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. _ 16 X
and/or
REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT OF 1940 _X____
Amendment No. __17 _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) (i)
on pursuant to paragraph (a) (i).
75 days after filing pursuant to paragraph (a)(ii)
on _________________ pursuant to paragraph (a)(ii) of Rule 485.
If appropriate, check the following box:
This post-effective amendment designates a new effective date for a
previously filed post-effective amendment.
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 13, 1995; 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 L.L.P. Piper & Marbury L.L.P.
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 twelve portfolios: (1) Biltmore Balanced Fund,
(2) Biltmore Equity Fund, (3) Biltmore Equity Index Fund, (4) Biltmore
Fixed Income Fund, (5) Biltmore Special Values Fund, (6) Biltmore Short-
Term Fixed Income Fund, (7) Biltmore Money Market Fund (Institutional
and Investment Shares); (8) Biltmore Tax-Free Money Market Fund
(Institutional and Investment Shares); (9) Biltmore U.S. Treasury Money
Market Fund (Institutional and Investment Shares), (10) Biltmore Prime
Cash Management Fund (Institutional Shares), (11) Biltmore Quantitative
Equity Fund, and (12) Biltmore Emerging Markets Fund, relates only to
one of the portfolios, Biltmore Emerging Markets Fund, and is comprised
of the following:
PART A. INFORMATION REQUIRED IN A PROSPECTUS.
Prospectus Heading
(Rule 404(c) Cross Reference)
Item 1. Cover Page (1-12) Cover Page.
Item 2. Synopsis (1-12) Summary of Fund
Expenses.
Item 3. Condensed Financial
Information (1-11) Financial Highlights.
Item 4. General Description of
Registrant (1-12) General Information;
Investment Objective;
Investment Policies;
Investment Limitations; (7-10)
Regulatory Compliance;
(1,2,4,5) Investment Risks;
(3,5) Investment
Considerations; Debt
Considerations; (1) Equity
Investment Considerations;
(12) Risk Characteristics of
Foreign Securities; Risk
Characteristics of Emerging
Markets; Appendix; (11)
Portfolio Turnover.
Item 5. Management of the Fund (1-12) The Biltmore Funds
Information; Management of The
Trust; Distribution of
(Institutional/Investment)
Shares; (7-9, Investment
Shares only) Distribution
Plan; (1-4,6,11,12) and (7-10,
Investment Shares only)
Administrative Arrangements;
(1-4, 6,11,12) Shareholder
Servicing Arrangements; (1-12)
Administration of the Fund;
Legal Services; Independent
Auditors; Expenses of the Fund
(and Institutional/ Investment
Shares); (1-6,11,12) Brokerage
Transactions.
Item 6. Capital Stock and Other
Securities (1-12) Dividends; Capital
Gains; Shareholder
Information; Voting Rights;
Massachusetts Partnership Law;
Tax Information; (8) State and
Local Taxes; (1-12) Effect of
Banking Laws; (7,8,9) Other
Classes of Shares.
Item 7. Purchase of Securities Being
Offered (1-12) Net Asset Value;
Investing in (the
Fund/Institutional/Investment)
Shares; Share Purchases; (1-
6,11) Through Wachovia
Brokerage Service; By Mail; By
Wire; (12) Through Authorized
Broker-Dealers; Through
Wachovia Securities, Inc.;
(1-6,11,12) Through the Trust
Divisions of The Wachovia
Banks;
(7-10) Through The Wachovia
Banks; (7-10) Via a Sweep
Account; (1-12) Minimum
Investment Required; What
Shares Cost; (1-6,11,12) Sales
Charge Reallowance, Reducing
the Sales Charge, Quantity
Discounts and Accumulated
Purchases, Letter of Intent,
Reinvestment Privilege,
Concurrent Purchases,
Systematic Investment Program;
(1-6,11) Exchanging Securities
for Fund Shares; Exchange
Privilege; (1-11) Certificates
and Confirmations; (12)
Subaccounting Services; (7-10)
Exchanges.
Item 8. Redemption or Repurchase (1-12) Redeeming
(Institutional/Investment)
Shares; By Telephone; (1-6,11)
and (7-10, Investment Shares
Only) Through Wachovia
Brokerage Service; By Mail; (7-
10, Investment Shares Only)
Through the Wachovia Banks;
Through Service Organizations;
(1-6, 11,12 and 7-10,
Investment Shares Only)
Accounts With Low Balances; (7-
10, (7-10) Redemption In Kind;
(1-4,6,12) Systematic
Withdrawal Program.
Item 9. Pending Legal Proceedings None.
PART B. INFORMATION REQUIRED IN A STATEMENT OF ADDITIONAL INFORMATION.
Item 10. Cover Page (1-12) Cover Page.
Item 11. Table of Contents (1-12) Table of Contents.
Item 12. General Information and
History (1-12) General Information
About the Fund.
Item 13. Investment Objectives and
Policies (1-12) Investment Objective
and Policies; Investment
Limitations; (8) Investment
Risks.
Item 14. Management of the Fund (1-12) The Biltmore Funds
Management.
Item 15. Control Persons and Principal
Holders of Securities Not Applicable.
Item 16. Investment Advisory and Other
Services (1-12) Investment Advisory
Services; Administrative
Services; (1-6,11)
Administrative Arrangements.
Item 17. Brokerage Allocation (1-12) Brokerage Transactions.
Item 18. Capital Stock and Other
Securities Not Applicable
Item 19. Purchase, Redemption and
Pricing of Securities Being
Offered (1-12) Purchasing (Fund/
Institutional/Investment)
Shares; Determining Net Asset
Value; Redeeming
(Institutional/Investment)
Shares; (1-6,11,12) Redemption
in Kind; Determining Market
Value of Securities.
Item 20. Tax Status (1-12) Tax Status.
Item 21. Underwriters (7,8,10, Investment Shares
only) Distribution Plan.
Item 22. Calculation of Performance
Data (1-10) Effective Yield; (1-12)
Yield; (8) Tax-Equivalent
Yield, (1-6,11,12) Total
Return; (1-12) Performance
Comparisons; (4,6) Duration;
(11) Standard & Poor's
Corporation.
Item 23. Financial Statements (1-12) Filed in Part A.
PROSPECTUS
DECEMBER 10, 1994
The shares of Biltmore Emerging Markets Fund (the "Fund") offered by this
prospectus represent interests in a diversified portfolio of securities, which
is one of a series of investment portfolios in The Biltmore Funds (the
"Trust"), an open-end management investment company (a mutual fund).
The investment objective of the Fund is to produce long-term capital
appreciation. The Fund pursues this objective by investing primarily in a
professionally managed and diversified portfolio of securities of issuers and
companies located in countries having emerging markets.
INVESTING IN EMERGING MARKETS CAN INVOLVE SIGNIFICANT RISKS AND THE FUND
IS DESIGNED FOR AGGRESSIVE INVESTORS. THE INVESTMENT COMPANY SHARES OFFERED BY
THIS PROSPECTUS ARE NOT DEPOSITS OR OBLIGATIONS OF, OR ENDORSED OR GUARANTEED
BY, WACHOVIA BANK OF NORTH CAROLINA, N.A. OR ITS AFFILIATES OR SUBSIDIARIES,
AND ARE NOT INSURED BY THE FEDERAL DEPOSIT INSURANCE CORPORATION (THE "FDIC"),
THE FEDERAL RESERVE BOARD, OR ANY OTHER GOVERNMENT AGENCY. INVESTMENT IN THESE
SHARES INVOLVES INVESTMENT RISKS, INCLUDING THE POSSIBLE LOSS OF PRINCIPAL.
This prospectus contains the information you should read and know before you
invest in the Fund. Keep this prospectus for future reference.
BILTMORE
EMERGING MARKETS FUND
(A Portfolio of The Biltmore Funds)
The Fund has also filed a Statement of Additional Information dated December
10, 1994 with the Securities and Exchange Commission. The information
contained in the Statement of Additional Information is incorporated by
reference into this prospectus. To request a copy of the Statement of
Additional Information free of charge, obtain other information, or make
inquiries about the Fund, call 1-800-994-4414 or write The Biltmore
Service Center, 101 Greystone Boulevard, SC-9215, Columbia,
South Carolina 29226.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS
A CRIMINAL OFFENSE.
===================================================
TABLE OF CONTENTS
- ---------------------------------------------------
SUMMARY OF FUND EXPENSES 1
- ---------------------------------------------------
GENERAL INFORMATION 2
- ---------------------------------------------------
INVESTMENT INFORMATION 2
Investment Objective 2
Investment Policies 2
Investment Process 3
Risk Considerations 3
Foreign Securities 3
Emerging Markets 4
Debt Obligations 4
Portfolio Investments 5
Acceptable Investments 5
Corporate Obligations 5
Investing in Securities of Other
Investment Companies 5
U.S. Government Obligations 6
Forward Foreign Currency Exchange
Contracts 6
Put and Call Options 6
Futures Contracts, Stock Index Futures and
Options on Futures 6
Risks 7
Restricted and Illiquid Securities 7
Temporary Investments 7
Repurchase Agreements 7
When-Issued and Delayed
Delivery Transactions 8
Lending of Portfolio Securities 8
Investment Limitation 8
- ---------------------------------------------------
THE BILTMORE FUNDS INFORMATION 8
Management of the Trust 8
Board of Trustees 8
Investment Adviser 8
Advisory Fees 8
Adviser's Background 9
Distribution of Shares 9
Administrative Arrangements 9
Shareholder Servicing Arrangements 9
Administration of the Fund 9
Administrative Services 9
Custodian 10
Transfer Agent, Dividend Disbursing
Agent and Portfolio Recordkeeper 10
Legal Services 10
Independent Auditors 10
Brokerage Transactions 10
Expenses of the Fund 10
- ---------------------------------------------------
NET ASSET VALUE 11
- ---------------------------------------------------
INVESTING IN THE FUND 11
Share Purchases 11
Through the Trust Divisions of the
Wachovia Banks 11
Through Wachovia Investments, Inc. 11
By Mail 11
By Wire 12
Through Authorized Broker/Dealers 12
Minimum Investment Required 12
What Shares Cost 12
Purchases at Net Asset Value 12
Sales Charge Reallowance 12
Reducing the Sales Charge 13
Quantity Discounts and Accumulated
Purchases 13
Letter of Intent 13
Reinvestment Privilege 13
Concurrent Purchases 13
Systematic Investment Program 13
Certificates and Confirmations 14
Subaccounting Services 14
Dividends 14
Capital Gains 14
Exchange Privilege 14
Exchange by Telephone 15
- ---------------------------------------------------
REDEEMING SHARES 15
By Telephone 15
By Mail 15
Signatures 16
Systematic Withdrawal Program 16
Accounts with Low Balances 16
- ---------------------------------------------------
SHAREHOLDER INFORMATION 16
Voting Rights 16
Massachusetts Business Trusts 16
- ---------------------------------------------------
EFFECT OF BANKING LAWS 17
- ---------------------------------------------------
TAX INFORMATION 17
- ---------------------------------------------------
PERFORMANCE INFORMATION 18
- ---------------------------------------------------
APPENDIX 19
- ---------------------------------------------------
ADDRESSES BACK COVER
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
SUMMARY OF FUND EXPENSES
SHAREHOLDER TRANSACTION EXPENSES
<TABLE>
<S> <C>
Maximum Sales Load Imposed on Purchases (as a percentage of offering price) 4.50%
Maximum Sales Load Imposed on Reinvested Dividends (as a percentage of offering price) None
Contingent Deferred Sales Charge (as a percentage of original purchase price or redemption
proceeds, as applicable) None
Redemption Fees (as a percentage of amount redeemed, if applicable) None
Exchange Fee None
</TABLE>
ANNUAL FUND OPERATING EXPENSES*
(As a percentage of projected average net assets)
<TABLE>
<S> <C>
Management Fee 1.00%
12b-1 Fees None
Other Expenses 0.80%
Shareholder Servicing Agent Fee (1) 0.00%
Total Fund Operating Expenses 1.80%
</TABLE>
(1) The Fund has no present intention of paying or accruing the shareholder
servicing agent fee during the fiscal year ending November 30, 1995. If the
Fund were paying or accruing the shareholder servicing agent fee, the Fund
would be able to pay up to 0.25 of 1% of the Fund's average daily net
assets for the shareholder servicing agent fee. See "The Biltmore Funds
Information."
* Total Fund Operating Expenses in the table above are estimated based on
average expenses expected to be incurred during the period ending November 30,
1995. During the course of this period, expenses may be more or less than the
average amount shown.
THE PURPOSE OF THIS TABLE IS TO ASSIST AN INVESTOR IN UNDERSTANDING THE VARIOUS
COSTS AND EXPENSES THAT A SHAREHOLDER OF THE FUND WILL BEAR, EITHER DIRECTLY OR
INDIRECTLY. FOR MORE COMPLETE DESCRIPTIONS OF THE VARIOUS COSTS AND EXPENSES,
SEE "THE BILTMORE FUNDS INFORMATION" AND "INVESTING IN THE FUND."
<TABLE>
<S> <C> <C>
Example 1 Year 3 Years
You would pay the following expenses on a $1,000 investment,
assuming (1) 5% annual return; (2) redemption at the end of each
time period; and (3) payment of the maximum sales load. As noted in
the table above, the Fund charges no redemption fees. $62 $99
</TABLE>
THE ABOVE EXAMPLE SHOULD NOT BE CONSIDERED A REPRESENTATION OF PAST OR FUTURE
EXPENSES. ACTUAL EXPENSES MAY BE GREATER OR LESS THAN THOSE SHOWN. THIS EXAMPLE
IS BASED ON ESTIMATED DATA FOR THE FUND'S FISCAL YEAR ENDING NOVEMBER 30, 1995.
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
GENERAL INFORMATION
The Biltmore Funds was established as a Massachusetts business trust under a
Declaration of Trust dated November 19, 1991. The Declaration of Trust permits
the Trust to offer separate series of shares of beneficial interest representing
interests in separate portfolios of securities. This prospectus relates only to
one portfolio, Biltmore Emerging Markets Fund. The shares in any portfolio may
be offered in separate classes. As of the date of this prospectus, the Board of
Trustees (the "Trustees") has not established classes of shares of the Fund.
The Fund is designed for institutions, pension plans and individuals as a
convenient means of accumulating an interest in a professionally managed,
diversified portfolio of securities of issuers and companies located in
countries having emerging markets. A minimum initial investment of $250 is
required. This amount may be waived from time to time. For further information,
Trust customers of the Wachovia Banks may telephone their account officer.
Except as otherwise noted in this prospectus, shares are currently sold at net
asset value plus an applicable sales charge and are redeemed at net asset value.
The other portfolios in the Trust are Biltmore Balanced Fund, Biltmore Equity
Fund, Biltmore Equity Index Fund, Biltmore Fixed Income Fund, Biltmore Money
Market Fund, Biltmore Prime Cash Management Fund, Biltmore Quantitative Equity
Fund, Biltmore Short-Term Fixed Income Fund, Biltmore Special Values Fund,
Biltmore Tax-Free Money Market Fund, and Biltmore U.S. Treasury Money Market
Fund (collectively, hereinafter referred to as the "Funds").
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
INVESTMENT INFORMATION
INVESTMENT OBJECTIVE
The investment objective of the Fund is to produce long-term capital
appreciation. While there is no assurance that the Fund will achieve its
investment objective, it endeavors to do so by following the investment policies
described in this prospectus. The investment objective cannot be changed without
the approval of shareholders. Unless indicated otherwise, the investment
policies described below may be changed by the Trustees without the approval of
shareholders. Shareholders will be notified before any material change in these
policies becomes effective.
INVESTMENT POLICIES
The Fund pursues its investment objective by investing primarily in a
professionally managed and diversified portfolio of securities of issuers and
companies located in countries having emerging markets. Under normal market
conditions, the Fund intends to invest at least 65% of its total assets in
securities of issuers and companies located in countries having emerging
markets. Although the Fund will focus its investment on the common stocks of
emerging market companies, the Fund may also invest in other securities,
including debt securities.
Many investments in emerging markets can be considered speculative, and
therefore may offer higher potential for gains and losses than investments in
the developed markets of the world. Investing in emerging markets can involve
significant risks and the Fund is designed for aggressive investors.
In managing the Fund's portfolio, the Fund's adviser, Wachovia Investment
Management Group (the "Adviser") considers countries having emerging markets to
be all countries that are generally considered to be developing or emerging
countries by the International Bank for Reconstruction and Development (more
commonly known as the World Bank) and the International Finance Corporation, as
well as countries that are classified by the United Nations or otherwise
regarded by their authorities as developing. The Adviser will consider the
following securities as permissible investments for the Fund:
(i) securities of companies the principal securities trading market for which
is an emerging market country, as described above;
(ii) securities, traded in any market, of companies or issuers that derive 50%
or more of their total revenue from either goods or services produced in
such emerging market countries or sales made in such emerging market
countries; or
(iii) securities of companies organized under the laws of, and with a principal
office in, an emerging market country.
INVESTMENT PROCESS. In selecting equity securities for the Fund, the Adviser
focuses on a broad diversification of emerging market countries. Initially, the
Adviser identifies those emerging market countries that, in the Adviser's
judgment, have made, or are currently making, progress toward improving their
economies and market environments through financial and/or political reform, and
which are likely to produce premium returns. Second, the Adviser then uses a
disciplined allocation process to classify the emerging market countries that it
has identified into one of two categories (or "Tiers"). The first, Tier 1, is
comprised of the most established and liquid of emerging market countries. The
second, Tier 2, represents those emerging market countries which are less
established, smaller, and less liquid than those in Tier 1. Examples of
countries classified in Tier 1 are Argentina, Brazil, Mexico and Thailand;
examples of countries which are classified in Tier 2 include Columbia,
Indonesia, Greece, Peru and Portugal.
In constructing the Fund's investment portfolio, the Adviser normally gives the
Tier 1 emerging market countries a greater weighting than is afforded to the
Tier 2 emerging market countries. Within each Tier, each emerging market country
is equally weighted and then its weight is adjusted to reflect the Adviser's
investment judgments regarding the particular country. The Adviser will consider
economic factors, political conditions and currency and market valuation levels,
in deciding upon which emerging market countries to include in the portfolio and
how those countries should be classified and weighted.
The number of emerging market countries represented in the Fund's portfolio will
vary over time. It is the Adviser's intention that the Fund remain broadly
diversified across many emerging market countries, companies, and geographic
regions. Under normal market conditions, the Adviser expects to invest in the
securities of issuers located in a minimum of six different emerging market
countries, with up to 25% of the Fund's total assets invested in any one
country.
In selecting securities in each emerging market country for purchase by the
Fund, the Adviser will focus on the most prominent and largest capitalized
companies. The Adviser will seek to construct the Fund's investment portfolio in
a manner that maintains adequate liquidity for trading purposes, and will
attempt to utilize the low historical correlation of returns among emerging
market countries to moderate the portfolio's volatility, wherever feasible.
RISK CONSIDERATIONS. Investing in the Fund entails a substantial degree of risk.
Because of the special risks associated with investing in emerging markets, an
investment in the Fund should be considered speculative. Investors are strongly
advised to carefully consider the special risks involved in emerging markets,
which are in addition to the usual risks of investing in developed markets
around the world. By itself, an investment in the Fund does not constitute a
balanced investment plan. Investors should be willing to assume a higher degree
of risk and accept a higher level of volatility than is generally associated
with investment in more developed markets.
Foreign Securities. The Fund has the ability to purchase securities in emerging
market countries. Accordingly, shareholders should carefully consider the
substantial risks involved in investing in securities issued by companies and
governments of foreign nations, which are in addition to the usual risks
inherent in domestic investments. These risks are often heightened for
investments in emerging markets and countries. There is a possibility of
expropriation, nationalization or confiscatory taxation, taxation of income
earned in foreign nations (including, for example, withholding taxes on interest
and dividends) or other taxes imposed with respect to investments in foreign
nations, foreign exchange controls (which may include suspension of the ability
to transfer currency from a given country and repatriation of investments),
default in foreign government securities, political or social instability or
diplomatic developments which could adversely affect investment in securities of
issuers in foreign nations. (Please refer to the Fund's Statement of Additional
Information for an expanded discussion of sovereign debt obligations.) In
addition, there is often less publicly available information about foreign
issuers than those in the United States. Emerging market companies are not
generally subject to uniform accounting, auditing and financial reporting
standards, and auditing practices and requirements may not be comparable to
those applicable to U.S. companies. Further, the Fund may encounter difficulties
or be unable to pursue legal remedies and obtain judgments in foreign courts.
Because the Fund's securities will generally be denominated in foreign
currencies, the value of such securities to the Fund will be affected by
changes in currency exchange rates and in exchange control regulations, and
costs will be incurred in connection with conversion between currencies. A
change in the value of a foreign currency against the U.S. dollar will result
in corresponding change in the U.S. dollar value of the Fund's securities
denominated in the currency. Such changes will also affect the Fund's income
and distributions to shareholders. The Fund may be affected, either favorably
or unfavorably, by the fluctuations in the relative rates of exchange between
the currencies of different nations, and the Fund therefore may engage in
certain hedging strategies. Such strategies involve certain investment risks
and transaction costs to which the Fund might not otherwise be subject. These
risks include dependence on the Adviser's ability to predict movements in
exchange rates, and imperfect movements between exchange rates and currency
hedges.
Emerging Markets. Brokerage commissions, fees for custodial services, and other
costs relating to investments in emerging market countries are generally greater
than in the United States. Such markets have different clearance and settlement
procedures, and in certain markets, there have been occasions when settlements
have been unable to keep pace with the volume of securities transactions, making
it difficult to effect certain transactions. The inability of the Fund to make
intended security purchases due to settlement problems could cause the Fund to
miss attractive investment opportunities. Inability to sell a portfolio security
due to settlement problems could result in either losses to the Fund, if the
value of the portfolio security subsequently declines, or, if the Fund has
entered into a contract to sell the security, could result in possible claims
against the Fund.
