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stroke
1933 Act File No. 33-46190
1940 Act File No. 811-6580
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. 5 X___
and/or
REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT OF 1940 X___
Amendment No. 7 X___
SOUTHTRUST VULCAN FUNDS
(Exact Name of Registrant as Specified in Charter)
Federated Investors Tower, Pittsburgh, Pennsylvania 15222-3779
(Address of Principal Executive Offices)
(412) 288-1900
(Registrant's Telephone Number)
John W. McGonigle, Esquire
Federated Investors Tower,
Pittsburgh, Pennsylvania 15222-3779
(Name and Address of Agent for Service)
It is proposed that this filing will become effective:
immediately upon filing pursuant to paragraph (b)
on ______________ pursuant to paragraph (b)
60 days after filing pursuant to paragraph (a) (i)
on pursuant to paragraph (a) (i).
X 75 days after filing pursuant to paragraph (a)(ii)
on _________________ pursuant to paragraph (a)(ii) of Rule 485.
If appropriate, check the following box:
This post-effective amendment designates a new effective date for a
previously filed post-effective amendment.
Registrant has filed with the Securities and Exchange Commission a
declaration pursuant to Rule 24f-2 under the Investment Company Act of
1940, and:
X filed the Notice required by that Rule on June 15, 1995; or
intends to file the Notice required by that Rule on or about
____________; or
during the most recent fiscal year did not sell any securities
pursuant to Rule 24f-2 under the Investment Company Act of 1940, and,
pursuant to Rule 24f-2(b)(2), need not file the Notice.
CROSS-REFERENCE SHEET
This Amendment to the Registration Statement of the SOUTHTRUST
VULCAN FUNDS, which consists of four portfolios: (1) Treasury
Obligations Money Market Fund; (2) Bond Fund; (3) Stock Fund; and (4)
Income Fund, relates only to the Income Fund and is comprised of the
following:
PART A. INFORMATION REQUIRED IN A PROSPECTUS.
Prospectus Heading
(Rule 404(c) Cross Reference)
Item 1. Cover Page (1-4)Cover Page.
Item 2. Synopsis (1-4)Expense Summary.
Item 3. Condensed Financial
Information (1-3)Financial Highlights.
Item 4. General Description of
Registrant (1-4)Cover Page; Investment
Objectives and Policies of the
Funds; Investment Activities;
Description of Shares.
Item 5. Management of the Fund (1-4)Management; Investment
Objectives and Policies of the
Funds; Dividends and Distributions;
Performance.
Item 6. Capital Stock and Other
Securities (1-4)Management of the Funds; How to
Purchase, Exchange and Redeem
Shares; Dividends and Distributions;
Taxes; Description of Shares.
Item 7. Purchase of Securities Being
Offered (1-4)How to Purchase, Exchange and
Redeem Shares; Pricing of Shares.
Item 8. Redemption or Repurchase How to Purchase, Exchange and Redeem
Shares.
Item 9. Pending Legal Proceedings Not applicable.
PART B. INFORMATION REQUIRED IN A STATEMENT OF ADDITIONAL INFORMATION.
Item 10. Cover Page (1-4)Cover Page.
Item 11. Table of Contents (1-4)Table of Contents
Item 12. General Information and
History (1-4)General; Trustees and Officers
Item 13. Investment Objectives and
Policies (1-4)Additional Information on Fund
Investments; Additional Investment
Limitations; Portfolio Transactions.
Item 14. Management of the Fund (1-4)Trustees and Officers;
Miscellaneous.
Item 15. Control Persons and Principal
Holders of Securities (1-4)Miscellaneous.
Item 16. Investment Advisory and Other
Services (1-4)Investment Advisory and Other
Service Arrangements.
Item 17. Brokerage Allocation (1-4)Portfolio Transactions.
Item 18. Capital Stock and Other
Securities (1-4)Additional Information
Concerning Shares.
Item 19. Purchase, Redemption and
Pricing of Securities
Being Offered (1-4)Purchase, Exchange and
Redemption Information; Net Asset
Value; Additional Information
Concerning Shares.
Item 20. Tax Status (1-4)Taxes
Item 21. Underwriters Investment Advisory and Other
Administrative Arrangements.
Item 22. Calculation of Performance
Data (1-4)Performance Information.
Item 23. Financial Statements (1-3)Filed in Part A; (4) To be
filed by Amendment.
SUBJECT TO COMPLETION, PRELIMINARY PROSPECTUS DATED SEPTEMBER 29,
1995
INFORMATION CONTAINED HEREIN IS SUBJECT TO COMPLETION OR AMENDMENT. A
REGISTRATION STATEMENT RELATING TO THESE SECURITIES HAS BEEN FILED WITH
THE SECURITIES AND EXCHANGE COMMISSION. THESE SECURITIES MAY NOT BE
SOLD NOR MAY OFFERS TO BUY BE ACCEPTED PRIOR TO THE TIME THE
REGISTRATION STATEMENT BECOMES EFFECTIVE. THIS STATEMENT OF ADDITIONAL
INFORMATION SHALL NOT CONSTITUTE AN OFFER TO SELL OR THE SOLICITATION OF
AN OFFER TO SELL OR THE SOLICITATION OF AN OFFER TO BUY NOR SHALL THERE
BE ANY SALE OF THESE SECURITIES IN ANY STATE IN WHICH SUCH OFFER,
SOLICITATION OR SALE WOULD BE UNLAWFUL PRIOR TO REGISTRATION OR
QUALIFICATION UNDER THE SECURITIES LAWS OF ANY SUCH STATE.
SouthTrust
Vulcan Funds
SouthTrust Vulcan Income Fund
Prospectus dated December __, 1995
The shares offered in this prospectus represent interests in the
SouthTrust Vulcan Income Fund (the "Fund"), an investment portfolio
of SouthTrust Vulcan Funds (the "Company"), an open-end investment
company (a mutual fund). The investment objective of the Fund is
to provide current income. The Fund will attempt to do so with a
minimum of principal volatility by maintaining a dollar-weighted
average maturity of five years or less. The Company currently
offers a selection of four investment portfolios, including the
Fund ("Portfolios"). Each Portfolio offered by the Company has a
distinct investment objective and policy, as described below:
_ Treasury Obligations Money Market Fund--to provide as
high a level of current interest income as is consistent
with maintaining liquidity and stability of principal.
_ Bond Fund--to provide a level of total return consistent
with a portfolio of high quality debt securities.
_ Stock Fund--to provide a level of long-term capital
appreciation, with income a secondary consideration.
_ Income Fund--to provide current income.
SouthTrust Bank of Alabama, N.A., is the investment adviser (the
"Adviser") of the Fund.
Shares of the Company are not deposits or obligations of
SouthTrust Bank of Alabama, N.A., are not endorsed, insured,
guaranteed, nor otherwise supported by, SouthTrust Bank of Alabama,
N.A., any bank, or the Federal Deposit Insurance Corporation (the
"FDIC"), the Federal Reserve Board, or any other government agency.
Investments in shares of the Fund offered by this Prospectus
involve investment risks, including the possible loss of principal.
This Prospectus contains information that a prospective investor
should know before investing. Investors are encouraged to read this
Prospectus and retain it for future reference. A Statement of
Additional Information dated December __, 1995 has been filed with
the Securities and Exchange Commission and is incorporated by
reference into this Prospectus. It may be obtained free of charge
by calling the Company at 1-800-843-8618.
SECURITIES OFFERED BY THIS PROSPECTUS HAVE NOT BEEN APPROVED OR
DISAPPROVED BY THE SECURITIES AND EXCHANGE COMMISSION OR ANY STATE
SECURITIES COMMISSION NOR HAS THE SECURITIES AND EXCHANGE COMMISSION OR
ANY STATE SECURITIES COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY OF
THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL
OFFENSE.
Expense Summary
Shareholder Transaction Expenses
Maximum Sales Load Imposed on Purchases (as a percentage of offering
price) 3.50%
Maximum Sales Load Imposed on Reinvested Dividends
(as a percentage of offering price) None
Contingent Deferred Sales Charge (as a percentage of original purchase
price or redemption proceeds, as applicable) None
Redemption Fees (as a percentage of amount redeemed, if applicable) 1.00%*
Exchange Fee None
*Applies to shares purchased at net asset value which are redeemed
within one year of purchase. See "How to Purchase, Exchange and Redeem
Shares."
Annual Operating Expenses
(As a percentage of projected average net assets)
Advisory Fee (after waiver) (1) 0.58%
12b-1 Fee (2) 0.00%
Total Other Expenses 0.30%
Total Fund Operating Expenses (after
waiver) (3) 0.88%
(1) The estimated
management fee has been reduced to reflect the anticipated
voluntary waiver by the investment adviser. The adviser can
terminate this voluntary waiver at any time at its sole
discretion. The maximum management fee is 0.60%.
(2) As of the date
of this Prospectus, the Fund is not paying or accruing the 12b-1
fees. If the Fund were paying or accruing the 12b-1 fee, the Fund
would be able to pay up to 0.25% of its average, daily net assets
for the 12b-1 fee. See "Distributor."
(3) Total operating
expenses are estimated to be 0.90% absent the anticipated
voluntary waiver by the Adviser.
Expenses in this table are estimated based on expenses expected to be
incurred during the fiscal year ending April 30, 1996. During the
course of this period expenses may be more or less than the amount
shown.
The purpose of this table is to assist an investor in understanding the
various costs and expenses that a shareholder of the Fund will bear,
either directly or indirectly. For more complete descriptions of the
various costs and expenses, see "Management of the Fund" in this
Prospectus and the Statement of Additional Information.
EXAMPLE
You would pay the following expenses on a $1,000 1 Year 3 Years
investment assuming (1) 5% annual return and (2)
redemption at the end of each time period $44 $62
The above example should not be considered a representation of future
expenses. Actual expenses may be greater or less than those shown.
This example is based on estimated data for the Fund's fiscal year
ending April 30, 1996.
INVESTMENT OBJECTIVES AND POLICIES OF THE FUND
The Company was established as a Massachusetts business
trust under a Master Trust Agreement dated March 4, 1992. The Master
Trust Agreement permits the Company to offer separate series of shares
of beneficial interest representing interests in separate portfolios of
securities. The Company currently offers shares in four investment
portfolios, each with its own investment objective and policies
("Portfolios"). The purchase of shares of any Portfolio should not be
considered a complete investment program, but an important segment of a
well-diversified investment program. This prospectus relates only to
shares of the Fund.
The investment objective of the Fund is to provide current
income. The Fund will attempt to do so with a minimum of principal
volatility. While there is no assurance that the Fund will achieve its
investment objective, it endeavors to do so by following the investment
policies described in this prospectus.
The Fund pursues its investment objective by investing in a
diversified portfolio comprised primarily of income-producing
securities. Income-producing securities may include: U.S. government
securities (as defined below); corporate debt obligations, which may
include bonds, notes, and debentures; convertible securities; asset-
backed and mortgage-backed securities, collateralized mortgage
obligations and adjustable rate mortgage securities; commercial paper,
bank instruments, money market instruments, and zero coupon securities.
