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Previous: PROTOCOL SYSTEMS INC/NEW, 8-K, 2000-07-27 |
Next: CCB FUNDS, 485BPOS, EX-99.AUDITCONSENT, 2000-07-27 |
1933 Act File No. 33-45753
1940 Act File No. 811-6561
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form N-1A
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 X
------
Pre-Effective Amendment No. ....................
-------- ------
Post-Effective Amendment No. 15 ..................... X
------ ------
and/or
REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT OF 1940 X
------
Amendment No. 14 .................................... X
------ ------
CCB FUNDS
(Exact Name of Registrant as Specified in Charter)
5800 Corporate Drive
Pittsburgh, Pennsylvania 15237-7010
(Address of Principal Executive Offices)
(412) 288-1900
(Registrant's Telephone Number)
John W. McGonigle, Esquire,
Federated Investors Tower,
1001 Liberty Avenue
Pittsburgh, Pennsylvania 15222-3779
(Name and Address of Agent for Service)
(Notices should be sent to the Agent for Service)
It is proposed that this filing will become effective:
immediately upon filing pursuant to paragraph (b) X on July 31, 2000 pursuant to
paragraph (b) 60 days after filing pursuant to paragraph (a) (i) _ on
_________________ pursuant to paragraph (a) (i). 75 days after filing pursuant
to paragraph (a)(ii) on _________________ pursuant to paragraph (a)(ii) of Rule
485.
If appropriate, check the following box:
This post-effective amendment designates a new effective date for a previously
filed post-effective amendment.
Copy to: Matthew G. Maloney, Esquire
Dickstein, Shapiro & Morin
2101 L Street, N.W.
Washington, D.C. 20037
A Portfolio of CCB Funds
A mutual fund seeking to provide high total return over longer periods of time through appreciation of capital and current income provided by dividends and interest payments. The Fund attempts to achieve this objective by investing primarily in dividend paying common stocks.
<R>
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.
| CONTENTS | ; | |
| Risk/Return Summary | 1 | |
| What are the Fund's Fees and Expenses? | 3 | |
| What are the Fund's Investment Strategies? | 3 | |
| What are the Principal Securities in Which the Fund Invests? | 4 | |
| What are the Specific Risks of Investing in the Fund? | 5 | |
| What do Shares Cost? | 5 | |
| How is the Fund Sold? | 5 | |
| How to Purchase Shares | 6 | |
| How to Exchange Shares | 6 | |
| How to Redeem Shares | 7 | |
| Account and Share Information | 8 | |
| Who Manages the Fund? | 8 | |
| Financial Information | 9 | |
| Report of Independent Public Accountants | 20 |
</R>
<R>
</R>
The Fund's investment objective is to provide high total return over longer periods of time through appreciation of capital and current income provided by dividends and interest payments. While there is no assurance that the Fund will achieve its investment objective, it endeavors to do so by following the strategies and policies described in this prospectus.
<R>
</R>
The Fund invests primarily in a broad, diversified range of dividend paying common stocks of companies deemed to have above average earnings growth prospects and whose shares are available at reasonable prices. As a matter of investment policy, the Fund will invest so that, under normal circumstances, at least 65% of its total assets are invested in equity securities. The Adviser uses the "value" style of investing, selecting companies which are trading at discounts to their historic relationship to the market as well as to their expected growth.
All mutual funds take investment risks. Therefore, it is possible to lose money by investing in the Fund. The primary factors that may reduce the Fund's return include:
The Shares offered by this prospectus are not deposits or obligations of Central Carolina Bank or its affiliates, are not endorsed or guaranteed by Central Carolina Bank or its affiliates and are not insured or guaranteed by the U.S. government, the Federal Deposit Insurance Corporation, the Federal Reserve Board, or any other government agency.
<R>
[Graphic Representation Omitted--See Appendix]
The bar chart shows the variability of the Fund's total returns on a calendar year-end basis.
The total returns displayed for the Fund do not reflect the payment of any sales charges or recurring shareholder account fees. If these charges or fees had been included, the returns shown would have been lower.
The Fund's total return for the six-month period from January 1, 2000 to June 30, 2000 was 3.52%.
Within the period shown in the Chart, the Fund's highest quarterly return was 21.31% (quarter ended December 31, 1998). Its lowest quarterly return was (10.72%) (quarter ended September 30, 1998).
The following table represents the Fund's Average Annual Total Returns for the calendar periods ended December 31, 1999. As of August 1, 1999, Fund Shares are sold without a sales charge.
The table shows the Fund's total returns averaged over a period of years relative to the Standard & Poor's 500 ("S&P 500"), a broad-based market index. The S&P 500 is a capitalization-weighted index of 500 stocks designed to measure performance of the broad domestic economy through changes in the aggregate market value of 500 stocks representing all major industries. Total returns for the index shown do not reflect sales charges, expenses or other fees that the Securities and Exchange Commission requires to be reflected in a mutual fund's performance. Indexes are unmanaged, and it is not possible to invest directly in an index.
</R>
|
Calendar Period |
; |
Fund |
; |
S&P 500 |
|
1 Year |
|
14.77% |
|
21.05% |
|
5 Years |
|
23.89% |
|
28.56% |
|
Start of Performance1 |
|
23.83% |
|
28.49% |
1 The Fund's start of performance date was December 5, 1994.
<R>
Past performance is no guarantee of future results. 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.
</R>
<R>
This table describes the fees and expenses that you may pay if you buy and hold Shares of the Fund.
|
Shareholder Fees |
|
|
|
Fees Paid Directly From Your Investment |
|
|
|
Maximum Sales Charge (Load) Imposed on Purchases (as a percentage of offering price) |
|
None |
|
|
|
|
|
Annual Fund Operating Expenses (Before Waivers)1 |
|
|
|
Expenses That are Deducted From Fund Assets (as a percentage of average net assets) |
|
|
|
Management Fee2 |
|
0.85% |
|
Distribution (12b-1) Fee |
|
None |
|
Shareholder Services Fee3 |
|
0.25% |
|
Other Expenses |
|
0.33% |
|
Total Annual Fund Operating Expenses4 |
|
1.43% |
|
1 Although not contractually obligated to do so, the Adviser, distributor and shareholder services provider expect to waive certain amounts. These are shown below along with the net expenses the Fund expects to actually pay for the fiscal year ending May 31, 2001. |
||
|
Total Waivers of Fund Expenses |
|
0.28% |
|
Total Actual Annual Fund Operating Expenses (after waivers)4 |
|
1.15% |
|
2 The Adviser expects to voluntarily waive a portion of the management fee. The Adviser can terminate this anticipated voluntary waiver at any time. The management fee paid by the Fund (after the anticipated voluntary waiver) will be 0.67% for the fiscal year ending May 31, 2001. |
||
|
3 The shareholder services provider expects to voluntarily waive a portion of the shareholder services fee. The shareholder services provider can terminate this anticipated voluntary waiver at any time. The shareholder services fee paid by the Fund (after the anticipated voluntary waiver) will be 0.15% for the fiscal year ending May 31, 2001. |
||
|
4 For the fiscal year ended May 31, 2000, the Total Annual Operating Expenses and Total Actual Annual Fund Operating Expenses (after waivers) were 1.34% and 1.09%, respectively. |
||
</R>
<R>
This Example is intended to help you compare the cost of investing in the Fund Shares with the cost of investing in other mutual funds.
The Example assumes that you invest $10,000 in the Fund Shares for the time periods indicated and then redeem all of your Shares at the end of those periods. The Example also assumes that your investment has a 5% return each year and that the Fund's operating expenses are before waivers as shown in the table and remain the same. Although your actual costs may be higher or lower, based on these assumptions your costs would be:
</R>
|
1 Year |
; |
$ |
146 |
|
3 Years |
$ |
452 |
|
|
5 Years |
$ |
782 |
|
|
10 Years |
$ |
1,713 |
<R>
The Fund invests at least 65% of its assets in equity securities. The Fund invests primarily in a broad, diversified range of dividend-paying common stocks which, in the Adviser's opinion, are trading at a low valuation in relation to their history, to their current market and to their expected future price. A description of the various types of securities in which the Fund invests, and their risks, immediately follows the strategy discussion.
</R>
Companies with similar characteristics may be grouped together in broad categories called sectors. Although the Adviser may allocate relatively more of the Fund's portfolio securities to a particular industry sector, the Adviser diversifies the Fund's investments, limiting the Fund's risk exposure with respect to individual securities and industry sectors.
The Fund's Adviser performs traditional fundamental analysis to select securities that exhibit the most promising long-term value for the Fund's portfolio. In selecting securities, the Adviser focuses on the current financial condition of the issuing company, in addition to examining each issuer's business and product strength, competitive position, and management expertise. Further, the Adviser considers current economic, financial market, and industry factors, which may affect the issuing company. To determine the timing of purchases and sales of portfolio securities, the Adviser looks at recent stock price performance and the direction of current fiscal year earnings estimates of various companies.
<R>
The Adviser uses the "value" style of investing, selecting securities of companies which are trading at discounts to their historic relationship to the market as well as to their expected growth. Because the Adviser uses a "value" style of investing, the price of the securities held by the Fund may not, under certain market conditions, increase as rapidly as stocks with growth characteristics.
</R>
<R>
The Fund actively trades its portfolio securities in an attempt to achieve its investment objective. Active trading will cause the Fund to have an increased portfolio turnover rate, which is likely to generate shorter-term gains (losses) for its shareholders, which are taxed at a higher rate than longer-term gains (losses). Actively trading portfolio securities increases the Fund's trading costs and may have an adverse impact on the Fund's performance.
</R>
The 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.
<R>
</R>
Equity securities represent a share of an issuer's earnings and assets, after the issuer pays its liabilities. The Fund cannot predict the income it will receive from equity securities because issuers generally have discretion as to the payment of any dividends or distributions. However, equity securities offer greater potential for appreciation than many other types of securities, because their value increases directly with the value of the issuer's business. The following describes the principal types of equity securities in which the Fund invests.
Common stocks are the most prevalent type of equity security. Common stocks receive the issuer's earnings after the issuer pays its creditors and any preferred stockholders. As a result, changes in an issuer's earnings directly influence the value of its common stock.
The value of equity securities in the Fund's portfolio will rise and fall. These fluctuations could be a sustained trend or a drastic movement. The Fund's portfolio will reflect changes in prices of individual portfolio stocks or general changes in stock valuations. Consequently, the Fund's share price may decline.
The Adviser attempts to manage market risk by limiting the amount the Fund invests in each company's equity securities. However, diversification will not protect the Fund against widespread or prolonged declines in the stock market.
Companies with similar characteristics may be grouped together in broad categories called sectors. Sector risk is the possibility that a certain sector may underperform other sectors or the market as a whole. As the Adviser allocates more of the Fund's portfolio holdings to a particular sector, the Fund's performance will be more susceptible to any economic, business or other developments which generally affect that sector.
Due to their relatively low valuations, value stocks are typically less volatile than growth stocks. For instance, the price of a value stock may experience a smaller increase on a forecast of higher earnings, a positive fundamental development, or positive market development. Further, value stocks tend to have higher dividends than growth stocks. This means they depend less on price changes for returns and may lag behind growth stocks in an up market.
You can purchase, redeem, or exchange Shares any day the New York Stock Exchange (NYSE) is open. When the Fund receives your transaction request in proper form (as described in the prospectus), it is processed at the next calculated net asset value (NAV). The Fund does not charge a front-end sales charge. NAV is determined at the end of regular trading (normally 4:00 p.m. Eastern time) each day the NYSE is open. The Fund generally values equity securities according to the last sale price in the market in which they are primarily traded (either a national securities exchange or the over-the-counter market).
The minimum initial investment for Fund Shares by an investor is $1,000. Subsequent investments must be in amounts of at least $100. The Fund may waive these minimums for purchases made by the Trust Division of Central Carolina Bank for its fiduciary or custodial accounts. An institutional investor's minimum investment will be calculated by combining all accounts it maintains with the Fund.
Keep in mind that investment professionals may charge you fees for their services in connection with your Share transactions.
The Fund's Distributor, Federated Securities Corp. (Distributor), markets the Shares described in this prospectus to trust clients of Central Carolina Bank and its affiliates and individual investors.
<R>
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).
</R>
<R>
You may purchase Shares through Central Carolina Bank, or through an investment professional that has a sales agreement with the Distributor (Authorized Dealer).
</R>
An investor may purchase Shares by calling Central Carolina Bank at 1-800-386-3111. Orders must be received by 3:00 p.m. (Eastern time) in order to receive that day's public offering price. Payment is normally required within three business days.
Texas residents must purchase Shares of the Fund through Federated Securities Corp. at 1-800-356-2805.
Call your Authorized Dealer for specific instructions.
<R>
Purchase orders must be received by the Dealer before 3:00 p.m. (Eastern time) in order to receive that day's public offering price. Orders received after 3:00 p.m. (Eastern time) will be purchased at the next determined public offering price.
</R>
You may exchange Shares of the Fund into shares of certain Federated Funds.
The Federated Funds you may exchange into are:
To do this, you must:
An exchange is treated as a redemption and a subsequent purchase, and is a taxable transaction. Signatures must be guaranteed if you request an exchange into another fund with a different shareholder registration.
The Fund may modify or terminate the exchange privilege at any time. Shareholders will be notified of the modification or termination of the exchange privilege. The Fund's management or Adviser may determine from the amount, frequency and pattern of exchanges that a shareholder is engaged in excessive trading which is detrimental to the Fund and other shareholders. If this occurs, the Fund may terminate the availability of exchanges to that shareholder and may bar that shareholder from purchasing other Federated Funds.
You may exchange Shares by telephone by calling 1-800-386-3111, or by calling your Authorized Dealer directly.
Telephone exchange instructions must be received by 4:00 p.m. (Eastern time) for Shares to be exchanged that day.
Your telephone instructions may be recorded. If the Fund does not follow reasonable procedures, it may be liable for losses due to unauthorized or fraudulent telephone instructions. The Fund will notify you if it changes telephone transaction privileges.
You may exchange Shares by sending a written request to the Fund. Send your requests by mail to:
CCB Funds
c/o Federated Shareholder Services Company
P.O. Box 8609
Boston, MA 02266
In addition, you may exchange Shares by sending a written request to your Authorized Dealer directly.
The 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 Central Carolina Bank or directly from the Fund.
Redemption requests must be received by 3:00 p.m. (Eastern time) and must be transmitted by Central Carolina Bank to the Fund before 4:00 p.m. (Eastern time) in order for Shares to be redeemed at that day's NAV.
You may redeem Shares by calling Central Carolina Bank at 1-800-386-3111.
Shareholders who have an Authorized Dealer should contact their Authorized Dealer for specific instructions on how to redeem by telephone.
Your telephone instructions may be recorded. If the Fund does not follow reasonable procedures, it may be liable for losses due to unauthorized or fraudulent telephone instructions. The Fund will notify you if it changes telephone transaction privileges.
You may redeem Shares by sending a written request to the Fund.
Send your written redemption request including your name, the Fund name, your account number and the Share or dollar amount requested to:
CCB Funds
c/o Federated Shareholder Services Company
P.O. Box 8609
Boston, MA 02266
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.
Redemption proceeds normally are wired or mailed within one business day after receiving a request in proper form. Payment may be delayed up to seven days:
You will not accrue interest or dividends on uncashed checks from the Fund if those checks are undeliverable and returned to the Fund.
Although the Fund intends to pay Share redemptions in cash, it reserves the right to pay the redemption price in whole or in part by a distribution of the Fund's portfolio securities.
The Systematic Withdrawal Program allows you to automatically redeem Shares on a regular basis. Your account value must be at least $10,000 at the time the program is established. This program may reduce, and eventually deplete, your account, and the payments should not be considered yield or income. You may apply for participation in this program through your financial institution.
<R>
The Fund does not issue share certificates. If you are redeeming or exchanging Shares represented by certificates previously issued by the 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.
</R>
You will receive confirmation of purchases, redemptions and exchanges (except for systematic transactions). In addition, you will receive periodic statements reporting all account activity, including systematic transactions, dividends and capital gains paid.
The Fund declares and pays any dividends quarterly to shareholders. Dividends are paid to all shareholders invested in the Fund on the record date. The record date is the date on which a shareholder must officially own Shares in order to earn a dividend.
In addition, the Fund pays any capital gains at least annually. Your dividends and capital gains distributions will be automatically reinvested in additional Shares without a sales charge, unless you elect cash payments.
If you purchase Shares just before a Fund declares a dividend or capital gain distribution, you will pay the full price for the Shares and then receive a portion of the price back in the form of a taxable distribution, whether or not you reinvest the distribution in Shares. Therefore, you should consider the tax implications of purchasing Shares shortly before the Fund declares a dividend or capital gain. Contact your investment professional or the Fund for information concerning when dividends and capital gains will be paid.
<R>
Due to the high cost of maintaining accounts with low balances, 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.