In certain emerging market countries, there is less government supervision and
regulation of business and industry practices, stock exchanges, brokers, and
listed companies than in the United States. The economies of emerging market
countries may be predominently based on a few industries and may be highly
vulnerable to change in local or global trade conditions. The securities markets
of many of the countries in which the Fund may invest also may be smaller, less
liquid, and subject to greater price volatility than those in the United States.
Some emerging market countries also may have fixed or managed currencies which
are not free-floating against the U.S. dollar. Further, certain emerging market
country currencies may not be internationally traded. Certain of these
currencies have experienced a steady devaluation relative to the U.S. dollar.
Any devaluations in the currencies in which the Fund's portfolio securities are
denominated may have an adverse impact on the Fund. Finally, many emerging
market countries have experienced substantial, and in some periods, extremely
high, rates of inflation for many years. Inflation and rapid fluctuations in
inflation rates have had, and may continue to have, negative effects on the
economies for individual emerging market countries. Moreover, the economies of
individual emerging market countries may differ favorably or unfavorably from
the U.S. economy in such respects as the rate of growth of domestic product,
inflation, capital reinvestment, resource self-sufficiency and balance of
payments position.
Debt Obligations. From time to time, a portion of the Fund's portfolio may
consist of lower-rated i.e., rated below BBB by Standard & Poor's Ratings Group
("S&P") or Baa by Moody's Investors Service, Inc. ("Moody's") debt obligations
which are commonly referred to as "junk bonds." The Fund will not invest more
than 35% of its total assets in such securities. A description of the rating
categories is contained in the Appendix to this prospectus. Lower-rated
securities will usually offer higher yields than higher-rated securities.
However, there is more risk associated with these investments. These lower-rated
bonds may be more susceptible to real or perceived adverse economic conditions
than investment grade bonds. These lower-rated bonds are regarded as
predominantly speculative with regard to each issuer's continuing ability to
make principal and interest payments. In addition, the secondary trading market
for lower-rated bonds may be less liquid than the market for investment grade
bonds. Finally, the prices of fixed-income securities, including bonds,
fluctuate inversely to the direction of interest rates. As a result of these
factors, lower-rated securities tend to have more price volatility and carry
more risk to principal than higher-rated securities. The Adviser will endeavor
to limit these risks through diversifying the portfolio and through careful
credit analysis of individual issuers. Purchasers should carefully assess the
risks associated with an investment in the Fund.
Many corporate debt obligations, including many lower-rated bonds, permit the
issuers to call the security and thereby redeem their obligations earlier than
the stated maturity dates. Issuers are more likely to call bonds during periods
of declining interest rates. In these cases, if the Fund owns a bond which is
called, the Fund will receive its return of principal earlier than expected and
would likely be required to reinvest the proceeds at lower interest rates, thus
reducing income to the Fund.
PORTFOLIO INVESTMENTS
Acceptable Investments. The Fund's investments will emphasize common stocks of
foreign companies located in emerging market countries. The Fund's permissible
investments may also include, but will not be limited to:
preferred stocks of foreign companies;
convertible securities and warrants of foreign companies;
investments in American Depositary Receipts ("ADRs") of foreign countries
traded on the New York Stock Exchange or in over-the-counter markets, and
investments in European Depositary Receipts ("EDRs," sometimes also referred to
as Continental Depositary Receipts), which are receipts issued in Europe,
typically by foreign banks and trust companies, that evidence ownership of
either foreign or domestic underlying securities;
fixed-income obligations of foreign governments, supranational entities and
corporate debt obligations denominated in currencies other than U.S. dollars,
rated B or better at the time of purchase by Moody's or S&P. (If a security's
rating is reduced below the required minimum after the Fund has purchased it,
the Fund is not required to sell the security, but may consider doing so.);
U.S. equity and debt securities rated, at the time of purchase, B or better by
Moody's or S&P;
restricted and illiquid securities;
securities of other investment companies, including closed-end investment
companies; and
securities issued or guaranteed by the U.S. government, its agencies, or
instrumentalities.
In addition, the Fund may enter into foreign currency transactions and
repurchase agreements, borrow money, lend portfolio securities, and engage in
when-issued and delayed delivery transactions. The Fund is also permitted to
invest in call options on securities and securities indexes, futures, and
options on futures, for hedging purposes. The Fund may maintain reserves in
foreign or U.S. money market instruments.
Corporate Obligations. The Fund may invest in preferred stocks, bonds, notes,
and debentures of corporate issuers located in countries with emerging markets.
In addition, the Fund may invest in convertible securities, which are
fixed-income securities that may be exchanged or converted into a predetermined
number of shares at the option of the holder during a specified time period. The
corporate obligations purchased by the Fund will be rated, at the time of
purchase, B or better by Moody's or S&P, or, if unrated, will be of comparable
quality as determined by the Adviser. (If a security's rating is reduced below
the required minimum after the Fund has purchased it, the Fund is not required
to sell the security, but may consider doing so.)
Convertible securities may take the form of convertible preferred stock,
convertible bonds or debentures, units consisting of "usable" bonds and warrants
or a combination of the features of several of these securities. The investment
characteristics of each convertible security vary widely, which allows
convertible securities to be employed for different investment objectives.
Convertible bonds and convertible preferred stocks generally retain the
investment characteristics of fixed-income securities until they have been
converted but also react to movements in the underlying equity securities. The
holder is entitled to receive the fixed income of a bond or the dividend
preference of a preferred stock until the holder elects to exercise the
conversion privilege. Usable bonds are corporate bonds that can be used in whole
or in part, customarily at full face value, in lieu of cash to purchase the
issuer's common stock.
Investing in Securities of Other Investment Companies. Due to restrictions on
direct investment by foreign entities in certain emerging market countries,
investment in other investment companies may be the most practical or only
manner in which the Fund can invest in securities markets of certain emerging
countries. 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. Such investments may involve the payment of substantial
premiums above the net asset value of such issuers' portfolio securities, and
may be constrained by market availability. There can be no assurance that
investment companies for investing in certain emerging market countries will be
available for investment. The Fund will invest in such funds when, in the
Adviser's judgment, the potential benefits of such investment justify the
payment of any applicable premium or sales charge. While it is the 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. The Fund would, however, continue
to pay its own investment advisory fees and other expenses with respect to its
investments in shares of closed-end companies.
U.S. Government Obligations. These securities include, but are not limited to:
direct obligations of the U.S. Treasury, such as U.S. Treasury bills, notes,
and bonds; and
notes, bonds and discount notes of U.S. government agencies or
instrumentalities.
Some of these obligations, such as Government National Mortgage Association
mortgage-backed securities, are backed by the full faith and credit of the U.S.
Treasury. No assurances can be given that the U.S. government will provide
financial support to other agencies or instrumentalities, since it is not
obligated to do so. These agencies and instrumentalities are supported by:
the issuer's right to borrow an amount limited to a specific line of credit
from the U.S. Treasury;
the discretionary authority of the U.S. government to purchase certain
obligations of an agency or instrumentality; or
the credit of the agency or instrumentality.
Forward Foreign Currency Exchange Contracts. A forward foreign currency exchange
contract ("forward contract") is an obligation to purchase or sell an amount of
a particular currency at a specific price and on a future date agreed upon by
the parties. Generally, no commission charges or deposits are involved. At the
time the Fund enters into a forward contract, Fund assets with a value equal to
the Fund's obligation under the forward contract are segregated on the Fund's
records and are maintained until the forward contract has been settled. The Fund
will not enter into a forward contract with a term of more than one year. The
Fund will generally enter into a forward contract to provide the proper currency
to settle a securities transaction at the time the transaction occurs ("trade
date"). The period between the trade date and settlement date will vary between
24 hours and 30 days, depending upon local custom.
The Fund may also protect against the decline of a particular foreign currency
by entering into a forward contract to sell an amount of that currency
approximating the value of all or a portion of the Fund's assets denominated in
that currency ("hedging"). The success of this type of short-term hedging
strategy is highly uncertain due to the difficulties of predicting short-term
currency market movements and of precisely matching forward contract amounts and
the constantly changing value of the securities involved. Although the Adviser
will consider the likelihood of changes in currency values when making
investment decisions, the Adviser believes that it is important to be able to
enter into forward contracts when it believes the interest of the Fund will be
served. The Fund will only enter into forward contracts for hedging purposes and
will not enter into forward contracts in a particular currency in an amount in
excess of the Fund's assets denominated in that currency. No more than 30% of
the Fund's assets will be committed to forward contracts at any time. (This
restriction does not include forward contracts entered into to settle securities
transactions.)
Put and Call Options. The Fund may purchase put options on its portfolio
securities. These options will be used only as a hedge to attempt to protect
securities which the Fund holds against decreases in value. The Fund may
purchase these put options as long as they are listed on a recognized options
exchange and the underlying stocks are held in its portfolio. The Fund may also
write call options on securities either held in its portfolio or which it has
the right to obtain without payment of further consideration or for which it has
segregated cash in the amount of any additional consideration. The call options
which the Fund writes and sells must be listed on a recognized options exchange.
Writing of calls by the Fund is intended to generate income for the Fund and
thereby protect against price movements in particular securities in the Fund's
portfolio.
Prior to exercise or expiration, an option position can only be terminated by
entering into a closing purchase or sale transaction. This requires a secondary
market on an exchange which may or may not exist for any particular call or put
option at any specific time. The absence of a liquid secondary market also may
limit the Fund's ability to dispose of the securities underlying an option. The
inability to close options also could have an adverse impact on the Fund's
ability to effectively hedge its portfolio. These instruments may not be
available with regard to the securities of certain emerging markets in which the
Fund may invest.
Futures Contracts, Stock Index Futures and Options on Futures. The Fund may
purchase and sell financial futures contracts to hedge all or a portion of its
portfolio against changes in the price of its portfolio securities, but will
not engage in futures transactions for speculative purposes. The Fund may also
write call options and purchase put options on financial futures as a hedge to
attempt to protect securities in its portfolio against decreases in value. The
Fund may not purchase or sell futures contracts or related options if
immediately thereafter the sum of the amount of margin deposits on the Fund's
existing futures positions and premiums paid for related options would exceed
5% of the market value of the Fund's total assets. The Fund may also utilize
stock index futures contracts, and options on futures contracts, subject to the
limitation that the value of these stock index futures contracts and options
will not exceed 20% of the Fund's total assets. Also, the Fund will not
purchase options to the extent that more than 5% of the value of the Fund's
total assets would be invested in premiums on open put option positions. These
futures contracts and options will be used to handle cash flows into and out of
the Fund and to potentially reduce transactional costs, since transactional
costs associated with futures and options contracts can be lower than costs
stemming from direct investment in stocks. These instruments may not be
available with regard to the securities of certain emerging markets in which
the Fund may invest.
Risks. When the Fund writes a call option, the Fund risks not participating in
any rise in the value of the underlying security. In addition, when the Fund
uses futures and options on futures as hedging devices, there is a risk that the
prices of the securities subject to the futures contracts may not correlate
perfectly with the prices of the securities in the Fund's portfolio. This may
cause the futures contract and any related options to react differently than the
portfolio securities to market changes. In addition, in the event the Adviser is
incorrect in its expectations about the events, the Fund may lose money on the
futures contract or option. It is not certain that a secondary market for
positions in futures contracts or options will exist at all times. Although the
Adviser will consider liquidity before entering into option transactions, there
is no assurance that a liquid secondary market will exist for any particular
futures contract or option at any particular time. The Fund's ability to
establish and close out futures and options positions depends on this secondary
market. The effective use of futures and options as hedging techniques depends
on the correlation between their prices and the behavior of the Fund's portfolio
securities, as well as the Adviser's ability to accurately predict the direction
of stock prices, interest rates and other relevant economic factors. In
addition, daily limits on the fluctuation of futures or options prices could
cause the Fund to be unable to timely liquidate its futures or options position
and cause it to suffer greater losses than would otherwise be the case. In this
regard, the Fund may be unable to anticipate the extent of its losses from
futures transactions.
Restricted and Illiquid Securities. The Fund may invest in restricted
securities. Restricted securities are any securities in which the Fund may
otherwise invest pursuant to its investment objective and policies, but which
are subject to restrictions on resale under federal securities laws. To the
extent that these securities are not determined to be liquid, the Fund will
limit its purchase of these securities, together with other securities
considered to be illiquid, to 15% of its net assets.
Temporary Investments. For temporary defensive purposes (up to 100% of total
assets) and to maintain liquidity (up to 35% of total assets), the Fund may
invest in:
certificates of deposit, demand and time deposits, savings shares, bankers'
acceptances, and other instruments of domestic and foreign banks and savings
and loans, which institutions have capital, surplus, and undivided profits over
$100 million, or if the principal amount of the instrument is insured in full
by the Bank Insurance Fund ("BIF"), or by the Savings Association Insurance
Fund ("SAIF"), both of which are administered by the FDIC;
securities issued and/or guaranteed as to payment of principal and interest by
the U.S. government, its agencies, or instrumentalities;
commercial paper (including Canadian Commercial Paper and Europaper) rated A-1
or better by S&P, or Prime-1 by Moody's, or, if unrated, of comparable quality
to the Fund's acceptable investments as determined by the Adviser; and
repurchase agreements.
The Fund may invest in certain temporary investments denominated in currencies
other than U.S. dollars.
REPURCHASE AGREEMENTS. The securities in which the Fund invests may be
purchased pursuant to repurchase agreements. Repurchase agreements are
arrangements in which banks, broker/dealers, and other recognized financial
institutions sell U.S. government securities or other securities to the Fund
and agree at the time of sale to repurchase them at a mutually agreed upon time
and price. To the extent that the original seller does not repurchase the
securities from the Fund, the Fund could receive less than the repurchase price
on any sale of such securities.
WHEN-ISSUED AND DELAYED DELIVERY TRANSACTIONS. The Fund may purchase securities
on a when-issued or delayed delivery basis. These transactions are arrangements
in which the Fund purchases securities with payment and delivery scheduled for a
future time. The seller's failure to complete these transactions may cause the
Fund to miss a price or yield considered to be advantageous. Settlement dates
may be a month or more after entering into these transactions, and the market
values of the securities purchased may vary from the purchase prices.
Accordingly, the Fund may pay more or less than the market value of the
securities on the settlement date. The Fund may not be able to engage in these
types of transactions with regard to the securities of certain emerging markets
in which the Fund may invest.
The Fund may dispose of a commitment prior to settlement if the Adviser deems it
appropriate to do so. In addition, the Fund may enter into transactions to sell
its purchase commitments to third parties at current market values and
simultaneously acquire other commitments to purchase similar securities at later
dates. The Fund may realize short-term profits or losses upon the sale of such
commitments.
LENDING OF PORTFOLIO SECURITIES. In order to generate additional income, as a
matter of fundamental policy the Fund may lend portfolio securities on a
short-term or long-term basis, or both, to broker/dealers, banks, or other
institutional borrowers of securities. The Fund will only enter into loan
arrangements with broker/dealers, banks, or other institutions which the Adviser
has determined are creditworthy under guidelines established by the Trustees and
will receive collateral in the form of cash or U.S. government securities equal
to at least 100% of the value of the securities loaned. The Fund may not be able
to engage in these types of transactions with regard to the securities of
certain emerging markets in which the Fund may invest. There is the risk that
when lending portfolio securities, the securities may not be available to the
Fund on a timely basis and the Fund may, therefore, lose the opportunity to sell
the securities at a desirable price. In addition, in the event that a borrower
of securities would file for bankruptcy or become insolvent, disposition of the
securities may be delayed pending court action.
INVESTMENT LIMITATION
The Fund will not:
borrow money directly or through reverse repurchase agreements (arrangements in
which the Fund sells a portfolio instrument for a percentage of its cash value
with an agreement to buy it back on a set date) or pledge securities except,
under certain circumstances, the Fund may borrow up to one-third of the value
of its total assets and pledge assets to secure such borrowings.
The above investment limitation cannot be changed without shareholder approval.
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THE BILTMORE FUNDS INFORMATION
MANAGEMENT OF THE TRUST
BOARD OF TRUSTEES. The Trustees are responsible for managing the Trust's
business affairs and for exercising all the Trust's powers except those reserved
for the shareholders.
INVESTMENT ADVISER. Pursuant to an investment advisory contract with the Trust
on behalf of the Fund, investment decisions for the Fund are made by Wachovia
Investment Management Group (the "Adviser"), a business unit of Wachovia Bank of
North Carolina, N.A., subject to direction by the Trustees. The Adviser
continually conducts investment research and supervision of investments for the
Fund and is responsible for the purchase or sale of portfolio instruments, for
which it receives an annual fee from the assets of the Fund.
Advisory Fees. The Adviser receives an annual investment advisory fee equal to
1.00% of the Fund's average daily net assets. The fee paid by the Fund, while
higher than the advisory fee paid by other mutual funds in general, is
comparable to fees paid by other mutual funds with similar objectives and
policies. The investment advisory contract provides that such fee shall be
accrued and paid daily. The Adviser has undertaken to reimburse the Fund for
operating expenses in excess of limitations established by certain states. The
Adviser may voluntarily choose to waive a portion of its fee or reimburse the
Fund for certain other expenses of the Fund but reserves the right to terminate
such waiver or reimbursement at any time at its sole discretion.
Adviser's Background. Wachovia Bank of North Carolina, N.A. is a direct,
wholly-owned subsidiary of Wachovia Corporation, a registered bank holding
company headquartered in Winston-Salem, North Carolina and Atlanta, Georgia.
Through offices in eight states, Wachovia Corporation and its subsidiaries
provide a broad range of financial services to individuals and businesses.
Wachovia Bank of North Carolina, N.A., a national banking association, offers
financial services that include, but are not limited to, commercial and consumer
loans, corporate, institutional, and personal trust services, demand and time
deposit accounts, letters of credit and international financial services.
The Adviser employs an experienced staff of professional investment analysts,
portfolio managers and traders. The Adviser uses fundamental analysis and other
investment management disciplines to identify investment opportunities. Wachovia
Bank of North Carolina, N.A., together with its affiliates, Wachovia Bank of
Georgia, N.A. and Wachovia Bank of South Carolina, N.A. (formerly known as The
South Carolina National Bank) (collectively, the "Wachovia Banks") have been
managing trust assets for over 100 years, with approximately $16.6 billion in
managed assets as of June 30, 1994. Wachovia Investment Management Group has
served as investment adviser to The Biltmore Funds since March 9, 1992. Wachovia
Bank of North Carolina, N.A., also serves as investment adviser of Biltmore
North Carolina Municipal Bond Fund, a portfolio of The Biltmore Municipal Funds,
another investment company.
The Fund's portfolio managers are Michael J. Tierney, B. Scott Sadler, and
Timothy L. Swanson. Mr. Tierney, Mr. Sadler and Mr. Swanson have managed the
Fund since its inception in December, 1994.
Mr. Tierney, who joined Wachovia Bank of North Carolina, N.A. in 1981, is Senior
Vice President/Group Executive with Wachovia Investment Management Group. Mr.
Tierney is a graduate of the University of Connecticut, and has more than 25
years of experience managing equity and fixed income investments.
Mr. Sadler, who joined Wachovia Bank of North Carolina, N.A. in 1987, is
responsible for managing personal trust investment portfolios. He is a graduate
of the University of Virginia's McIntire School of Commerce with a bachelor's
degree in economics. Mr. Sadler is a Chartered Financial Analyst.
Mr. Swanson, who joined Wachovia Bank of North Carolina, N.A. in 1991, is also
responsible for managing personal trust portfolios. Mr. Swanson is a graduate of
Wake Forest University with a bachelor's degree in mathematical economics, and
of the University of Rochester with a master's degree in economics. Mr. Swanson
is a Chartered Financial Analyst.
DISTRIBUTION OF SHARES
Federated Securities Corp. is the distributor (the "Distributor") for shares of
the Fund. It is a Pennsylvania corporation organized on November 14, 1969, and
is the distributor for a number of investment companies. Federated Securities
Corp. is a subsidiary of Federated Investors.
ADMINISTRATIVE ARRANGEMENTS
The Distributor may pay financial institutions and other financial service
providers, such as banks, fiduciaries, custodians for public funds, investment
advisers, and broker/dealers a fee based upon the average net asset value of
shares of their customers for providing administrative services. This fee, if
paid, will be reimbursed by the Adviser and not the Fund.
SHAREHOLDER SERVICING ARRANGEMENTS
Federated Administrative Services, Pittsburgh, Pennsylvania, a subsidiary of
Federated Investors, is the Fund's shareholder servicing agent (the "Shareholder
Servicing Agent"). The Fund may pay the Shareholder Servicing Agent a fee based
on the average daily net asset value of shares for which it provides shareholder
services. These shareholder services include, but are not limited to,
distributing prospectuses and other information, providing shareholder
assistance and communicating or facilitating purchases and redemptions of
shares. This fee will be computed at an annual rate equal to 0.25 of 1% of the
Fund's average daily net assets for which the Shareholder Servicing Agent
provides services; however, the Shareholder Servicing Agent may choose
voluntarily to waive all or a portion of its fee at any time or pay all or some
of its fees to financial institutions or other financial service providers.
ADMINISTRATION OF THE FUND
ADMINISTRATIVE SERVICES. Federated Administrative Services provides the Fund
with certain administrative personnel and services necessary to operate the
Fund. Such services include the preparation of filings with the Securities and
Exchange Commission and other regulatory authorities, assistance with respect to
meetings of the Trustees, shareholder servicing and accounting services, and
other administrative services. Federated Administrative Services provides these
at an annual rate, computed and payable daily, as specified below:
<TABLE>
<CAPTION>
Average Aggregate Daily
Maximum Net Assets of the Trust
Administrative Fee and The Biltmore Municipal Funds
<S> <C>
0.150 of 1% of the first $250 million
0.125 of 1% of the next $250 million
0.100 of 1% of the next $250 million
0.075 of 1% in excess of $750 million
</TABLE>
The administrative fee received during any fiscal year for the Fund and each of
the other portfolios of The Biltmore Funds shall aggregate at least $75,000.
Federated Administrative Services may choose voluntarily to waive or reimburse a
portion of its fee at any time.
