------------------------------------------------------------
Conversion to Federal Funds 6
EXCHANGING SECURITIES FOR FUND SHARES 6
- ---------------------------------------------------------------
DETERMINING NET ASSET VALUE 6
- ---------------------------------------------------------------
Use of the Amortized Cost Method 7
REDEEMING INSTITUTIONAL SHARES 7
- ---------------------------------------------------------------
Redemption in Kind 8
TAX STATUS 8
- ---------------------------------------------------------------
The Fund's Tax Status 8
Shareholders' Tax Status 8
TOTAL RETURN 8
- ---------------------------------------------------------------
YIELD 8
- ---------------------------------------------------------------
EFFECTIVE YIELD 9
- ---------------------------------------------------------------
PERFORMANCE COMPARISONS 9
- ---------------------------------------------------------------
APPENDIX 10
- ---------------------------------------------------------------
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.
Shares of the Fund are offered in one class, Institutional Shares. This
Statement of Additional Information relates to the Institutional Shares of the
Fund.
INVESTMENT OBJECTIVE AND POLICIES
- --------------------------------------------------------------------------------
The Fund's investment objective is to provide current income consistent with
stability of principal and liquidity. The investment objective cannot be changed
without approval of shareholders.
TYPES OF INVESTMENTS
The Fund invests exclusively in money market instruments which mature in 397
days or less and which include, but are not limited to, high quality obligations
issued or backed by the U.S. government, its agencies or instrumentalities,
commercial paper, variable amount master demand notes, and bank instruments.
The instruments of banks whose deposits are insured by the Bank Insurance Fund
("BIF") which is administered by the Federal Deposit Insurance Corporation, such
as certificates of deposit, demand and time deposits, and bankers' acceptances,
are not necessarily guaranteed by that organization.
U.S. GOVERNMENT OBLIGATIONS
The types of U.S. government obligations in which the Fund may invest
generally include direct obligations of the U.S. Treasury (such as U.S.
Treasury bills, notes, and bonds) and obligations issued or guaranteed by
U.S. government agencies or instrumentalities. These securities are
backed by:
the full faith and credit of the U.S. Treasury;
the issuer's right to borrow from the U.S. Treasury;
the discretionary authority of the U.S. government to purchase certain
obligations of agencies or instrumentalities; or
the credit of the agency or instrumentality issuing the obligations.
Examples of agencies and instrumentalities which may not always receive
financial support from the U.S. government are:
Federal Farm Credit Banks;
Federal Home Loan Banks;
Federal National Mortgage Association;
Student Loan Marketing Association; and
Federal Home Loan Mortgage Corporation.
BANK INSTRUMENTS
In addition to domestic bank obligations such as certificates of deposit,
demand and time deposits, and bankers' acceptances, the Fund may invest
in:
Eurodollar Certificates of Deposit issued by foreign branches of U.S. or
foreign banks;
Eurodollar Time Deposits, which are U.S. dollar-denominated deposits in
foreign branches of U.S. or foreign banks; and
Yankee Certificates of Deposit, which are U.S. dollar-denominated
certificates of deposit issued by U.S. branches of foreign banks and
held in the United States.
WHEN-ISSUED AND DELAYED DELIVERY TRANSACTIONS
These transactions are made to secure what is considered to be an advantageous
price or yield for the Fund. 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.
No fees or other expenses, other than normal transaction costs, are incurred.
However, liquid assets of the Fund sufficient to make payments for the
securities to be purchased are segregated at the trade date. These assets are
marked to market daily and are maintained until the transaction has been
settled.
The Fund may engage in these transactions to an extent that would cause the
segregation of up to 20% of the total value of its assets.
- --------------------------------------------------------------------------------
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 assets are marked to market daily and
are maintained until the transaction has been settled.
INVESTMENT LIMITATIONS
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 amount
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 or 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.
LENDING CASH OR SECURITIES
The Fund will not lend any of its assets, except portfolio securities up
to one-third of the value of its total assets. This shall not prevent the
Fund from purchasing or holding money market instruments, including
repurchase agreements and variable amount demand master notes, permitted
by its investment objective, policies, and limitations or Declaration of
Trust.