</R>
The Fund sends 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 are expected to be both dividends and capital gains. 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 Fund. The Board selects and oversees the Adviser, Central Carolina Bank. The Adviser manages the Fund's assets, including buying and selling portfolio securities. The Adviser's address is 111 Corcoran Street, Durham, North Carolina 27702.
The Adviser has delegated daily management of the Fund's assets to the Sub-Adviser, Franklin Street Advisors, Inc., who is paid by the Adviser and not by the Fund. The Sub-Adviser's address is 6330 Quadrangle Drive, Chapel Hill, North Carolina 27514. The Sub-Adviser manages the Fund's assets, including buying and selling portfolio securities.
<R>
The Adviser is the bank within CCB Financial Corporation, which is a multibank holding company that includes a commercial bank subsidiary with offices in North Carolina. The Adviser has managed commingled funds since 1953. As of June 30, 2000, the Adviser managed $2.1 billion. The Adviser also manages one commingled fund with approximately $95 million in total assets. The Adviser has managed CCB Funds since their inception in July 1992.
The Sub-Adviser is a registered investment advisory firm founded in 1990 and is a wholly owned subsidiary of Franklin Street Partners, Inc., a privately owned holding company that also owns a private non-depository trust bank. As of June 30, 2000, the Sub-Adviser managed assets in excess of $800 million.
</R>
The Fund's Adviser receives an annual maximum investment advisory fee equal to 0.85% of the Fund's average daily net assets. The Adviser may voluntarily choose to waive all or a portion of its fee or reimburse the Fund for certain operating expenses. The Adviser can terminate this voluntary waiver of its advisory fee at any time at its sole discretion.
<R>
Robert C. Eubanks, Jr. has been the Fund's portfolio manager since its inception. Mr. Eubanks is the President of Franklin Street Advisors, Inc., and has served in that capacity since 1990. He is also Vice-Chairman and Chief Investment Officer of Franklin Street Trust, an affiliate of the Sub-Adviser. Prior to founding Franklin Street Trust, he was co-founder and president of McMillion Eubanks Capital Management in Greensboro, North Carolina.
William B. Thompson, Jr. has been a co-portfolio manager for the Fund since November 1995. Mr. Thompson is a portfolio manager for Franklin Street Advisors, Inc., and has served in that capacity since April 1995. Mr. Thompson is also a partner with Franklin Street Partners, Inc., the parent company of Franklin Street Advisors, Inc. Prior to joining Franklin Street Advisors, Inc., he was co-founder and President of Peacock-Thompson Investment Management in Cary, North Carolina since November 1987.
</R>
<R>
The Financial Highlights will help you understand the Fund's financial performance for its past five fiscal years. 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 the Fund, assuming reinvestment of any dividends and capital gains.
This information has been audited by Arthur Andersen LLP, whose report, along with the Fund's audited financial statements, is included in this prospectus.
</R>
<R>
|
Year Ended May 31, |
|
2000 |
|
|
1999 |
|
|
1998 |
|
|
1997 |
|
|
1996 |
|
|
Net Asset Value, Beginning of Period |
|
$21.74 |
|
|
$20.24 |
|
|
$17.33 |
|
|
$13.80 |
|
|
$11.48 |
|
|
Income From Investment Operations: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net investment income |
|
0.08 |
|
|
0.08 |
|
|
0.07 |
|
|
0.13 |
|
|
0.14 |
|
|
Net realized and unrealized gain on investments and options |
|
3.27 |
|
|
3.10 |
|
|
3.93 |
|
|
3.72 |
|
|
2.57 |
|
|
Total from investment operations |
|
3.35 |
|
|
3.18 |
|
|
4.00 |
|
|
3.85 |
|
|
2.71 |
|
|
Less Distributions: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Distributions from net investment income |
|
(0.08 |
) |
|
(0.08 |
) |
|
(0.07 |
) |
|
(0.13 |
) |
|
(0.16 |
) |
|
Distributions from net realized gain on investments and options |
|
(3.86 |
) |
|
(1.60 |
) |
|
(1.02 |
) |
|
(0.19 |
) |
|
(0.23 |
) |
|
Total distributions |
|
(3.94 |
) |
|
(1.68 |
) |
|
(1.09 |
) |
|
(0.32 |
) |
|
(0.39 |
) |
|
Net Asset Value, End of Period |
|
$21.15 |
|
|
$21.74 |
|
|
$20.24 |
|
|
$17.33 |
|
|
$13.80 |
|
|
Total Return1 |
|
16.12 |
% |
|
15.90 |
% |
|
23.86 |
% |
|
28.25 |
% |
|
23.91 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Ratios to Average Net Assets: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Expense |
|
1.09 |
% |
|
1.00 |
% |
|
1.00 |
% |
|
1.03 |
% |
|
1.25 |
% |
|
Net investment income |
|
0.38 |
% |
|
0.39 |
% |
|
0.39 |
% |
|
0.81 |
% |
|
1.08 |
% |
|
Expense waiver/reimbursement2 |
|
0.25 |
% |
|
0.09 |
% |
|
0.07 |
% |
|
0.16 |
% |
|
0.20 |
% |
|
Supplemental Data: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net assets, end of period (000 omitted) |
|
$93,870 |
|
|
$99,526 |
|
|
$219,694 |
|
|
$167,503 |
|
|
$29,194 |
|
|
Portfolio turnover |
|
42 |
% |
|
92 |
% |
|
69 |
% |
|
55 |
% |
|
69 |
% |
1 Based on net asset value, which does not reflect the sales charge or contingent deferred sales charge, if applicable.
2 This voluntary expense decrease is reflected in both the expense and the net investment income ratios shown above.
See Notes which are an integral part of the Financial Statements
</R>
<R>
|
Shares |
|
|
|
|
Value |
|
|
|
COMMON STOCKS--96.6% |
|
|
|
|
|
|
Commercial Services--0.7% |
|
|
|
|
21,679 |
1 |
Sabre Holdings Corp. |
|
$ |
623,271 |
|
|
|
Consumer Basics--7.7% |
|
|
|
|
15,000 |
|
Emerson Electric Co. |
|
|
885,000 |
|
120,000 |
|
General Electric Co. |
|
|
6,315,000 |
|
|
|
Total |
|
|
7,200,000 |
|
|
|
Consumer Non-Durables--2.8% |
|
|
|
|
40,000 |
|
General Mills, Inc. |
|
|
1,587,500 |
|
20,000 |
|
Unilever N.V., ADR |
|
|
1,016,250 |
|
|
|
Total |
|
|
2,603,750 |
|
|
|
Electronic Technology--24.1% |
|
|
|
|
35,000 |
1 |
Applied Materials, Inc. |
|
|
2,922,500 |
|
100,000 |
1 |
Cisco Systems, Inc. |
|
|
5,693,750 |
|
19,500 |
1 |
EMC Corp. Mass |
|
|
2,268,094 |
|
33,400 |
|
Intel Corp. |
|
|
4,164,562 |
|
10,000 |
|
International Business Machines Corp. |
|
|
1,073,125 |
|
20,000 |
|
Lucent Technologies, Inc. |
|
|
1,147,500 |
|
10,000 |
|
Motorola, Inc. |
|
|
937,500 |
|
25,000 |
|
Nortel Networks Corp. |
|
|
1,357,812 |
|
42,000 |
|
Texas Instruments, Inc. |
|
|
3,034,500 |
|
|
Total |
|
|
22,599,343 |
|
|
|
|
Energy Minerals--1.2% |
|
|
|
|
25,000 |
|
Burlington Resources, Inc. |
|
|
1,143,750 |
|
|
|
Finance--17.1% |
|
|
|
|
30,000 |
|
American Express Co. |
|
|
1,614,375 |
|
20,000 |
|
American International Group, Inc. |
|
|
2,251,250 |
|
70,000 |
|
Associates First Capital Corp., Class A |
|
|
1,920,625 |
|
50,000 |
|
Capital One Financial Corp. |
|
|
2,362,500 |
|
21,000 |
|
Chase Manhattan Corp. |
|
|
1,568,437 |
|
60,000 |
|
Citigroup, Inc. |
|
|
3,731,250 |
|
17,100 |
|
Duke-Weeks Realty Corp. |
|
|
368,719 |
|
41,500 |
|
Pennsylvania Real Estate Investment Trust |
|
|
723,656 |
|
24,000 |
|
Peoples Bank Bridgeport |
|
|
505,500 |
|
50,000 |
|
ProLogis Trust |
|
|
1,034,375 |
|
|
|
Total |
|
|
16,080,687 |
|
|
|
Health Technology--9.8% |
|
|
|
|
50,400 |
|
Abbott Laboratories |
|
|
2,050,650 |
|
50,000 |
|
Medtronic, Inc. |
|
|
2,581,250 |
|
31,800 |
|
Merck & Co., Inc. |
|
|
2,373,075 |
|
50,000 |
|
Pfizer, Inc. |
|
|
2,228,125 |
|
|
|
Total |
|
|
9,233,100 |
|
|
|
Industrial Services--2.4% |
|
|
|
|
20,000 |
|
Nokia Oyj, Class A, ADR |
|
|
1,040,000 |
|
15,000 |
|
Schlumberger Ltd. |
|
|
1,103,437 |
|
2,904 |
|
Transocean Sedco Forex, Inc. |
|
|
142,840 |
|
|
|
Total |
|
|
2,286,277 |
|
|
|
Mortgage--2.6% |
|
|
|
|
40,000 |
|
Fannie Mae |
|
|
2,405,000 |
|
|
|
Non-Energy Minerals--2.3% |
|
|
|
|
37,000 |
|
Alcoa, Inc. |
|
|
2,162,188 |
|
|
|
Oil--5.1% |
|
|
|
|
30,000 |
|
BP Amoco PLC, ADR |
|
|
1,631,250 |
|
37,746 |
|
Exxon Mobil Corp. |
|
|
3,144,713 |
|
|
|
Total |
|
|
4,775,963 |
|
|
|
Producer Manufacturing--5.1% |
|
|
|
|
55,000 |
|
Delphi Auto Systems Corp. |
|
|
993,438 |
|
35,000 |
|
Honeywell International, Inc. |
|
|
1,914,063 |
|
40,000 |
|
Tyco International Ltd. |
|
|
1,882,500 |
|
|
|
Total |
|
|
4,790,001 |
|
|
|
Retail--4.9% |
|
|
|
|
40,000 |
|
Lowe's Cos., Inc. |
|
|
1,862,500 |
|
21,500 |
|
Target Corp. |
|
|
1,347,781 |
|
23,400 |
|
Wal-Mart Stores, Inc. |
|
|
1,348,425 |
|
|
|
Total |
|
|
4,558,706 |
|
|
|
Technology Services--2.7% |
|
|
|
|
35,000 |
1 |
Microsoft Corp. |
|
|
2,189,688 |
|
15,000 |
1 |
PSINet, Inc. |
|
|
390,938 |
|
|
|
Total |
|
|
2,580,626 |
|
|
|
Utilities--8.1% |
|
|
|
|
70,000 |
|
Carolina Power & Light Co. |
|
|
2,406,250 |
|
110,000 |
|
Cinergy Corp. |
|
|
2,928,750 |
|
40,079 |
1 |
MCI Worldcom, Inc. |
|
|
1,507,972 |
|
17,500 |
|
Vodafone AirTouch PLC, ADR |
|
|
801,719 |
|
|
|
Total |
|
|
7,644,691 |
|
|
|
Total Common Stocks (identified cost $48,848,962) |
|
|
90,687,353 |
|
|
|
MUTUAL FUND--2.4% |
|
|
|
|
2,274,474 |
|
Goldman Sachs Financial Square Money Market Fund (AT NET ASSET VALUE) |
|
|
2,274,474 |
|
|
|
U.S. TREASURY OBLIGATION--1.1% |
|
|
|
|
$1,000,000 |
|
United States Treasury Bill, 6/1/2000 (IDENTIFIED COST $1,000,000) |
|
|
1,000,000 |
|
|
|
Total Investments (identified cost $52,123,436)2 |
|
$ |
93,961,827 |
Non-income producing security.
2 The cost of investments for federal tax purposes amounts to $52,598,297. The net unrealized appreciation of investments on a federal tax basis amounts to $41,363,530 which is comprised of $43,169,010 appreciation and $1,805,480 depreciation at May 31, 2000.
Note: The categories of investments are shown as a percentage of net assets ($93,870,066) at May 31, 2000.
The following acronym is used throughout this portfolio:
ADR--American Depositary Receipt
See Notes which are an integral part of the Financial Statements
</R>
<R>
|
Assets: |
|
|
|
|
|
|
|
Total investments in securities, at value (identified cost $52,123,436 and tax cost $52,598,297) |
|
|
|
|
$ |
93,961,827 |
|
Cash |
|
|
|
|
|
2,618 |
|
Income receivable |
|
|
|
|
|
92,907 |
|
Receivable for shares sold |
|
|
|
|
|
19,135 |
|
Prepaid expenses |
|
|
|
|
|
912 |
|
Total assets |
|
|
|
|
|
94,077,399 |
|
Liabilities: |
|
|
|
|
|
|
|
Payable for shares redeemed |
|
$ |
16,837 |
|
|
|
|
Payable for adviser fee |
|
|
106,242 |
|
|
|
|
Payable for shareholder services fee |
|
|
59,472 |
|
|
|
|
Payable for administrative personnel and services fee |
|
|
11,953 |
|
|
|
|
Payable for transfer and dividend disbursing agent fees and expenses |
|
|
4,908 |
|
|
|
|
Accrued expenses |
|
|
7,921 |
|
|
|
|
Total liabilities |
|
|
|
|
|
207,333 |
|
Net Assets for 4,437,393 shares outstanding |
|
|
|
|
$ |
93,870,066 |
|
Net Assets Consist of: |
|
|
|
|
|
|
|
Paid-in capital |
|
|
|
|
$ |
40,120,824 |
|
Net unrealized appreciation of investments |
|
|
|
|
|
41,838,391 |
|
Accumulated net realized gain on investments and options |
|
|
|
|
|
11,851,946 |
|
Undistributed net investment income |
|
|
|
|
|
58,905 |
|
Total Net Assets |
|
|
|
|
$ |
93,870,066 |
|
Net Asset Value, Offering Price and Redemption Proceeds Per Share: |
|
|
|
|
|
|
|
Net Asset Value Per Share ($93,870,066 4,437,393 shares outstanding) |
|
|
|
|
|
$21.15 |
See Notes which are an integral part of the Financial Statements
</R>
<R>
|
Investment Income: |
|
|
|
|
|
|
|
|
|
|
|
|
Dividends (net of foreign taxes withheld of $8,403) |
|
|
|
|
|
|
|
|
|
$ |
1,298,318 |
|
Interest |
|
|
|
|
|
|
|
|
|
|
154,443 |
|
Total income |
|
|
|
|
|
|
|
|
|
|
1,452,761 |
|
Expenses: |
|
|
|
|
|
|
|
|
|
|
|
|
Investment adviser fee |
|
|
|
|
|
$ |
834,859 |
|
|
|
|
|
Administrative personnel and services fee |
|
|
|
|
|
|
148,276 |
|
|
|
|
|
Custodian fees |
|
|
|
|
|
|
16,505 |
|
|
|
|
|
Transfer and dividend disbursing agent fees and expenses |
|
|
|
|
|
|
50,174 |
|
|
|
|
|
Directors'/Trustees' fees |
|
|
|
|
|
|
8,163 |
|
|
|
|
|
Auditing fees |
|
|
|
|
|
|
12,592 |
|
|
|
|
|
Legal fees |
|
|
|
|
|
|
3,895 |
|
|
|
|
|
Portfolio accounting fees |
|
|
|
|
|
|
45,328 |
|
|
|
|
|
Shareholder services fee |
|
|
|
|
|
|
161,286 |
|
|
|
|
|
Share registration costs |
|
|
|
|
|
|
14,772 |
|
|
|
|
|
Printing and postage |
|
|
|
|
|
|
16,785 |
|
|
|
|
|
Insurance premiums |
|
|
|
|
|
|
869 |
|
|
|
|
|
Miscellaneous |
|
|
|
|
|
|
2,895 |
|
|
|
|
|
Total expenses |
|
|
|
|
|
|
1,316,399 |
|
|
|
|
|
Waivers: |
|
|
|
|
|
|
|
|
|
|
|
|
Waiver of investment adviser fee |
|
$ |
(176,794 |
) |
|
|
|
|
|
|
|
|
Waiver of shareholder services fee |
|
|
(64,514 |
) |
|
|
|
|
|
|
|
|
Total waivers |
; |
|
|
|
; |
|
(241,308 |
) |
; |
|
|
|
Net expenses |
|
|
|
|
|
|
|
|
|
|
1,075,091 |
|
Net investment income |
|
|
|
|
|
|
|
|
|
$ |
377,670 |
|
Realized and Unrealized Gain on Investments and Options: |
|
|
|
|
|
|
|
|
|
|
|
|
Net realized gain on investments and options |
|
|
|
|
|
|
|
|
|
|
13,862,859 |
|
Net change in unrealized appreciation of investments and options |
|
|
|
|
|
|
|
|
|
|
763,308 |
|
Net realized and unrealized gain on investments and options |
|
|
|
|
|
|
|
|
|
|
14,626,167 |
|
Change in net assets resulting from operations |
|
|
|
|
|
|
|
|
|
$ |
15,003,837 |
See Notes which are an integral part of the Financial Statements
</R>
<R>
|
Year Ended May 31, |
|
|
2000 |
|
|
|
1999 |
|
|
Increase (Decrease) in Net Assets: |
|
|
|
|
|
|
|
|
|
Operations: |
|
|
|
|
|
|
|
|
|
Net investment income |
|
$ |
377,670 |
|
|
$ |
659,246 |
|
|
Net realized gain on investments and options ($14,050,309 and $15,378,089, respectively, as computed for federal tax purposes) |
|
|
13,862,859 |
|
|
|
15,309,462 |
|
|
Net change in unrealized appreciation of investments and options |
|
|
763,308 |
|
|
|
(7,645,911 |
) |
|
Change in net assets resulting from operations |
|
|
15,003,837 |
|
|
|
8,322,797 |
|
|
Distributions to Shareholders: |
|
|
|
|
|
|
|
|
|
Distributions from net investment income |
|
|
(370,116 |
) |
|
|
(836,115 |
) |
|
Distributions from net realized gain on investments and options |
|
|
(16,844,327 |
) |
|
|
(17,056,128 |
) |
|
CHANGE IN NET ASSETS RESULTING FROM DISTRIBUTIONS TO SHAREHOLDERS |
|
|
(17,214,443 |
) |
|
|
(17,892,243 |
) |
|
Share Transactions: |
|
|
|
|
|
|
|
|
|
Proceeds from sale of shares |
|
|
8,210,125 |
|
|
|
36,663,336 |
|
|
Net asset value of shares issued to shareholders in payment of distributions declared |
|
|
3,070,354 |
|
|
|
1,187,375 |
|
|
Cost of shares redeemed |
|
|
(14,725,349 |
) |
|
|
(148,449,379 |
) |
|
Change in net assets resulting from share transactions |
|
|
(3,444,870 |
) |
|
|
(110,598,668 |
) |
|
Change in net assets |
|
|
(5,655,476 |
) |
|
|
(120,168,114 |
) |
|
Net Assets: |
|
|
|
|
|
|
|
|
|
Beginning of period |
|
|
99,525,542 |
|
|
|
219,693,656 |
|
|
End of period (including undistributed net investment income of $58,905 and $51,351, respectively) |
|
$ |
93,870,066 |
|
|
$ |
99,525,542 |
|
See Notes which are an integral part of the Financial Statements
</R>
<R>
CCB Funds (the "Trust") is registered under the Investment Company Act of 1940, as amended (the "Act"), as an open-end, management investment company. The Trust consists of one portfolio. The financial statements included herein are those of CCB Equity Fund (the "Fund"), a diversified portfolio. The investment objective of the Fund is to provide high total return over longer periods of time through appreciation of capital and current income provided by dividends and interest payments.
