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Previous: WACHOVIA FUNDS, 40-17F2, 2000-05-24 |
Next: DREYFUS PREMIER INTERNATIONAL GROWTH FUND INC, 497, 2000-05-24 |
<R>
<R>
<R>
</R>
[Graphic Representation Omitted -- See Appendix]
WWW.WACHOVIAFUNDS.COM
Portfolios of The Wachovia Funds
As with all mutual funds, the Securities and Exchange Commission (SEC) has not approved or disapproved these securities or passed upon the adequacy of this prospectus. Any representation to the contrary is a criminal offense.
Fund Goals, Strategies, Performance and Risk
What are the Funds' Fees and Expenses?
What are the Funds' Main Investments and
Investment Techniques?
What are the Risks of Investing in the Funds?
What do Shares Cost?
How are the Funds Sold?
How to Purchase Shares
How to Exchange Shares
How to Redeem Shares
Account and Share Information
Who Manages the Funds?
Financial Information
<R>
</R>
Each Fund offered in this prospectus is a money market fund that seeks to maintain a stable net asset value of $1.00 per share.
To provide current income consistent with stability of principal and liquidity.
The Fund pursues its objective by investing exclusively in a portfolio of money market instruments (high-quality, short-term debt securities) maturing in 397 days or less. The investment adviser uses macroeconomic, credit and market analysis to select portfolio securities. In doing so, it assesses the trend in investment rates, the shape of various yield curves and relative duration.
[Graphic Representation Omitted -- See Appendix]
Historically, the Fund has maintained a constant $1.00 net asset value per share. The bar chart shows the variability of the Fund's Institutional Shares total returns on a calendar year-end basis.
The Fund's Institutional Shares are sold without a sales charge (load). The total returns displayed above are based upon net asset value.
Within the period shown in the Chart, the Fund's Institutional Shares highest quarterly return was 1.50% (quarter ended June 30, 1995). Its lowest quarterly return was 0.78% (quarter ended March 31, 1994).
The following table represents the Fund's Institutional Shares Average Annual Total Return for the calendar periods ended December 31, 1999.
<R>
|
Calendar Period |
|
Institutional |
|
|
|
|
|
1 Year |
|
5.11% |
|
|
|
|
|
5 Years |
|
5.51% |
|
|
|
|
|
Start of Performancef1 |
|
5.27% |
|
|
|
|
</R>
1 The Fund's Institutional Shares start of performance date was December 2, 1993.
The Fund's Institutional Shares 7-Day Net Yield as of
December 31, 1999 was 5.60%. You may call the Fund
at 1-800-994-4414 for
the current 7-Day Net Yield.
Past performance does not necessarily predict future performance. This information provides you with historical performance information so that you can analyze whether the Fund's investment risks are balanced by its potential returns.
To provide current income exempt from federal regular income tax consistent with stability of principal and liquidity.
The Fund pursues its objective by investing primarily in a portfolio of short-term municipal securities maturing in 397 days or less. The investment adviser selects investments after assessing factors such as the trend in interest rates, the shape of the municipal yield curve, tax rates and supply.
[Graphic Representation Omitted -- See Appendix]
Historically, the Fund has maintained a constant $1.00 net asset value per share. The bar chart shows the variability of the Fund's Institutional Shares total returns on a calendar year-end basis.
The Fund's Institutional Shares are sold without a sales charge (load). The total returns displayed above are based upon net asset value.
Within the period shown in the Chart, the Fund's Institutional Shares highest quarterly return was 0.96% (quarter ended June 30, 1995). Its lowest quarterly return was 0.52% (quarter ended March 31, 1994).
The following table represents the Fund's Institutional Shares Average Annual Total Return for the calendar periods ended December 31, 1999.
|
Calendar Period |
|
Institutional |
|
|
|
|
|
1 Year |
|
3.03% |
|
|
|
|
|
5 Years |
|
3.30% |
|
|
|
|
|
Start of Performance1 |
|
3.02% |
|
|
|
|
1 The Fund's Institutional Shares start of performance date was May 14, 1992.
The Fund's Institutional Shares 7-Day Net Yield as of December
31, 1999 was 4.11%. You may call the Fund
at 1-800-994-4414 for the
current 7-Day Net Yield.
Past performance does not necessarily predict future performance. This information provides you with historical performance information so that you can analyze whether the Fund's investment risks are balanced by its potential returns.
To provide current income consistent with stability of principal and liquidity.
<R>
The Fund pursues its objective by investing in a portfolio of short-term U.S. Treasury obligations which are issued by the U.S. government, and are fully guaranteed as to payment of principal and interest by the United States, and repurchase agreements backed by treasury securities. The investment adviser selects investments after assessing factors such as the trend in interest rates, the shape of the treasury yield curve, tax rates and supply.
</R>
[Graphic Representation Omitted -- See Appendix]
Historically, the Fund has maintained a constant $1.00 net asset value per share. The bar chart shows the variability of the Fund's Institutional Shares total returns on a calendar year-end basis.
The Fund's Institutional Shares are sold without a sales charge (load). The total returns displayed above are based upon net asset value.
Within the period shown in the Chart, the Fund's Institutional Shares highest quarterly return was 1.43% (quarter ended June 30, 1995). Its lowest quarterly return was 0.70% (quarter ended December 31,1993).
The following table represents the Fund's Institutional Shares Average Annual Total Return for the calendar periods ended December 31, 1999.
|
Calendar Period |
|
Institutional |
|
|
|
|
|
1 Year |
|
4.81% |
|
|
|
|
|
5 Years |
|
5.23% |
|
|
|
|
|
Start of Performance1 |
|
4.58% |
|
|
|
|
1 The Fund's Institutional Shares start of performance date was May 7, 1992.
The Fund's Institutional Shares 7-Day Net Yield as of
December 31, 1999 was 4.48%. You may call the Fund
at
1-800-994-4414 for the current 7-Day Net Yield.
Past performance does not necessarily predict future performance. This information provides you with historical performance information so that you can analyze whether the Fund's investment risks are balanced by its potential returns.
The Shares offered by this prospectus are not deposits or obligations of any bank, are not endorsed or guaranteed by any bank and are not insured or guaranteed by the U.S. government, the Federal Deposit Insurance Corporation, the Federate Reserve Board, or any other government agency. All mutual funds take investment risks. Therefore, even though the Funds are money market funds that seek to maintain a stable net asset value, it is possible to lose money by investing in a Fund.
<R>
</R>
Any of these risks may have an adverse affect on a Fund's total return or yield.
This table describes the fees and expenses that you may pay if you buy and hold Shares of the Funds' Institutional Shares.
|
Shareholder Fees |
|
Prime Cash |
|
Tax-Free |
|
U.S. |
|---|---|---|---|---|---|---|
|
|
|
|
|
|
|
|
|
Maximum Sales Charge Imposed on Purchases (as a percentage of offering price) |
|
None |
|
None |
|
None |
|
Maximum Sales Charge Imposed on Reinvested Dividends |
|
None |
|
None |
|
None |
|
Contingent Deferred Sales Charge (as a percentage of original purchase price or redemption proceeds, as applicable) |
|
None |
|
None |
|
None |
|
Redemption Fee (as a percentage of amount redeemed, if applicable) |
|
None |
|
None |
|
None |
|
Exchange Fee |
|
None |
|
None |
|
None |
|
|
|
|
|
|
|
|
|
Annual Fund Operating Expenses (Before Waivers) 1 |
|
|
|
|
|
|
|
Management Fee1 |
|
0.30% |
|
0.50% |
|
0.50% |
|
Distribution (12b-1) Fee |
|
None |
|
None |
|
None |
|
Shareholder Services Fee |
|
None |
|
None |
|
None |
|
Other Expenses |
|
0.07% |
|
0.13% |
|
0.12% |
|
Total Annual Fund Operating Expenses (Before Waiver) |
|
0.37% |
|
0.63% |
|
0.62% |
|
Waiver of Fund Expenses |
|
0.19% |
|
0.39% |
|
0.38% |
|
Total Actual Fund Operating Expenses (After Waiver) |
|
0.18% |
|
0.24% |
|
0.24% |
|
|
|
|
|
|
|
|
|
1 Pursuant to an agreement between the Adviser and the Trust, the Adviser agrees during the period from December 13, 1999 through January 31, 2001 to waive its fees, and/or make reimbursements to the Funds so that each Fund's net operating expenses do not exceed, in the aggregate, the Fund's Total Actual Annual Operating Expenses listed above. The Adviser agrees that this obligation shall constitute a contractual commitment enforceable by the Trust and that the Adviser shall not assert any right to reimbursement of amounts so waived or reimbursed. |
||||||
This Example is intended to help you compare the cost of investing in each of the Funds with the cost of investing in other funds.
The Example assumes that you invest $10,000 in each of the Funds for the time periods indicated and then redeem all of your Shares at the end of those periods. Expenses assuming no redemption are also shown. The Example also assumes that your investment has a 5% return each year and that each of the Funds' operating expenses are before waivers as shown in the table and remain the same. Wire-transferred redemptions of less than $5,000 may be subject to additional fees. Although your actual costs may be higher or lower, based on these assumptions your costs would be:
|
|
1 Year |
|
3 Years |
|
5 Years |
|
10 Years |
|
|
|
|
|
|
|
|
|
|
Prime Cash |
$38 |
|
$119 |
|
$208 |
|
$468 |
|
|
|
|
|
|
|
|
|
|
Tax-Free Money |
$64 |
|
$202 |
|
$351 |
|
$786 |
|
|
|
|
|
|
|
|
|
|
U.S. Treasury |
$63 |
|
$199 |
|
$346 |
|
$774 |
|
|
|
|
|
|
|
|
|
Money market funds are subject to federal regulations designed to help maintain liquidity and a stable share price. The regulations set high standards for credit quality, and require investments in individual securities to mature in 397 days or less.
Municipal securities are issued by states, counties, cities and other political subdivisions and authorities. Although many municipal securities are exempt from federal income tax, the Tax-Free Fund may invest in taxable municipal securities.
U.S. Treasury obligations are direct obligations of the federal government of the United States. Investors regard treasury securities as having the lowest credit risk.
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.
<R>
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 Adviser.
The Fund's custodian or subcustodian will take possession of the securities subject to repurchase agreements. The 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. Investors should consult their tax adviser about the tax consequences of investing in repurchase agreements.
</R>
The Tax-Free Fund may temporarily depart from its principal investment strategies by investing its assets in cash and shorter-term debt securities and similar obligations. It may do this to minimize potential losses and maintain liquidity to meet shareholder redemptions during adverse market conditions. This may cause the Fund to give up greater investment returns to maintain the safety of principal, that is, the original amount invested by shareholders.
Bank insurance instruments may include Eurodollar Certificates of Deposit (ECDs), Yankee Certificates of Deposit (Yankee CDs) and Eurodollar Time Deposits (ETDs). ECDs, ETDs, Yankee CDs, and Europaper are subject to somewhat different risks than domestic obligations of domestic issuers. Examples of these risks include international economic and political developments, foreign governmental restrictions that may adversely affect the payment of principal or interest, foreign withholding or other taxes on interest income, difficulties in obtaining or enforcing a judgment against the issuing bank, and the possible impact of interruptions in the flow of international currency transactions. Different risks may also exist for ECDs, ETDs, and Yankee CDs because the banks issuing these instruments, or their domestic or foreign branches, are not necessarily subject to the same regulatory requirements that apply to domestic banks, such as reserve requirements, loan limitations, examinations, accounting, auditing, and recordkeeping and the public availability of information.
Local political and economic factors may adversely affect the value and liquidity of municipal securities held by a Fund. The value of municipal securities may be affected more by supply and demand factors or the creditworthiness of the issuer than market interest rates. Repayment of municipal securities depends on the ability of the issuer or project backing such securities to generate taxes or revenues.
In order to be tax-exempt, municipal securities must meet certain legal requirements. Failure to meet such requirements may cause the interest received and distributed by a Fund to shareholders to be taxable.
Changes or proposed changes in federal tax laws may cause the prices of municipal securities to fall.
You can purchase, exchange or redeem Shares any day the New York Stock Exchange (NYSE) is open for business. Each Fund attempts to stabilize the net asset value (NAV) of its Shares at $1.00 by valuing the portfolio securities using the amortized cost method. The Funds cannot guarantee that their NAV will always remain at $1.00 per Share.
NAV is determined at 12:00 noon and as of the end of regular trading (normally, 4:00 p.m. Eastern time) each day the NYSE is open.
|
Fund |
|
Minimum Investment Required |
|
|
|
|
|
Prime Cash Management Fund |
|
$5 million |
|
|
|
|
|
Tax-Free Fund |
|
Consult your account agreement with |
|
|
|
|
Minimums may be waived from time to time.