CUSTODIAN. Wachovia Bank of North Carolina, N.A., Winston-Salem, North Carolina,
is custodian (the "Custodian") for the securities and cash of the Fund. Under
the Custodian Agreement, the Custodian holds the Fund's portfolio securities in
safekeeping and keeps all necessary records and documents relating to its
duties. For the services to be provided to the Trust pursuant to the Custodian
Agreement, the Trust pays the Custodian an annual fee based upon the average
daily net assets of the Fund and which is payable monthly. The Custodian will
also charge transaction fees and out-of-pocket expenses.
Foreign securities purchased by the Fund are held by foreign banks participating
in a network coordinated by J.P. Morgan, which serves as sub-custodian for the
Fund. All expenses incurred through this network are paid by the Fund.
TRANSFER AGENT, DIVIDEND DISBURSING AGENT AND PORTFOLIO RECORDKEEPER. Federated
Services Company is transfer agent (the "Transfer Agent") for the shares of the
Fund, and dividend disbursing agent for the Fund. Federated Services Company
also provides certain accounting and recordkeeping services with respect to the
Fund's portfolio investments.
LEGAL SERVICES. Legal services for the Fund are provided by Kirkpatrick &
Lockhart, Washington, D.C. Piper & Marbury, Washington, D.C., serves as counsel
to the independent Trustees.
INDEPENDENT AUDITORS. The independent auditors are Ernst & Young LLP,
Pittsburgh, Pennsylvania.
BROKERAGE TRANSACTIONS
When selecting brokers and dealers to handle the purchase and sale of portfolio
instruments, the Adviser looks for prompt execution of the order at a favorable
price. In working with dealers, the Adviser will generally utilize those who are
recognized dealers in specific portfolio instruments, except when a better price
and execution of the order can be obtained elsewhere. In selecting among firms
believed to meet these criteria, the Adviser may give consideration to those
firms which have sold or are selling shares of the Fund and other funds
distributed by Federated Securities Corp. and advised by the Adviser. The
Adviser makes decisions on portfolio transactions and selects brokers and
dealers subject to review by the Trustees.
EXPENSES OF THE FUND
The Fund pays all of its own expenses and its allocable share of Trust expenses.
These expenses include, but are not limited to, the costs of: organizing the
Trust and continuing its existence; Trustees' fees; investment advisory and
administrative services; printing prospectuses and other Fund documents for
shareholders; registering the Trust, the Fund and shares of the Fund; taxes and
commissions; issuing, purchasing, repurchasing, and redeeming shares; fees for
custodian, transfer agent, dividend disbursing agent, shareholder servicing
agents, and registrars; printing, mailing, auditing, accounting, and legal
expenses; reports to shareholders and government agencies; meetings of Trustees
and shareholders and proxy solicitations therefor; insurance premiums;
association membership dues; and such nonrecurring and extraordinary items as
may arise. However, the Adviser may voluntarily waive and/or reimburse some
expenses.
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NET ASSET VALUE
The Fund's net asset value per share fluctuates. It is determined by dividing
the sum of the market value of all securities and other assets, less
liabilities, by the number of shares outstanding. Trading in foreign securities
may be completed at times which vary from the closing of the New York Stock
Exchange. As a result, in computing the Fund's net asset value, the Fund values
foreign securities at the latest closing price on the exchange on which they are
traded immediately prior to the closing of the New York Stock Exchange. Certain
foreign currency exchange rates may also be determined at the latest rate prior
to the closing of the New York Stock Exchange. Foreign securities quoted in
foreign currencies are translated into U.S. dollars at current rates.
Occasionally, events that affect these values and exchange rates may occur
between the times at which they are determined and the closing of the New York
Stock Exchange. If such events materially affect the value of portfolio
securities, these securities may be valued at their fair value as determined in
good faith by the Trustees, although the actual calculation may be done by
others.
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INVESTING IN THE FUND
SHARE PURCHASES
Fund shares are sold on days on which the New York Stock Exchange and the
Federal Reserve Wire System are open for business. Shares may be purchased
through the Trust Divisions of the Wachovia Banks, Wachovia Investments, Inc. or
authorized broker/dealers which have a sales agreement with the Distributor. All
purchase orders must be transmitted to the Fund by 5:00 p.m. (Eastern time).
Texas residents must purchase shares through Federated Securities Corp. at
1-800-618-8573. In connection with the sale of shares, the Distributor may from
time to time offer certain items of nominal value to any shareholder or
investor. The Fund and the Distributor reserve the right to reject any purchase
request.
THROUGH THE TRUST DIVISIONS OF THE WACHOVIA BANKS. Trust customers of the
Wachovia Banks may place an order to purchase shares of the Fund by telephoning,
sending written instructions, or placing the order in person with their account
officer in accordance with the procedures established by the Wachovia Banks and
as set forth in the relevant account agreement.
Payment may be made to the Wachovia Banks by check, by wire of federal funds, or
by debiting a customer's account with the Wachovia Banks. Purchase orders must
normally be received by the Wachovia Banks by 3:00 p.m. (Eastern time), in order
for shares to be purchased at that day's price. It is the responsibility of the
Wachovia Banks to transmit orders promptly to the Fund. Shares of the Fund
cannot be purchased by wire on any day on which the Wachovia Banks, the New York
Stock Exchange and the Federal Reserve Wire System are not open for business.
THROUGH WACHOVIA INVESTMENTS, INC. Customers of Wachovia Investments, Inc. or
Wachovia Brokerage Service may place an order to purchase shares by telephoning
The Biltmore Service Center at 1-800-994-4414, sending written instructions, or
placing an order in person. Payment may be made by check, by wire of federal
funds (the customer's bank sends money to the Fund's bank through the Federal
Reserve Wire System) or by debiting a customer's account at Wachovia
Investments, Inc. Purchase orders must normally be received by Wachovia
Investments, Inc. before 3:30 p.m. (Eastern time). Wachovia Investments, Inc., a
wholly-owned subsidiary of Wachovia Corporation, is a registered broker/dealer
and member of the National Association of Securities Dealers, Inc. Wachovia
Brokerage Service is a business unit of Wachovia Investments, Inc.
BY MAIL. To purchase shares of the Fund through Wachovia Investments, Inc. by
mail, send a check made payable to Biltmore Emerging Markets Fund to The
Biltmore Service Center, 101 Greystone Boulevard, SC-9215, Columbia, South
Carolina 29226. Orders by mail are considered received after payment by check is
converted by Wachovia Investments, Inc. into federal funds. This is normally the
next business day after Wachovia Investments, Inc. receives the check.
BY WIRE. To purchase shares of the Fund through Wachovia Investments, Inc. by
wire, wire funds as follows:
Wachovia Investments, Inc.
ABA Number 0531-00494
Credit: 8735-001342
Further credit to: Biltmore Emerging Markets Fund
Re: (Customer name and brokerage account number)
Shares of the Fund cannot be purchased by wire on any day on which the Wachovia
Banks, the New York Stock Exchange and the Federal Reserve Wire System are not
open for business.
THROUGH AUTHORIZED BROKER/DEALERS. An investor may place an order through
authorized brokers and dealers to purchase shares of the Fund. Shares will be
purchased at the public offering price next determined after the Fund receives
the purchase request. Purchase requests through registered broker/dealers must
normally be received by the broker/dealer and transmitted to the Fund before
3:30 p.m. (Eastern time) in order for shares to be purchased at that day's
public offering price.
MINIMUM INVESTMENT REQUIRED
The minimum initial investment in shares of the Fund is $250. This amount may be
waived from time to time. Subsequent investments may be in amounts of $50 or
more.
WHAT SHARES COST
Fund shares are sold at their net asset value next determined after an order is
received, plus a sales charge as follows:
<TABLE>
<CAPTION>
Sales Charge as a Sales Charge as a
Percentage of Percentage of
Amount of Transaction Public Offering Price Net Amount Invested
<S> <C> <C>
Less than $100,000 4.50% 4.71%
$100,000 but less than $250,000 3.75% 3.90%
$250,000 but less than $500,000 2.50% 2.56%
$500,000 but less than $750,000 2.00% 2.04%
$750,000 but less than $1 million 1.00% 1.01%
$1 million or more 0.25% 0.25%
</TABLE>
The net asset value is determined at or after the close of the New York Stock
Exchange, Monday through Friday, except on: (i) days on which there are not
sufficient changes in the value of the Fund's portfolio securities that its net
asset value might be materially affected; (ii) days during which no shares are
tendered for redemption and no orders to purchase shares are received; or (iii)
the following holidays: New Year's Day, Martin Luther King Day, Presidents' Day,
Good Friday, Memorial Day, Independence Day, Labor Day, Columbus Day, Veterans'
Day, Thanksgiving Day and Christmas Day.
PURCHASES AT NET ASSET VALUE. Shares of the Fund may be purchased at net asset
value, without a sales charge, by investment advisers registered under the
Investment Advisers Act of 1940 purchasing on behalf of their clients, and by
the Wachovia Banks for funds which are held in a fiduciary, agency, custodial,
or similar capacity. Trustees, officers, directors and retired directors,
advisory board members, employees and retired employees of the Fund and the
Wachovia Banks, the spouses and children under the age of 21 of such persons,
and any trusts, pension profit-sharing plans and individual retirement accounts
operated for such persons, may purchase shares of the Fund at net asset value.
In addition, trustees, officers, directors and employees of the Distributor and
its affiliates, and any bank or investment dealer who has a sales agreement with
the Distributor relating to the Fund, may also purchase shares at their net
asset value.
SALES CHARGE REALLOWANCE. For shares sold with a sales charge, the Wachovia
Banks or an affiliated broker or a dealer will receive up to 100% of the
applicable sales charge for purchases of Fund shares made directly through the
Wachovia Banks or such broker or dealer. Any portion of the sales charge which
is not paid to a dealer will be retained by the Distributor.
The sales charge for shares sold other than through Wachovia Investments, Inc.,
the Wachovia Banks or registered broker/dealers will be retained by the
Distributor. However, the Distributor, at its sole discretion, may uniformly
offer to pay cash, or promotional incentives in the form of trips to sales
seminars at luxury resorts, tickets or other items, to all dealers selling
shares of the Fund. Such payments will be predicated upon the amount of shares
of the Fund that are sold by the dealers.
REDUCING THE SALES CHARGE. The sales charge can be reduced on the purchase of
shares of the Fund through:
quantity discounts and accumulated purchases;
signing a 13-month letter of intent;
using the reinvestment privilege; or
concurrent purchases.
QUANTITY DISCOUNTS AND ACCUMULATED PURCHASES. As shown in the table in this
prospectus under the section entitled "What Shares Cost," larger purchases
reduce the sales charge paid. The Fund will combine purchases made on the same
day by the investor, the investor's spouse, and the investor's children under
age 21 when it calculates the sales charge.
If an additional purchase of shares of the Fund is made, the Fund will consider
the previous purchases still invested in the Fund. For example, if a shareholder
already owns shares having a current value at the public offering price of
$90,000 and then purchases $10,000 more at the current public offering price,
the sales charge of the additional purchase according to the schedule now in
effect would be 3.75%, not 4.50%.
To receive the sales charge reduction, the Wachovia Banks, Wachovia Investments,
Inc. or the Distributor must be notified by the shareholder at the time the
purchase is made that Fund shares are already owned or that purchases are being
combined. The Fund will reduce the sales charge after it confirms the purchases.
LETTER OF INTENT. If a shareholder intends to purchase shares of the Fund equal
in value to at least $100,000 over the next 13 months, the sales charge may be
reduced by signing a letter of intent to that effect. This letter of intent
includes a provision for a sales charge adjustment depending on the amount
actually purchased within the 13-month period and a provision for the Custodian
to hold 4.50% of the total amount intended to be purchased in escrow (in shares
of the Fund) until such purchase is completed.
The 4.50% held in escrow will be applied to the shareholder's account at the end
of the 13-month period, unless the amount specified in the letter of intent is
not purchased. In this event, an appropriate number of escrowed shares may be
redeemed in order to realize the difference in the sales charge.
This letter of intent will not obligate the shareholder to purchase shares, but
if the shareholder does, each purchase during the period will be at the sales
charge applicable to the total amount intended to be purchased. This letter may
be dated as of a prior date to include any purchases made within the past 90
days.
REINVESTMENT PRIVILEGE. If shares in the Fund have been redeemed, the
shareholder has a one-time right, within 90 days, to reinvest the redemption
proceeds in the Fund at the next- determined net asset value without any sales
charge. The Wachovia Banks, Wachovia Investments, Inc. or the Distributor must
be notified by the shareholder in writing or by his financial institution of the
reinvestment in order to eliminate a sales charge. If the shareholder redeems
his shares in the Fund, there may be tax consequences.
CONCURRENT PURCHASES. For purposes of qualifying for a sales charge reduction, a
shareholder has the privilege of combining concurrent purchases of two or more
of the Funds and the portfolios in The Biltmore Municipal Funds, the purchase
price of which includes a sales charge. For example, if a shareholder
concurrently invested $70,000 in one of the other Funds with a sales charge, and
$40,000 in another fund of the Trust with a sales charge, the sales charge would
be reduced.
To receive this sales charge reduction, the Wachovia Banks, Wachovia
Investments, Inc. or the Distributor must be notified by the agent placing the
order at the time the concurrent purchases are made. The sales charge will be
reduced after the purchase is confirmed.
SYSTEMATIC INVESTMENT PROGRAM Once a Fund account has been opened, shareholders
may add to their investment on a regular basis in a minimum amount of $100.
Under this program, funds may be automatically withdrawn periodically from the
shareholder's checking account and invested in Fund shares at the net asset
value next determined after an order is received by the Fund, plus the
applicable sales charge. A shareholder may apply for participation in this
program through Wachovia Banks, Wachovia Investments, Inc. or through the
Distributor.
CERTIFICATES AND CONFIRMATIONS
As the transfer agent, Federated Services Company maintains a share account for
each shareholder of record. Share certificates are not issued unless requested
in writing to the Fund.
Detailed confirmations of each purchase or redemption are sent to each
shareholder of record. Annual statements are sent to report dividends paid
during the year.
SUBACCOUNTING SERVICES
Institutions are encouraged to open single master accounts. However, certain
institutions may wish to use the Transfer Agent's subaccounting system to
minimize their internal recordkeeping requirements. The Transfer Agent may
charge a fee based on the level of subaccounting services rendered. Institutions
holding shares of the Fund in a fiduciary, agency, custodial, or similar
capacity may charge or pass through subaccounting fees as part of or in addition
to normal trust or agency account fees. They may also charge fees for other
services provided which may be related to the ownership of Fund shares. This
prospectus should, therefore, be read together with any agreement between the
customer and the institution with regard to the services provided, the fees
charged for those services, and any restrictions and limitations imposed.
DIVIDENDS
Dividends are declared and paid annually to all shareholders invested in the
Fund on the record date. Unless shareholders request cash payments by writing to
the Fund, dividends are automatically reinvested in additional shares of the
Fund on the payment dates at the ex-dividend date net asset value without a
sales charge.
CAPITAL GAINS
Capital gains, when realized by the Fund, will be distributed at least once
every 12 months.
EXCHANGE PRIVILEGE
All shareholders of the Fund are shareholders of the Trust. The Trust currently
consists of the Funds, as previously defined in the "General Information"
section of this prospectus. The Funds are advised by Wachovia Investment
Management Group and distributed by Federated Securities Corp.
Shareholders of the Fund have easy access to the other Funds comprising the
Trust, to the three portfolios of The Biltmore Municipal Funds (Biltmore Georgia
Municipal Bond Fund, Biltmore North Carolina Municipal Bond Fund, and South
Carolina Municipal Bond Fund), and to the International Equity Fund (a mutual
fund advised by Fiduciary International, Inc.) (hereinafter collectively
referred to as, the "Participating Funds") through a telephone exchange program.
Shares of the Participating Funds may be exchanged for shares of the Fund at net
asset value without a sales charge (if a sales charge was previously paid). The
exchange privilege is available to shareholders residing in any state in which
the shares being acquired may be legally sold. Prior to any exchange, the
shareholder should review a copy of the current prospectus of the Participating
Fund into which an exchange is to be effected. Shareholders contemplating
exchanges into The Biltmore Municipal Funds should consult their tax advisers,
since the tax advantages of each portfolio of The Biltmore Municipal Funds may
vary.
Shareholders using this privilege must exchange shares having a net asset value
at least equal to the minimum investment of the Participating Fund into which
they are exchanging. Shareholders who desire to automatically exchange shares of
a predetermined amount on a monthly, quarterly, or annual basis may take
advantage of a systematic exchange privilege. A shareholder may obtain further
information on these exchange privileges by calling the Fund, Wachovia
Investments, Inc., or in the case of customers of the Wachovia Banks, the
shareholder's account officer.
Shares of the Participating Funds with a sales charge may be exchanged at net
asset value for shares of other Participating Funds with an equal sales charge
or no sales charge. Exchanges are made at net asset value, plus the difference
between the sales charge already paid on the Fund's shares and any sales charge
of the Participating Fund into which the shares are to be exchanged, if higher.
Shares of Participating Funds with no sales charge acquired by direct purchase
or reinvestment of dividends on such shares may be exchanged for shares of
Participating Funds at net asset value.
Upon receipt of proper instructions and all necessary supporting documents,
shares submitted for exchange will be redeemed at the next-determined net asset
value. Written exchange instructions may require a signature guarantee. Exercise
of this privilege is treated as a sale for federal income tax purposes and,
depending on the circumstances, a short or long-term capital gain or loss may be
realized. The exchange privilege may be modified or terminated at any time.
Shareholders will be notified of the modification or termination of the exchange
privilege.
EXCHANGE BY TELEPHONE. Instructions for exchanges between Participating Funds
may be given by telephone to Wachovia Investments, Inc. Trust customers should
contact their account officer. Shares may be exchanged by telephone only between
fund accounts having identical shareholder registrations. Exchange instructions
given by telephone may be electronically recorded.
Telephone exchange instructions must be received before 4:00 p.m. (Eastern time)
for shares to be exchanged the same day. The telephone exchange privilege may be
modified or terminated at any time. Shareholders will be notified of such
modification or termination. Shareholders may have difficulty in making
exchanges by telephone through banks, brokers, and other financial institutions
during times of drastic economic or market changes. If a shareholder cannot
contact his bank, broker, or financial institution by telephone, it is
recommended that an exchange request be made in writing and sent by overnight
mail. If reasonable procedures are not followed by the Fund, it may be liable
for losses due to unauthorized or fraudulent telephone instructions.
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REDEEMING SHARES
The Fund redeems shares at their net asset value next determined after the Fund
receives the redemption request. Redemptions will be made on days on which the
Fund computes its net asset value. Telephone or written requests for redemptions
must be received in proper form and can be made through the Wachovia Banks,
Wachovia Investments, Inc., or directly to the Fund.
BY TELEPHONE. A shareholder may redeem shares of the Fund by calling the
Wachovia Banks (call toll-free 1-800-994-4414) to request the redemption.
Telephone redemption instructions may be recorded. Shares will be redeemed at
the net asset value next determined after the Fund receives the redemption
request from the Wachovia Banks. Redemption requests made through the Wachovia
Banks must be received by the Wachovia Banks before 3:00 p.m. (Eastern time) in
order for shares to be redeemed at that day's net asset value. The Wachovia
Banks are responsible for promptly submitting redemption requests and providing
proper written redemption instructions to the Fund. Registered broker/dealers
may charge customary fees and commissions for this service. If reasonable
procedures are not followed by the Fund, it may be liable for losses due to
unauthorized or fraudulent telephone instructions.
A shareholder who is a customer of Wachovia Investments, Inc. may redeem shares
of the Fund by phone by calling The Biltmore Service Center at 1-800-994-4414. A
shareholder who is a customer of the Wachovia Banks and whose account agreement
with the Wachovia Banks permits telephone redemption may redeem shares of the
Fund by telephoning his account officer. Shares will be redeemed at the net
asset value next determined after the Fund receives the redemption request.
Redemption requests must be received by 4:00 p.m. (Eastern time) in order for
shares to be redeemed at that day's net asset value. In no event will proceeds
be credited more than seven days after a proper request for redemption has been
received. In the event of drastic economic or market changes, a shareholder may
experience difficulty in redeeming by telephone. If such a case should occur,
another method of redemption should be considered.
BY MAIL. A shareholder may redeem Fund shares by sending a written request to
the Wachovia Banks. The written request should include the shareholder's name,
the Fund name, the account number, and the share or dollar amount requested. If
share certificates have been issued, they must be properly endorsed and should
be sent by registered or certified mail with the written request to the Fund.
Shareholders should call the Wachovia Banks for assistance in redeeming by mail.
A shareholder who is a customer of Wachovia Investments, Inc. may redeem shares
by sending a written request to Wachovia Investments, Inc. The written request
should include the shareholder's name and address, the Fund name, the brokerage
account number, and the share or dollar amount requested. Shareholders should
call Wachovia Investments, Inc. for assistance in redeeming by mail. Normally,
a check for the proceeds is mailed within five business days, but in no event
more than seven days, after receipt of a proper written redemption request.
SIGNATURES. Shareholders requesting a redemption of $50,000 or more, a
redemption of any amount to be sent to an address other than that on record with
the Fund, or a redemption payable other than to the shareholder of record, must
have signatures on written redemption requests guaranteed by:
a trust company or commercial bank whose deposits are insured by the BIF;
a member firm of the New York, American, Boston, Midwest, or Pacific Stock
Exchange;
a savings bank or savings and loan association whose deposits are insured by
the SAIF; or
any other "eligible guarantor institution," as defined in the Securities
Exchange Act of 1934.
The Fund does not accept signatures guaranteed by a notary public.
The Fund and the Transfer Agent have adopted standards for accepting signature
guarantees from the above institutions. The Fund may elect in the future to
limit eligible signature guarantors to institutions that are members of a
signature guarantee program. The Fund and the Transfer Agent reserve the right
to amend these standards at any time without notice.