INVESTING IN REAL ESTATE
The Fund will not purchase or sell real estate, including limited
partnership interests, although it may invest in securities of issuers
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.
DIVERSIFICATION OF INVESTMENTS
With respect to securities comprising 75% of the value of its total
assets, the Fund will not purchase securities of 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 U.S. government securities) if as
a result more than 5% of the value of its total assets would be invested
in the securities of that issuer. (For purposes of this limitation, the
Fund considers instruments issued by a U.S. branch of a domestic bank
having capital, surplus, and undivided profits in excess of $100,000,000
at the time of investment to be "cash items.")
CONCENTRATION OF INVESTMENTS
The Fund will not invest 25% or more of the value of its total assets in
any one industry. The Fund may invest 25% or more of the value of its
total assets in cash or certain money market instruments (including
instruments issued by a U.S. branch of a domestic bank having capital,
surplus, and undivided profits in excess of $100,000,000 at the time of
investment), securities issued or guaranteed by the U.S. government, its
agencies, or instrumentalities, or instruments secured by these money
market instruments, such as repurchase agreements.
UNDERWRITING
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 in accordance with its investment
objective, policies, and limitations.
Except as noted, the above limitations cannot be changed without shareholder
approval. The Fund does not consider the issuance of separate classes of shares
to involve the issuance of "senior securities" within the meaning of the
investment limitation set forth above. The following investment limitations,
however, may be changed by the Board of Trustees (the "Trustees") without
shareholder approval. Shareholders will be notified before any material change
in these policies becomes effective.
SELLING SHORT AND BUYING ON MARGIN
The Fund will not sell any securities short or purchase any securities on
margin but may obtain such short-term credits as are necessary for
clearance of transactions.
INVESTING IN RESTRICTED SECURITIES
The Fund will not invest more than 10% of its net assets in securities
subject to restrictions on resale under federal securities law, except
for Section 4(2) commercial paper and other restricted securities
determined to be liquid under criteria established by the Trustees.
INVESTING IN ILLIQUID SECURITIES
The Fund will not invest more than 10% 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
income time deposits with maturities over seven days, and restricted
securities which have not been determined to be liquid under criteria
established by the Trustees.
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 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 investment adviser,
owning individually more than 0.5 of 1% of the issuer's securities,
together own more than 5% of the issuer's securities.
INVESTING IN MINERALS
The Fund will not purchase interests in oil, gas, or other mineral
exploration or development programs or leases, although it may invest in
the securities of issuers which invest in or sponsor such programs.
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, invest no 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. The Fund will limit its investments in the
securities of other investment companies to those of money market funds
having investment objectives and policies similar to its own. 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 investment adviser's policy to waive its
investment advisory fee on assets invested in securities of 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.
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 will not purchase any securities while borrowings in excess of 5% of
the value of its total assets are outstanding.
The Fund does not expect to borrow money in excess of 5% of the value of its net
assets or invest in securities of closed-end investment companies during the
coming fiscal year.
THE BILTMORE FUNDS MANAGEMENT
- --------------------------------------------------------------------------------
OFFICERS AND TRUSTEES
Officers and Trustees of the Trust are listed with their principal occupations
and 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.
<TABLE>
<CAPTION>
POSITIONS WITH
NAME AND ADDRESS THE TRUST PRINCIPAL OCCUPATIONS DURING PAST FIVE YEARS
<S> <C> <C>
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. (investment company); Director, Kinder-Care Learning
Centers, Inc. (child care); and Director, Wangner Systems Corporation
(manufacturer of fabrics for paper production).
Samuel E. Hudgins Trustee Principal, Lally, Percival & Co., Inc.; 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 Vice President, Secretary, General Counsel, and Trustee, Federated
Treasurer 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 Vice President, Federated Administrative Services; Vice President and
and Assistant Assistant Treasurer of certain investment companies for which Federated
Treasurer Securities Corp. is the principal distributor; formerly Associate
Corporate Counsel, Federated Investors.
Joseph M. Huber Secretary Corporate Counsel, Federated Investors.
</TABLE>
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.
As of January 7, 1994, the following shareholder of record owned 5% or more of
the outstanding Institutional Shares of the Fund: Wachovia Brokerage Services,
Winston-Salem, North Carolina, owned approximately 178,109,218 Institutional
Shares (100%).