The required minimum investment may be modified for investments made via the sweep account program under the applicable account agreement.
The Funds (except Prime Cash Management Fund) offer two share classes: Investment Shares and Institutional Shares, each representing interests in a single portfolio of securities. This prospectus relates only to Institutional Shares. Each share class has different expenses, which affect their performance. Call 1-800-922-9008 or contact your investment professional for more information concerning the other class.
<R>
The Funds' Distributor, Federated Securities Corp., markets the Shares described in this prospectus only for purchase through Wachovia Bank and its affiliates. Shares are offered only to accounts held by Wachovia Bank in a fiduciary, advisory, agency, custodial or similar capacity. 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). The Tax-Free Fund may not be a suitable investment for retirement plans.
</R>
The Funds and the Distributor reserve the right to reject any purchase request.
If you are a customer of Wachovia Bank you may purchase Shares by telephone, by mail or in person in accordance with the procedures established by Wachovia Bank set forth in your account agreement.
Payment may be made to Wachovia Bank by check, federal funds, or by debiting your account with Wachovia Bank.
In order for your purchase to receive that day's dividends:
Orders are considered received after payment by check is converted into federal funds and received by Wachovia Bank, normally the next business day.
You may purchase Shares through an exchange from the same share class of another Fund. You must meet the minimum initial investment requirement for purchasing Shares and both accounts must have identical registrations.
Ifyou are investing in a Fund as part of a Wachovia Bank sweep account program, automatic purchases and redemptions will be made by Wachovia Bank on your behalf pursuant to the sweep agreement you signed as part of your trust account with Wachovia Bank.
You may exchange Shares of a Fund for Shares of the same class of another Fund at NAV. To do this you must:
Anexchange 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.
Anexcessive number of exchanges may be disadvantageous to the Funds. Therefore, the Funds, in addition to the right to reject any exchange, reserve the right to modify or terminate the exchange privilege of any shareholder, provided the shareholder is given 60 days' written notice.
Exchange orders must be received by the Funds between 12:00 noon (Eastern time) and 4:00 p.m. (Eastern time) to receive that day's share price. Orders received after 4:00 p.m. (Eastern time) will receive the price determined at 12:00 noon (Eastern time) the next business day.
Call you account officer at Wachovia Bank for complete instructions on how to exchange Shares.
Each Fund redeems Shares at their NAV next determined after the Fund receives the redemption request in proper form.
Ifyour redemption request is received by Wachovia Bank by 11:00 a.m. (Eastern time) redemption proceeds will normally be wired that same day but will not be entitled to that day's dividend. Proceeds for redemption requests received after 11:00 a.m. (Eastern time) will normally be wired or a check mailed the following business day and those Shares will be entitled to that day's dividend.
Contact your account officer at Wachovia Bank for complete instructions on how to redeem Shares.
The Funds will record your telephone instructions. If the Funds do not follow reasonable procedures, it may be liable for losses due to unauthorized or fraudulent telephone instructions. The Funds will notify you if it changes telephone transaction privileges.
The Funds no longer issue Share certificates. If you are redeeming or exchanging Shares represented by certificates previously issued by a Fund, you must return the certificates with your written redemption or exchange request. For your protection, send your certificates by registered or certified mail, but do not endorse them.
You will receive confirmation of purchases, exchanges and redemptions. In addition, you will receive periodic statements reporting all account activity, including dividends and capital gains paid.
Each Fund declares any dividends daily and pays them monthly to shareholders. If you purchase shares by check, you begin earning dividends on the business day after the Fund receives your check. You earn dividends through the day your redemption request is received.
The Funds do not expect to realize any capital gains or losses. If capital gains or losses were to occur, they could result in an increase or decrease in dividends. The Fund pays any capital gains at least annually. Your dividends and capital gains distributions will be automatically reinvested in additional Shares, unless you elect cash payments.
Due to the high cost of maintaining 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, you will be notified and allowed 30 days to purchase additional Shares to meet the minimum.
The Funds send 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. Dividends are taxable as ordinary income; capital gains are taxable at different rates depending upon the length of time the Fund holds its assets.
Fund distributions (except Tax-Free Fund) are expected to be primarily dividends. Redemptions and exchanges are taxable sales.
Please consult your tax adviser regarding your federal, state, and local tax liability.
The Tax-Free Fund sends an annual statement of your account activity to assist you in completing your federal, state and local tax returns. It is anticipated that the Fund's distributions will be primarily dividends that are exempt from federal income tax, although a portion of the Fund's dividends may not be exempt. Dividends may be subject to state and local taxes. Capital gains and non-exempt dividends are taxable whether paid in cash or reinvested in the Fund. Redemptions and exchanges are taxable sales. Please consult your tax adviser regarding your federal, state and local tax liability.
The Board of Trustees governs the Funds. The Board selects and oversees the investment adviser, Wachovia Asset Management, a business unit of Wachovia Bank. The investment adviser manages the Funds' 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 approximately $44 billion in managed assets as of December 31, 1999. Wachovia Asset Management also serves as investment adviser to The Wachovia Municipal Funds, another investment company.
|
Fund |
|
Annual Investment |
|
|
|
|
|
Prime Cash Management Fund |
|
0.30% |
|
|
|
|
|
Tax-Free Money Market Fund |
|
0.50% |
|
|
|
|
|
U.S. Treasury Money |
|
0.50% |
|
|
|
|
Pursuant to an agreement between the investment adviser and the Trust, the investment adviser agrees during the period from December 15, 1998 through January 31, 2000 to waive its fees and/or make reimbursements to the Funds, so that each Fund's net operating expenses do not exceed, in the aggregate, the Fund's Total Actual Annual Operating Expenses. 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.
The following financial highlights are intended to help you understand each Fund's financial performance for its past five fiscal years, or since inception, if the life of the Fund is shorter. Some of the information is presented on a per share basis. Total returns represent the rate an investor would have earned (or lost) on an investment in a Fund, assuming reinvestment of all dividends and distributions.
This information has been audited by Ernst & Young LLP, whose report, along with the Fund's audited financial statements, is included in the Annual Report.
(For a share outstanding throughout each period)
|
|
|
Year Ended November 30, |
|||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||
|
|
|
1999 |
|
|
1998 |
|
|
1997 |
|
|
1996 |
|
|
1995 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net asset value, beginning |
|
$1.00 |
|
|
$1.00 |
|
|
$1.00 |
|
|
$1.00 |
|
|
$1.00 |
|
|
Income from investment operations |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net investment income |
|
0.05 |
|
|
0.05 |
|
|
0.05 |
|
|
0.05 |
|
|
0.06 |
|
|
Less distributions |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Distributions from net |
|
(0.05 |
) |
|
(0.05 |
) |
|
(0.05 |
) |
|
(0.05 |
) |
|
(0.06 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||
|
Net asset value, end of period |
|
$1.00 |
|
|
$1.00 |
|
|
$1.00 |
|
|
$1.00 |
|
|
$1.00 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||
|
Total return (1) |
|
5.05 |
% |
|
5.54 |
% |
|
5.55 |
% |
|
5.44 |
% |
|
5.95 |
% |
|
Ratios to average net assets |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Expenses |
|
0.18 |
% |
|
0.18 |
% |
|
0.18 |
% |
|
0.18 |
% |
|
0.18 |
% |
|
Net investment income |
|
4.93 |
% |
|
5.40 |
% |
|
5.43 |
% |
|
5.34 |
% |
|
5.80 |
% |
|
Expense waiver/ |
|
0.19 |
% |
|
0.19 |
% |
|
0.25 |
% |
|
0.27 |
% |
|
0.27 |
% |
|
Supplemental data |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net assets, end of period |
|
$1,710,005 |
|
|
$1,829,211 |
|
|
$1,450,195 |
|
|
$1,176,855 |
|
|
$879,603 |
|
(1) Based on net asset value, which does not reflect the sales charge or contingent deferred sales charge, if applicable.
(2) This contractual expense decrease is reflected in both the expense and net investment income ratios shown above.
See Notes which are an integral part of the Financial Statements
(For a share outstanding throughout each period)
|
|
|
Year Ended November 30, |
|||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||
|
|
|
1999 |
|
|
1998 |
|
|
1997 |
|
|
1996 |
|
|
1995 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net asset value, beginning of period |
|
$1.00 |
|
|
$1.00 |
|
|
$1.00 |
|
|
$1.00 |
|
|
$1.00 |
|
|
Income from investment operations |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net investment income |
|
0.03 |
|
|
0.03 |
|
|
0.03 |
|
|
0.03 |
|
|
0.04 |
|
|
Less distributions |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Distributions from net investment income |
|
(0.03 |
) |
|
(0.03 |
) |
|
(0.03 |
) |
|
(0.03 |
) |
|
(0.04 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||
|
Net asset value, end of period |
|
$1.00 |
|
|
$1.00 |
|
|
$1.00 |
|
|
$1.00 |
|
|
$1.00 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||
|
Total Return (1) |
|
2.99 |
% |
|
3.29 |
% |
|
3.41 |
% |
|
3.24 |
% |
|
3.59 |
% |
|
Ratios to average net assets |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Expenses |
|
0.24 |
% |
|
0.24 |
% |
|
0.24 |
% |
|
0.29 |
% |
|
0.32 |
% |
|
Net investment income |
|
2.95 |
% |
|
3.24 |
% |
|
3.34 |
% |
|
3.22 |
% |
|
3.55 |
% |
|
Expense waiver/reimbursement (2) |
|
0.39 |
% |
|
0.42 |
% |
|
0.45 |
% |
|
0.43 |
% |
|
0.46 |
% |
|
Supplemental data |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net assets, end of period (000 omitted) |
|
$225,466 |
|
|
$275,323 |
|
|
$182,473 |
|
|
$118,877 |
|
|
$80,274 |
|
(1) Based on net asset value, which does not reflect the sales charge or contingent deferred sales charge, if applicable. Results represent past performance and do not guarantee future results.
(2) This contractual expense decrease is reflected in both the expense and net investment income ratios shown above.
See Notes which are an integral part of the Financial Statements
(For a share outstanding throughout each period)
|
|
|
Year Ended November 30, |
|||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||
|
|
|
1999 |
|
|
1998 |
|
|
1997 |
|
|
1996 |
|
|
1995 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net asset value, beginning of period |
|
$1.00 |
|
|
$1.00 |
|
|
$1.00 |
|
|
$1.00 |
|
|
$1.00 |
|
|
Income from investment operations |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net investment income |
|
0.05 |
|
|
0.05 |
|
|
0.05 |
|
|
0.05 |
|
|
0.06 |
|
|
Less distributions |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Distributions from net investment income |
|
(0.05 |
) |
|
(0.05 |
) |
|
(0.05 |
) |
|
(0.05 |
) |
|
(0.06 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||
|
Net asset value, end of period |
|
$1.00 |
|
|
$1.00 |
|
|
$1.00 |
|
|
$1.00 |
|
|
$1.00 |
|
|
Total return (1) |
|
4.77 |
% |
|
5.25 |
% |
|
5.31 |
% |
|
5.18 |
% |
|
5.66 |
% |
|
Ratios to average net assets |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Expenses |
|
0.24 |
% |
|
0.24 |
% |
|
0.24 |
% |
|
0.30 |
% |
|
0.32 |
% |
|
Net investment income |
|
4.65 |
% |
|
5.15 |
% |
|
5.20 |
% |
|
5.07 |
% |
|
5.54 |
% |
|
Expense waiver/reimbursement (2) |
|
0.38 |
% |
|
0.40 |
% |
|
0.41 |
% |
|
0.39 |
% |
|
0.40 |
% |
|
Supplemental data |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net assets, end of period (000 omitted) |
|
$448,758 |
|
|
$466,538 |
|
|
$510,323 |
|
|
$302,306 |
|
|
$214,356 |
|
(1) Based on net asset value, which does not reflect the sales charge or contingent deferred sales charge, if applicable.
(2) This contractual expense decrease is reflected in both the expense and net investment income ratios shown above.
See Notes which are an integral part of the Financial Statements
The following documents contain further details about the Fund and are available upon request and without charge:
Statement of Additional Information (SAI)--The SAI includes additional information about the Fund. The SAI is incorporated by reference into this prospectus, making it legally a part of this prospectus.
Shareholder Reports--The Fund publishes annual and semi-annual reports to shareholders which include information about the Fund's investments.
Toobtain the SAI, the annual and semi-annual reports and other information call your investment professional or the Fund at 1-800-994-4414.
You can obtain information about the Fund (including the SAI) by writing to or visiting the Public Reference Room of the Securities and Exchange Commission in Washington, D.C. You may also access fund information from the EDGAR Database on the SEC's Internet site at http://www.sec.gov. You can purchase copies of this information by contacting the SEC by email at [email protected] or by writing to the SEC's Public Reference Section, Washington, DC 20549-0102. Call 1-202-942-8090 for information on the Public Reference Room's operations and copying fees.