SYSTEMATIC WITHDRAWAL PROGRAM
Shareholders who desire to receive payments of a predetermined amount may take
advantage of the Systematic Withdrawal Program. Under this program, shares are
redeemed to provide for monthly or quarterly withdrawal payments in an amount
directed by the shareholder. Shareholders may redeem by periodic withdrawal
payments in a minimum amount of $100. Depending upon the amount of the
withdrawal payments, the amount of dividends paid and capital gains
distributions with respect to shares, and the fluctuation of net asset value of
shares redeemed under this program, redemptions may reduce, and eventually
deplete, the shareholder's investment in the Fund. For this reason, payments
under this program should not be considered as yield or income on the
shareholder's investment in the Fund. To be eligible to participate in this
program, a shareholder must have an account value of at least $10,000. A
shareholder may apply for participation in this program through his financial
institution. Due to the fact that shares are sold with a sales charge, it is not
advisable for shareholders to be purchasing shares while participating in this
program.
ACCOUNTS WITH LOW BALANCES
Due to the high cost of maintaining accounts with low balances, the Fund may
redeem shares in any account and pay the proceeds to the shareholder if the
account balance falls below the required minimum value of $250 due to
shareholder redemptions. This requirement does not apply, however, if the
balance falls below $250 because of changes in the Fund's net asset value.
Before shares are redeemed to close an account, the shareholder is notified in
writing and allowed 30 days to purchase additional shares to meet the minimum
requirement.
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SHAREHOLDER INFORMATION
VOTING RIGHTS
Each share of the Fund gives the shareholder one vote in Trustee elections and
other matters submitted to shareholders for vote. All shares of each Fund in the
Trust have equal voting rights, except that in matters affecting only a
particular Fund, only shares of that Fund are entitled to vote.
As a Massachusetts business trust, the Trust is not required to hold annual
shareholder meetings. Shareholder approval will be sought only for certain
changes in the Trust or the Fund's operation and for the election of Trustees
under certain circumstances.
Trustees may be removed by the Trustees or shareholders at a special meeting. A
special meeting of the shareholders shall be called by the Trustees upon the
written request of shareholders owning at least 10% of the Trust's outstanding
shares.
MASSACHUSETTS BUSINESS TRUSTS
Under certain circumstances, shareholders may be held personally liable under
Massachusetts law for acts or obligations of the Trust. To protect
shareholders, the Trust has filed legal documents with Massachusetts that
expressly disclaim the liability of shareholders for such acts or obligations
of the Trust. These documents require notice of this disclaimer to be given in
each agreement, obligation, or instrument the Trust or the Trustees enter into
or sign on behalf of the Fund.
In the unlikely event a shareholder is held personally liable for the Trust's
obligations on behalf of the Fund, the Trust is required by its Declaration of
Trust to use the property of the Fund to protect or compensate the shareholder.
On request, the Trust will defend any claim made and pay any judgment against a
shareholder of the Fund for any act or obligation of the Trust on behalf of the
Fund. Therefore, financial loss resulting from liability as a shareholder of the
Fund will occur only if the Trust cannot meet its obligations to indemnify
shareholders and pay judgments against them from the assets of the Fund.
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EFFECT OF BANKING LAWS
The Glass-Steagall Act and other banking laws and regulations presently prohibit
a bank holding company registered under the Bank Holding Company Act of 1956 or
any bank or non-bank affiliate thereof from sponsoring, organizing, controlling
or distributing the shares of a registered, open-end investment company
continuously engaged in the issuance of its shares, and prohibit banks generally
from issuing, underwriting or distributing most securities. However, such
banking laws and regulations do not prohibit such a holding company or its bank
and non-bank affiliates generally from acting as investment adviser, transfer
agent or custodian to such an investment company or from purchasing shares of
such a company as agent for and upon the order of their customer. The Fund's
investment adviser, Wachovia Investment Management Group, and its affiliate
banks, are subject to such banking laws and regulations.
The Adviser believes, based on the advice of its counsel, that it may perform
the services for the Fund contemplated by its investment advisory contract and
the Custodian Agreement with the Trust without violation of the Glass-Steagall
Act or other applicable banking laws or regulations. Changes in either federal
or state statutes and regulations relating to the permissible activities of
banks and their subsidiaries or affiliates, as well as further judicial or
administrative decisions or interpretations of present or future statutes and
regulations, could prevent the Adviser from continuing to perform all or a part
of the above services for its customers and/or the Fund. If it were prohibited
from engaging in these customer-related activities, the Trustees would consider
alternative service providers and means of continuing available investment
services. In such event, changes in the operation of the Fund may occur,
including the possible termination of any automatic or other Fund share
investment and redemption services then being provided by the Adviser. It is not
expected that existing Fund shareholders would suffer any adverse financial
consequences (if another adviser with equivalent abilities to the Adviser is
found) as a result of any of these occurrences.
The Glass-Steagall Act prohibits a depository institution (such as a commercial
bank or a savings and loan association) from being an underwriter or distributor
of most securities. In the event the Glass-Steagall Act is deemed to prohibit
depository institutions from acting in the administrative capacities described
above, or should Congress relax current restrictions on depository institutions,
the Trustees will consider appropriate changes in the services.
State securities laws governing the ability of depository institutions to act as
underwriters or distributors of securities may differ from interpretations given
to the Glass-Steagall Act and, therefore, banks and financial institutions may
be required to register as dealers pursuant to state law.
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TAX INFORMATION
The Fund expects to pay no federal income tax because it intends to meet
requirements of the Internal Revenue Code applicable to regulated investment
companies and to receive the special tax treatment afforded to such companies.
The Fund will be treated as a single, separate entity for federal income tax
purposes so that income (including capital gains) and losses realized by the
Trust's other portfolios will not be combined for tax purposes with those
realized by the Fund.
Investment income received by the Fund from sources within emerging market
countries may be subject to foreign taxes withheld at the source. The United
States has entered into tax treaties with many foreign countries that entitle
the Fund to reduced tax rates or exemptions on this income. The effective rate
of foreign tax cannot be predicted since the amount of Fund assets to be
invested within various emerging market countries is unknown. However, the Fund
intends to operate so as to qualify for treaty-reduced tax rates where
applicable.
Unless otherwise exempt, shareholders are subject to federal income tax on any
dividends and other distributions, including capital gains distributions,
received. This applies whether dividends and distributions are received in cash
or as additional shares. The Fund will provide shareholders with tax information
for reporting purposes. Shareholders are urged to consult their own tax advisers
regarding the status of their accounts under state and local tax laws.
If more than 50% of the value of the Fund's assets at the end of the tax year is
represented by stock or securities of foreign corporations, the Fund intends to
qualify for certain Internal Revenue Code stipulations that would allow
shareholders to claim a foreign tax credit or deduction on their U.S. income tax
returns. The Internal Revenue Code, as amended, may limit a shareholder's
ability to claim a foreign tax credit. Furthermore, shareholders who elect to
deduct their portion of the Fund's foreign taxes rather than take the foreign
tax credit must itemize deductions on their income tax returns.
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PERFORMANCE INFORMATION
From time to time the Fund advertises its total return and yield.
Total return represents the change, over a specified period of time, in the
value of an investment in the Fund after reinvesting all income and capital gain
distributions. It is calculated by dividing that change by the initial
investment and is expressed as a percentage.
The yield of the Fund is calculated by dividing the net investment income per
share (as defined by the Securities and Exchange Commission) earned by the Fund
over a thirty-day period by the maximum offering price per share of the Fund on
the last day of the period. This number is then annualized using semi-annual
compounding. The yield does not necessarily reflect income actually earned by
the Fund and, therefore, may not correlate to the dividends or other
distributions paid to shareholders.
The performance information reflects the effect of the maximum sales load which,
if excluded, would increase the total return and yield.
From time to time, the Fund may advertise its performance using certain
financial publications and/or compare its performance to certain indices.
Advertisements and other sales literature for the Fund may quote performance
information which does not reflect the effect of a sales load.
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APPENDIX
STANDARD & POOR'S RATINGS GROUP CORPORATE BOND RATINGS
AAA--Debt rated "AAA" has the highest rating assigned by S&P. Capacity to pay
interest and repay principal is extremely strong.
AA--Debt rated "AA" has a very strong capacity to pay interest and repay
principal and differs from the higher rated issues only in small degree.
A--Debt rated "A" has a strong capacity to pay interest and repay principal
although it is somewhat more susceptible to the adverse effects of changes in
circumstances and economic conditions than debt in higher rated categories.
BBB--Debt rated "BBB" is regarded as having an adequate capacity to pay interest
and repay principal. Whereas it normally exhibits adequate protection
parameters, adverse economic conditions or changing circumstances are more
likely to lead to a weakened capacity to pay interest and repay principal for
debt in this category than in higher rated categories.
BB, B, CCC, CC--Debt rated "BB", "B", "CCC" and "CC" is regarded, on balance, as
predominantly speculative with respect to capacity to pay interest and repay
principal in accordance with the terms of the obligation. "BB" indicates the
lowest degree of speculation and "CC" the highest degree of speculation. While
such debt will likely have some quality and protective characteristics, these
are outweighed by large uncertainties of major risk exposures to adverse
conditions.
C--The rating "C" is reserved for income bonds on which no interest is being
paid.
D--Debt rated "D" is in default, and payment of interest and/or repayment of
principal is in arrears.
MOODY'S INVESTORS SERVICE, INC., CORPORATE BOND RATINGS
AAA--Bonds which are rated "Aaa" are judged to be of the best quality. They
carry the smallest degree of investment risk and are generally referred to as
"gilt edged." Interest payments are protected by a large or by an exceptionally
stable margin and principal is secure. While the various protective elements are
likely to change, such changes as can be visualized are most unlikely to impair
the fundamentally strong position of such issues.
AA--Bonds which are rated "Aa" are judged to be of high quality by all
standards. Together with the "Aaa" group, they comprise what are generally known
as high grade bonds. They are rated lower than the best bonds because margins of
protection may not be as large as in "Aaa" securities or fluctuation of
protective elements may be of greater amplitude or there may be other elements
present which make the long term risks appear somewhat larger than in "Aaa"
securities.
A--Bonds which are rated "A" possess many favorable investment attributes and
are to be considered as upper medium grade obligations. Factors giving security
to principal and interest are considered adequate but elements may be present
which suggest a susceptibility to impairment sometime in the future.
BAA--Bonds which are rated "Baa" are considered as medium grade obligations,
i.e., they are neither highly protected nor poorly secured. Interest payments
and principal security appear adequate for the present but certain protective
elements may be lacking or may be characteristically unreliable over any great
length of time. Such bonds lack outstanding investment characteristics and in
fact have speculative characteristics as well.
BA--Bonds which are rated "Ba" are judged to have speculative elements; their
future cannot be considered as well-assured. Often the protection of interest
and principal payments may be very moderate and thereby not well safeguarded
during both good and bad times over the future. Uncertainty of position
characterizes bonds in this class.
B--Bonds which are rated "B" generally lack characteristics of the desirable
investment. Assurance of interest and principal payments or of maintenance of
other terms of the contract over any long period of time may be small.
CAA--Bonds which are rated "Caa" are of poor standing. Such issues may be in
default or there may be present elements of danger with respect to principal or
interest.
CA--Bonds which are rated "Ca" represent obligations which are speculative in a
high degree. Such issues are often in default or have other marked shortcomings.
C--Bonds which are rated "C" are the lowest rated class of bonds and issues so
rated can be regarded as having extremely poor prospects of ever attaining any
real investment standing.
==============================================================================
Addresses
Biltmore Emerging Markets Fund Federated Investors Tower
Pittsburgh, Pennsylvania 15222-3779
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Distributor Federated Securities Corp.
Federated Investors Tower
Pittsburgh, Pennsylvania 15222-3779
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Investment Adviser Wachovia Investment Management Group
301 North Main Street
Winston-Salem, North Carolina 27150
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Custodian Wachovia Bank of North Carolina, N.A.
Wachovia Trust Operations
301 North Main Street
Winston-Salem, North Carolina 27150
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Transfer Agent, Dividend Disbursing Federated Services Company
Agent, and Portfolio Recordkeeper Federated Investors Tower
Pittsburgh, Pennsylvania 15222-3779
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Counsel to The Biltmore Funds Kirkpatrick & Lockhart
1800 M Street, N.W.
Washington, D.C. 20036-5891
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Counsel to the Independent Trustees Piper & Marbury
1200 Nineteenth Street, N.W.
Washington, D.C. 20036-2430
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Independent Auditors Ernst & Young LLP
One Oxford Centre
Pittsburgh, Pennsylvania 15219
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The Biltmore Service Center 101 Greystone Boulevard
SC-9215
Columbia, South Carolina 29226
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Biltmore Emerging Markets Fund Prospectus
A Diversified Portfolio of The Biltmore Funds
An Open-End, Management Investment Company
December 10, 1994 G00648-01 (11/94)
BILTMORE EMERGING MARKETS FUND
(A Portfolio of The Biltmore Funds)
Supplement to Statement of Additional Information dated December 10, 1994
A. Please replace the section entitled "Sovereign Debt Obligations" on page
2 of the Statement of Additional Information with the following:
"Sovereign Debt Obligations
The Fund may purchase sovereign debt instruments issued or guaranteed by
foreign governments or their agencies, including debt of Latin American
nations or other developing countries. Sovereign debt may be in the
form of conventional securities or other types of debt instruments, such
as loans or loan participations. Sovereign debt of developing countries
may involve a high degree of risk. Governmental entities responsible
for repayment of the debt may be unable or unwilling to repay principal
and interest when due, and may require renegotiation or rescheduling of
debt payments. In addition, prospects for repayment of principal and
interest may depend on political as well as economic factors. The Fund
may also invest in debt obligations of supranational entities, which
include international organizations designed or supported by
governmental entities to promote economic reconstruction or development,
and international banking institutions and related government agencies.
Examples of these include, but are not limited to, the International
Bank for Reconstruction and Development (World Bank), European
Investment Bank and Inter-American Development Bank."
B. Please delete Malcolm T. Hopkins from the "Officers and Trustees" table
on page 10 of the Statement of Additional Information.
C. Please delete Joseph M. Huber from the "Officers and Trustees" table on
page 10 of the Statement of Additional Information and replace with the
following information:
"Peter J. Germain
Secretary
Senior Corporate Counsel, Federated Investors"
D. Please insert the following information as a second paragraph under the
section entitled "Fund Ownership" on page 10 of the Statement of
Additional Information:
"As of June 6, 1995, the following shareholder of record owned 5% or
more of the outstanding
shares of the Fund: Wachovia Bank of North Carolina, N.A., Winston-
Salem, North Carolina, on behalf of certain underlying accounts, owned
approximately 385,873 shares (10.92%)."
E. Please insert the following "Trustees' Compensation" table after the
section entitled "Fund Ownership" on page 10 of the Statement of Additional
Information. In addition, please add the heading "Trustees'
Compensation" to the Table of Contents on page I after the heading "Fund
Ownership":
"Trustees' Compensation
AGGREGATE
NAME , COMPENSATION
POSITION WITH FROM TOTAL COMPENSATION PAID
TRUST TRUST*# FROM FUND COMPLEX +
James A. Hanley, $ 21,186 $ 22,275 for the
Trust and
Trustee 1 other
investment company
in the Fund
Complex
Samuel E. Hudgins, $ 22,266 $ 23,400 for the
Trust and
Trustee 1 other
investment company
in the Fund
Complex
J. Berkley Ingram, Jr., $ 17,100 $ 18,000 for the
Trust and
Trustee 1 other
investment company
in the Fund
Complex
D. Dean Kaylor, $ 17,100 $ 18,000 for the
Trust and
Trustee 1 other
investment company
in the Fund
Complex
*Information is furnished for the fiscal year ended November 30, 1994.
#The aggregate compensation is provided for the Trust, which is comprised of
12 portfolios.
+The information is provided for the last calendar year."
F. 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 11 of the Statement of Additional Information:
"From the date of initial public investment, December 26, 1994, to May
31, 1995, the Adviser earned $64,774 in advisory fees."
G. Please insert the following information as the second sentence under the
section entitled "Administrative Services" on page 11 of the Statement of
Additional Information:
"From the date of initial public investment, December 26, 1994, to May
31, 1995, the Fund incurred costs for administrative services of $5,839."
H. Please add the following information as the final paragraph under the
section entitled "Brokerage Transactions" on page 11 of the Statement of
Additional Information:
"From the date of initial public investment, December 26, 1994 , to May
31, 1995, $158,292 was paid in brokerage commissions."
I. Please replace the section entitled "Total Return" on page 8 of the
Statement of Additional Information with the following information:
"From the date of initial public investment, December 26, 1994, to May
31, 1995, the Fund's cumulative total return was 6.21%.
Cumulative total return reflects the Fund's total performance over a
specific period of time. This total return assumes and is reduced by the
payment of the maximum sales load. The Fund's total return is representative
of only five months of investment activity since the Fund's effective date."
June 30, 1995
FEDERATED SECURITIES CORP.
Distributor
A subsidiary of Federated Investors
Federated Investors Tower
Pittsburgh, PA 15222-3779
Cusip 090313206
G00807-03 (6/95)
BILTMORE EMERGING MARKETS FUND
(A PORTFOLIO OF THE BILTMORE FUNDS)
STATEMENT OF ADDITIONAL INFORMATION
This Statement of Additional Information should be read with the prospectus of
Biltmore Emerging Markets Fund (the "Fund") of The Biltmore Funds (the
"Trust"), dated December 10, 1994. This Statement is not a prospectus itself.
To receive a copy of the prospectus, write the Fund or call The Biltmore
Service Center toll-free 1-800-994-4414.
FEDERATED INVESTORS TOWER
PITTSBURGH, PENNSYLVANIA 15222-3779
Statement dated December 10, 1994
[LOGO] FEDERATED SECURITIES CORP.
---------------------------------------------------------
Distributor
A subsidiary of FEDERATED INVESTORS
TABLE OF CONTENTS
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GENERAL INFORMATION ABOUT THE FUND 1
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INVESTMENT OBJECTIVE AND POLICIES 1
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Types of Investments 1
Investment Philosophy 1
Mortgage-Backed Securities 1
Convertible Securities 1
Warrants 2
Sovereign Debt Obligations 2
Futures and Options Transactions 2
Futures Contracts 3
Put Options on Financial Futures Contracts 3
Call Options on Financial Futures Contracts 3
Foreign Currency Transactions 4
"Margin" in Futures Transactions 5
Restricted and Illiquid Securities 6
When-Issued and Delayed
Delivery Transactions 6
Repurchase Agreements 6
Reverse Repurchase Agreements 7
Lending of Portfolio Securities 7
Investment Limitations 7
THE BILTMORE FUNDS MANAGEMENT 9
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Officers and Trustees 9
Fund Ownership 10
Trustee Liability 10
INVESTMENT ADVISORY SERVICES 11
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Adviser to the Fund 11
Advisory Fees 11
ADMINISTRATIVE SERVICES 11
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Transfer Agent and Dividend Disbursing Agent 11
BROKERAGE TRANSACTIONS 11
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Portfolio Turnover 12
PURCHASING FUND SHARES 12
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Conversion to Federal Funds 12
DETERMINING NET ASSET VALUE 12
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DETERMINING MARKET VALUE OF SECURITIES 12
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REDEEMING FUND SHARES 13
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Redemption in Kind 13
TAX STATUS 13
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The Fund's Tax Status 13
Shareholders' Tax Status 13
Capital Gains 13
TOTAL RETURN 13
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YIELD 14
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PERFORMANCE COMPARISONS 14
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GENERAL INFORMATION ABOUT THE FUND
- --------------------------------------------------------------------------------
The Fund is a portfolio in The Biltmore Funds (the "Trust"). The Trust was
established as a Massachusetts business trust under a Declaration of Trust dated
November 19, 1991.
INVESTMENT OBJECTIVE AND POLICIES
- --------------------------------------------------------------------------------
The Fund's investment objective is to produce long-term capital appreciation.
The objective cannot be changed without approval of shareholders. Unless
otherwise indicated, the investment policies described below may be changed by
the Board of Trustees ("Trustees") without shareholder approval. Shareholders
will be notified before any material change in these policies becomes effective.
TYPES OF INVESTMENTS
The Fund invests principally in a professionally managed and diversified
portfolio of securities of issuers and companies located in countries having
emerging markets. Although the Fund may invest in other securities and in money
market instruments, it is the Fund's policy, under normal market conditions, to
invest at least 65% of its assets in securities of issuers and companies located
in countries having emerging markets.
INVESTMENT PHILOSOPHY
As described in the Fund's prospectus under "Investment Policies" and
"Investment Process," the Fund's investment adviser (the "Adviser") manages the
Fund's portfolio to attempt to capture the return opportunities presented by
securities of issuers and companies located in emerging markets. In light of
recent political events (for example, the fall of Communism in Europe, the
opening of China to Western investment, the move toward free-market capitalism
in many developing countries, etc.), conditions for investing in many emerging
market economies have become attractive. A number of emerging market capitalist
economies present striking market growth opportunities (stemming from the
increasing number of working-class and middle-class citizens in those nations
who are now demanding improved housing, infrastructure such as roads and
utilities and a greater array of consumer goods). In view of the fact that
approximately 75% of the world's population resides in emerging market
countries, and many of these countries are still in the early or initial stages
of growth and development, it is conceivable that many of these emerging market
countries will exhibit economic and earnings growth that exceeds similar
measurements in what have been traditionally characterized as the developed
nations of Europe, Japan, and the United States. While past performance is not a
guarantee of future results, this trend has been seen in recent years, as the
stock markets of a number of emerging market economies have outperformed the
stock markets of more developed countries. Investors should recognize that
investments in emerging market countries present a number of risks, which are
discussed in the Fund's prospectus.
MORTGAGE-BACKED SECURITIES
The mortgages underlying mortgage-backed securities often may be prepaid without
penalty or premium. Therefore, mortgage-backed securities are generally subject
to higher prepayment risks than most other types of debt instruments. Prepayment
risks on mortgage-backed securities tend to increase during periods of declining
mortgage interest rates, because many borrowers refinance their mortgages to
take advantage of the more favorable rates. Depending upon market conditions,
the yield that the Fund receives from the reinvestment of such prepayments, or
any scheduled principal payments, may be lower than the yield on the original
mortgage security. As a consequence, mortgage-backed securities may be a less
effective means of "locking in" interest rates than other types of debt
securities having the same stated maturity and may also have less potential for
capital appreciation. For certain types of asset pools, such as collateralized
mortgage obligations, prepayments may be allocated to one tranche of securities
ahead of other tranches in order to reduce the risk of prepayments for the other
tranches.
