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__
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Pre-Effective Amendment No. ___ .............................
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Post-Effective Amendment No. 28 ........................... X__
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and/or
REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT OF 1940 _ X__
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Amendment No. 29 ............................................ _ X__
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THE WACHOVIA FUNDS
(Exact Name of Registrant as Specified in Charter)
Federated Investors Tower, Pittsburgh, Pennsylvania 15222-3779
(Address of Principal Executive Offices)
(412) 288-1900
(Registrant's Telephone Number)
John W. McGonigle, Esquire,
Federated Investors Tower,
Pittsburgh, Pennsylvania 15222-3779
(Name and Address of Agent for Service)
It is proposed that this filing will become effective:
immediately upon filing pursuant to paragraph (b) on pursuant to paragraph
(b) 60 days after filing pursuant to paragraph (a) (i) on pursuant to
paragraph (a) (i).
X 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.
Copies to:
Donald W. Smith, Esquire Alan C. Porter, Esquire
Kirkpatrick & Lockhart L.L.P. Piper & Marbury L.L.P.
1800 Massachusetts Avenue, N.W. 1200 Nineteenth Street, N.W.
Washington, D.C. 20036-1800 Washington, D.C. 20036-2430
PROSPECTUS
THE INFORMATION IN THIS PROSPECTUS IS NOT COMPLETE AND MAY BE CHANGED. WE MAY
NOT SELL THESE SECURITIES UNTIL THE REGISTRATION STATEMENT FILED WITH THE
SECURITIES AND EXCHANGE COMMISSION IS EFFECTIVE. THIS PROSPECTUS IS NOT AN OFFER
TO SELL THESE SECURITIES AND IS NOT SOLICITING AN OFFER TO BUY THESE SECURITIES
IN ANY STATE WHERE THE OFFER OR SALE IS NOT PERMITTED.
Wachovia Personal Equity Fund
The Wachovia Funds
CLASS A SHARES
As with all mutual funds, the Securities and Exchange Commission has not
approved or disapproved these securities or passed upon the adequacy of this
prospectus, and any representation to the contrary is a criminal offense.
CONTENTS
Fund Goal, Strategies and Risk 1
What are the Fund's Fees and Expenses? 1
What are the Fund's Main Investments and Investment Techniques? 2
What are the Specific Risks of Investing in the Fund? 2
What Do Shares Cost? 3
How is the Fund Sold? 3
How to Purchase Shares 3
How to Exchange Shares 4
How to Redeem Shares 5
Account and Share Information 5
Who Manages the Fund? 6
Financial Information 7
JULY __, 1999
Fund Goal, Strategies and Risk
WHAT IS THE FUND'S INVESTMENT GOAL?
The Fund's goal is to produce growth of principal and income, while minimizing
the impact of taxes on shareholder returns.
WHAT IS THE MAIN INVESTMENT STRATEGY OF THE FUND?
The Fund pursues its goal by investing in a portfolio of common stock of
companies with an established market. The Fund is managed with a long-term time
horizon, and is anticipated to have a lower turnover ratio than a typical equity
mutual fund. With the goal of maximizing after-tax returns, the Fund's
investment adviser will seek to minimize realized capital gains in general, and
short-term capital gains in particular. For example, it will generally buy
securities that it intends to hold over the long term, and avoid short-term
trading. In deciding which securities to sell, the Fund's investment adviser
will consider their capital gain or loss situation, and may attempt to off-set
capital gains by selling securities that have gone down in value or that have
the highest cost basis. Also, the Fund's investment adviser generally will
consider selling any security that has not met its expectations for growth, in
which case the capital gain generally would be relatively small. Successful
application of this strategy will result in shareholders incurring capital gains
when they ultimately sell their Fund shares.
WHAT ARE THE MAIN RISKS OF INVESTING IN THE FUND?
All mutual funds take investment risks. Therefore, it is possible to lose money
by investing in the Fund.
The value of equity securities in the Fund's portfolio will rise and fall.
These fluctuations could be a sustained trend or a drastic movement. The Fund's
portfolio will reflect changes in prices of individual stocks or general changes
in stock valuations.
The Fund is also subject to the risk that its investment adviser will not
succeed in attempting to minimize capital gains.
An investment in the Fund is not a deposit of a bank, is not insured or
guaranteed by Wachovia Bank, N.A., and is not insured or guaranteed by the U.S.
government, the Federal Deposit Insurance Corporation, the Federal Reserve
Board, or any other government agency.
What are the Fund's Fees and Expenses?
This table describes the fees and expenses that you may pay when you buy, hold,
and redeem the Fund's Class A Shares.
<TABLE>
<CAPTION>
Shareholder Fees Class A
Fees Paid Directly From Your Investment Shares
<S> <C>
Maximum Sales Charge (Load) Imposed on Purchases
(as a percentage of offering price) 4.50%
Annual Fund Operating Expenses/1/ Expenses That are Deducted From Fund Assets
(as a percentage of average net assets)
Management Fee 0.70%
Distribution (12b-1) Fee None
Shareholder Services Fee 0.25%
Other Expenses/2/ 0.25%
Total Annual Class A Shares Operating Expenses (Before Waiver)/1/ 1.20%
Waiver of Fund Expenses 0.05%
Total Actual Annual Class A Shares Operating Expenses 1.15%
(After Waiver)
1 Pursuant to an agreement between the investment adviser and the Trust, the
investment adviser agrees during the period from July 1, 1999, through
January 31, 2000 to waive its fees and/or make reimbursements to the Fund,
so that the Fund's net operating expenses do not exceed, in the aggregate,
the Fund's Total Actual Annual Operating Expenses listed above. The
investment adviser agrees that this obligation shall constitute a
contractual commitment enforceable by the Trust and that the investment
adviser shall not assert any right to reimbursement of amounts so waived or
reimbursed.
2 Other Expenses are based on estimated amounts for the current fiscal year.
</TABLE>
EXAMPLE
The following Example is intended to help you compare the cost of investing in
the Fund's Class A Shares with the cost of investing in other mutual funds. The
Example assumes that you invest $10,000 in the Fund's Shares for the time
periods indicated and then redeem all of your shares at the end of those
periods. The Example also assumes that your investment has a 5% return each year
and that the Fund's Class A Shares operating expenses are based upon the current
expense limitation as shown above in the table. Although your actual costs may
be higher or lower, based on these assumptions your costs would be:
<TABLE>
<CAPTION>
Class A Shares 1 Year 3 Years 5 Years 10 Years
<S> <C> <C> <C> <C>
$567 $814 $1,080 $1,839
</TABLE>
What are the Fund's Main Investments and Investment Techniques?
EQUITY SECURITIES
Equity securities are the fundamental unit of ownership in a company. They
represent a share of the issuer's earnings and assets, after the issuer pays its
liabilities. Generally, issuers have discretion as to the payment of any
dividends or other distributions. As a result, investors cannot predict the
income they will receive from equity securities. However, equity securities
offer greater potential for appreciation than many other types of securities
because their value increases directly with the value of the issuer's business.
The following describes the types of equity securities in which the Fund
invests.
Common Stocks
Common stocks are the most prevalent type of equity security. Common
stockholders receive the residual value of the issuer's earnings and assets
after the issuer pays its creditors and any preferred stockholders. As a result,
changes in an issuer's earnings directly influence the value of its common
stock.
Preferred Stocks
Preferred stocks have the right to receive specified dividends before the
issuer makes payments on its common stock. Some preferred stocks also
participate in dividends and other distributions paid on common stock. Preferred
stocks may also permit the issuer to redeem the stock.
Warrants
Warrants give the Fund the option to buy the issuer's equity securities at a
specified price (the exercise price) at a specified future date (the expiration
date). The Fund may buy the designated securities by paying the exercise price
before the expiration date. Warrants may become worthless if the price of the
stock does not rise above the exercise price by the expiration date. This
increases the market risks of warrants as compared to the underlying security.
Rights are the same as warrants, except companies typically issue rights to
existing stockholders.
TEMPORARY DEFENSIVE INVESTMENTS
The Fund may temporarily depart from its principal investment strategy by
investing assets in cash, cash items, and shorter-term, higher quality debt
securities. The Fund may do this to minimize potential losses and maintain
liquidity to meet shareholder redemptions during adverse market conditions. This
may cause the Fund to forego investment returns for the safety of principal.
What are the Specific Risks of Investing in the Fund?
EQUITY SECURITIES RISKS
The Fund is subject to fluctuations in the stock market which has periods of
increasing and decreasing values. These fluctuations can be caused by many
events, including changes to domestic or international economic conditions.
Because the Fund invests primarily in stocks it is more subject to equity risks.
Stocks have greater volatility than debt securities. While greater volatility
increases risk, it offers the potential for greater reward.
There is also a risk that the Fund will not be able to off-set sufficient
capital gains to attain its objective of minimizing the impact of taxes on
shareholder returns.
LEVERAGING RISKS
Various investment strategies involve agreements to purchase or sell securities
or currencies in amounts that exceed the amount the Fund has invested in the
underlying securities or currencies. The excess exposure increases the risks
associated with the underlying securities or currencies on the Fund's investment
performance.
SECURITIES LENDING RISKS
The Fund may lend securities. When the Fund lends its portfolio securities, it
may not be able to get them back from the borrower on a timely basis, thereby
exposing the Fund to a loss of investment opportunities.
YEAR 2000 READINESS
The "Year 2000" problem is the potential for computer errors or failures because
certain computer systems may be unable to interpret dates after December 31,
1999 or experience other date- related problems. The Year 2000 problem may cause
systems to process information incorrectly and could disrupt businesses, such as
the Fund, that rely on computers.
While it is impossible to determine in advance all of the risks to the Fund,
the Fund could experience interruptions in basic financial and operational
functions. Fund shareholders could experience errors or disruptions in Fund
share transactions or Fund communications.
The Fund's service providers are making changes to their computer systems to
fix any Year 2000 problems. In addition, they are working to gather information
from third-party providers to determine their Year 2000 readiness.
Year 2000 problems would also increase the risks of the Fund's investments. To
assess the potential effect of the Year 2000 problem, the investment adviser is
reviewing information regarding the Year 2000 readiness of issuers of securities
the Fund may purchase.
However, this may be difficult with certain issuers. For example, funds
dealing with foreign service providers or investing in foreign securities will
have difficulty determining the Year 2000 readiness of those entities. This is
especially true of entities or issuers in emerging markets.
The financial impact of these issues for the Fund is still being determined.
There can be no assurance that potential Year 2000 problems would not have a
material adverse effect on the Fund.
What do Shares Cost?
You can purchase, redeem, or exchange Class A Shares (Shares) any day on which
Wachovia Bank, N.A., (Wachovia Bank), the New York Stock Exchange (NYSE) and the
Federal Reserve Wire System are open for business. When the Fund receives your
transaction request in proper form, it is processed at the next determined net
asset value (NAV) plus any applicable sales charge (the public offering price).
NAV is determined at the end of regular trading (normally 4:00 p.m. Eastern
time) each day the NYSE is open. The value of Shares is generally determined
based upon the market value of portfolio securities. However, the Fund's Board
may determine in good faith that another method of valuing investments is
necessary to appraise their fair market value.
The required minimum initial investment amount in the Fund is $250. Subsequent
investments must be at least $50.
Minimum initial investments may be waived from time to time for purchases by
the Trust Division of Wachovia Bank for its fiduciary or custodial accounts. An
institutional investor's minimum investment will be calculated by combining all
accounts it maintains with the Fund. Accounts established through investment
professionals may be subject to a smaller minimum investment amount. Keep in
mind that investment professionals may charge you fees for their services in
connection with your Share transactions.
SALES CHARGE WHEN YOU PURCHASE
Class A Shares of the Fund are sold at its NAV next determined after an order is
received, plus a sales charge as follows:
<TABLE>
<CAPTION>
Purchase Amount Sales Charge
as a Percentage Sales Charge
of Public Offering as a Percentage
Price of NAV
<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 greater 0.25% 0.25%
</TABLE>
The sales charge at purchase may be reduced by:
. quantity purchases of Shares;
. combining concurrent purchases of Shares made by you, your spouse, or your
children under age 21;
. accumulating purchases (in calculating the sales charge on an additional
purchase, you may count the current value of previous Share purchases still
invested in the Fund); or
. signing a letter of intent to purchase at least $100,000 in Shares within 13
months (call the Fund for an application and more information).
The sales charge will be eliminated when you purchase Shares:
. using the reinvestment privilege;
. by exchanging Shares from the same share class of another Wachovia Fund; or
. through wrap accounts or other investment programs where you pay an
investment professional a fee for services.
If your investment qualifies, you should notify the Fund's distributor,
Federated Securities Corp. (Distributor) at the time of purchase to reduce or
eliminate the sales charge. You will receive the reduced sales charge only on
additional purchases, and not retroactively on previous purchases.
How is the Fund Sold?
The Fund offers two share classes: Class A Shares and Class Y Shares, each
representing interests in a single portfolio of securities. This prospectus
relates only to Class A Shares. Each share class has different sales charges and
other expenses, which affect their performance. Call 1-800-994-4414 or contact
your investment professional for more information concerning the other class.
The Fund's Distributor markets Shares to institutions or individuals, directly
or through an investment professional that has an agreement with the Distributor
(Authorized Dealer). When the Distributor receives sales charges and marketing
fees, it may pay some or all of them to investment professionals. The
Distributor and its affiliates may pay out of their assets other amounts
(including items of material value) to investment professionals for marketing
and servicing Shares. The Distributor is a subsidiary of Federated Investors,
Inc. (Federated).
How to Purchase Shares
You may purchase Shares through the Trust Division of Wachovia Bank, through
Wachovia Investments, Inc. or through an Authorized Dealer.
The Fund and the Distributor reserve the right to reject any request to
purchase Shares.
THROUGH THE TRUST DIVISION OF WACHOVIA BANK
Trust customers of Wachovia Bank may purchase Shares of the Fund in accordance
with the procedures set forth in the account agreement.
Orders must be received by the Fund before 4:00 p.m. (Eastern time) in order
to receive that day's public offering price. Orders received by the Fund after
4:00 p.m. (Eastern time) will be purchased at the next determined public
offering price.
THROUGH WACHOVIA INVESTMENTS, INC.
Customers of Wachovia Investments, Inc. or Wachovia Brokerage Service may
purchase shares by mail, by telephone or in person. All purchase orders must be
received by the Fund before 4:00 p.m. (Eastern time) in order for Shares to
receive that day's public offering price. Orders received by the Fund after 4:00
p.m. (Eastern time) will be purchased at the next determined public offering
price.
By Mail
To purchase Shares of the Fund by mail, send a check made payable to the Fund
to:
Wachovia Investments, Inc.
P.O. Box 8612
Boston, MA 02266-8612
Orders by mail are considered received after payment by check is converted
into federal funds, which is normally the next business day after Wachovia
Investments, Inc. receives the check.
By Telephone
Once you have opened an account and completed the appropriate sections of the
account application, you may purchase Shares by telephone. For more information
call 1-800-994-4414.
THROUGH AN AUTHORIZED DEALER
Call your Authorized Dealer for specific instructions.
Purchase orders must be received by the dealer before 3:00 p.m. (Eastern time)
in order to receive that day's public offering price. Orders received by the
dealer after 3:00 p.m. (Eastern time) will be purchased at the next determined
public offering price.
AUTOMATED CLEARING HOUSE
Purchase requests made after 3:00 p.m. (Eastern time) with payment made through
Automated Clearing House are considered received by the Fund on the business day
following the request. Purchases made in this manner receive the public offering
price calculated on the business day following the request.
THROUGH AN EXCHANGE
You may purchase Class A Shares through an exchange from Class A Shares of
another Wachovia Fund. (However, if you exchange shares of Wachovia Short-Term
Fixed Income Fund, you will be required to pay the difference in sales charge.)
You must meet any minimum initial investment requirement for purchasing Shares.
SYSTEMATIC INVESTMENT PROGRAM
Once you have opened a Fund account, you may add to your investment on a regular
basis in amounts of at least $25. Under this program, funds may be automatically
withdrawn from your checking account and invested in Shares at NAV next
determined after an order is received by the Fund. You may apply for
participation in this program through Wachovia Bank or through the Distributor.
How to Exchange Shares
EXCHANGE PRIVILEGE
You may exchange Class A Shares of the Fund for Class A Shares of another
Wachovia Fund (except the Wachovia Short-Term Fixed Income Fund) at NAV. To do
this, you must: . meet any minimum initial investment requirements; and .
receive a prospectus for the Fund into which you wish to exchange. If you
exchange shares of Wachovia Short-Term Fixed Income Fund, you will be required
to pay the difference in sales charges.
An exchange is treated as a redemption and subsequent purchase and is a
taxable transaction. Signatures must be guaranteed if you request an exchange
into another Fund with a different shareholder registration.
The Fund may modify or terminate the exchange privilege at any time.
Shareholders will be notified of any modification or termination of the exchange
privilege. The Fund's management or investment adviser may determine from the
amount, frequency and pattern of exchanges that a shareholder is engaged in
excessive trading that is detrimental to the Fund and other shareholders. If
this occurs, the Fund may terminate the availability of exchanges to that
shareholder and may bar that shareholder from purchasing other Wachovia Funds.
Shareholders contemplating exchanges into The Wachovia Municipal Funds should
consult their tax advisers since the tax advantages of each Fund may vary.
By Telephone
You may exchange Shares by telephone by calling 1-800-994-4414.
Telephone exchange instructions must be received by 4:00 p.m. (Eastern time)
for Shares to be exchanged that day.
Your telephone instructions may be recorded. If the Fund does not follow
reasonable procedures, it may be liable for losses due to unauthorized or
fraudulent telephone instructions. The Fund will notify you if it changes
telephone transaction privileges.