<R>
|
WACHOVIA MONEY MARKET FUND |
101 Greystone Boulevard SC-9215 Columbia, SC 29226 |
|
|
|
||
|
DISTRIBUTOR |
Federated Securities Corp. Federated Investors Tower 1001 Liberty Avenue Pittsburgh, PA 15222-3779 |
|
|
|
||
|
INVESTMENT ADVISER |
Wachovia Asset Management 100 North Main Street Winston-Salem, NC 27101 |
|
|
|
||
|
CUSTODIAN |
Wachovia Bank, N.A. |
|
|
|
||
|
TRANSFER AGENT, |
Federated Shareholder Services Company Federated Investors Tower 1001 Liberty Avenue Pittsburgh, PA 15222-3779 |
|
|
|
||
|
COUNSEL TOTHE WACHOVIA FUNDS |
Kirkpatrick & Lockhart LLP 1800 Massachusetts Avenue, NW Washington, DC 20036-1800 |
|
|
|
||
|
COUNSEL TO |
Piper Marbury Rudnick & Wolfe LLP 1200 Nineteenth Street, NW Washington, DC 20036-2412 |
|
|
|
||
|
INDEPENDENT AUDITORS |
Ernst & Young LLP 200 Clarendon Street Boston, MA 02116 |
|
</R>
<R>
January 31, 2000
(Revised May 31, 2000)
822-30 (5/00)
</R>
Cusip 929901684
Cusip 929901304
Cusip 929901833
<R>
G01947-01 (5/00)
513893
</R>
[GRAPHIC REPRESENTATION OMITTED--SEE APPENDIX]
[GRAPHIC REPRESENTATION OMITTED--SEE APPENDIX]
Portfolios of The Wachovia Funds
As with all mutual funds, the Securities and Exchange Commission (SEC) has not approved or disapproved these securities or passed upon the adequacy of this prospectus. Any representation to the contrary is a criminal offense.
| Fund Goals, Strategies, Performance and Risk | 1 | |
| What are the Funds' Fees and Expenses? | 5 | |
| What are the Funds' Main Investments and Investment Techniques? | 6 | |
| What are the Risks of Investing in the Funds? | 7 | |
| What do Shares Cost? | 7 | |
| How are the Funds Sold? | 7 | |
| How to Purchase Shares | 8 | |
| How to Exchange Shares | 8 | |
| How to Redeem Shares | 9 | |
| Account and Share Information | 10 | |
| Who Manages the Funds? | 11 | |
| Financial Information | 11 |
Each Fund offered in this prospectus is a money market fund that seeks to maintain a stable net asset value of $1.00 per share.
To provide current income consistent with stability of principal and liquidity.
The Fund pursues its objective by investing exclusively in a portfolio of money market instruments (high-quality, short-term debt securities) maturing in 397 days or less. The investment adviser uses macroeconomic credit and market analysis to select portfolio securities. In doing so, it assesses the trend in interest rates, the shape of various yield curves and relative duration.
[GRAPHIC REPRESENTATION OMITTED--SEE APPENDIX]
Historically, the Fund has maintained a constant $1.00 net asset value per share. The bar chart shows the variability of the Fund's Investment Shares total returns on a calendar year-end basis.
The Fund's Investment Shares are sold without a sales charge (load). The total returns displayed above are based upon net asset value.
Within the period shown in the Chart, the Fund's Investment Shares highest quarterly return was 1.37% (quarter ended June 30, 1995). Its lowest quarterly return was 0.66% (quarter ended June 30, 1993).
The following table represents the Fund's Investment Shares Average Annual Total Returns for the calendar period ended December 31, 1999.
|
Calendar Period |
|
Investment Shares |
|
1 Year |
|
4.50% |
|
5 Years |
|
4.91% |
|
Start of Performance1 |
|
4.30% |
1 The Fund's Investment Shares start of performance date was June 2, 1992.
The Fund's Investment Shares 7-Day Net Yield as of December
31, 1999 was 5.05%. You may call the Fund at
1-800-994-4414 for the current
7-Day Net Yield.
Past performance does not necessarily predict future performance. This information provides you with historical performance information so that you can analyze whether the Fund's investment risks are balanced by its potential returns.
To provide current income exempt from federal regular income tax consistent with stability of principal and liquidity.
The Fund pursues its objective by investing primarily in a portfolio of short-term municipal securities maturing in 397 days or less. The investment adviser selects investments after assessing factors such as the trend in interest rates, the shape of the municipal yield curve, tax rates and supply.
[GRAPHIC REPRESENTATION OMITTED--SEE APPENDIX]
Historically, the Fund has maintained a constant $1.00 net asset value per share. The bar chart shows the variability of the Fund's Investment Shares total returns on a calendar year-end basis.
The Fund's Investment Shares are sold without a sales charge (load). The total returns displayed above are based upon net asset value.
Within the period shown in the Chart, the Fund's Investment Shares highest quarterly return was 0.88% (quarter ended June 30, 1995). Its lowest quarterly return was 0.45% (quarter ended March 31, 1994).
The following table represents the Fund's Investment Shares Average Annual Total Returns for the calendar period ended December 31, 1999.
|
Calendar Period |
|
Investment Shares |
|
1 Year |
|
2.62% |
|
5 Years |
|
2.90% |
|
Start of Performance1 |
|
2.65% |
1 The Fund's Investment Shares start of performance date was May 20, 1992.
The Fund's 7-Day Net Yield as of December 31, 1999 was 3.71%. You may call the Fund at 1-800-994-4414 for the current 7-Day Net Yield.
Past performance does not necessarily predict future performance. This information provides you with historical performance information so that you can analyze whether the Fund's investment risks are balanced by its potential returns.
To provide current income consistent with stability of principal and liquidity.
<R>
The Fund pursues its objective by investing in a portfolio of short-term U.S. Treasury obligations which are issued by the U.S. government, and are fully guaranteed as to payment of principal and interest by the United States, and repurchase agreements backed by treasury securities. The investment adviser selects investments after assessing factors such as the trend in interest rates, the shape of the treasury yield curve, tax rates and supply.
</R>
[GRAPHIC REPRESENTATION OMITTED--SEE APPENDIX]
Historically, the Fund has maintained a constant $1.00 net asset value per share. The bar chart shows the variability of the Fund's Investment Shares total returns on a calendar year-end basis.
The Fund's Investment Shares are sold without a sales charge (load). The total returns displayed above are based upon net asset value.
Within the period shown in the Chart, the Fund's Investment Shares highest quarterly return was 1.36% (quarter ended June 30, 1995). Its lowest quarterly return was 0.64% (quarter ended March 31, 1994).
The following table represents the Fund's Investment Shares Average Annual Total Returns for the calendar period ended December 31, 1999.
|
Calendar Period |
|
Investment Shares |
|
1 Year |
|
4.39% |
|
5 Years |
|
4.83% |
|
Start of Performance1 |
|
4.42% |
1 The Fund's Investment Shares start of performance date was May 11, 1993.
The Fund's 7-Day Net Yield as of December 31, 1999 was 4.08%. You may call the Fund at 1-800-994-4414 for the current 7-Day Net Yield.
Past performance does not necessarily predict future performance. This information provides you with historical performance information so that you can analyze whether the Fund's investment risks are balanced by its potential returns.
The Shares offered by this prospectus are not deposits or obligations of any bank, are not endorsed or guaranteed by any bank and are not insured or guaranteed by the U.S. government, the Federal Deposit Insurance Corporation, the Federate Reserve Board, or any other government agency. All mutual funds take investment risks. Therefore, even though the Funds are money market funds that seek to maintain a stable net asset value, it is possible to lose money by investing in a Fund.
</R>
Any of these risks may have an adverse affect on a Fund's total return or yield.
This table describes the fees and expenses that you may pay if you buy and hold Investment Shares.
|
Shareholder Fees |
|
Money |
|
Tax Free |
|
U.S. |
|
Fees Paid Directly From Your Investment |
||||||
|
Maximum Sales Charge Imposed on Purchases (as a percentage of offering price) |
|
None |
|
None |
|
None |
|
Maximum Sales Charge Imposed on Reinvested Dividends |
|
None |
|
None |
|
None |
|
Contingent Deferred Sales Charge (as a percentage of original |
|
None |
|
None |
|
None |
|
Redemption Fee (as a percentage of amount redeemed, if applicable) |
|
None |
|
None |
|
None |
|
Exchange Fee |
|
None |
|
None |
|
None |
|
|
|
|
|
|
|
|
|
Annual Fund Operating Expenses(Before Waivers) 1 |
|
|
|
|
|
|
|
(As percentage of average net assets) |
|
|
|
|
|
|
|
Management Fee1 |
|
0.50% |
|
0.50% |
|
0.50% |
|
Distribution (12b-1) Fee |
|
0.40% |
|
0.40% |
|
0.40% |
|
Shareholder Services Fee |
|
None |
|
None |
|
None |
|
Other Expenses |
|
0.12% |
|
0.13% |
|
0.12% |
|
Total Annual Fund Operating Expenses (Before Waiver) |
|
1.02% |
|
1.03% |
|
1.02% |
|
Waiver of Fund Expenses |
|
0.24% |
|
0.39% |
|
0.38% |
|
Total Actual Fund Operating Expenses (After Waiver) |
|
0.78% |
|
0.64% |
|
0.64% |
|
1 Pursuant to an agreement between the Adviser and the Trust, the Adviser agrees during the period from December 13, 1999 through January 31, 2001 to waive its fees, and/or make reimbursements to the Funds, so that each Fund's net operating expenses do not exceed, in the aggregate, the Fund's Total Actual Annual Operating Expenses listed above. The Adviser agrees that this obligation shall constitute a contractual commitment enforceable by the Trust and that the Adviser shall not assert any right to reimbursement of amounts so waived or reimbursed. |
||||||
|
|
||||||
This Example is intended to help you compare the cost of investing in each of the Funds with the cost of investing in other funds.
The Example assumes that you invest $10,000 in each of the Funds for the time periods indicated and then redeem all of your Shares at the end of those periods. Expenses assuming no redemption are also shown. The Example also assumes that your investment has a 5% return each year and that each of the Funds' operating expenses are before waivers as shown in the table and remain the same. Wire-transferred redemptions of less than $5,000 may be subject to additional fees. Although your actual costs may be higher or lower, based on these assumptions your costs would be:
|
Share Class |
|
1 Year |
|
3 Years |
|
5 Years |
|
10 Years |
|
Money Market Fund |
|
$104 |
|
$325 |
|
$563 |
|
$1,248 |
|
Tax-Free Money |
|
$105 |
|
$328 |
|
$569 |
|
$1,259 |
|
U.S. Treasury |
|
$104 |
|
$325 |
|
$563 |
|
$1,248 |
Money market funds are subject to federal regulations designed to help maintain liquidity and a stable share price. The regulations set high standards for credit quality, and require investments in individual securities to mature in 397 days or less.
Municipal securities are issued by states, counties, cities and other political subdivisions and authorities. Although most municipal securities are exempt from federal income tax, the Tax-Free Fund may invest in taxable municipal securities.
U.S. Treasury obligations are direct obligations of the federal government of the United States. Investors regard treasury securities as having the lowest credit risk.
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.
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. The 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 Adviser.
The Fund's custodian or subcustodian will take possession of the securities subject to repurchase agreements. The 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. Investors should consult their tax adviser about the tax consequences of investing in repurchase agreements.
The Tax-Free Fund may temporarily depart from its principal investment strategies by investing its assets in cash and shorter-term debt securities and similar obligations. It may do this to minimize potential losses and maintain liquidity to meet shareholder redemptions during adverse market conditions. This may cause the Fund to give up greater investment returns to maintain the safety of principal, that is, the original amount invested by shareholders.
Bank insurance instruments may include Eurodollar Certificates of Deposit (ECDs), Yankee Certificates of Deposit (Yankee CDs) and Eurodollar Time Deposits (ETDs). ECDs, ETDs, Yankee CDs, and Europaper are subject to somewhat different risks than domestic obligations of domestic issuers. Examples of these risks include international economic and political developments, foreign governmental restrictions that may adversely affect the payment of principal or interest, foreign withholding or other taxes on interest income, difficulties in obtaining or enforcing a judgment against the issuing bank, and the possible impact of interruptions in the flow of international currency transactions. Different risks may also exist for ECDs, ETDs, and Yankee CDs because the banks issuing these instruments, or their domestic or foreign branches, are not necessarily subject to the same regulatory requirements that apply to domestic banks, such as reserve requirements, loan limitations, examinations, accounting, auditing, and recordkeeping and the public availability of information.