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.
In the interest of limiting expenses of the Fund during its initial
period of operations, the Adviser has agreed to waive a portion of its
investment advisory fee.
ADMINISTRATIVE SERVICES
- --------------------------------------------------------------------------------
Federated Administrative Services, which is a subsidiary of Federated Investors,
provides administrative personnel and services to the Funds for the fees set
forth in the prospectus.
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 use those who are
recognized dealers in specific portfolio instruments, except when a better price
and execution of the order can be obtained elsewhere. The Adviser makes
decisions on portfolio transactions and selects brokers and dealers subject to
review by the Trustees.
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 exercises reasonable business judgment in selecting brokers who
offer brokerage and research services to execute securities transactions. The
Adviser determines in good faith that commissions charged by such persons are
reasonable in relationship to the value of the brokerage and research services
provided.
Research services provided by brokers 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 might otherwise have paid,
it would tend to reduce its 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.
PURCHASING INSTITUTIONAL SHARES
- --------------------------------------------------------------------------------
Institutional Shares of the Fund are sold at their net asset value without a
sales charge on days Wachovia Bank of North Carolina, N.A., the New York Stock
Exchange and the Federal Reserve Wire System are open for business. The
procedure for purchasing Institutional Shares is explained in the prospectus
under "Investing in Institutional Shares."
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 (as defined
in the prospectus) act as the shareholder's agent in depositing checks and
converting them to federal funds.
EXCHANGING SECURITIES FOR FUND SHARES
- --------------------------------------------------------------------------------
The Fund has no present intention of accepting securities in exchange for Fund
shares. However, if the Fund should allow such exchanges, it will do so only
upon the prior approval of the Fund and only upon a determination by the Fund
and its Adviser that the securities to be exchanged are acceptable.
Any securities exchanged must meet the investment objective and policies of the
Fund, must have a readily ascertainable market value, must be liquid and must
not be subject to restrictions on resale. The market value of any securities
exchanged in an initial investment, plus any cash, must be at least equal to the
minimum investment requirement of the Fund.
Securities accepted by the Fund will be valued in the same manner as the Fund
values its assets. The basis of the exchange will depend upon the net asset
value of Fund shares on the day the securities are valued. One share of the Fund
will be issued for each equivalent amount of securities accepted.
Any interest earned on the securities prior to the exchange will be considered
in valuing the securities. All interest, dividends, subscription or other rights
attached to the securities become the property of the Fund, along with the
securities.
TAX CONSEQUENCES
If an exchange is permitted, it will be treated as a sale for federal
income tax purposes. Depending upon the cost basis of the securities
exchanged for Fund shares, a gain or loss may be realized by the
investor.
DETERMINING NET ASSET VALUE
- --------------------------------------------------------------------------------
The Fund attempts to stabilize the value of a share at $1.00. The days on which
net asset value is calculated by the Fund are described in the prospectus.
USE OF THE AMORTIZED COST METHOD
The Trustees have decided that the best method for determining the value of
portfolio instruments is amortized cost. Under this method, portfolio
instruments are valued at the acquisition cost as adjusted for amortization of
premium or accumulation of discount rather than at current market value. The
Fund's use of the amortized cost method of valuing portfolio instruments depends
on its compliance with certain conditions in Rule 2a-7 (the "Rule") promulgated
by the Securities and Exchange Commission under the Investment Company Act of
1940, as amended (the "1940 Act"). Under the Rule, the Trustees must establish
procedures reasonably designed to stabilize the net asset value per share, as
computed for purposes of distribution and redemption, at $1.00 per share, taking
into account current market conditions and the Fund's investment objective.
Under the Rule, the Fund is permitted to purchase instruments which are subject
to demand features or standby commitments. As defined by the Rule, a demand
feature entitles the Fund to receive the principal amount of the instrument from
the issuer or a third party on (1) no more than 30 days' notice or (2) at
specified intervals not exceeding 397 days on no more than 30 days' notice. A
standby commitment entitles the Fund to achieve same day settlement and to
receive an exercise price equal to the amortized cost of the underlying
instrument plus accrued interest at the time of exercise.