Under normal market and economic conditions, the Fund will invest at
least 65% of its assets in such securities. In an effort to minimize
principal volatility, the Fund will maintain a dollar-weighted average
maturity of five years or less. The Fund may also invest in certain
equity securities, including common stock and preferred stock.
INVESTMENT ACTIVITIES
U.S. Government Securities. The Fund invests in U.S.
government securities. These instruments are either issued or guaranteed
by the U.S. government, its agencies, or instrumentalities. These
securities include, but are not limited to:
o direct obligations of the U.S. Treasury, such as U.S. Treasury
bills, notes, and bonds; and
o notes, bonds, and discount notes of U.S. government agencies
or instrumentalities, such as the: Farm Credit System,
including the National Bank for Cooperatives, Farm Credit
Banks, and Banks for Cooperatives; Farmers Home
Administration; Federal Home Loan Banks; Federal Home Loan
Mortgage Corporation; Federal National Mortgage Association;
Government National Mortgage Association; and Student Loan
Marketing Association.
Some obligations issued or guaranteed by agencies or instrumentalities
of the U.S. government, such as Government National Mortgage Association
participation certificates, are backed by the full faith and credit of
the U.S. Treasury. No assurances can be given that the U.S. government
will provide financial support to other agencies or instrumentalities,
since it is not obligated to do so. These instrumentalities are
supported by:
o the issuer's right to borrow an amount limited to a specific
line of credit from the U.S. Treasury;
o discretionary authority of the U.S. government to purchase
certain obligations of an agency or instrumentality; or
o the credit of the agency or instrumentality.
Corporate Debt Obligations. The Fund may invest up to 35%
of its assets in corporate debt obligations, including bonds, notes and
debentures, which may have fixed or floating rates of interest and which
are rated, at the time of purchase, investment grade by a nationally
recognized statistical ratings organization ("NRSRO"), or, if unrated,
are of comparable quality as determined by the Adviser. Bonds rated
"BBB" by Standard and Poor's Ratings Service ("S&P") or Fitch Investors
Service, Inc. ("Fitch"), or "Baa" by Moody's Investors Service, Inc.
("Moody's"), are considered medium-grade obligations and are regarded as
having an adequate capacity to pay interest and repay principal, and
have speculative characteristics. Changes in economic conditions or
other circumstances are more likely to lead to weakened capacity to make
principal and interest payments than higher rated bonds.
Fixed Rate Obligations. The Fund may invest in fixed
rate securities, including fixed rate securities with short-term
characteristics. Fixed rate securities with short-term characteristics
are long-term debt obligations but are treated in the market as having
short maturities because call features of the securities may make
them callable within a short period of time. A fixed rate
security with short-term characteristics would include a fixed income
security priced close to call or redemption price or fixed income
security approaching maturity, where the expectation of call or
redemption is high.
Fixed rate securities exhibit more price volatility during
times of rising or falling interest rates than securities with
floating rates of interest. This is because floating rate securities,
as described below, behave like short-term instruments in that
the rate of interest they pay is subject to periodic adjustments
based on a designated interest rate index. Fixed rate securities
pay a fixed rate of interest and are more sensitive to fluctuating
interest rates. In periods of rising interest rates the value of a
fixed rate security is likely to fall. Fixed rate securities with
short-term characteristics are not subject to the same price volatility
as fixed rate securities without such characteristics. Therefore,
they behave more like floating rate securities with respect to
price volatility .
The market value of fixed-income obligations in the Fund can
be expected to fluctuate inversely to changes in prevailing
interest rates. Investors should recognize that, in periods of
declining interest rates, the yields of funds composed primarily of
fixed-income securities will tend to be higher than prevailing market
rates and, in periods of rising interest rates, yields will tend to
be somewhat lower.
Floating Rate Obligations. The Fund may invest in
floating rate debt obligations, including increasing rate
securities. Floating rate securities are generally offered an initial
interest rate which is at or above prevailing market rates. The
interest rate paid on these securities is then reset periodically
(commonly every 90 days to an increment over some predetermined
interest rate index). Commonly utilized indices include the three-month
Treasury bill rate, the 180-day Treasury bill rate, the one-month
or three-month London Interbank Offered Rate (LIBOR), the prime rate
of a bank, the commercial paper rates, or the longer-term rates on U.S.
Treasury securities.
Convertible Securities. Convertible securities are
securities which may be exchanged or converted into a predetermined
number of the issuer's underlying common stock at the option of the
holder during a specified time period. Convertible securities may take
the form of convertible bonds, convertible preferred stock or
debentures, units consisting of "usable" bonds or a combination of the
features of several of these securities. The investment characteristics
of each convertible security vary widely, which allows convertible
securities to be employed for different investment objectives.
Convertible bonds and convertible preferred stocks are fixed
income securities that generally retain the investment characteristics
of fixed income securities until they have been converted but also react
to movements in the underlying equity securities. The holder is
entitled to receive the fixed income of a bond or the dividend
preference of a preferred stock until the holder elects to exercise the
conversion privilege. Usable bonds are corporate bonds that can be used
in whole or in part, customarily at full face value, in lieu of cash to
purchase the issuer's common stock. When owned as part of a unit along
with warrants, which are options to buy the common stock, they function
as convertible bonds, except that the warrants generally will expire
before the bond's maturity. Convertible securities are senior to equity
securities, and therefore have a claim to assets of the corporation
prior to the holders of common stock in the case of liquidation.
However, convertible securities are generally subordinated to similar
nonconvertible securities of the same company. The interest income and
dividends from convertible bonds and preferred stocks provide a stable
stream of income with generally higher yields than common stocks, but
lower than nonconvertible securities of similar quality. The Fund will
exchange or convert the convertible securities held in its portfolio
into shares of the underlying common stocks when, in the Adviser's
opinion, the investment characteristics of the underlying common shares
will assist the Fund in achieving its investment objective. Otherwise,
the Fund will hold or trade the convertible securities. In selecting
convertible securities for the Fund, the Adviser evaluates the
investment characteristics of the convertible security as a fixed income
instrument, and the investment potential of the underlying equity
security for capital appreciation. In evaluating these matters with
respect to a particular convertible security, the Adviser considers
numerous factors, including the economic and political outlook, the
value of the security relative to other investment alternatives, trends
in the determinants of the issuer's profits, and the issuer's management
capability and practices.
Mortgage-Backed Securities. The Fund may purchase mortgage-backed
securities that provide monthly payments of principal and interest. The
average life of mortgage-backed securities varies with the maturities of
the underlying instruments that have maximum maturities of forty years.
The average life of a mortgage-backed instrument, in particular, is
likely to be substantially less than the original maturity of the
mortgage pools underlying the securities as the result of scheduled
principal payments and mortgage prepayments. The rate of such mortgage
prepayments, and hence the life of the certificates, will be primarily a
function of current market rates and current conditions in the relevant
housing markets. In calculating the weighted average maturity of the
Fund, the maturity of mortgage-backed instruments will be based on
estimates of average life of the underlying mortgages. The Fund will
continuously monitor and revise, as appropriate, its calculations of the
estimated average life of mortgage-backed instruments. The relationship
between mortgage prepayments and interest rates may give some high-
yielding mortgage-related securities less potential for appreciation
than conventional bonds with comparable maturities. In addition, in
periods of falling interest rates, the rate of mortgage prepayments tend
to increase. During such periods, the reinvestment of prepayment
proceeds by the Fund will generally be at lower rates than the rates
that were carried by the obligations that have been prepaid. Because of
these and other reasons, a mortgage-backed security's total return may
be difficult to predict precisely. To the extent that the Fund purchases
mortgage-related or mortgage-backed securities at a premium, mortgage
prepayments (which may be made at any time without penalty) may result
in some loss of the Fund's principal investment to the extent of the
premium paid.
Presently there are several types of mortgage-backed
securities issued or guaranteed by U.S. government agencies, including
guaranteed mortgage pass-through certificates, which provide the holder
with a pro rata interest in the underlying mortgages, and collateralized
mortgage obligations ("CMOs"), which provide the holder with a specified
interest in the cash flow of a pool of underlying mortgages or other
mortgage-backed securities. Issuers of CMOs ordinarily elect to be taxed
as a pass-through entity known as a real estate mortgage investment
conduit. CMOs are issued in multiple classes, each with a specified
fixed or floating interest rate and a final distribution date. The
relative payment rights of the various CMO classes may be structured in
many ways. In most cases, however, payments of principal are applied to
the CMO classes in the order of their respective stated maturities, so
that no principal payments will be made on a CMO class until all other
classes having an earlier stated maturity date are paid in full. The
classes may include accrual certificates (also known as "Z-Bonds"),
which only accrue interest at a specified rate until other specified
classes have been retired and are converted thereafter to interest-
paying securities. They may also include planned amortization classes
which generally require, within certain limits, that specified amounts
of principal be applied on each payment date, and generally exhibit less
yield and market volatility than other classes. The Fund will not
purchase "residual" CMO interests, which normally exhibit the greatest
price volatility
Mortgage-backed and asset-backed securities (described
below) generally pay back principal and interest over the life of the
security. At the time the Fund reinvests the payments and any
unscheduled prepayments of principal received, the Fund may receive a
rate of interest which is actually lower than the rate of interest paid
on these securities ("prepayment risks"). Mortgage-backed and asset-
backed securities are subject to higher prepayment risks than most other
types of debt instruments with prepayment risks because the underlying
mortgage loans or the collateral supporting asset-backed securities may
be prepaid without penalty or premium. Prepayment risks on mortgage-
backed securities tend to increase during periods of declining mortgage
interest rates because many borrowers refinance their mortgages to take
advantage of the more favorable rates. Prepayments on mortgage-backed
securities are also affected by other factors, such as the frequency
with which people sell their homes or elect to make unscheduled payments
on their mortgages. Although asset-backed securities generally are less
likely to experience substantial prepayments than are mortgage-backed
securities, certain factors that affect the rate of prepayments on
mortgage-backed securities also affect the rate of prepayments on asset-
backed securities.
While mortgage-backed securities generally entail less risk
of a decline during periods of rapidly rising interest rates, mortgage-
backed securities may also have less potential for capital appreciation
than other similar investments (e.g., investments with comparable
maturities) because as interest rates decline, the likelihood increases
that mortgages will be prepaid. Furthermore, mortgage-backed securities
are purchased at a premium, mortgage foreclosures and unscheduled
principal payments may result in some loss of a holder's principal
investment to the extent of the premium paid. Conversely, if mortgage-
backed securities are purchased at a discount, both a scheduled payment
of principal and an unscheduled prepayment of principal would increase
current and total returns and would accelerate the recognition of
income, which would be taxed as ordinary income when distributed to
shareholders.