Prepayments may result in a capital loss to the Fund to the extent that the
prepaid mortgage securities were purchased at a market premium over their stated
principal amount. Conversely, the prepayment of mortgage-backed securities
purchased at a market discount from their stated principal amount will
accelerate the recognition of interest income by the Fund, which would be taxed
as ordinary income when distributed to the shareholders.
CONVERTIBLE SECURITIES
When owned as part of a unit along with warrants, which are options to buy the
common stock, convertible securities function as convertible bonds, except that
the warrants generally will expire before the bond's maturity. Convertible
securities are senior to equity securities and, therefore, have a claim to
assets of the corporation prior to the holders of common stock in the case of
liquidation. However, convertible securities are generally subordinated to
similar nonconvertible securities of the same company. The interest income and
dividends from convertible bonds and preferred stock provide a stable stream of
income with generally higher yields than common stock, but lower than
non-convertible securities of similar quality.
The Fund will exchange or convert the convertible securities held in its
portfolio into shares of the underlying common stock in instances in which, in
the Adviser's opinion, the investment characteristics of the underlying common
shares will assist the Fund in achieving its investment objective. Otherwise,
the Fund will hold or trade the convertible securities. In selecting convertible
securities for the Fund, the Adviser evaluates the investment characteristics of
the convertible security as a fixed income instrument, and the investment
potential of the underlying equity security for capital appreciation. In
evaluating these matters with respect to a particular convertible security, the
Adviser considers numerous factors, including the economic and political
outlook, the value of the security relative to other investment alternatives,
trends in the determination of the issuer's profits, and the issuer's management
capability and practices.
WARRANTS
Warrants are basically options to purchase common stock at a specific price
(usually at a premium above the market value of the optioned common stock at
issuance) valid for a specific period of time. Warrants may have a life ranging
from less than a year to twenty years or may be perpetual. However, most
warrants have expiration dates after which they are worthless. In addition, if
the market price of the common stock does not exceed the warrant's exercise
price during the life of the warrant, the warrant will expire as worthless.
Warrants have no voting rights, pay no dividends, and have no right with respect
to the assets of the corporation issuing them. The percentage increase or
decrease in the market price of the warrant may tend to be greater than the
percentage increase or decrease in the market price of the optioned common
stock.
SOVEREIGN DEBT OBLIGATIONS
The Fund may purchase sovereign debt instruments issued or guaranteed by foreign
governments or their agencies, including debt of Latin American nations or other
developing countries. Sovereign debt may be in the form of conventional
securities or other types of debt instruments, such as loans or loan
participations. Sovereign debt of developing countries may involve a high degree
of risk, and may be in default or present the risk of default. Governmental
entities responsible for repayment of the debt may be unable or unwilling to
repay principal and interest when due, and may require renegotiation or
rescheduling of debt payments. In addition, prospects for repayment of principal
and interest may depend on political as well as economic factors. The Fund may
also invest in debt obligations of supranational entities, which include
international organizations designed or supported by governmental entities to
promote economic reconstruction or development, and international banking
institutions and related government agencies. Examples of these include, but are
not limited to, the International Bank for Reconstruction and Development (World
Bank), European Investment Bank and InterAmerican Development Bank.
FUTURES AND OPTIONS TRANSACTIONS
As a means of reducing fluctuations in the net asset value of shares of the
Fund, the Fund may attempt to hedge its portfolio by buying and selling
financial futures contracts and stock index futures contracts, buying put
options on portfolio securities and listed put options on futures contracts, and
writing call options on futures contracts. The Fund may also write covered call
options on portfolio securities to attempt to increase its current income.
The Fund will maintain its positions in securities, options and segregated cash
subject to puts and calls until the options are exercised, closed, or have
expired. An option position on financial futures contracts may be closed out
over-the-counter or on a nationally-recognized exchange which provides a
secondary market for options of the same series.
In addition to purchasing put options and writing call options as described in
the prospectus, the Fund may purchase and write over-the-counter options on
portfolio securities in negotiated transactions with the buyers or writers of
the options when options on the portfolio securities held by the Fund are not
traded on an exchange. The Fund purchases and writes options only with
investment dealers and other financial institutions (such as commercial banks or
savings and loan associations) deemed creditworthy by the Adviser.
Over-the-counter options are two party contracts with price and terms negotiated
between buyer and seller. In contrast, exchange-traded options are third party
contracts with standardized strike prices and expiration dates and are purchased
from a clearing corporation. Exchange-traded options have a continuous liquid
market while over-the-counter options may not.
The Fund may also write call options and purchase put options on financial
futures and stock index futures contracts as a hedge to attempt to protect
securities in its portfolio against decreases in value.
FUTURES CONTRACTS
A futures contract is a firm commitment by two parties: the seller, who agrees
to make delivery of the specific type of security called for in the contract
("going short") and the buyer, who agrees to take delivery of the security
("going long") at a certain time in the future.
A stock index futures contract is a bilateral agreement which obligates the
seller to deliver (and the purchaser to take delivery of) an amount of cash
equal to a specific dollar amount times the difference between the value of a
specific stock index at the close of trading of the contract and the price at
which the agreement is originally made. There is no physical delivery of the
stocks constituting the index and no price is paid upon entering into a futures
contract. In general, contracts are closed out prior to their expiration.
There are several risks accompanying the utilization of futures contracts to
effectively anticipate market movements. First, positions in futures contracts
may be closed only on an exchange or board of trade that furnishes a secondary
market for such contracts. While the Fund plans to utilize futures contracts
only if there exists an active market for such contracts, there is no guarantee
that a liquid market will exist for the contracts at a specified time.
Furthermore, because, by definition, futures contracts look to projected price
levels in the future, and not to current levels of valuation, market
circumstances may result in there being a discrepancy between the price of the
stock index future and the movement in the corresponding stock index. The
absence of a perfect price correlation between the futures contract and its
underlying stock index could stem from investors choosing to close futures
contracts by offsetting transactions rather than satisfying additional margin
requirements. This could result in a distortion of the relationship between the
index and the futures market. In addition, because the futures market imposes
less burdensome margin requirements than the securities market, an increased
amount of participation by speculators in the futures market could result in
price fluctuations.
PUT OPTIONS ON FINANCIAL FUTURES CONTRACTS
The Fund may purchase listed put options on financial futures contracts. Unlike
entering directly into a futures contract, which requires the purchaser to buy a
financial instrument on a set date at a specified price, the purchase of a put
option on a futures contract entitles (but does not obligate) its purchaser to
decide on or before a future date whether to assume a short position at the
specified price.
Generally, if the hedged portfolio securities decrease in value during the term
of an option, the related futures contracts will also decrease in value and the
option will increase in value. In such an event, the Fund will normally close
out its option by selling an identical option. If the hedge is successful, the
proceeds received by the Fund upon the sale of the second option will be large
enough to offset both the premium paid by the Fund for the original option, plus
the decrease in value of the hedged securities.
Alternatively, the Fund may exercise its put option to close out the position.
To do so, it would simultaneously enter into a futures contract of the type
underlying the option (for a price less than the strike price of the option) and
exercise the option. The Fund would then deliver the futures contract in return
for payment of the strike price. If the Fund neither closes out nor exercises an
option, the option will expire on the date provided in the option contract, and
only the premium paid for the contract will be lost.
CALL OPTIONS ON FINANCIAL FUTURES CONTRACTS
In addition to purchasing put options on futures, the Fund may write listed call
options on futures contracts to hedge its portfolio. When the Fund writes a call
option on a futures contract, it is undertaking the obligation of assuming a
short futures position (selling a futures contract) at the fixed strike price at
any time during the life of the option if the option is exercised. As stock
prices fall, causing the prices of futures to go down, the Fund's obligation
under a call option on a future (to sell a futures contract) costs less to
fulfill, causing the value of the Fund's call option position to increase.
In other words, as the underlying futures price goes down below the strike
price, the buyer of the option has no reason to exercise the call, so that the
Fund keeps the premium received for the option. This premium can substantially
offset the drop in value of the Fund's fixed income or indexed portfolio which
is occurring as interest rates rise.
Prior to the expiration of a call written by the Fund, or exercise of it by the
buyer, the Fund may close out the option by buying an identical option. If the
hedge is successful, the cost of the second option will be less than the premium
received by the Fund for the initial option. The net premium income of the Fund
will then substantially offset the decrease in value of the hedged securities.
The Fund will not maintain open positions in futures contracts it has sold or
call options it has written on futures contracts if, in the aggregate, the
value of the open positions (marked to market) exceeds the current market value
of its securities portfolio, plus or minus the unrealized gain or loss on those
open positions, adjusted for the correlation of volatility between the hedged
securities and the futures contracts. If this limitation is exceeded at any
time, the Fund will take prompt action to close out a sufficient number of open
contracts to bring its open futures and options positions within this
limitation.
FOREIGN CURRENCY TRANSACTIONS
CURRENCY RISKS
The exchange rates between the U.S. dollar and foreign currencies are a
function of such factors as supply and demand in the currency exchange
markets, international balances of payments, governmental intervention,
speculation and other economic and political conditions. Although the
Fund values its assets daily in U.S. dollars, the Fund may not convert
its holdings to U.S. dollars daily. The Fund may incur conversion costs
when it converts its holdings to another currency. Foreign exchange
dealers may realize a profit on the difference between the price at which
the Fund buys and sells currencies.
The Fund will engage in foreign currency exchange transactions in
connection with its portfolio investments. The Fund will conduct its
foreign currency exchange transactions either on a spot (i.e., cash)
basis at the spot rate prevailing in the foreign currency exchange market
or through forward contracts to purchase or sell foreign currencies.
FORWARD FOREIGN CURRENCY EXCHANGE CONTRACTS
The Fund may enter into forward foreign currency exchange contracts in
order to protect against possible loss resulting from an adverse change
in the relationship between the U.S. dollar and a foreign currency
involved in an underlying transaction. However, forward foreign currency
exchange contracts may limit potential gains which could result from a
positive change in such currency relationships. The Adviser believes that
it is important to have the flexibility to enter into forward currency
exchange contracts whenever it determines that it is in the Fund's best
interest to do so. The Fund will not speculate in foreign currency
exchange.
The Fund will not enter into forward foreign currency exchange contracts
or maintain a net exposure in such contracts when it would be obligated
to deliver an amount of foreign currency in excess of the value of its
portfolio securities or other assets denominated in that currency or, in
the case of a "cross-hedge" denominated in a currency or currencies that
the Adviser believes will tend to be closely correlated with that
currency with regard to price movements. Generally, the Fund will not
enter into a forward foreign currency exchange contract with a term
longer that one year.
FOREIGN CURRENCY OPTIONS
A foreign currency option provides the option buyer with the right to buy
or sell a stated amount of foreign currency at the exercise price on a
specified date or during the option period. The owner of a call option
has the right, but not the obligation, to buy the currency. Conversely,
the owner of a put option has the right, but not the obligation, to sell
the currency.
When the option is exercised, the seller (i.e., writer) of the option is
obligated to fulfill the terms of the sold option. However, either the
seller or the buyer may, in the secondary market, close its position
during the option period at any time prior to expiration.
A call option on a foreign security generally rises in value if the
underlying currency appreciates in value, and a put option on a foreign
currency generally falls in value if the underlying currency depreciates
in value. Although purchasing a foreign currency option can protect the
Fund against an adverse movement in the value of a foreign currency, the
option will not limit the movement in the value of such currency. For
example, if the Fund was holding securities denominated in a foreign
currency that was appreciating and had purchased a foreign currency to
put a hedge against a decline in the value of the currency, the Fund
would not have to exercise its put option. Likewise, if the Fund were to
enter into a contract to purchase a security denominated in foreign
currency and, in conjunction with that purchase, were to purchase a
foreign currency call option to hedge against a rise in value of the
currency, and if the value of the currency instead depreciated between
the date of purchase and the settlement date, the Fund would not have to
exercise its call. Instead, the Fund could acquire in the spot market the
amount of foreign currency needed for settlement.
SPECIAL RISKS ASSOCIATED WITH FOREIGN CURRENCY OPTIONS
Buyers and sellers of foreign currency options are subject to the same
risks that apply to options generally. In addition, there are certain
additional risks associated with foreign currency options. The markets in
foreign currency options are relatively new, and the Fund's ability to
establish and close out positions on such options is subject to the
maintenance of a liquid secondary market. Although the Fund will not
purchase or write such options unless and until, in the opinion of the
Adviser, the market for them has developed sufficiently to ensure that
the risks in connection with such options are not greater than the risks
in connection with the underlying currency, there can be no assurance
that a liquid secondary market will exist for a particular option at any
specific time.
In addition, options on foreign currencies are affected by all of those
factors that influence foreign exchange rates and investments generally.
The value of a foreign currency option depends upon the value of the
underlying currency relative to the U.S. dollar. As a result, the price
of the option position may vary with changes in the value of either or
both currencies and may have no relationship to the investment merits of
a foreign security. Because foreign currency transactions occurring in
the interbank market involve substantially larger amounts than those that
may be involved in the use of foreign currency options, investors may be
disadvantaged by having to deal in an odd market lot (generally
consisting of transactions of less than $1 million) for the underlying
foreign currencies at prices that are less favorable than for round lots.
There is no systematic reporting of last sale information for foreign
currencies or any regulatory requirement that quotations available
through dealers or other market sources be firm or revised on a timely
basis. Available quotation information is generally representative of
very large transactions in the interbank market and thus may not reflect
relatively smaller transactions (i.e., less than $1 million) where rates
may be less favorable. The interbank market in foreign currencies is a
global, around-the-clock market. To the extent that the U.S. option
markets are closed while the markets for the underlying currencies remain
open, significant price and rate movements may take place in the
underlying markets that cannot be reflected in the options markets until
they reopen.
FOREIGN CURRENCY FUTURES TRANSACTIONS
By using foreign currency futures contracts and options on such
contracts, the Fund may be able to achieve many of the same objectives as
it would through the use of forward foreign currency exchange contracts.
The Fund may be able to achieve these objectives possibly more
effectively and at a lower cost by using futures transactions instead of
forward foreign currency exchange contracts.
SPECIAL RISKS ASSOCIATED WITH FOREIGN CURRENCY FUTURES CONTRACTS AND
RELATED OPTIONS
Buyers and sellers of foreign currency futures contracts are subject to
the same risks that apply to the use of futures generally. In addition,
there are risks associated with foreign currency futures contracts and
their use as a hedging device similar to those associated with options on
futures currencies, as described above.
Options on foreign currency futures contracts may involve certain
additional risks. Trading options on foreign currency futures contracts
is relatively new. The ability to establish and close out positions on
such options is subject to the maintenance of a liquid secondary market.
To reduce this risk, the Fund will not purchase or write options on
foreign currency futures contracts unless and until, in the opinion of
the Adviser, the market for such options has developed sufficiently that
the risks in connection with such options are not greater than the risks
in connection with transactions in the underlying foreign currency
futures contracts. Compared to the purchase or sale of foreign currency
futures contracts, the purchase of call or put options on futures
contracts involves less potential risk to the Fund because the maximum
amount at risk is the premium paid for the option (plus transaction
costs). However, there may be circumstances when the purchase of a call
or put option on a futures contract would result in a loss, such as when
there is no movement in the price of the underlying currency or futures
contract.
"MARGIN" IN FUTURES TRANSACTIONS
Unlike the purchase or sale of a security, the Fund does not pay or receive
money upon the purchase or sale of a futures contract. Rather, the Fund is
required to deposit an amount of "initial margin" in cash or U.S. Treasury
bills with its custodian (or the broker, if legally permitted). The nature of
initial margin in futures transactions is different from that of margin in
securities transactions in that initial margin in futures transactions does not
involve the borrowing of funds by the Fund to finance the transactions. Initial
margin is in the nature of a performance bond or good faith deposit on the
contract which is returned to the Fund upon termination of the futures
contract, assuming all contractual obligations have been satisfied.
A futures contract held by the Fund is valued daily at the official settlement
price or the exchange on which it is traded. Each day the Fund pays or receives
cash, called "variation margin," equal to the daily change in value of the
futures contract. This process is known as "marking to market." Variation margin
does not represent a borrowing or loan by the Fund but is instead settlement
between the Fund and the broker of the amount one would owe the other if the
futures contract expired. In computing its daily net asset value, the Fund will
mark to market its open futures positions.
The Fund is also required to deposit and maintain margin when it writes call
options on futures contracts.
The Fund will comply with the following restrictions when purchasing and selling
futures contracts. First, the Fund will not participate in futures transactions
if the sum of its initial margin deposits on open contracts will exceed 5% of
the market value of the Fund's total assets, after taking into account the
unrealized profits and losses on those contracts it has entered into. Second,
the Fund will not enter into these contracts for speculative purposes. Third,
since the Fund does not constitute a commodity pool, it will not market itself
as such, nor serve as a vehicle for trading in the commodities futures or
commodity options markets. Connected with this, the Fund will disclose to all
prospective investors, the limitations on its futures and option transactions,
and make clear that these transactions are entered into only for bona fide
hedging purposes, or other permissible purposes pursuant to regulations
promulgated by the Commodity Futures Trading Commission ("CFTC"). Finally,
because the Fund will submit to the CFTC special calls for information, the Fund
will not register as a commodities pool operator.
RESTRICTED AND ILLIQUID SECURITIES
The ability of the Trustees to determine the liquidity of certain restricted
securities is permitted under a Securities and Exchange Commission (the "SEC")
Staff position set forth in the adopting release for Rule 144A under the
Securities Act of 1933 (the "Rule"). The Rule is a non-exclusive, safe-harbor
for certain secondary market transactions involving securities subject to
restrictions on resale under federal securities laws. The Rule provides an
exemption from registration for resales of otherwise restricted securities to
qualified institutional buyers. The Rule was expected to further enhance the
liquidity of the secondary market for securities eligible for resale under the
Rule. The Trust, on behalf of the Fund, believes that the Staff of the SEC has
left the question of determining the liquidity of all restricted securities for
determination to the Trustees. The Trustees consider the following criteria in
determining the liquidity of certain restricted securities:
.the frequency of trades and quotes for the security;
.the number of dealers willing to purchase or sell the security and the number
of other potential buyers;
.dealer undertakings to make a market in the security; and
the nature of the security and the nature of the marketplace trades.
WHEN-ISSUED AND DELAYED DELIVERY TRANSACTIONS
These transactions are made to secure what is considered to be an advantageous
price and yield for the Fund. No fees or other expenses, other than normal
transaction costs, are incurred. However, liquid assets of the Fund sufficient
to make payment for the securities to be purchased are segregated on the Fund's
records at the trade date. These assets are marked to market daily and are
maintained until the transaction has been settled. The Fund does not intend to
engage in when-issued and delayed delivery transactions to an extent that would
cause the segregation of more than 20% of the total value of its assets.
REPURCHASE AGREEMENTS
The Fund requires its custodian to take possession of the securities subject to
repurchase agreements and these securities are marked to market daily. To the
extent that the original seller does not repurchase the securities from the
Fund, the Fund could receive less than the repurchase price on any sale of such
securities. In the event that such a defaulting seller filed for bankruptcy or
became insolvent, disposition of such securities by the Fund might be delayed
pending court action. The Fund believes that, under the regular procedures
normally in effect for custody of the Fund's portfolio securities subject to
repurchase agreements, a court of competent jurisdiction would rule in favor of
the Fund and allow retention or disposition of such securities. The Fund will
only enter into repurchase agreements with banks and other recognized financial
institutions, such as broker/dealers, which are deemed by the Adviser to be
creditworthy pursuant to guidelines established by the Trustees.
REVERSE REPURCHASE AGREEMENTS
The Fund may also enter into reverse repurchase agreements. These transactions
are similar to borrowing cash. In a reverse repurchase agreement, the Fund
transfers possession of a portfolio instrument to another person, such as a
financial institution, broker, or dealer, in return for a percentage of the
instrument's market value in cash, and agrees that on a stipulated date in the
future the Fund will repurchase the portfolio instrument by remitting the
original consideration plus interest at an agreed upon rate. The use of reverse
repurchase agreements may enable the Fund to avoid selling portfolio instruments
at a time when a sale may be deemed to be disadvantageous, but the ability to
enter into reverse repurchase agreements does not ensure that the Fund will be
able to avoid selling portfolio instruments at a disadvantageous time.
When effecting reverse repurchase agreements, liquid assets of the Fund in a
dollar amount sufficient to make payment for the obligations to be purchased are
segregated at the trade date. These securities are marked to market daily and
are maintained until the transaction is settled.
LENDING OF PORTFOLIO SECURITIES
The collateral received when the Fund lends portfolio securities must be valued
daily and, should the market value of the loaned securities increase, the
borrower must furnish additional collateral to the Fund. During the time
portfolio securities are on loan, the borrower pays the Fund any dividends or
interest paid on such securities. Loans are subject to termination at the option
of the Fund or the borrower. The Fund may pay reasonable administrative and
custodial fees in connection with a loan and may pay a negotiated portion of the
interest earned on the cash or equivalent collateral to the borrower or placing
broker.
INVESTMENT LIMITATIONS
SELLING SHORT AND BUYING ON MARGIN
The Fund will not sell any securities short or purchase any securities on
margin, other than in connection with buying stock index futures
contracts, put options on stock index futures, put options on financial
futures and portfolio securities, and writing covered call options, but
may obtain such short-term credits as may be necessary for clearance of
purchases and sales of portfolio securities. A deposit or payment by the
Fund of initial or variation margin in connection with futures contracts
or related options transactions is not considered the purchase of a
security on margin.
ISSUING SENIOR SECURITIES AND BORROWING MONEY
The Fund will not issue senior securities, except that the Fund may
borrow money directly or through reverse repurchase agreements in amounts
up to one-third of the value of its total assets, including the amounts
borrowed.