The following is a summary of significant accounting policies consistently followed by the Fund in the preparation of its financial statements. These policies are in conformity with generally accepted accounting principles.
Listed equity securities are valued at the last sale price reported on the primary national securities exchange. Unlisted equity securities are generally valued at the mean of the latest bid and asked prices provided by an independent pricing service. Short-term securities are valued at the prices provided by an independent pricing service. However, short-term securities with remaining maturities of 60 days or less at the time of purchase may be valued at amortized cost, which approximates fair market value. Investments in other open-end regulated investment companies are valued at net asset value.
Interest income and expenses are accrued daily. Bond premium and discount, if applicable, are amortized as required by the Internal Revenue Code, as amended (the "Code"). Dividend income and distributions to shareholders are recorded on the ex-dividend date. Non-cash dividends included in dividend income, if any, are recorded at fair value.
</R>
<R>
It is the Fund's policy to comply with the provisions of the Code applicable to regulated investment companies and to distribute to shareholders each year substantially all of its income. Accordingly, no provision for federal tax is necessary.
The Fund may engage in when-issued or delayed delivery transactions. The Fund records when-issued securities on the trade date and maintains security positions such that sufficient liquid assets will be available to make payment for the securities purchased. Securities purchased on a when-issued or delayed delivery basis are marked to market daily and begin earning interest on the settlement date. Losses may occur on theses transactions due to changes in market conditions or the failure of counterparties to perform under the contract.
The Fund may write option contracts. A written option obligates the Fund to deliver (a call), or to receive (a put), the contract amount upon exercise by the holder of the option. The value of the option contract is recorded as a liability and as an unrealized gain or loss is measured by the difference between the current value and the premium received. For the year ended May 31, 2000, the Fund had a realized gain of $274,864 on written options.
The following is a summary of the Fund's written option activity:
|
Contracts |
|
Number of |
|
|
Aggregate |
|
|
|
Outstanding at prior |
|
400 |
|
|
$ |
28,799 |
|
|
Contracts written |
|
1490 |
|
|
|
558,554 |
|
|
Contracts expired |
|
(950 |
) |
|
|
(188,995 |
) |
|
Contracts closed |
|
(940 |
) |
|
|
(398,358 |
) |
|
Outstanding at |
|
0 |
|
|
$ |
0 |
|
</R>
<R>
At May 31, 2000, the Fund had no outstanding options.
The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the amounts of assets, liabilities, expenses and revenues reported in the financial statements. Actual results could differ from those estimated.
Investment transactions are accounted for on a trade date basis.
</R>
<R>
The Declaration of Trust permits the Board of Trustees (the "Trustees") to issue an unlimited number of full and fractional shares of beneficial interest (without par value).
Transactions in shares were as follows:
|
Year Ended May 31, |
|
2000 |
|
|
1999 |
|
|
Shares sold |
|
387,273 |
|
|
3,263,940 |
|
|
Shares issued to shareholders in |
|
150,266 |
|
|
57,062 |
|
|
Shares redeemed |
|
(677,341 |
) |
|
(9,598,643 |
) |
|
Net change resulting from share transactions |
|
(139,802 |
) |
|
(6,277,641 |
) |
</R>
<R>
Central Carolina Bank and Trust Company, the Fund's investment adviser (the "Adviser"), receives for its services an annual investment adviser fee equal to 0.85% of the Fund's average daily net assets. The Adviser may voluntarily choose to waive any portion of its fee. The Adviser can modify or terminate this voluntary waiver at any time at its sole discretion.
Under the terms of a sub-adviser agreement between the Adviser and Franklin Street Advisors, Inc., (the "Sub-Adviser"), the Sub-Adviser receives an annual fee from the Adviser equal to 0.65% of the Fund's average daily net assets. The Sub-Adviser may voluntarily waive any portion of its fee.
Federated Administrative Services ("FAS") provides the Fund with certain administrative personnel and services. The fee paid to FAS is based on a scale that ranges from 0.15% to 0.075% of the average aggregate net assets of the Trust for the period, subject to a minimum fee of $125,000.
Under the terms of a Shareholder Services Agreement with FAS, the Fund will pay FAS up to 0.25% of average daily net assets of the Fund for the period. The fee paid to FAS is used to finance certain services for shareholders and to maintain shareholder accounts. FAS may voluntarily choose to waive any portion of its fee. FAS can modify or terminate this voluntary waiver at any time at its sole discretion.
</R>
<R>
Federated Services Company ("FServ"), through its subsidiary Federated Shareholders Services Company ("FSSC"), serves as transfer and dividend disbursing agent for the Fund. The fee paid to FSSC is based on the size, type, and number of accounts and transactions made by shareholders.
FServ maintains the Fund's accounting records for which it receives
a fee. The fee is based on the level of the Fund's average daily net
assets for the period, plus
out-of-pocket expenses.
Organizational expenses of $35,000 were borne initially by the Adviser. The Fund has reimbursed the Adviser for these expenses. These expenses have been deferred and are being amortized over the five year period following the Fund's effective date. For the year ended May 31, 2000, the Fund expensed $4,397 which represents the remainder of the organizational expenses.
</R>
<R>
Certain of the Officers and Trustees of the Trust are Officers and Directors or Trustees of the above companies.
Purchases and sales of investments, excluding short-term securities (and in-kind contributions), for the year ended May 31, 2000, were as follows:
|
Purchases |
; |
$39,545,607 |
|
Sales |
|
$60,264,771 |
</R>
<R>
TO THE SHAREHOLDERS AND BOARD OF TRUSTEES OF
CCB FUNDS (CCB
EQUITY FUND):
We have audited the accompanying statement of assets and liabilities of CCB Equity Fund (an investment portfolio of CCB Funds, a Massachusetts business trust), including the schedule of portfolio of investments, as of May 31, 2000, and the related statement of operations for the year then ended, and the statements of changes in net assets and the financial highlights for the periods presented. These financial statements and financial highlights are the responsibility of the Funds' management. Our responsibility is to express an opinion on these financial statements and financial highlights based on our audits.
We conducted our audits in accordance with auditing standards generally accepted in the United States. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements and financial highlights are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. Our procedures included confirmation of securities owned as of May 31, 2000, by correspondence with the custodian. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements and the financial highlights referred to above present fairly, in all material respects, the financial position of CCB Equity Fund (an investment portfolio of CCB Funds) as of May 31, 2000, the results of its operations for the year then ended and the changes in its net assets and its financial highlights for the periods presented in conformity with accounting principles generally accepted in the United States.
Arthur Andersen LLP
Boston, Massachusetts
July 24, 2000
</R>
<R>
Central Carolina Bank
</R>
<R>
</R>
<R>
A Statement of Additional Information (SAI) dated July 31, 2000, is incorporated by reference into this prospectus. Additional information about the Fund and its investments is contained in the Fund's SAI and Annual and Semi-Annual Reports to shareholders as they become available. The Annual Report's Management Discussion and Analysis discusses market conditions and investment strategies that significantly affected the Fund's performance during its last fiscal year. To obtain the SAI, Annual Report, Semi-Annual Report and other information without charge, and make inquiries, call your investment professional or the Fund at 1-800-386-3111.
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.
Federated Securities Corp. is the distributor of the fund.
Investment Company Act File No 811-6561
Cusip 12500E307
005826 (7/00)
</R>
[Graphic Representation Omitted--See Appendix]
STATEMENT OF ADDITIONAL INFORMATION
CCB EQUITY FUND
A Portfolio of CCB Funds
This Statement of Additional Information (SAI) is not a prospectus. Read
this SAI in conjunction with the prospectus for CCB Equity Fund (Fund), dated
July 31, 2000. Obtain the prospectus and the Annual Report's Management
Discussion & Analysis without charge by calling 1-800-386-3111.
<R> July 31, 2000
CONTENTS
How is the Fund Organized? 2
Securities in Which the Fund Invests 2
What do Shares Cost? 13
How is the Fund Sold? 13
Subaccounting Services 14
Redemption in Kind 14
Massachusetts Partnership Law 14
Account and Share Information 15
Tax Information 15
Who Manages and Provides Services to the Fund? 15
How Does the Fund Measure Performance? 20
Investment Ratings 22
Addresses 26
CUSIP 12500E307
005902 (7/00)
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HOW IS THE FUND ORGANIZED?
The Fund is a diversified portfolio of CCB Funds (Trust). The Trust is an
open-end, management investment company that was established under the laws of
the Commonwealth of Massachusetts on December 11, 1991. The Trust may offer
separate series of shares representing interests in separate portfolios of
securities. The Trust changed its name from 111 Corcoran Funds to CCB Funds and
the Fund changed its name from 111 Corcoran Equity Fund to CCB Equity Fund on
May 13, 1998. The Fund's investment adviser is Central Carolina Bank and Trust
Company (Central Carolina Bank or Adviser).
SECURITIES IN WHICH THE FUND INVESTS
Following is a table that indicates which types of securities are a:
P = PRINCIPAL investment of the Fund; (shaded in chart)
A = ACCEPTABLE (but not principal) investment of the Fund
AGENCY SECURITIES A
AMERICAN DEPOSITORY RECEIPTS A
BANK INSTRUMENTS A
COMMON STOCKS P
CONVERTIBLE SECURITIES A
CORPORATE DEBT SECURITIES A
DELAYED DELIVERY TRANSACTIONS A
DERIVATIVE CONTRACTS A
INVESTING IN SECURITIES OF OTHER INVESTMENTA
COMPANIES
LENDING OF PORTFOLIOS SECURITIES A
PREFERRED STOCKS A
REPURCHASE AGREEMENTS A
RESTRICTED AND ILLIQUID SECURITIES (1) A
REVERSE REPURCHASE AGREEMENTS A
SECURITIES OF FOREIGN ISSUERS (2) A
TREASURY SECURITIES A
WARRANTS A
ZERO COUPON SECURITIES A
(1) The Fund will limit investments in illiquid securities, including certain
restricted securities not determined by the Board of Trustees (Board) to be
liquid, to 15% of its net assets.
(2) The Fund will not invest more than 10% of its total assets in securities of
foreign issuers.
In pursuing its investment strategy, the Fund may invest in the following
securities for any purpose that is consistent with its investment objective.
SECURITIES DESCRIPTIONS AND TECHNIQUES
EQUITY SECURITIES
Equity securities represent a share of an issuer's earnings and assets,
after the issuer pays its liabilities. The Fund cannot predict the income it
will receive from equity securities because issuers generally have discretion as
to the payment of any dividends or distributions. However, equity securities
offer greater potential for appreciation than many other types of securities,
because their value increases directly with the value of the issuer's business.
The following describes the types of equity securities in which the Fund
invests.
COMMON STOCKS
Common stocks are the most prevalent type of equity security. Common stocks
receive the issuer's earnings after the issuer pays its creditors and any
preferred stockholders. As a result, changes in an issuer's earnings directly
influence the value of its common stock.
PREFERRED STOCKS
Preferred stocks have the right to receive specified dividends or
distributions before the issuer makes payments on its common stock. Some
preferred stocks also participate in dividends and distributions paid on common
stock. Preferred stocks may also permit the issuer to redeem the stock. The Fund
may also treat such redeemable preferred stock as a fixed income security.
WARRANTS
Warrants give the Fund the option to buy the issuer's equity securities at
a specified price (the exercise price) at a specified future date (the
expiration date). The Fund may buy the designated securities by paying the
exercise price before the expiration date. Warrants may become worthless if the
price of the stock does not rise above the exercise price by the expiration
date. This increases the MARKET RISKS of warrants as compared to the underlying
security. Rights are the same as warrants, except companies typically issue
rights to existing stockholders.
FIXED INCOME SECURITIES Fixed income securities pay interest, dividends or
distributions at a specified rate. The rate may be a fixed percentage of the
principal or adjusted periodically. In addition, the issuer of a fixed income
security must repay the principal amount of the security, normally within a
specified time. Fixed income securities provide more regular income than equity
securities. However, the returns on fixed income securities are limited and
normally do not increase with the issuer's earnings. This limits the potential
appreciation of fixed income securities as compared to equity securities.
A security's yield measures the annual income earned on a security as a
percentage of its price. A security's yield will increase or decrease depending
upon whether it costs less (a discount) or more (a premium) than the principal
amount. If the issuer may redeem the security before its scheduled maturity, the
price and yield on a discount or premium security may change based upon the
probability of an early redemption. Securities with higher risks generally have
higher yields. The following describes the types of fixed income securities in
which the Fund invests.
TREASURY SECURITIES
Treasury securities are direct obligations of the federal government of the
United States. Treasury securities are generally regarded 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. Agency
securities are generally regarded as having low credit risks, but not as low as
treasury securities.
The Fund treats mortgage backed securities guaranteed by GSEs as agency
securities. Although a GSE guarantee protects against credit risks, it does not
reduce the market and prepayment risks of these mortgage backed securities.
CORPORATE DEBT SECURITIES
Corporate debt securities are fixed income securities issued by businesses.
The corporate debt securities in which the Fund invests are rated, at the time
of purchase, at least Baa by Moody's Investors Service, Inc. ("Moody's"), or at
least BBB by Standard & Poor's ("S&P") or Fitch IBCA, Inc. ("Fitch"),
or, if not rated, determined by the Fund's Adviser to be of comparable quality.
Notes, bonds, debentures and commercial paper are the most prevalent types of
corporate debt securities. The Fund may also purchase interests in bank loans to
companies. The credit risks of corporate debt securities vary widely among
issuers. In addition, the credit risk of an issuer's debt security may 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.
ZERO COUPON SECURITIES
Zero coupon securities do not pay interest or principal until final
maturity unlike debt securities that provide periodic payments of interest
(referred to as a coupon payment). Investors buy zero coupon securities at a
price below the amount payable at maturity. The difference between the purchase
price and the amount paid at maturity represents interest on the zero coupon
security. Investors must wait until maturity to receive interest and principal,
which increases the market and credit risks of a zero coupon security. A zero
coupon step-up security converts to a coupon security before final maturity.