The Fund acquires instruments subject to demand features and standby commitments
to enhance the instrument's liquidity. The Fund treats demand features and
standby commitments as a part of the underlying instruments because the Fund
does not acquire them for speculative purposes and cannot transfer them
separately from the underlying instruments. Therefore, although the Rule defines
demand features and standby commitments as "puts," the Fund does not consider
them to be separate investments for the purposes of its investment policies.
MONITORING PROCEDURES
The Trustees' procedures include monitoring the relationship between the
amortized cost value per share and the net asset value per share based
upon available indications of market value. The Trustees will decide
what, if any, steps should be taken if there is a difference of more than
0.5 of 1% between the two values. The Trustees will take any steps they
consider appropriate (such as redemption in kind or shortening the
average portfolio maturity) to minimize any material dilution or other
unfair results arising from differences between the two methods of
determining net asset value.
INVESTMENT RESTRICTIONS
The Rule requires that the Fund limit its investments to instruments
that, in the opinion of the Trustees, present minimal credit risk and
that, if rated, meet minimum rating standards set forth in the Rule. If
the instruments are not rated, the Trustees must determine that they are
of comparable quality. The Rule also requires the Fund to maintain a
dollar-weighted average portfolio maturity (not more than 90 days)
appropriate to the objective of maintaining a stable net asset value of
$1.00 per share. In addition, no instrument with a remaining maturity of
more than 397 days can be purchased by the Fund. Should the disposition
of a portfolio security result in a dollar-weighted average portfolio
maturity of more than 90 days, the Fund will invest its available cash to
reduce the average maturity to 90 days or less as soon as possible.
Shares of investment companies purchased by the Fund will meet these same
criteria and will have investment policies consistent with the Rule.
The Fund may attempt to increase yield by trading portfolio securities to take
advantage of short-term market variations. This policy may, from time to time,
result in high portfolio turnover. Under the amortized cost method of valuation,
neither the amount of daily income nor the net asset value is affected by any
unrealized appreciation or depreciation of the portfolio. In periods of
declining interest rates, the indicated daily yield on shares of the Fund
computed by dividing the annualized daily income on the Fund's portfolio by the
net asset value computed as above may tend to be higher than a similar
computation made by using a method of valuation based upon market prices and
estimates. In periods of rising interest rates, the indicated daily yield on
shares of the Fund computed the same way may tend to be lower than a similar
computation made by using a method of calculation based upon market prices and
estimates.
REDEEMING INSTITUTIONAL SHARES
- --------------------------------------------------------------------------------
Institutional Shares are redeemed at the next computed net asset value after the
Fund receives the redemption request. Redemption procedures are explained in the
prospectus under "Redeeming Institutional Shares."
REDEMPTION IN KIND
Although the Fund intends to redeem Institutional 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.
The Fund has elected to be governed by Rule 18f-1 under the 1940 Act, 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 respective Fund's net asset value during any
90-day period. Any redemption beyond this amount will also be in cash unless the
Trustees determine that payments should be in kind. In such a case, the Fund
will pay all or a portion of the remainder of the redemption in portfolio
instruments, valued in the same way as the Fund determines net asset value. The
portfolio instruments will be selected in a manner that the Trustees deem fair
and equitable.
Redemption in kind is not as liquid as 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.
TAX STATUS
- --------------------------------------------------------------------------------
THE FUND'S TAX STATUS
The Fund will pay no federal income tax because it expects 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 and any short-term
capital gains received as cash or additional shares. No portion of any income
dividend paid by the Fund is eligible for the dividends received deduction
available to corporations. These dividends and any short-term capital gains are
taxable as ordinary income.
CAPITAL GAINS
Capital gains experienced by the Fund could result in an increase in
dividends. Capital losses could result in a decrease in dividends. If,
for some extraordinary reason, the Fund realizes net long-term capital
gains, it will distribute them at least once every 12 months.
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
compounded by multiplying the number of Institutional Shares owned at the end of
the period by the net asset value per Institutional Share at the end of the
period. The number of Institutional Shares owned at the end of the period is
based on the number of Institutional Shares purchased at the beginning of the
period with $1,000, adjusted over the period by any additional Institutional
Shares, assuming the monthly reinvestment of all dividends and distributions.