The Fund will not borrow money or engage in reverse repurchase agreements
for investment leverage, but rather as a temporary, extraordinary, or
emergency measure to facilitate management of the portfolio by enabling
the Fund to meet redemption requests when the liquidation of portfolio
securities is deemed to be inconvenient or disadvantageous. The Fund will
not purchase any securities while borrowings in excess of 5% of its total
assets are outstanding.
PLEDGING ASSETS
The Fund will not mortgage, pledge, or hypothecate any assets except to
secure permitted borrowings. For purposes of this limitation, the
following will not be deemed to be pledges of the Fund's assets: (a) the
deposit of assets in escrow in connection with the writing of covered put
or call options and the purchase of securities on a when-issued basis;
and (b) collateral arrangements with respect to (i) the purchase and sale
of stock options (and options on stock indices) and (ii) initial or
variation margin for futures contracts.
INVESTING IN REAL ESTATE
The Fund will not purchase or sell real estate, including limited
partnership interests, although it may invest in the securities of
companies whose business involves the purchase or sale of real estate or
in securities which are secured by real estate or interests in real
estate.
INVESTING IN COMMODITIES
The Fund will not purchase or sell commodities, commodity contracts, or
commodity futures contracts. However, the Fund may purchase put options
on stock index futures, put options on financial futures, stock index
futures contracts, and put options on portfolio securities, and may write
covered call options.
UNDERWRITING
The Fund will not underwrite any issue of securities, except as it may be
deemed to be an underwriter under the Securities Act of 1933 in
connection with the sale of securities which the Fund may purchase
pursuant to its investment objective, policies, and limitations.
DIVERSIFICATION OF INVESTMENTS
With respect to securities comprising 75% of the value of its total
assets, the Fund will not purchase securities issued by any one issuer
(other than cash, cash items, or securities issued or guaranteed by the
government of the United States or its agencies or instrumentalities and
repurchase agreements collateralized by such securities) if, as a result,
more than 5% of the value of its total assets would be invested in the
securities of that issuer or if it would own more than 10% of the
outstanding voting securities of any one issuer.
CONCENTRATION OF INVESTMENTS
The Fund will not invest 25% or more of the value of its total assets in
any one industry. However, the Fund may invest 25% or more of the value
of its assets in cash or cash items, securities issued or guaranteed by
the U.S. government, its agencies or instrumentalities, or instruments
secured by these money market instruments, such as repurchase agreements.
LENDING CASH OR SECURITIES
The Fund will not lend any of its assets, except portfolio securities.
This shall not prevent the Fund from purchasing or holding money market
instruments, repurchase agreements, obligations of the U.S. government,
its agencies or instrumentalities, bonds, debentures, notes, or certain
debt instruments as permitted by its investment objective, policies, and
limitations or the Trust's Declaration of Trust.
The above investment limitations cannot be changed without shareholder approval.
The following limitations, however, may be changed by the Trustees without
shareholder approval. Shareholders will be notified before any material change
in these limitations becomes effective.
INVESTING IN RESTRICTED SECURITIES
The Fund will not invest more than 5% of its total assets in securities
subject to restrictions on resale under the Securities Act of 1933,
except for commercial paper issued under Section 4(2) of the Securities
Act of 1933 and certain other restricted securities which meet the
criteria for liquidity as established by the Trustees.
INVESTING IN ILLIQUID SECURITIES
The Fund will not invest more than 15% of the value of its net assets in
illiquid securities, including repurchase agreements providing for
settlement in more than seven days after notice, non-negotiable fixed
time deposits with maturities over seven days, over-the-counter options,
and certain securities not determined by the Trustees to be liquid.
INVESTING IN MINERALS
The Fund will not purchase interests in oil, gas, or other mineral
exploration or development programs or leases, except it may invest in
the securities of issuers which invest in or sponsor such programs.
INVESTING IN NEW ISSUERS
The Fund will not invest more than 5% of the value of its total assets in
securities of issuers which have records of less than three years of
continuous operations, including the operation of any predecessor.
INVESTING IN ISSUERS WHOSE SECURITIES ARE OWNED BY OFFICERS AND TRUSTEES OF
THE TRUST
The Fund will not purchase or retain the securities of any issuer if the
Officers and Trustees of the Trust or the Adviser, owning individually
more than 1/2 of 1% of the issuer's securities, together own more than 5%
of the issuer's securities.
PURCHASING SECURITIES TO EXERCISE CONTROL
The Fund will not purchase securities of a company for purpose of
exercising control or management.
INVESTING IN WARRANTS
The Fund will not invest more than 5% of its net assets in warrants,
including those acquired in units or attached to other securities. To
comply with certain state restrictions, the Fund will limit its
investment in such warrants not listed on the New York or American Stock
Exchanges to 2% of its net assets. (If state restrictions change, this
latter restriction may be revised without notice to shareholders.) For
purposes of this investment restriction, warrants acquired by the Fund in
units with or attached to securities may be deemed to be without value.
INVESTING IN OPTIONS
The Fund will not purchase put or call options on securities or futures
contracts if more than 5% of the value of the Fund's total assets would
be invested in premiums on open option positions.
WRITING COVERED CALL OPTIONS
The Fund will not write call options on securities unless the securities
are held in the Fund's portfolio or unless the Fund is entitled to them
in deliverable form without further payment or after segregating cash in
the amount of any further payment.
ARBITRAGE TRANSACTIONS
The Fund will not enter into transactions for the purpose of engaging in
arbitrage.
INVESTING IN SECURITIES OF OTHER INVESTMENT COMPANIES
The Fund will limit its investment in other investment companies to no
more than 3% of the total outstanding voting stock of any investment
company, will invest no more than 5% of its total assets in any one
investment company, and will invest no more than 10% of its total assets
in investment companies in general. The Fund will purchase securities of
closed-end investment companies only in open market transactions
involving only customary broker's commissions. However, these limitations
are not applicable if the securities are acquired in a merger,
consolidation, reorganization, or acquisition of assets.
Except with respect to borrowing money, if a percentage limitation is adhered to
at the time of investment, a later increase or decrease in percentage resulting
from any change in value or net assets will not result in a violation of such
restriction.
The Fund does not intend to borrow money or pledge securities in excess of 5% of
the value of its net assets during the coming fiscal year.
For purposes of its policies and limitations, the Fund considers certificates of
deposit and demand and time deposits issued by a U.S. branch of a domestic bank
or savings and loan having capital, surplus, and undivided profits in excess of
$100,000,000 at the time of investment to be "cash items."
To comply with registration requirements in certain states, the Fund (1) will
limit the margin deposits on futures contracts entered into by the Fund to 5% of
its net assets, (2) will limit the aggregate value of the assets underlying
covered call options or put options written by the Fund to not more than 25% of
its net assets, and (3) will limit the premiums paid for options purchased by
the Fund to 5% of its net assets. (If state requirements change, these
restrictions may be revised without shareholder notification.)
THE BILTMORE FUNDS MANAGEMENT
- --------------------------------------------------------------------------------
OFFICERS AND TRUSTEES
Officers and Trustees of the Trust are listed with their principal occupations
during the past five years and their present positions. Each of the Trustees and
officers listed below holds an identical position with The Biltmore Municipal
Funds, another investment company. Except as listed below, none of the Trustees
or officers are affiliated with Wachovia Bank of North Carolina, N.A., Federated
Investors, Federated Securities Corp., Federated Services Company or Federated
Administrative Services.
- --------------------------------------------------------------------------------
James A. Hanley
Trustee
Retired; Vice President and Treasurer, Abbott Laboratories (health care
products) until 1992.
- --------------------------------------------------------------------------------
Malcolm T. Hopkins
Trustee
Private investor and consultant; Director, The Columbia Gas System, Inc.
(integrated natural gas production, transmission and distribution); Director,
MAPCO, Inc. (diversified energy); Director, Metropolitan Series Funds, Inc. and
MetLife Portfolios, Inc. (investment companies); Director, Kinder-Care Learning
Centers, Inc. (child care); and Director, U.S. Home Corp. (residential builders
and land development).
- --------------------------------------------------------------------------------
Samuel E. Hudgins
Trustee
President, Percival, Hudgins & Company Inc. (investment bankers/financial
consultants); Director, Atlantic American Corporation (insurance holding
company); Director, Bankers Fidelity Life Insurance Company; Director and Vice
Chairman, Leath Furniture, Inc. (retail furniture); President, Atlantic American
Corporation until 1988; Director, Vice Chairman and Chief Executive Officer,
Rhodes, Inc. (retail furniture) until 1988; Chairman and Director, Atlantic
American Life Insurance Co., Georgia Casualty & Surety Company, and Bankers
Fidelity Life Insurance until 1988.
- --------------------------------------------------------------------------------
J. Berkley Ingram, Jr.
Trustee
Real estate investor and partner; Director, VF Corporation (apparel company).
- --------------------------------------------------------------------------------
D. Dean Kaylor
Trustee
Retired; Executive Vice President and Chief Financial Officer, NBD Bank, N.A.
and NBD Bancorp, Inc. (bank and bank holding company) until 1990.
- --------------------------------------------------------------------------------
John W. McGonigle
President and Treasurer
Vice President, Secretary, General Counsel, and Trustee, Federated Investors;
Vice President, Secretary, and Trustee, Federated Advisers, Federated
Management, and Federated Research; Trustee, Federated Services Company;
Executive Vice President, Secretary, and Trustee, Federated Administrative
Services; Executive Vice President and Director, Federated Securities Corp.
- --------------------------------------------------------------------------------
Ronald M. Petnuch
Vice President and Assistant Treasurer
Vice President, Federated Administrative Services; formerly, Associate Corporate
Counsel, Federated Investors; Vice President and Assistant Treasurer for certain
investment companies for which Federated Securities Corp. is the
principal distributor.
- --------------------------------------------------------------------------------
Joseph M. Huber
Secretary
Corporate Counsel, Federated Investors.
- --------------------------------------------------------------------------------
The address of the Trustees and officers of the Trust is Federated Investors
Tower, Pittsburgh, Pennsylvania 15222-3779.
FUND OWNERSHIP
Officers and Trustees own less than 1% of the Fund's outstanding shares.
TRUSTEE LIABILITY
The Trust's Declaration of Trust provides that the Trustees are not liable for
errors of judgment or mistakes of fact or law. However, they are not protected
against any liability to which they would otherwise be subject by reason of
willful misfeasance, bad faith, gross negligence, or reckless disregard of the
duties involved in the conduct of their office.
INVESTMENT ADVISORY SERVICES
- --------------------------------------------------------------------------------
ADVISER TO THE FUND
The Fund's investment adviser is Wachovia Investment Management Group (the
"Adviser"). The Adviser is a business unit of Wachovia Bank of North Carolina,
N.A., which is a wholly-owned subsidiary of Wachovia Corporation of North
Carolina, a wholly-owned subsidiary of Wachovia Corporation.
The Adviser shall not be liable to the Trust, the Fund or any shareholder of the
Fund for any losses that may be sustained in the purchase, holding, or sale of
any security, or for anything done or omitted by it, except acts or omissions
involving willful misfeasance, bad faith, gross negligence, or reckless
disregard of the duties imposed upon it by its contract with the Trust.
ADVISORY FEES
For its advisory services, the Adviser receives an annual investment advisory
fee as described in the prospectus.
STATE EXPENSE LIMITATIONS
The Adviser has undertaken to comply with the expense limitations
established by certain states for investment companies whose shares are
registered for sale in those states. If the Fund's normal operating
expenses (including the investment advisory fee, but not including
brokerage commissions, interest, taxes, and extraordinary expenses)
exceed 2-1/2% per year of the first $30 million of average net assets, 2%
per year of the next $70 million of average net assets, and 1-1/2% per
year of the remaining average net assets, the Adviser will waive its fee
or reimburse the Fund for its expenses over the limitation.
If the Fund's monthly projected operating expenses exceed this
limitation, the investment advisory fee paid will be reduced by the
amount of the excess, subject to an annual adjustment. If the expense
limitation is exceeded, the amount to be reimbursed by the Adviser will
be limited, in any single fiscal year, by the amount of the investment
advisory fee.
ADMINISTRATIVE SERVICES
- --------------------------------------------------------------------------------
Federated Administrative Services ("FAS'), a subsidiary of Federated Investors,
provides administrative personnel and services to the Fund for a fee as
described in the prospectus.
TRANSFER AGENT AND DIVIDEND DISBURSING AGENT
Federated Services Company serves as transfer agent and dividend disbursing
agent for the Fund. The fee is based on the size, type, and number of accounts
and transactions made by shareholders.
Federated Services Company also maintains the 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.
BROKERAGE TRANSACTIONS
- --------------------------------------------------------------------------------
The Adviser may select brokers and dealers who offer brokerage and research
services. These services may be furnished directly to the Fund or to the Adviser
and may include:
advice as to the advisability of investing in securities;
security analysis and reports;
economic studies;
industry studies;
receipt of quotations for portfolio evaluations; and
similar services.
The Adviser and its affiliates exercise reasonable business judgment in
selecting brokers who offer brokerage and research services to execute
securities transactions. They determine in good faith that commissions charged
by such persons are reasonable in relationship to the value of the brokerage and
research services provided. The Fund will normally trade its securities in the
home country of the foreign issuer, since the best available market for foreign
securities is often in such country. Brokerage commissions in certain foreign
countries are often higher than in the United States and may be fixed, unlike in
the United States, where commissions are negotiated.
Research services provided by brokers and dealers may be used by the Adviser in
advising the Fund and other accounts. To the extent that receipt of these
services may supplant services for which the Adviser or its affiliates might
otherwise have paid, it would tend to reduce expenses. The Fund has no
obligation to deal with any broker or group of brokers in the execution of
portfolio transactions.
Some of the Adviser's other clients have investment objectives and programs
similar to those of the Fund. Occasionally, the Adviser may make recommendations
to other clients which result in their purchasing or selling securities
simultaneously with the Fund. Consequently, the demand for securities being
purchased or the supply of securities being sold may increase, and this could
have an adverse effect on the price of those securities. It is the Adviser's
policy not to favor one client over another in making recommendations or in
placing orders. If two or more of the Adviser's clients are purchasing a given
security on the same day from the same broker or dealer, the Adviser may average
the price of the transactions and allocate the average among the clients
participating in the transaction.
PORTFOLIO TURNOVER
The Fund will not attempt to set or meet a portfolio turnover rate since any
turnover would be incidental to transactions undertaken in an attempt to achieve
the Fund's investment objective. Securities in its portfolio will be sold
whenever the Adviser believes it is appropriate to do so in light of the Fund's
investment objective, without regard to the length of time a particular security
may have been held. Transactions for the Fund's portfolio will be based only
upon investment considerations and will not be limited by any other
considerations when the Adviser deems it appropriate to make changes in the
Fund's portfolio. For the period ending November 30, 1995, the Adviser does not
expect the Fund's portfolio turnover to exceed 100%.
PURCHASING FUND SHARES
- --------------------------------------------------------------------------------
Shares of the Fund are sold at net asset value plus an applicable sales charge
on days on which the New York Stock Exchange, the Wachovia Banks (as such term
is defined in the prospectus) and the Federal Reserve Wire System are open for
business. The procedure for purchasing shares of the Fund is explained in the
prospectus under "Investing in the Fund."
CONVERSION TO FEDERAL FUNDS
It is the Fund's policy to be as fully invested as possible so that maximum
interest may be earned. To this end, all payments from shareholders must be in
federal funds or be converted into federal funds. The Wachovia Banks act as the
shareholders' agent in depositing checks and converting them to federal funds.
DETERMINING NET ASSET VALUE
- --------------------------------------------------------------------------------
Net asset value generally changes each day. The days on which net asset value is
calculated by the Fund are described in the prospectus.
DETERMINING MARKET VALUE OF SECURITIES
- --------------------------------------------------------------------------------
The market value of the Fund's portfolio securities are determined as follows:
.for equity securities, according to the last sale price on a national
securities exchange, if available;
.in the absence of recorded sales for listed equity securities, according to the
mean between the last closing bid and asked prices;
.for unlisted equity securities, the latest bid prices;
.for bonds and other fixed income securities, as determined by an independent
pricing service;
.for short-term obligations, according to the mean between bid and asked prices
as furnished by an independent pricing service or for short-term obligations
with remaining maturities of 60 days or less at the time of purchase at
amortized cost;
.for all other securities, at fair value as determined in good faith by the
Trustees.
Prices provided by independent pricing services may be determined without
relying exclusively on quoted prices, and may reflect: institutional trading in
similar groups of securities; yield; quality; coupon rate; maturity; type of
issue; trading characteristics; and other market data.
The Fund will value futures contracts, options and put options on financial
futures at their market values established by the exchanges at the close of
option trading on such exchanges, unless the Trustees determine in good faith
that another method of valuing option positions is necessary.
TRADING IN FOREIGN SECURITIES
Trading in foreign securities may be completed at times which vary from the
closing of the New York Stock Exchange. In computing its net asset value, the
Fund values foreign securities at the latest closing price on the exchange on
which the securities are traded immediately prior to the closing of the New
York Stock Exchange. Certain foreign currency exchange rates may also be
determined at the latest rate prior to the closing of the New York Stock
Exchange. Foreign securities quoted in foreign currencies are translated into
U.S. dollars at current rates. Occasionally, events that affect these values
and exchange rates may occur between the times at which they are determined and
the closing of the New York Stock Exchange. If such events materially affect
the value of portfolio securities, these securities may be valued at their fair
value as determined in good faith by the Trustees, although the actual
calculation may be done by others.
REDEEMING FUND SHARES
- --------------------------------------------------------------------------------
The Fund redeems shares at the next computed net asset value after the Fund
receives the redemption request. Redemption procedures are explained in the
prospectus under "Redeeming Shares."
REDEMPTION IN KIND
Although the Fund intends to redeem shares in cash, it reserves the right under
certain circumstances to pay the redemption price in whole or in part by a
distribution of securities from the Fund's portfolio. To the extent available,
such securities will be readily marketable.
Redemption in kind will be made in conformity with applicable SEC rules, taking
such securities at the same value employed in determining net asset value and
selecting the securities in a manner the Trustees determine to be fair and
equitable.
Redemption in kind is not as liquid as a cash redemption. If redemption is made
in kind, shareholders receiving their securities and selling them before their
maturity could receive less than the redemption value of their securities and
could incur transaction costs.
The Fund has elected to be governed by Rule 18f-1 under the Investment Company
Act of 1940, which obligates the Fund to redeem shares for any one shareholder
in cash only up to the lesser of $250,000 or 1% of the Fund's net asset value
during any 90-day period.
TAX STATUS
- --------------------------------------------------------------------------------
THE FUND'S TAX STATUS
The Fund expects to pay no federal income tax because it intends to meet the
requirements of Subchapter M of the Internal Revenue Code applicable to
regulated investment companies and to receive the special tax treatment afforded
to such companies. To qualify for this treatment, the Fund must, among other
requirements:
.derive at least 90% of its gross income from dividends, interest, and gains
from the sale of securities;
.derive less than 30% of its gross income from the sale of securities held less
than three months;
.invest in securities within certain statutory limits; and
.distribute to its shareholders at least 90% of its net income earned during the
year.
SHAREHOLDERS' TAX STATUS
Shareholders are subject to federal income tax on dividends received as cash or
additional shares. The dividends received deduction for corporations will apply
to ordinary income distributions to the extent the distribution represents
amounts that would qualify for the dividends received deduction to the Fund if
the Fund were a regular corporation, and to the extent designated by the Fund as
so qualifying. These dividends, and any short-term capital gains, are taxable as
ordinary income.
CAPITAL GAINS
Long-term capital gains distributed to shareholders will be treated as long-term
capital gains regardless of how long shareholders have held shares.
TOTAL RETURN
- --------------------------------------------------------------------------------
The average annual total return for the Fund is the average compounded rate of
return for a given period that would equate a $1,000 initial investment to the
ending redeemable value of that investment. The ending redeemable value is
computed by multiplying the number of shares owned at the end of the period by
the net asset value per share at the end of the period. The number of shares
owned at the end of the period is based on the number of shares purchased at the
beginning of the period with $1,000, less any applicable sales load, adjusted
over the period by any additional shares, assuming the reinvestment of all
dividends and distributions.
YIELD
- --------------------------------------------------------------------------------
The yield for the Fund is determined by dividing the net investment income per
share (as defined by the SEC) earned by the Fund over a thirty-day period by the
maximum offering price per share of the Fund on the last
day of the period. This value is then annualized using semi-annual compounding.
This means that the amount of income generated during the thirty-day period is
assumed to be generated each month over a 12-month period and is reinvested
every six months. The yield does not necessarily reflect income actually earned
by the Fund because of certain adjustments required by the SEC and, therefore,
may not correlate to the dividends or other distributions paid to shareholders.
To the extent that financial institutions and broker/dealers charge fees in
connection with services provided in conjunction with an investment in the Fund,
the performance will be reduced for those shareholders paying those fees.
PERFORMANCE COMPARISONS
- --------------------------------------------------------------------------------
The Fund's performance depends upon such variables as:
.stock market fluctuations;
.portfolio quality;
.average portfolio maturity;
.type of instruments in which the portfolio is invested;
.changes in interest rates and market value of portfolio securities;
.changes in the Fund's expenses;
.the relative amount of Fund cash flow; and
.various other factors.
The Fund's performance fluctuates on a daily basis largely because net earnings
and offering price per share fluctuate daily. Both net earnings and net asset
value per share are factors in the computation of yield and total return.
Investors may use financial publications and/or indices to obtain a more
complete view of the Fund's performance. When comparing performance, investors
should consider all relevant factors, such as the composition of any index used,
prevailing market conditions, portfolio compositions of other funds, and methods
used to value portfolio securities and compute offering price. The financial
publications and/or indices which the Fund uses in advertising may include:
.LIPPER ANALYTICAL SERVICES, INC. ranks funds in various fund categories by
making comparative calculations using total return. Total return assumes the
reinvestment of all capital gains distributions and income dividends and takes
into account any change in maximum offering price over a specific period of
time.