BANK INSTRUMENTS
Bank instruments are unsecured interest bearing deposits with banks. Bank
instruments include bank accounts, time deposits, certificates of deposit and
banker's acceptances. Yankee instruments are denominated in U.S. dollars and
issued by U.S. branches of foreign banks. Eurodollar instruments are denominated
in U.S. dollars and issued by non-U.S. branches of U.S. or foreign banks.
CONVERTIBLE SECURITIES
Convertible securities are fixed income securities that the Fund has the
option to exchange for equity securities at a specified conversion price. The
option allows the Fund to realize additional returns if the market price of the
equity securities exceeds the conversion price. For example, the Fund may hold
fixed income securities that are convertible into shares of common stock at a
conversion price of $10 per share. If the market value of the shares of common
stock reached $12, the Fund could realize an additional $2 per share by
converting its fixed income securities. Convertible securities have lower yields
than comparable fixed income securities. In addition, at the time a convertible
security is issued the conversion price exceeds the market value of the
underlying equity securities. Thus, convertible securities may provide lower
returns than non-convertible fixed income securities or equity securities
depending upon changes in the price of the underlying equity securities.
However, convertible securities permit the Fund to realize some of the potential
appreciation of the underlying equity securities with less risk of losing its
initial investment.
The convertible securities in which the Fund invests are rated, at the time
of purchase, at least BBB by S&P or Fitch, or at least Baa by Moody's, or,
if not rated, determined by the Fund's Adviser to be of comparable quality. The
Fund treats convertible securities as both fixed income and equity securities
for purposes of its investment policies and limitations, because of their unique
characteristics.
FOREIGN SECURITIES
Foreign securities are securities of issuers based outside the United
States. The Fund considers an issuer to be based outside the United States if: o
it is organized under the laws of, or has a principal office located in, another
country; o the principal trading market for its securities is in another
country; or o it (or its subsidiaries) derived in its most current fiscal year
at least 50% of its total assets, capitalization, gross revenue or profit from
goods produced, services performed, or sales made in another country.
The only foreign securities in which the Fund invests are American
Depositary Receipts. AMERICAN DEPOSITARY RECEIPTS American Depositary Receipts
("ADRs") represent interests in underlying securities issued by a foreign
company. The foreign securities underlying ADRs are not traded in the United
States. ADRs provide a way to buy shares of foreign-based companies in the
United States rather than in overseas markets. ADRs are also traded in U.S.
dollars, eliminating the need for foreign exchange transactions. ADRs involve
risks of foreign investing.
DERIVATIVE CONTRACTS
Derivative contracts are financial instruments that require payments based
upon changes in the values of designated (or underlying) securities, currencies,
commodities, financial indices or other assets. Some derivative contracts (such
as futures, forwards and options) require payments relating to a future trade
involving the underlying asset. Other derivative contracts (such as swaps)
require payments relating to the income or returns from the underlying asset.
The other party to a derivative contract is referred to as a counterparty.
Many derivative contracts are traded on securities or commodities
exchanges. In this case, the exchange sets all the terms of the contract except
for the price. Investors make payments due under their contracts through the
exchange. Most exchanges require investors to maintain margin accounts through
their brokers to cover their potential obligations to the exchange. Parties to
the contract make (or collect) daily payments to the margin accounts to reflect
losses (or gains) in the value of their contracts. This protects investors
against potential defaults by the counterparty. Trading contracts on an exchange
also allows investors to close out their contracts by entering into offsetting
contracts.
For example, the Fund could close out an open contract to buy an asset at a
future date by entering into an offsetting contract to sell the same asset on
the same date. If the offsetting sale price is more than the original purchase
price, the Fund realizes a gain; if it is less, the Fund realizes a loss.
Exchanges may limit the amount of open contracts permitted at any one time. Such
limits may prevent the Fund from closing out a position. If this happens, the
Fund will be required to keep the contract open (even if it is losing money on
the contract), and to make any payments required under the contract (even if it
has to sell portfolio securities at unfavorable prices to do so). Inability to
close out a contract could also harm the Fund by preventing it from disposing of
or trading any assets it has been using to secure its obligations under the
contract.
The Fund may also trade derivative contracts over-the-counter (OTC) in
transactions negotiated directly between the Fund and the counterparty. OTC
contracts do not necessarily have standard terms, so they cannot be directly
offset with other OTC contracts. In addition, OTC contracts with more
specialized terms may be more difficult to price than exchange traded contracts.
Depending upon how the Fund uses derivative contracts and the relationships
between the market value of a derivative contract and the underlying asset,
derivative contracts may increase or decrease the Fund's exposure to market and
currency risks, and may also expose the Fund to liquidity and leverage risks.
OTC contracts also expose the Fund to credit risks in the event that a
counterparty defaults on the contract.
The Fund may trade in the following types of derivative contracts. FUTURES
CONTRACTS Futures contracts provide for the future sale by one party and
purchase by another party of a specified amount of an underlying asset at a
specified price, date, and time. Entering into a contract to buy an underlying
asset is commonly referred to as buying a contract or holding a long position in
the asset. Entering into a contract to sell an underlying asset is commonly
referred to as selling a contract or holding a short position in the asset.
Futures contracts are considered to be commodity contracts. Futures contracts
traded OTC are frequently referred to as forward contracts.
The Fund may buy and sell the following types of futures contracts: stock
index futures contracts and financial futures contracts.
OPTIONS
Options are rights to buy or sell an underlying asset for a specified price
(the exercise price) during, or at the end of, a specified period. A call option
gives the holder (buyer) the right to buy the underlying asset from the seller
(writer) of the option. A put option gives the holder the right to sell the
underlying asset to the writer of the option. The writer of the option receives
a payment, or premium, from the buyer, which the writer keeps regardless of
whether the buyer uses (or exercises) the option.
The Fund may:
o Buy put options on portfolio securities and financial futures contracts in
anticipation of a decrease in the value of the underlying asset.
o Write call options on portfolio securities and financial futures contracts
to generate income from premiums, and in anticipation of a decrease or only
limited increase in the value of the underlying asset. If a call written by
the Fund is exercised, the Fund foregoes any possible profit from an
increase in the market price of the underlying asset over the exercise
price plus the premium received.
o Buy or write options to close out existing options positions. When the Fund
writes options on futures contracts, it will be subject to margin
requirements similar to those applied to futures contracts.
SPECIAL TRANSACTIONS REPURCHASE AGREEMENTS Repurchase agreements are
transactions in which the Fund buys a security from a dealer or bank and agrees
to sell the security back at a mutually agreed upon time and price. The
repurchase price exceeds the sale price, reflecting the Fund's return on the
transaction. This return is unrelated to the interest rate on the underlying
security. The Fund will enter into repurchase agreements only with banks and
other recognized financial institutions, such as securities dealers, deemed
creditworthy by the 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.
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, including when issued transactions, are
arrangements in which the Fund buys securities for a set price, with payment and
delivery of the securities scheduled for a future time. During the period
between purchase and settlement, no payment is made by the Fund to the issuer
and no interest accrues to the Fund. The Fund records the transaction when it
agrees to buy the securities and reflects their value in determining the price
of its shares. Settlement dates may be a month or more after entering into these
transactions so that the market values of the securities bought may vary from
the purchase prices. Therefore, delayed delivery transactions create interest
rate risks for the Fund. Delayed delivery transactions also involve credit risks
in the event of a counterparty default.
SECURITIES LENDING The Fund may lend portfolio securities to borrowers that
the 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.
RESTRICTED AND ILLIQUID SECURITIES The Fund may invest in restricted
securities. Restricted securities are any securities in which the Fund may
otherwise invest pursuant to its investment objective and policies, but which
are subject to restrictions on resale under federal securities laws. However,
the Fund will limit investments in illiquid securities, including certain
restricted securities not determined by the Board to be liquid, to 15% of its
net assets.
INVESTING IN SECURITIES OF OTHER INVESTMENT COMPANIES
The Fund may invest its assets in securities of other investment companies,
including the securities of affiliated money market funds, as an efficient means
of carrying out its investment policies and managing its uninvested cash.
INVESTMENT RATINGS FOR INVESTMENT GRADE SECURITIES The Adviser will
determine whether a security is investment grade based upon the credit ratings
given by one or more nationally recognized rating services. For example,
Standard and Poor's, a rating service, assigns ratings to investment grade
securities (AAA, AA, A, and BBB) based on their assessment of the likelihood of
the issuer's inability to pay interest or principal (default) when due on each
security. Lower credit ratings correspond to higher credit risk. If a security
has not received a rating, the Fund must rely entirely upon the Adviser's credit
assessment that the security is comparable to investment grade.
INVESTMENT RISKS
There are many factors which may affect an investment in the Fund. The
Fund's principal risks are described in its prospectus. Additional risk factors
are outlined below.
STOCK MARKET RISKS
The value of equity securities in the Fund's portfolio will rise and fall.
These fluctuations could be a sustained trend or a drastic movement. The Fund's
portfolio will reflect changes in prices of individual portfolio stocks or
general changes in stock valuations. Consequently, the Fund's share price may
decline. The Adviser attempts to manage market risk by limiting the amount the
Fund invests in each company's equity securities. However, diversification will
not protect the Fund against widespread or prolonged declines in the stock
market.
SECTOR RISKS Companies with similar characteristics may be grouped together
in broad categories called sectors. Sector risk is the possibility that a
certain sector may underperform other sectors or the market as a whole. As the
Adviser allocates more of the Fund's portfolio holdings to a particular sector,
the Fund's performance will be more susceptible to any economic, business or
other developments which generally affect that sector.
RISKS RELATED TO INVESTING FOR VALUE
Due to their relatively low valuations, value stocks are typically less
volatile than growth stocks. For instance, the price of a value stock may
experience a smaller increase on a forecast of higher earnings, a positive
fundamental development, or positive market development. Further, value stocks
tend to have higher dividends than growth stocks. This means they depend less on
price changes for returns and may lag behind growth stocks in an up market.
RISKS RELATED TO COMPANY SIZE
Generally, the smaller the market capitalization of a company, the fewer
the number of shares traded daily, the less liquid its stock and the more
volatile its price. Market capitalization is determined by multiplying the
number of its outstanding shares by the current market price per share.
Companies with smaller market capitalizations also tend to have unproven
track records, a limited product or service base and limited access to capital.
These factors also increase risks and make these companies more likely to fail
than companies with larger market capitalizations.
LIQUIDITY RISKS
Trading opportunities are more limited for equity securities that are not
widely held. This may make it more difficult to sell or buy a security at a
favorable price or time. Consequently, the Fund may have to accept a lower price
to sell a security, sell other securities to raise cash or give up an investment
opportunity, any of which could have a negative effect on the Fund's
performance. Infrequent trading of securities may also lead to an increase in
their price volatility. Liquidity risk also refers to the possibility that the
Fund may not be able to sell a security or close out a derivative contract when
it wants to. If this happens, the Fund will be required to continue to hold the
security or keep the position open, and the Fund could incur losses.
OTC derivative contracts generally carry greater liquidity risk than
exchange-traded contracts. CREDIT RISKS 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.
INTEREST RATE RISKS
Prices of fixed income securities rise and fall in response to changes in
the interest rate paid by 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. 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.
RISKS OF FOREIGN INVESTING
Foreign securities pose additional risks because foreign economic or
political conditions may be less favorable than those of the United States.
Securities in foreign markets may also be subject to taxation policies that
reduce returns for U.S. investors.
Foreign companies may not provide information (including financial
statements) as frequently or to as great an extent as companies in the United
States. Foreign companies may also receive less coverage than U.S. companies by
market analysts and the financial press. In addition, foreign countries may lack
uniform accounting, auditing and financial reporting standards or regulatory
requirements comparable to those applicable to U.S. companies. These factors may
prevent the Fund and its Adviser from obtaining information concerning foreign
companies that is as frequent, extensive and reliable as the information
available concerning companies in the United States.
Foreign countries may have restrictions on foreign ownership of securities
or may impose exchange controls, capital flow restrictions or repatriation
restrictions which could adversely affect the liquidity of the Fund's
investments.
FUNDAMENTAL INVESTMENT OBJECTIVE
The Fund's investment objective is to provide high total return over longer
periods of time through appreciation of capital and current income provided by
dividends and interest payments. The investment objective may not be changed by
the Fund's Board without shareholder approval.
INVESTMENT LIMITATIONS
SELLING SHORT AND BUYING ON MARGIN
The Fund will not sell any securities short or purchase any securities on
margin, other than in connection with buying stock index futures contracts, put
options on stock index futures, put options on financial futures and portfolio
securities, and writing covered call options, but may obtain such short-term
credits as may be necessary for clearance of purchases and sales of portfolio
securities. A deposit or payment by the Fund of initial or variation margin in
connection with futures contracts or related options transactions is not
considered the purchase of a security on margin.
ISSUING SENIOR SECURITIES AND BORROWING MONEY
The Fund will not issue senior securities except that the Fund may borrow
money directly or through reverse repurchase agreements in amounts up to
one-third of the value of its total assets, including the amounts borrowed.
The Fund will not borrow money or engage in reverse repurchase agreements
for investment leverage, but rather as a temporary, extraordinary, or emergency
measure to facilitate management of the portfolio by enabling the Fund to meet
redemption requests when the liquidation of portfolio securities is deemed to be
inconvenient or disadvantageous. The Fund will not purchase any securities while
borrowings in excess of 5% of its total assets are outstanding.
PLEDGING ASSETS
The Fund will not mortgage, pledge, or hypothecate any assets except to
secure permitted borrowings. For purposes of this limitation, the following will
not be deemed to be pledges of the Fund's assets: (a) the deposit of assets in
escrow in connection with the writing of covered put or call options and the
purchase of securities on a when- issued basis; and (b) collateral arrangements
with respect to (i) the purchase and sale of stock options (and options on stock
indices) and (ii) initial or variation margin for futures contracts.
INVESTING IN REAL ESTATE
The Fund will not purchase or sell real estate, including limited
partnership interests, although it may invest in the securities of companies
whose business involves the purchase or sale of real estate or in securities
which are secured by real estate or interests in real estate.
INVESTING IN COMMODITIES
The Fund will not purchase or sell commodities, commodity contracts, or
commodity futures contracts. However, the Fund may purchase put options on stock
index futures, put options on financial futures, stock index futures contracts,
and put options on portfolio securities, and may write covered call options.
UNDERWRITING
The Fund will not underwrite any issue of securities, except as it may be
deemed to be an underwriter under the Securities Act of 1933 in connection with
the sale of securities which the Fund may purchase pursuant to its investment
objective, policies, and limitations.
DIVERSIFICATION OF INVESTMENTS
With respect to securities comprising 75% of the value of its total assets,
the Fund will not purchase securities issued by any one issuer (other than cash,
cash items, or securities issued or guaranteed by the government of the United
States or its agencies or instrumentalities and repurchase agreements
collateralized by such securities) if, as a result, at the time of such
purchase, more than 5% of the value of its total assets would be invested in the
securities of that issuer, or if it would own more than 10% of the outstanding
voting securities of any one issuer.
CONCENTRATION OF INVESTMENTS The Fund will not invest 25% or more of the
value of its total assets in any one industry. However, the Fund may invest 25%
or more of the value of its assets in cash or cash items, securities issued or
guaranteed by the U.S. government, its agencies or instrumentalities, or
instruments secured by these money market instruments, such as repurchase
agreements.
LENDING CASH OR SECURITIES
The Fund will not lend any of its assets, except portfolio securities. This
shall not prevent the Fund from purchasing or holding money market instruments,
repurchase agreements, obligations of the U.S. government, its agencies or
instrumentalities, variable rate demand notes, bonds, debentures, notes,
certificates of indebtedness, or certain debt instruments as permitted by its
investment objective, policies, and limitations or the Trust's Declaration of
Trust.
THE ABOVE LIMITATIONS CANNOT BE CHANGED UNLESS AUTHORIZED BY THE BOARD AND
BY THE "VOTE OF A MAJORITY OF ITS OUTSTANDING VOTING SECURITIES," AS DEFINED BY
THE INVESTMENT COMPANY ACT. 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.
INVESTING IN ILLIQUID SECURITIES
The Fund will not invest more than 15% of the value of its net assets in
illiquid securities, including repurchase agreements providing for settlement in
more than seven days after notice, non-negotiable fixed time deposits with
maturities over seven days, over-the-counter options, and certain securities not
determined by the Trustees to be liquid.
PURCHASING SECURITIES TO EXERCISE CONTROL
The Fund will not purchase securities of a company for purpose of
exercising control or management. WRITING COVERED CALL OPTIONS The Fund will not
write call options on securities unless the securities are held in the Fund's
portfolio or unless the Fund is entitled to them in deliverable form without
further payment or after segregating cash in the amount of any further payment.