If you are not able to make your exchange by telephone, an exchange request
may be made in writing and sent by overnight mail to:
The Wachovia Funds
1099 Hingham Street
Rockland, MA 02370-3317
How to Redeem Shares
The Fund redeems Shares at their NAV next determined after the Fund receives the
redemption request in proper form. Shares may be redeemed by telephone or by
mail through the Trust Division of Wachovia Bank, through Wachovia Investments,
Inc., through an Authorized Dealer or directly from the Fund.
All redemption requests must be received before 4:00 p.m. (Eastern time) in
order for Shares to be redeemed at that day's NAV.
By Mail
You may redeem Shares by sending a written request to Wachovia Bank or Wachovia
Investments, Inc., as appropriate.
Send your written redemption request including your name, the Fund's name,
your account number and the Share or dollar amount requested to:
The Wachovia Funds
P.O. Box 8612
Boston, MA 02266-8612
By Telephone
You may redeem Shares of the Fund by calling the Fund at 1-800-994-4414.
Shareholders who are trust customers of Wachovia Bank may also contact their
trust officer.
Shareholders who have an Authorized Dealer should contact their Authorized
Dealer for specific instructions on how to redeem by telephone.
Your telephone instructions may be recorded. If the Fund does not follow
reasonable procedures, it may be liable for losses due to unauthorized or
fraudulent telephone instructions. The Fund will notify you if it changes
telephone transaction privileges.
AUTOMATED CLEARING HOUSE
Redemption requests made after 3:00 p.m. (Eastern time) with redemption proceeds
processed through Automated Clearing House are considered received by the Fund
on the business day following the request. Redemptions made in this manner
receive the public offering price calculated on the business day following the
request.
SIGNATURE GUARANTEES Signatures must be guaranteed if:
. your redemption is to be sent to an address other than the address of record;
. your redemption is to be sent to an address of record that was changed within
the last thirty days; or
. a redemption is payable to someone other than the shareholder(s) of record.
Your signature can be guaranteed by any federally insured financial institution
(such as a bank or credit union) or by a broker/ dealer that is a domestic stock
exchange member, but not by a notary public.
LIMITATIONS ON REDEMPTION PROCEEDS
Redemption proceeds normally are mailed within one business day after receiving
a request in proper form. However, payment may be delayed up to seven days:
. to allow your purchase payment to clear;
. during periods of market volatility; or
. when a shareholder's trade activity or amount adversely impacts the Fund's
ability to manage its assets.
REDEMPTION IN KIND
Although the Fund intends to pay Share redemptions in cash, it reserves the
right to pay the redemption price in whole or in part by a distribution of the
Fund's portfolio securities.
RETIREMENT DISTRIBUTIONS
A minimum of 10% of the value of your retirement distribution (redemption) will
be withheld for taxes in the absence of your specific instructions.
SYSTEMATIC WITHDRAWAL PROGRAM
The Systematic Withdrawal Program allows you to automatically redeem Shares
monthly or quarterly at a minimum of $100. Your account value must be at least
$10,000 at the time the program is established. This program may reduce, and
eventually deplete, your account, and the payments should not be considered
yield or income. You may apply for participation in this program through your
financial institution.
SHARE CERTIFICATES
The Fund does not issue Share certificates.
Account and Share Information
CONFIRMATIONS AND ACCOUNT STATEMENTS
You will receive confirmation of purchases, redemptions and exchanges (except
for systematic transactions). In addition, you will receive periodic statements
reporting all account activity, including systematic transactions, dividends and
capital gain distributions paid.
DIVIDENDS AND CAPITAL GAIN DISTRIBUTIONS
The Fund declares and pays any dividends to shareholders quarterly. Dividends
are declared and paid to shareholders invested in the Fund on the record date.
In addition, the Fund pays any net capital gains at least annually. Your
dividends and capital gain distributions will be automatically reinvested in
additional Shares without a sales charge, unless you elect cash payments.
If you purchase Shares just before the Fund declares a dividend or capital
gain distribution, you will pay the full price for the Shares and then receive a
portion of the price back in the form of a distribution, whether or not you
reinvest the distribution in Shares. Therefore, you should consider the tax
implications of purchasing Shares shortly before the Fund declares a dividend or
capital gain distribution. Contact your investment professional or the Fund for
more information concerning when dividends and capital gain distributions will
be paid.
ACCOUNTS WITH LOW BALANCES
Non-retirement accounts may be closed if redemptions or exchanges cause the
account balance to fall below the minimum initial investment amount. Before an
account is closed, the shareholder will be notified and given 30 days to
purchase additional Shares to meet the minimum.
TAX INFORMATION
The Fund sends you an annual statement of your account activity to assist you in
completing your federal, state and local tax returns. Fund distributions of
dividends and capital gains are taxable to you whether paid in cash or
reinvested in the Fund. Fund distributions are expected to be primarily from net
capital gains. Capital gains distributions are taxable at different rates
depending on the length of time the Fund holds its assets, not how long you hold
your Shares.
Redemptions and exchanges are taxable sales. Please consult your tax adviser
regarding your federal, state and local tax liability.
Tax-Sensitive Approach to Investing
When possible the Fund will be managed in an attempt to keep its distributions
of capital gains relatively low. Whenever the Fund sells a stock from its
portfolio, it is likely to "realize" either a capital gain (if the stock has
risen in value) or a capital loss (if the stock has fallen in value) equal to
the difference between the price the Fund paid to acquire the stock and the
price at which it sells the stock. Each year, mutual funds are required to
determine if their capital gains exceed their capital losses and, if they do,
generally must distribute any such net capital gains to their shareholders.
Shareholders must then pay income tax capital gains taxes on these
distributions. The Fund will try to keep its capital gain distributions
relatively low.
Who Manages the Fund?
The Board of Trustees governs the Fund. The Board selects and oversees the
investment adviser, Wachovia Asset Management, a business unit of Wachovia Bank.
The investment adviser manages the Fund's assets, including buying and selling
portfolio securities. The investment adviser's address is 100 North Main Street,
Winston-Salem, NC 27101.
Wachovia Bank has been managing trust assets for over 100 years, with over $42
billion in managed assets as of December 31, 1998. Wachovia Bank also serves as
investment adviser to The Wachovia Municipal Funds, another investment company.
The investment adviser receives an annual investment advisory fee equal to
0.70% of the Fund's average aggregate daily net assets.
Pursuant to an agreement between the investment adviser and the Trust, the
investment adviser agrees during the period from July 1, 1999, through January
31, 2000 to waive its fees and/or make reimbursements to the Fund, so that the
Fund's net operating expenses do not exceed, in the aggregate, 1.15%. The
investment adviser agrees that this obligation shall constitute a contractual
commitment enforceable by the Trust and that the investment adviser shall not
assert any right to reimbursement of amounts so waived or reimbursed.
PORTFOLIO MANAGERS
Daniel S. Earthman
Daniel S. Earthman is a Chartered Financial Analyst, Portfolio Manager, and a
Senior Vice President of the investment adviser. Prior to joining Wachovia Bank
in 1988, Mr. Earthman was a Vice President and Investment Manager with Richland
Asset Management in Nashville, and an Assistant Vice President and Portfolio
Manager with North Carolina National Bank in Charlotte. Mr. Earthman received a
bachelors degree in business from Southern Methodist University and a MBA from
the University of North Carolina at Chapel Hill.
John F. Hageman
John F. Hageman is a Chartered Financial Analyst and a Senior Vice President and
Institutional Portfolio Manager for the investment adviser. Mr. Hageman is
responsible for managing employee benefit, foundation and endowment portfolios.
Prior to joining Wachovia Bank in 1986, Mr. Hageman was Vice President and head
of Institutional Investment Management at Michigan National Investment
Corporation from 1977 to 1986, and an account executive with Merrill Lynch from
1975 to 1977. Mr. Hageman received his B.A. from Wabash College.
Russell L. Kimbro, Jr.
Russell L. Kimbro, Jr. Is a Chartered Financial Analyst and a Senior Vice
President and Portfolio Manager for Personal Financial Services for the
investment adviser. Mr. Kimbro joined Wachovia Bank in 1985. Mr. Kimbro is an
instructor of corporate finance at the University of North Carolina at
Greensboro. He received his bachelors degree in economics from Virginia
Polytechnical Institute and State University and a MBA from the University of
North Carolina at Greensboro.
F. Stanley King
F. Stanley King is a Chartered Financial Analyst and a Senior Vice President of
the investment adviser. Mr. King serves as manager of institutional portfolio
management for the investment adviser. Mr. King joined Wachovia Bank in 1985 as
a securities analyst and assumed his current position in 1991. He has both his
bachelors and masters of science degrees from North Carolina State University.
Matthew J. McGuinness
Matthew J. McGuinness is a Chartered Financial Analyst and a Vice President and
Portfolio Manager for Personal Financial Services for the investment adviser.
Mr. McGuinness joined Wachovia Bank in 1991 in the Estates/Closely-Held Unit. He
received an MBA from the University of North Carolina at Chapel Hill.
Michael O. Mercer
Michael O. Mercer is a Chartered Financial Analyst and a Senior Vice President
and Portfolio Manager for the investment adviser. Mr. Mercer joined Wachovia
Bank in 1983. Mr. Mercer is a graduate of Catawba College and received an MBA
from Florida State University.
Joseph H. Waterfill
Joseph H. Waterfill is a Senior Vice President and Portfolio Manager of the
investment adviser. Mr. Waterfill joined Wachovia Bank in 1976. Mr. Waterfill
received his bachelors of science degree from the U.S. Naval Academy and his MBA
from Vanderbilt University.
Financial Information
The Fund will have a fiscal year end of November 30. As this is the Fund's first
fiscal year, financial information is not yet available.
Wachovia Personal Equity Fund
A Portfolio of The Wachovia Funds
CLASS A SHARES
JULY, 1999
The Fund's Statement of Additional Information (SAI) is incorporated by
reference into this prospectus, making it legally a part of this prospectus. The
SAI includes additional information about the Fund.
To obtain a free copy of the SAI and other information call your investment
professional or the Fund at 1-800-994-4414.
You can obtain information about the Fund by visiting or writing the Public
Reference Room of the Securities and Exchange Commission in Washington, DC
20549-6009 or from the Commission's Internet site at http://www.sec.gov. You can
call 1-800-SEC-0330 for information on the Public Reference Room's operations
and copying charges.
SEC File Number: 811-6504
Cusip:
G02165-09 (7/99)
PROSPECTUS
THE INFORMATION IN THIS PROSPECTUS IS NOT COMPLETE AND MAY BE CHANGED. WE MAY
NOT SELL THESE SECURITIES UNTIL THE REGISTRATION STATEMENT FILED WITH THE
SECURITIES AND EXCHANGE COMMISSION IS EFFECTIVE. THIS PROSPECTUS IS NOT AN OFFER
TO SELL THESE SECURITIES AND IS NOT SOLICITING AN OFFER TO BUY THESE SECURITIES
IN ANY STATE WHERE THE OFFER OR SALE IS NOT PERMITTED.
Wachovia Personal Equity Fund
The Wachovia Funds
CLASS A SHARES
As with all mutual funds, the Securities and Exchange Commission has not
approved or disapproved these securities or passed upon the adequacy of this
prospectus, and any representation to the contrary is a criminal offense.
CONTENTS
Fund Goal, Strategies and Risk 1
What are the Fund's Fees and Expenses? 1
What are the Fund's Main Investments and Investment Techniques? 2
What are the Specific Risks of Investing in the Fund? 2
What Do Shares Cost? 3
How is the Fund Sold? 3
How to Purchase Shares 3
How to Exchange Shares 4
How to Redeem Shares 5
Account and Share Information 5
Who Manages the Fund? 6
Financial Information 7
JULY __, 1999
Fund Goal, Strategies and Risk
WHAT IS THE FUND'S INVESTMENT GOAL?
The Fund's goal is to produce growth of principal and income, while minimizing
the impact of taxes on shareholder returns.
WHAT IS THE MAIN INVESTMENT STRATEGY OF THE FUND?
The Fund pursues its goal by investing in a portfolio of common stock of
companies with an established market. The Fund is managed with a long-term time
horizon, and is anticipated to have a lower turnover ratio than a typical equity
mutual fund. With the goal of maximizing after-tax returns, the Fund's
investment adviser will seek to minimize realized capital gains in general, and
short-term capital gains in particular. For example, it will generally buy
securities that it intends to hold over the long term, and avoid short-term
trading. In deciding which securities to sell, the Fund's investment adviser
will consider their capital gain or loss situation, and may attempt to off-set
capital gains by selling securities that have gone down in value or that have
the highest cost basis. Also, the Fund's investment adviser generally will
consider selling any security that has not met its expectations for growth, in
which case the capital gain generally would be relatively small. Successful
application of this strategy will result in shareholders incurring capital gains
when they ultimately sell their Fund shares.
WHAT ARE THE MAIN RISKS OF INVESTING IN THE FUND?
All mutual funds take investment risks. Therefore, it is possible to lose money
by investing in the Fund.
The value of equity securities in the Fund's portfolio will rise and fall.
These fluctuations could be a sustained trend or a drastic movement. The Fund's
portfolio will reflect changes in prices of individual stocks or general changes
in stock valuations.
The Fund is also subject to the risk that its investment adviser will not
succeed in attempting to minimize capital gains.
An investment in the Fund is not a deposit of a bank, is not insured or
guaranteed by Wachovia Bank, N.A., and is not insured or guaranteed by the U.S.
government, the Federal Deposit Insurance Corporation, the Federal Reserve
Board, or any other government agency.
What are the Fund's Fees and Expenses?
This table describes the fees and expenses that you may pay when you buy, hold,
and redeem the Fund's Class A Shares.
<TABLE>
<CAPTION>
Shareholder Fees Class A
Fees Paid Directly From Your Investment Shares
<S> <C>
Maximum Sales Charge (Load) Imposed on Purchases
(as a percentage of offering price) 4.50%
Annual Fund Operating Expenses/1/ Expenses That are Deducted From Fund Assets
(as a percentage of average net assets)
Management Fee 0.70%
Distribution (12b-1) Fee None
Shareholder Services Fee 0.25%
Other Expenses/2/ 0.25%
Total Annual Class A Shares Operating Expenses (Before Waiver)/1/ 1.20%
Waiver of Fund Expenses 0.05%
Total Actual Annual Class A Shares Operating Expenses 1.15%
(After Waiver)
1 Pursuant to an agreement between the investment adviser and the Trust, the
investment adviser agrees during the period from July 1, 1999, through
January 31, 2000 to waive its fees and/or make reimbursements to the Fund,
so that the Fund's net operating expenses do not exceed, in the aggregate,
the Fund's Total Actual Annual Operating Expenses listed above. The
investment adviser agrees that this obligation shall constitute a
contractual commitment enforceable by the Trust and that the investment
adviser shall not assert any right to reimbursement of amounts so waived or
reimbursed.
2 Other Expenses are based on estimated amounts for the current fiscal year.
</TABLE>
EXAMPLE
The following Example is intended to help you compare the cost of investing in
the Fund's Class A Shares with the cost of investing in other mutual funds. The
Example assumes that you invest $10,000 in the Fund's Shares for the time
periods indicated and then redeem all of your shares at the end of those
periods. The Example also assumes that your investment has a 5% return each year
and that the Fund's Class A Shares operating expenses are based upon the current
expense limitation as shown above in the table. Although your actual costs may
be higher or lower, based on these assumptions your costs would be:
<TABLE>
<CAPTION>
Class A Shares 1 Year 3 Years 5 Years 10 Years
<S> <C> <C> <C> <C>
$567 $814 $1,080 $1,839
</TABLE>
What are the Fund's Main Investments and Investment Techniques?
EQUITY SECURITIES
Equity securities are the fundamental unit of ownership in a company. They
represent a share of the issuer's earnings and assets, after the issuer pays its
liabilities. Generally, issuers have discretion as to the payment of any
dividends or other distributions. As a result, investors cannot predict the
income they will receive from equity securities. However, equity securities
offer greater potential for appreciation than many other types of securities
because their value increases directly with the value of the issuer's business.
The following describes the types of equity securities in which the Fund
invests.
Common Stocks
Common stocks are the most prevalent type of equity security. Common
stockholders receive the residual value of the issuer's earnings and assets
after the issuer pays its creditors and any preferred stockholders. As a result,
changes in an issuer's earnings directly influence the value of its common
stock.
Preferred Stocks
Preferred stocks have the right to receive specified dividends before the
issuer makes payments on its common stock. Some preferred stocks also
participate in dividends and other distributions paid on common stock. Preferred
stocks may also permit the issuer to redeem the stock.
Warrants
Warrants give the Fund the option to buy the issuer's equity securities at a
specified price (the exercise price) at a specified future date (the expiration
date). The Fund may buy the designated securities by paying the exercise price
before the expiration date. Warrants may become worthless if the price of the
stock does not rise above the exercise price by the expiration date. This
increases the market risks of warrants as compared to the underlying security.
Rights are the same as warrants, except companies typically issue rights to
existing stockholders.
TEMPORARY DEFENSIVE INVESTMENTS
The Fund may temporarily depart from its principal investment strategy by
investing assets in cash, cash items, and shorter-term, higher quality debt
securities. The Fund may do this to minimize potential losses and maintain
liquidity to meet shareholder redemptions during adverse market conditions. This
may cause the Fund to forego investment returns for the safety of principal.
What are the Specific Risks of Investing in the Fund?
EQUITY SECURITIES RISKS
The Fund is subject to fluctuations in the stock market which has periods of
increasing and decreasing values. These fluctuations can be caused by many
events, including changes to domestic or international economic conditions.