YIELD
- --------------------------------------------------------------------------------
The Fund calculates the yield for Institutional Shares daily, based upon the
seven days ending on the day of the calculation, called the "base period." This
yield is computed by:
determining the net change in the value of a hypothetical account with a balance
of one Institutional Share at the beginning of the base period, with the net
change excluding capital changes but including the value of any additional
Institutional Shares purchased with dividends earned from the original one
Institutional Share and all dividends declared on the original and any purchased
Institutional Shares;
dividing the net change in the account's value by the value of the account at
the beginning of the base period to determine the base period return; and
multiplying the base period return by 365/7.
To the extent that financial institutions and broker/dealers charge fees in
connection with services provided in conjunction with an investment in
Institutional Shares, the performance will be reduced for those shareholders
paying those fees.
EFFECTIVE YIELD
- --------------------------------------------------------------------------------
The Fund's effective yield for Institutional Shares is computed by compounding
the unannualized base period return by:
adding 1 to the base period return;
raising the sum to the 365/7th power; and
subtracting 1 from the result.
PERFORMANCE COMPARISONS
- --------------------------------------------------------------------------------
The performance of Institutional Shares depends upon such variables as:
portfolio quality;
average portfolio maturity;
type of instruments in which the portfolio is invested;
changes in interest rates on money market instruments;
changes in the expenses of the Fund or of Institutional Shares; and
the relative amount of Fund cash flow.
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 net asset value. 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 income dividends and capital gains distributions, if any.
From time to time, the Fund will quote its Lipper ranking in the "money market
instruments funds" category in advertising and sales literature.
BANK RATE MONITOR NATIONAL INDEX, Miami Beach, Florida, is a financial
reporting service which publishes weekly average rates of 50 leading bank
and thrift institution money market deposit accounts. The rates published in
the index are averages of the personal account rates offered on the Wednesday
prior to the date of publication by ten of the largest banks and thrifts in
each of the five largest Standard Metropolitan Statistical Areas. Account
minimums range upward from $2,500 in each institution and compounding methods
vary. If more than one rate is offered, the lowest rate is used. Rates are
subject to change at any time specified by the institution.
IBC/DONOGHUE'S MONEY FUND REPORT publishes annualized yields of hundreds of
money market funds on a weekly basis and, through its Money Market Insight
publication, reports monthly and 12-month-to-date investment results for the
same money funds.
MONEY, a monthly magazine, regularly ranks money market funds in various
categories based on the latest available seven-day compound (effective) yield.
From time to time, the Fund will quote its Money ranking in advertising and
sales literature.
Advertisements and other sales literature for Institutional Shares may quote
total returns which are calculated on standardized base periods. These total
returns also represent the historic change in the value of an investment in
Institutional Shares based on the monthly reinvestment of dividends over a
specified period of time.
APPENDIX
- --------------------------------------------------------------------------------
STANDARD AND POOR'S CORPORATION COMMERCIAL PAPER RATING DEFINITIONS
A-1--This designation indicates that the degree of safety regarding timely
payment is either overwhelming or very strong. Those issues determined to
possess overwhelming safety characteristics are denoted with a plus (+) sign
designation.
MOODY'S INVESTORS SERVICE, INC. COMMERCIAL PAPER RATING DEFINITIONS
P-1--Issuers (or supporting institutions) rated Prime-1 (P-1) have a superior
ability for repayment of senior short-term debt obligations. P-1 repayment
ability will often be evidenced by many of the following characteristics:
Leading market positions in well-established industries.
High rates of return of funds employed.
Conservative capitalization structure with moderate reliance on debt and ample
asset protection.
Broad margins in earnings coverage of fixed financial charges and high internal
cash generation.
Well-established access to a range of financial markets and assured sources of
alternate liquidity.
FITCH INVESTORS SERVICE, INC. COMMERCIAL PAPER RATING DEFINITIONS
FITCH-1--(Highest Grade) Commercial paper assigned this rating is regarded as
having the strongest degree of assurance for timely payment.
IBCA SHORT-TERM RATING DEFINITIONS
A1+--Obligations supported by the highest capacity for timely repayment.
A1--Obligations supported by a very strong capacity for timely repayment.