Local political and economic factors may adversely affect the value and liquidity of municipal securities held by a Fund. The value of municipal securities may be affected more by supply and demand factors or the creditworthiness of the issuer than market interest rates. Repayment of municipal securities depends on the ability of the issuer or project backing such securities to generate taxes or revenues.
In order to be tax-exempt, municipal securities must meet certain legal requirements. Failure to meet such requirements may cause the interest received and distributed by a Fund to shareholders to be taxable. Changes or proposed changes in federal tax laws may cause the prices of municipal securities to fall.
You can purchase, exchange or redeem Shares any day the New York Stock Exchange (NYSE) is open. Each Fund attempts to stabilize the next determined net asset value (NAV) of its Shares at $1.00 by valuing the portfolio securities using the amortized cost method. The Funds cannot guarantee that their NAV will always remain at $1.00 per Share.
NAV is determined at 12:00 noon and as of the close of regular trading (normally 4:00 p.m. Eastern time) each day the NYSE is open.
Your first investment in a Fund must be at least $1,000.
The required minimum investment may be modified for investments made via the sweep account program under the applicable account agreement.
The Funds offer two share classes: Investment Shares and Institutional Shares, each representing interests in a single portfolio of securities.
This prospectus relates only to Investment Shares. Each share class has different expenses, which affects its performance. Call 1-800-994-4414 or contact your investment professional for more information concerning the other class.
The Funds' Distributor, Federated Securities Corp., markets the Shares described in this prospectus to institutions or individuals, directly or through investment professionals. When the Distributor receives 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). The Tax-Free Fund may not be a suitable investment for retirement plans.
Each Fund has adopted a Rule 12b-1 Plan, which allows it to pay marketing fees to the Distributor and investment professionals for the sale, distribution and customer servicing of the Fund's Investment Shares. Because these Shares pay marketing fees on an ongoing basis, your investment cost may be higher over time than for other shares with different sales charges and marketing fees.
You may purchase Shares through Wachovia Investments, Inc., Wachovia Bank or other Service Organizations.
The Funds and the Distributor reserve the right to reject any purchase request.
If you are a customer of Wachovia Investments or Wachovia Brokerage Service you may purchase Shares by telephone, by mail or in person.
In order for your purchase to receive that day's dividends:
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.
To purchase Shares of a Fund by mail, send a check made payable to (Name of Fund) and send to:
P.O. Box 8612
Boston, MA 02266-8612
Orders by mail are considered received after payment by check is converted by Wachovia Investments, Inc. into federal funds.
Customers of Wachovia Bank may purchase Shares of the Funds by telephone, by mail, or in person with their account officer in accordance with procedures in your account agreement.
In order for your purchase to receive that day's dividends:
You may purchase Shares through an exchange from the same Share class of another Fund. You must meet the minimum initial investment requirement for purchasing Shares and both accounts must have identical registrations.
If you are investing in a Fund as part of a Wachovia Bank sweep account program, automatic purchases and redemptions will be made by Wachovia Bank on your behalf pursuant to the sweep agreement you signed as part of your trust account with Wachovia Bank.
You may exchange Shares of a Fund for Shares of the same class of another Fund at NAV. To do this you must:
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.
<R>
Each shareholder is limited to five exchanges per year or three per calendar quarter. The Funds reserve the right to modify or terminate a shareholder's exchange privilege if exchanges exceed these limitations. The Funds reserve the right to reject any exchange.
</R>
Exchange orders must be received by the Funds between 12:00 noon (Eastern time) and 4:00 p.m. (Eastern time) to receive that day's share price. Orders received after 4:00 p.m. (Eastern time) will receive the price determined at 12:00 noon (Eastern time) the next business day.
To exchange Shares by telephone call 1-800-994-4414.
To exchange Shares by mail, write the Fund at:
The Wachovia Funds
1099 Hingham Street
Rockland, MA 02370-3317
You may exchange Class B Shares of another Wachovia Fund for Investment Shares of the U.S. Treasury Fund.
|
Year of Redemption After Purchase of |
CDSC |
|
|
First |
|
5.00% |
|
Second |
|
4.00% |
|
Third |
|
3.00% |
|
Fourth |
|
3.00% |
|
Fifth |
|
2.00% |
|
Sixth |
|
1.00% |
|
Seventh and beyond |
|
0.00% |
Class B Shares will be exchanged without a contingent deferred sales charge (CDSC) unless you redeem the exchanged-for shares within seven years of the original purchase of Class B Shares. The CDSC will be determined as follows:
You will not be charged a CDSC when redeeming Shares:
If your redemption qualifies, you or your account representative must notify the Distributor at the time of redemption to eliminate the CDSC.
Each Fund redeems Shares at its NAV next determined after the Fund receives the redemption request in proper form. Shares may be redeemed by telephone or by mail through Wachovia Investments, Wachovia Bank or through a Service Organization.
To redeem Shares by telephone you must:
Proceeds will normally be credited the same day to your brokerage account. For orders received after these times, proceeds will normally be credited to your account the following business day.
To redeem Shares by mail send your written request to the Funds at:
The Wachovia Funds
PO Box 8612
Boston, MA 02266-8612
Include your name, the Fund's name and Share class, the brokerage account number and the Share or dollar amount requested.
Call 1-800-994-4414 for assistance in redeeming Shares by mail.
Call your account officer/representative for instructions on redeeming by telephone. Your Service Organization may charge you fees for its services.
Redemption requests must be received by the Funds by:
Money Market Fund 11:00 a.m. (Eastern time)
Tax-Free Fund 10:00 a.m. (Eastern time)
U.S. Treasury Fund 11:00 a.m. (Eastern time).
Proceeds will normally be wired that same day to your account at Wachovia Bank or a check sent to your address of record. For orders received after these times, proceeds will normally be wired or a check mailed the following business day.
Contact Wachovia Bank or your Service Organization for instructions on how to redeem Shares by mail.
If you are redeeming Shares held through a Wachovia Bank sweep account program, redemptions will be made by Wachovia Bank on your behalf pursuant to the sweep agreement you signed as part of your trust account with Wachovia Bank.
If you are redeeming Shares of the Money Market Fund held through a wrap fee program, they will be made by Wachovia Bank on your behalf pursuant to the related account agreement you have with Wachovia Bank.
Redemption proceeds are normally paid within one business day after receiving a request in proper form. However, payment may be delayed up to seven days:
Signatures must be guaranteed if:
A signature guarantee is designed to protect your account from fraud. Obtain a signature guarantee from a bank or trust company, savings association, credit union or broker, dealer or securities exchange member. A notary public cannot provide a signature guarantee.
The Funds will record your telephone instructions. If the Funds do not follow reasonable procedures, it may be liable for losses due to unauthorized or fraudulent telephone instructions. The Funds will notify you if it changes telephone transaction privileges.
The Funds no longer issues Share certificates. If you are redeeming or exchanging Shares represented by certificates previously issued by a Fund, you must return the certificates with your written redemption or exchange request. For your protection, send your certificates by registered or certified mail, but do not endorse them.
You will receive confirmation of purchases, exchanges and redemptions. In addition, you will receive periodic statements reporting all account activity, including dividends and capital gains paid.
Each Fund declares any dividends daily and pays them monthly to shareholders. If you purchase shares by check, you begin earning dividends on the business day after the Fund receives your check. You earn dividends through the day your redemption request is received.
The Funds do not expect to realize any capital gains or losses. If capital gains or losses were to occur, they could result in an increase or decrease in dividends. The Fund pays any capital gains at least annually. Your dividends and capital gains distributions will be automatically reinvested in additional Shares, unless you elect cash payments.
Due to the high cost of maintaining 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, you will be notified and allowed 30 days to purchase additional Shares to meet the minimum.
The Funds send 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. Dividends are taxable as ordinary income; capital gains are taxable at different rates depending upon the length of time the Fund holds its assets.
Fund distributions (except Tax-Free Fund) are expected to be primarily dividends. Redemptions and exchanges are taxable sales.
Please consult your tax adviser regarding your federal, state, and local tax liability.
The Tax-Free Fund sends an annual statement of your account activity to assist you in completing your federal, state and local tax returns. It is anticipated that the Fund's distributions will be primarily dividends that are exempt from federal income tax, although a portion of the Fund's dividends may not be exempt. Dividends may be subject to state and local taxes. Capital gains and non-exempt dividends are taxable whether paid in cash or reinvested in the Fund. Redemptions and exchanges are taxable sales. Please consult your tax adviser regarding your federal, state and local tax liability.
The Board of Trustees governs the Funds. The Board selects and oversees the investment adviser, Wachovia Asset Management, a business unit of Wachovia Bank. The investment adviser manages the Funds' 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 approximately $44 billion in managed assets as of December 31, 1999. Wachovia Asset Management also serves as investment adviser to The Wachovia Municipal Funds, another investment company.
The investment adviser receives an annual investment advisory fee equal to 0.50% of each Fund's average daily net assets.
Pursuant to an agreement between the investment adviser and the Trust the investment adviser agrees during the period from December 15, 1998 through January 31, 2001 to waive its fees and/or make reimbursements to the Funds, so that each Fund's net operating expenses do not exceed, in the aggregate, the Fund's total actual operating expenses. 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.
The following financial highlights are intended to help you understand each Fund's financial performance for its past five fiscal years, or since inception, if the life of the Fund is shorter. Some of the information is presented on a per share basis. Total returns represent the rate an investor would have earned (or lost) on an investment in a Fund, assuming reinvestment of all dividends and distributions.
This information has been audited by Ernst & Young LLP, whose report, along with the Fund's audited financial statements, is included in the Annual Report.
|
|
|
Year Ended November 30, |
|||||||||||||
|
|
|
1999 |
|
|
1998 |
|
|
1997 |
|
|
1996 |
|
|
1995 |
|
|
Net asset value, beginning of period |
|
$1.00 |
|
|
$1.00 |
|
|
$1.00 |
|
|
$1.00 |
|
|
$1.00 |
|
|
Income from investment operations |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net investment income |
|
0.04 |
|
|
0.05 |
|
|
0.05 |
|
|
0.05 |
|
|
0.05 |
|
|
Less distributions |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Distributions from net investment income |
(0.04 |
) |
(0.05 |
) |
(0.05 |
) |
(0.05 |
) |
(0.05 |
) |
|||||
|
|
|
|
|
|
|||||||||||
|
Net asset value, end of period |
|
$1.00 |
|
|
$1.00 |
|
|
$1.00 |
|
|
$1.00 |
|
|
$1.00 |
|
|
|
|
|
|
|
|||||||||||
|
Total Return (1) |
|
4.44 |
% |
|
4.92 |
% |
|
4.95 |
% |
|
4.83 |
% |
|
5.40 |
% |
|
Ratios to average net assets |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Expenses |
|
0.78 |
% |
|
0.78 |
% |
|
0.78 |
% |
|
0.77 |
% |
|
0.72 |
% |
|
Net investment income |
|
4.38 |
% |
|
4.80 |
% |
|
4.85 |
% |
|
4.74 |
% |
|
5.27 |
% |
|
Expense waiver/reimbursement (2) |
|
0.24 |
% |
|
0.26 |
% |
|
0.28 |
% |
|
0.32 |
% |
|
0.40 |
% |
|
Supplemental data |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net assets, end of period (000 omitted) |
|
$613,978 |
|
|
$482,128 |
|
|
$320,480 |
|
|
$230,263 |
|
|
$165,636 |
|
(1) Based on net asset value, which does not reflect the sales charge or contingent deferred sales charge, if applicable.
(2) This contractual expense decrease is reflected in both the expense and the net investment income ratios shown above.
(For a share outstanding throughout each period)
|
|
|
Year Ended November 30, |
||||||||||||||
|
|
|
1999 |
|
|
1998 |
|
|
1997 |
|
|
1996 |
|
|
1995 |
|
|
|
Net asset value, beginning of period |
|
$1.00 |
|
|
$1.00 |
|
|
$1.00 |
|
|
$1.00 |
|
|
$1.00 |
|
|
|
Income from investment operations |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net investment income |
|
0.03 |
|
|
0.03 |
|
|
0.03 |
|
|
0.03 |
|
|
0.03 |
|
|
|
Less distributions |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Distributions from net investment income |
(0.03 |
) |
(0.03 |
) |
(0.03 |
) |
(0.03 |
) |
(0.03 |
) |
||||||
|
|
|
|
|
| ||||||||||||
|
Net asset value, end of period |
|
$1.00 |
|
|
$1.00 |
|
|
$1.00 |
|
|
$1.00 |
|
|
$1.00 |
|
|
|
|
|
|
|
|
||||||||||||
|
Total Return (1) |
|
2.58 |
% |
|
2.88 |
% |
|
2.99 |
% |
|
2.83 |
% |
|
3.25 |
% |
|
|
Ratios to average net assets |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Expenses |
|
0.64 |
% |
|
0.64 |
% |
|
0.64 |
% |
|
0.69 |
% |
|
0.66 |
% |
|
|
Net investment income |
|
2.56 |
% |
|
2.83 |
% |
|
2.93 |
% |
|
2.84 |
% |
|
3.19 |
% |
|
|
Expense waiver/reimbursement (2) |
|
0.39 |
% |
|
0.41 |
% |
|
0.45 |
% |
|
0.43 |
% |
|
0.52 |
% |
|
|
Supplemental data |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net assets, end of period (000 omitted) |
|
$144,436 |
|
|
$133,211 |
|
|
$85,852 |
|
|
$74,922 |
|
|
$55,733 |
|
|
(1) Based on net asset value, which does not reflect the sales charge or contingent deferred sales charge, if applicable.