Except with respect to borrowing money, if a percentage limitation is
adhered to at the time of investment, a later increase or decrease in percentage
resulting from any change in value or net assets will not result in a violation
of such restriction. The Fund does not intend to borrow money or pledge
securities in excess of 5% of the value of its net assets during the coming
fiscal year. For purposes of its policies and limitations, the Fund considers
certificates of deposit and demand and time deposits issued by a U.S. branch of
a domestic bank or savings and loan having capital, surplus, and undivided
profits in excess of $100,000,000 at the time of investment to be "cash items."
DETERMINING MARKET VALUE OF SECURITIES Market values of the Fund's
portfolio securities are determined as follows:
o for equity securities, according to the last sale price in the market in
which they are primarily traded (either a national securities exchange or
the over-the-counter market), if available;
o in the absence of recorded sales for equity securities, according to the
mean between the last closing bid and asked prices;
o for fixed income securities, at the last sale price on a national
securities exchange, if available, otherwise, as determined by an
independent pricing service;
o futures contracts and options are generally valued at market values
established by the exchanges on which they are traded at the close of
trading on such exchanges. Options traded in the over-the-counter market
are generally valued according to the mean between the last bid and the
last asked price for the option as provided by an investment dealer or
other financial institution that deals in the option. The Board may
determine in good faith that another method of valuing such investments is
necessary to appraise their fair market value;
o for short-term obligations, according to the mean between bid and asked
prices as furnished by an independent pricing service, except that
short-term obligations with remaining maturities of less than 60 days at
the time of purchase may be valued at amortized cost or at fair market
value as determined in good faith by the Board; and
o for all other securities at fair value as determined in good faith by the
Board.
Prices provided by independent pricing services may be determined without
relying exclusively on quoted prices and may consider institutional trading in
similar groups of securities, yield, quality, stability, risk, coupon rate,
maturity, type of issue, trading characteristics, and other market data or
factors. From time to time, when prices cannot be obtained from an independent
pricing service, securities may be valued based on quotes from broker-dealers or
other financial institutions that trade the securities.
<R> WHAT DO SHARES COST?
The Fund's net asset value (NAV) per Share fluctuates and is based on the
market value of all securities and other assets of the Fund.
HOW IS THE FUND SOLD?
Under the Distributor's Contract with the Fund, the Distributor (Federated
Securities Corp.) offers Shares on a continuous, best-efforts basis.
</R>
SHAREHOLDER SERVICES
The Fund may pay Federated Administrative Services, a subsidiary of
Federated Investors, Inc. (Federated), for providing shareholder services and
maintaining shareholder accounts. Federated Administrative Services may select
others to perform these services for their customers and may pay them fees.
SUPPLEMENTAL PAYMENTS
Investment professionals may be paid fees out of the assets of the
Distributor and/or Federated Administrative Services (but not out of Fund
assets). The Distributor and/or Federated Administrative Services may be
reimbursed by the Adviser or its affiliates.
Investment professionals receive such fees for providing
distribution-related and/or shareholder services, such as advertising, providing
incentives to their sales personnel, sponsoring other activities intended to
promote sales, and maintaining shareholder accounts These payments may be based
upon such factors as the number or value of Shares the investment professional
sells or may sell; the value of client assets invested; and/or the type and
nature of sales or marketing support furnished by the investment professional.
SUBACCOUNTING SERVICES
Certain investment professionals may wish to use the transfer agent's
subaccounting system to minimize their internal recordkeeping requirements. The
transfer agent may charge a fee based on the level of subaccounting services
rendered. Investment professionals holding Shares in a fiduciary, agency,
custodial or similar capacity may charge or pass through subaccounting fees as
part of or in addition to normal trust or agency account fees. They may also
charge fees for other services that may be related to the ownership of Shares.
This information should, therefore, be read together with any agreement between
the customer and the investment professional about the services provided, the
fees charged for those services, and any restrictions and limitations imposed.
<R> REDEMPTION IN KIND
Although the Fund intends to pay Share redemptions in cash, it reserves the
right, as described below, to pay the redemption price in whole or in part by a
distribution of the Fund's portfolio securities.
Because the Fund has elected to be governed by Rule 18f-1 under the 1940
Act, the Fund is obligated to pay Share redemptions to any one shareholder in
cash only up to the lesser of $250,000 or 1% of the net assets represented by
such Share class during any 90-day period. </R>
Any Share redemption payment greater than this amount will also be in cash
unless the Fund's Board determines that payment should be in kind. In such a
case, the Fund will pay all or a portion of the remainder of the redemption in
portfolio securities, valued in the same way as the Fund determines its NAV. The
portfolio securities will be selected in a manner that the Fund's Board deems
fair and equitable and, to the extent available, such securities will be readily
marketable.
Redemption in kind is not as liquid as a cash redemption. If redemption is
made in kind, shareholders receiving the portfolio securities and selling them
before their maturity could receive less than the redemption value of the
securities and could incur certain transaction costs.
MASSACHUSETTS PARTNERSHIP LAW
Under certain circumstances, shareholders may be held personally liable as
partners under Massachusetts law for obligations of the Trust. To protect its
shareholders, the Trust has filed legal documents with Massachusetts that
expressly disclaim the liability of its shareholders for acts or obligations of
the Trust.
In the unlikely event a shareholder is held personally liable for the
Trust's obligations, the Trust is required by the Declaration of Trust to use
its property to protect or compensate the shareholder. On request, the Trust
will defend any claim made and pay any judgment against a shareholder for any
act or obligation of the Trust. Therefore, financial loss resulting from
liability as a shareholder will occur only if the Trust itself cannot meet its
obligations to indemnify shareholders and pay judgments against them.
ACCOUNT AND SHARE INFORMATION <R>
VOTING RIGHTS
Each share of the Fund gives the shareholder one vote in Trustee elections
and other matters submitted to shareholders for vote.
All Shares of 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 Board or by shareholders at a special
meeting. A special meeting of shareholders will be called by the Board upon the
written request of shareholders who own at least 10% of the Trust's outstanding
shares
As July 3, 2000, the following shareholders owned of record, beneficially,
or both, 5% or more of outstanding Shares: Central Carolina Bank & Trust,
Durham, NC, owned approximatly 3,807,160 Shares (87.06%).
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. </R>
TAX INFORMATION
FEDERAL INCOME TAX
The Fund intends to meet requirements of Subchapter M of the Internal
Revenue Code applicable to regulated investment companies. If these requirements
are not met, it will not receive special tax treatment and will pay federal
income tax.
The Fund will be treated as a single, separate entity for federal income
tax purposes so that income earned and capital gains and losses realized by the
Trust's other portfolios will be separate from those realized by the Fund.
WHO MANAGES AND PROVIDES SERVICES TO THE FUND?
BOARD OF TRUSTEES
The Board is responsible for managing the Trust's business affairs and for
exercising all the Trust's powers except those reserved for the shareholders.
Information about each Board member is provided below and includes each
person's: name, address, birth date, present position(s) held with the Trust,
principal occupations for the past five years and positions held prior to the
past five years, and total compensation received as a Trustee from the Trust for
its most recent fiscal year. The Trust is comprised of one fund and is the only
investment company in the Fund Complex. <R> As of July 3, 2000, the Fund's
Board and Officers as a group owned less than 1% of the Fund's outstanding
Shares. </R>
------------------------------------------------------------------------------
NAME
BIRTH DATE -- --------------
ADDRESS
POSITION WITH --PRINCIPAL OCCUPATIONS ---AGGREGATE
-------------------- FOR PAST FIVE YEARS COMPENSATION
TRUST -- ---FROM TRUST
JOHN F. DONAHUE*+ Chief Executive Officer and Director $0
Birth Date: July or Trustee of the Federated Fund
28, 1924 Complex; Chairman and Director,
Federated Investors Federated Investors, Inc.; Chairman,
Tower Federated Investment Management
1001 Liberty Avenue Company, Federated Global Investment
Pittsburgh, PA Management Corp. and Passport
CHAIRMAN AND TRUSTEE Research, Ltd. ; formerly: Trustee,
Federated Investment Management
Company and Chairman and Director,
Federated Investment Counseling.
----------------------Director or Trustee of the Federated ----------------
THOMAS G. BIGLEY Fund Complex; Director, Member of $951.714
Birth Date: Executive Committee, Children's
February 3, 1934 Hospital of Pittsburgh; Director,
15 Old Timber Trail Robroy Industries, Inc. (coated steel
Pittsburgh, PA conduits/computer storage equipment);
TRUSTEE formerly: Senior Partner, Ernst &
Young LLP; Director, MED 3000 Group,
Inc. (physician practice management);
Director, Member of Executive
Committee, University of Pittsburgh.
----------------------Director or Trustee of the Federated ----------------
JOHN T. CONROY, JR. Fund Complex; President, Investment $988.44
Birth Date: June Properties Corporation; Senior Vice
23, 1937 President, John R. Wood and
Grubb & Associates, Inc., Realtors; Partner or
Ellis/Investment Trustee in private real estate
Properties ventures in Southwest Florida;
Corporation formerly: President, Naples Property
3201 Tamiami Trail Management, Inc. and Northgate Village
North Development Corporation.
Naples, FL
TRUSTEE
----------------------Director or Trustee of the Federated ----------------
NICHOLAS P. Fund Complex; Director, Michael Baker $585.24
CONSTANTAKIS Corporation (engineering,
Birth Date: construction, operations and technical
September 3, 1939 services); formerly: Partner, Andersen
175 Woodshire Drive Worldwide SC.
Pittsburgh, PA
TRUSTEE
-------------------- --------------------------------------- -----------
JOHN F. CUNNINGHAM Director or Trustee of some of the $898.43
Birth Date: March Federated Fund Complex; Chairman,
5, 1943 President and Chief Executive Officer,
353 El Brillo Way Cunningham & Co., Inc. (strategic
Palm Beach, FL business consulting); Trustee
TRUSTEE Associate, Boston College; Director,
Iperia Corp.
(communications/software); formerly:
Director, Redgate Communications and EMC Corporation
(computer storage systems).
Previous Positions: Chairman of the
Board and Chief Executive Officer,
Computer Consoles, Inc.; President and
Chief Operating Officer, Wang
Laboratories; Director, First National
Bank of Boston; Director, Apollo
Computer, Inc.
----------------------Director or Trustee of the Federated ----------------
LAWRENCE D. ELLIS, Fund Complex; Professor of Medicine, $898.43
M.D.* University of Pittsburgh; Medical
Birth Date: October Director, University of Pittsburgh
11, 1932 Medical Center - Downtown;
3471 Fifth Avenue Hematologist, Oncologist and
Suite 1111 Internist, University of Pittsburgh
Pittsburgh, PA Medical Center; Member, National Board
TRUSTEE of Trustees, Leukemia Society of
America.
-------------------- -------------------------------------------------------
PETER E. MADDEN Director or Trustee of the Federated $935.16
Birth Date: March Fund Complex; formerly:
16, 1942 Representative, Commonwealth of
One Royal Palm Way Massachusetts General Court;
100 Royal Palm Way President, State Street Bank and Trust
Palm Beach, FL Company and State Street Corporation.
TRUSTEE
Previous Positions: Director, VISA USA
and VISA International; Chairman and
Director, Massachusetts Bankers
Association; Director, Depository
Trust Corporation; Director, The
Boston Stock Exchange.
-------------------- Director or Trustee of some of the ----------------
CHARLES F. Federated Fund Complex; Executive Vice $988.44
MANSFIELD, JR. President, Legal and External Affairs,
Birth Date: April Dugan Valva Contess, Inc. (marketing,
10, 1945 communications, technology and
80 South Road consulting); formerly: Management
Westhampton Beach, Consultant.
NY
-------------------- Previous Positions: Chief Executive
Officer, PBTC International Bank;
-------------------- Partner, Arthur Young & Company (now
TRUSTEE Ernst & Young LLP); Chief Financial
Officer of Retail Banking Sector, Chase Manhattan Bank;
Senior Vice President, Marine Midland Bank; Vice
President, Citibank; Assistant Professor of Banking and
Finance, Frank G. Zarb School of Business, Hofstra
University.
----------------------Director or Trustee of the Federated ----------------
JOHN E. MURRAY, Fund Complex; President, Law $935.16
JR., J.D., S.J.D.# Professor, Duquesne University;
Birth Date: Consulting Partner, Mollica & Murray;
December 20, 1932 Director, Michael Baker Corp.
President, Duquesne (engineering, construction, operations
University and technical services).
Pittsburgh, PA
TRUSTEE Previous Positions: Dean and Professor
of Law, University of Pittsburgh
School of Law; Dean and Professor of
Law, Villanova University School of
Law.
----------------------Director or Trustee of the Federated ----------------
MARJORIE P. SMUTS Fund Complex; Public $898.43
Birth Date: June Relations/Marketing/Conference
21, 1935 Planning.
4905 Bayard Street
Pittsburgh, PA Previous Positions: National
TRUSTEE Spokesperson, Aluminum Company of
America; television producer; business owner.
----------------------Director or Trustee of some of the ----------------
JOHN S. WALSH Federated Fund Complex; President and $898.43
Birth Date: Director, Heat Wagon, Inc.
November 28, 1957 (manufacturer of construction
2007 Sherwood Drive temporary heaters); President and
Valparaiso, IN Director, Manufacturers Products, Inc.
TRUSTEE (distributor of portable construction
heaters); President, Portable Heater
Parts, a division of Manufacturers
Products, Inc.; Director, Walsh &
Kelly, Inc. (heavy highway
contractor); formerly: Vice President,
Walsh & Kelly, Inc.
----------------------President or Executive Vice President ----------------
J. CHRISTOPHER of the Federated Fund Complex; $0
DONAHUE+* Director or Trustee of some of the
Birth Date: April Funds in the Federated Fund Complex;
11, 1949 President, Chief Executive Officer and
Federated Investors Director, Federated Investors, Inc.;
Tower President, Chief Executive Officer and
1001 Liberty Avenue Trustee, Federated Investment
Pittsburgh, PA Management Company; Trustee, Federated
EXECUTIVE VICE Investment Counseling; President,
PRESIDENT AND Chief Executive Officer and Director,
TRUSTEE Federated Global Investment Management
Corp.; President and Chief Executive
Officer, Passport Research, Ltd.;
Trustee, Federated Shareholder
Services Company; Director, Federated
Services Company; formerly: President,
Federated Investment Counseling.
----------------------President, Executive Vice President ----------------
EDWARD C. GONZALES and Treasurer of some of the Funds in $0
Birth Date: October the Federated Fund Complex; Vice
22, 1930 Chairman, Federated Investors, Inc.;
Federated Investors Trustee, Federated Administrative
Tower Services; formerly: Trustee or
1001 Liberty Avenue Director of some of the Funds in the
Pittsburgh, PA Federated Fund Complex; CEO and
PRESIDENT AND Chairman, Federated Administrative
TREASURER Services; Vice President, Federated
Investment Management Company,
Federated Investment Counseling,
Federated Global Investment Management
Corp. and Passport Research, Ltd.;
Director and Executive Vice President,
Federated Securities Corp.; Director,
Federated Services Company; Trustee,
Federated Shareholder Services Company.
----------------------Executive Vice President and Secretary ----------------
JOHN W. MCGONIGLE of the Federated Fund Complex; $0
Birth Date: October Executive Vice President, Secretary
26, 1938 and Director, Federated Investors,
Federated Investors Inc.; formerly: Trustee, Federated
Tower Investment Management Company and
1001 Liberty Avenue Federated Investment Counseling;
Pittsburgh, PA Director, Federated Global Investment
EXECUTIVE VICE Management Corp., Federated Services
PRESIDENT AND Company and Federated Securities Corp.
SECRETARY
-----------------------------------------------------------------------------
RICHARD B. FISHER President or Vice President of some of $0
Birth Date: May 17, the Funds in the Federated Fund
1923 --Complex; Vice Chairman, Federated
Federated Investors Investors, Inc.; Chairman, Federated
Tower Securities Corp.; formerly: Director
1001 Liberty Avenue --or Trustee of some of the Funds in the
Pittsburgh, PA Federated Fund Complex,; Executive
VICE PRESIDENT Vice President, Federated Investors,
Inc. and Director and Chief Executive
Officer, Federated Securities Corp.
------------------------------------------------------------------------------
--------------------
JOSEPH S. MACHI Vice President and Assistant Treasurer $0
Birth Date: May 22, of some of the Funds.
1962
Federated Investors Tower
1001 Liberty Avenue
Pittsburgh, PA
VICE PRESIDENT AND
ASSISTANT TREASURER
* AN ASTERISK DENOTES A TRUSTEE WHO IS DEEMED TO BE AN INTERESTED PERSON AS
DEFINED IN THE 1940 ACT. # A POUND SIGN DENOTES A MEMBER OF THE BOARD'S
EXECUTIVE COMMITTEE, WHICH HANDLES THE BOARD'S RESPONSIBILITIES BETWEEN ITS
MEETINGS.
+ MR. DONAHUE IS THE FATHER OF J. CHRISTOPHER DONAHUE, EXECUTIVE VICE
PRESIDENT AND TRUSTEE OF THE TRUST.