Because the Fund invests primarily in stocks it is more subject to equity risks.
Stocks have greater volatility than debt securities. While greater volatility
increases risk, it offers the potential for greater reward.
There is also a risk that the Fund will not be able to off-set sufficient
capital gains to attain its objective of minimizing the impact of taxes on
shareholder returns.
LEVERAGING RISKS
Various investment strategies involve agreements to purchase or sell securities
or currencies in amounts that exceed the amount the Fund has invested in the
underlying securities or currencies. The excess exposure increases the risks
associated with the underlying securities or currencies on the Fund's investment
performance.
SECURITIES LENDING RISKS
The Fund may lend securities. When the Fund lends its portfolio securities, it
may not be able to get them back from the borrower on a timely basis, thereby
exposing the Fund to a loss of investment opportunities.
YEAR 2000 READINESS
The "Year 2000" problem is the potential for computer errors or failures because
certain computer systems may be unable to interpret dates after December 31,
1999 or experience other date- related problems. The Year 2000 problem may cause
systems to process information incorrectly and could disrupt businesses, such as
the Fund, that rely on computers.
While it is impossible to determine in advance all of the risks to the Fund,
the Fund could experience interruptions in basic financial and operational
functions. Fund shareholders could experience errors or disruptions in Fund
share transactions or Fund communications.
The Fund's service providers are making changes to their computer systems to
fix any Year 2000 problems. In addition, they are working to gather information
from third-party providers to determine their Year 2000 readiness.
Year 2000 problems would also increase the risks of the Fund's investments. To
assess the potential effect of the Year 2000 problem, the investment adviser is
reviewing information regarding the Year 2000 readiness of issuers of securities
the Fund may purchase.
However, this may be difficult with certain issuers. For example, funds
dealing with foreign service providers or investing in foreign securities will
have difficulty determining the Year 2000 readiness of those entities. This is
especially true of entities or issuers in emerging markets.
The financial impact of these issues for the Fund is still being determined.
There can be no assurance that potential Year 2000 problems would not have a
material adverse effect on the Fund.
What do Shares Cost?
You can purchase, redeem, or exchange Class A Shares (Shares) any day on which
Wachovia Bank, N.A., (Wachovia Bank), the New York Stock Exchange (NYSE) and the
Federal Reserve Wire System are open for business. When the Fund receives your
transaction request in proper form, it is processed at the next determined net
asset value (NAV) plus any applicable sales charge (the public offering price).
NAV is determined at the end of regular trading (normally 4:00 p.m. Eastern
time) each day the NYSE is open. The value of Shares is generally determined
based upon the market value of portfolio securities. However, the Fund's Board
may determine in good faith that another method of valuing investments is
necessary to appraise their fair market value.
The required minimum initial investment amount in the Fund is $250. Subsequent
investments must be at least $50.
Minimum initial investments may be waived from time to time for purchases by
the Trust Division of Wachovia Bank for its fiduciary or custodial accounts. An
institutional investor's minimum investment will be calculated by combining all
accounts it maintains with the Fund. Accounts established through investment
professionals may be subject to a smaller minimum investment amount. Keep in
mind that investment professionals may charge you fees for their services in
connection with your Share transactions.
SALES CHARGE WHEN YOU PURCHASE
Class A Shares of the Fund are sold at its NAV next determined after an order is
received, plus a sales charge as follows:
<TABLE>
<CAPTION>
Purchase Amount Sales Charge
as a Percentage Sales Charge
of Public Offering as a Percentage
Price of NAV
<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 greater 0.25% 0.25%
</TABLE>
The sales charge at purchase may be reduced by:
. quantity purchases of Shares;
. combining concurrent purchases of Shares made by you, your spouse, or your
children under age 21;
. accumulating purchases (in calculating the sales charge on an additional
purchase, you may count the current value of previous Share purchases still
invested in the Fund); or
. signing a letter of intent to purchase at least $100,000 in Shares within 13
months (call the Fund for an application and more information).
The sales charge will be eliminated when you purchase Shares:
. using the reinvestment privilege;
. by exchanging Shares from the same share class of another Wachovia Fund; or
. through wrap accounts or other investment programs where you pay an
investment professional a fee for services.
If your investment qualifies, you should notify the Fund's distributor,
Federated Securities Corp. (Distributor) at the time of purchase to reduce or
eliminate the sales charge. You will receive the reduced sales charge only on
additional purchases, and not retroactively on previous purchases.
How is the Fund Sold?
The Fund offers two share classes: Class A Shares and Class Y Shares, each
representing interests in a single portfolio of securities. This prospectus
relates only to Class A Shares. Each share class has different sales charges and
other expenses, which affect their performance. Call 1-800-994-4414 or contact
your investment professional for more information concerning the other class.
The Fund's Distributor markets Shares to institutions or individuals, directly
or through an investment professional that has an agreement with the Distributor
(Authorized Dealer). When the Distributor receives sales charges and marketing
fees, it may pay some or all of them to investment professionals. The
Distributor and its affiliates may pay out of their assets other amounts
(including items of material value) to investment professionals for marketing
and servicing Shares. The Distributor is a subsidiary of Federated Investors,
Inc. (Federated).
How to Purchase Shares
You may purchase Shares through the Trust Division of Wachovia Bank, through
Wachovia Investments, Inc. or through an Authorized Dealer.
The Fund and the Distributor reserve the right to reject any request to
purchase Shares.
THROUGH THE TRUST DIVISION OF WACHOVIA BANK
Trust customers of Wachovia Bank may purchase Shares of the Fund in accordance
with the procedures set forth in the account agreement.
Orders must be received by the Fund before 4:00 p.m. (Eastern time) in order
to receive that day's public offering price. Orders received by the Fund after
4:00 p.m. (Eastern time) will be purchased at the next determined public
offering price.
THROUGH WACHOVIA INVESTMENTS, INC.
Customers of Wachovia Investments, Inc. or Wachovia Brokerage Service may
purchase shares by mail, by telephone or in person. All purchase orders must be
received by the Fund before 4:00 p.m. (Eastern time) in order for Shares to
receive that day's public offering price. Orders received by the Fund after 4:00
p.m. (Eastern time) will be purchased at the next determined public offering
price.
By Mail
To purchase Shares of the Fund by mail, send a check made payable to the Fund
to:
Wachovia Investments, Inc.
P.O. Box 8612
Boston, MA 02266-8612
Orders by mail are considered received after payment by check is converted
into federal funds, which is normally the next business day after Wachovia
Investments, Inc. receives the check.
By Telephone
Once you have opened an account and completed the appropriate sections of the
account application, you may purchase Shares by telephone. For more information
call 1-800-994-4414.
THROUGH AN AUTHORIZED DEALER
Call your Authorized Dealer for specific instructions.
Purchase orders must be received by the dealer before 3:00 p.m. (Eastern time)
in order to receive that day's public offering price. Orders received by the
dealer after 3:00 p.m. (Eastern time) will be purchased at the next determined
public offering price.
AUTOMATED CLEARING HOUSE
Purchase requests made after 3:00 p.m. (Eastern time) with payment made through
Automated Clearing House are considered received by the Fund on the business day
following the request. Purchases made in this manner receive the public offering
price calculated on the business day following the request.
THROUGH AN EXCHANGE
You may purchase Class A Shares through an exchange from Class A Shares of
another Wachovia Fund. (However, if you exchange shares of Wachovia Short-Term
Fixed Income Fund, you will be required to pay the difference in sales charge.)
You must meet any minimum initial investment requirement for purchasing Shares.
SYSTEMATIC INVESTMENT PROGRAM
Once you have opened a Fund account, you may add to your investment on a regular
basis in amounts of at least $25. Under this program, funds may be automatically
withdrawn from your checking account and invested in Shares at NAV next
determined after an order is received by the Fund. You may apply for
participation in this program through Wachovia Bank or through the Distributor.
How to Exchange Shares
EXCHANGE PRIVILEGE
You may exchange Class A Shares of the Fund for Class A Shares of another
Wachovia Fund (except the Wachovia Short-Term Fixed Income Fund) at NAV. To do
this, you must: . meet any minimum initial investment requirements; and .
receive a prospectus for the Fund into which you wish to exchange. If you
exchange shares of Wachovia Short-Term Fixed Income Fund, you will be required
to pay the difference in sales charges.
An exchange is treated as a redemption and subsequent purchase and is a
taxable transaction. Signatures must be guaranteed if you request an exchange
into another Fund with a different shareholder registration.
The Fund may modify or terminate the exchange privilege at any time.
Shareholders will be notified of any modification or termination of the exchange
privilege. The Fund's management or investment adviser may determine from the
amount, frequency and pattern of exchanges that a shareholder is engaged in
excessive trading that is detrimental to the Fund and other shareholders. If
this occurs, the Fund may terminate the availability of exchanges to that
shareholder and may bar that shareholder from purchasing other Wachovia Funds.
Shareholders contemplating exchanges into The Wachovia Municipal Funds should
consult their tax advisers since the tax advantages of each Fund may vary.
By Telephone
You may exchange Shares by telephone by calling 1-800-994-4414.
Telephone exchange instructions must be received by 4:00 p.m. (Eastern time)
for Shares to be exchanged that day.
Your telephone instructions may be recorded. If the Fund does not follow
reasonable procedures, it may be liable for losses due to unauthorized or
fraudulent telephone instructions. The Fund will notify you if it changes
telephone transaction privileges.
If you are not able to make your exchange by telephone, an exchange request
may be made in writing and sent by overnight mail to:
The Wachovia Funds
1099 Hingham Street
Rockland, MA 02370-3317
How to Redeem Shares
The Fund redeems Shares at their NAV next determined after the Fund receives the
redemption request in proper form. Shares may be redeemed by telephone or by
mail through the Trust Division of Wachovia Bank, through Wachovia Investments,
Inc., through an Authorized Dealer or directly from the Fund.
All redemption requests must be received before 4:00 p.m. (Eastern time) in
order for Shares to be redeemed at that day's NAV.
By Mail
You may redeem Shares by sending a written request to Wachovia Bank or Wachovia
Investments, Inc., as appropriate.
Send your written redemption request including your name, the Fund's name,
your account number and the Share or dollar amount requested to:
The Wachovia Funds
P.O. Box 8612
Boston, MA 02266-8612
By Telephone
You may redeem Shares of the Fund by calling the Fund at 1-800-994-4414.
Shareholders who are trust customers of Wachovia Bank may also contact their
trust officer.
Shareholders who have an Authorized Dealer should contact their Authorized
Dealer for specific instructions on how to redeem by telephone.
Your telephone instructions may be recorded. If the Fund does not follow
reasonable procedures, it may be liable for losses due to unauthorized or
fraudulent telephone instructions. The Fund will notify you if it changes
telephone transaction privileges.
AUTOMATED CLEARING HOUSE
Redemption requests made after 3:00 p.m. (Eastern time) with redemption proceeds
processed through Automated Clearing House are considered received by the Fund
on the business day following the request. Redemptions made in this manner
receive the public offering price calculated on the business day following the
request.
SIGNATURE GUARANTEES Signatures must be guaranteed if:
. your redemption is to be sent to an address other than the address of record;
. your redemption is to be sent to an address of record that was changed within
the last thirty days; or
. a redemption is payable to someone other than the shareholder(s) of record.
Your signature can be guaranteed by any federally insured financial institution
(such as a bank or credit union) or by a broker/ dealer that is a domestic stock
exchange member, but not by a notary public.
LIMITATIONS ON REDEMPTION PROCEEDS
Redemption proceeds normally are mailed within one business day after receiving
a request in proper form. However, payment may be delayed up to seven days:
. to allow your purchase payment to clear;
. during periods of market volatility; or
. when a shareholder's trade activity or amount adversely impacts the Fund's
ability to manage its assets.
REDEMPTION IN KIND
Although the Fund intends to pay Share redemptions in cash, it reserves the
right to pay the redemption price in whole or in part by a distribution of the
Fund's portfolio securities.
RETIREMENT DISTRIBUTIONS
A minimum of 10% of the value of your retirement distribution (redemption) will
be withheld for taxes in the absence of your specific instructions.
SYSTEMATIC WITHDRAWAL PROGRAM
The Systematic Withdrawal Program allows you to automatically redeem Shares
monthly or quarterly at a minimum of $100. Your account value must be at least
$10,000 at the time the program is established. This program may reduce, and
eventually deplete, your account, and the payments should not be considered
yield or income. You may apply for participation in this program through your
financial institution.
SHARE CERTIFICATES
The Fund does not issue Share certificates.
Account and Share Information
CONFIRMATIONS AND ACCOUNT STATEMENTS
You will receive confirmation of purchases, redemptions and exchanges (except
for systematic transactions). In addition, you will receive periodic statements
reporting all account activity, including systematic transactions, dividends and
capital gain distributions paid.
DIVIDENDS AND CAPITAL GAIN DISTRIBUTIONS
The Fund declares and pays any dividends to shareholders quarterly. Dividends
are declared and paid to shareholders invested in the Fund on the record date.
In addition, the Fund pays any net capital gains at least annually. Your
dividends and capital gain distributions will be automatically reinvested in
additional Shares without a sales charge, unless you elect cash payments.
If you purchase Shares just before the Fund declares a dividend or capital
gain distribution, you will pay the full price for the Shares and then receive a
portion of the price back in the form of a distribution, whether or not you
reinvest the distribution in Shares. Therefore, you should consider the tax
implications of purchasing Shares shortly before the Fund declares a dividend or
capital gain distribution. Contact your investment professional or the Fund for
more information concerning when dividends and capital gain distributions will
be paid.
ACCOUNTS WITH LOW BALANCES
Non-retirement accounts may be closed if redemptions or exchanges cause the
account balance to fall below the minimum initial investment amount. Before an
account is closed, the shareholder will be notified and given 30 days to
purchase additional Shares to meet the minimum.
TAX INFORMATION
The Fund sends you an annual statement of your account activity to assist you in
completing your federal, state and local tax returns. Fund distributions of
dividends and capital gains are taxable to you whether paid in cash or
reinvested in the Fund. Fund distributions are expected to be primarily from net
capital gains. Capital gains distributions are taxable at different rates
depending on the length of time the Fund holds its assets, not how long you hold
your Shares.
Redemptions and exchanges are taxable sales. Please consult your tax adviser
regarding your federal, state and local tax liability.
Tax-Sensitive Approach to Investing
When possible the Fund will be managed in an attempt to keep its distributions
of capital gains relatively low. Whenever the Fund sells a stock from its
portfolio, it is likely to "realize" either a capital gain (if the stock has
risen in value) or a capital loss (if the stock has fallen in value) equal to
the difference between the price the Fund paid to acquire the stock and the
price at which it sells the stock. Each year, mutual funds are required to
determine if their capital gains exceed their capital losses and, if they do,
generally must distribute any such net capital gains to their shareholders.
Shareholders must then pay income tax capital gains taxes on these
distributions. The Fund will try to keep its capital gain distributions
relatively low.
Who Manages the Fund?
The Board of Trustees governs the Fund. The Board selects and oversees the
investment adviser, Wachovia Asset Management, a business unit of Wachovia Bank.
The investment adviser manages the Fund's assets, including buying and selling
portfolio securities. The investment adviser's address is 100 North Main Street,
Winston-Salem, NC 27101.
Wachovia Bank has been managing trust assets for over 100 years, with over $42
billion in managed assets as of December 31, 1998. Wachovia Bank also serves as
investment adviser to The Wachovia Municipal Funds, another investment company.
The investment adviser receives an annual investment advisory fee equal to
0.70% of the Fund's average aggregate daily net assets.
Pursuant to an agreement between the investment adviser and the Trust, the
investment adviser agrees during the period from July 1, 1999, through January
31, 2000 to waive its fees and/or make reimbursements to the Fund, so that the
Fund's net operating expenses do not exceed, in the aggregate, 1.15%. The
investment adviser agrees that this obligation shall constitute a contractual
commitment enforceable by the Trust and that the investment adviser shall not
assert any right to reimbursement of amounts so waived or reimbursed.
PORTFOLIO MANAGERS
Daniel S. Earthman
Daniel S. Earthman is a Chartered Financial Analyst, Portfolio Manager, and a
Senior Vice President of the investment adviser. Prior to joining Wachovia Bank
in 1988, Mr. Earthman was a Vice President and Investment Manager with Richland
Asset Management in Nashville, and an Assistant Vice President and Portfolio
Manager with North Carolina National Bank in Charlotte. Mr. Earthman received a
bachelors degree in business from Southern Methodist University and a MBA from
the University of North Carolina at Chapel Hill.
John F. Hageman
John F. Hageman is a Chartered Financial Analyst and a Senior Vice President and
Institutional Portfolio Manager for the investment adviser. Mr. Hageman is
responsible for managing employee benefit, foundation and endowment portfolios.
Prior to joining Wachovia Bank in 1986, Mr. Hageman was Vice President and head
of Institutional Investment Management at Michigan National Investment
Corporation from 1977 to 1986, and an account executive with Merrill Lynch from
1975 to 1977. Mr. Hageman received his B.A. from Wabash College.
Russell L. Kimbro, Jr.
Russell L. Kimbro, Jr. Is a Chartered Financial Analyst and a Senior Vice
President and Portfolio Manager for Personal Financial Services for the
investment adviser. Mr. Kimbro joined Wachovia Bank in 1985. Mr. Kimbro is an
instructor of corporate finance at the University of North Carolina at
Greensboro. He received his bachelors degree in economics from Virginia
Polytechnical Institute and State University and a MBA from the University of
North Carolina at Greensboro.