Adjustable Rate Mortgage Securities ("ARMS"). ARMS are pass-
through mortgage securities representing interests in adjustable rather
than fixed interest rate mortgages. The ARMS in which the Fund invests
are issued by Ginnie Mae, Federal National Mortgage Association ("Fannie
Mae"), or the Federal Home Loan Mortgage Association ("Freddie Mac"),
and are actively traded. The underlying mortgages which collateralize
ARMS issued by Ginnie Mae are fully guaranteed by the Federal Housing
Administration or Veterans Administration, while those collateralizing
ARMS issued by Fannie Mae or Freddie Mac are typically conventional
residential mortgages conforming to strict underwriting size and
maturity constraints.
Asset-Backed Securities. The Fund may invest in asset-
backed securities which have structural characteristics similar to
mortgage-backed securities but have underlying assets that are not
mortgage loans or interests in mortgage loans. Asset-backed securities
are created by the grouping of certain private loans, receivables, and
other lender assets into pools. These securities differ from other forms
of debt securities, which normally provide periodic payment of interest
in fixed amounts with principal paid at maturity or specified call
dates. Asset-backed securities, however, provide periodic payments which
generally consist of both interest and principal payments. The estimated
life of an asset-backed security and the average maturity of a portfolio
including such assets vary with the prepayment experience with respect
to the underlying debt instruments. The credit characteristics of asset-
backed securities also differ in a number of respects from those of
traditional debt securities. The credit quality of most asset-backed
securities depends primarily upon the credit quality of the assets
underlying such securities, how well the entity issuing the securities
is insulated from the credit risk of the originator or any other
affiliated entities, and the amount and quality of any credit support
provided to such securities.
The Fund may invest in asset-backed securities which
include, but are not limited to, interests in pools of receivables, such
as motor vehicle installment purchase obligations and credit card
receivables. These securities may be in the form of pass-through
instruments or asset-backed bonds. The securities are issued by non-
governmental entities and carry no direct or indirect government
guarantee.
Asset-backed securities present certain risks that are not
presented by mortgage-backed securities. Primarily, these securities do
not have the benefit of the same security interest in the related
collateral. Credit card receivables are generally unsecured and the
debtors are entitled to the protection of a number of state and federal
consumer credit laws, many of which give such debtors the right to set-
off certain amounts owed on the credit cards, thereby reducing the
balance due. Most issuers of asset-backed securities backed by motor
vehicle installment purchase obligations permit the servicer of such
receivables to retain possession of the underlying obligations. If the
servicer sells these obligations to another party, there is a risk that
the purchaser would acquire an interest superior to that of the holders
of the related asset-backed securities. Furthermore, if a vehicle is
registered in one state and is then reregistered because the owner and
obligor moves to another state, such reregistration could defeat the
original security interest in the vehicle in certain cases. In addition,
because of the large number of vehicles involved in a typical issuance
and technical requirements under state laws, the trustee for the holders
of asset-backed securities backed by automobile receivables may not have
a proper security interest in all of the obligations backing such
receivables. Therefore, there is the possibility that recoveries on
repossessed collateral may not, in some cases, be available to support
payments on these securities.
Equity Securities. The Fund may invest in common stocks,
preferred stocks, and convertible securities, including convertible
bonds and convertible preferred stock. A convertible security is a
security that may be converted either at a stated price or rate within a
specified period of time into a specified number of shares of common
stock. By investing in convertible securities, the Fund seeks the
opportunity, through the conversion feature, to participate in the
capital appreciation of the common stock into which the securities are
convertible, while earning higher current income than is available from
the common stock. Although the Fund may acquire convertible securities
that are rated below investment grade, the Company does not expect that
investments in lower-rated convertible securities will exceed 10% of the
value of the total assets of the Fund at the time of purchase.
Variable and Floating Rate Instruments. The Fund may
purchase variable rate and floating rate instruments. Variable and
floating rate instruments may include variable amount master demand
notes that permit the amount of indebtedness to vary in addition to
providing for periodic adjustment in the interest rate. The absence of
an active secondary market, however, could make it difficult to dispose
of the instruments, and the Fund could suffer a loss if the issuer
defaulted or during periods that the Fund is not entitled to exercise
its demand rights. Variable and floating rate instruments held by the
Fund may be subject to the Fund's 15% limitation on illiquid investments
when the Fund can not demand payment of the principal amount within
seven days absent a reliable trading market.
Investment Company Securities. The Fund may invest in the
securities of other investment companies, but will not own more than 3%
of the total outstanding voting stock of any investment company, invest
more than 5% of total assets in any one investment company, or invest
more than 10% of total assets in investment companies in the aggregate.
The Fund will invest in other investment companies primarily for the
purpose of investing short-term cash which has not yet been invested in
other portfolio instruments. It should be noted that investment
companies incur certain expenses, and therefore, any investment by the
Fund in shares of another investment company would be subject to certain
duplicate expenses, particularly transfer agent and custodian fees. The
Adviser will waive its investment advisory fee on assets invested in
securities of open-end investment companies.
Zero Coupon Bonds. The Fund may purchase zero coupon bonds
(i.e., discount debt obligations that do not make periodic interest
payments). Zero coupon bonds held by the Fund are subject to greater
market fluctuations from changing interest rates than debt obligations
of comparable maturities that make current distributions of interest.
Repurchase Agreements. The Fund may purchase portfolio
securities subject to the seller's agreement to repurchase them at a
mutually specified date and price ("repurchase agreements"). Repurchase
agreements will be entered into only with financial institutions, such
as banks and broker/dealers, that are deemed to be creditworthy by the
Adviser under guidelines approved by the Company's Board of Trustees
(the "Trustees"). The seller under a repurchase agreement will be
required to maintain the value of the securities that are subject to the
agreement and held by the Fund in an amount that exceeds the agreed upon
repurchase price. The Fund's purchase of portfolio securities pursuant
to a repurchase agreement may be considered to be the making of a loan
to the seller. Default by or bankruptcy of the seller, however, could
expose the Fund to possible loss because of adverse market action,
delays in connection with the disposition of the underlying obligations
or expenses of enforcing its rights.
When-Issued Securities and Delayed-Delivery Transactions.
In order to secure yields or prices deemed advantageous at the time, the
Fund may purchase or sell securities on a when-issued or a delayed-
delivery basis. The Fund will not enter into a when-issued or delayed-
delivery transaction for speculative purposes, but only in furtherance
of its investment objective. In such transactions, delivery of the
securities occurs beyond the normal settlement period, but no payment or
delivery is made by, and no interest accrues to, the Fund prior to, the
actual delivery or payment by the other party to the transaction,
normally within 30 days of commitment. Due to fluctuations in the value
of securities purchased on a when-issued or delayed-delivery basis, the
yields obtained on such securities may be higher or lower than the
yields available in the market on the dates when the investments are
actually delivered to the Fund. Similarly, the sale of securities for
delayed-delivery can involve the risk that the prices available in the
market when delivery is made may actually be higher than those obtained
in the transaction itself.
Reverse Repurchase Agreements. The Fund may borrow funds
for temporary purposes by selling portfolio securities to financial
institutions, such as banks and broker/dealers, and agreeing to
repurchase them at a mutually specified date and price ("reverse
repurchase agreements"). Reverse repurchase agreements involve the risks
that the market value of the securities sold by the Fund may decline
below the repurchase price and the other party to the agreement may
default, in which event there may be delays in recovering the
securities. The Fund would pay interest on amounts obtained pursuant to
a reverse repurchase agreement.
Illiquid Securities. The Fund may invest up to 15% of the
total value of its net assets in securities that are illiquid. An
illiquid security is one which may not be sold or disposed of in the
ordinary course of business within seven days at approximately the value
at which the Fund has valued it on its books. Repurchase agreements with
maturities in excess of seven days will be considered by the Fund to be
illiquid.
Liquidity Management. As a temporary defensive measure, if
the Adviser determines that market conditions warrant, the Fund may
invest without limitation in U.S. government obligations, notes, zero
coupon securities and repurchase agreements collateralized by U.S.
government obligations.
Lending of Portfolio Securities. From time to time, the Fund
may lend portfolio securities to brokers/dealers and other financial
organizations. Such loans will not exceed 20% of the Fund's total
assets. Loans of portfolio securities by the Fund will be
collateralized by cash, letters of credit or U.S. government securities
which are maintained at all times in an amount equal to at least 100% of
the current market value of the loaned securities. The risks in lending
portfolio securities, like those associated with other extensions of
secured credit, consist of possible decline in value of collateral,
possible delays in receiving additional collateral or in the recovery of
the loaned securities or expenses of enforcing the Fund's rights. Loans
will be made to firms deemed by the Adviser to be of good standing and
will not be made unless, in the judgment of the Adviser, the
consideration to be earned from such loans would justify the risk.
Average Portfolio Maturity
The Fund does not maintain a stable net asset value.
However, to the extent consistent with the Fund's investment objective
of current income, the Adviser will seek to limit the magnitude of
fluctuations in the Fund's net asset value by limiting the dollar-
weighted average maturity of the Fund's portfolio to less than five
years. Securities with shorter maturities generally have less price
movement than securities of comparable quality with longer maturities.
In periods of anticipated rising interest rates, a greater portion of
the assets of the Fund may be invested in securities the value of which
is believed to be less sensitive to interest rate changes. However, the
prices of fixed income securities fluctuate inversely to the direction
of interest rates.
Portfolio Transactions and Turnover
All orders for the purchase or sale of securities on behalf
of the Fund are placed by the Adviser with broker/dealers that the
Adviser selects. The Company cannot accurately predict the turnover rate
for the Fund, but expects that the annual turnover rate may, but
generally will not exceed 100%. Short-term capital gains realized from
portfolio transactions are taxable to shareholders as ordinary income.
In addition, higher portfolio turnover rates can result in corresponding
increases in brokerage commissions and other transaction costs. The Fund
will not consider portfolio turnover rates a limiting factor in making
investment decisions consistent with its investment objective and
policies.
Investment Limitations
The Fund's investment objective and policies, except as
otherwise indicated, may be changed by the Trustees without shareholder
approval. However, shareholders will be notified in writing at least 30
days prior to any change in an investment objective. Any such change may
result in the Fund having an investment objective different from the
investment objective which the shareholder considered appropriate at the
time of investment in the Fund. No assurance can be provided that the
Fund will achieve its investment objective.
The Fund has also adopted certain fundamental investment
limitations that may be changed only with the approval of a majority of
the Fund's outstanding shares. The following descriptions summarize
several of the Funds' fundamental investment policies, which are set
forth in full in the Statement of Additional Information.
The Fund may not:
(1)purchase securities, except U.S. government securities, if
more than 5% of its total assets will be invested in the
securities of any one issuer, except that up to 25% of the
Fund's total assets may be invested without regard to this
5% limitation;
(2) subject to the foregoing 25% exception, purchase more
than 10% of the outstanding voting securities of any issuer;
(3) invest 25% or more of its total assets in one or more
issuers conducting their principal business activities in
the same industry; and
(4) borrow money except for temporary purposes in amounts up
to one-third of the value of its total assets at the time of
such borrowing. Whenever borrowings exceed 5% of the Fund's
total assets, the Fund will not make any additional
investments.
These investment limitations are applied at the time investment
securities are purchased.