.EUROPE, AUSTRALIA, AND FAR EAST ("EAFE") is a market capitalization weighted
foreign securities index, which is widely used to measure the performance of
European, Australian, New Zealand and Far Eastern stock markets. The index
covers approximately 1,020 companies drawn from 18 countries in the above
regions. The index values its securities daily in both U.S. dollars and local
currency and calculates total returns monthly. EAFE U.S. dollar total return is
a net dividend figure less Luxembourg withholding tax. The EAFE is monitored by
Capital International, S.A., Geneva, Switzerland.
.INTERNATIONAL FINANCE CORPORATION ("IFC") EMERGING MARKET INDICES are market
capitalization-weighted foreign securities indices, which are used to measure
the performance of emerging markets (as defined by the World Bank) in Europe,
Asia, Latin America, and the Middle East/Africa. The IFC calculates both a
"Global" and an "Investable" version of its index. The "Global" version
includes companies and countries with regard to their access to foreign
investors. The "Investable" Index adjusts company and market weights to reflect
their accessibility to foreign investors. The IFC Global Index currently covers
approximately 1,200 securities in 25 markets; the IFC Investable Index
currently covers approximately 900 securities in 24 markets. Both indices are
presently calculated in local currency and in US dollars, without dividends and
with gross dividends reinvested (e.g., before withholding taxes). The IFC is a
subsidiary of the World Bank, and has been collecting data on emerging markets
since 1975.
.MORGAN STANLEY CAPITAL INTERNATIONAL ("MSCI") EMERGING MARKETS INDICES are
market capitalization-weighted foreign securities indices, which are used to
measure the performance of emerging markets (as defined by the World Bank) in
Europe, Asia, Latin America, and the Middle East/Africa. MSCI calculates a
"Global" and a "Free" version of its index. The "Global" version includes
companies and countries without regards to their access to foreign investors.
The "Free" Index adjusts company and market weights to reflect their
assessibility to foreign investors. The MSCI Global Index currently covers
approximately 630 securities in 20 markets; the MSCI Free Index currently
covers approximately 560 securities in 19 markets. Both indices are presently
calculated in local currency and in US dollars, without dividends and with
gross dividends reinvested (e.g., before withholding taxes).
.MORNINGSTAR, INC., an independent rating service, is the publisher of the
bi-weekly Mutual Fund Values. Mutual Fund Values rates more than 1,000
NASDQ-listed mutual funds of all types, according to their risk-adjusted
returns. The maximum rating is five stars, and ratings are effective for two
weeks.
Advertisements and other sales literature for the Fund may quote total returns
which are calculated on non-standardized base periods. These total returns also
represent the historic change in the value of an investment in the Fund based on
the annual reinvestment of dividends over a specified period of time.
Advertisements may quote performance information which does not reflect the
effect of the sales load.
G00648B (12/94)
PART C. OTHER INFORMATION.
Item 24. Financial Statements and Exhibits:
(a) Financial Statements (1-12) Filed in Part A.
(b) Exhibits:
(1) Conformed copy of Declaration of Trust of the
Registrant and Amendments 1-6 thereto; (12)
(2) Copy of By-Laws of the Registrant;(1)
(i) Amended By-Laws of the Registrant;(2)
(3) Not applicable;
(4) Not Applicable;
(5) Conformed copy of Investment Advisory Contract
of the Registrant and Exhibits A-I thereto;(12)
(i) Conformed Copy of Sub-Advisory Agreement
of the Registrant; (10)
(ii) Conformed copy of Exhibit J to Investment
Advisory Contract to add Biltmore Emerging
Markets Fund to the present Investment
Advisory Contract (13);
(6) Conformed copy of
Distributor's Contract of the Registrant
and Exhibits A-G thereto; (12)
(i)Conformed copy of Exhibit H to Distributor's
Contract of the Registrant to add Biltmore
Emerging Markets Fund (13);
(7) Not applicable;
(8) Conformed copy of Custodian Agreement of the
Registrant and
Exhibits A-D thereto; (12)
+ 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)
(10) Response is incorporated by reference to Registrant's Post-
Effective Amendment No. 12 on Form N-1A filed June 29, 1994.
(File Nos. 33-44590 and 811-6504)
(12) Response is incorporated by reference to Registrant's Post-
Effective Amendment No. 14 on Form N-1A filed October 6, 1994.
(File Nos. 33-44590 and 811-6504)
(13) Response is incorporated by reference to Registrant's Post-
Effective Amendment No. 15 on Form N-1A filed January 30, 1995.
(File Nos. 33-44590 and 811-6504)
(9) (i) Conformed copy of Portfolio
Accounting and Shareholder Recordkeeping
Agreement of the Registrant and Schedules
A, and H thereto; (12)
(ii) Copy of Schedule I to Portfolio Accounting
and Shareholder Recordkeeping Agreement of
the Registrant; (12)
(iii) Conformed Copy of Exhibit F to Transfer
Agency and Service Agreement of the
Registrant;(3)
(iv) Conformed Copy of Schedule G to Transfer
Agency and Service Agreement of the
Registrant;(8)
(v) Conformed Copy of Sub-Transfer Agency and
Service Agreement;(7)
(vi) Conformed Copy of Administrative Services
Agreement of the Registrant through and
including copies of exhibits A-D and
Amendment 1 thereto; (12)
(vii) Copy of Exhibit E to Administrative
Services Agreement of the Registrant; (12)
(viii) Conformed Copy of Shareholder Services
Plan; (7)
(ix) Conformed Copy of Exhibit A to Shareholder
Services Plan of the Registrant and
Amendment No.1 thereto; (12)
(x) Conformed Copy of Amendment No. 2 to
Exhibit A of the Shareholder Services Plan
of the Registrant (13);
(xi) Conformed copy of Shareholder Services
Agreement; (8)
(xii) Conformed copy of Exhibit A to Shareholder
Services Agreement of the Registrant; (12)
(10) Conformed copy of Opinion and Consent of Counsel
as to legality of shares being registered; (12)
(11) Not applicable;
(12) Not applicable;
+ All exhibits have been electronically filed.
(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).
(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. 10 on form N-1A filed January 11, 1994
(File Nos. 33-44590 and 811-6504)
(12) Response is incorporated by reference to Registrant's
Post-Effective Amendment No. 14 on Form N-1A filed October 6, 1994
(File Nos. 33-44590 and 811-6504)
(13) Response is incorporated by reference to Registrant's Post-
Effective Amendment No. 15 on Form N-1A filed January 30, 1995. (File
Nos. 33- 44590 and 811-6504)
(13) Conformed copy of Initial Capital
Understanding;(2)
(14) Not Applicable;
(15) (i) Conformed copy of Distribution Plan and
Exhibits A-B thereto; (12)
(ii) Copy of Dealer Agreement; (6)
(iii) Copy of Exhibit to Dealer Agreement;(6)
(iv) Copy of Rule 12b-1 Agreement;(2)
(v) Copy of Exhibits A and B to 12b-1
Agreement;(6)
(16) (i) Copy of Schedule for Computation of Fund
Performance Data, Biltmore Money Market
Fund (5);
(ii) Copy of Schedule for Computation of Fund
Performance Data, Biltmore Prime Cash
Management Fund (10);
(iii) Copy of Schedule for Computation of Fund
Performance Data, Biltmore Equity Fund
(7);
(iv) Copy of Schedule for Computation of Fund
Performance Data, Biltmore Fixed Income
Fund (7);
(v) Copy of Schedule for Computation of Fund
Performance Data, Biltmore Equity Index
Fund (7);
(vi) Copy of Schedule for Computation of Fund
Performance Data, Biltmore Short-Term
Fixed Income Fund (7);
(vii) Copy of Schedule for Computation of Fund
Performance Data, Biltmore Special Values
Fund (7);
(viii)Copy of Schedule for Computation of Fund
Performance Data, Biltmore Balanced
Fund (7);
(ix) Copy of Schedule for Computation of Fund
Performance Data, Biltmore Quantitative
Equity Fund (11);
(xx) Copy of Schedule for Computation of Fund
Performance Data, Biltmore Emerging
Markets Fund; +
(17) Copy of Financial Data Schedules; +
(18) Not applicable;
(19) Conformed Copy of Power of Attorney; +
+ 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)
(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)
(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)
(10) Response is incorporated by reference to Registrant's Post-
Effective Amendment No. 12 on Form N-1A filed June 29, 1994.
(File Nos. 33-44590 and 811-6504)
(11) Response is incorporated by reference to Registrant's Post-
Effective Amendment No. 13 on Form N-1A filed July 26, 1994.
(File Nos. 33-44590 and 811-6504)
(12) Response is incorporated by reference to Registrant's Post-
Effective Amendment No. 14 on Form N-1A filed October 6, 1994.
(File Nos. 33-44590 and 811-6504)
Item 25. Persons Controlled by or Under Common Control with
Registrant:
None
Item 26. Number of Holders of Securities:
Number of Record Holders
Title of Class as of June 6,1995
Shares of beneficial interest
(no par value)
Biltmore Balanced Fund 746
Biltmore Equity Fund 1,356
Biltmore Equity Index Fund 441
Biltmore Emerging Markets Fund 1,496
Biltmore Fixed Income Fund 697
Biltmore Special Values Fund 304
Biltmore Short-Term Fixed Income Fund 335
Biltmore Money Market Fund
(Investment Shares) 20
Biltmore Money Market Fund
(Institutional Shares) 8
Biltmore Tax-Free Money Market Fund
(Investment Shares) 13
Biltmore Tax-Free Money Market Fund
(Institutional Shares) 6
Biltmore U.S. Treasury Money Market Fund
(Investment Shares) 11
Biltmore U.S. Treasury Money Market Fund
(Institutional Shares) 8
Biltmore Prime Cash Management Fund 28
Biltmore Quantitative Equity Fund 246
Item 27. Indemnification: (2)
Item 28. Business and Other Connections of Investment Adviser:
(a) For a description of the other business of the
investment adviser, see the section entitled "The
Biltmore Funds Information - Management of the Trust" in
Part A. The Officers of the investment adviser are:
Chairman of the Board, L. M. Baker, Jr.; President and
Chief Executive Officer, J. Walter McDowell; Chief
Financial Officer and Executive Vice President, Robert
F. McCoy; Chief Loan Administration Officer and
Executive Vice President, Robert L. Alphin; Executive
Vice President, Hugh M. Durden; Executive Vice
President, Mickey W. Dry; Executive Vice President,
Walter E. Leonard, Jr.; and Executive Vice President,
Richard B. Roberts. The business address of each of the
Officers of the investment adviser is Wachovia Bank of
North Carolina, N.A., 310 North Main Street, Winston-
Salem, N.C. 27150.
The Directors of the investment adviser are listed below
with their occupations: L.M. Baker, Jr., President and
Chief Executive Officer, Wachovia Corporation, Chairman,
Wachovia Bank of North Carolina, N.A.; H.C. Bissell,
Chairman of the Board and Chief Executive Officer, The
Bissell Companies, Inc.; Bert Collins, President and
Chief Executive Officer,
_______________________________
(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)
North Carolina Mutual Life Insurance Company; Felton J
Capel, Chairman of the Board and President, Century
Associates of North Carolina; Richard L. Daugherty,
Retired Vice President and Consultant, IBM Corporation;
Estell C. Lee, Chairman of the Board and President, The
Lee Company; David J. Whichard II, Chairman, The Daily
Reflector; John C. Whitaker, Jr., Chairman of the Board
and Chief Executive Officer, Inmar Enterprises, Inc.;
William Cavanaugh, III, President and Chief Operating
Officer, Carolina Power and Light Company; J. Walter
McDowell, III, President and Chief Executive Officer,
Wachovia Bank of North Carolina, N.A.; John F. Ward,
Senior Vice President, Sara Lee Corporation; and
Anderson D. Warlick, President and Chief Operating
Officer, Parkdale Mills, Inc.
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; Arrow Funds; Automated Cash
Management Trust; Automated Government Money Trust;
BayFunds; The Biltmore Funds; The Biltmore Municipal
Funds; California Municipal Cash Trust; Cash Trust
Series, Inc.; Cash Trust Series II; DG Investor Series;
Edward D. Jones & Co. Daily Passport Cash Trust;
Federated ARMs Fund; Federated Exchange Fund, Ltd.;
Federated GNMA Trust; Federated Government Trust;
Federated Growth Trust; Federated High Yield Trust;
Federated Income Securities Trust; Federated Income
Trust; Federated Index Trust; Federated Institutional
Trust; Federated Master Trust; Federated Municipal
Trust; Federated Short-Term Municipal Trust; Federated
Short-Term U.S. Government Trust; Federated Stock Trust;
Federated Tax-Free Trust; Federated Total Return Series,
Inc.; Federated U.S. Government Bond Fund; Federated
U.S. Government Securities Fund: 1-3 Years; Federated
U.S. Government Securities Fund: 3-5 Years;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; Insurance
Management Series; Intermediate Municipal Trust;
International Series Inc.; Investment Series Funds,
Inc.; Investment Series Trust; Liberty Equity Income
Fund, Inc.; Liberty High Income Bond Fund, Inc.; Liberty
Municipal Securities Fund, Inc.; Liberty U.S. Government
Money Market Trust; Liberty Utility Fund, Inc.; Liquid
Cash Trust; Managed Series Trust; Marshall Funds, Inc.;
Money Market Management, Inc.; Money Market Obligations
Trust; Money Market Trust; The Monitor Funds; Municipal
Securities Income Trust; Newpoint Funds; New York
Municipal Cash Trust; 111 Corcoran Funds; Peachtree
Funds; The Planters Funds; RIMCO Monument Funds; The
Shawmut Funds; 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; The Virtus Funds; Vision Fiduciary Funds,
Inc.; Vision Group of Funds, Inc.; and World Investment
Series, Inc.
Federated Securities Corp. also acts as principal underwriter
for the following closed-end investment company:
Liberty Term Trust, Inc.- 1999.
(b)
(1) (2) (3)
Name and Principal Positions and Offices Positions and Offices
Business Address With Underwriter With Registrant
Richard B. Fisher Director, Chairman, Chief --
Federated Investors Tower Executive Officer, Chief
Pittsburgh, PA 15222-3779 Operating Officer, and
Asst. Treasurer, Federated
Securities Corp.
Edward C. Gonzales Director, Executive Vice --
Federated Investors Tower President, and Treasurer,
Pittsburgh, PA 15222-3779 Federated Securities
Corp.
John W. McGonigle Director, Executive Vice President and
Federated Investors Tower President, and Assistant Treasurer
Pittsburgh, PA 15222-3779 Secretary, Federated
Securities Corp.
John B. Fisher President-Institutional Sales, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779
James F. Getz President-Broker/Dealer, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779
Mark R. Gensheimer Executive Vice President of --
Federated Investors Tower Bank/Trust
Pittsburgh, PA 15222-3779 Federated Securities Corp.
Mark W. Bloss Senior Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779
Theodore Fadool, Jr. Senior Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779
Bryant R. Fisher Senior Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779
Christopher T. Fives Senior Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779
James S. Hamilton Senior Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779
James M. Heaton Senior Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779
(1) (2) (3)
Name and Principal Positions and Offices Positions and Offices
Business Address With Underwriter With Registrant
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
Solon A. Person, IV 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
Thomas E. Territ Senior Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779
John B. Bohnet 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
Kevin J. Crenny, Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779
Daniel T. Culbertson 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
(1) (2) (3)
Name and Principal Positions and Offices Positions and Offices
Business Address With Underwriter With Registrant
Michael D. Fitzgerald 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
Craig S. Gonzales Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779
Richard C. Gonzales Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779
Scott A. Hutton Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779
William J. Kerns Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779
William E. Kugler Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779
Dennis M. Laffey Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779
Stephen A. LaVersa 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
Richard C. Mihm 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
(1) (2) (3)
Name and Principal Positions and Offices Positions and Offices
Business Address With Underwriter With Registrant
Michael P. O'Brien Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779
Robert D. Oehlschlager Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779
Robert F. Phillips Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779
Eugene B. Reed Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779
Paul V. Riordan Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779
Charles A. Robison Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779
John C. Shelar, Jr. 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
Jamie M. Teschner 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
Paul A. Uhlman 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
Michael P. Wolff 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
(1) (2) (3)
Name and Principal Positions and Offices Positions and Offices
Business Address With Underwriter With Registrant
Charlene H. Jennings Assistant Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779
Ernest L. Linane Assistant Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779
S. Elliott Cohan Secretary, Federated Assistant
Federated Investors Tower Securities Corp. Secretary
Pittsburgh, PA 15222-3779
(c) Not applicable.
Item 30. Location of Accounts and Records:
Registrant Federated Investors Tower
Pittsburgh, PA 15222-3779
Federated Services Company Federated Investors Tower
(Transfer Agent, Dividend Pittsburgh, PA 15222-3779
Disbursing Agent and Portfolio
Recordkeeper)
Federated Administrative Services Federated Investors Tower
(Administrator) Pittsburgh, PA 15222-3779
Wachovia Investment Management Group 301 North Main Street
(Adviser) Winston-Salem, NC 21750
Twin Capital Management, Inc. 3244 Washington Road
(Sub-Adviser to Biltmore McMurrary, PA 15315-3153
Quantitative Equity Fund only)
Wachovia Bank of North Carolina Wachovia Trust Operations
(Custodian) 301 North Main Street
Winston-Salem, NC 21750
Item 31. Management Services: Not applicable.
Item 32. Undertakings:
Registrant hereby undertakes to comply with the provisions of Section
16(c) of the 1940 Act with respect to the removal of Trustees and the
calling of special shareholder meetings by shareholders on behalf of
each of its portfolios.
Registrant hereby undertakes to furnish each person to whom a
prospectus is delivered with a copy of the Registrant's latest annual
report to shareholders upon request and without charge.
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 30th day of June,
1995.
THE BILTMORE FUNDS
BY: /s/Mark A. Sheehan
Mark A. Sheehan, Assistant Secretary
Attorney in Fact for John W. McGonigle
June 30, 1995
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 30, 1995
ASSISTANT SECRETARY For the Persons
Listed Below
NAME TITLE
John W. McGonigle* President and Treasurer
James A. Hanley* Trustee
Samuel E. Hudgins* Trustee
J. Berkley Ingram, Jr.* Trustee
D. Dean Kaylor* Trustee
* By Power of Attorney
Exhibit 19 under Form N-1A
Exhibit 99 under Item 601/Reg. S-K
POWER OF ATTORNEY
Each person whose signature appears below hereby constitutes and appoints
the Secretary and Assistant Secretary of THE BILTMORE MUNICIPAL FUNDS and the
Deputy General Counsel of Federated Services, Co., and each of them, their
true and lawful attorneys-in-fact and agents, with full power of substitution
and resubstitution for them and in their names, place and stead, in any and
all capacities, to sign any and all documents to be filed with the Securities
and Exchange Commission pursuant to the Securities Act of 1933, the Securities
Exchange Act of 1934 and the Investment Company Act of 1940, by means of the
Securities and Exchange Commission's electronic disclosure system known as
EDGAR; and to file the same, with all exhibits thereto and other documents in
connection therewith, with the Securities and Exchange Commission, granting
unto said attorneys-in-fact and agents, and each of them, full power and
authority to sign and perform each and every act and thing requisite and
necessary to be done in connection therewith, as fully to all intents and
purposes as each of them might or could do in person, hereby ratifying and
confirming all that said attorneys-in-fact and agents, or any of them, or
their or his substitute or substitutes, may lawfully do or cause to be done by
virtue thereof.
SIGNATURES TITLE DATE
/s/ JOHN W. McGONIGLE President and Treasurer June 5, 1995
John W. McGonigle (Chief Executive Officer,
Principal Financial and
Accounting Officer)
/s/ JAMES A. HANLEY Trustee June 5, 1995
James A. Hanley
/s/ SAMUEL E. HUDGINS Trustee June 5, 1995
Samuel E. Hudgins
/s/ J. BERKLEY INGRAM, JR. Trustee June 5, 1995
J. Berkley Ingram, Jr.
/s/ D. DEAN KAYLOR Trustee June 5, 1995
D. Dean Kaylor
Sworn to and subscribed before me this 5th day of June, 1995.