F. Stanley King
F. Stanley King is a Chartered Financial Analyst and a Senior Vice President of
the investment adviser. Mr. King serves as manager of institutional portfolio
management for the investment adviser. Mr. King joined Wachovia Bank in 1985 as
a securities analyst and assumed his current position in 1991. He has both his
bachelors and masters of science degrees from North Carolina State University.
Matthew J. McGuinness
Matthew J. McGuinness is a Chartered Financial Analyst and a Vice President and
Portfolio Manager for Personal Financial Services for the investment adviser.
Mr. McGuinness joined Wachovia Bank in 1991 in the Estates/Closely-Held Unit. He
received an MBA from the University of North Carolina at Chapel Hill.
Michael O. Mercer
Michael O. Mercer is a Chartered Financial Analyst and a Senior Vice President
and Portfolio Manager for the investment adviser. Mr. Mercer joined Wachovia
Bank in 1983. Mr. Mercer is a graduate of Catawba College and received an MBA
from Florida State University.
Joseph H. Waterfill
Joseph H. Waterfill is a Senior Vice President and Portfolio Manager of the
investment adviser. Mr. Waterfill joined Wachovia Bank in 1976. Mr. Waterfill
received his bachelors of science degree from the U.S. Naval Academy and his MBA
from Vanderbilt University.
Financial Information
The Fund will have a fiscal year end of November 30. As this is the Fund's first
fiscal year, financial information is not yet available.
Wachovia Personal Equity Fund
A Portfolio of The Wachovia Funds
CLASS A SHARES
JULY, 1999
The Fund's Statement of Additional Information (SAI) is incorporated by
reference into this prospectus, making it legally a part of this prospectus. The
SAI includes additional information about the Fund.
To obtain a free copy of the SAI and other information call your investment
professional or the Fund at 1-800-994-4414.
You can obtain information about the Fund by visiting or writing the Public
Reference Room of the Securities and Exchange Commission in Washington, DC
20549-6009 or from the Commission's Internet site at http://www.sec.gov. You can
call 1-800-SEC-0330 for information on the Public Reference Room's operations
and copying charges.
SEC File Number: 811-6504
Cusip:
G02165-09 (7/99)
THE INFORMATION IN THIS STATEMENT OF ADDITIONAL INFORMATION IS NOT COMPLETE AND
MAY BE CHANGED. WE MAY NOT SELL THESE SECURITIES UNTIL THE REGISTRATION
STATEMENT FILED WITH THE SECURITIES AND EXCHANGE COMMISSION IS EFFECTIVE. THIS
STATEMENT OF ADDITIONAL INFORMATION IS NOT AN OFFER TO SELL THESE SECURITIES AND
IS NOT SOLICITING AN OFFER TO BUY THESE SECURITIES IN ANY STATE WHERE THE OFFER
OR SALE IS NOT PERMITTED.
THE WACHOVIA FUNDS
Wachovia Personal Equity Fund
Class A Shares
Class Y Shares
Statement of Additional Information
July __, 1999
This Statement of Additional Information (SAI) is not a prospectus. Read
this SAI in conjunction with the prospectuses of Wachovia Personal Equity
Fund, dated July __, 1999. Obtain the prospectuses without charge by
calling 1-800-994-4414.
CONTENTS
How is the Fund
Organized?..........................................................1
Securities in Which the Fund
Invests.......................................................1
What Do Shares
Cost?................................................................9
How is the Fund
Sold?...............................................................10
How to Buy
Shares...............................................................10
How to Exchange
Shares..............................................................10
How to Redeem
Shares..............................................................11
Account and Shares
Information......................................................11
Tax
Information........................................................11
Who Manages and Provides Services to the
Fund?.............................................12
How Does the Fund Measure
Performance?.....................................................14
Investment
Ratings..........................................................16
Addresses........................................................Back
Cover
Federated Securities Corp., Distributor,
A subsidiary of Federated Investors, Inc.
G02165-11 (7/99)
<PAGE>
25
HOW IS THE FUND ORGANIZED?
The Wachovia Funds (Trust) is an open-end, management investment company
established under the laws of the Commonwealth of Massachusetts on November 19,
1991. The Trust may offer separate series of shares representing interests in
separate portfolios of securities. The Trust changed its name from The Biltmore
Funds on July 31, 1997. The Wachovia Personal Equity Fund (Fund) is a
professionally managed, diversified series of the Trust. The Board of Trustees
(Board) has established two classes of shares of the Fund, known as Class A
Shares and Class Y Shares (Shares). This SAI relates to both classes of Shares.
SECURITIES IN WHICH THE FUND INVESTS
In pursuing its investment strategy, the Fund may invest in the following
securities for any purpose that is consistent with its investment objective.
Following is a table that indicates which types of securities are a: P =
Principal investment of the Fund; or A = Acceptable (but not principal)
investment of the Fund.
- --------------------------------------------- ---------------
Securities Personal
Equity Fund
- ---------------------------------------------
- --------------------------------------------- ---------------
Banking Instruments A
- ---------------------------------------------
- --------------------------------------------- ---------------
Commercial Paper1 A
- ---------------------------------------------
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Common Stocks P
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- ---------------------------------------------
Convertible Securities A
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Corporate Debt Securities2 A
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Depositary Receipts3 A
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- ---------------------------------------------
European Depositary Receipts A
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Foreign Securities3 A
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Futures and Options Transactions A
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- ---------------------------------------------
Global Depositary Receipts A
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- --------------------------------------------- ---------------
Lending of Portfolio Securities A
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Money Market Instruments A
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Options on Financial Futures A
- --------------------------------------------- ---------------
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Over-the-Counter Options A
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Preferred Stocks A
- --------------------------------------------- ---------------
- --------------------------------------------- ---------------
Repurchase Agreements A
- --------------------------------------------- ---------------
- --------------------------------------------- ---------------
Restricted and Illiquid Securities4 A
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Reverse Repurchase Agreements A
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- --------------------------------------------- ---------------
Securities of Other Investment Companies A
- --------------------------------------------- ---------------
- --------------------------------------------- ---------------
Stock Index Futures and Options5 A
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- --------------------------------------------- ---------------
Temporary Investments A
- --------------------------------------------- ---------------
- --------------------------------------------- ---------------
U.S. Government Obligations A
- ---------------------------------------------
- --------------------------------------------- ---------------
Variable Rate Demand Notes A
- --------------------------------------------- ---------------
- ---------------------------------------------
Warrants A
- --------------------------------------------- ---------------
When-Issued Transactions A
- --------------------------------------------- ---------------
1. Rated A or better by Moody's or S&P or of comparable quality as determined by
the investment adviser. 2. Rated Prime-1 by Moody's or A-1 by S&P or of
comparable quality as determined by the investment adviser. 3. The Fund may not
invest more than 20% of its assets in ADRs and not more than 10% of its assets
in other securities of
foreign issuers (non-ADRs).
4. The Fund will limit investments in illiquid securities, including certain
restricted securities not determined by the Trustees to be liquid,
non-negotiable time deposits, over-the-counter options, and repurchase
agreements providing for settlement in more than seven days after notice,
to 15% of its net assets.
5. Not more than 20% of the Fund's assets will be invested in such securities.
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 or margin deposits on open positions as applicable.
<PAGE>
Securities Descriptions and Techniques
Equity Securities
Equity securities represent a share of an issuer's earnings and assets, after
the issuer pays its liabilities. The Fund cannot predict the income it will
receive from equity securities because issuers generally have discretion as to
the payment of any dividends or distributions. However, equity securities offer
greater potential for appreciation than many other types of securities, because
their value increases directly with the value of the issuer's business. The
following describes the types of equity securities in which the Fund may invest.
Common Stocks
Common stocks are the most prevalent type of equity security. Common stocks
receive the issuer's earnings after the issuer pays its creditors and any
preferred stockholders. As a result, changes in an issuer's earnings
directly influence the value of its common stock. Preferred Stocks
Preferred stocks have the right to receive specified dividends or
distributions before the issuer makes payments on its common stock. Some
preferred stocks also participate in dividends and distributions paid on
common stock. Preferred stocks may also permit the issuer to redeem the
stock. Warrants Warrants give the Fund the option to buy the issuer's
equity securities at a specified price (the exercise price) at a specified
future date (the expiration date). The Fund may buy the designated
securities by paying the exercise price before the expiration date.
Warrants may become worthless if the price of the stock does not rise above
the exercise price by the expiration date. This increases the market risks
of warrants as compared to the underlying security. Rights are the same as
warrants, except companies typically issue rights to existing stockholders.
Fixed Income Securities
Fixed income securities pay interest, dividends or distributions at a specified
rate. The rate may be a fixed percentage of the principal or adjusted
periodically. In addition, the issuer of a fixed income security must repay the
principal amount of the security, normally within a specified time. Fixed income
securities provide more regular income than equity securities. However, the
returns on fixed income securities are limited and normally do not increase with
the issuer's earnings. This limits the potential appreciation of fixed income
securities as compared to equity securities. A security's yield measures the
annual income earned on a security as a percentage of its price. A security's
yield will increase or decrease depending upon whether it costs less (a
discount) or more (a premium) than the principal amount. If the issuer may
redeem the security before its scheduled maturity, the price and yield on a
discount or premium security may change based upon the probability of an early
redemption. Securities with higher risks generally have higher yields. The
following describes the types of fixed income securities in which the Fund may
invest.
Treasury Securities
Treasury securities are direct obligations of the federal government of the
United States. Investors regard treasury securities as having the lowest
credit risks. Agency Securities Agency securities are issued or guaranteed
by a federal agency or other government-sponsored entity acting under
federal authority (a GSE). The United States supports some GSEs with its
full, faith and credit. Other GSEs receive support through federal
subsidies, loans or other benefits. A few GSEs have no explicit financial
support, but are regarded as having implied support because the federal
government sponsors their activities. Investors regard agency securities as
having low credit risks, but not as low as treasury securities. The Fund
treats mortgage backed securities guaranteed by GSEs as agency securities.
Although a GSE guarantee protects against credit risks, it does not reduce
the market and prepayment risks of these mortgage backed securities.
Corporate Debt Securities Corporate debt securities are fixed income
securities issued by businesses. Notes, bonds, debentures and commercial
paper are the most prevalent types of corporate debt securities. The Fund
may also purchase interests in bank loans to companies. The credit risks of
corporate debt securities vary widely amount issuers. The credit risk of an
issuer's debt security may also vary based on its priority for repayment.
For example, higher ranking (senior) debt securities have a higher priority
than lower ranking (subordinated) securities. This means that the issuer
might not make payments on subordinated securities while continuing to make
payments on senior securities. In addition, in the event of bankruptcy,
holders of senior securities may receive amounts otherwise payable to the
holders of subordinated securities. Some subordinated securities, such as
trust preferred and capital securities notes, also permit the issuer to
defer payments under certain circumstances. For example, insurance
companies issue securities known as surplus notes that permit the insurance
company to defer any payment that would reduce its capital below regulatory
requirements.
Commercial Paper
Commercial paper is an issuer's obligation with a maturity of less than
nine months. Companies typically issue commercial paper to pay for
current expenditures. Most issuers constantly reissue their commercial
paper and use the proceeds (or borrowings from bank loans) to repay
maturing paper. If the issuer cannot continue to obtain liquidity in
this fashion, its commercial paper may default. The short maturity of
commercial paper reduces both the market and credit risks as compared
to other debt securities of the same issuer. Demand Instruments Demand
instruments are corporate debt securities that the issuer must repay
upon demand. Other demand instruments require a third party, such as a
dealer or bank, to repurchase the security for its face value upon
demand. The Fund treats demand instruments as short-term securities,
even though their stated maturity may extend beyond one year.
Bank Instruments
Bank instruments are unsecured interest-bearing deposits with banks. Bank
instruments include bank accounts, time deposits, certificates of deposit
and banker's acceptances. Yankee instruments are denominated in U.S.
dollars and issued by U.S. branches of foreign banks. Eurodollar
instruments are denominated in U.S. dollars and issued by non-U.S. branches
of U.S. or foreign banks.
Convertible Securities
Convertible securities are fixed income securities that the Fund has the option
to exchange for equity securities at a specified conversion price. The option
allows the Fund to realize additional returns if the market price of the equity
securities exceeds the conversion price. For example, the Fund may hold fixed
income securities that are convertible into shares of common stock at a
conversion price of $10 per share. If the market value of the shares of common
stock reached $12, the Fund could realize an additional $2 per share by
converting its fixed income securities. Convertible securities have lower yields
than comparable fixed income securities. In addition, at the time a convertible
security is issued the conversion price exceeds the market value of the
underlying equity securities. Thus, convertible securities may provide lower
returns than non-convertible fixed income securities or equity securities
depending upon changes in the price of the underlying equity securities.
However, convertible securities permit the Fund to realize some of the potential
appreciation of the underlying equity securities with less risk of losing its
initial investment. The Fund may treat convertible securities as both fixed
income and equity securities for purposes of its investment policies and
limitations, because of their unique characteristics. Foreign Securities Foreign
securities are securities of issuers based outside the United States. The Fund
considers an issuer to be based outside the United States if: o it is organized
under the laws of, or has a principal office located in, another country; o the
principal trading market for its securities is in another country; or o it (or
its subsidiaries) derived in its most current fiscal year at least 50% of its
total assets, capitalization, gross
revenue or profit from goods produced, services performed, or sales made in
another country.
Foreign securities are primarily denominated in foreign currencies. Along with
the risks normally associated with domestic securities of the same type, foreign
securities are subject to currency risks and risks of foreign investing. Trading
in certain foreign markets is also subject to liquidity risks.
Depositary Receipts
Depositary receipts represent interests in underlying securities issued by
a foreign company. Depositary receipts are not traded in the same market as
the underlying security. The foreign securities underlying American
Depositary Receipts (ADRs) are traded in the United States. ADRs provide a
way to buy shares of foreign-based companies in the United States rather
than in overseas markets. ADRs are also traded in U.S. dollars, eliminating
the need for foreign exchange transactions. The foreign securities
underlying European Depositary Receipts (EDRs) and Global Depositary
Receipts (GDRs), are traded globally or outside the United States.
Depositary Receipts involve many of the same risks of investing directly in
foreign securities, including currency risks and risks of foreign
investing.
Derivative Contracts
Derivative contracts are financial instruments that require payments based upon
changes in the values of designated (or underlying) securities, currencies,
commodities, financial indices or other assets. Some derivative contracts (such
as futures, forwards and options) require payments relating to a future trade
involving the underlying asset. Other derivative contracts (such as swaps)
require payments relating to the income or returns from the underlying asset.
The other party to a derivative contract is referred to as a counterparty. Many
derivative contracts are traded on securities or commodities exchanges. In this
case, the exchange sets all the terms of the contract except for the price.
Investors make payments due under their contracts through the exchange. Most
exchanges require investors to maintain margin accounts through their brokers to
cover their potential obligations to the exchange. Parties to the contract make
(or collect) daily payments to the margin accounts to reflect losses (or gains)
in the value of their contracts. This protects investors against potential
defaults by the counterparty. Trading contracts on an exchange also allows
investors to close out their contracts by entering into offsetting contracts.
For example, the Fund could close out an open contract to buy an asset at a
future date by entering into an offsetting contract to sell the same asset on
the same date. If the offsetting sale price is more than the original purchase
price, the Fund realizes a gain; if it is less, the Fund realizes a loss.
Exchanges may limit the amount of open contracts permitted at any one time. Such
limits may prevent the Fund from closing out a position. If this happens, the
Fund will be required to keep the contract open (even if it is losing money on
the contract), and to make any payments required under the contract (even if it
has to sell portfolio securities at unfavorable prices to do so). Inability to
close out a contract could also harm the Fund by preventing it from disposing of
or trading any assets it has been using to secure its obligations under the
contract. The Fund may also trade derivative contracts over-the-counter (OTC) in
transactions negotiated directly between the Fund and the counterparty. OTC
contracts do not necessarily have standard terms, so they cannot be directly
offset with other OTC contracts. In addition, OTC contracts with more
specialized terms may be more difficult to price than exchange traded contracts.
Depending upon how the Fund uses derivative contracts and the relationships
between the market value of a derivative contract and the underlying asset,
derivative contracts may increase or decrease the Fund's exposure to market and
currency risks, and may also expose the Fund to liquidity and leverage risks.
OTC contracts also expose the Fund to credit risks in the event that a
counterparty defaults on the contract. The Fund may trade in the following types
of derivative contracts.
Futures Contracts
Futures contracts provide for the future sale by one party and purchase by
another party of a specified amount of an underlying asset at a specified
price, date and time. Entering into a contract to buy an underlying asset
is commonly referred to as buying a contract or holding a long position in
the asset. Entering into a contract to sell an underlying asset is commonly
referred to as selling a contract or holding a short position in the asset.
Futures contracts are considered to be commodity contracts.
Futures contracts traded OTC are frequently referred to as forward
contracts.
Options
Options are rights to buy or sell an underlying asset for a specified price
(the exercise price) during, or at the end of, a specified period. A call
option gives the holder (buyer) the right to buy the underlying asset from
the seller (writer) of the option. A put option gives the holder the right
to sell the underlying asset to the writer of the option. The writer of the
option receives a payment, or premium, from the buyer, which the writer
keeps regardless of whether the buyer uses (or exercises) the option. The
Fund may engage in one or more of the following: Buy call options on
securities, securities indices and futures contracts in anticipation of an
increase in the value of the underlying asset. Buy put options on
securities, securities indices and futures contracts in anticipation of a
decrease in the value of the underlying asset. Write call options on
securities, securities indices and futures contracts to generate income
from premiums, and in anticipation of a decrease or only limited increase
in the value of the underlying asset. If a call written by the Fund is
exercised, the Fund foregoes any possible profit from an increase in the
market price of the underlying asset over the exercise price plus the
premium received.