(2) This contractual expense decrease is reflected in both the expense and the net investment income ratios shown above.
(For a share outstanding throughout each period)
|
|
|
Year Ended November 30, |
|||||||||||||
|
|
|
1999 |
|
|
1998 |
|
|
1997 |
|
|
1996 |
|
|
1995 |
|
|
Net asset value, beginning of period |
|
$1.00 |
|
|
$1.00 |
|
|
$1.00 |
|
|
$1.00 |
|
|
$1.00 |
|
|
Income from investment operations |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net investment income |
|
0.04 |
|
|
0.05 |
|
|
0.05 |
|
|
0.04 |
|
|
0.05 |
|
|
Less distributions |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Distributions from net investment income |
|
(0.04 |
) |
|
(0.05 |
) |
|
(0.05 |
) |
|
(0.04 |
) |
|
(0.05 |
) |
|
|
|
|
|
|
|||||||||||
|
Net asset value, end of period |
|
$1.00 |
|
|
$1.00 |
|
|
$1.00 |
|
|
$1.00 |
|
|
$1.00 |
|
|
|
|
|
|
|
|||||||||||
|
Total Return (1) |
|
4.35 |
% |
|
4.83 |
% |
|
4.89 |
% |
|
4.77 |
% |
|
5.30 |
% |
|
Ratios to average net assets |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Expenses |
|
0.64 |
% |
|
0.63 |
% |
|
0.64 |
% |
|
0.70 |
% |
|
0.66 |
% |
|
Net investment income |
|
4.28 |
% |
|
4.74 |
% |
|
4.80 |
% |
|
4.68 |
% |
|
5.21 |
% |
|
Expense waiver/reimbursement (2) |
|
0.38 |
% |
|
0.40 |
% |
|
0.41 |
% |
|
0.39 |
% |
|
0.40 |
% |
|
Supplemental data |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net assets, end of period (000 omitted) |
|
$208,021 |
|
|
$198,771 |
|
|
$117,495 |
|
|
$104,336 |
|
|
$81,739 |
|
(1) Based on net asset value, which does not reflect the sales charge or contingent deferred sales charge, if applicable.
(2) This contractual expense decrease is reflected in both the expense and the net investment income ratios shown above.
The following documents contain further details about the Fund and are available upon request and without charge:
Statement of Additional Information (SAI)--The SAI includes additional information about the Fund. The SAI is incorporated by reference into this prospectus, making it legally a part of this prospectus.
Shareholder Reports--The Fund publishes annual and semi-annual reports to shareholders which include information about the Fund's investments.
To obtain the SAI, the annual and semiannual reports and other information call your investment professional or the Fund at 1-800-994-4414.
You can obtain information about the Fund (including the SAI) by writing to or visiting the Public Reference Room in Washington, DC. You may also access fund information from the EDGAR Database on the SEC's Internet site at http://www.sec.gov. You can purchase copies of this information by contacting the SEC by email at [email protected] or by writing to the SEC's Public Reference Section, Washington, DC 20549-0102. Call 1-202-942-8090 for information on the Public Reference Room's operations and copying fees.
| WACHOVIA MONEY MARKET FUND INVESTMENT SHARES |
|
101 Greystone Boulevard SC-9215 Columbia, SC 29226 |
| DISTRIBUTOR |
|
Federated Securities Corp. Federated Investors Tower 1001 Liberty Avenue Pittsburgh, PA 15222-3779 |
| INVESTMENT ADVISER |
|
Wachovia Asset Management 100 North Main Street Winston-Salem, NC 27101 |
| CUSTODIAN |
|
Wachovia Bank, N.A. 301 North Church Street Winston-Salem, NC 27150 |
|
TRANSFER AGENT, |
|
Federated Shareholder Services Company Federated Investors Tower 1001 Liberty Avenue Pittsburgh, PA 15222-3779 |
|
COUNSEL TO |
|
Kirkpatrick & Lockhart LLP 1800 Massachusetts Avenue, NW Washington, DC 20036-1800 |
|
COUNSEL TO |
|
Piper Marbury Rudnick & Wolfe LLP 1200 Nineteenth Street, NW Washington, DC 20036-2412 |
|
INDEPENDENT AUDITORS |
|
Ernst & Young LLP 200 Clarendon Street Boston, MA 02116 |
January 31, 2000
<R>
(Revised May 31, 2000)
</R>
<R>
822-21 (5/00)
</R>
Cusip 929901205
Cusip 929901403
Cusip 929901825
<R>
3042106A (5/00)
513892
</R>
THE WACHOVIA FUNDS
WACHOVIA MONEY MARKET FUND
WACHOVIA PRIME CASH MANAGEMENT FUND
WACHOVIA U.S. TREASURY MONEY MARKET FUND
WACHOVIA TAX-FREE MONEY MARKET FUND
Institutional Shares
Investment Shares
STATEMENT OF ADDITIONAL INFORMATION
JANUARY 31, 2000
(REVISED FEBRUARY 2, 2000 AND MAY 31, 2000)
This Statement of Additional Information (SAI) is not a prospectus. Read
this SAI in conjunction with the prospectuses of The Wachovia Funds dated
January 31, 2000 (Revised May 31, 2000).
This SAI incorporates by reference the Funds' Annual Report. Obtain the
prospectus or the Annual Report without charge by calling 1-800-994-4414.
CONTENTS
=======================================================================================
HOW ARE THE FUNDS ORGANIZED?..........................................1
SECURITIES IN WHICH THE FUNDS INVEST..................................1
WHAT DO SHARES COST?..................................................8
HOW ARE THE FUNDS SOLD?...............................................8
HOW TO BUY SHARES.....................................................8
HOW TO REDEEM SHARES..................................................9
ACCOUNT AND SHARE INFORMATION.........................................9
TAX INFORMATION.......................................................9
WHO MANAGES AND PROVIDES SERVICES TO THE FUNDS........................10
HOW DO THE FUNDS MEASURE PERFORMANCE?.................................12
FINANCIAL INFORMATION.................................................14
INVESTMENT RATINGS....................................................15
ADDRESSES.............................................................19
Federated Securities Corp., Distributor,
subsidiary of Federated Investors, Inc.
2020203B (5/00)
=======================================================================================
21
HOW ARE THE FUNDS ORGANIZED?
=======================================================================================
The Wachovia Funds (the Trust) is an open-end, management investment company
that 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 Funds are diversified portfolios of
the Trust. The Trust changed its name from The Biltmore Funds on July 31, 1997.
The Board of Trustees (the Board) has established two classes of shares of the
Funds, known as Institutional Shares and Investment Shares (Shares). This SAI
relates to both classes of Shares. Each Fund offers both classes except for the
Prime Cash Management Fund which offers only Investment Shares.
SECURITIES IN WHICH THE FUNDS INVEST
=======================================================================================
Following is a table that indicates which types of securities are a: o P =
PRINCIPAL investment of a Fund; (shaded in chart) o A = ACCEPTABLE (but not
principal) investment of a Fund; or o N = NOT AN ACCEPTABLE investment of a
Fund.
----------------------------------------------------------------------------------
SECURITIES MONEY PRIME CASH U.S TAX-FREE
MARKET FUND MANAGEMENT TREASURY FUND
FUND FUND
-------------------------------
----------------------------------------------------------------------------------
BANK INSTRUMENTS A A N A
----------------------------------------------------------------------------------
----------------------------------------------------------------------------------
COMMERCIAL PAPER2 A A N A
----------------------------------------------------------------------------------
----------------------------------------------------------------------------------
CORPORATE DEBT OBLIGATIONS A A N N
----------------------------------------------------------------------------------
----------------------------------------------------------------------------------
CREDIT ENHANCEMENT7 A A N A
----------------------------------------------------------------------------------
----------------------------------------------------------------------------------
FOREIGN BANK INSTRUMENTS A A N N
------------------------------- -------------------------
----------------------------------------------------------------------------------
LENDING OF PORTFOLIO A A A N
SECURITIES5
------------------------------- -------------------------
----------------------------------------------------------------------------------
MONEY MARKET INSTRUMENTS1 P P A A
---------------------------------------------------------
------------------------------- -------------------------
MUNICIPAL SECURITIES3 N N N P
--------------------------------------------------------- -------------
----------------------------------------------------------------------------------
REPURCHASE AGREEMENTS4 A A P A
----------------------------------------------------------------------------------
----------------------------------------------------------------------------------
RESTRICTED AND ILLIQUID A A N A
SECURITIES4
----------------------------------------------------------------------------------
----------------------------------------------------------------------------------
REVERSE REPURCHASE AGREEMENTS A A A A
---------------------------------------------------
----------------------------------------------------------------------------------
SECURITIES OF OTHER A A A A
INVESTMENT COMPANIES
---------------------------------------------------
----------------------------------------------------------------------------------
TEMPORARY INVESTMENTS N N N A
-------------------------- -------------
----------------------------------------------------------------------------------
U.S. GOVERNMENT OBLIGATIONS A A P A
---------------------------------------------------
----------------------------------------------------------------------------------
VARIABLE RATE DEMAND NOTES A A N A
-------------------------------
---------------------------------------------------
WHEN-ISSUED AND DELAYED A A A A
DELIVERY TRANSACTIONS6
----------------------------------------------------------------------------------
---------------------------------------------------------------------------------------
1. Rated in the highest short-term rating categories by one or more nationally
recognized statistical rating organizations (NRSROs). 2. Rated A-1 by Standard &
Poor's or Prime-1 by Moody's Investors Service. 3. The Tax-Free Fund may
purchase up to 20% of its total net assets in municipal securities, the interest
of which is subject to federal alternative minimum tax. 4. As a matter of
practice, repurchase agreements providing for settlement in more than seven days
after notice and other illiquid obligations will be limited to not more than 10%
of each Fund's net assets.
5. The amount of portfolio securities each Fund will lend will be limited to not
more than one-third of each Fund's total assets. 6. Each Fund does not intend to
engage in such transactions to an extent that would cause the segregation of
more than 20% of the total value of its assets. 7. A Fund may have more than 25%
of its total assets invested in securities credit enhanced by banks.
SECURITIES DESCRIPTIONS AND TECHNIQUES
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 a 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 interest rate 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. A 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 interest rate 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.
CREDIT ENHANCEMENT
Credit enhancement consists of an arrangement in which a company agrees to
pay amounts due on a fixed income security after the issuer defaults. In some
cases the company providing credit enhancement makes all payments directly to
the security holders and receives reimbursement from the issuer. Normally,
the credit enhancer has greater financial resources and liquidity than the
issuer. For this reason, the investment adviser may evaluate the credit risk
of a fixed income security based solely upon its credit enhancement.
Common types of credit enhancement include guarantees, letters of credit,
bond insurance and surety bonds. Credit enhancement also includes
arrangements where securities or other liquid assets secure payment of a
fixed income security. Following a default, these assets may be sold and the
proceeds paid to security's holders. Either form of credit enhancement
reduces credit risks by providing another source of payment for a fixed
income security.
TAX EXEMPT SECURITIES
Tax exempt securities are fixed income securities that pay interest that is not
subject to regular federal income taxes. Typically, states, counties, cities and
other political subdivisions and authorities issue tax exempt securities. The
market categorizes tax exempt securities by their source of repayment.
GENERAL OBLIGATION BONDS
General obligation bonds are supported by the issuer's power to exact
property or other taxes. The issuer must impose and collect taxes sufficient
to pay principal and interest on the bonds. However, the issuer's authority
to impose additional taxes may be limited by its charter or state law.
SPECIAL REVENUE BONDS
Special revenue bonds are payable solely from specific revenues received by
the issuer such as specific taxes, assessments, tolls, or fees. Bondholders
may not collect from the municipality's general taxes or revenues. For
example, a municipality may issue bonds to build a toll road, and pledge the
tolls to repay the bonds. Therefore, any shortfall in the tolls normally
would result in a default on the bonds.