DUFF & PHELPS, INC. COMMERCIAL PAPER RATING DEFINITIONS
DUFF 1+--Highest certainty of timely payment. Short-term liquidity, including
internal operating factors and/or access to alternative sources of funds, is
outstanding, and safety is just below risk-free U.S. Treasury short-term
obligations.
DUFF 1--Very high certainty of timely payment. Liquidity factors are excellent
and supported by good fundamental protection factors. Risk factors are minor.
DUFF 1S--High certainty of timely payment. Liquidity factors are strong and
supported by good fundamental protection factors. Risk factors are very small.
2051406B-IS (1/94)
PART C. OTHER INFORMATION.
Item 24. Financial Statements and Exhibits:
(a) Financial Statements (1-10) Filed in Part A; (11)
to be filed by amendment.
(b) Exhibits:
(1) Copy of Declaration of Trust of the
Registrant;(1)
(i) Copy of the Amended and
Restated Declaration of Trust;(2)
(ii) Copy of Amendment No. 1 to
Declaration of Trust;(5)
(iii) Copy of Amendment No. 3 to
Declaration of Trust;(6)
(iv) Copy of Amendment No. 4 to
the Declaration of Trust; (8)
(v)Copy of Amendment No. 5 to the
Declaration of Trust; (8)
(2) Copy of By-Laws of the Registrant;(1)
(i) Amended By-Laws of the
Registrant;(2)
(3) Not applicable;
(4) Not Applicable;
(5) Copy of Investment Advisory Contract of the
Registrant(2);
(i) Copy of Exhibit to Investment
Advisory Contract of the Registrant;(3)
(ii) Conformed Copy of Exhibit to
Investment Advisory Contract of the
Registrant to add Biltmore Quantitative
Equity Fund to the present Investment
Advisory Contract; (8)
(iii) Conformed Copy of Sub-Advisory
Agreement of the Registrant; +
(iv) Conformed copy of Exhibits C-H to
Investment Advisory Contract of the
registrant to add the executed version
of these exhibits to the present
Investment Advisory Contract; (9)
+ 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. 8 on form N-1A filed July 29, 1993
(File Nos. 33-44590 and 811-6504)
(9) 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)
(6) Copy of Distributor's Contract of the
Registrant;(3)
(i) Copy of Administrative
Agreement;(7)
(ii) Copy of Exhibit to
Distributor's Contract of the
Registrant;(3)
(iii) Copy of Exhibit to
Distributor's Contract of the
Registrant;(6)
(iv) Copy of Exhibit to
Distribution Agreement of the
Registrant;(7)
(v) Conformed Copy of Exhibit to
Distributor's Contract; (8)
(7) Not applicable;
(8) Copy of Custodian Agreement of the Registrant;(2)
(i) Copy of Exhibit to Custodian
Agreement of the Registrant;(3)
(9) Copy of Transfer Agency and Service Agreement
of the Registrant;(2)
(i) Copy of Exhibit to Transfer
Agency and Service Agreement of the
Registrant;(3)
(ii) Copy of Exhibit to Transfer
Agency and Service Agreement of the
Registrant;(7)
(iii) Copy of Sub-Transfer Agency
and Service Agreement;(7)
(10) Copy of Opinion and Consent of Counsel
as to legality of shares being
registered;(2)
(11) Not applicable;
(12) Not applicable;
(13) Copy of Initial Capital
Understanding;(2)
(14) Not applicable
(15) (i)Copy of Distribution Plan;(2)
(ii) Copy of Exhibit to
Distribution Plan;(7)
(iii) Copy of Dealer Agreement;(2)
(iv) Copy of Exhibit to Dealer
Agreement(6)
(v) Copy of 12b-1 Agreement;(2)
(vi) Copy of Exhibit to 12b-1
Agreement;(6)
(vii) Copy of Shareholder Services
Plan; (7)
(viii) Conformed Copy of Exhibit to
Shareholder Services Plans; (8)
(ix) Copy of Shareholder Services
Agreement; (8)
(16) Copy of Schedule for Computation of
Trust Performance Data(Prime Cash
Management Fund)+
(17) Power of Attorney;(8)
(18) Not applicable
Item 25. Persons Controlled by or Under Common Control with
Registrant
None
+ 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)
(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)
Item 26. Number of Holders of Securities:
Number of Record Holders
Title of Class as of May 31, 1994
Shares of beneficial interest
(no par value)
Biltmore Balanced Fund
Biltmore Equity Fund 411
Biltmore Equity Index Fund 453
Biltmore Fixed Income Fund 447
Biltmore Special Values Fund 96