<PAGE>
Write put options on securities, securities indices and futures contracts
(to generate income from premiums, and in anticipation of an increase or
only limited decrease in the value of the underlying asset). In writing
puts, there is a risk that the Fund may be required to take delivery of the
underlying asset when its current market price is lower than the exercise
price. When the Fund writes options on futures contracts, it will be
subject to margin requirements similar to those applied to futures
contracts. Buy or write options to close out existing options positions.
Hybrid Instruments Hybrid instruments combine elements of derivative
contracts with those of another security (typically a fixed income
security). All or a portion of the interest or principal payable on a
hybrid security is determined by reference to changes in the price of an
underlying asset or by reference to another benchmark (such as interest
rates, currency exchange rates or indices). Hybrid instruments also include
convertible securities with conversion terms related to an underlying asset
or benchmark. The risks of investing in hybrid instruments reflect a
combination of the risks of investing in securities, options, futures and
currencies, and depend upon the terms of the instrument. Thus, an
investment in a hybrid instrument may entail significant risks in addition
to those associated with traditional fixed income or convertible
securities. Hybrid instruments are also potentially more volatile and carry
greater market risks than traditional instruments. Moreover, depending on
the structure of the particular hybrid, it may expose the Fund to leverage
risks or carry liquidity risks.
Special Transactions
Repurchase Agreements
Repurchase agreements are transactions in which the Fund buys a security
from a dealer or bank and agrees to sell the security back at a mutually
agreed upon time and price. The repurchase price exceeds the sale price,
reflecting the Fund's return on the transaction. This return is unrelated
to the interest rate on the underlying security. The Fund will enter into
repurchase agreements only with banks and other recognized financial
institutions, such as securities dealers, deemed creditworthy by the
investment adviser. The Fund's custodian or subcustodian will take
possession of the securities subject to repurchase agreements. The
investment adviser or subcustodian will monitor the value of the underlying
security each day to ensure that the value of the security always equals or
exceeds the repurchase price. Repurchase agreements are subject to credit
risks. Reverse Repurchase Agreements Reverse repurchase agreements are
repurchase agreements in which the Fund is the seller (rather than the
buyer) of the securities, and agrees to repurchase them at an agreed upon
time and price. A reverse repurchase agreement may be viewed as a type of
borrowing by the Fund. Reverse repurchase agreements are subject to credit
risks. In addition, reverse repurchase agreements create leverage risks
because the Fund must repurchase the underlying security at a higher price,
regardless of the market value of the security at the time of repurchase.
When Issued Transactions When issued transactions are arrangements in which
the Fund buys securities for a set price, with payment and delivery of the
securities scheduled for a future time. During the period between purchase
and settlement, no payment is made by the Fund to the issuer and no
interest accrues to the Fund. The Fund records the transaction when it
agrees to buy the securities and reflects their value in determining the
price of its shares. Settlement dates may be a month or more after entering
into these transactions so that the market values of the securities bought
may vary from the purchase prices. Therefore, when issued transactions
create market risks for the Fund. When issued transactions also involve
credit risks in the event of a counterparty default.
To Be Announced Securities (TBAs)
As with other when issued transactions, a seller agrees to issue a TBA
security at a future date. However, the seller does not specify the
particular securities to be delivered. Instead, the Fund agrees to
accept any security that meets specified terms. For example, in a TBA
mortgage backed transaction, the Fund and the seller would agree upon
the issuer, interest rate and terms of the underlying mortgages.
However, the seller would not identify the specific underlying
mortgages until it issues the security. TBA mortgage backed securities
increase market risks because the underlying mortgages may be less
favorable than anticipated by the Fund.
<PAGE>
Securities Lending
The Fund may lend portfolio securities to borrowers that the investment
adviser deems creditworthy. In return, the Fund receives cash or liquid
securities from the borrower as collateral. The borrower must furnish
additional collateral if the market value of the loaned securities
increases. Also, the borrower must pay the Fund the equivalent of any
dividends or interest received on the loaned securities. The Fund will
reinvest cash collateral in securities that qualify as an acceptable
investment for the Fund. However, the Fund must pay interest to the
borrower for the use of cash collateral. Loans are subject to termination
at the option of the Fund or the borrower. The Fund will not have the right
to vote on securities while they are on loan, but it will terminate a loan
in anticipation of any important vote. The Fund may pay administrative and
custodial fees in connection with a loan and may pay a negotiated portion
of the interest earned on the cash collateral to a securities lending agent
or broker. Securities lending activities are subject to market risks and
credit risks.
Asset Coverage
In order to secure its obligations in connection with derivatives contracts or
special transactions, the Fund will either own the underlying assets, enter into
an offsetting transaction or set aside readily marketable securities with a
value that equals or exceeds the Fund's obligations. Unless the Fund has other
readily marketable assets to set aside, it cannot trade assets used to secure
such obligations entering into an offsetting derivative contract or terminating
a special transaction. This may cause the Fund to miss favorable trading
opportunities or to realize losses on derivative contracts or special
transactions. Investment Risks Stock Market Risks o The value of equity
securities in the Fund's portfolio will rise and fall. These fluctuations could
be a sustained trend or
a drastic movement. The Fund's portfolio will reflect changes in prices of
individual portfolio stocks or general changes in stock valuations.
Consequently, the Fund's share price may decline and you could lose money.
o The investment adviser attempts to manage market risk by limiting the
amount the Fund invests in each company's equity securities. However,
diversification will not protect the Fund against widespread or prolonged
declines in the stock market.
Sector Risks
o Companies with similar characteristics may be grouped together in broad
categories called sectors. Sector risk is the possibility that a certain
sector may underperform other sectors or the market as a whole. As the
investment adviser allocates more of the Fund's portfolio holdings to a
particular sector, the Fund's performance will be more susceptible to any
economic, business or other developments which generally affect that
sector.
Liquidity Risks
o Trading opportunities are more limited for equity securities that are not
widely held and for fixed income securities that have not received any
credit ratings, have received ratings below investment grade or are not
widely held. This may make it more difficult to sell or buy a security at a
favorable price or time. Consequently, the Fund may have to accept a lower
price to sell a security, sell other securities to raise cash or give up an
investment opportunity, any of which could have a negative effect on the
Fund's performance. Infrequent trading of securities may also lead to an
increase in their price volatility.
o Liquidity risk also refers to the possibility that the Fund may not be able
to sell a security or close out a derivative contract when it wants to. If
this happens, the Fund will be required to continue to hold the security or
keep the position open, and the Fund could incur losses.
o OTC derivative contracts generally carry greater liquidity risk than
exchange-traded contracts. Currency Risks o Exchange rates for currencies
fluctuate daily. The combination of currency risk and market risk tends to make
securities
traded in foreign markets more volatile than securities traded exclusively
in the U.S.
o The investment adviser attempts to manage currency risk by limiting the
amount the Fund invests in securities denominated in a particular currency.
However, diversification will not protect the Fund against a general
increase in the value of the U.S.
dollar relative to other currencies.
<PAGE>
Risks of Foreign Investing
o Foreign securities pose additional risks because foreign economic or
political conditions may be less favorable than those of the United States.
Foreign financial markets may also have fewer investor protections.
Securities in foreign markets may also be subject to taxation policies that
reduce returns for U.S. investors.
o Due to these risk factors, foreign securities may be more volatile and less
liquid than similar securities traded in the U.S. Leverage Risks o Leverage risk
is created when an investment exposes the Fund to a level of risk that exceeds
the amount invested. Changes in
the value of such an investment magnify the Fund's risk of loss and
potential for gain.
o Investments can have these same results if their returns are based on a
multiple of a specified index, security or other benchmark.
Bond Market Risks
o Prices of fixed income securities rise and fall in response to interest
rate changes for similar securities. Generally, when interest rates rise,
prices of fixed income securities fall.
o Interest rate changes have a greater effect on the price of fixed income
securities with longer durations. Duration measures the price sensitivity
of a fixed income security relative to changes in interest rates.
Credit Risks
o Credit risk is the possibility that an issuer will default on a security by
failing to pay interest or principal when due. If an issuer defaults, the
Fund will lose money.
o Many fixed income securities receive credit ratings from services such as
Standard & Poor's and Moody's Investors Service. These services assign
ratings to securities by assessing the likelihood of issuer default. Lower
credit ratings correspond to higher credit risk. If a security has not
received a rating, the Fund must rely entirely upon the investment
adviser's credit assessment.
o Fixed income securities generally compensate for greater credit risk by
paying interest at a higher rate. The difference between the yield of a
security and the yield of a U.S. Treasury security with a comparable
maturity (the spread) measures the additional interest paid for risk.
Spreads may increase generally in response to adverse economic or market
conditions. A security's spread may also increase if the security's rating
is lowered, or the security is perceived to have an increased credit risk.
An increase in the spread will cause the price of the security to decline.
o Credit risk includes the possibility that a party to a transaction
involving the Fund will fail to meet its obligations. This could cause the
Fund to lose the benefit of the transaction or prevent the Fund from
selling or buying other securities to implement its investment strategy.
Investment Limitations
Issuing Senior Securities and Borrowing Money
The Fund may borrow money, directly or indirectly, and issue senior
securities, to the maximum extent permitted under the 1940 Act, any
rule or order thereunder, or any SEC staff interpretation thereof.
Investing in Real Estate The Fund may not purchase or sell real estate,
provided that this restriction does not prevent the Fund from investing
in issuers which invest, deal, or otherwise engage in transactions in
real estate or interests therein, or investing in securities that are
secured by real estate or interests therein. The Fund may exercise its
rights under agreements relating to such securities, including the
right to enforce security interests and to hold real estate acquired by
reason of such enforcement until that real estate can be liquidated in
an orderly manner. Investing in Commodities The Fund may not purchase
or sell physical commodities, provided that the Fund may purchase
securities of companies that deal in commodities. For purposes of this
restriction, investments in transactions involving futures contracts
and options, forward currency contracts, swap transactions and other
financial contracts that settle by payment of cash are not deemed to be
investments in commodities. Underwriting The Fund may not underwrite
the securities of other issuers, except that the Fund may engage in
transactions involving the acquisition, disposition or resale of its
portfolio securities, under circumstances where it may be considered to
be an underwriter under the Securities Act of 1933. Diversification of
Investments With respect to securities comprising 75% of the value of
its total assets, the Fund will not purchase securities of any one
issuer (other than cash; cash items; securities issued or guaranteed by
the government of the United States or its agencies or
instrumentalities and repurchase agreements collateralized by such U.S.
government securities; and securities of other investment companies)
if, as a result, more than 5% of the value of its total assets would be
invested in the securities of that issuer, or the Fund would own more
than 10% of the outstanding voting securities of that issuer.
Concentration of Investments The Fund will not make investments that
will result in the concentration of its investments in the securities
of issuers primarily engaged in the same industry. For purposes of this
restriction, the term concentration has the meaning set forth in the
1940 Act, any rule or order thereunder, or any SEC staff interpretation
thereof. Government securities and municipal securities will not be
deemed to constitute an industry. The Fund has adopted a related
non-fundamental policy which provides that in applying the
concentration restriction: (a) utility companies will be divided
according to their services, for example, gas, gas transmission,
electric and telephone will each be considered a separate industry; (b)
financial service companies will be classified according to the end
users of their services, for example, automobile finance, bank finance
and diversified finance will each be considered a separate industry;
and (c) asset-backed securities will be classified according to the
underlying assets securing such securities. Lending Cash or Securities
The Fund may not make loans, provided that this restriction does not
prevent the Fund from purchasing debt obligations, entering into
repurchase agreements, lending its assets to broker/dealers or
institutional investors and investing in loans, including assignments
and participation interests.
The above investment limitations cannot be changed without shareholder approval
of a majority of the Fund's outstanding Shares as defined in the 1940 Act. 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 Securities of Other Investment Companies
The Fund may invest its assets in securities of other investment
companies as an efficient means of carrying out its investment
policies. It should be noted that investment companies incur certain
expenses, such as management fees, and, therefore, any investment by
the Fund in shares of other investment companies may be subject to such
duplicate expenses. The Fund may invest in the securities of affiliated
money market funds as an efficient means of managing the Fund's
uninvested cash. Purchases on Margin The Fund will not purchase
securities on margin, provided that the Fund may obtain short-term
credits necessary for the clearance of purchases and sales of
securities, and further provided that the Fund may make margin deposits
in connection with its use of financial options and futures, forward
and spot currency contracts, and other financial contracts or
derivative instruments. Pledging Assets The Fund will not mortgage,
pledge, or hypothecate any of its assets, provided that this shall not
apply to the transfer of securities in connection with any permissible
borrowing or to collateral arrangements in connection with permissible
activities. Investing in Illiquid Securities The Fund will not purchase
securities for which there is no readily available market, or enter
into repurchase agreements or purchase time deposits maturing in more
than seven days, if immediately after and as a result, the value of
such securities would exceed, in the aggregate 15% of the Fund's net
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. 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 association, having capital, surplus, and undivided
profits in excess of $100,000,000 at the time of deposit, to be "cash items."
The Fund does not intend to borrow money in excess of 5% of the value of its
total assets during the coming fiscal year. Determining Market Value of
Securities Market values of the Fund's portfolio securities are determined as
follows:
for equity securities, according to the last sale price in the market
in which they are primarily traded (either a national securities exchange
or the over-the-counter market), if available;
in the absence of recorded sales for equity securities, according to the
mean between the last closing bid and asked prices;
for bonds and other fixed income securities, at the last sale price on
a national securities exchange, if available, otherwise, 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, except that
short-term obligations with remaining maturities of less than 60 days at
the time of purchase may be valued at amortized cost or at fair market
value as determined in good faith by the Board; and
for all other securities, at fair value as determined in good faith by the
Board.
Prices provided by independent pricing services may be determined without
relying exclusively on quoted prices and may consider: institutional trading in
similar groups of securities, yield, quality, stability, risk, coupon rate,
maturity, type of issue, trading characteristics and other market data or
factors. From time to time, when prices cannot be obtained from an independent
pricing service, securities may be valued based on quotes from broker-dealers or
other financial institutions that trade the securities.
The Fund values futures contracts and options at their market values established
by the exchanges on which they are traded at the close of trading on such
exchanges. Options traded in the over-the-counter market are valued according to
the mean between the last bid and the last asked price for the option as
provided by an investment dealer or other financial institution that deals in
the option. The Board may determine in good faith that another method of valuing
such investments is necessary to appraise their fair market value.
Trading in Foreign Securities. Trading in foreign securities may be completed at
times which vary from the closing of the New York Stock Exchange (NYSE). In
computing its net asset value (NAV), 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 NYSE. Certain foreign currency exchange rates may also be
determined at the latest rate prior to the closing of the NYSE. 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
NYSE. 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
Fund's Board, although the actual calculation may be done by others. WHAT DO
SHARES COST?
The Fund's NAV per Share fluctuates and is based on the market value of all
securities and other assets of the Fund. The NAV for each class of Shares may
differ due to the variance in expenses incurred by each class. Such variance
will reflect only accrued net income to which the shareholders of a particular
class are entitled.
Reducing or Eliminating the Front-End Sales Charge - Class A Shares Only You can
reduce or eliminate the applicable front-end sales charge, as follows:
Quantity Discounts. Larger purchases of the same Share class reduce the sales
charge you pay. You can combine purchases of Shares made on the same day by you,
your spouse, and your children under age 21. In addition, purchases made at one
time by a trustee or fiduciary for a single trust estate or a single fiduciary
account can be combined.
Accumulated Purchases. If you make an additional purchase of Shares, you can
count previous Share purchases still invested in the Fund in calculating the
applicable sales charge on the additional purchase.
Concurrent Purchases. You can combine concurrent purchases of the corresponding
Share class of two or more Wachovia Funds in calculating the applicable sales
charge.
Letter of Intent. You can sign a letter of intent committing to purchase a
certain amount of the same or corresponding class of Shares within a 13 month
period in order to combine such purchases in calculating the applicable sales
charge. The Fund's custodian will hold Shares in escrow equal to the maximum
applicable sales charge. If you complete your commitment, the escrowed Shares
will be released to your account. If you do not complete your commitment within
13 months, the custodian will redeem an appropriate number of escrowed Shares to
pay for the applicable sales charge.
Reinvestment Privilege. You may reinvest, within 90 days, your Share redemption
proceeds at the next determined NAV, without any sales charge. This sales charge
elimination is offered because a sales charge was previously assessed.
HOW IS THE FUND SOLD?
Under the Distributor's contract with the Fund, the Distributor (Federated
Securities Corp.) offers Shares on a continuous, best-efforts basis.
Front-End Sales Charge Reallowances
The Distributor receives a front-end sales charge on certain Share sales. The
Distributor generally pays up to 90% (and as much as 100%) of this charge to
investment professionals for sales and/or administrative services. Any payments
to investment professionals in excess of 90% of the front-end sales charge are
considered supplemental payments. The Distributor retains any portion not paid
to a financial intermediary.
HOW TO BUY SHARES
Purchases at Net Asset Value
Class A Shares of the Fund may be purchased at NAV, without an initial sales
charge, by investment advisers registered under the Investment Advisers Act of
1940, purchasing on behalf of their clients, by Wachovia Bank or affiliates for
funds which are held in fiduciary, advisory, agency, custodial, or similar
capacity, and for which Wachovia Bank, or an affiliate or a third party will
provide shareholder services for a fee paid by the Fund, and by trustees,
officers, directors and retired directors, advisory board members, employees and
spouses and children under the age of 21 of such persons, and any trusts, or
individual retirement accounts operated for such persons.