PRIVATE ACTIVITY BONDS
Private activity bonds are special revenue bonds used to finance private
entities. For example, a municipality may issue bonds to finance a new
factory to improve its local economy. The municipality would lend the
proceeds from its bonds to the company using the factory, and the company
would agree to make loan payments sufficient to repay the bonds. The bonds
would be payable solely from the company's loan payments, not from any
other revenues of the municipality. Therefore, any default on the loan
normally would result in a default on the bonds.
The interest on many types of private activity bonds is subject to the
federal alternative minimum tax (AMT). The Tax-Free Fund may invest in
bonds subject to AMT.
TAX INCREMENT FINANCING BONDS
Tax increment financing (TIF) bonds are payable from increases in taxes or
other revenues attributable to projects financed by the bonds. For example, a
municipality may issue TIF bonds to redevelop a commercial area. The TIF
bonds would be payable solely from any increase in sales taxes collected from
merchants in the area. The bonds could default if merchants' sales, and
related tax collections, failed to increase as anticipated.
MUNICIPAL NOTES
Municipal notes are short-term tax exempt securities. Many municipalities
issue such notes to fund their current operations before collecting taxes or
other municipal revenues. Municipalities may also issue notes to fund capital
projects prior to issuing long-term bonds. The issuers typically repay the
notes at the end of their fiscal year, either with taxes, other revenues or
proceeds from newly issued notes or bonds.
VARIABLE RATE DEMAND INSTRUMENTS
Variable rate demand instruments are tax exempt securities that require the
issuer or a third party, such as a dealer or bank, to repurchase the security
for its face value upon demand. The securities also pay interest at a
variable rate intended to cause the securities to trade at their face value.
The Fund treats demand instruments as short-term securities, because their
variable interest rate adjusts in response to changes in market rates, even
though their stated maturity may extend beyond thirteen months.
MUNICIPAL LEASES
Municipalities frequently enter into leases for equipment or facilities. In
order to comply with state public financing laws, these leases are typically
subject to annual appropriation. In other words, a municipality may end a
lease, without penalty, by failing to include the lease payments in its
annual budget. After the lease ends, the lessor can resell the equipment or
facility but may lose money on the sale.
The Fund typically invests in securities supported by pools of municipal
leases. The most common type of lease backed securities are certificates of
participation (COPs). However, the Fund may also invest directly in
individual leases.
SPECIAL TRANSACTIONS
REPURCHASE AGREEMENTS
Repurchase agreements are transactions in which a 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 Funds' 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.
DELAYED DELIVERY TRANSACTIONS
Delayed delivery 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, delayed delivery transactions create interest
rate risks for the Fund. Delayed delivery 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 interest rate risks
because the underlying mortgages may be less favorable than anticipated by
the Fund.
SECURITIES LENDING
A 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 interest rate risks and credit
risks. These transactions create leverage risks.
INVESTMENT RISKS
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.
INTEREST RATE RISKS
o Prices of fixed income securities rise and fall in response to interest rate
changes in the interest rate paid by for similar securities. Generally, when
interest rates rise, prices of fixed income securities fall. However, market
factors, such as the demand for particular fixed income securities, may cause
the price of certain fixed income securities to fall while the prices of
other securities rise or remain unchanged.
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 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, a 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.
PREPAYMENT RISKS
o Unlike traditional fixed income securities, which pay a fixed rate of
interest until maturity (when the entire principal amount is due) payments on
mortgage backed securities include both interest and a partial payment of
principal. Partial payment of principal may be comprised of scheduled
principal payments as well as unscheduled payments from the voluntary
prepayment , refinancing, or foreclosure of the underlying loans. These
unscheduled prepayments of principal create risks that can adversely affect a
Fund holding mortgage backed securities.
For example, when interest rates decline, the values of mortgage backed
securities generally rise. However, when interest rates decline, unscheduled
prepayments can be expected to accelerate, and the Fund would be required to
reinvest the proceeds of the prepayments at the lower interest rates then
available. Unscheduled prepayments would also limit the potential for capital
appreciation on mortgage backed securities.
Conversely, when interest rates rise, the values of mortgage backed
securities generally fall. Since rising interest rates typically result in
decreased prepayments, this could lengthen the average lives of mortgage
backed securities, and cause their value to decline more than traditional
fixed income securities.
o Generally, mortgage backed securities compensate for the increased risk
associated with prepayments by paying a higher yield. The additional interest
paid for risk is measured by the difference between the yield of a mortgage
backed security and the yield of a U.S. Treasury security with a comparable
maturity (the spread). An increase in the spread will cause the price of the
mortgage backed security to decline. Spreads generally increase in response
to adverse economic or market conditions. Spreads may also increase if the
security is perceived to have an increased prepayment risk or is perceived to
have less market demand.
INVESTMENT LIMITATIONS
ISSUING SENIOR SECURITIES AND BORROWING MONEY
The Funds will not issue senior securities, except that each Fund may
borrow money directly or through reverse repurchase agreements in amounts
up to one-third of the value of its total assets, including the amount
borrowed. The Funds will not borrow money or engage in reverse repurchase
agreements for investment leverage, but rather as a temporary,
extraordinary, or emergency measure or to facilitate management of the
portfolio by enabling the Fund to meet redemption requests when the
liquidation of portfolio securities is deemed to be inconvenient or
disadvantageous.
LENDING CASH OR SECURITIES
The Funds will not lend any of its assets, except portfolio securities up
to one-third of the value of its total assets. This shall not prevent the
Money Market Fund or the Prime Cash Management Fund from purchasing or
holding money market instruments, including repurchase agreements and
variable amount demand master notes, permitted by its investment
objective, policies, and limitations or Declaration of Trust or prevent
the Treasury Money Market Fund from purchasing or holding U.S. government
securities, including repurchase agreements, permitted by its investment
objective and policies.
The Tax-Free Fund will not lend any of its assets, except that it may
acquire publicly or non-publicly issued Municipal Securities or temporary
investments or enter into repurchase agreements, in accordance with its
investment objective, policies and limitations.
INVESTING IN REAL ESTATE
The Money Market Fund and the Prime Cash Management Fund will not purchase
or sell real estate, including limited partnership interests, although
they may invest in securities of issuers whose business involves the
purchase or sale of real estate or in securities which are secured by real
estate or interests in real estate.
The Treasury Money Market Fund and the Tax-Free Money Market Fund may not
purchase or sell real estate, including limited partnership interests,
although the Tax-Free Money Market Fund may invest in securities secured
by real estate or interests in real estate.
INVESTING IN COMMODITIES
The Funds will not purchase or sell commodities, commodity contracts, or
commodity futures contracts.
DIVERSIFICATION OF INVESTMENTS
With respect to securities comprising 75% of the value of its total
assets, the Money Market Fund, Prime Cash Management Fund and Tax-Free
Money Market Fund each will not purchase securities of any one issuer
(other than cash, cash items or securities issued or guaranteed by the
government of the United States or its agencies or instrumentalities and
repurchase agreements collateralized by U.S. government securities, or,
with respect to the Treasury Money Market Fund, collateralized by U.S.
Treasury Securities) if as a result more than 5% of the value of its total
assets would be invested in the securities of that issuer.
CONCENTRATION OF INVESTMENTS
The Money Market Fund and the Prime Cash Management Fund each will not
invest 25% or more of the value of its total assets in any one industry.
Each Fund may invest 25% or more of the value of its total assets in cash
or certain money market instruments, (including, with respect to the Prime
Cash Management Fund, instruments issued by a U.S. branch of a domestic
bank having capital, surplus, and undivided profits in excess of
$100,000,000 at the time of investment), securities issued or guaranteed
by the U.S. government, its agencies, or instrumentalities, or instruments
secured by these money market instruments, such as repurchase agreements.
The Tax-Free Money Market Fund will not purchase securities, if, as a
result of such purchase 25% or more of the value of its assets would be
invested in any one industry or in industrial development bonds or other
securities, the interest upon which is paid from revenues of similar type
projects. However, the Fund may invest, as a temporary investments, more
than 25% of the value of its assets in cash or certain money market
instruments, including securities issued or guaranteed by the U.S.
government, its agencies, or instrumentalities or instruments secured by
these money market instruments, such as repurchase agreements.
UNDERWRITING
Each Fund will not underwrite any issue of securities, except as it may be
deemed to be an underwriter under the Securities Act of 1933 in connection
with the sale of securities in accordance with its investment objective,
policies, and limitations.
THE ABOVE INVESTMENT LIMITATIONS CANNOT BE CHANGED BY THE BOARD OF TRUSTEES
(BOARD) UNLESS AUTHORIZED BY THE "VOTE OF A MAJORITY OF ITS OUTSTANDING VOTING
SECURITIES," AS DEFINED BY THE INVESTMENT COMPANY ACT. WITHOUT SHAREHOLDER
APPROVAL. THE FOLLOWING LIMITATIONS, HOWEVER, MAY BE CHANGED BY THE BOARD
WITHOUT SHAREHOLDER APPROVAL. SHAREHOLDERS WILL BE NOTIFIED BEFORE ANY MATERIAL
CHANGE IN THESE LIMITATIONS BECOMES EFFECTIVE.
SELLING SHORT AND BUYING ON MARGIN
The Funds will not sell any securities short or purchase any securities on
margin but may obtain such short-term credits as are necessary for
clearance of transactions.
INVESTING IN RESTRICTED SECURITIES
The Money Market Fund and the Prime Cash Management Fund each will not
invest more than 10% of its net assets in securities subject to
restrictions in resale under federal securities law, except for Section
4(2) commercial paper and other restricted securities determined to be
liquid under criteria established by the Trustees.
The Tax-Free Money Market Fund will not invest more than 10% of its net
assets in securities subject to restrictions on resale under federal
securities law, except for restricted securities determined to be liquid
under criteria established by the Trustees.
INVESTING IN ILLIQUID SECURITIES
The Money Market Fund and the Prime Cash Management Fund each will not
invest more than 10% of the value of its net assets in illiquid
securities, including repurchase agreements providing for settlement in
more than seven days after notice, non-negotiable fixed income time
deposits with maturities over seven days, and restricted securities which
have not been determined to be liquid under criteria established by the
Trustees.
The Tax-Free Money Market Fund and the Treasury Money Market Fund each
will not invest more than 10% of its net assets in illiquid securities,
including repurchase agreements providing for settlement in more than
seven days after notice, and, with respect to Tax-Free Money Market Fund,
in restricted securities which have not been determined to be liquid under
criteria established by the Trustees.
INVESTING IN SECURITIES OF OTHER INVESTMENT COMPANIES
The Fund will limit its investment in other investment companies to no
more than 3% of the total outstanding voting stock of any investment
company, invest no more than 5% of its total assets in any one investment
company, or invest more than 10% of its total assets in investment
companies in general, unless it is permitted to exceed these limitations
by action of the SEC. The Fund will limit its investments in the
securities of other investment companies to those of money market funds
having investment objectives and policies similar to its own. The Fund
will purchase securities of closed-end investment companies only in open
market transactions involving only customary broker's commissions.
However, these limitations are not applicable if the securities are
acquired in a merger, consolidation, reorganization or acquisition of
assets. It should be noted that investment companies incur certain
expenses, such as custodian and transfer agent fees, and therefore any
investment by the Fund in shares of another investment company would be
subject to such duplicate expenses.
Except with respect to borrowing money, if a percentage limitation is adhered to
at the time of investment, a later increase or decrease in percentage resulting
from any change in value or net assets will not result in a violation of such
restriction.
Each Fund will not purchase any securities while borrowings in excess of 5% of
the value of its total assets are outstanding.
Each Fund does not expect to borrow money in excess of 5% of the value of its
net assets or invest in securities of closed-end investment companies during the
coming fiscal year.
For purposes of its policies and limitations, the Funds consider certificates of
deposit and demand and time deposits issued by a U.S. branch of a domestic bank
or savings and loan, having capital, surplus, and undivided profits in excess of
$100,000,000 at the time of investment , to be "cash items."
REGULATORY COMPLIANCE
The Funds may follow non-fundamental operational policies that are more
restrictive than its fundamental investment limitations, as set forth in the
prospectus and this Statement of Additional Information, in order to comply with
applicable laws and regulations, including the provisions of and regulations
under the Investment Company Act of 1940. In particular, the Funds will comply
with the various requirements of Rule 2a-7 (the Rule), which regulates money
market mutual funds. The Funds will determine the effective maturity of their
investments according to the Rule. The Funds may change these operational
policies to reflect changes in the laws and regulations without the approval of
their shareholders.
WHAT DO SHARES COST?
=======================================================================================
Each Fund attempts to stabilize the value of a Share at $1.00.
USE OF THE AMORTIZED COST METHOD
The Trustees have decided that the best method for determining the value of
portfolio instruments is amortized cost. Under this method, portfolio
instruments are valued at the acquisition cost as adjusted for amortization of
premium or accumulation of discount rather than at current market value.