Biltmore Short-Term Fixed Income Fund324
Biltmore Money Market Fund
(Investment Shares) 24
Biltmore Money Market Fund
(Institutional Shares) 15
Biltmore Tax-Free Money Market Fund
(Investment Shares) 21
Biltmore Tax-Free Money Market Fund
(Institutional Shares) 13
Biltmore U.S. Treasury Money Market Fund
(Investment Shares) 17
Biltmore U.S. Treasury Money Market Fund
(Institutional Shares) 13
Biltmore Prime Cash Management Fund 28
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, David L. Cotterill; Executive Vice
President, Mickey W. Dry; Executive Vice President,
Walter E. Leonard, Jr.; Executive Vice President,
Robert P. Noble III; 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.; Felton J. Capel, Chairman of the Board and
President, Century Associates of North Carolina;
Richard L. Daugherty, North Carolina Senior
Executive and Vice President, Entry Systems
Division, 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.; 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; Cambridge Series Trust; Cash
Trust Series, Inc.; Cash Trust Series II; DG
Investor Series; Edward D. Jones & Co. Daily
Passport Cash Trust; FT Series, Inc.; 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
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; Financial Reserves 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; 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.; 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; Signet Select Funds; 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.
(1) (2) (3)
Name and Principal Positions and Offices Positions and
Offices
Business Address With Underwriter With
Registrant
Richard B. Fisher Director, Chairman, Chief None
Federated Investors Tower Executive Officer, Chief
Pittsburgh, PA 15222-3779 Operating Officer, and
Asst. Treasurer, Federated
Securities Corp.
Edward C. Gonzales Director, Executive Vice None
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 None
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
(1) (2) (3)
Name and Principal Positions and Offices Positions and
Offices
Business Address With Underwriter With
Registrant
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
(1) (2) (3)
Name and Principal Positions and Offices Positions and
Offices
Business Address With Underwriter With
Registrant
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
Francis J. Matten, Jr. 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
(1) (2) (3)
Name and Principal Positions and Offices Positions and
Offices
Business Address With Underwriter With
Registrant
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
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 file a post-effective
amendment on behalf of Biltmore Quantitative Equity
Fund using financial statements for Biltmore
Quantitative Equity Fund, which need not be certified,
within four to six months from the date of Post-
Effective Amendment No. 9.
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.
SIGNATURES
Pursuant to the requirements of the Securities Act of
1933 and the Investment Company Act of 1940, the Registrant,
THE BILTMORE FUNDS, certifies that it meets all of the
requirements for effectiveness of this Amendment to its
Registration Statement pursuant to Rule 485(b) of the
Securities Act of 1933 and 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 29th day
of June, 1994.
THE BILTMORE FUNDS
BY: /s/Mark A. Sheehan
Mark A. Sheehan, Assistant Secretary
Attorney in Fact for John W. McGonigle
June 29, 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 June 29,
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
Exhibit 5 under Form N-1A
Exhibit 10 under Item 601/Reg. S-K
INVESTMENT SUB-ADVISORY AGREEMENT
Agreement made as of December 9, 1993, between Wachovia
Bank of North Carolina, N.A. ("Adviser"), a national banking
association organized under the laws of the United States, the
Twin Capital Management, Inc. ("Sub-Adviser"), a corporation
organized under the laws of the State of Pennsylvania.