Through A Retirement Program
Class A Shares may be purchased at NAV by participants in qualified retirement
plans for which Wachovia Bank, or an affiliate, had previously, but no longer,
serves in an administrative or fiduciary capacity. Purchases made by or through
a qualified retirement plan (Retirement Plan) that has in excess of an aggregate
investment of $500,000 in certain Delaware Group Funds and any portfolios of The
Wachovia Funds and purchases made by companies participating in a Retirement
Plan that has at least 100 employees will be made at NAV, without the imposition
of the sales charge. Purchases made by any Retirement Plan that has an aggregate
investment of over $500,000 in The Wachovia Funds may also purchase at NAV.
Class Y Shares are also offered to participants in qualified retirement plans
that offer a Wachovia Fund as an investment option through a program known as
"Institutional Solutions" marketed by Delaware Investment and Retirement
Services, Inc. Exchanging Securities for Shares You may contact the Distributor
to request a purchase of Shares in an exchange for securities you own. The Fund
reserves the right to determine whether to accept your securities and the
minimum market value to accept. The Fund will value your securities in the same
manner as it values its assets. This exchange is treated as a sale of your
securities for federal tax purposes.
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. Wachovia Bank acts as the
shareholders' agent in depositing checks and converting them to federal funds.
HOW TO EXCHANGE SHARES
Qualified Retirement Plan Participants
Participants in a Delaware/Wachovia Qualified Retirement Plan are permitted to:
o exchange all or part of their Class A Shares of other eligible Delaware Funds,
as well as Eligible Wachovia Funds at NAV; and o exchange all or part of their
Eligible Wachovia Fund shares into Class A Shares of the Eligible Delaware
Funds, at NAV. However, a participant in any Retirement Plan that has an
aggregate investment of $1 million or less in the Eligible Funds who exchanges
into an Eligible Fund from the Money Fund must pay the applicable front-end
sales charge at the time of the exchange (unless the Money Fund shares were
acquired in an exchange from an Eligible Fund subject to a front-end sales
charge or by reinvestment of dividends). HOW TO REDEEM SHARES
Redemption In Kind
Although the Fund intends to pay Share redemptions in cash, it reserves the
right, as described below, to pay the redemption price in whole or in part by a
distribution of the Fund's portfolio securities.
Because the Fund has elected to be governed by Rule 18f-1 under the 1940 Act,
the Fund is obligated to pay Share redemptions to any one shareholder in cash
only up to the lesser of $250,000 or 1% of the net assets represented by such
Share class during any 90-day period.
Any Share redemption payment greater than this amount will also be in cash
unless the Board determines that payment should be in kind. In such a case, the
Fund will pay all or a portion of the remainder of the redemption in portfolio
securities, valued in the same way as the Fund determines its NAV. The portfolio
securities will be selected in a manner that the Fund's Board deems fair and
equitable and, to the extent available, such securities will be readily
marketable.
Redemption in kind is not as liquid as a cash redemption. If redemption is made
in kind, shareholders receiving the portfolio securities and selling them before
their maturity could receive less than the redemption value of the securities
and could incur certain transaction costs.
ACCOUNT AND SHARE 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 classes of each series of
the Trust have equal voting rights, except that in matters affecting only the
Fund or a particular class, only Shares of the Fund or class are entitled to
vote.
Trustees may be removed by the Trustees or by shareholders at a special meeting.
A special meeting of shareholders will be called by the Trustees upon the
written request of shareholders who own at least 10% of each Trust's outstanding
shares of all series entitled to vote.
TAX INFORMATION
Federal Income Tax
The Fund intends to meet requirements of Subchapter M of the Internal Revenue
Code applicable to regulated investment companies. If these requirements are not
met, the Fund will not receive special tax treatment and will pay federal income
tax.
The Fund will be treated as a single, separate entity for federal income tax
purposes so that income earned and capital gains and losses realized by the
Trust's other portfolios will be separate from those realized by the Fund.
Foreign Investments
If the Fund purchases foreign securities, its investment income and gains from
those securities may be subject to foreign withholding or other taxes that could
reduce the return on these securities. Tax treaties between the United States
and foreign countries, however, may reduce or eliminate the amount of foreign
taxes to which the Fund would be subject. The effective rate of foreign tax
cannot be predicted since the amount of Fund assets to be invested within
various countries is uncertain. However, the Fund intends to operate so as to
qualify for treaty-reduced tax rates when applicable.
Distributions from the Fund may be based on estimates of book income for the
year. Book income generally consists solely of the coupon income generated by
the portfolio, whereas tax basis income includes gains or losses attributable to
currency fluctuation. Due to differences in the book and tax treatment of fixed
income securities denominated in foreign currencies, it is difficult to project
currency effects on an interim basis. Therefore, to the extent that currency
fluctuations cannot be anticipated, a portion of distributions to shareholders
could later be designated as a return of capital, rather than income, for income
tax purposes, which may be of particular concern to simple trusts.
The Fund may invest in the stock of certain foreign corporations, that
constitute Passive Foreign Investment Companies (PFICs), and the Fund may be
subject to federal income taxes upon disposition of PFIC investments.
If more than 50% of the value of the Fund's assets at the end of the tax year is
represented by stock or other securities of foreign corporations, the Fund
intends to qualify for certain Code stipulations that would allow shareholders
to claim a foreign tax credit or deduction on its U.S. income tax returns. The
Code may limit a shareholder's ability to claim a foreign tax credit.
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.
WHO MANAGES AND PROVIDES SERVICES TO THE FUND?
Board Of Trustees
The Board is responsible for managing the Trust's business affairs and for
exercising all the Trust's powers except those reserved for the shareholders.
Information about each Board member is provided below and includes the following
data: name, address, birthdate, present position(s) held with the Trust,
principal occupations for the past five years, total compensation received as a
Trustee from the Trust for the Trust's most recent fiscal year. Each of the
Trustees and officers listed below holds an identical position with The Wachovia
Municipal Funds, another investment company. The Wachovia Funds are comprised of
fifteen funds and The Wachovia Municipal Funds are comprised of four funds,
together they form the Fund Complex.
An asterisk (*) denotes a Trustee who is deemed to be an interested person as
defined in the Investment Company Act of 1940.
<PAGE>
<TABLE>
<CAPTION>
<S> <C> <C>
- ---------------------------------- ---------------------------------------------------------------------- -------------------
Name Occupations for past 5 Years Aggregate
Birthdate Compensation from
Address Fund Complex
Position with Trust
- ---------------------------------- ---------------------------------------------------------------------- -------------------
- ---------------------------------- ---------------------------------------------------------------------- -------------------
James A. Hanley Retired; Vice President and Treasurer, Abbott Laboratories (health $26,400
August 13, 1931 care products) (until 1992).
4272 Sanctuary Way
Bonita Springs, FL
Trustee
- ---------------------------------- ---------------------------------------------------------------------- -------------------
- ---------------------------------- ---------------------------------------------------------------------- -------------------
Samuel E. Hudgins Hudgins Consulting, LLC (independent consultant); President, $26,400
March 4, 1929 Percival Hudgins & Company, LLC (investment bankers/financial
715 Whitemere Court, N.W. consultants) (until September 1997); Director, Atlantic American
Atlanta, GA Corporation (insurance holding company).
Trustee
- ---------------------------------- ---------------------------------------------------------------------- -------------------
- ---------------------------------- ---------------------------------------------------------------------- -------------------
J. Berkely Ingram, Jr. Real estate investor and partner; formerly, Vice Chairman, $24,000
April 17, 1924 Massachusetts Mutual Life Insurance Company.
114-L Reynolda Village
Winston-Salem, NC
Trustee
- ---------------------------------- ---------------------------------------------------------------------- -------------------
- ---------------------------------- ---------------------------------------------------------------------- -------------------
D. Dean Kaylor Retired; Executive Vice President and Chief Financial Officer, NBD $24,000
June 29, 1930 Bank, N.A. and NBD Bancorp, Inc. (bank and bank holding company)
2835 Greenbriar (until 1990).
Harbor Springs, MI
Trustee
- ---------------------------------- ---------------------------------------------------------------------- -------------------
- ---------------------------------- ---------------------------------------------------------------------- -------------------
Alvin J. Schexnider, Ph.D. Chancellor, Winston-Salem State University. $12,000
May 26, 1945
5005 Marble Arch Road
Winston-Salem, NC 27104
Trustee
- ---------------------------------- ---------------------------------------------------------------------- -------------------
- ---------------------------------- ---------------------------------------------------------------------- -------------------
Charles S. Way, Jr.* President, Chairman and CEO, The Beach Company and its various $24,000
December 18, 1937 affiliated companies and partnerships.
211 King Street
Suite 300
Charleston, SC
Trustee
- ---------------------------------- ---------------------------------------------------------------------- -------------------
- ---------------------------------- ---------------------------------------------------------------------- -------------------
John W. McGonigle President and Chief Executive Officer, Federated Investors $0
October 26, 1938 Management Company; Executive Vice President, Secretary, General
Federated Investors Tower Counsel, and Trustee, Federated Investors; Trustee, Federated
Pittsburgh, PA Advisers, Federated Management, Federated Research, and Federated
President and Treasurer Services Company; and Director, Federated Securities Corp.
- ---------------------------------- ---------------------------------------------------------------------- -------------------
- ---------------------------------- ---------------------------------------------------------------------- -------------------
Charles L. Davis, Jr. Vice President, Federated Services Company. $0
March 23, 1960
Federated Investors Tower
Pittsburgh, PA
Vice President and Assistant
Treasurer
- ---------------------------------- ---------------------------------------------------------------------- -------------------
- ---------------------------------- ---------------------------------------------------------------------- -------------------
Peter J. Germain Senior Vice President and Director of Proprietary Funds Services, $0
September 3, 1959 Federated Services Company; formerly, Senior Corporate Counsel,
Federated Investors Tower Federated Services Company.
Pittsburgh, PA
Secretary
- ---------------------------------- ---------------------------------------------------------------------- -------------------
</TABLE>
Investment Adviser
The investment adviser, Wachovia Asset Management, conducts investment research
and makes investment decisions for the Fund. The investment adviser is a
business unit of Wachovia Bank, N.A.
The investment adviser shall not be liable to the Trust, the Fund, or any Fund
shareholder 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.
Brokerage Transactions
When selecting brokers and dealers to handle the purchase and sale of portfolio
instruments, the investment adviser looks for prompt execution of the order at a
favorable price. The investment adviser will generally use firms that are
recognized dealers in specific portfolio instruments, except when a better price
and execution of the order can be obtained elsewhere. The investment adviser may
select brokers and dealers based on whether they also offer research services
(as described below). In selecting among firms believed to meet these criteria,
the investment adviser may give consideration to those firms which have sold or
are selling Shares of the Fund and other funds distributed by the Distributor
and its affiliates. The investment adviser makes decisions on portfolio
transactions and selects brokers and dealers subject to review by the Fund's
Board.
Research Services
Research services 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. Research
services may be used by the investment adviser or by affiliates of Federated
Investors in advising other accounts. To the extent that receipt of these
services may replace services for which the investment adviser or its affiliates
might otherwise have paid, it would tend to reduce their expenses. The
investment adviser and its affiliates exercise reasonable business judgment in
selecting those 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. However, it is possible for the Fund to pay a higher
commission than another broker might have charged for the same transaction in
recognition of services provided.
Investment decisions for the Fund are made independently from those of other
accounts managed by the investment adviser. When the Fund and one or more of
those accounts invests in, or disposes of, the same security, available
investments or opportunities for sales will be allocated among the Fund and the
account(s) in a manner believed by the investment adviser to be equitable. While
the coordination and ability to participate in volume transactions may benefit
the Fund, it is possible that this procedure could adversely impact the price
paid or received and/or the position obtained or disposed of by the Fund.
Administrator
Federated Services Company, a subsidiary of Federated Investors, provides
administrative personnel and services (including certain legal and financial
reporting services) necessary to operate the Fund. Federated Services Company
provides these at the following annual rate of the average aggregate daily net
assets of the Fund as specified below:
Maximum Average Aggregate Daily Net
Administrative Fee Assets of the Fund
.10 of 1% on the first $3.5 billion
.06 of 1% on assets in excess of $3.5 billion
<PAGE>
Custodian
Wachovia Bank, N.A., 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.
Transfer Agent And Dividend Disbursing Agent
Federated Services Company, through its registered transfer agent subsidiary,
Federated Shareholder Services Company, also provides certain accounting and
recordkeeping services with respect to the Fund's portfolio investments.
Independent Public Accountants
Ernst & Young LLP is the independent auditors for the Fund.
Shareholder Services
The Fund may pay Federated Administrative Services, a subsidiary of Federated,
for providing shareholder services and maintaining shareholder accounts.
Federated Administrative Services may select others to perform these services
for their customers and may pay them fees.
HOW DOES THE FUND MEASURE PERFORMANCE?
The Fund may advertise Share performance by using the Securities and Exchange
Commission's (SEC) standard method for calculating performance applicable to all
mutual funds. The SEC also permits this standard performance information to be
accompanied by non-standard performance information.
Unless otherwise stated, any quoted Share performance reflects the effect of
non-recurring charges, such as maximum sales charges, which, if excluded, would
increase the total return and yield. The performance of Shares depends upon such
variables as: portfolio quality; average portfolio maturity; type and value of
portfolio securities; changes in interest rates; changes or differences in the
Fund's or any class of Shares' expenses; and various other factors.
Share performance fluctuates on a daily basis largely because net earnings and
offering price per Share fluctuate daily. Both net earnings and offering price
per Share are factors in the computation of yield and total return.
Total Return
Total return represents the change (expressed as a percentage) in the value of
Shares over a specific period of time, and includes the investment of dividends
and capital gain distributions.
The average annual total return for Shares 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 NAV 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 charge, adjusted over the
period by any additional Shares, assuming the annual reinvestment of all
dividends and capital gain distributions.
When Shares of the Fund are in existence for less than a year, the Fund may
advertise cumulative total return for that specific period of time, rather than
annualizing the total return.
Yield
The yield of Shares is calculated by dividing: (i) the net investment income per
Share earned by the Shares over a thirty-day period; by (ii) the maximum
offering price per Share on the last day of the period. This number 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.
To the extent investment professionals and broker/dealers charge fees in
connection with services provided in conjunction with an investment in Shares,
the Share performance is lower for shareholders paying those fees.
Performance Comparisons
Advertising and sales literature may include:
o references to ratings, rankings, and financial publications and/or performance
comparisons of Shares to certain indices; o charts, graphs and illustrations
using the Fund's returns, or returns in general, that demonstrate investment
concepts such
as tax-deferred compounding, dollar-cost averaging and systematic investment;
o discussions of economic, financial and political developments and their
impact on the securities market, including the portfolio manager's views on
how such developments could impact the Fund; and
o information about the mutual fund industry from sources such as the Investment
Company Institute.
The Fund may compare its performance, or performance for the types of securities
in which it invests, to a variety of other investments, including federally
insured bank products such as bank savings accounts, certificates of deposit,
and Treasury bills.
The Fund may quote information from reliable sources regarding individual
countries and regions, world stock exchanges, and economic and demographic
statistics.
You may use financial publications and/or indices to obtain a more complete view
of Share performance. When comparing performance, you should consider all
relevant factors such as the composition of the 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. ("Lipper") ranks funds in various fund
categories by making comparative calculations using total return. Total
return assumes the reinvestment of all capital gain distributions and
income dividends and takes into account any change in maximum offering
price over a specific period of time. From time to time, the Fund will
quote its Lipper ranking in advertising and sales literature.
Dow Jones Industrial Average ("DJIA") represents share prices of selected
blue-chip industrial corporations. The DJIA indicates daily changes in the
average price of stock of these corporations. Because it represents the top
corporations in the United States, the DJIA index is a leading economic
indicator for the stock market as a whole. Standard & Poor's 500 Stock
Price Index (the "S&P Index"), is a composite index of common stocks in
industry, transportation, and financial and public utility companies. In
addition, the S&P Index assumes reinvestment of all dividends paid by
stocks listed on the S&P Index. Taxes due on any of these distributions are
not included, nor are brokerage or other fees calculated in the S&P Index
figures. Morningstar, Inc., an independent rating service, is the publisher
of the bi-weekly Mutual Fund Values. Mutual Fund Values rates more than
1,000 NASDAQ-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.
<PAGE>
INVESTMENT RATINGS
Standard & Poor's 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 exposure 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. NR--NR indicates that no
public rating has been requested, that there is insufficient information on
which to base a rating, or that S&P does not rate a particular type of
obligation as a matter of policy. S&P may apply a plus (+) sign or minus (-)
sign to the above rating classifications to show relative standing within the
classifications. Moody's Investors Services, 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 some time 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 "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 a 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.
<PAGE>
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 or ever attaining any
real investment standing. NR--Not rated by Moody's. Moody's applies numerical
modifiers, 1, 2 and 3 in each generic rating classification from "Aa" through
"B" in its corporate bond rating system. The modifier 1 indicates that the
security ranks in the higher end of its generic rating category; the modifier 2
indicates a mid-range ranking; and the modifier 3 indicates that the issue ranks
in the lower end of its generic rating category. Standard & Poor's Commercial
Paper Ratings A-1--This highest category indicates that the degree of safety
regarding timely payment is strong. Those issues determined to possess extremely
strong safety characteristics are denoted with a plus sign (+) designation.