INVESTMENT ADVISER
The Adviser conducts investment research and makes investment decisions for
the Fund. The Adviser shall not be liable to the Trust, the Fund or any Fund
shareholder for any losses that may be sustained in the purchase, holding, or
sale of any security or for anything done or omitted by it, except acts or
omissions involving willful misfeasance, bad faith, gross negligence, or
reckless disregard of the duties imposed upon it by its contract with the Trust.
Because of internal controls maintained by the Adviser to restrict the flow of
non-public information, Fund investments are typically made without any
knowledge of the Adviser or its affiliates' lending relationships with an
issuer.
SUB-ADVISER
The Fund is sub-advised by Franklin Street Advisors, Inc. Pursuant to the
terms of an investment sub-advisory agreement between the Adviser and Franklin
Street Advisors, Inc. (Sub-Adviser), the Sub-Adviser manages the Fund's assets,
including buying and selling portfolio securities. The Sub-Adviser is paid by
the Adviser and not by the Fund. In no event shall the Fund be responsible for
any fees due to the Sub-Adviser for its services to the Adviser.
<R> CODE OF ETHICS RESTRICTIONS ON PERSONAL TRADING
As required by SEC rules, the Fund, its Adviser, and its Distributor have
adopted codes of ethics. These codes govern securities trading activities of
investment personnel, Fund Trustees, and certain other employees. Although they
do permit these people to trade in securities, including those that the Fund
could buy, they also contain significant safeguards designed to protect the Fund
and its shareholders from abuses in this area, such as requirements to obtain
prior approval for, and to report, particular transactions. </R>
BROKERAGE TRANSACTIONS
When selecting brokers and dealers to handle the purchase and sale of
portfolio instruments, the Adviser looks for prompt execution of the order at a
favorable price. The Adviser will generally use those who are recognized dealers
in specific portfolio instruments, except when a better price and execution of
the order can be obtained elsewhere. The Adviser may select brokers and dealers
based on whether they also offer research services (as described below). In
selecting among firms believed to meet these criteria, the Adviser may give
consideration to those firms which have sold or are selling Shares of the Fund
and other funds distributed by the Distributor and its affiliates. The Adviser
makes decisions on portfolio transactions and selects brokers and dealers
subject to review by the Fund's Board.
RESEARCH SERVICES
Research services may include advice as to the advisability of investing in
securities; security analysis and reports; economic studies; industry studies;
receipt of quotations for portfolio evaluations; and similar services. Research
services may be used by the Adviser or by affiliates of Federated in advising
other accounts. To the extent that receipt of these services may replace
services for which the Adviser or its affiliates might otherwise have paid, it
would tend to reduce their expenses. The Adviser and its affiliates exercise
reasonable business judgment in selecting those brokers who offer brokerage and
research services to execute securities transactions. They determine in good
faith that commissions charged by such persons are reasonable in relationship to
the value of the brokerage and research services provided.
For the fiscal year ended, May 31, 2000, the Fund's Adviser directed
brokerage transactions to certain brokers due to research services they
provided. The total amount of these transactions was $168,869,666 for which the
Fund paid $149,527 in brokerage commissions.
Investment decisions for the Fund are made independently from those of
other accounts managed by the Adviser. When the Fund and one or more of those
accounts invests in, or disposes of, the same security, available investments or
opportunities for sales will be allocated among the Fund and the account(s) in a
manner believed by the Adviser to be equitable. While the coordination and
ability to participate in volume transactions may benefit the Fund, it is
possible that this procedure could adversely impact the price paid or received
and/or the position obtained or disposed of by the Fund.
ADMINISTRATOR
Federated Services Company, a subsidiary of Federated, provides
administrative personnel and services (including certain legal and financial
reporting services) necessary to operate the Fund. Federated Services Company
provides these at the following annual rate of the average aggregate daily net
assets of all Federated Funds as specified below:
AVERAGE AGGREGATE DAILY
MAXIMUM NET ASSETS OF THE
ADMINISTRATIVE FEE FEDERATED FUNDS
0.150 of 1% on the first $250 million
0.125 of 1% on the next $250 million
0.100 of 1% on the next $250 million
0.075 of 1% on assets in excess of
$750 million
<R> The administrative fee received during any fiscal year shall be
at least $125,000 per portfolio. Federated Services Company may voluntarily
waive a portion of its fee and may reimburse the Fund for expenses. </R>
Federated Services Company also provides certain accounting and
recordkeeping services with respect to the Fund's portfolio investments for a
fee based on Fund assets plus out-of-pocket expenses.
CUSTODIAN AND PORTFOLIO ACCOUNTANT
Fifth Third Bank, Cincinnati, Ohio, is custodian for the securities and
cash of the Fund. Federated Services Company provides certain accounting and
recordkeeping services with respect to the Fund's portfolio investments. The fee
paid for this service is based upon the level of the Fund's average net assets
for the period plus out-of-pocket expenses.
TRANSFER AGENT AND DIVIDEND DISBURSING AGENT
Federated Services Company, through its registered transfer agent
subsidiary, Federated Shareholder Services Company, maintains all necessary
shareholder records. The Fund pays the transfer agent a fee based on the size,
type and number of accounts and transactions made by shareholders.
INDEPENDENT PUBLIC ACCOUNTANTS
The independent public accountant for the Fund, Arthur Andersen, 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.
<R> FEES PAID BY THE FUND FOR SERVICES
FOR THE YEAR ENDED MAY 31, 2000 1999 1998
Advisory Fee Earned $834,859 $1,420,177 $1,713,011
Advisory Fee Reduction $176,794 $148,367 $141,072
Sub-Advisory Fee $638,404 $1,085,528 $1,309,949
Brokerage Commissions $139,688 $239,314 $291,312
Administrative Fee $148,276 $241,260 $290,642
</R>
HOW DOES THE FUND MEASURE PERFORMANCE?
The Fund may advertise Share performance by using the Securities and
Exchange Commission's (SEC) standard method for calculating performance
applicable to all mutual funds. The SEC also permits this standard performance
information to be accompanied by non-standard performance information.
The performance of Shares depends upon such variables as: portfolio
quality; average portfolio maturity; type and value of portfolio securities;
changes in interest rates; changes or differences in the Fund's or any class of
Shares' expenses; and various other factors.
Share performance fluctuates on a daily basis largely because net earnings
fluctuate daily. Both net earnings and offering price per Share are factors in
the computation of yield and total return.
<R> AVERAGE ANNUAL TOTAL RETURNS AND YIELD
Total return are given for the one-year, five-year and Start of Performance
periods ended May 31, 2000.
Yield is given for the 30-day period ended May 31, 2000.
Start of
Performance on
December 5, 1994
1 Year
30-DAY PERIOD 5 Years
Total Return N/A 16.12% 21.51% 22.61%
Yield 0.28% N/A N/A N/A
</R> TOTAL RETURN
Total return represents the change (expressed as a percentage) in the value
of Shares over a specific period of time, and includes the investment of income
and capital gains distributions.
The average annual total return for Shares is the average compounded rate
of return for a given period that would equate a $1,000 initial investment to
the ending redeemable value of that investment. The ending redeemable value is
computed by multiplying the number of Shares owned at the end of the period by
the NAV per Share at the end of the period. The number of Shares owned at the
end of the period is based on the number of Shares purchased at the beginning of
the period with $1,000, less any applicable sales charge, adjusted over the
period by any additional Shares, assuming the annual reinvestment of all
dividends and distributions.
YIELD
The yield of Shares is calculated by dividing: (i) the net investment
income per Share earned by the Shares over a 30-day period; by (ii) the maximum
offering price per Share on the last day of the period. This number is then
annualized using semi-annual compounding. This means that the amount of income
generated during the 30-day period is assumed to be generated each month over a
12-month period and is reinvested every six months. The yield does not
necessarily reflect income actually earned by Shares because of certain
adjustments required by the SEC and, therefore, may not correlate to the
dividends or other distributions paid to shareholders. To the extent investment
professionals and broker/dealers charge fees in connection with services
provided in conjunction with an investment in Shares, the Share performance is
lower for shareholders paying those fees.
PERFORMANCE COMPARISONS
Advertising and sales literature may include:
o references to ratings, rankings, and financial publications and/or
performance comparisons of Shares to certain indices;
o charts, graphs and illustrations using the Fund's returns, or returns in
general, that demonstrate investment concepts such as tax-deferred
compounding, dollar-cost averaging and systematic investment;
o discussions of economic, financial and political developments and their
impact on the securities market, including the portfolio manager's views on
how such developments could impact the Fund; and
o information about the mutual fund industry from sources such as the
Investment Company Institute.
The Fund may compare its performance, or performance for the types of
securities in which it invests, to a variety of other investments, including
federally insured bank products such as bank savings accounts, certificates of
deposit, and Treasury bills.
The Fund may quote information from reliable sources regarding individual
countries and regions, world stock exchanges, and economic and demographic
statistics.
You may use financial publications and/or indices to obtain a more complete
view of Share performance. When comparing performance, you should consider all
relevant factors such as the composition of the index used, prevailing market
conditions, portfolio compositions of other funds, and methods used to value
portfolio securities and compute offering price. The financial publications
and/or indices which the Fund uses in advertising may include:
o STANDARD & POOR'S ("S&P") DAILY STOCK PRICE INDEX OF 500 COMMON STOCKS,
which is a composite index of common stocks in industry, transportation,
and financial and public utility companies, and can be used to compare to
the total returns of funds whose portfolios are invested primarily in
common stocks. In addition, the S&P assumes reinvestments of all dividends
paid by stocks listed on its index. Taxes due on any of these distributions
are not included, nor are brokerage or other fees calculated in S&P
figures.
o LIPPER ANALYTICAL SERVICES, INC. ranks funds in various fund categories by
making comparative calculations using total return. Total return assumes
the reinvestment of all capital gains distributions and income dividends
and takes into account any change in the maximum offering price over a
specific period of time. From time to time, the Fund will quote its Lipper
ranking in the "index funds" category in advertising and sales literature.
o MORNINGSTAR, INC., an independent rating service, is the publisher of the
bi-weekly MUTUAL FUND VALUES. MUTUAL FUND VALUES rates more than 1,000
NASDAQ-listed mutual funds of all types, according to their risk-adjusted
returns. The maximum rating is five stars, and ratings are effective for
two weeks.
<R>
</R>
Investment Ratings
STANDARD & POOR'S LONG-TERM DEBT RATING DEFINITIONS
AAA--Debt rated AAA has the highest rating assigned by Standard & Poor's.
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--Debt rated BB has less near-term vulnerability to default than other
speculative issues. However, it faces major ongoing uncertainties or exposure to
adverse business, financial, or economic conditions which could lead to
inadequate capacity to meet timely interest and principal payments. The BB
rating category is also used for debt subordinated to senior debt that is
assigned an actual or implied BBB rating.
B--Debt rated B has a greater vulnerability to default but currently has
the capacity to meet interest payments and principal repayments. Adverse
business, financial, or economic conditions will likely impair capacity or
willingness to pay interest and repay principal. The B rating category is also
used for debt subordinated to senior debt that is assigned an actual or implied
BB or BB- rating.
CCC--Debt rated CCC has a currently identifiable vulnerability to default,
and is dependent upon favorable business, financial, and economic conditions to
meet timely payment of interest and repayment of principal. In the event of
adverse business, financial, or economic conditions, it is not likely to have
the capacity to pay interest and repay principal. The CCC rating category is
also used for debt subordinated to senior debt that is assigned an actual or
implied B or B rating.
CC--The rating CC typically is applied to debt subordinated to senior debt
that is assigned an actual or implied CCC debt rating.
C--The rating C typically is applied to debt subordinated to senior debt
which is assigned an actual or implied CCC debt rating. The C rating may be used
to cover a situation where a bankruptcy petition has been filed, but debt
service payments are continued.
MOODY'S INVESTORS SERVICE, INC. LONG-TERM BOND RATING DEFINITIONS
AAA--Bonds which are rated AAA are judged to be of the best quality. They carry
the smallest degree of investment risk and are generally referred to as gilt
edged. Interest payments are protected by a large or by an exceptionally stable
margin and principal is secure. While the various protective elements are likely
to change, such changes as can be visualized are most unlikely to impair the
fundamentally strong position of such issues.
AA--Bonds which are rated AA are judged to be of high quality by all
standards. Together with the AAA group, they comprise what are generally known
as high-grade bonds. They are rated lower than the best bonds because margins of
protection may not be as large as in AAA securities or fluctuation of protective
elements may be of greater amplitude or there may be other elements present
which make the long-term risks appear somewhat larger than in AAA securities.
A--Bonds which are rated A possess many favorable investment attributes and
are to be considered as upper-medium-grade obligations. Factors giving security
to principal and interest are considered adequate but elements may be present
which suggest a susceptibility to impairment sometime in the future.
BAA--Bonds which are rated BAA are considered as medium-grade obligations,
(i.e., they are neither highly protected nor poorly secured). Interest payments
and principal security appear adequate for the present but certain protective
elements may be lacking or may be characteristically unreliable over any great
length of time. Such bonds lack outstanding investment characteristics and in
fact have speculative characteristics as well.
BA--Bonds which are 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.
FITCH IBCA, INC. LONG-TERM DEBT RATING DEFINITIONS
AAA--Bonds considered to be investment grade and of the highest credit
quality. The obligor has an exceptionally strong ability to pay interest and
repay principal, which is unlikely to be affected by reasonably foreseeable
events. AA--Bonds considered to be investment grade and of very high credit
quality. The obligor's ability to pay interest and repay principal is very
strong, although not quite as strong as bonds rated AAA. Because bonds rated in
the AAA and AA categories are not significantly vulnerable to foreseeable future
developments, short-term debt of these issuers is generally rated F-1+.
A--Bonds considered to be investment grade and of high credit quality. The
obligor's ability to pay interest and repay principal is considered to be
strong, but may be more vulnerable to adverse changes in economic conditions and
circumstances than bonds with higher ratings.
BBB--Bonds considered to be investment grade and of satisfactory credit
quality. The obligor's ability to pay interest and repay principal is considered
to be adequate. Adverse changes in economic conditions and circumstances,
however, are more likely to have adverse impact on these bonds, and therefore
impair timely payment. The likelihood that the ratings of these bonds will fall
below investment grade is higher than for bonds with higher ratings.
BB--Bonds are considered speculative. The obligor's ability to pay interest
and repay principal may be affected over time by adverse economic changes.
However, business and financial alternatives can be identified which could
assist the obligor in satisfying its debt service requirements.
B--Bonds are considered highly speculative. While bonds in this class are
currently meeting debt service requirements, the probability of continued timely
payment of principal and interest reflects the obligor's limited margin of
safety and the need for reasonable business and economic activity throughout the
life of the issue. CCC--Bonds have certain identifiable characteristics which,
if not remedied, may lead to default. The ability to meet obligations requires
an advantageous business and economic environment.
CC--Bonds are minimally protected. Default in payment of interest and/or
principal seems probable over time. C--Bonds are imminent default in payment of
interest or principal. MOODY'S INVESTORS SERVICE, INC. COMMERCIAL PAPER RATINGS
PRIME-1--Issuers rated Prime-1 (or related supporting institutions) have a
superior capacity for repayment of short-term promissory obligations. Prime-1
repayment capacity will normally be evidenced by 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.
STANDARD & POOR'S COMMERCIAL PAPER RATINGS A-1--This designation 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. FITCH IBCA, INC. COMMERCIAL PAPER RATING DEFINITIONS
FITCH-1--(Highest Grade) Commercial paper assigned this rating is regarded as
having the strongest degree of assurance for timely payment.
FITCH-2--(Very Good Grade) Issues assigned this rating reflect an assurance
of timely payment only slightly less in degree than the strongest issues.
ADDRESSES
CCB EQUITY FUND
(A Portfolio of CCB Funds)
5800 Corporate Drive
Pittsburgh, PA 15237-7010
DISTRIBUTOR
Federated Securities Corp.
Federated Investors Tower
1001 Liberty Avenue
Pittsburgh, PA 15222-3779
INVESTMENT ADVISER
Central Carolina Bank and Trust Company
111 Corcoran Street
Durham, NC 27702
SUB-ADVISER
Franklin Street Advisors, Inc.
6330 Quadrangle Drive
Chapel Hill, NC 27514
CUSTODIAN
Fifth Third Bank
38 Fountain Square Plaza
Cincinnati, OH 45263
TRANSFER AGENT AND DIVIDEND DISBURSING AGENT
Federated Shareholder Services Company
P.O. Box 8600
Boston, MA 02266-8600
INDEPENDENT PUBLIC ACCOUNTANTS
Arthur Andersen LLP
225 Franklin Street
Boston, MA 02110-2812
PART C. OTHER INFORMATION.
Item 23.