HOW TO PURCHASE, EXCHANGE AND REDEEM SHARES
Purchase of Shares -- General
Federated Securities Corp. (the "Distributor") has
established several procedures for purchasing Fund shares. Shares may be
purchased through SouthTrust Bank of Alabama, N.A., or its affiliated
and correspondent banks ("SouthTrust"), or Fund shares may be purchased
through a broker/dealer that has entered into a sales agreement with the
Distributor (a "SouthTrust Vulcan Funds Dealer"). SouthTrust or a
SouthTrust Vulcan Funds Dealer will be responsible for transmitting
purchase and redemption orders directly to the Distributor in a timely
manner. Orders may be placed by contacting the Fund at 1-800-843-8618.
Texas residents should purchase shares through Federated Securities
Corp. at 1-800-356-2805. Purchases will be effected at the net asset
value next determined after the purchase order is received in proper
form by the transfer agent and the custodian has federal funds available
immediately to it. SouthTrust (or a SouthTrust Vulcan Funds Dealer) will
normally be the holder of record of Fund shares and will reflect a
customer's beneficial ownership of shares in the customer's account
statements. Investors wishing to purchase shares of the Fund should
contact their SouthTrust account representative or a SouthTrust Vulcan
Funds Dealer.
The minimum initial investment in the Fund is $1,000. The
minimum subsequent investment is $50. With respect to investments made
in the Fund through a sweep program, initial investment minimums may be
modified under the relevant account agreement. Purchases may be effected
on business days when the Adviser, Distributor, and the custodian are
open for business. The Company reserves the right to reject any purchase
order. Additional account applications may be obtained by calling the
Fund at 1-800-843-8618. SouthTrust or a SouthTrust Vulcan Funds Dealer
may set different minimums for its customers.
Purchase of Shares -- Income Fund
Shares of the Fund are purchased at the net asset value per
share plus any applicable sales charge (the "Public Offering Price")
next determined on the day the purchase order is received. Net asset
value is determined at the close of regular trading hours of the New
York Stock Exchange (currently 4:00 p.m. Eastern time). Immediately
available funds in payment of the purchase price must be received by the
Fund's custodian no later than 4:00 p.m. (Eastern time) by the third
business day following receipt of the order. If federal funds are not
received by such date, the order will be canceled and notice thereof
will be given, and the institution placing the order will be responsible
for any loss to the Fund or its shareholders. Payment for orders which
are not received or accepted will be returned after prompt inquiry to
the sending institution.
Automatic Investment Program ("AIP"). Once an account has
been opened in the Fund, shareholders may add to their investment on a
monthly basis in a minimum amount of $50. Under the AIP, funds may be
automatically withdrawn from the shareholder's checking account, via
Automated Clearing House ("ACH") processing, through the shareholder's
financial institution. Such funds are invested in shares at the net
asset value next determined plus any applicable sales charges on the day
an order is effected by the transfer agent. An investor may apply for
participation in the AIP through SouthTrust or a SouthTrust Vulcan Funds
Dealer servicing his or her SouthTrust Vulcan account and by completing
the supplementary AIP authorization form. In order to participate in the
AIP, the investor must determine that his or her financial institution
is an ACH participant and will clear and process ACH transactions. The
AIP may be modified or terminated by a shareholder on 30-days' written
notice to SouthTrust, a SouthTrust Vulcan Funds Dealer, or by the Fund
at any time.
Sales Charge
The Public Offering Price of shares of the Fund equals the
Fund's net asset value per share plus any applicable sales charge. No
sales charge will be assessed on the reinvestment of distributions. The
following tables illustrate the applicable front-end sales charge at
various investment levels.
Sales Charge as Sales
Charge as
% of Offering % of Net Amount Dealer
Allowance as
Price Invested % of
Offering Price
$0 but less than $100,000 3.50% 3.63%
3.00%
$100,000 but less than $250,000 3.00%
3.09% 2.50%
$250,000 but less than $500,000 2.50%
2.56% 2.00%
$500,000 but less than $1,000,000 2.00%
2.04% 1.50%
$1,000,000 or more 0* 0% 0%
____________________________
* A redemption fee of 1% may be imposed on certain redemptions made
within one year of purchase. See "Redemption of Shares" -- "Redemption
Fee."
The Distributor will pay the appropriate dealer concession
to SouthTrust Vulcan Fund Dealers. Upon notice, the Distributor may also
elect to reallow a higher percentage of the sales charge stated above to
selected brokers and dealers for all sales made during a particular
period. From time to time, the Distributor will conduct sales programs
and contests that compensate SouthTrust Vulcan Funds Dealers with cash
or non-cash items, such as payments of certain expenses of qualified
SouthTrust Vulcan Funds Dealers and their spouses to attend
informational meetings about the Fund or other special events at
recreational facilities, or items of material value. In some instances,
these incentives will be made available only to SouthTrust Vulcan Funds
Dealers who have sold or may sell significant amounts of shares. The
cost of such compensation is borne by the Distributor and is not borne
by the Fund.
Reduced Sales Charges
The sales charge on purchases of the Fund may be reduced
through the following:
o right of accumulation;
o quantity discounts;
o letter of intent; and
o reinvestment privilege.
Right of Accumulation. Under the Right of Accumulation, the
current value of an investor's existing shares in the Portfolios may be
combined with the amount of the investor's current purchases in
determining the applicable sales charge. In order to receive the
cumulative quantity reduction, previous purchases of Fund shares must be
called to the attention of the Fund at the time of the current purchase.
Quantity Discounts. As shown on the prior page, larger
purchases reduce the sales charge paid. The Company will combine
purchases made on the same day by the investor, spouse and any children
under age 21 when calculating the sales charge.
Letter of Intent. If a shareholder intends to purchase at
least $100,000 of shares in the Fund over the next 13 months, the sales
charge may be reduced by signing a Letter of Intent to that effect. This
Letter of Intent includes a provision for a sales charge adjustment
depending on the amount actually purchased within the 13-month period
and a provision for the custodian to hold 3.50% of the total amount
intended to be purchased in escrow (in shares) until such purchase is
completed.
The shares held in escrow will be released at the
fulfillment of the Letter of Intent or at the end of the 13-month
period, whichever comes first. If the amount specified in the Letter of
Intent is not purchased, an appropriate number of escrowed shares may be
redeemed in order to realize the difference in the sales charge.
This Letter of Intent will not obligate the shareholder to
purchase shares, but if the shareholder does, each purchase during the
period will be at the sales charge applicable to the total amount
intended to be purchased. At the time a Letter of Intent is established,
current balances in accounts in any Fund, excluding money market
accounts, will be aggregated to provide a purchase credit towards
fulfillment of the Letter of Intent. Prior trade prices will not be
adjusted.
Reinvestment Privilege. Upon redemption of Fund shares, a
shareholder has a one-time right, to be exercised within 30 days, to
reinvest the redemption proceeds without any sales charge at the next
determined net asset value after receipt of the purchase order. The
shareholder must notify in writing SouthTrust or his or her SouthTrust
Vulcan Funds Dealer of the reinvestment in order to eliminate a sales
charge.
Miscellaneous. Reduced sales charges may be modified or
terminated at any time and are subject to confirmation of an investor's
holdings. For more information about reduced sales charges, an investor
should contact his or her SouthTrust account representative, a
SouthTrust Vulcan Funds Dealer or the Fund.
Sales Charge Waivers. The following classes of investors
may purchase shares of the Fund with no sales charge in the manner
described below: (1) officers, trustees, directors, employees and
retired employees of SouthTrust Corporation and its affiliates, and
employees of the transfer agent, Distributor or an authorized SouthTrust
Vulcan Funds Dealer (and spouses and children of the foregoing); (2)
investors for whom SouthTrust Corporation or one of its affiliates acts
in a fiduciary, advisory, custodial, agency or similar capacity (this
does not include self-directed Individual Retirement Accounts'
transactions executed by SouthTrust Securities, Inc.); and (3) investors
who purchase shares of the Fund through a 401(k) plan or a 403(b) plan
which by its terms permits purchases of shares.
Exchanges of Shares
The exchange privilege enables shareholders to exchange
shares of the Fund for shares in another Portfolio offered by the
Company. Shareholders may also exchange shares of the Fund for Class A
Shares (or Liberty Shares, as the case may be) in certain funds within
the Liberty Family of Funds ("Liberty Funds"), which funds are
distributed by Federated Securities Corp. The Liberty Funds with net
asset value exchange privileges with the Company are:
o International Income Fund;
o International Equity Fund;
o Liberty Equity Income Fund, Inc.;
o Liberty High Income Bond Fund, Inc.;
o Liberty Municipal Securities Fund, Inc.;
o Liberty Utility Fund, Inc.; and
o Tax-Free Instruments Trust.
Exchanging Shares. Shareholders who have purchased shares
of the Fund (including shares acquired through a reinvestment of a
dividend or distribution on such shares) may exchange those shares for
shares of another load Portfolio or a Liberty Fund identified previously
without paying an additional exchange or sales charge, except that this
privilege does not apply to exchanges into the Stock Fund until an
investor has owned shares in the Fund for 90 days. The 90-day holding
period does not apply to exchanges in which the investor obtained Fund
shares through a prior exchanges of shares of the Stock Fund.
Shareholders who exercise this exchange privilege must
exchange shares having a net asset value of at least $1,000. Prior to
any exchange, the shareholder must receive a copy of the current
prospectus of the Portfolio or Liberty Fund into which an exchange is to
be effected.
The exchange privilege is available to shareholders residing
in any state in which the Fund shares being acquired may legally be
sold. Upon receipt of proper instructions and all necessary supporting
documents, shares submitted for exchange will be redeemed at the next-
determined net asset value. Written exchange instructions may require a
signature guarantee (see "Redemption of Shares"). Exercise of this
privilege is treated as a sale for federal income tax purposes and,
depending on the circumstances, a short or long-term capital gain or
loss may be realized. The exchange privilege may be terminated at any
time upon 60 days' written notice to shareholders. A shareholder may
obtain further information on the exchange privilege by consulting the
shareholder's SouthTrust account representative, a SouthTrust Vulcan
Funds Dealer, or the Distributor.
Exchange-By-Telephone. An investor may telephone an
exchange request by calling the investor's SouthTrust account
representative or SouthTrust Vulcan Funds Dealer which is responsible
for transmitting such exchange request to the Distributor. Shares may be
exchanged by telephone only between fund accounts having identical
shareholder registrations. Telephone exchange instructions may be
recorded.
An investor may have difficulty in making exchanges by
telephone through a SouthTrust account representative or SouthTrust
Vulcan Funds Dealer during times of drastic economic or market changes.
If a shareholder cannot contact the shareholder's SouthTrust account
representative or SouthTrust Vulcan Funds Dealer by telephone, it is
recommended that an exchange request be made in writing and sent by
overnight mail.
An investor should be aware that a transaction initiated by
telephone and reasonably believed to be genuine by the above-named
parties may subject the investor to the risk of loss if such transaction
is subsequently found not to be genuine. If reasonable procedures are
not followed by the Fund, it may be liable for losses due to
unauthorized or fraudulent telephone instructions.