A-2--Capacity for timely payment on issues with this designation is
satisfactory. However, the relative degree of safety is not as high as for
issues designated "A-1." A-3--Issues carrying this designation have adequate
capacity for timely payment. They are, however, more vulnerable to the adverse
effects of changes in circumstances than obligations carrying the higher
designations. B--Issues rated "B" are regarded as having only speculative
capacity for timely payment. C--This rating is assigned to short-term debt
obligations with a doubtful capacity for payment. D--Debt rated "D" is in
payment default. The "D" rating category is used when interest payments or
principal payments are not made on the date due, even if the applicable grace
period has not expired, unless S&P believes that such payments will be made
during such grace period. Moody's Investors Services, Inc. Commercial Paper
Ratings Prime-1--Issuers rated "Prime-1" (or related supporting institutions)
have a superior capacity for repayment of short-term promissory obligations.
"Prime-1" repayment capacity will normally be evidenced by many of the following
characteristics: o Leading market positions in well-established industries; o
High rates of return on funds employed; o Conservative capitalization structure
with moderate reliance on debt and ample asset protection; o Broad margins in
earnings coverage of fixed financial charges and high internal cash generation;
or o Well-established access to a range of financial markets and assured sources
of alternate liquidity. Prime-2--Issuers rated "Prime-2" (or related supporting
institutions) have a strong capacity for repayment of short-term promissory
obligations. This will normally be evidenced by many of the characteristics
cited above, but to a lesser degree. Earnings trends and coverage ratios, while
sound, will be more subject to variation. Capitalization characteristics, while
still appropriate, may be more affected by external conditions. Ample alternate
liquidity is maintained. Moody's Investors Services, Inc. Short-Term Debt
Ratings Prime-1--Issuers rated Prime-1 (or related supporting institutions) have
a superior capacity for repayment of short-term promissory obligations. Prime-1
repayment capacity will normally be evidenced by the following characteristics:
o Leading market positions in well established industries; o High rates of
return on funds employed; o Conservative capitalization structure with moderate
reliance on debt and ample asset protection; o Broad margins in earning coverage
of fixed financial charges and high internal cash generation; and o
Well-established access to a range of financial markets and assured sources of
alternate liquidity. Prime-2--Issuers rated Prime-2 (or related supporting
institutions) have a strong capacity for repayment of short-term promissory
obligations. This will normally be evidenced by many of the characteristics
cited above, but to a lesser degree. Earnings trends and coverage ratios, while
sound, will be more subject to variation. Capitalization characteristics, while
still appropriate, may be more affected by external conditions. Ample alternate
liquidity is maintained. Prime-3--Issuers rated Prime-3 (or related supporting
institutions) have an acceptable ability for repayment of senior short-term
obligations. The effect of industry characteristics and market compositions may
be more pronounced. Variability in earnings and profitability may result in
changes in the level of debt protection measurements and may require relatively
high financial leverage. Adequate alternate liquidity is maintained. Not
Prime--Issuers rated Not Prime do not fall within any of the Prime rating
categories. Moody's Investors Services, Inc. Short Term Loan Ratings MIG 1/VMIG
1--This designation denotes best quality. There is present strong protection by
established cash flows, superior liquidity support or demonstrated broad based
access to the market for refinancing. MIG 2/VMIG 2--This designation denotes
high quality. Margins of protection are ample although not so large as in the
preceding group. MIG 3/VMIG 3--This designation denotes favorable quality. All
security elements are accounted for but there is lacking the undeniable strength
of the preceding grades. Liquidity and cash flow protection may be narrow and
market access for refinancing is likely to be less well established.
<PAGE>
ADDRESSES
<TABLE>
<CAPTION>
<S> <C>
Wachovia Personal Equity Fund
Class A Shares and Class Y Shares 101 Greystone Boulevard
SC-9215
Columbia, SC 29226
Distributor
Federated Securities Corp. Federated Investors Tower
1001 Liberty Avenue,
Pittsburgh, Pennsylvania 15222-3779
Investment Adviser
Wachovia Asset Management 100 North Main Street
Winston-Salem, NC 27101
Custodian
Wachovia Bank, N.A. 100 North Main Street
Winston-Salem, NC 27101
Transfer Agent and Dividend Disbursing Agent
Federated Shareholder Services Company Federated Investors Tower
1001 Liberty Avenue
Pittsburgh, PA 15222-3779
Independent Auditors
Ernst & Young LLP 200 Clarendon Street
Boston, MA 02116
</TABLE>
Item 23. Exhibits:
(a) Conformed copy of Declaration of Trust of the Registrant; (12)
(i) Conformed copy of Amendment #1 to the Declaration of Trust; (12)
(ii) Conformed copy of Amendment #2 to the Declaration of Trust; (12)
(iii) Conformed copy of Amendment #3 to the Declaration of Trust; (12)
(iv) Conformed copy of Amendment #4 to the Declaration of Trust; (12)
(v) Conformed copy of Amendment #5 to the Declaration of Trust; (12)
(vi) Conformed copy of Amendment #6 to the Declaration of Trust; (12)
(vii) Conformed copy of Amendment #13 to the Declaration of Trust; (19)
(b) Copy of Amended By-Laws of the Registrant; (2)
(c) Copy of Specimen Certificates for Shares of Beneficial Interest; (17)
(i) Copy of Specimen Certificate for Class A
Shares of Wachovia Balanced Fund; (17) (ii)
Copy of Specimen Certificate for Class B
Shares of Wachovia Balanced Fund; (17) (iii)
Copy of Specimen Certificate for Class A
Shares of Wachovia Equity Fund; (17) (iv)
Copy of Specimen Certificate for Class B
Shares of Wachovia Equity Fund; (17) (v)
Copy of Specimen Certificate for Class A
Shares of Wachovia Equity Index Fund; (17)
(vi) Copy of Specimen Certificate for Class
A Shares of Wachovia Fixed Income Fund; (17)
(vii) Copy of Specimen Certificate for Class
B Shares of Wachovia Fixed Income Fund; (17)
(viii) Copy of Specimen Certificate for
Class A Shares of Wachovia Special Values
Fund; (17) (ix) Copy of Specimen Certificate
for Class A Shares of Wachovia Short-Term
Fixed Income Fund; (17) (x) Copy of Specimen
Certificate for Investment Shares of
Wachovia Money Market Fund; (17) (xi) Copy
of Specimen Certificate for Investment
Shares of Wachovia Tax-Free Money Market
Fund; (17)
+ 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)
(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)
(17) Response is incorporated by reference to Registrant's Post-.....Effective
Amendment No. 21 on Form N-1A filed December 22, 1997. (File Nos. 33-44590
and 811-6504)
(19) Response is incorporated by reference to Registrant' Post-......Effective
Amendment No. 24 on Form N-1A filed March 12, 1998. (File Nos. 33-44590 and
811-6504)
<PAGE>
(xii) Copy of Specimen Certificate for
Investment Shares of Wachovia U.S. Treasury
Money Market Fund; (17) (xiii) Copy of
Specimen Certificate for Class A Shares of
Wachovia Quantitative Equity Fund; (17)
(ivx) Copy of Specimen Certificate for Class
B Shares of Wachovia Quantitative Equity
Fund; (17) (xv) Copy of Specimen Certificate
for Class A Shares of Wachovia Emerging
Markets Fund; (17)
(d) Conformed copy of Investment Advisory Contract of the Registrant; (12)
(i) Conformed copy of Exhibit A to the Investment Advisory Contract; (12)
(ii) Conformed copy of Exhibit B to the Investment Advisory Contract; (12)
(iii) Conformed copy of Exhibit C to the Investment Advisory Contract; (12)
(iv) Conformed copy of Exhibit D to the Investment Advisory Contract; (12)
(v) Conformed copy of Exhibit E to the Investment Advisory Contract; (12)
(vi) Conformed copy of Exhibit F to the Investment Advisory Contract; (12)
(vii) Conformed copy of Exhibit G to the Investment Advisory Contract; (12)
(viii) Conformed copy of Exhibit H to the Investment Advisory Contract; (12)
(ix) Conformed copy of Exhibit I to the Investment Advisory Contract; (12)
(x) Conformed Copy of Sub-Advisory Agreement of the Registrant; (10)
(xi) Conformed copy of Exhibit J to the Investment Advisory Contract; (13)
(xii) Conformed copy of Exhibit K to the Investment Advisory Contract; (18)
(xiii) Conformed copy of Investment Advisory agreement between The Wachovia
Funds and the Adviser; (20) (xiv) Conformed copy of Investment Advisory
agreement between The Wachovia Municipal Funds and the Adviser; (20)
(e) Conformed copy of Distributor's Contract of
the Registrant and Exhibits A-G thereto;
(12) (i) Conformed copy of Exhibit A to the
Distributor's Contract; (12)
+ All exhibits have been electronically filed.
(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)
(17) Response is incorporated by reference to Registrant's Post-Effective
Amendment No. 21 on Form N-1A filed December 22, 1997. (File Nos. 33-44590
and 811-6504)
(18) Response is incorporated by reference to Registrant's Post-Effective
Amendment No. 22 on Form N-1A filed February 4, 1998. (File Nos. 33-44590
and 811-6504)
(20) Response is incorporated by reference to Registrant's Post-Effective
Amendment No. 25 on Form N-1A filed February 22, 1999. (File Nos. 33-44590
and 811-6504)
<PAGE>
(ii) Conformed copy of Exhibit B to the
Distributor's Contract; (12) (iii) Conformed
copy of Exhibit C to the Distributor's
Contract; (12) (iv) Conformed copy of
Exhibit D to the Distributor's Contract;
(12) (v) Conformed copy of Exhibit E to the
Distributor's Contract; (12) (vi) Conformed
copy of Exhibit F to the Distributor's
Contract; (12) (vii) Conformed copy of
Exhibit G to the Distributor's Contract;
(12) (viii) Conformed copy of Exhibit H to
the Distributor's Contract; (13) (ix)
Conformed copy of Exhibit I to the
Distributor's Contract; (16) (x) Conformed
copy of Exhibit J to the Distributor's
Contract; (16) (xi) Conformed copy of
Exhibit K to the Distribution Agreement;
(18) (xii) Conformed copy of Exhibit L to
the Distribution Agreement; (18)
(f) Not applicable;
(g) Conformed copy of Custodian Agreement of the
Registrant; (12) (i) Exhibit A to the
Custodian Agreement; (12) (ii) Exhibit B to
the Custodian Agreement; (12) (iii) Exhibit
C to the Custodian Agreement; (12) (iv)
Exhibit D to the Custodian Agreement; (12)
(v) Conformed copy of Global Custody
Agreement for the Biltmore Emerging Markets
Fund;(17)
(vi) Amendment to Exhibit A to Custody
Agreement; (19)
(h) Conformed copy of Portfolio Accounting and
Shareholder Recordkeeping Agreement of the
Registrant; (12) (i) Copy of Schedule A to
Portfolio Accounting and Shareholdere
Recordkeeping Agreement; . (12)
(ii) Copy of Schedule H to Portfolio
Accounting and Shareholdere
Recordkeeping Agreement; . (12)
+ All exhibits have been electronically filed.
(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)
(16) Response is incorporated by reference to Registrant's Post-Effective
Amendment No. 20 on Form N-1A filed January 29, 1996. (File Nos. 33-44590
and 811-6504)
(18) Response is incorporated by reference to Registrant's Post- Effective
Amendment No. 22 on Form N-1A filed February 4, 1998. (File Nos. 33-44590
and 811-6504)
(19) Response is incorporated by reference to Registrant's Post- Effective
Amendment No. 24 on Form N-1A filed March 12, 1998. (File Nos. 33-44590 and
811-6504).
<PAGE>
(iii) Copy of Schedule I to Portfolio Accounting and Shareholder
Recordkeeping Agreement; (12)
(iv) Conformed Copy of Exhibit F to Transfer Agency and Service
Agreement;(3)
(v) Conformed Copy of Schedule G to Transfer Agency and Service
Agreement;(8)
(vi) Conformed Copy of Schedule G to Transfer Agency and Service
Agreement;(8)
(vii) Conformed Copy of Sub-Transfer Agency and Service Agreement;(7)
(viii) Conformed Copy of Administrative Services Agreement of the
Registrant; (12)
(ix) Conformed copy of Exhibit A to the Administrative Services
Agreement; (12)
(x) Conformed copy of Exhibit B to the Administrative Services
Agreement; (12)
(xi) Conformed copy of Exhibit C to the Administrative Services
Agreement; (12)
(xii) Conformed copy of Exhibit D to the Administrative Services
Agreement; (12)
(xiii) Conformed copy of Amendment No. 1 to the Administrative Services
Agreement; (12)
(xiv) Conformed copy of Amendment No. 2 to the Administrative Services
Agreement; (15)
(xv) Conformed copy of Exhibit E to the Administrative Services
Agreement; (12)
(xvi) Conformed Copy of Shareholder Services
Plan; (16)
(xvii) Conformed Copy of Exhibit A to Shareholder Services Plan; (12)
(xviii)Conformed copy of Amendment No. 1 to Exhibit A of the Shareholder
Services Plan; (12)
(xix) Conformed Copy of Amendment No. 2 to Exhibit A of the Shareholder
Services Plan; (13)
+ All exhibits have been electronically filed.
(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)
(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)
(15) Response is incorporated by reference to Registrant's Post-Effective
Amendment No. 18 on Form N-1A filed June 24, 1996. (File Nos. 33-44590 and
811-6504)
(16) Response is incorporated by reference to Registrant's Post-Effective
Amendment No. 20 on Form N-1A filed January 29, 1996. (File Nos. 33-44590
and 811-6504)
(17) Response is incorporated by reference to Registrant's Post-Effective
Amendment No. 21 on Form N-1A filed December 22, 1997. (File Nos. 33-44590
and 811-6504)
(18) Response is incorporated by reference to Registrant's Post-Effective
Amendment No. 22 on Form N-1A filed February 4, 1998. (File Nos. 33-44590
and 811-6504)
<PAGE>
(xx) Conformed copy of Shareholder Services
Agreement; (16) (xxi) Conformed copy of
Exhibit A to Shareholder Services Agreement;
(12) (xxii) Amendment to Exhibit A of the
Shareholder Services Agreement; (19)
(xxiii)Conformed copy of Portfolio
Accounting and Shareholder Recordkeeping
Agreement Amendment
No. 2 to Schedule B; (16)
(xxiv)Form of Agreement for Administrative Services; (17)
(xxv) Amendment No. 1 to Agreement for Administrative Services; (18)
(i) Conformed copy of Opinion and Consent of Counsel as to legality of
shares being registered; (12)
(j) Not applicable;
(k) Not applicable;
(l) Conformed copy of Initial Capital Understanding; (2)
(m) Conformed copy of Distribution Plan and Exhibits A-B thereto; (12)
(i) Conformed copy of Exhibit A to
Distribution Plan; (12) (ii) Conformed copy
of Exhibit B to Distribution Plan; (12)
(iii) Copy of Dealer Agreement; (6) (iv)
Copy of Exhibit to Dealer Agreement; (6) (v)
Copy of Rule 12b-1 Agreement; (2) (vi)Copy
of Exhibit A to 12b-1 Agreement; (6) (vii)
Copy of Exhibit B to 12b-1 Agreement; (6)
(viii) Copy of Exhibit C to 12b-1 Agreement;
(16) (ivx) Conformed copy of Exhibit D to
Plan of
Distribution; (18)
- ---------------------
+ 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)
(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)
(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)
(16) Response is incorporated by reference to Registrant's Post-.....Effective
Amendment No. 20 on Form N-1A filed January 29, 1996(File Nos. 33-44590 and
811-6504)
(17) Response is incorporated by reference to Registrant's Post-Effective
Amendment No. 21 on Form N-1A filed December 22, 1997. (File Nos. 33-44590
and 811-6504)
(18) Response is incorporated by reference to Registrant's Post- Effective
Amendment No. 22 on Form N-1A filed February 4, 1998. (File Nos. 33-44590
and 811-6504)
(19) Response is incorporated by reference to Registrant's Post- Effective
Amendment No. 24 on Form N-1A filed March 12, 1998. (File Nos. 33-44590 and
811-6504).
<PAGE>
(n) Not applicable.
(o) Copy of The Wachovia Funds Multiple Class Plan; (15)
(i) Amendment to Exhibit A to Multiple Class Plan; (18)
(p) Conformed Copy of Power of Attorney; (15)
Item 24. Persons Controlled by or Under Common Control with Registrant:
None
Item 25. Indemnification: (2)
Item 26. Business and Other Connections of Investment Adviser:
(a) For a description of the other business of the
investment adviser, see the section entitled "Who
Manages the Funds?" 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; Executive Vice President, Robert S.
McCoy, Jr.; 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.; Executive Vice
President, Richard B. Roberts; and Executive Vice
President, Robert G. Brookly. The business address of
each of the Officers of the investment adviser is
Wachovia Bank of North Carolina, N.A., 100 North Main
Street, Winston-Salem, N.C.
27101.
The Directors of the investment adviser are listed below
with their occupations: L.M. Baker, Jr., President and Chief
Executive Officer, Wachovia Corporation, Chairman, Wachovia
Bank of North Carolina, N.A.; H.C. Bissell, Chairman of the
Board and Chief Executive Officer, The Bissell Companies,
Inc.; Bert Collins, President and Chief Executive Officer,
North Carolina Mutual Life 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;
Anderson D. Warlick, President and Chief Operating Officer,
Parkdale Mills, Inc.; Thomas M. Belk, Jr., Senior Vice
President, Belk Stores Services, Inc.; George W. Henderson,
President and Chief Executive Officer, Burlington
Industries, Inc.; G. George Prendergast, Executive Vice
President, Wachovia Corporation; Robert L. Tillman, Chief
Operating Officer, Lowe's Companies, Inc.; and Andrew J.
Schindler, President and Chief Executive Officer, R.J.
Reynolds Tobacco Company.