(a) (i) Conformed Copy of Declaration of Trust of the Registrant (7);
(ii) Conformed Copy of Amendment No. 1 to Declaration of Trust
dated February 3, 1992 (7);
(iii) Conformed copy of Amendment No. 2 to Declaration of Trust
dated August 25, 1994 (6);
(iv) Conformed Copy of Amendment No. 3 to Declaration of Trust
dated August 25, 1994 (9);
(v) Conformed Copy of Amendment No. 4 to Declaration of
Trust dated May 13, 1998 (9);
(b) (i) Copy of By-Laws of the Registrant (7);
(ii) Copy of Amendment No.1 to By-Laws of Registrant (9);
(iii) Copy of Amendment No.2 to By-Laws of Registrant (9);
(iv) Copy of Amendment No.3 to By-Laws of Registrant (9);
(v) Copy of Amendment No.4 to By-Laws of Registrant (9);
(c) (i) Copy of Specimen Certificate for Shares of
Beneficial Interest of the 111 Corcoran Bond Fund (5);
(ii) Copy of Specimen Certificate for Shares of Beneficial
Interest of the 111 Corcoran North Carolina Municipal Securities
Fund (5);
(iii) Copy of Specimen Certificate for Shares of Beneifical
Interest of the 111 Corcoran Equity Fund (7);
(d) (i) Conformed copy of Investment Advisory Contract of the Registrant
and Exhibits A and B thereto (6);
(ii) Conformed Copy of Exhibit C to the present
Investment Advisory Contract to add 111 Corcoran Equity Fund (7);
(iii) Conformed Copy of Sub-Advisory Agreement including Exhibit A on
behalf of 111 Corcoran Equity Fund (7);
(e) (i) Conformed copy of Distributor's Contract of the Registrant and
Exhibit A thereto (6);
(ii) Conformed Copy of Exhibit B to Distributor's Contract to
add 111 Corcoran Equity Fund (7);
(f) Not applicable;
5. Response is incorporated by reference to Registrant's Initial Registration
Statement on Form N-1A filed February 19, 1992 (File Nos. 33-45753 and
811-6561)
6. Response is incorporated by reference to Registrant's Post-Effective
Amendment No. 5 on Form N-1A filed October 3, 1994 (File Nos. 33-45753 and
811-6561)
7. Response is incorporated by reference to Registrant's Post-Effective
Amendment No. 6 on Form N-1A filed May 24, 1995 (File Nos. 33-45753 and
811-6561)
9. Response is incorporated by reference to Registrant's Post-Effective
Amendment No. 12 on Form N-1A filed July 21, 1998 (File Nos. 33-45753 and
811-6561)
(g) (i) Conformed copy of Custody Agreement of the Registrant, and
Exhibits A, B, and C, thereto (Exhibit C is Custodian Fee
Schedule) (9);
(h) (i) Conformed copy of Fund Accounting and Shareholder Recordkeeping
Agreement of the Registrant (7);
(ii) Conformed copy of Administrative Services Agreement (5);
(iii) Conformed copy of Amendment No.1 to Administrative
Services Agreement (9);
(iv) Conformed Copy of Shareholder Services Plan (7);
(v) Conformed copy of Exhibit A to Shareholder Services
Plan on behalf of 111 Corcoran Equity Fund (7);
(vi) Conformed copy of Exhibit B to Shareholder Services
Plan on behalf of CCB Bond Fund (10);
(vii) Conformed copy of Exhibit C to Shareholder Services
Plan on behalf of CCB North Carolina Municipal Securities
Fund (10);
(viii) Conformed copy of Shareholder Services Agreement, and
Exhibits A, B, and C, thereto (10);
(i) Conformed Copy of Opinion and Consent of Counsel as to legality of
shares being registered (7);
(j) Conformed copy of Consent of Independent Public Accountants; +
(k) Not applicable;
(l) Conformed Copy of Initial Capital Understanding (7);
(m) (i) Copy of Rule 12b-1 Distribution Plan (6);
(ii) Conformed Copy of Exhibit A to Rule 12b-1 Plan on
behalf of 111 Corcoran Equity Fund (7); (iii) Copy of
Rule 12b-1 Agreement (6);
(iv) Copy of Fee Schedule for Rule 12b-1 Agreement with
Federated Securities Corp. (6);
(n) Not applicable;
-------------------------------------------------------------------------
+ All exhibits have been filed electronically.
5. Response is incorporated by reference to Registrant's Initial Registration
Statement on Form N-1A filed February 19, 1992 (File Nos. 33-45753 and
811-6561)
6. Response is incorporated by reference to Registrant's Post-Effective
Amendment No. 5 on Form N-1A filed October 3, 1994 (File Nos. 33-45753 and
811-6561)
7. Response is incorporated by reference to Registrant's Post-Effective
Amendment No. 6 on Form N-1A filed May 24, 1995 (File Nos. 33-45753 and
811-6561)
9. Response is incorporated by reference to Registrant's Post-Effective
Amendement No. 12 on Form N-1A filed July 21, 1998 (File Nos. 33-45753 and
811-6561)
10. Response is incorporated by reference to Registrant's Post-Effective
Amendment No. 13 on Form N-1A filed July 23, 1999 (File Nos. 33-45753 and
811-6561)
(o) (i) Conformed Copy of Power of Attorney of the Registrant (10);
(ii) Conformed Copy of Power of Attorney of Trustee of
the Registrant (10); (iii) Conformed Copy of Power of
Attorney of Trustee of the Registrant (10);
(iv) Conformed Copy of Power of Attorney of Trustee of the
Registrant (10);
(v) Conformed Copy of Power of Attorney of Trustee of the
Registrant (+)
(p) Conformed Copy of Code of Ethics of Registrant (+)
Item 24. Persons Controlled by or Under Common Control with Registrant
None
Item 25. Indemnification: 1
Item 26. Business and Other Connections of Investment Adviser and Sub-Adviser:
(a) Central Carolina Bank and Trust Company (CCB), the Fund's adviser, was
founded in 1903 as Durham Bank and Trust Company. Central Carolina
Bank was created from Durham Bank and Trust Company on September 30,
1961. CCB is the lead bank within CCB Financial Corporation which is a
multibank holding company that includes a commercial bank subsidiary
with offices also in North Carolina. CCB Financial Corp. was
incorporated in North Carolina in November, 1982. The principal
executive offices of the bank are located at 111 Corcoran Street,
Durham, North Carolina 27702. The activities of the bank encompass a
full range of commercial banking services, including trust services.
CCB has managed commingled funds since 1953. As of June 30, 1998, the Trust
Division managed assets in excess of $2.4 billion. The Trust Division manages 2
commingled funds with assets of approximately $260 million.
---------------------------------------------------------------------------
+ All exhibits have been filed electronically.
1. Response is incorporated by reference to Registrant's Initial Registration
Statement on Form N-1A filed February 19, 1992 (File Nos. 33-45753 and
811-6561)
10. Response is incorporated by reference to Registrant's Post-Effective
Amendment No. 13 on Form N-1A filed July 23, 1999 (File Nos. 33-45753 and
811-6561)
Franklin Street Advisors, Inc. is CCB Equity Fund's sub-adviser. The
principal executive offices of the sub-adviser are located at 6330 Quadrangle
Drive, Chapel Hill, North Carolina 27514. The sub-adviser is a registered
investment advisory firm founded in 1990, and currently manages assets in excess
of $575 million. Franklin Street Advisors, Inc. has not previously acted as an
investment adviser to an investment company. Franklin Street Advisors, Inc. is a
wholly-owned subsidiary of Franklin Street Partners, Inc., a privately-owned
holding company. Franklin Street Partners, Inc. also owns a private
non-depository trust bank, Franklin Street Trust Company, as well as another
subsidiary, Franklin Street Securities, Inc.
The principal executive officers of the Fund's Investment Adviser and
Sub-Adviser, the Directors of the Fund's Adviser and Sub-Adviser, and Partners
of the Fund's Sub-Adviser are set forth in the following tables.
(b)
(1) (2) (3)
Other Substantial
Position with Business, Profession,
NAME THE ADVISER VOCATION OR EMPLOYMENT
Ernest C. Roessler Chairman; President; Chairman, President
Chief Executive Officer and Chief Executive
and Director Officer, CCB Financial Corporation
David B. Jordan Vice Chairman Vice Chairman, CCB
and Director Financial Corporation
W.L. Burns, Jr. Chairman Emeritus Retired Chairman of
and Director the Board, Central Carolina Bank
Financial Corporation; Retired
President and Chief Executive
Officer, CCB Financial Corporation
and Central Carolina Bank and
Trust Company
W.L. ("Roy") Abercrombie, Jr. Director Chairman, President and Chief
Executive Officer, American
Federal Bank, FSB
J. Harper Beall, III Director President and Chief Executive
Officer, Fairfield
Chair Company
James B. Brame, Jr. Director President, Brame Specialty Co.,
Inc.
Timothy B. Burnett Director President, Bessemer Improvement
Company
Other Substantial
Position with Business, Profession,
NAME THE ADVISER VOCATION OR EMPLOYMENT
Blake P. Garrett, Jr. Director Partner, Garrett & Garrett Co.
Edward S. Holmes Director Partner, Holmes & McLaurin,
Attorneys at Law
Dan C. Joyner Director President, Western South Carolina
The Prudential/C. Dan Joyner Co.
Owen G. Kenan Director President, Kenan Enterprises,
Inc., Kenan Oil Co., Inc., Kenan
Developments, Inc.; Director,
Kenan Transport Co., Inc.; Vice
Chairman, Flagler Systems, Inc.;
Chairman, Kenan Global Ent., LLC
Other Substantial
Eugene J. McDonald Director President; Duke Management
Company; Executive Vice President;
Duke University; Director SBSF
Funds, Inc., Sphinx Phar.
Hamilton W. McKay, Jr., M.D. Director Physician, Carolina Asthma &
Allergy Center, P.A.
George J. Morrow Director Managing Director, Glaxo Wellcome
UK Ltd.
Eric B. Munson Director Executive Director; University of
North Carolina Hospitals
Dr. David Emory Shi Director Pesident, Furman University
Jimmy K. Stegall Director President, Service Oil of Monroe,
Inc.
H. Allen Tate, Jr. Director President, Allen Tate Company, Inc.
James L. Williamson Director Retired Partner, KPMG Peat Marwick
Other Substantial
Position with Business, Profession,
NAME THE ADVISER VOCATION OR EMPLOYMENT
Dr. Phail Wynn, Jr. Director President, Durham Technical
Community College
Robert C. Eubanks Director; President; President; Franklin
and Partner Street Partners, Inc.; Director,
Franklin Street Trust Company,
Director and President, Franklin
Street Securities, Inc.; founder,
McMillion and Eubanks Capital
Management, Inc.; former Chairman of
the Board of Trustees, University of
North Carolina
George M. Salley Director, Vice President
Vice President, and Franklin Street
Partner Advisors, Inc. and Franklin
Street Trust Company; former
Senior Vice President and
portfolio manager, Wachovia
Investment Management
Thomas W. Hudson, Jr. Director and Partner Director, Franklin Street Trust
Company, former Executive with
Kohlberg, Kravis, Roberts & Co.,
former Partner with Deloitte,
Huskins & Sells
William M. Moore, Jr. Director and Partner Director, Franklin Street Trust
Co., founder and Chief Executive
Officer of Trident Financial
Corporation
Richard V. Fulp Director and Partner Director, Franklin Street Trust
Company; former Group Executive
Vice President, Bank of America;
Director, Depository Trust
Company; former Chairman of
American Bankers Association
Trust and Investment Management
Division
Other Substantial
Position with Business, Profession,
NAME THE ADVISER VOCATION OR EMPLOYMENT
Paul J. Rizzo Director and Partner Director, Franklin Street Trust
Company, and Franklin Street
Securities, Inc.; Vice Chairman of
the Board, IBM; former Dean, Kenan
Flagler Business School (University
of North Carolina); and serves as
independent director of several
corporations traded on the New York
Stock Exchange
M. Rex Teaney, III Director and Partner President and Director, Franklin
Street Trust Company; former
Senior Vice President, Wachovia
National Bank of North Carolina;
Member, Board of Directors,
Public Securities Association and
Bank Capital Markets Association;
Member, Municipal Securities
Rulemaking Board
H. Michael Weaver Director and Partner Director, Franklin Street Trust
Company, and Franklin Street
Securities, Inc.; Chairman of the
Board, W.H. Weaver Construction
Co. (Greensboro, NC); former
Chairman of the Board of
Trustees, University of North
Carolina
Carol E. Manzon Secretary- Secretary-Treasurer,
Treasurer Franklin Street Partners, Inc.,
Franklin Street Trust Company and
Franklin Street Securities, Inc.
Other Substantial
Position with Business, Profession,
NAME THE SUB-ADVISER VOCATION OR EMPLOYMENT
Susan T. Kaderbek Vice President Vice President, Franklin Street
Securities, Inc.; former tax
analyst, Bear Stearns; former
associate, McGladrey & Pullen and
Arthur Andersen
Malcolm M. Trevillian Vice President Vice President, Franklin Street
Trust Company, Vice President,
Franklin Street Advisors, former
Vice President and Portfolio
Manager, First Union Capital
Management, former President,
North Carolina Society of
Financial Analysts
ITEM 27. PRINCIPAL UNDERWRITERS:
(a) Federated Securities Corp. the Distributor for shares of the Registrant,
acts as principal underwriter for the following open-end investment
companies, including the Registrant:
Cash Trust Series II; Cash Trust Series, Inc.; CCB Funds; Edward D. Jones &
Co. Daily Passport Cash Trust; Federated Adjustable Rate U.S. Government Fund,
Inc.; Federated American Leaders Fund, Inc.; Federated ARMs Fund; Federated Core
Trust; Federated Equity Funds; Federated Equity Income Fund, Inc.; Federated
Fixed Income Securities, Inc.; Federated Fund for U.S. Government Securities,
Inc.; Federated GNMA Trust; Federated Government Income Securities, Inc.;
Federated High Income Bond Fund, Inc.; Federated High Yield Trust; Federated
Income Securities Trust; Federated Income Trust; Federated Index Trust;
Federated Institutional Trust; Federated Insurance Series; Federated
International Series, Inc.; Federated Investment Series Funds, Inc.; Federated
Managed Allocation Portfolios; Federated Municipal Opportunities Fund, Inc.;
Federated Municipal Securities Fund, Inc.; Federated Municipal Securities Income
Trust; Federated Short-Term Municipal Trust; Federated Stock and Bond Fund,
Inc.; Federated Stock Trust; Federated Tax-Free Trust; Federated Total Return
Series, Inc.; Federated U.S. Government Bond Fund; Federated U.S. Government
Securities Fund: 1-3 Years; Federated U.S. Government Securities Fund: 2-5
Years; Federated U.S. Government Securities Fund: 5-10 Years; Federated Utility
Fund, Inc.; Federated World Investment Series, Inc.; FirstMerit Funds; Hibernia
Funds; Independence One Mutual Funds; Intermediate Municipal Trust; Marshall
Funds, Inc.; Money Market Obligations Trust; Regions Funds; RIGGS Funds;
SouthTrust Funds; Tax-Free Instruments Trust; The Wachovia Funds; The Wachovia
Municipal Funds; and Vision Group of Funds, Inc.
(b)
(1) (2) (3)
Name and Principal Positions and Offices Positions and Offices
BUSINESS ADDRESS WITH DISTRIBUTOR WITH REGISTRANT
------------------ ------------------------ -----------------
Richard B. Fisher Chairman, Vice President
Federated Investors Tower Federated Securities Corp.
1001 Liberty Avenue
Pittsburgh, PA 15222-3779
Arthur L. Cherry Director, --
Federated Investors Tower Federated Securities Corp.
1001 Liberty Avenue
Pittsburgh, PA 15222-3779
(1) (2) (3)
Name and Principal Positions and Offices Positions and Offices
BUSINESS ADDRESS WITH DISTRIBUTOR WITH REGISTRANT
------------------ ------------------------ -----------------
John B. Fisher President-Institutional Sales --
Federated Investors Tower and Director,
1001 Liberty Avenue Federated Securities Corp.
Pittsburgh, PA 15222-3779
Thomas R. Donahue Director, Executive Vice --
Federated Investors Tower Vice President and Assistant
1001 Liberty Avenue Secretary,
Pittsburgh, PA 15222-3779 Federated Securities Corp.
James F. Getz President-Broker/Dealer and --
Federated Investors Tower Director,
1001 Liberty Avenue Federated Securities Corp.
Pittsburgh, PA 15222-3779
David M. Taylor Executive Vice President, --
Federated Investors Tower Federated Securities Corp.
1001 Liberty Avenue
Pittsburgh, PA 15222-3779
Mark W. Bloss Senior Vice President, --
Federated Investors Tower Federated Securities Corp.
1001 Liberty Avenue
Pittsburgh, PA 15222-3779
Richard W. Boyd Senior Vice President, --
Federated Investors Tower Federated Securities Corp.
1001 Liberty Avenue
Pittsburgh, PA 15222-3779
Laura M. Deger Senior Vice President, --
Federated Investors Tower Federated Securities Corp.