/s/ MARIE M. HAMM
Marie M. Hamm
Notary Public
Schedule for Computation Initial
of Fund Performance Data Invest of: $1,000
Offering
Biltmore Emerging Markets Price/
Share= $10.47
Return Since Inception
ending 12/23/94 NAV= $10.00
FYE: November 30
DECLARED:ANNUALLY
PAID: ANNUALLY
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C>
Begin Capital Reinvest Ending Total
Reinvest Period Dividend Gain Price Period Ending Invest
Dates Shares /Share /Share /Share Shares Price Value
12/23/94 95.511 0.000000000 0.00000 $10.00 95.511 $10.00 $955.11
5/31/95 95.511 0.000000000 0.00000 $11.12 95.511 $11.12 $1,062.08
</TABLE>
$1,000 (1+T) = End Value
T = 6.21%
<TABLE> <S> <C>
<S> <C>
<ARTICLE> 6
<SERIES>
<NUMBER> 1
<NAME> Biltmore Balanced Fund
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> Nov-30-1994
<PERIOD-END> Nov-30-1994
<INVESTMENTS-AT-COST> 202,574,532
<INVESTMENTS-AT-VALUE> 196,301,659
<RECEIVABLES> 3,124,878
<ASSETS-OTHER> 40,620
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 199,467,157
<PAYABLE-FOR-SECURITIES> 4,466,998
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 604,990
<TOTAL-LIABILITIES> 5,071,988
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 196,851,545
<SHARES-COMMON-STOCK> 19,576,137
<SHARES-COMMON-PRIOR> 16,094,625
<ACCUMULATED-NII-CURRENT> 1,080,144
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 2,736,353
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> (6,272,873)
<NET-ASSETS> 194,395,169
<DIVIDEND-INCOME> 2,487,572
<INTEREST-INCOME> 5,339,319
<OTHER-INCOME> 0
<EXPENSES-NET> 1,391,211
<NET-INVESTMENT-INCOME> 6,435,680
<REALIZED-GAINS-CURRENT> 2,764,758
<APPREC-INCREASE-CURRENT> (10,096,911)
<NET-CHANGE-FROM-OPS> (896,473)
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 6,032,536
<DISTRIBUTIONS-OF-GAINS> 669,917
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 6,165,635
<NUMBER-OF-SHARES-REDEEMED> 3,337,297
<SHARES-REINVESTED> 653,174
<NET-CHANGE-IN-ASSETS> 28,124,416
<ACCUMULATED-NII-PRIOR> 677,000
<ACCUMULATED-GAINS-PRIOR> 641,512
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 1,291,534
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 1,712,396
<AVERAGE-NET-ASSETS> 185,212,407
<PER-SHARE-NAV-BEGIN> 10.330
<PER-SHARE-NII> 0.350
<PER-SHARE-GAIN-APPREC> (0.380)
<PER-SHARE-DIVIDEND> 0.330
<PER-SHARE-DISTRIBUTIONS> 0.040
<RETURNS-OF-CAPITAL> 0.000
<PER-SHARE-NAV-END> 9.930
<EXPENSE-RATIO> 75
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0.000
</TABLE>
<TABLE> <S> <C>
<S> <C>
<ARTICLE> 6
<SERIES>
<NUMBER> 2
<NAME> Biltmore Equity Fund
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> Nov-30-1994
<PERIOD-END> Nov-30-1994
<INVESTMENTS-AT-COST> 86,432,152
<INVESTMENTS-AT-VALUE> 86,627,565
<RECEIVABLES> 1,015,453
<ASSETS-OTHER> 15,569
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 87,658,587
<PAYABLE-FOR-SECURITIES> 535,103
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 101,711
<TOTAL-LIABILITIES> 636,814
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 84,771,793
<SHARES-COMMON-STOCK> 8,430,672
<SHARES-COMMON-PRIOR> 6,031,010
<ACCUMULATED-NII-CURRENT> 314,166
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 1,748,207
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 187,607
<NET-ASSETS> 87,021,773
<DIVIDEND-INCOME> 1,702,801
<INTEREST-INCOME> 379,725
<OTHER-INCOME> 0
<EXPENSES-NET> 636,249
<NET-INVESTMENT-INCOME> 1,446,277
<REALIZED-GAINS-CURRENT> 1,790,525
<APPREC-INCREASE-CURRENT> (922,981)
<NET-CHANGE-FROM-OPS> 2,313,821
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 1,351,595
<DISTRIBUTIONS-OF-GAINS> 473,495
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 4,415,092
<NUMBER-OF-SHARES-REDEEMED> 2,185,478
<SHARES-REINVESTED> 170,048
<NET-CHANGE-IN-ASSETS> 25,024,534
<ACCUMULATED-NII-PRIOR> 219,483
<ACCUMULATED-GAINS-PRIOR> 431,177
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 511,439
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 752,714
<AVERAGE-NET-ASSETS> 72,747,056
<PER-SHARE-NAV-BEGIN> 10.280
<PER-SHARE-NII> 0.200
<PER-SHARE-GAIN-APPREC> 0.120
<PER-SHARE-DIVIDEND> 0.200
<PER-SHARE-DISTRIBUTIONS> 0.080
<RETURNS-OF-CAPITAL> 0.000
<PER-SHARE-NAV-END> 10.320
<EXPENSE-RATIO> 87
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0.000
</TABLE>
<TABLE> <S> <C>
<S> <C>
<ARTICLE> 6
<SERIES>
<NUMBER> 3
<NAME> Biltmore Equity Index Fund
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> Nov-30-1994
<PERIOD-END> Nov-30-1994
<INVESTMENTS-AT-COST> 181,244,672
<INVESTMENTS-AT-VALUE> 183,515,594
<RECEIVABLES> 949,715
<ASSETS-OTHER> 36,783
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 184,502,092
<PAYABLE-FOR-SECURITIES> 365,412
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 284,934
<TOTAL-LIABILITIES> 650,346
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 180,368,811
<SHARES-COMMON-STOCK> 17,903,963
<SHARES-COMMON-PRIOR> 14,252,482
<ACCUMULATED-NII-CURRENT> 783,440
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 580,010
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 2,119,485
<NET-ASSETS> 183,851,746
<DIVIDEND-INCOME> 4,280,704
<INTEREST-INCOME> 594,674
<OTHER-INCOME> 0
<EXPENSES-NET> 776,147
<NET-INVESTMENT-INCOME> 4,099,231
<REALIZED-GAINS-CURRENT> 596,542
<APPREC-INCREASE-CURRENT> (3,907,225)
<NET-CHANGE-FROM-OPS> 788,548
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 3,872,917
<DISTRIBUTIONS-OF-GAINS> 255,437
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 5,136,588
<NUMBER-OF-SHARES-REDEEMED> 1,878,820
<SHARES-REINVESTED> 393,713
<NET-CHANGE-IN-ASSETS> 34,586,020
<ACCUMULATED-NII-PRIOR> 557,126
<ACCUMULATED-GAINS-PRIOR> 238,906
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 503,953
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 910,594
<AVERAGE-NET-ASSETS> 167,920,561
<PER-SHARE-NAV-BEGIN> 10.470
<PER-SHARE-NII> 0.250
<PER-SHARE-GAIN-APPREC> (0.190)
<PER-SHARE-DIVIDEND> 0.240
<PER-SHARE-DISTRIBUTIONS> 0.020
<RETURNS-OF-CAPITAL> 0.000
<PER-SHARE-NAV-END> 10.270
<EXPENSE-RATIO> 46
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0.000
</TABLE>
<TABLE> <S> <C>
<S> <C>
<ARTICLE> 6
<SERIES>
<NUMBER> 4
<NAME> Biltmore Fixed Income Fund
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> Nov-30-1994
<PERIOD-END> Nov-30-1994
<INVESTMENTS-AT-COST> 158,632,571
<INVESTMENTS-AT-VALUE> 146,798,909
<RECEIVABLES> 5,352,672
<ASSETS-OTHER> 34,661
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 152,186,242
<PAYABLE-FOR-SECURITIES> 3,000,000
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 435,586
<TOTAL-LIABILITIES> 3,435,586
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 164,349,149
<SHARES-COMMON-STOCK> 16,591,943
<SHARES-COMMON-PRIOR> 14,031,227
<ACCUMULATED-NII-CURRENT> 172,040
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> (3,936,871)
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> (11,833,662)
<NET-ASSETS> 148,750,656
<DIVIDEND-INCOME> 0
<INTEREST-INCOME> 9,500,681
<OTHER-INCOME> 0
<EXPENSES-NET> 1,017,156
<NET-INVESTMENT-INCOME> 8,483,525
<REALIZED-GAINS-CURRENT> (3,910,216)
<APPREC-INCREASE-CURRENT> (10,860,025)
<NET-CHANGE-FROM-OPS> (6,286,716)
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 8,390,071
<DISTRIBUTIONS-OF-GAINS> 893,398
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 4,885,157
<NUMBER-OF-SHARES-REDEEMED> 3,277,961
<SHARES-REINVESTED> 953,520
<NET-CHANGE-IN-ASSETS> 8,425,287
<ACCUMULATED-NII-PRIOR> 78,586
<ACCUMULATED-GAINS-PRIOR> 866,743
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 862,327
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 1,209,726
<AVERAGE-NET-ASSETS> 143,607,194
<PER-SHARE-NAV-BEGIN> 10.000
<PER-SHARE-NII> 0.550
<PER-SHARE-GAIN-APPREC> (0.970)
<PER-SHARE-DIVIDEND> 0.550
<PER-SHARE-DISTRIBUTIONS> 0.060
<RETURNS-OF-CAPITAL> 0.000
<PER-SHARE-NAV-END> 8.970
<EXPENSE-RATIO> 71
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0.000
</TABLE>
<TABLE> <S> <C>
<S> <C>
<ARTICLE> 6
<SERIES>
<NUMBER> 5
<NAME> Biltmore Money Market Fund
Institutional Shares
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> Nov-30-1994
<PERIOD-END> Nov-30-1994
<INVESTMENTS-AT-COST> 194,305,717
<INVESTMENTS-AT-VALUE> 194,305,717
<RECEIVABLES> 837,025
<ASSETS-OTHER> 14,467
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 195,157,209
<PAYABLE-FOR-SECURITIES> 9,016,713
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 802,620
<TOTAL-LIABILITIES> 9,819,333
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 185,337,876
<SHARES-COMMON-STOCK> 129,232,911
<SHARES-COMMON-PRIOR> 177,090,062
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 0
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 0
<NET-ASSETS> 129,232,911
<DIVIDEND-INCOME> 0
<INTEREST-INCOME> 7,076,136
<OTHER-INCOME> 0
<EXPENSES-NET> 744,279
<NET-INVESTMENT-INCOME> 6,331,857
<REALIZED-GAINS-CURRENT> 0
<APPREC-INCREASE-CURRENT> 0
<NET-CHANGE-FROM-OPS> 6,331,857
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 5,146,447
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 385,548,512
<NUMBER-OF-SHARES-REDEEMED> 433,405,663
<SHARES-REINVESTED> 0
<NET-CHANGE-IN-ASSETS> (1,594,283)
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 0
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 859,936
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 1,463,124
<AVERAGE-NET-ASSETS> 172,477,137
<PER-SHARE-NAV-BEGIN> 1.000
<PER-SHARE-NII> 0.040
<PER-SHARE-GAIN-APPREC> 0.000
<PER-SHARE-DIVIDEND> 0.040
<PER-SHARE-DISTRIBUTIONS> 0.000
<RETURNS-OF-CAPITAL> 0.000
<PER-SHARE-NAV-END> 1.000
<EXPENSE-RATIO> 38
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0.000
</TABLE>
<TABLE> <S> <C>
<S> <C>
<ARTICLE> 6
<SERIES>
<NUMBER> 6
<NAME> Biltmore Money Market Fund
Investment Shares
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> Nov-30-1994
<PERIOD-END> Nov-30-1994
<INVESTMENTS-AT-COST> 194,305,717
<INVESTMENTS-AT-VALUE> 194,305,717
<RECEIVABLES> 837,025
<ASSETS-OTHER> 14,467
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 195,157,209
<PAYABLE-FOR-SECURITIES> 9,016,713
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 802,620
<TOTAL-LIABILITIES> 9,819,333
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 185,337,876
<SHARES-COMMON-STOCK> 56,104,965
<SHARES-COMMON-PRIOR> 9,842,097
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 0
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 0
<NET-ASSETS> 56,104,965
<DIVIDEND-INCOME> 0
<INTEREST-INCOME> 7,076,136
<OTHER-INCOME> 0
<EXPENSES-NET> 744,279
<NET-INVESTMENT-INCOME> 6,331,857
<REALIZED-GAINS-CURRENT> 0
<APPREC-INCREASE-CURRENT> 0
<NET-CHANGE-FROM-OPS> 6,331,857
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 1,185,410
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 94,114,744
<NUMBER-OF-SHARES-REDEEMED> 47,851,876
<SHARES-REINVESTED> 0
<NET-CHANGE-IN-ASSETS> (1,594,283)
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 0
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 859,936
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 1,463,124
<AVERAGE-NET-ASSETS> 172,477,137
<PER-SHARE-NAV-BEGIN> 1.000
<PER-SHARE-NII> 0.030
<PER-SHARE-GAIN-APPREC> 0.000
<PER-SHARE-DIVIDEND> 0.030
<PER-SHARE-DISTRIBUTIONS> 0.000
<RETURNS-OF-CAPITAL> 0.000
<PER-SHARE-NAV-END> 1.000
<EXPENSE-RATIO> 68
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0.000
</TABLE>
<TABLE> <S> <C>
<S> <C>
<ARTICLE> 6
<SERIES>
<NUMBER> 7
<NAME> Biltmore Prime Cash Management Fund
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> Nov-30-1994
<PERIOD-END> Nov-30-1994
<INVESTMENTS-AT-COST> 816,862,942
<INVESTMENTS-AT-VALUE> 816,862,942
<RECEIVABLES> 2,803,092
<ASSETS-OTHER> 252,865
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 819,918,899
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 3,911,174
<TOTAL-LIABILITIES> 3,911,174
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 816,007,725
<SHARES-COMMON-STOCK> 816,007,725
<SHARES-COMMON-PRIOR> 0
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 0
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 0
<NET-ASSETS> 816,007,725
<DIVIDEND-INCOME> 0
<INTEREST-INCOME> 26,163,164
<OTHER-INCOME> 0
<EXPENSES-NET> 1,053,251
<NET-INVESTMENT-INCOME> 25,109,913
<REALIZED-GAINS-CURRENT> 0
<APPREC-INCREASE-CURRENT> 0
<NET-CHANGE-FROM-OPS> 25,109,913
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 25,109,913
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 1,747,708,257
<NUMBER-OF-SHARES-REDEEMED> 931,700,532
<SHARES-REINVESTED> 0
<NET-CHANGE-IN-ASSETS> 816,007,725
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 0
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 1,748,930
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 2,662,441
<AVERAGE-NET-ASSETS> 586,246,336
<PER-SHARE-NAV-BEGIN> 1.000
<PER-SHARE-NII> 0.040
<PER-SHARE-GAIN-APPREC> 0.000
<PER-SHARE-DIVIDEND> 0.040
<PER-SHARE-DISTRIBUTIONS> 0.000
<RETURNS-OF-CAPITAL> 0.000
<PER-SHARE-NAV-END> 1.000
<EXPENSE-RATIO> 18
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0.000
</TABLE>
<TABLE> <S> <C>
<S> <C>
<ARTICLE> 6
<SERIES>
<NUMBER> 8
<NAME> Biltmore Quantitative Equity Fund
<PERIOD-TYPE> 8-MOS
<FISCAL-YEAR-END> Nov-30-1994
<PERIOD-END> Nov-30-1994
<INVESTMENTS-AT-COST> 93,712,997
<INVESTMENTS-AT-VALUE> 92,024,586
<RECEIVABLES> 246,155
<ASSETS-OTHER> 30,033
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 92,300,774
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 321,849
<TOTAL-LIABILITIES> 321,849
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 95,753,725
<SHARES-COMMON-STOCK> 9,582,109
<SHARES-COMMON-PRIOR> 0
<ACCUMULATED-NII-CURRENT> 264,051
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> (2,350,440)
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> (1,688,411)
<NET-ASSETS> 91,978,925
<DIVIDEND-INCOME> 1,563,933
<INTEREST-INCOME> 153,028
<OTHER-INCOME> 0
<EXPENSES-NET> 565,107
<NET-INVESTMENT-INCOME> 1,151,854
<REALIZED-GAINS-CURRENT> (2,350,440)
<APPREC-INCREASE-CURRENT> (1,688,411)
<NET-CHANGE-FROM-OPS> (2,886,997)
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 887,803
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 10,458,666
<NUMBER-OF-SHARES-REDEEMED> 966,330
<SHARES-REINVESTED> 89,773
<NET-CHANGE-IN-ASSETS> 91,978,925
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 0
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 439,878
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 627,948
<AVERAGE-NET-ASSETS> 92,739,261
<PER-SHARE-NAV-BEGIN> 10.000
<PER-SHARE-NII> 0.120
<PER-SHARE-GAIN-APPREC> (0.430)
<PER-SHARE-DIVIDEND> 0.090
<PER-SHARE-DISTRIBUTIONS> 0.000
<RETURNS-OF-CAPITAL> 0.000
<PER-SHARE-NAV-END> 9.600
<EXPENSE-RATIO> 90
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0.000
</TABLE>
<TABLE> <S> <C>
<S> <C>
<ARTICLE> 6
<SERIES>
<NUMBER> 9
<NAME> Biltmore Short-Term Fixed Income Fund
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> Nov-30-1994
<PERIOD-END> Nov-30-1994
<INVESTMENTS-AT-COST> 150,083,233
<INVESTMENTS-AT-VALUE> 146,936,469
<RECEIVABLES> 5,423,298
<ASSETS-OTHER> 38,332
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 152,398,099
<PAYABLE-FOR-SECURITIES> 3,946,090
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 125,603
<TOTAL-LIABILITIES> 4,071,693
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 154,702,480
<SHARES-COMMON-STOCK> 15,477,202
<SHARES-COMMON-PRIOR> 15,586,073
<ACCUMULATED-NII-CURRENT> 138,211
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> (3,367,521)
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> (3,146,764)
<NET-ASSETS> 148,326,406
<DIVIDEND-INCOME> 0
<INTEREST-INCOME> 7,755,311
<OTHER-INCOME> 0
<EXPENSES-NET> 896,129
<NET-INVESTMENT-INCOME> 6,859,182
<REALIZED-GAINS-CURRENT> (2,862,364)
<APPREC-INCREASE-CURRENT> (2,079,336)
<NET-CHANGE-FROM-OPS> 1,917,482
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 6,884,557
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 3,860,561
<NUMBER-OF-SHARES-REDEEMED> 4,674,812
<SHARES-REINVESTED> 705,380
<NET-CHANGE-IN-ASSETS> (6,132,770)
<ACCUMULATED-NII-PRIOR> 163,586
<ACCUMULATED-GAINS-PRIOR> (505,157)
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 816,857
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 1,158,697
<AVERAGE-NET-ASSETS> 148,942,344
<PER-SHARE-NAV-BEGIN> 9.910
<PER-SHARE-NII> 0.450
<PER-SHARE-GAIN-APPREC> (0.330)
<PER-SHARE-DIVIDEND> 0.450
<PER-SHARE-DISTRIBUTIONS> 0.000
<RETURNS-OF-CAPITAL> 0.000
<PER-SHARE-NAV-END> 9.580
<EXPENSE-RATIO> 60
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0.000
</TABLE>
<TABLE> <S> <C>
<S> <C>
<ARTICLE> 6
<SERIES>
<NUMBER> 10
<NAME> Biltmore Special Value Fund
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> Nov-30-1994
<PERIOD-END> Nov-30-1994
<INVESTMENTS-AT-COST> 18,324,505
<INVESTMENTS-AT-VALUE> 17,776,270
<RECEIVABLES> 49,753
<ASSETS-OTHER> 4,229
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 17,830,252
<PAYABLE-FOR-SECURITIES> 365,653
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 33,705
<TOTAL-LIABILITIES> 399,358
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 17,855,871
<SHARES-COMMON-STOCK> 1,788,054
<SHARES-COMMON-PRIOR> 1,178,428
<ACCUMULATED-NII-CURRENT> 15,510
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 107,748
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> (548,235)
<NET-ASSETS> 17,430,894
<DIVIDEND-INCOME> 217,148
<INTEREST-INCOME> 40,245
<OTHER-INCOME> 0
<EXPENSES-NET> 165,106
<NET-INVESTMENT-INCOME> 92,287
<REALIZED-GAINS-CURRENT> 107,758
<APPREC-INCREASE-CURRENT> (511,222)
<NET-CHANGE-FROM-OPS> (311,177)
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 74,663
<DISTRIBUTIONS-OF-GAINS> 333,979
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 726,898
<NUMBER-OF-SHARES-REDEEMED> 157,522
<SHARES-REINVESTED> 40,250
<NET-CHANGE-IN-ASSETS> 5,359,146
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 333,969
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 117,003
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 324,575
<AVERAGE-NET-ASSETS> 14,636,454
<PER-SHARE-NAV-BEGIN> 10.240
<PER-SHARE-NII> 0.060
<PER-SHARE-GAIN-APPREC> (0.220)
<PER-SHARE-DIVIDEND> 0.050
<PER-SHARE-DISTRIBUTIONS> 0.280
<RETURNS-OF-CAPITAL> 0.000
<PER-SHARE-NAV-END> 9.750
<EXPENSE-RATIO> 113
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0.000
</TABLE>
<TABLE> <S> <C>
<S> <C>
<ARTICLE> 6
<SERIES>
<NUMBER> 11
<NAME> Biltmore Tax-Free Money Market Fund
Institutional Shares
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> Nov-30-1994
<PERIOD-END> Nov-30-1994
<INVESTMENTS-AT-COST> 137,600,274
<INVESTMENTS-AT-VALUE> 137,600,274
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</TABLE>
<TABLE> <S> <C>
<S> <C>
<ARTICLE> 6
<SERIES>
<NUMBER> 12
<NAME> Biltmore Tax-Free Money Market Fund
Investment Shares
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> Nov-30-1994
<PERIOD-END> Nov-30-1994
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</TABLE>
<TABLE> <S> <C>
<S> <C>
<ARTICLE> 6
<SERIES>
<NUMBER> 13
<NAME> Biltmore U.S. Treasury Money Market Fund
Institutional Shares
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> Nov-30-1994
<PERIOD-END> Nov-30-1994
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<NET-ASSETS> 87,531,434
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<OTHER-INCOME> 0
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<NET-INVESTMENT-INCOME> 3,653,910
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<PER-SHARE-NAV-BEGIN> 1.000
<PER-SHARE-NII> 0.040
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<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0.000
</TABLE>
<TABLE> <S> <C>
<S> <C>
<ARTICLE> 6
<SERIES>
<NUMBER> 14
<NAME> Biltmore U.S. Treasury Money Market Fund
Investment Shares
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> Nov-30-1994
<PERIOD-END> Nov-30-1994
<INVESTMENTS-AT-COST> 134,433,895
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<RECEIVABLES> 10,886
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<TOTAL-ASSETS> 134,453,885
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<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 526,297
<TOTAL-LIABILITIES> 526,297
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<PAID-IN-CAPITAL-COMMON> 133,927,588
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<ACCUMULATED-NII-CURRENT> 0
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<ACCUMULATED-NET-GAINS> 0
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 0
<NET-ASSETS> 46,396,154
<DIVIDEND-INCOME> 0
<INTEREST-INCOME> 4,087,226
<OTHER-INCOME> 0
<EXPENSES-NET> 433,316
<NET-INVESTMENT-INCOME> 3,653,910
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<PER-SHARE-NAV-BEGIN> 1.000
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</TABLE>
<TABLE> <S> <C>
<S> <C>
<ARTICLE> 6
<SERIES>
<NUMBER> 15
<NAME> Biltmore Emerging Markets Fund
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> Nov-30-1995
<PERIOD-END> May-31-1995
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</TABLE>