+ 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)
(15) Response is incorporated by reference to Registrant's Post-Effective
Amendment No. 18 on filed June 24, 1996. (File Nos. 33-44590 and 811-6504)
(18) Response is incorporated by reference to Registrant's Post-Effective
Amendment No. 22 on Form N-1A filed February 4, 1998. (File Nos. 33-44590
and 811-6504)
<PAGE>
Item 27. Principal Underwriters:
(a) Federated Securities Corp. the Distributor for shares of the
Registrant, acts as principal underwriter for the following open-end investment
companies, including the Registrant:
Automated Government Money Trust; Cash Trust Series II; Cash Trust Series, Inc.;
CCB Funds; DG Investor Series; Edward D. Jones & Co. Daily Passport Cash Trust;
Federated Adjustable Rate U.S. Government Fund, Inc.; Federated American Leaders
Fund, Inc.; Federated ARMs Fund; Federated Core Trust; Federated Equity Funds;
Federated Equity Income Fund, Inc.; Federated Fund for U.S. Government
Securities, Inc.; Federated GNMA Trust; Federated Government Income Securities,
Inc.; Federated Government Trust; Federated High Income Bond Fund, Inc.;
Federated High Yield Trust; Federated Income Securities Trust; Federated Income
Trust; Federated Index Trust; Federated Institutional Trust; Federated Insurance
Series; Federated Master Trust; Federated Municipal Opportunities Fund, Inc.;
Federated Municipal Securities Fund, Inc.; Federated Municipal Trust; Federated
Short-Term Municipal Trust; Federated Short-Term U.S. Government Trust;
Federated Stock and Bond Fund, Inc.; 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: 2-5 Years; Federated U.S. Government Securities Fund: 5-10
Years; Federated Utility Fund, Inc.; Fixed Income Securities, Inc.; ; Hibernia
Funds; Independence One Mutual Funds; Intermediate Municipal Trust;
International Series, Inc.; Investment Series Funds, Inc.; Liberty U.S.
Government Money Market Trust; Liquid Cash Trust; Managed Series Trust; Marshall
Funds, Inc.; Money Market Management, Inc.; Money Market Obligations Trust;
Money Market Obligations Trust II; Money Market Trust; Municipal Securities
Income Trust; Newpoint Funds; Regions Funds; RIGGS Funds; SouthTrust Funds;
Tax-Free Instruments Trust; The Planters Funds; The Wachovia Funds; The Wachovia
Municipal Funds; Trust for Government Cash Reserves; Trust for Short-Term U.S.
Government Securities; Trust for U.S. Treasury Obligations; Vision Group of
Funds, Inc.; World Investment Series, Inc.; Blanchard Funds; Blanchard Precious
Metals Fund, Inc.; High Yield Cash Trust; Investment Series Trust; Star Funds;
Targeted Duration Trust; The Virtus Funds; Trust for Financial Institutions;
Federated Securities Corp. also acts as principal
underwriter for the following closed-end investment company:
Liberty Term Trust, Inc.- 1999.
<TABLE>
<CAPTION>
<S> <C> <C>
(b)
(1) (2) (3)
Name and Principal Positions and Offices Positions and Offices
Business Address With Distributor With Registrant
Richard B. Fisher Director, Chairman, Chief
Federated Investors Tower Executive Officer, Chief
1001 Liberty Avenue Operating Officer, Asst.
Pittsburgh, PA 15222-3779 Secretary and Asst.
Treasurer, Federated
Securities Corp.
Edward C. Gonzales Director, Executive Vice
Federated Investors Tower President,
1001 Liberty Avenue Federated Securities Corp.
Pittsburgh, PA 15222-3779
Thomas R. Donahue Director, Assistant Secretary
Federated Investors Tower and Assistant Treasurer
1001 Liberty Avenue Federated Securities Corp.
Pittsburgh, PA 15222-3779
James F. Getz President-Broker/Dealer, --
Federated Investors Tower Federated Securities Corp.
1001 Liberty Avenue
Pittsburgh, PA 15222-3779
<PAGE>
John B. Fisher President-Institutional Sales, --
Federated Investors Tower Federated Securities Corp.
1001 Liberty Avenue
Pittsburgh, PA 15222-3779
David M. Taylor Executive Vice President --
Federated Investors Tower Federated Securities Corp.
1001 Liberty Avenue
Pittsburgh, PA 15222-3779
Mark W. Bloss Senior Vice President, --
Federated Investors Tower Federated Securities Corp.
1001 Liberty Avenue
Pittsburgh, PA 15222-3779
Richard W. Boyd Senior Vice President, --
Federated Investors Tower Federated Securities Corp.
1001 Liberty Avenue
Pittsburgh, PA 15222-3779
Laura M. Deger Senior Vice President, --
Federated Investors Tower Federated Securities Corp.
1001 Liberty Avenue
Pittsburgh, PA 15222-3779
Theodore Fadool, Jr. Senior Vice President, --
Federated Investors Tower Federated Securities Corp.
1001 Liberty Avenue
Pittsburgh, PA 15222-3779
Bryant R. Fisher Senior Vice President, --
Federated Investors Tower Federated Securities Corp.
1001 Liberty Avenue
Pittsburgh, PA 15222-3779
Christopher T. Fives Senior Vice President, --
Federated Investors Tower Federated Securities Corp.
1001 Liberty Avenue
Pittsburgh, PA 15222-3779
James S. Hamilton Senior Vice President, --
Federated Investors Tower Federated Securities Corp.
1001 Liberty Avenue
Pittsburgh, PA 15222-3779
James M. Heaton Senior Vice President, --
Federated Investors Tower Federated Securities Corp.
1001 Liberty Avenue
Pittsburgh, PA 15222-3779
Keith Nixon Senior Vice President, --
Federated Investors Tower Federated Securities Corp.
1001 Liberty Avenue
Pittsburgh, PA 15222-3779
Solon A. Person, IV Senior Vice President, --
Federated Investors Tower Federated Securities Corp.
1001 Liberty Avenue
Pittsburgh, PA 15222-3779
Timothy C. Pillion Senior Vice President, --
Federated Investors Tower Federated Securities Corp.
1001 Liberty Avenue
Pittsburgh, PA 15222-3779
Thomas E. Territ Senior Vice President, --
Federated Investors Tower Federated Securities Corp.
1001 Liberty Avenue
Pittsburgh, PA 15222-3779
Ernest G. Anderson Vice President, --
Federated Investors Tower Federated Securities Corp.
1001 Liberty Avenue
Pittsburgh, PA 15222-3779
Teresa M. Antoszyk Vice President, --
Federated Investors Tower Federated Securities Corp.
1001 Liberty Avenue
Pittsburgh, PA 15222-3779
John B. Bohnet Vice President, --
Federated Investors Tower Federated Securities Corp.
1001 Liberty Avenue
Pittsburgh, PA 15222-3779
Jane E. Broeren-Lambesis Vice President, --
Federated Investors Tower Federated Securities Corp.
1001 Liberty Avenue
Pittsburgh, PA 15222-3779
David J. Callahan Vice President, --
Federated Investors Tower Federated Securities Corp.
1001 Liberty Avenue
Pittsburgh, PA 15222-3779
Mary J. Combs Vice President, --
Federated Investors Tower Federated Securities Corp.
1001 Liberty Avenue
Pittsburgh, PA 15222-3779
R. Edmond Connell, Jr. Vice President, --
Federated Investors Tower Federated Securities Corp.
1001 Liberty Avenue
Pittsburgh, PA 15222-3779
R. Leonard Corton, Jr. Vice President, --
Federated Investors Tower Federated Securities Corp.
1001 Liberty Avenue
Pittsburgh, PA 15222-3779
Kevin J. Crenny Vice President, --
Federated Investors Tower Federated Securities Corp.
1001 Liberty Avenue
Pittsburgh, PA 15222-3779
Daniel T. Culbertson Vice President, --
Federated Investors Tower Federated Securities Corp.
1001 Liberty Avenue
Pittsburgh, PA 15222-3779
G. Michael Cullen Vice President, --
Federated Investors Tower Federated Securities Corp.
1001 Liberty Avenue
Pittsburgh, PA 15222-3779
Marc C. Danile Vice President, --
Federated Investors Tower Federated Securities Corp.
1001 Liberty Avenue
Pittsburgh, PA 15222-3779
William C. Doyle Vice President, --
Federated Investors Tower Federated Securities Corp.
1001 Liberty Avenue
Pittsburgh, PA 15222-3779
Jill Ehrenfeld Vice President, --
Federated Investors Tower Federated Securities Corp.
1001 Liberty Avenue
Pittsburgh, PA 15222-3779
Mark D. Fisher Vice President, --
Federated Investors Tower Federated Securities Corp.
1001 Liberty Avenue
Pittsburgh, PA 15222-3779
Joseph D. Gibbons Vice President, --
Federated Investors Tower Federated Securities Corp.
1001 Liberty Avenue
Pittsburgh, PA 15222-3779
John K. Goettlicher Vice President, --
Federated Investors Tower Federated Securities Corp.
1001 Liberty Avenue
Pittsburgh, PA 15222-3779
Craig S. Gonzales Vice President, --
Federated Investors Tower Federated Securities Corp.
1001 Liberty Avenue
Pittsburgh, PA 15222-3779
Raymond Hanley Vice President, --
Federated Investors Tower Federated Securities Corp.
1001 Liberty Avenue
Pittsburgh, PA 15222-3779
Bruce E. Hastings Vice President, --
Federated Investors Tower Federated Securities Corp.
1001 Liberty Avenue
Pittsburgh, PA 15222-3779
Beth A. Hetzel Vice President, --
Federated Investors Tower Federated Securities Corp.
1001 Liberty Avenue
Pittsburgh, PA 15222-3779
James E. Hickey Vice President, --
Federated Investors Tower Federated Securities Corp.
1001 Liberty Avenue
Pittsburgh, PA 15222-3779
Charlene H. Jennings Vice President, --
Federated Investors Tower Federated Securities Corp.
1001 Liberty Avenue
Pittsburgh, PA 15222-3779
H. Joseph Kennedy Vice President, --
Federated Investors Tower Federated Securities Corp.
1001 Liberty Avenue
Pittsburgh, PA 15222-3779
Michael W. Koenig Vice President, --
Federated Investors Tower Federated Securities Corp.
1001 Liberty Avenue
Pittsburgh, PA 15222-3779
Michael R. Manning Vice President, --
Federated Investors Tower Federated Securities Corp.
1001 Liberty Avenue
Pittsburgh, PA 15222-3779
Mark J. Miehl Vice President, --
Federated Investors Tower Federated Securities Corp.
1001 Liberty Avenue
Pittsburgh, PA 15222-3779
Richard C. Mihm Vice President, --
Federated Investors Tower Federated Securities Corp.
1001 Liberty Avenue
Pittsburgh, PA 15222-3779
J. Michael Miller Vice President, --
Federated Investors Tower Federated Securities Corp.
1001 Liberty Avenue
Pittsburgh, PA 15222-3779
Alec H. Neilly Vice President, --
Federated Investors Tower Federated Securities Corp.
1001 Liberty Avenue
Pittsburgh, PA 15222-3779
<PAGE>
Thomas A. Peters III Vice President, --
Federated Investors Tower Federated Securities Corp.
1001 Liberty Avenue
Pittsburgh, PA 15222-3779
Robert F. Phillips Vice President, --
Federated Investors Tower Federated Securities Corp.
1001 Liberty Avenue
Pittsburgh, PA 15222-3779
Richard A. Recker Vice President, --
Federated Investors Tower Federated Securities Corp.
1001 Liberty Avenue
Pittsburgh, PA 15222-3779
Eugene B. Reed Vice President, --
Federated Investors Tower Federated Securities Corp.
1001 Liberty Avenue
Pittsburgh, PA 15222-3779
Paul V. Riordan Vice President, --
Federated Investors Tower Federated Securities Corp.
1001 Liberty Avenue
Pittsburgh, PA 15222-3779
John Rogers Vice President, --
Federated Investors Tower Federated Securities Corp.
1001 Liberty Avenue
Pittsburgh, PA 15222-3779
Brian S. Ronayne Vice President, --
Federated Investors Tower Federated Securities Corp.
1001 Liberty Avenue
Pittsburgh, PA 15222-3779
Thomas S. Schinabeck Vice President, --
Federated Investors Tower Federated Securities Corp.
1001 Liberty Avenue
Pittsburgh, PA 15222-3779
Edward L. Smith Vice President, --
Federated Investors Tower Federated Securities Corp.
1001 Liberty Avenue
Pittsburgh, PA 15222-3779
David W. Spears Vice President, --
Federated Investors Tower Federated Securities Corp.
1001 Liberty Avenue
Pittsburgh, PA 15222-3779
John A. Staley Vice President, --
Federated Investors Tower Federated Securities Corp.
1001 Liberty Avenue
Pittsburgh, PA 15222-3779
Colin B. Starks Vice President, --
Federated Investors Tower Federated Securities Corp.
1001 Liberty Avenue
Pittsburgh, PA 15222-3779
Jeffrey A. Stewart Vice President, --
Federated Investors Tower Federated Securities Corp.
1001 Liberty Avenue
Pittsburgh, PA 15222-3779
William C. Tustin Vice President, --
Federated Investors Tower Federated Securities Corp.
1001 Liberty Avenue
Pittsburgh, PA 15222-3779
<PAGE>
Paul A. Uhlman Vice President, --
Federated Investors Tower Federated Securities Corp.
1001 Liberty Avenue
Pittsburgh, PA 15222-3779
Miles J. Wallace Vice President, --
Federated Investors Tower Federated Securities Corp.
1001 Liberty Avenue
Pittsburgh, PA 15222-3779
John F. Wallin Vice President, --
Federated Investors Tower Federated Securities Corp.
1001 Liberty Avenue
Pittsburgh, PA 15222-3779
Richard B. Watts Vice President, --
Federated Investors Tower Federated Securities Corp.
1001 Liberty Avenue
Pittsburgh, PA 15222-3779
Edward J. Wojnarowski Vice President, --
Federated Investors Tower Federated Securities Corp.
1001 Liberty Avenue
Pittsburgh, PA 15222-3779
Michael P. Wolff Vice President, --
Federated Investors Tower Federated Securities Corp.
1001 Liberty Avenue
Pittsburgh, PA 15222-3779
Edward R. Bozek Assistant Vice President, --
Federated Investors Tower Federated Securities Corp.
1001 Liberty Avenue
Pittsburgh, PA 15222-3779
Terri E. Bush Assistant Vice President, --
Federated Investors Tower Federated Securities Corp.
1001 Liberty Avenue
Pittsburgh, PA 15222-3779
Beth C. Dell Assistant Vice President, --
Federated Investors Tower Federated Securities Corp.
1001 Liberty Avenue
Pittsburgh, PA 15222-3779
David L. Immonen Assistant Vice President, --
Federated Investors Tower Federated Securities Corp.
1001 Liberty Avenue
Pittsburgh, PA 15222-3779
Renee L. Martin Assistant Vice President, --
Federated Investors Tower Federated Securities Corp.
1001 Liberty Avenue
Pittsburgh, PA 15222-3779
Robert M. Rossi Assistant Vice President, --
Federated Investors Tower Federated Securities Corp.
1001 Liberty Avenue
Pittsburgh, PA 15222-3779
Matthew S. Hardin Secretary, --
Federated Investors Tower Federated Securities Corp.
1001 Liberty Avenue
Pittsburgh, PA 15222-3779
Denis McAuley Treasurer, --
Federated Investors Tower Federated Securities Corp.
1001 Liberty Avenue
Pittsburgh, PA 15222-3779
<PAGE>
Leslie K. Platt Assistant Secretary, --
Federated Investors Tower Federated Securities Corp.
1001 Liberty Avenue
Pittsburgh, PA 15222-3779
</TABLE>
(c) Not applicable.
Item 28. Location of Accounts and Records:
All accounts and records required to be maintained by Section 31(a) of the
Investment Company Act of 1940 and Rules 31a-1 through 31a-3 promulgated
thereunder are maintained at one of the following locations:
<TABLE>
<CAPTION>
<S> <C>
Registrant
The Wachovia Funds 5800 Corporate Drive
Pittsburgh, PA 15237-7010
Federated Services Company Federated Investors Tower
(Transfer Agent, Dividend Pittsburgh, PA 15222-3779
Disbursing Agent and Portfolio
Recordkeeper)
Federated Services Company Federated Investors Tower
(Administrator) Pittsburgh, PA 15222-3779
Wachovia Asset Management 301 North Main Street
(Adviser) Winston-Salem, NC 21750
Twin Capital Management, Inc. 3244 Washington Road
(Sub-Adviser to Wachovia 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
</TABLE>
Item 29. Management Services: Not applicable.
Item 30. 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.
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933 and the
Investment Company Act of 1940, the Registrant, THE WACHOVIA FUNDS, has duly
caused this Amendment to its Registration Statement to be signed on its behalf
by the undersigned, thereunto duly authorized, in the City of Pittsburgh and
Commonwealth of Pennsylvania, on the 1st day of July, 1999.
THE WACHOVIA FUNDS
BY: /s/ Gail Cagney
Gail Cagney, Assistant Secretary
Attorney in Fact for John W. McGonigle
July 1, 1999
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:
<TABLE>
<CAPTION>
<S> <C> <C>
NAME TITLE DATE
By: /s/Gail Cagney
Gail Cagney Attorney In Fact July 1, 1999
ASSISTANT SECRETARY For the Persons
Listed Below
NAME TITLE
John W. McGonigle* President and Treasurer
(Chief Executive Officer
and Principal Financial and
Accounting Officer)
James A. Hanley* Trustee
Samuel E. Hudgins* Trustee
J. Berkley Ingram, Jr.* Trustee
D. Dean Kaylor* Trustee
* By Power of Attorney
</TABLE>