Shares held in certificate form cannot be exchanged by
telephone but must be forwarded to the transfer agent by the SouthTrust
account representative or a SouthTrust Vulcan Funds Dealer before an
exchange request can be processed.
Redemption of Shares
An investor may redeem Fund shares in accordance with
instructions and limitations relating to the customer's account at
SouthTrust or the investor's SouthTrust Vulcan Funds Dealer. These
procedures will vary in accordance with the type of account, and a
shareholder should contact the account representative to redeem shares.
A SouthTrust account representative or a SouthTrust Vulcan Funds Dealer
is responsible for transmitting redemption orders promptly to the Fund.
No charge for wiring redemption payments is imposed by the
Company, although SouthTrust or a SouthTrust Vulcan Funds Dealer may
charge customer accounts for services provided in connection with the
redemption of shares. Information relating to such redemption services
and charges, if any, may be obtained by customers from their account
representative. Except for certain redemptions made within one year from
the date of purchase, redemption orders are effected at the net asset
value per share next determined after receipt of the order by the
Distributor. See "Redemption Fee" below for a discussion of
circumstances in which a redemption fee may be assessed on redemptions.
With respect to the Fund, redemption proceeds are normally
remitted in federal funds to the redeeming institution within five
business days following receipt of the order.
A written redemption request must identify the account
number and be accompanied by share certificates, if any have been
issued, properly endorsed for transfer. A signature guarantee is
required with respect to written redemption requests. If shares to be
redeemed have a value of $5,000 or more, the signature(s) must be
guaranteed by an "eligible guarantor institution" as that term is
defined under Rule 17Ad-15 under the Securities Exchange Act of 1934.
Such institutions may include domestic banks, savings and loan
institutions, credit unions, brokers, dealers, securities exchanges and
associations and clearing agencies, which are approved by the transfer
agent. Additional documentation may be required if the redemption is
requested by a corporation, partnership, trust, fiduciary, executor or
administrator.
Redemption Fee
In order to discourage short-term investments in the Fund,
the Company charges a redemption fee in connection with redemptions of
shares held for less than one year which were purchased at net asset
value (investments in excess of $1,000,000). The charge is 1% of the
lesser of the value of the shares redeemed (exclusive of reinvested
dividends and capital gain distributions) or the total cost of such
shares. In determining if a charge applies and the amount of any such
charge, the first shares redeemed are those purchased with reinvested
dividends and capital gain distributions, followed by others held the
longest. The redemption fee is not assessed on (i) exchanges (except if
shares acquired by exchange were then redeemed with 12 months of the
initial purchase); (ii) redemptions made in connection with
distributions from qualified retirement plans, 403(b) plans or IRAs due
to death, disability or attainment of age 59 1/2; (iii) redemptions
resulting from the tax-free return of excess contributions to IRAs or
employee benefit plans; and (iv) redemptions through certain automatic
withdrawals. The 1% redemption fee is not a deferred sales charge but is
rather a means to offset the additional costs associated with short-term
investments in the Fund.
Automatic Withdrawal Plan ("AWP"). An AWP may be
established by a new or existing shareholder of the Fund if the value of
the shareholder's account (valued at the net asset value at the time of
the establishment of the AWP) equals $10,000 or more. Shareholders who
elect to establish an AWP may receive a monthly, quarterly, semi-annual,
or annual payment in a stated amount of not less than $50. Fund shares
will be redeemed as necessary to meet withdrawal payments. Withdrawals
may reduce principal and eventually deplete the shareholder's account.
If a shareholder desires to establish an AWP after opening an account, a
signature guarantee will be required. An AWP may be terminated by a
shareholder on 30-days' written notice to SouthTrust, a SouthTrust
Vulcan Funds Dealer, or by the Fund at any time.
Purchase of Shares at Net Asset Value. From time to time,
the Distributor may offer special concessions to enable investors to
purchase shares of a load Fund offered by the Company at net asset
value, without payment of a sales charge. To qualify for a net asset
value purchase, the investor must pay for such purchase with proceeds
from the redemption of shares of a non-affiliated mutual fund on which a
sales charge was paid. A qualifying purchase of shares must occur within
30 days of the prior redemption and must be evidenced by a confirmation
of the redemption transaction. At the time of purchase, SouthTrust or a
SouthTrust Vulcan Funds Dealer must notify the Distributor that the
purchase qualifies for a purchase at net asset value. Proceeds from the
redemption of shares on which no sales charges or commissions were paid
do not qualify for a purchase at net asset value.
DIVIDENDS AND DISTRIBUTIONS
Dividends from net investment income of the Fund are
declared and paid monthly. All dividends are paid in cash. The Fund's
net realized capital gains (including net short-term capital gains) are
distributed at least annually . Shareholders may elect to have their
dividends reinvested in additional shares of the Fund at the net asset
value of such shares on the payment date. Such election, or any
revocation thereof, must be communicated in writing by SouthTrust or a
SouthTrust Vulcan Funds Dealer on behalf of its customer to the transfer
agent and will become effective with respect to dividends paid after its
receipt. The crediting and payment of dividends will be in accordance
with the procedures governing the shareholder's account at SouthTrust or
the SouthTrust Vulcan Funds Dealer. Shareholders whose purchase orders
are received and executed by 12:00 noon (Eastern time) receive dividends
for that day. On the other hand, shareholders whose redemption orders
have been received by 12:00 noon (Eastern time) will not receive
dividends for that day, while shareholders whose redemption orders have
been received after 12:00 noon (Eastern time) will receive that day's
dividends. The Fund does not expect to realize net long-term capital
gains.
The Fund's expenses are deducted from the total income of
the Fund before dividends are declared and paid. These expenses include,
but are not limited to: fees paid to the Adviser and the administrator,
custodian and transfer agent; fees and expenses of officers and
Trustees; taxes; interest; legal and auditing fees; brokerage fees and
commissions; certain fees and expenses in registering and qualifying the
Fund and its shares for distribution under federal and state securities
laws; expenses of preparing prospectuses and statements of additional
information and of printing and distributing prospectuses and statements
of additional information to existing shareholders; the expense of
reports to shareholders, shareholders' meetings and proxy solicitations;
fidelity bond and trustees' and officers' liability insurance premiums;
and the expense of using independent pricing services and other expenses
which are not assumed by the administrator. Any general expenses of the
Company that are not readily identifiable as belonging to a particular
Portfolio will be allocated among all Portfolios by or under the
direction of the Trustees in a manner the Trustees determine to be fair
and equitable. The Adviser, administrator, custodian and transfer agent
may voluntarily waive all or a portion of their fees from time to time.
PRICING OF SHARES
The net asset value of shares in the Fund for purposes of
pricing purchase and redemption orders is determined once daily as of
the close of regular trading hours on the New York Stock Exchange or
4:00 p.m. (Eastern time) on days the New York Stock Exchange is closed.
Net asset value and pricing are determined on each day the New York
Stock Exchange and the Federal Reserve Bank of Philadelphia ("FRB") are
open for trading. Currently, the days on which the New York Stock
Exchange and/or the FRB are closed (other than weekends) are: New Year's
Day, Martin Luther King, Jr. Day, Presidents' Day, Good Friday, Memorial
Day (observed), Independence Day, Labor Day, Columbus Day (observed),
Veterans' Day, Thanksgiving Day, and Christmas Day. The Fund's net asset
value is calculated by adding the value of all securities and other
assets of the Fund, subtracting its liabilities and dividing the result
by the number of outstanding shares.
Portfolio securities which are traded on a recognized stock
exchange are valued at the last sales price on the securities exchange
on which such securities are primarily traded or at the last sale price
on the national securities market. Securities traded only on over-the-
counter markets are valued on the basis of closing over-the-counter bid
prices. Securities for which there were no transactions are valued at
the average of the current bid and asked prices. Restricted securities,
securities for which market quotations are not readily available, and
other assets are valued at fair value by the Adviser under the
supervision of the Trustees. Debt securities with remaining maturities
of 60 days or less at the time of purchase are valued on an amortized
cost basis (unless the Trustees determine that such basis does not
represent fair value at the time). Under this method, such securities
are valued initially at cost on the date of purchase. Thereafter, absent
unusual circumstances, the Fund assumes a constant proportionate
amortization of any discount or premium until maturity of the security.
MANAGEMENT OF THE FUNDS
Board of Trustees
The Company is managed under the direction of the Board of
Trustees. The Statement of Additional Information contains background
information and the name of each Trustee.
Investment Adviser
SouthTrust Bank of Alabama, N.A., a national banking
association, serves as the investment adviser for each of the Funds. The
Adviser, headquartered in Birmingham, Alabama, is a wholly-owned
subsidiary of SouthTrust Corporation, a publicly-held bank holding
company. The Adviser and SouthTrust Corporation have their principal
offices at 420 North 20th Street, Birmingham, Alabama 35203. The
Adviser's experience includes the management of various collective and
common investment funds and the provision of investment management
services to banks and thrift institutions, corporate and profit-sharing
trusts, municipal and state retirement funds, and individual investors.
As of June 1, 1995, the Adviser had approximately $1.8 billion in assets
under management. The Adviser has served as investment adviser to the
Company since its inception on March 4, 1992.
Subject to the supervision of the Trustees, the Adviser
provides overall investment management for the Fund, provides research
and credit analysis, is responsible for all purchases and sales of
portfolio securities, maintains books and records with respect to the
Fund's securities transactions and provides periodic and special reports
to the Trustees as requested. All investment decisions for the Fund
are made by an investment group.
For the advisory services provided and expenses assumed by
it, the Adviser is entitled to receive a fee from the Fund, computed
daily and payable monthly, at an annual rate .60%.
As part of its regular banking operations, SouthTrust Bank
of Alabama, N.A. may make loans to public companies. Thus, it may be
possible, from time to time, for the Fund to hold or acquire the
securities of issuers which are also lending clients of SouthTrust Bank
of Alabama, N.A. The lending relationship will not be a factor in the
selection of securities.
Both the Company and the Adviser have adopted strict codes
of ethics governing the conduct of all employees who manage the Fund and
its portfolio securities. These codes recognize that such persons owe a
fiduciary duty to the Fund's shareholders and must place the interests
of shareholders ahead of the employees' own interest. Among other
things, the codes: require preclearance and periodic reporting of
personal securities transactions; prohibit personal transactions in
securities being purchased or sold, or being considered for purchase or
sale, by the Fund; prohibit purchasing securities in initial public
offerings; and prohibit taking profits on securities held for less than
sixty days. Violations of the codes are subject to review by the Board
of Trustees, and could result in severe penalties.
Administrator, Custodian, and Transfer Agent
Federated Administrative Services, Federated Investors
Tower, Pittsburgh, Pennsylvania 15222-3779, a subsidiary of Federated
Investors, provides the Fund with certain administrative personnel and
services necessary to operate the Fund, such as legal and accounting
services. The administrator provides these at an annual rate as
specified below:
Maximum Average Daily Net Assets
Administrative Fee of the Company
.150 of 1% on the first $250
million
.125 of 1% on the next $250
million
.100 of 1% on the next $250 million
.075 of 1% on assets in excess of
$750 million
The administrative fee received during any fiscal year with
respect to the Fund shall be at least $100,000. The administrator may
voluntary waive a portion of its fee.