Accordingly, neither the amount of daily income nor the net asset value is
affected by any unrealized appreciation or depreciation of the portfolio. In
periods of declining interest rates, the indicated daily yield on shares of the
Funds computed by dividing the annualized daily income on each Fund's portfolio
by the net asset value computed as above may tend to be higher than a similar
computation made by using a method of valuation based upon market prices and
estimates. In periods of rising interest rates, the opposite may be true.
The Funds' use of the amortized cost method of valuing portfolio instruments
depends on its compliance with certain conditions in Rule 2a-7 (the "Rule")
promulgated by the SEC under the 1940 Act. Under the Rule, the Trustees must
establish procedures reasonably designed to stabilize the net asset value per
Share, as computed for purposes of distribution and redemption, at $1.00 per
Share, taking into account current market conditions and the Fund's investment
objective. The procedures includes monitoring the relationship between the
amortized cost value per Share and the net asset value per Share based upon
available indications of market value. The Trustees will decide what, if any,
steps should be taken if there is a difference of more than 0.5 of 1% between
the two values. The Trustees will take any steps they consider appropriate (such
as redemption in kind or shortening the average portfolio maturity) to minimize
any material dilution or other unfair results arising from differences between
the two methods of determining net asset value.
HOW ARE THE FUNDS SOLD?
=======================================================================================
Under the Distributor's Contract with the Funds, the Distributor (Federated
Securities Corp.) offers Shares on a continuous, best-efforts basis.
FORMER TRUST CUSTOMERS
Former trust customers of Wachovia Bank, N.A. whose trust relationship
transferred to State Street Bank & Trust Company during the period September 3,
1999 through June 30, 2000 may continue to hold the Institutional Shares of The
Wachovia Funds.
RULE 12B-1 PLAN
As a compensation-type plan, the Rule 12b-1 Plan is designed to pay the
Distributor (who may then pay investment professionals such as banks,
broker/dealers, trust departments of bank, and registered investment advisers)
for marketing activities (such as advertising, printing and distributing
prospectuses, and providing incentives to investment professionals) to promote
sales of Shares so that overall Fund assets are maintained or increased. This
helps the Funds achieve economies of scale, reduce per share expenses, and
provide cash for orderly portfolio management and Share redemptions. Also, the
Funds' service providers that receive asset-based fees also benefit from stable
or increasing Fund assets.
The Funds may compensate the Distributor more or less than its actual marketing
expenses. In no event will a Fund pay for any expenses of the Distributor that
exceed the maximum Rule 12b-1 Plan fee.
HOW TO BUY SHARES
=======================================================================================
EXCHANGING SECURITIES FOR SHARES
You may contact the Distributor to request a purchase of Shares in an exchange
for securities you own. The Funds reserve the right to determine whether to
accept your securities and the minimum market value to accept. Each 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 each 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 REDEEM SHARES
=======================================================================================
REDEMPTION IN KIND
Although each 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 Funds' portfolio securities.
Because the Funds have elected to be governed by Rule 18f-1 under the Investment
Company Act of 1940, 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, a
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 Funds' 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 a Fund gives the shareholder one vote in Trustee elections and
other matters submitted to shareholders for vote. All classes of each Fund in
the Trust have equal voting rights, except that in matters affecting only a
particular Fund or class, only Shares of that Fund or class are entitled to
vote.
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 the Trust's outstanding
shares of all series entitled to vote.
As of January 4, 2000, the following shareholders owned of record, beneficially,
or both, 5% or more of outstanding Shares of the Funds. Unless otherwise noted,
the address of the shareholder is 301 North Main Street, Winston-Salem, NC
27101.
---------------------------------------------------------------------------------------
SHAREHOLDER NAME FUND SHARE CLASS PERCENTAGE OWNED
---------------------------------------------------------------------------------------
---------------------------------------------------------------------------------------
Wachovia Brokerage Services Money Market Fund Investment 94.49%
--------------------------- Tax Free Money Market Investment 100.00%
Fund Investment 95.88%
U.S. Treasury Money
Market Fund
---------------------------------------------------------------------------------------
---------------------------------------------------------------------------------------
Wachovia Bank, N.A. Money Market Fund Institutional 100.00%
Tax Free Money Market Institutional 100.00%
Fund Institutional 100.00%
U.S. Treasury Money Institutional 100.00%
Market Fund
Prime Cash Management
Fund
---------------------------------------------------------------------------------------
Shareholders owning 25% or more of outstanding Shares may be in control and be
able to affect the outcome of certain matters presented for a vote of
shareholders.
TAX INFORMATION
=======================================================================================
FEDERAL INCOME TAX
Each 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 Funds will not receive special tax treatment and will pay federal
income tax.
Each 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.
WHO MANAGES AND PROVIDES SERVICES TO THE FUNDS?
=======================================================================================
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 as part of the Fund Complex for the 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 fourteen 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. As of January 4, 2000, the Funds'
Board and Officers as a group owned less than 1% of the Funds' outstanding
Shares. An ^ denotes retiring as a member of the Board of Trustees on February
23, 2000.
------------------------------------------------------------------------ --------------
NAME OCCUPATIONS FOR PAST 5 YEARS AGGREGATE
----------------------- COMPENSATION
BIRTHDATE FROM FUND
ADDRESS COMPLEX
POSITION WITH TRUSTS
------------------------------------------------------------------------ --------------
------------------------------------------------------------------------ --------------
JAMES A. HANLEY Retired; Vice President and Treasurer, Abbott $33,200 August 13,
1931 Laboratories (health care products) (until 4272 Sanctuary Way 1992).
Bonita Springs, FL
Trustee
------------------------------------------------------------------------ --------------
------------------------------------------------------------------------ --------------
SAMUEL E. HUDGINS Hudgins Consulting, LLC (independent $33,200
March 4, 1929 consultant); President, Percival Hudgins &
715 Whitemere Court, Company, LLC (investment bankers/financial
N.W. consultants) (until September 1997); Director,
Atlanta, GA Atlantic American Corporation (insurance
Trustee holding company).
------------------------------------------------------------------------ --------------
------------------------------------------------------------------------ --------------
J. BERKELY INGRAM, JR.^ Real estate investor and partner; formerly, $26,000
April 17, 1924 Vice Chairman, Massachusetts Mutual Life
114-L Reynolda Village Insurance Company.
Winston-Salem, NC
Trustee
------------------------------------------------------------------------ --------------
------------------------------------------------------------------------ --------------
D. DEAN KAYLOR Retired; Executive Vice President and Chief $26,000
June 29, 1930 Financial Officer, NBD Bank, N.A. and NBD
2835 Greenbriar Bancorp, Inc. (bank and bank holding company)
Harbor Springs, MI (until 1990).
Trustee
------------------------------------------------------------------------ --------------
------------------------------------------------------------------------ --------------
ALVIN J. SCHEXNIDER, Director, Office of Health Policy Development, $26,000
PH.D. Wake Forest University School of Medicine
May 26, 1945 (since February 2000); Chancellor,
3174 Turkey Hill Road Winston-Salem State University (1996 to
Winston-Salem, NC 27106 January 2000); Formerly, Vice Provost,
Trustee Virginia Commonwealth University (1987 to
1996).
------------------------------------------------------------------------ --------------
------------------------------------------------------------------------ --------------
CHARLES S. WAY, JR.* President and CEO, The Beach Company and its $26,000
December 18, 1937 various affiliated companies and partnerships.
211 King Street
Suite 300
Charleston, SC
Trustee
------------------------------------------------------------------------ --------------
------------------------------------------------------------------------ --------------
JOHN W. MCGONIGLE Executive Vice President and Secretary of the $0
October 26, 1938 Federated Fund Complex; Executive Vice
Federated Investors President, Secretary and Director, Federated
Tower Investors, Inc.; Trustee, Federated Investment
Pittsburgh, PA Management Company and Federated Investment
President and Treasurer Counseling; Director, Federated Global
Investment Management Corp, Federated Services
Company and 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 Mutual $0
September 3, 1959 Funds Services, Federated Services Company;
Federated Investors formerly, Senior Corporate Counsel, Federated
Tower Services Company.
Pittsburgh, PA
Secretary
------------------------------------------------------------------------ --------------
INVESTMENT ADVISER
The Adviser, Wachovia Asset Management, conducts investment research and makes
investment decisions for the Funds. The Adviser is a business unit of Wachovia
Bank, N.A.
The Adviser shall not be liable to the Trust, the Funds, 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.
Investment decisions for the Funds are made independently from those of other
accounts managed by the Adviser. When the Funds 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 Adviser to be equitable. While the coordination and
ability to participate in volume transactions may benefit the Funds, it is
possible that this procedure could adversely impact the price paid or received
and/or the position obtained or disposed of by the Funds.
ADMINISTRATOR
Federated Services Company, a subsidiary of Federated Investors, Inc.,
(Federated) provides administrative personnel and services (including certain
legal and financial reporting services) necessary to operate the Funds.
Federated Services Company provides these at the following annual rate of the
average aggregate daily net assets of The Wachovia Funds and The Wachovia
Municipal Funds (excluding Wachovia Prime Cash Management Fund) as specified
below:
MAXIMUM AVERAGE AGGREGATE DAILY NET
ADMINISTRATIVE FEE ASSETS OF THE FUNDS
------------------ -------------------
.10 of 1% on the first $3.5 billion
.06 of 1% on $3.5 billion to $5.0 billion
.04 of 1% on $5.0 billion to $10 billion
.03 of 1% on $10.0 billion to $20.0 billion
.02 of 1% on assets in excess of $20.0 billion
Federated Services Company provides these services for an annual fee equal to
.05 of 1% of the Wachovia Prime Cash Management Fund's average daily net assets.
CUSTODIAN
Wachovia Bank, N.A., is custodian (the Custodian) for the securities and cash of
the Funds. Under the Custodian Agreement, the Custodian holds the Funds'
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 each 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 Funds' portfolio investments.
INDEPENDENT AUDITORS
The independent auditors for the Funds, Ernst & Young LLP, plans and performs
its audit so that it may provide an opinion as to whether the Fund's financial
statements and financial highlights are free of material misstatement.
FEES PAID BY THE FUNDS FOR SERVICES
--------------------------------------------------------------------------------
FUND ADVISORY FEE PAID/ ADMINISTRATIVE FEE PAID 12B-1
ADVISORY FEE WAIVED ADMINISTRATIVE FEE FEE PAID
WAIVED
-----------------------------------
---------------------------------------------------------------
FOR THE FISCAL YEAR ENDED FOR THE FISCAL YEAR FOR THE
NOVEMBER 30, ENDED FISCAL
NOVEMBER 30, YEAR
ENDED
-----------------------------------------------------
-----------------------------------------------------
1999 1998 1997 1999 1998 1997 NOVEMBER
30, 1999
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MONEY MARKET $4,298,57$2,852,31$2,133,189$715,029$538,074 $357,303$2,204,402
FUND $2,031,49$1,483,24$1,207,652$0 $0 $0
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PRIME CASH $5,565,47$5,235,53$4,057,063$927,578$853,922 $1,132,1N/A
MANAGEMENT FUND $3,551,92$3,308,31$2,841,827$0 $0 $383,724
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U.S. TREASURY $3,415,56$3,390,86$3,023,600$573,461$641,336 $507,009$789,762
FUND $2,576,07$2,669,81$2,489,781$0 $0 $0
----------
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TAX-FREE FUND $2,104,65$1,878,12$1,318,455$353,303$353,629 $220,229$606,130
$1,626,09$1,562,98$1,185,295$0 $0 $0
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Fees are allocated among Classes based on their pro rata share of Fund assets,
except for marketing (Rule 12b-1) fees which are borne only by the applicable
Class of Shares.
HOW DO THE FUNDS MEASURE PERFORMANCE?
=======================================================================================
The Funds 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.
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 Funds' or any class of Shares'
expenses; and various other factors.
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.
YIELD
Each Fund calculates its yield for both classes of Shares daily, based upon the
seven days ending on the day of the calculation, called the "base period." This
yield is computed by:
determining the net change in the value of a hypothetical account with a
balance of one Share at the beginning of the base period, with the net change
excluding capital changes but including the value of any additional Shares
purchased with dividends earned from the original one Share and all dividends
declared on the original and any purchased Shares;
dividing the net change in the account's value by the value of the account at
the beginning of the base period to determine the base period return; and
multiplying the base period return by (365/7).
EFFECTIVE YIELD
The Funds' effective yield for both classes of Shares is computed by compounding
the unannualized base period return by:
adding 1 to the base period return;
raising the sum to the 365/7th power; and
o subtracting 1 from the result.