WHEREAS, Adviser has entered into an Investment Advisory
Contract ("Advisory Contract") dated March 9, 1992 with The
Biltmore Funds ("Trust"), an open-end investment company
registered under the Investment Company Act of 1940, as amended
("1940 Act"); and
WHEREAS, the Adviser wishes to retain the Sub-Adviser as
sub-adviser to furnish certain investment advisory services to
the Adviser in connection with the Adviser's management of the
Biltmore Quantitative Equity Fund ("Fund"), a series of the
Trust, and the Sub-Adviser is willing to furnish such services;
NOW, THEREFORE, in connection of the premises and mutual
covenants herein contained, it is agreed between the parties
hereto as follows:
1. Appointment. Adviser hereby retains the Sub-Adviser
as its investment sub-adviser with respect to the Fund for the
period and on the terms set forth in this Agreement. The Sub-
Adviser agrees to render the services to the Adviser herein set
forth, for the compensation herein provided.
2. Duties as Sub-Adviser. The Sub-Adviser will provide
for the duration of this Agreement investment research
information and recommendations to the Adviser pursuant to a
quantitative, multi-factor model. The Sub-Adviser shall have no
authority or discretion with regard to the investment of assets
of the Fund.
3. Compensation. For the services provided and the
expenses assumed by the Sub-Adviser pursuant to this Agreement,
the Sub-Adviser shall receive from the Adviser a management fee
in the amount of $55,000 per year, payable in quarterly
installments. In no event, shall the Fund be responsible for
any fees due to the Sub-Adviser under this Agreement.
4. Duration and Termination.
(a) As used in this Agreement, the terms "assignment" and
"vote of a majority of the outstanding voting securities" shall
have the meanings given to them by Section 2(a)(4) and 2(a)(42),
respectively, of the Investment Company Act of 1940, as amended.
This Agreement shall terminate automatically in the event of its
assignment, or upon termination of the Advisory Contract between
the Trust and the Adviser with regard to the Fund. This
agreement may be terminated at any time, without the payment of
any penalty, (i) with respect to the Fund by the Trustees of the
Trust or by vote of a majority of the outstanding voting
securities of the Fund or by the Adviser on not less than thirty
nor more than sixty days' written notice addressed to the Sub-
Adviser at its principal place of business; and (ii) by the Sub-
Adviser, without the payment of any penalty, on not less than
thirty nor more than sixty days' written notice addressed to the
Adviser at the Adviser's principal place of business.
(b) Unless sooner terminated as provided herein, this
Agreement shall remain in full force and effect until December
9, 1995, and from year to year thereafter only so long as its
continuance is approved in the manner required by the Investment
Company Act of 1940, as from time to time amended.
5. Services Not Exclusive. The services furnished by the
Sub-Adviser hereunder are not to be deemed exclusive, and the
Sub-Adviser shall be free to furnish similar services to others
so long as its services under this Agreement are not impaired
thereby.
6. Governing Law. This Agreement shall be construed in
accordance with the laws of the State of North Carolina without
giving effect to the conflicts of laws principles thereof and
the 1940 Act. To the extent that the applicable laws of the
State of North Carolina conflict with the applicable provisions
of the 1940 Act, the latter shall control.
IN WITNESS WHEREOF, the parties hereto have caused this
instrument to be executed by their duly authorized signatories
as of the date and year first above written.
Attest: WACHOVIA BANK OF NORTH CAROLINA,N.A.
/s/ James G. Vanderberry By: /s/ H. Vernon Winters
Attest: TWIN CAPITAL MANAGEMENT, INC.
/s/ Francis T. Stack By: /s/ Geoffrey Gerber
Exhibit 16 under Form N-1A
Exhibit 99 under Item 601 / Reg. S-K
Schedule for computation of Yield Calculation
<TABLE>
<S> <C>
Biltmore Prime Cash Management Fund
This example illustrates the yield quotation for the seven-day period ended: 31-May-94
Value of a hypothetical pre-existing account with exactly
one share at the beginning of the base period $1.000000000
Value of same account (excluding capital changes) at end
of the seven-day base period* $1.000769677
Net change in account value $0.000769677
Base Period Return:
Net change in account value divided by the beginning account value
($ .000769677 / $1.000000000) $0.000769677
Annualized Current Net Yield ( .000769677 x 365/7) 4.01%
Effective Yield ** (.000769677 + 1 ) ^ (365/7) - 1 4.09%
</TABLE>
* This value includes the value of additional shares purchased with
dividends from the original share, and dividends declared on both the
original share and any such additional shares.
** This value may change to include shares purchased with dividends
reinvested on a less frequent basis.