State Street Bank and Trust Company ("State Street"), whose
principal office is located in Boston, Massachusetts, serves as the
custodian of the Company's assets.
Federated Services Company, a subsidiary of Federated
Investors, is transfer agent and dividend disbursing agent for the
Company. It also provides certain accounting and recordkeeping services
with respect to the Fund's portfolio investments. The transfer agent,
which is a subsidiary of Federated Investors, has the same address as
the administrator and Distributor.
Distributor
Shares of the Fund are sold on a continuous basis for the
Company by Federated Securities Corp. It is a Pennsylvania corporation
organized on November 14, 1969, and is the distributor for a number of
investment companies. The Distributor may offer certain items of nominal
value from time to time to any shareholder or investor in connection
with the sale of Fund shares. The Distributor, which is a subsidiary of
Federated Investors, has the same address as the administrator and
transfer agent.
Distribution Plan. Under a distribution plan (the "Plan")
adopted in accordance with Securities and Exchange Commission ("SEC")
Rule 12b-1 under the Investment Company Act of 1940, as amended, the
Fund will pay to the Distributor an amount computed at an annual rate of
up to 0.25% of the average daily net asset value of the shares to
finance any activity which is principally intended to result in the sale
of shares subject to the Plan. The Distributor may select Financial
Institutions such as banks, fiduciaries, custodians for public funds,
investment advisers, and broker/dealers to provide sales support
services as agent for their clients or customers. Certain trust clients
of the Company, including ERISA plans, will not be affected by the Plan
because the Plan will not be activated unless and until a second,
"Trust" class of shares of the Fund (which would not have a Rule 12b-1
plan) is created and such trust clients' investments in the Fund are
converted to such Trust class.
The Fund's plan is a compensation type plan. As such, the
Fund makes no payments to the Distributor except as described above.
Therefore, the Fund does not pay for unreimbursed expenses of the
Distributor, including amounts expended by the Distributor in excess of
amounts received by it from the Fund, interest, carrying or other
financing charges in connection with excess amounts expended, or the
Distributor's overhead expenses. However, the Distributor may be able
to recover such amount or may earn a profit from future payments made by
the Fund under the Plan.
The Glass-Steagall Act prohibits a depository institution
(such as a commercial bank or a savings and loan association) from being
an underwriter or distributor of most securities. In the event the
Glass-Steagall Act is deemed to prohibit depository institutions from
acting in the capacities described above or should Congress relax
current restrictions on depository institutions, the Company's Trustees
will consider appropriate changes in the services.
State securities laws on this issue may differ from the
interpretations of federal law expressed herein and banks and financial
institutions may be required to register ads dealers pursuant to certain
states' laws.
Administrative Arrangements
The Distributor may select brokers, dealers and
administrators (including depository or other institutions such as
commercial banks and savings and loan associations) to provide
distribution and/or administrative services for which they will receive
fees from the Distributor based upon shares owned by their clients or
customers. These administrative services include distributing
prospectuses and other information, providing account assistance, and
communicating or facilitating purchases and redemptions of the Fund's
shares. The fees are calculated as a percentage of the average aggregate
net asset value of shareholder accounts held during the period for which
the brokers, dealers, and administrators provide services. Any fees paid
for these services by the Distributor will be reimbursed by the Adviser
and not the Fund.
Taxes
The Fund intends to qualify as a regulated investment
company under Subchapter M of the Internal Revenue Code of 1986, as
amended (the "Code"). Such qualification relieves the Fund of liability
for federal income taxes to the extent its earnings are distributed in
accordance with the Code.
Qualification as a regulated investment company under the
Code for a taxable year requires, among other things, that the Fund
distribute to its shareholders an amount equal to at least 90% of its
investment company income (if any) net of certain deductions for such
year. In general, the Fund's investment company income will be its
taxable income (including dividends, interest, and short-term capital
gains) subject to certain adjustments and excluding the excess of any
net long-term capital gain for the taxable year over the net short-term
capital loss, if any, for such year. The Fund intends to distribute
substantially all of its investment company income each taxable year.
Such distributions will be taxable as ordinary income to the Fund's
shareholders who are not currently exempt from federal income taxes,
whether such income is received in cash or reinvested in additional
shares. (Federal income taxes for distributions to an IRA or qualified
retirement plan are deferred under the Code.)
Substantially all of Fund's net realized long-term capital
gains, if any, will be distributed at least annually to the Fund's
shareholders. The Fund will generally have no tax liability with respect
to such gains, and the distributions will be taxable to such
shareholders who are not currently exempt from federal income taxes as
long-term capital gains, regardless of how long the shareholders have
held Fund shares and whether such gains are received in cash or
reinvested in additional shares.
Dividends declared in October, November, or December of any year payable
to shareholders of record on a specified date in such months will be
deemed to have been received by shareholders and paid by the Fund on
December 31 of such year if such dividends are actually paid during
January of the following year.
Before purchasing shares in the Fund, the impact of
dividends or distributions which are expected to be declared or have
been declared, but not paid, should be carefully considered. Any
dividend or distribution declared shortly after a purchase of such
shares prior to the record date will have the effect of reducing the per
share net asset value by the per share amount of the dividend or
distribution. All or a portion of such dividend or distribution,
although in effect a return of capital, may be subject to tax.
A taxable gain or loss may be realized by a holder of shares
of the Fund upon the redemption or transfer of Fund shares, depending
upon the tax basis of such shares and their price at the time of
redemption or transfer.
Distributions of net investment income may be taxable to
shareholders as dividend income under state or local laws even though a
substantial portion of such distributions may be derived from interest
on U.S. government obligations, which, if realized directly, would be
exempt from such income taxes. Shareholders should consult their tax
advisers concerning the application of state and local taxes.
On an annual basis, the Company will send written notices to
record owners of shares regarding the federal tax status of
distributions made by the Fund.
Since this is not an exhaustive discussion of applicable tax
consequences, investors should contact their tax advisers concerning
investments in the Fund.
Description of Shares
The Company was organized as a Massachusetts business trust
on March 4, 1992, and is registered under the 1940 Act as an open-end
management investment company. Effective June 30, 1993, the Company
changed its name from 'Vulcan Funds' to 'SouthTrust Vulcan Funds.' The
Master Trust Agreement authorizes the Trustees to classify and
reclassify any unissued shares into one or more classes of shares.
Pursuant to such authority, the Trustees have authorized the issuance of
an unlimited number of shares of beneficial interest in the Company,
representing interests in the Fund, which is classified as a
diversified investment company under the 1940 Act.
Each share of the Fund has a par value of $.001, represents
an equal proportionate interest in the particular Fund involved and is
entitled to such dividends and distributions earned on the Fund's assets
as are declared in the discretion of the Trustees.
The Company's shareholders are entitled to one vote for each
full share held and proportionate fractional votes for fractional shares
held, and will vote in the aggregate and not by Portfolio, except where
otherwise required by law or when the Trustees determine that the matter
to be voted upon affects only the interests of the shareholders of a
particular Portfolio. Under Massachusetts law and the Company's Master
Trust Agreement, the Company is not required and does not currently
intend to hold annual meetings of shareholders for the election of
Trustees except as required under the 1940 Act. The Trustees are
required to call a meeting of shareholders upon the written request of
at least 10% of the Company's outstanding shares. In addition, to the
extent required by law, the Company will assist in shareholder
communications in connection with such a meeting. For a further
discussion of the voting rights of shareholders, see "Additional
Information Concerning Shares" in the Statement of Additional
Information.
Total Returns and Yields
Total Return. From time to time the Fund may advertise its
average annual total return over various periods of time. Such total
return figures show the average percentage change in value of an
investment in the Fund from the beginning date of the measuring period
to the end of the measuring period. These figures reflect changes in the
price of the Fund's shares and assume that any income dividends and/or
capital gain distributions made by the Fund during the period were
reinvested in shares of the Fund. When considering average total return
figures for periods longer than one year, it is important to note that
the relevant Fund's average annual total return for any one year in the
period might have been greater or less than the average for the entire
period. The Fund may also use aggregate total return figures for various
periods representing the cumulative share prices and assuming
reinvestment of dividends and distributions. Aggregate total returns may
be shown by means of schedules, charts or graphs and may indicate sub-
totals of the various components of total return (i.e., change in value
of initial investment, income dividends and capital gains
distributions).
Yield. From time to time, the Fund may quote a 30-day yield
in advertisements or in communications to shareholders. The yield of the
Fund refers to the income generated by an investment in the Fund over a
30-day period (which period will be stated in the advertisement). This
income is then "annualized." That is, the amount of income generated by
the investment during the 30-day period is assumed to be earned and
reinvested at a constant rate and compounded semi-annually. The
annualized income is then shown as a percentage of the investment.
Quotations of yield and total return of the Fund represent
the Fund's past performance and should not be considered as
representative of future results. Any account fees charged by SouthTrust
or a SouthTrust Vulcan Funds Dealer will not be included in the Fund's
calculations of yield and total return. Such fees, if any, will reduce
the investor's net return on an investment. The methods used to compute
each performance quotation are described in more detail in the Statement
of Additional Information.
No person has been authorized to give
any information or to make any SouthTrust
representations not contained in this Vulcan
Prospectus, or in the Company's Funds
Statement of Additional Information
incorporated herein by reference, in
connection with the offerng made by this
Prospectus and, if given or made, such
information or representation must not
be relied upon as having been authorized
by the Company or its Distributor. The
Prospectus does not constitute an
offering by the company or by the
Distributor in any jurisdiction in which
such offering may not lawfully be made.
Table of Contents
Page
Expense Sunnary 2
INCOME FUND
Investment Objectives and Policies of the Fund 3
Investment Activities 3
Average Portfolio Maturity 10
Portfolio Transactions and Turnover 10
Investment Limitations 10
How to Purchase, Exchange and Redeem Shares 11
Purchase of Shares -- General 11
Purchase of Shares -- Income Fund 11
Sales Charge 12
Reduced Sales Charges 13
Exchanges of Shares 14
Redemption of Shares 15
Redemption Fee 16
Dividends and Distributions 17
Pricing of Shares 17
Management of the Funds 18
Board of Trustees 18
Investment Adviser 18
Administrator, Custodian, and Transfer Agent 19
Distributor 19
Administrative Arrangements 20
Taxes 20
Description of Shares 21
Total Returns and Yields 22
. Investment Adviser:
SouthTrust Bank
of Alabama, N.A.