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FUND YIELD EFFECTIVE YIELD
for the 7-day period for the 7-day period
ended November 30, 1999 ended November 30, 1999
-------------------------------------------------
-------------------------------------------------
INSTITUTIONAINVESTMENT INSTITUTIONALINVESTMENT
SHARES SHARES SHARES SHARES
---------------------------------------------------------------------------
---------------------------------------------------------------------------
Money Market Fund 5.39% 4.99% 5.54% 5.12%
---------------------------------------------------------------------------
---------------------------------------------------------------------------
Prime Cash Management 5.55% N/A 5.70% N/A
Fund
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---------------------------------------------------------------------------
U.S. Treasury Fund 5.32% 4.92% 5.04% 5.46%
---------------------------------------------------------------------------
Tax-Free Fund 3.44% 3.04% 3.50% 3.09%
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TAX-EQUIVALENT YIELD-TAX-FREE FUND
The tax- equivalent yield of Shares is calculated similarly to the yield, but is
adjusted to reflect the taxable yield that Shares would have had to earn to
equal the actual yield, assuming a specific tax rate. The yield and
tax-equivalent yield do not necessarily reflect income actually earned by Shares
because of certain adjustments required by the SEC and, therefore, may not
correlate to the dividends or other distributions paid to shareholders.
The tax-equivalent yields for the Tax-Free Money Market Fund's Institutional
Shares and Investment Shares for the seven-day period ended November 30, 1999
were 5.70% and 5.03%, respectively.
TAX EQUIVALENCY TABLE-TAX-FREE FUND
Set forth below is the sample tax-equivalency table that may be used in
advertising and sales literature. The table is for illustrative purposes only
and is not representative of past or future performance of the Fund. The
interest earned by the municipal securities owned by the Fund generally remains
free from federal regular income tax and is often free from state and local
taxes as well. However, some of a Fund's income may be subject to the federal
alternative minimum tax and state and/or local taxes.
TAX EQUIVALENCY TABLE
TAXABLE YIELD EQUIVALENT FOR 2000 MULTI-STATE MUNICIPAL FUND
FEDERAL INCOME TAX 15.00% 28.00% 31.00% 36.00% 39.60%
BRACKET:
Joint Return $1-43,85$43,851-105,$105,951-161,$161,451-288Over
288,350
Single Return $1-26,25$26,251-63,5$63,551-132,6$132,601-288Over
288,350
TAX EXEMPT YIELD: TAXABLE YIELD EQUIVALENT:
1.00% 1.18% 1.39% 1.45% 1.56% 1.66%
1.50% 1.76% 2.08% 2.17% 2.34% 2.48%
2.00% 2.35% 2.78% 2.90% 3.13% 3.31%
2.50% 2.94% 3.47% 3.62% 3.91% 4.14%
3.00% 3.53% 4.17% 4.35% 4.69% 4.97%
3.50% 4.12% 4.86% 5.07% 5.47% 5.79%
4.00% 4.71% 5.56% 5.80% 6.25% 6.62%
4.50% 5.29% 6.25% 6.52% 7.03% 7.45%
5.00% 5.88% 6.94% 7.25% 7.81% 8.28%
5.50% 6.47% 7.64% 7.97% 8.59% 9.11%
6.00% 7.06% 8.33% 8.70% 9.38% 9.93%
6.50% 7.65% 9.03% 9.42% 10.16% 10.76%
7.00% 8.24% 9.72% 10.14% 10.94% 11.59%
7.50% 8.82% 10.42% 10.87% 11.72% 12.42%
8.00% 9.41% 11.11% 11.59% 12.50% 13.25%
8.50% 10.00% 11.81% 12.32% 13.28% 14.07%
9.00% 10.59% 12.50% 13.04% 14.06% 14.90%
NOTE: THE MAXIMUM MARGINAL TAX RATE FOR EACH BRACKET WAS USED IN CALCULATING THE
TAXABLE YIELD EQUIVALENT.
---------------------------------------------------------------------------------------
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 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 Funds; and
o information about the mutual fund industry from sources such as the Investment
Company Institute.
A 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.
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 Funds use in advertising may include:
LIPPER ANALYTICAL SERVICES, INC. ranks funds in various fund categories by
making comparative calculations using total return. Total return assumes the
reinvestment of all income dividends and capital gains distributions, if any.
From time to time, the Fund will quote its Lipper ranking in the
"institutional tax exempt money market funds" and "tax exempt money market
funds" categories in advertising and sales literature.
SALOMON BROTHERS SIX-MONTH PRIME MUNI NOTEs is an index of selected
municipal notes, maturing in six months, whose yields are chosen as
representative of this market. Calculations are made weekly and monthly.
SALOMON BROTHERS ONE-MONTH TAX-EXEMPT COMMERCIAL PAPER is an index of selected
tax-exempt commercial paper issues, maturing in one month, whose yields are chosen
as representative of this particular market. Calculations are made weekly and
monthly. Ehrlich-Bober & Co., Inc. also tracks this Salomon Brothers index.
MONEY, a monthly magazine, regularly ranks money market funds in various
categories based on the latest available seven-day compound (effective)
yield. From time to time, the Funds will quote its MONEY ranking in
advertising and sales literature.
o IBC/DONOGHUE'S MONEY FUND REPORT publishes annualized yields of hundreds of
money market funds on a weekly basis and, through its MONEY MARKET INSIGHT
publication, reports monthly and 12-month-to-date investment results for the
same money funds.
BANK RATE MONITOR NATIONAL INDEX, Miami Beach, Florida, is a financial
reporting service which publishes weekly average rates of 50 leading bank and
thrift institution money market deposit accounts. The rates published in the
index are averages of the personal account rates offered on the Wednesday
prior to the date of publication by ten of the largest banks and thrifts in
each of the five largest Standard Metropolitan Statistical Areas. Account
minimums range upward from $2,500 in each institution and compounding methods
vary. If more than one rate is offered, the lowest rate is used. Rates are
subject to change at any time specified by the institution.
FINANCIAL INFORMATION
=======================================================================================
The Financial Statements for the Funds for the fiscal year ended November
30,1999 are incorporated herein by reference to the Annual Reports to
Shareholders of the Funds dated November 30, 1999.
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 SERVICE CORPORATE BOND RATING
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.
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 SERVICE COMMERCIAL PAPER RATING DEFINITIONS
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.
STANDARD & POOR'S MUNICIPAL 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 effect 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
outweighed by large uncertainties of major risk exposure to adverse conditions.
C--The rating "C" is reversed 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.
STANDARD & POOR'S MUNICIPAL NOTE RATINGS
SP-1--Very strong or strong capacity to pay principal and interest. Those issues
determined to possess overwhelming safety characteristics will be given a plus
sign (+) designation.
SP-2--Satisfactory capacity to pay principal and interest.
SP-3--Speculative capacity to pay principal and interest.
MOODY'S INVESTORS SERVICE MUNICIPAL 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 the desirable
investment. Assurance of interest and principal payments or of maintenance of
other terms of the contract over any long period of time may be small.
CAA--Bonds which are rated "Caa" are of poor standing. Such issues may be in
default or there may be present elements of danger with respect to principal or
interest.
CA--Bonds which are rated "Ca" represent obligations which are speculative in a
high degree. Such issues are often in default or have other marked shortcomings.
C--Bonds which are rated "C" are the lowest rated class of bonds and issues so
rated can be regarded as having extremely poor prospects of ever attaining any
real investment standing.
MOODY'S INVESTORS SERVICE 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 SERVICE 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.
=======================================================================================
ADDRESSES
=======================================================================================
THE WACHOVIA FUNDS
Institutional Shares and Investment Shares 101 Greystone Boulevard
SC-9215
Columbia, SC 29226
---------------------------------------------------------------------------------------
Distributor
FEDERATED SECURITIES CORP. Federated Investors Tower
1001 Liberty Avenue,
Pittsburgh, PA 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
---------------------------------------------------------------------------------------
APPENDIX Note: The cover page graphic references refer to artwork on this page. 1. The following bar chart appears on page1 of the Institutional Shares prospectus: "The graphic presentation displayed here consists of a bar chart representing the annual total returns of Wachovia Prime Cash Management Fund as of the calendar year-end for each of six years. The "y" axis reflects the "% Total Return" beginning with 0% and increasing in increments of 2% up to 6%. The "x" axis represents calculation periods from the earliest first full calendar year-end of the Fund's start of business through the calendar year ended December 31, 1999. The light gray shaded chart features six distinct vertical bars, each shaded in charcoal, and each visually representing by height the total return percentages for the calendar year stated directly at its base. The calculated total return percentage for the Fund for each calendar year is stated directly at the top of each respective bar, for the calendar years 1994 through 1999. The percentages noted are: 4.24%, 5.96%, 5.42%, 5.57%, 5.49%, and 5.11%." 2. The following bar chart appears on page 2 of the Institutional Shares prospectus: "The graphic presentation displayed here consists of a bar chart representing the annual total returns of Wachovia Tax-Free Money Market Fund as of the calendar year-end for each of seven years. The "y" axis reflects the "% Total Return" beginning with 0% and increasing in increments of 1% up to 4%. The "x" axis represents calculation periods from the earliest first full calendar year-end of the Fund's start of business through the calendar year ended December 31, 1999. The light gray shaded chart features seven distinct vertical bars, each shaded in charcoal, and each visually representing by height the total return percentages for the calendar year stated directly at its base. The calculated total return percentage for the Fund for each calendar year is stated directly at the top of each respective bar, for the calendar years 1993 through 1999. The percentages noted are: 2.25%, 2.54%, 3.60%, 3.23%, 3.40%, 3.24%, and 3.03%." 3. The following bar chart appears on page 3 of the Institutional Shares prospectus: "The graphic presentation displayed here consists of a bar chart representing the annual total returns of Wachovia U.S. Treasury Money Market Fund as of the calendar year-end for each of seven years. The "y" axis reflects the "% Total Return" beginning with 0% and increasing in increments of 2% up to 6%. The "x" axis represents calculation periods from the earliest first full calendar year-end of the Fund's start of business through the calendar year ended December 31, 1999. The light gray shaded chart features seven distinct vertical bars, each shaded in charcoal, and each visually representing by height the total return percentages for the calendar year stated directly at its base. The calculated total return percentage for the Fund for each calendar year is stated directly at the top of each respective bar, for the calendar years 1993 through 1999. The percentages noted are: 2.89%, 3.90%, 5.68%, 5.17%, 5.32%, 5.18%, and 4.81%." 4. The following bar chart appears on page 1 of the Investment Shares prospectus: "The graphic presentation displayed here consists of a bar chart representing the annual total returns of Wachovia Money Market Fund as of the calendar year-end for each of seven years. The "y" axis reflects the "% Total Return" beginning with 0% and increasing in increments of 1% up to 6%. The "x" axis represents calculation periods from the earliest first full calendar year-end of the Fund's start of business through the calendar year ended December 31, 1999. The light gray shaded chart features seven distinct vertical bars, each shaded in charcoal, and each visually representing by height the total return percentages for the calendar year stated directly at its base. The calculated total return percentage for the Fund for each calendar year is stated directly at the top of each respective bar, for the calendar years 1993 through 1999. The percentages noted are: 2.72%, 3.67%, 5.39%, 4.81%, 4.97%, 4.86%, and 4.50%." 5. The following bar chart appears on page 2 of the Investment Shares prospectus: "The graphic presentation displayed here consists of a bar chart representing the annual total returns of Wachovia Tax-Free Money Market Fund as of the calendar year-end for each of seven years. The "y" axis reflects the "% Total Return" beginning with 0% and increasing in increments of 1% up to 4%. The "x" axis represents calculation periods from the earliest first full calendar year-end of the Fund's start of business through the calendar year ended December 31, 1999. The light gray shaded chart features seven distinct vertical bars, each shaded in charcoal, and each visually representing by height the total return percentages for the calendar year stated directly at its base. The calculated total return percentage for the Fund for each calendar year is stated directly at the top of each respective bar, for the calendar years 1993 through 1999. The percentages noted are: 1.94%, 2.24%, 3.25%, 2.82%, 2.99%, 2.83%, and 2.62%." 6. The following bar chart appears on page 3 of the Investment Shares prospectus: "The graphic presentation displayed here consists of a bar chart representing the annual total returns of Wachovia U.S. Treasury Money Market Fund as of the calendar year-end for each of six years. The "y" axis reflects the "% Total Return" beginning with 0% and increasing in increments of 1% up to 6%. The "x" axis represents calculation periods from the earliest first full calendar year-end of the Fund's start of business through the calendar year ended December 31, 1999. The light gray shaded chart features six distinct vertical bars, each shaded in charcoal, and each visually representing by height the total return percentages for the calendar year stated directly at its base. The calculated total return percentage for the Fund for each calendar year is stated directly at the top of each respective bar, for the calendar years 1994 through 1999. The percentages noted are: 3.59%, 5.32%, 4.75%, 4.90%, 4.76%, and 4.39%."
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