1001 Liberty Avenue
Pittsburgh, PA 15222-3779
Theodore Fadool, Jr. Senior Vice President, --
Federated Investors Tower Federated Securities Corp.
1001 Liberty Avenue
Pittsburgh, PA 15222-3779
Bryant R. Fisher Senior Vice President, --
Federated Investors Tower Federated Securities Corp.
1001 Liberty Avenue
Pittsburgh, PA 15222-3779
(1) (2) (3)
Name and Principal Positions and Offices Positions and Offices
BUSINESS ADDRESS WITH DISTRIBUTOR WITH REGISTRANT
------------------ ------------------------ -----------------
Christopher T. Fives Senior Vice President, --
Federated Investors Tower Federated Securities Corp.
1001 Liberty Avenue
Pittsburgh, PA 15222-3779
James S. Hamilton Senior Vice President, --
Federated Investors Tower Federated Securities Corp.
1001 Liberty Avenue
Pittsburgh, PA 15222-3779
James M. Heaton Senior Vice President, --
Federated Investors Tower Federated Securities Corp.
1001 Liberty Avenue
Pittsburgh, PA 15222-3779
Keith Nixon Senior Vice President, --
Federated Investors Tower Federated Securities Corp.
1001 Liberty Avenue
Pittsburgh, PA 15222-3779
Solon A. Person, IV Senior Vice President, --
Federated Investors Tower Federated Securities Corp.
1001 Liberty Avenue
Pittsburgh, PA 15222-3779
Ronald M. Petnuch Senior Vice President, --
Federated Investors Tower Federated Securities Corp.
1001 Liberty Avenue
Pittsburgh, PA 15222-3779
Timothy C. Pillion Senior Vice President, --
Federated Investors Tower Federated Securities Corp.
1001 Liberty Avenue
Pittsburgh, PA 15222-3779
Thomas E. Territ Senior Vice President, --
Federated Investors Tower Federated Securities Corp.
1001 Liberty Avenue
Pittsburgh, PA 15222-3779
John M. Albert Vice President, --
Federated Investors Tower Federated Securities Corp.
1001 Liberty Avenue
Pittsburgh, PA 15222-3779
Ernest G. Anderson Vice President, --
Federated Investors Tower Federated Securities Corp.
1001 Liberty Avenue
Pittsburgh, PA 15222-3779
(1) (2) (3)
Name and Principal Positions and Offices Positions and Offices
BUSINESS ADDRESS WITH DISTRIBUTOR WITH REGISTRANT
------------------ ------------------------ -----------------
Teresa M. Antoszyk Vice President, --
Federated Investors Tower Federated Securities Corp.
1001 Liberty Avenue
Pittsburgh, PA 15222-3779
John B. Bohnet Vice President, --
Federated Investors Tower Federated Securities Corp.
1001 Liberty Avenue
Pittsburgh, PA 15222-3779
Jane E. Broeren-Lambesis Vice President, --
Federated Investors Tower Federated Securities Corp.
1001 Liberty Avenue
Pittsburgh, PA 15222-3779
Matthew W. Brown Vice President, --
Federated Investors Tower Federated Securities Corp.
1001 Liberty Avenue
Pittsburgh, PA 15222-3779
David J. Callahan Vice President, --
Federated Investors Tower Federated Securities Corp.
1001 Liberty Avenue
Pittsburgh, PA 15222-3779
Mark Carroll Vice President, --
Federated Investors Tower Federated Securities Corp.
1001 Liberty Avenue
Pittsburgh, PA 15222-3779
Steven R. Cohen Vice President, --
Federated Investors Tower Federated Securities Corp.
1001 Liberty Avenue
Pittsburgh, PA 15222-3779
Mary J. Combs Vice President, --
Federated Investors Tower Federated Securities Corp.
1001 Liberty Avenue
Pittsburgh, PA 15222-3779
R. Edmond Connell, Jr. Vice President, --
Federated Investors Tower Federated Securities Corp.
1001 Liberty Avenue
Pittsburgh, PA 15222-3779
Kevin J. Crenny Vice President, --
Federated Investors Tower Federated Securities Corp.
1001 Liberty Avenue
Pittsburgh, PA 15222-3779
(1) (2) (3)
Name and Principal Positions and Offices Positions and Offices
BUSINESS ADDRESS WITH DISTRIBUTOR WITH REGISTRANT
------------------ ------------------------ -----------------
Daniel T. Culbertson Vice President, --
Federated Investors Tower Federated Securities Corp.
1001 Liberty Avenue
Pittsburgh, PA 15222-3779
G. Michael Cullen Vice President, --
Federated Investors Tower Federated Securities Corp.
1001 Liberty Avenue
Pittsburgh, PA 15222-3779
Marc C. Danile Vice President, --
Federated Investors Tower Federated Securities Corp.
1001 Liberty Avenue
Pittsburgh, PA 15222-3779
Robert J. Deuberry Vice President, --
Federated Investors Tower Federated Securities Corp.
1001 Liberty Avenue
Pittsburgh, PA 15222-3779
William C. Doyle Vice President, --
Federated Investors Tower Federated Securities Corp.
1001 Liberty Avenue
Pittsburgh, PA 15222-3779
Mark D. Fisher Vice President, --
Federated Investors Tower Federated Securities Corp.
1001 Liberty Avenue
Pittsburgh, PA 15222-3779
Mark A. Gessner Vice President, --
Federated Investors Tower Federated Securities Corp.
1001 Liberty Avenue
Pittsburgh, PA 15222-3779
Joseph D. Gibbons Vice President, --
Federated Investors Tower Federated Securities Corp.
1001 Liberty Avenue
Pittsburgh, PA 15222-3779
John K. Goettlicher Vice President, --
Federated Investors Tower Federated Securities Corp.
1001 Liberty Avenue
Pittsburgh, PA 15222-3779
G. Tad Gullickson Vice President, --
Federated Investors Tower Federated Securities Corp.
1001 Liberty Avenue
Pittsburgh, PA 15222-3779
(1) (2) (3)
Name and Principal Positions and Offices Positions and Offices
BUSINESS ADDRESS WITH DISTRIBUTOR WITH REGISTRANT
------------------ ------------------------ -----------------
Dayna C. Haferkamp Vice President, --
Federated Investors Tower Federated Securities Corp.
1001 Liberty Avenue
Pittsburgh, PA 15222-3779
Anthony J. Harper Vice President, --
Federated Investors Tower Federated Securities Corp.
1001 Liberty Avenue
Pittsburgh, PA 15222-3779
Bruce E. Hastings Vice President, --
Federated Investors Tower Federated Securities Corp.
1001 Liberty Avenue
Pittsburgh, PA 15222-3779
Charlene H. Jennings Vice President, --
Federated Investors Tower Federated Securities Corp.
1001 Liberty Avenue
Pittsburgh, PA 15222-3779
H. Joseph Kennedy Vice President, --
Federated Investors Tower Federated Securities Corp.
1001 Liberty Avenue
Pittsburgh, PA 15222-3779
Michael W. Koenig Vice President, --
Federated Investors Tower Federated Securities Corp.
1001 Liberty Avenue
Pittsburgh, PA 15222-3779
Dennis M. Laffey Vice President, --
Federated Investors Tower Federated Securities Corp.
1001 Liberty Avenue
Pittsburgh, PA 15222-3779
Christopher A. Layton Vice President, --
Federated Investors Tower Federated Securities Corp.
1001 Liberty Avenue
Pittsburgh, PA 15222-3779
Michael H. Liss Vice President, --
Federated Investors Tower Federated Securities Corp.
1001 Liberty Avenue
Pittsburgh, PA 15222-3779
Michael R. Manning Vice President, --
Federated Investors Tower Federated Securities Corp.
1001 Liberty Avenue
Pittsburgh, PA 15222-3779
(1) (2) (3)
Name and Principal Positions and Offices Positions and Offices
BUSINESS ADDRESS WITH DISTRIBUTOR WITH REGISTRANT
------------------ ------------------------ -----------------
Amy Michalisyn Vice President, --
Federated Investors Tower Federated Securities Corp.
1001 Liberty Avenue
Pittsburgh, PA 15222-3779
Mark J. Miehl Vice President, --
Federated Investors Tower Federated Securities Corp.
1001 Liberty Avenue
Pittsburgh, PA 15222-3779
Richard C. Mihm Vice President, --
Federated Investors Tower Federated Securities Corp.
1001 Liberty Avenue
Pittsburgh, PA 15222-3779
Alec H. Neilly Vice President, --
Federated Investors Tower Federated Securities Corp.
1001 Liberty Avenue
Pittsburgh, PA 15222-3779
Thomas A. Peter III Vice President, --
Federated Investors Tower Federated Securities Corp.
1001 Liberty Avenue
Pittsburgh, PA 15222-3779
Robert F. Phillips Vice President, --
Federated Investors Tower Federated Securities Corp.
1001 Liberty Avenue
Pittsburgh, PA 15222-3779
Richard A. Recker Vice President, --
Federated Investors Tower Federated Securities Corp.
1001 Liberty Avenue
Pittsburgh, PA 15222-3779
Eugene B. Reed Vice President, --
Federated Investors Tower Federated Securities Corp.
1001 Liberty Avenue
Pittsburgh, PA 15222-3779
Paul V. Riordan Vice President, --
Federated Investors Tower Federated Securities Corp.
1001 Liberty Avenue
Pittsburgh, PA 15222-3779
John Rogers Vice President, --
Federated Investors Tower Federated Securities Corp.
1001 Liberty Avenue
Pittsburgh, PA 15222-3779
(1) (2) (3)
Name and Principal Positions and Offices Positions and Offices
BUSINESS ADDRESS WITH DISTRIBUTOR WITH REGISTRANT
------------------ ------------------------ -----------------
Brian S. Ronayne Vice President, --
Federated Investors Tower Federated Securities Corp.
1001 Liberty Avenue
Pittsburgh, PA 15222-3779
Thomas S. Schinabeck Vice President, --
Federated Investors Tower Federated Securities Corp.
1001 Liberty Avenue
Pittsburgh, PA 15222-3779
Edward J. Segura Vice President, --
Federated Investors Tower Federated Securities Corp.
1001 Liberty Avenue
Pittsburgh, PA 15222-3779
Edward L. Smith Vice President, --
Federated Investors Tower Federated Securities Corp.
1001 Liberty Avenue
Pittsburgh, PA 15222-3779
David W. Spears Vice President, --
Federated Investors Tower Federated Securities Corp.
1001 Liberty Avenue
Pittsburgh, PA 15222-3779
John A. Staley Vice President, --
Federated Investors Tower Federated Securities Corp.
1001 Liberty Avenue
Pittsburgh, PA 15222-3779
Colin B. Starks Vice President, --
Federated Investors Tower Federated Securities Corp.
1001 Liberty Avenue
Pittsburgh, PA 15222-3779
Jeffrey A. Stewart Vice President, --
Federated Investors Tower Federated Securities Corp.
1001 Liberty Avenue
Pittsburgh, PA 15222-3779
William C. Tustin Vice President, --
Federated Investors Tower Federated Securities Corp.
1001 Liberty Avenue
Pittsburgh, PA 15222-3779
Paul A. Uhlman Vice President, --
Federated Investors Tower Federated Securities Corp.
1001 Liberty Avenue
Pittsburgh, PA 15222-3779
(1) (2) (3)
Name and Principal Positions and Offices Positions and Offices
BUSINESS ADDRESS WITH DISTRIBUTOR WITH REGISTRANT
------------------ ------------------------ -----------------
Richard B. Watts Vice President, --
Federated Investors Tower Federated Securities Corp.
1001 Liberty Avenue
Pittsburgh, PA 15222-3779
Edward J. Wojnarowski Vice President, --
Federated Investors Tower Federated Securities Corp.
1001 Liberty Avenue
Pittsburgh, PA 15222-3779
Michael P. Wolff Vice President, --
Federated Investors Tower Federated Securities Corp.
1001 Liberty Avenue
Pittsburgh, PA 15222-3779
Robert W. Bauman Assistant Vice President, --
Federated Investors Tower Federated Securities Corp.
1001 Liberty Avenue
Pittsburgh, PA 15222-3779
Edward R. Bozek Assistant Vice President, --
Federated Investors Tower Federated Securities Corp.
1001 Liberty Avenue
Pittsburgh, PA 15222-3779
Beth C. Dell Assistant Vice President, --
Federated Investors Tower Federated Securities Corp.
1001 Liberty Avenue
Pittsburgh, PA 15222-3779
Donald C. Edwards Assistant Vice President, --
Federated Investors Tower Federated Securities Corp.
1001 Liberty Avenue
Pittsburgh, PA 15222-3779
John T. Glickson Assistant Vice President, --
Federated Investors Tower Federated Securities Corp.
1001 Liberty Avenue
Pittsburgh, PA 15222-3779
Ernest L. Linane Assistant Vice President, --
Federated Investors Tower Federated Securities Corp.
1001 Liberty Avenue
Pittsburgh, PA 15222-3779
Renee L. Martin Assistant Vice President, --
Federated Investors Tower Federated Securities Corp.
1001 Liberty Avenue
Pittsburgh, PA 15222-3779
(1) (2) (3)
Name and Principal Positions and Offices Positions and Offices
BUSINESS ADDRESS WITH DISTRIBUTOR WITH REGISTRANT
------------------ ------------------------ -----------------
Kirk A. Montgomery Secretary, --
Federated Investors Tower Federated Securities Corp.
1001 Liberty Avenue
Pittsburgh, PA 15222-3779
Denis McAuley, III Treasurer, --
Federated Investors Tower Federated Securities Corp.
1001 Liberty Avenue
Pittsburgh, PA 15222-3779
Timothy S. Johnson Assistant Secretary, --
Federated Investors Tower Federated Securities Corp.
1001 Liberty Avenue
Pittsburgh, PA 15222-3779
Victor R. Siclari Assistant Secretary, --
Federated Investors Tower Federated Securities Corp.
1001 Liberty Avenue
Pittsburgh, PA 15222-3779
Item 28. Location of Accounts and Records:
All accounts and records required to be maintained by Section 31(a)
of the Investment Company Act of 1940 and Rules 31a-1 through 31a-3 promulgated
thereunder are maintained at one of the following locations:
Registrant Federated Investors Tower
1001 Liberty Avenue
Pittsburgh, PA 15223-3779
(Notices should be sent to the Agent for Service at the above address)
5800 Corporate Drive
Pittsburgh, PA 15237-7010
Federated Shareholder Services P.O. Box 8600
Company Boston, MA 02266-8600
("Transfer Agent and Dividend
Disbursing Agent")
Federated Administrative Services Federated Investors Tower
("Administrator") 1001 Liberty Avenue
Pittsburgh, PA 15222-3779
Central Carolina Bank and Trust 111 Corcoran Street
Company Durham, NC 27702
("Adviser")
Franklin Street Advisors, Inc. 6330 Quadrangle Drive
("Sub-Adviser") Chapel Hill, NC 27514
Fifth Third Bank 38 Fountain Square Plaza
("Custodian") Cincinnati, OH 45263
Item 29. Management Services: Not applicable.
Item 30. Undertakings:
Registrant hereby undertakes to comply with the provisions of
Section 16(c) of the 1940 Act with respect to the removal of
Trustees and the calling of special shareholder meetings by
reholders.
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933 and the
Investment Company Act of 1940, the Registrant, CCB FUNDS, certifies that it
meets all of the requirements for effectiveness of this Amendment to its
Registration Statement pursuant to Rule 485(b) under the Securities Act of 1933
and has duly caused this Amendment to its Registration Statement to be signed on
its behalf by the undersigned, thereto duly authorized, in the City of
Pittsburgh and Commonwealth of Pennsylvania, on the 31st day of July, 2000.
CCB FUNDS
BY: /s/C. Todd Gibson
C. Todd Gibson, Assistant Secretary
Attorney in Fact for John F. Donahue
July 31, 2000
Pursuant to the requirements of the Securities Act of 1933, this Amendment
to its Registration Statement has been signed below by the following person in
the capacity and on the date indicated:
NAME TITLE DATE
---- ----- ----
By: /s/C. Todd Gibson Attorney In Fact July 31, 2000
C. Todd Gibson For the Persons
ASSISTANT SECRETARY Listed Below
John F. Donahue* Chairman and Trustee
(Chief Executive Officer)
Edward C. Gonzales* President, Treasurer
and Trustee (Principal
Financial and Accounting Officer)
J. Christopher Donahue Executive Vice President and Trustee
Thomas G. Bigley* Trustee
John T. Conroy, Jr.* Trustee
Nicholas P. Constantakis Trustee
John F. Cunningham* Trustee
Lawrence D. Ellis, M.D.* Trustee
Peter E. Madden* Trustee
Charles F. Mansfield, Jr.* Trustee
John E. Murray, Jr.* Trustee
Marjorie P. Smuts* Trustee
John S. Walsh* Trustee
* By Power of Attorney
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