G00204-03 (9/95)
SUBJECT TO COMPLETION, PRELIMINARY PROSPECTUS DATED SEPTEMBER 29, 1995
INFORMATION CONTAINED HEREIN IS SUBJECT TO COMPLETION OR AMENDMENT. A
REGISTRATION STATEMENT RELATING TO THESE SECURITIES HAS BEEN FILED WITH
THE SECURITIES AND EXCHANGE COMMISSION. THESE SECURITIES MAY NOT BE
SOLD NOR MAY OFFERS TO BUY BE ACCEPTED PRIOR TO THE TIME THE
REGISTRATION STATEMENT BECOMES EFFECTIVE. THIS STATEMENT OF ADDITIONAL
INFORMATION SHALL NOT CONSTITUTE AN OFFER TO SELL OR THE SOLICITATION OF
AN OFFER TO BUY NOR SHALL THERE BE ANY SALE OF THESE SECURITIES IN ANY
STATE IN WHICH SUCH OFFER, SOLICITATION OR SALE WOULD BE UNLAWFUL PRIOR
TO REGISTRATION OR QUALIFICATION UNDER THE SECURITIES LAWS OF ANY SUCH
STATE.
SouthTrust Vulcan Income Fund
(An Investment Portfolio of SouthTrust Vulcan Funds)
STATEMENT OF ADDITIONAL INFORMATION
This Statement of Additional Information provides supplementary
information pertaining to the SouthTrust Vulcan Income Fund (the
"Fund"), an investment portfolio of SouthTrust Vulcan Funds (the
"Company"). This Statement of Additional Information is not a
prospectus, and should be read only in conjunction with the
Company's Prospectus for the Fund dated December __, 1995. A copy
of the Prospectus may be obtained without charge by calling the
Company at 1-800-843-8618. This Statement of Additional
Information dated December __, 1995, although not in itself a
Prospectus, is incorporated by reference in its entirety into the
Fund's Prospectus.
TABLE OF CONTENTS
Page
General 1
Additional Information on Fund Investments 1
Additional Investment Limitations 3
Trustees and Officers 5
Investment Advisory and Other Service Arrangements 8
Portfolio Transactions 8
Purchase, Exchange and Redemption Information 10
Net Asset Value 11
Performance Information 11
Taxes 12
Additional Information Concerning Shares 14
Independent Public Accountants 14
Miscellaneous 14
Appendix A-1
No person has been authorized to give any information or to make
any representations not contained in this Statement of Additional
Information or in the Prospectus in connection with the offering
made by the Prospectus and, if given or made, such information or
representations must not be relied upon as having been authorized
by the Company or the Distributor. The Prospectus does not
constitute an offering by the Company or by the Distributor in any
jurisdiction in which such offering may not lawfully be made.
GENERAL
The Company is an open-end, management investment company
currently offering shares in four diversified investment portfolios. The
Company was organized on March 4, 1992. On June 30, 1993, the name of
the Company changed from "Vulcan Funds" to "SouthTrust Vulcan Funds."
As stated in the Prospectus, the investment adviser (the
"Adviser") of the Fund is SouthTrust Bank of Alabama, N.A. Capitalized
terms used herein and not otherwise defined have the same meanings as
are given to them in the Prospectus.
ADDITIONAL INFORMATION ON FUND INVESTMENTS
The following supplements the information contained in the
Prospectus concerning the investment objectives and policies of the
Fund. A description of applicable credit ratings is set forth in
Appendix A hereto.
Repurchase Agreements. The Fund may enter into repurchase
agreements with financial institutions, such as banks and non-bank
dealers of U.S. government securities that are listed on the Federal
Reserve Bank of New York's list of reporting dealers. The Adviser will
continuously monitor the creditworthiness of the seller under a
repurchase agreement, and will require the seller to maintain during the
term of the agreement the value of the securities subject thereto at not
less than the repurchase price. The repurchase price under the
repurchase agreements generally equals the price paid by the Fund plus
interest negotiated on the basis of current short-term rates (which may
be more or less than the rate on the securities underlying the
repurchase agreement).
Reverse Repurchase Agreements. Reverse repurchase agreements
involve the sale of securities held by the Fund pursuant to the Fund's
agreement to repurchase the securities at an agreed upon price, date and
rate of interest. Such agreements are considered to be borrowings under
the Investment Company Act of 1940, as amended (the "1940 Act"), and may
be entered into only for temporary or emergency purposes. While a
reverse repurchase agreement is outstanding, the Fund will maintain in a
segregated account cash, U.S. government securities or other liquid high-
grade debt securities of an amount at least equal to the market value of
the securities, plus accrued interest, subject to the agreement.
Variable and Floating Rate Instruments. Debt instruments may
be structured to have variable or floating interest rates. Variable and
floating rate obligations purchased by the Fund may have stated
maturities in excess of the Fund's maturity limitation if the Fund can
demand payment of the principal of the instrument at least once every
thirteen months on not more than thirty days' notice (this demand
feature is not required if the instrument is guaranteed by the U.S.
government or an agency thereof). These instruments may include variable
amount master demand notes that permit the amount of indebtedness to
vary in addition to providing for periodic adjustments in the interest
rates. The Adviser will consider the earning power, cash flows and other
liquidity ratios of the issuers and guarantors of such instruments and,
if the instrument is subject to a demand feature, will continuously
monitor their financial ability to meet payment on demand. Where
necessary to ensure that a variable or floating rate instrument is
equivalent to the quality standards applicable to the Fund, the issuer's
obligation to pay the principal of the instrument will be backed by an
unconditional bank letter or line of credit, guarantee or commitment to
lend.
In determining weighted average portfolio maturity of the
Fund, an instrument will usually be deemed to have a maturity equal to
the longer of the period remaining until the next interest rate
adjustment or the time the Fund involved can recover payment of
principal as specified in the instrument. Variable rate U.S. government
obligations held by the Fund, however, will be deemed to have maturities
equal to the period remaining until the next interest rate adjustment.
The absence of an active secondary market for certain
variable and floating rate notes could make it difficult to dispose of
the instruments, and the Fund could suffer a loss if the issuer
defaulted or during periods that the Fund is not entitled to exercise
its demand rights.
Variable and floating rate instruments held by the Fund will
be subject to the Fund's 15% limitation on illiquid investments when the
Fund may not demand payment of the principal amount within seven days
absent a reliable trading market.
Money Market Instruments. The Fund may invest in money
market instruments such as:
_ instruments of domestic and foreign banks and savings and loans if
they have capital, surplus, and undivided profits of over $l00,000,000
or if the principal amount of the instrument is federally insured;
_ commercial paper rated, at the time of purchase, not less than A-1 by
Standard & Poor's Ratings Group ("S&P"), Prime-1 by Moody's Investors
Service Inc. ("Moody's") or F-1 by Fitch Investors Service, Inc.
("Fitch"), and unrated commercial paper that is deemed by the Fund's
investment adviser to be of comparable quality to securities having such
ratings;
_ time and savings deposits whose accounts are insured by the Bank
Insurance Fund ("BIF") which is administered by the Federal Deposit
Insurance Corporation ("FDIC") or in institutions whose accounts are
insured by the Savings Association Insurance Fund ("SAIF"), which is
also administered by the FDIC, including certificates of deposit issued
by and other time deposits in foreign branches of BIF-insured banks; or
_ bankers' acceptances.
When-Issued Purchases and Forward Commitments (Delayed-
Delivery). When-issued purchases and forward commitments (delayed-
delivery) are commitments by the Fund to purchase or sell particular
securities with payment and delivery to occur at a future date (normally
within thirty days). These transactions permit the Fund to lock-in a
price or yield on a security, regardless of future changes in interest
rates.
When the Fund agrees to purchase securities on a when-issued
or forward commitment basis, the Fund will set aside cash or liquid
portfolio securities equal to the amount of the commitment in a separate
account. Normally, the custodian will set aside portfolio securities to
satisfy a purchase commitment, and in such a case the Fund may be
required subsequently to place additional assets in the separate account
in order to ensure that the value of the account remains equal to the
amount of the Fund's commitments. It may be expected that the market
value of the Fund's net assets will fluctuate to a greater degree when
it sets aside portfolio securities to cover such purchase commitments
than when it sets aside cash. Because the Fund's liquidity and ability
to manage its portfolio might be affected when it sets aside cash or
portfolio securities to cover such purchase commitments, the Adviser
expects that its commitments to purchase when-issued securities and
forward commitments will not exceed 25% of the value of the Fund's total
assets absent unusual market conditions.
The Fund will purchase securities on a when-issued or
forward commitment basis only with the intention of completing the
transaction and actually purchasing the securities. If deemed advisable
as a matter of investment strategy, however, the Fund may dispose of or
renegotiate a commitment after it is entered into, and may sell
securities it has committed to purchase before those securities are
delivered to the Fund on the settlement date. In these cases the Fund
may realize a taxable capital gain or loss.
When the Fund engages in when-issued and forward commitment
transactions, it relies on the other party to consummate the trade.
Failure of such party to do so may result in the Fund's incurring a loss
or missing an opportunity to obtain a price considered to be
advantageous.
The market value of the securities underlying a when-issued
purchase or a forward commitment to purchase securities, and any
subsequent fluctuations in their market value, are taken into account
when determining the market value of the Fund starting on the day the
Fund agrees to purchase the securities. The Fund does not earn interest
on the securities it has committed to purchase until they are paid for
and delivered on the settlement date.
Mortgage-Related Securities. There are a number of important
differences among the agencies and instrumentalities of the U.S.
government that issue mortgage-related securities and among the
securities that they issue. Mortgage-related securities guaranteed by
the Government National Mortgage Association ("GNMA") include GNMA
Mortgage Pass-Through Certificates (also known as "Ginnie Maes"), which
are guaranteed as to the timely payment of principal and interest by
GNMA and such guarantee is backed by the full faith and credit of the
United States. GNMA is a wholly-owned U.S. government corporation within
the Department of Housing and Urban Development. Ginnie Maes are also
supported by the authority of GNMA to borrow funds from the U.S.
Treasury to make payments under its guarantee. Mortgage-related
securities issued by the Federal National Mortgage Association ("FNMA")
include FNMA Guaranteed Mortgage Pass-Through Certificates (also known
as "Fannie Maes") which are solely the obligations of FNMA and are not
backed by or entitled to the full faith and credit of the United States,
but are supported by the right of the issuer to borrow from the U.S.
Treasury. FNMA is a government-sponsored organization owned entirely by
private stockholders. Fannie Maes are guaranteed as to timely payment of
the principal and interest by FNMA. Mortgage-related securities issued
by the Federal Home Loan Mortgage Corporation ("FHLMC") include FHLMC
Mortgage Participation Certificates (also known as "Freddie Macs" or
"PCs"). FHLMC is a corporate instrumentality of the United States,
created pursuant to an Act of Congress, which is owned entirely by the
Federal Home Loan Banks. Freddie Macs are not guaranteed by the United
States or by any Federal Home Loan Banks and do not constitute a debt or
obligation of the United States or of any Federal Home Loan Bank.
Freddie Macs entitle the holder to timely payment of interest, which is
guaranteed by the FHLMC. FHLMC guarantees either ultimate collection or
timely payment of all principal payments on the underlying mortgage
loans. When FHLMC does not guarantee timely payment of principal, FHLMC
may remit the amount due on account of its guarantee of ultimate payment
of principal at any time after default on an underlying mortgage, but in
no event later than one year after it becomes payable.
Investment Companies. The Fund currently intends to limit
investments in securities issued by other investment companies so that,
as determined immediately after a purchase of such securities is made:
(i) not more than 5% of the value of the Fund's total assets will be
invested in the securities of any one investment company; (ii) not more
than 10% of the value of the Fund's total assets will be invested in the
aggregate in securities of investment companies as a group; and (iii)
not more than 3% of the outstanding voting stock of any one investment
company will be owned by the Fund or by the Company as a whole.
Lending of Portfolio Securities. The Fund may lend
securities from its portfolio to brokers, dealers and other financial
organizations. Such loans, if and when made, may not exceed 20% of the
Fund's total assets, taken at value. The Fund may not lend its portfolio
securities to the Adviser or its affiliates without specific
authorization from the Securities and Exchange Commission (the "SEC").
Loans of portfolio securities by the Fund will be collateralized by
cash, letters of credit or securities issued or guaranteed by the U.S.
government or its agencies which are maintained at all times in an
amount equal to at least 100% of the current market value of the loaned
securities. From time to time, the Fund may return a part of the
interest earned from the investment of collateral received for
securities loaned to the borrower and/or a third party, which is
unaffiliated with the Fund or with the Adviser, and which is acting as a
"finder."
In lending its portfolio securities, the Fund can increase
its income by continuing to receive interest on the loaned securities as
well as by either investing the cash collateral in short-term
instruments or obtaining yield in the form of interest paid by the
borrower when government securities are used as collateral. Requirements
of the SEC, which may be subject to future modifications, currently
provide that the following conditions must be met whenever portfolio
securities are loaned: (a) the Fund must receive at least 100% cash
collateral or equivalent securities from the borrower; (b) the borrower
must increase such collateral whenever the market value of the
securities rises above the level of such collateral; (c) the Fund must
be able to terminate the loan at any time; (d) the Fund must receive
reasonable interest on the loan, as well as an amount equivalent to any
dividends, interest or other distributions on the loaned securities, and
any increase in market value; (e) the Fund may pay only reasonable
custodian fees in connection with the loan; and (f) voting rights on the
loaned securities may pass to the borrower; however, if a material event
adversely affecting the investment occurs, the Trustees must terminate
the loan and regain the right to vote the securities. The risks in
lending portfolio securities, like those associated with other
extensions of secured credit, consist of: possible declines in value of
collateral, possible delays in receiving additional collateral or in the
recovery of loaned securities or expenses of enforcing the Fund's
rights. Loans will be made to firms deemed by the Adviser to be of good
standing and will not be made unless, in the judgment of the Adviser,
the consideration to be earned from such loans would justify the risk.
Yields and Ratings. The yields on certain obligations,
including the money market instruments in which the Fund may invest
(such as commercial paper and bank obligations), are dependent on a
variety of factors, including general money market conditions,
conditions in the particular market for the obligation, the financial
condition of the issuer, the size of the offering, the maturity of the
obligation and the ratings of the issue. The ratings of Standard &
Poor's Ratings Group, Moody's Investors Service, Inc., Duff & Phelps
Credit Rating Co., and other nationally recognized statistical rating
organizations ("NRSROs") represent their respective opinions as to the
quality of the obligations they undertake to rate. Ratings, however, are
general and are not absolute standards of quality. Consequently,
obligations with the same rating, maturity and interest rate may have
different market prices..
Other. It is possible that unregistered securities purchased
by the Fund in reliance upon Rule 144A under the Securities Act of 1933
could have the effect of increasing the level of the Fund's illiquidity
to the extent that qualified institutional buyers become, for a period,
uninterested in purchasing these securities. To comply with restrictions
of certain states, the Fund will limit their investments in restricted
securities to no more than 5% of their respective total assets. (If
state requirements change, this restriction may be revised without
shareholder notification.)
ADDITIONAL INVESTMENT LIMITATIONS
In addition to the fundamental investment limitations
disclosed in the Prospectus, the Fund is subject to the investment
limitations enumerated in this sub-section which may be changed with
respect to a particular Fund only by a vote of the holders of a majority
of such Fund's outstanding shares as defined under "Miscellaneous--
Shareholder Approvals."
The Fund may not:
1. Purchase or sell real estate, except that the Fund may
purchase securities of issuers which deal in real
estate and may purchase securities which are secured
by interests in real estate.
2. Acquire any other investment company or investment
company security except in connection with a merger,
consolidation, reorganization or acquisition of assets
or where otherwise permitted by the 1940 Act.
3. Act as an underwriter of securities, except to the
extent that it may be deemed an underwriter within the
meaning of the Securities Act of 1933 on disposition
of securities acquired subject to legal or contractual
restrictions on resale.
4. Write or sell put options, call options, straddles,
spreads, or any combination thereof, except for
transactions in options on securities, securities
indices, futures contracts, options on futures
contracts and transactions in securities on a when-
issued or forward commitment basis, and except that a
non-money market fund may enter into forward foreign
currency contracts and options thereon in accordance
with its investment objectives and policies.
5. Purchase securities of companies for the purpose of
exercising control.
6. Purchase securities on margin, make short sales of
securities or maintain a short position, except that
(a) this investment limitation shall not apply to the
Fund's transactions in futures contracts and related
options, the Fund's sale of securities short against
the box or the Fund's transactions in securities on a
when-issued or forward commitment basis, and (b) the
Fund may obtain short-term credit as may be necessary
for the clearance of purchases and sales of portfolio
securities.
7. Purchase or sell commodity contracts, or invest in
oil, gas or mineral exploration or development
programs, except that the Fund may, to the extent
appropriate to its investment policies, purchase
publicly traded securities of companies engaging in
whole or in part in such activities, may enter into
futures contracts and related options, and may engage
in transactions in securities on a when-issued or
forward commitment basis, and except that a non-money
market fund may enter into forward foreign currency
contracts and options thereon in accordance with its
investment objectives and policies.
8. Make loans, except that the Fund may purchase and hold
debt instruments (whether such instruments are part of
a public offering or privately negotiated), may lend
portfolio securities and enter into repurchase
agreements in accordance with its investment objective
and policies.
In addition, the investment limitations listed below are
summarized in the Prospectus and are set forth below in their entirety.
The Fund may not:
1. Purchase securities of any one issuer other than
securities issued or guaranteed by the U.S.
government, its agencies or instrumentalities or
certificates of deposit for any such securities if
more than 5% of the value of the Fund's total assets,
taken at current value, would be invested in the
securities of such issuer, or more than 10% of the
issuer's outstanding voting securities would be owned
by the Fund or the Company, except that up to 25% of
the value of the Fund's total assets, taken at current
value, may be invested without regard to these
limitations. For purposes of this limitation, a
security is considered to be issued by the entity (or
entities) whose assets and revenues back the security.
A guarantee of a security is not deemed to be a
security issued by the guarantor when the value of all
securities issued and guaranteed by the guarantor, and
owned by the Fund, does not exceed 10% of the value of
the Fund's total assets.
2. Borrow money or issue senior securities except that
the Fund may borrow from banks and enter into reverse
repurchase agreements for temporary purposes in
amounts up to one-third of the value of its total
assets at the time of such borrowing; or mortgage,
pledge or hypothecate any assets, except in connection
with any such borrowing and then in amounts not in
excess of one-third of the value of the Fund's total
assets at the time of such borrowing. The Fund will
not purchase securities while its aggregate borrowings
including reverse repurchase agreements and borrowing
from banks in excess of 5% of its total assets are
outstanding. Securities held in escrow or separate
accounts in connection with the Fund's investment
practices are not deemed to be pledged for purposes of
this limitation.
3. Purchase any securities which would cause 25% or more
of the value of the Fund's total assets at the time of
purchase to be invested in the securities of one or
more issuers conducting their principal business
activities in the same industry, provided that (a)
there is no limitation with respect to (i) instruments
that are issued (as defined in Investment Limitation
No. 1 above) or guaranteed by the United States, any
state, territory or possession of the United States,
the District of Columbia or any of their authorities,
agencies, instrumentalities or political subdivisions
and (ii) repurchase agreements secured by the
instruments described in clause (i); (b) wholly-owned
finance companies will be considered to be in the
industries of their parents if their activities are
primarily related to financing the activities of the
parents; and (c) utilities will be divided according
to their services (for example, gas, gas transmission,
electric and gas, electric and telephone will each be
considered a separate industry).
If a percentage limitation is satisfied at the time of
investment, a later increase or decrease in such percentage resulting
from a change in the value of the Fund's investments will not constitute
a violation of such limitation, except that any borrowing by the Fund
that exceeds the fundamental investment limitations stated above must be
reduced to meet such limitations within the period required by the 1940
Act (currently three days). Otherwise, the Fund may continue to hold a
security even though it causes the Fund to exceed a percentage
limitation because of fluctuation in the value of the Fund's assets.
In order to permit the sale of shares in certain states, the
Company may make commitments more restrictive than the investment
policies and limitations described above. To comply with restrictions of
certain states, the Fund will not: invest more than 5% of the value of
their respective total assets in portfolio instruments of unseasoned
issuers, including their predecessors, that have been in operation for
less than three years; invest in real estate limited partnerships. If
state requirements change, these restrictions may be revised without
shareholder notification.
TRUSTEES AND OFFICERS
The Trustees and Executive Officers of the Company, and
their business addresses, birthdates, and principal occupations during
the past five years, are:
*William O. Vann
Box 757
Birmingham, AL 35201
Birthdate: January 28, 1942
Trustee and Chairman of the Board
President and Chief Executive Officer, Young & Vann Supply Co. (since
1987); Partner, B &B Investments; Trustee and Past Chairman, The
Childrens' Hospital of Alabama.
Edward C. Gonzales
Federated Investors Tower
Pittsburgh, PA 15222
Birthdate: October 22, 1930
President and Treasurer
Vice President, Treasurer, and Trustee, Federated Investors; Vice
President and Treasurer, Federated Advisers, Federated Management,
Federated Research, Federated Research Corp., and Passport Research,
Ltd.; Executive Vice President, Treasurer, and Director, Federated
Securities Corp.; Trustee, Federated Services Company and Federated
Shareholder Services; Chairman, Treasurer, and Director, Federated
Administrative Services; Trustee or Director and Vice President and
Treasurer of other funds distributed by Federated Securities Corp.
C. Christine Thompson
Federated Investors Tower
Pittsburgh, PA 15222
Birthdate: September 1, 1957
Vice President and Assistant Treasurer
Vice President, Federated Administrative Services; Vice President and
Assistant Treasurer of other funds distributed by Federated Securities
Corp.
Peter J. Germain
Federated Investors Tower
Pittsburgh, PA 15222
Birthdate: September 3, 1959
Secretary
Senior Corporate Counsel, Federated Investors
Thomas L. Merrill, Sr.
210 Inverness Center Dr.
P.O. Box 10264
Birmingham, AL 35242
Birthdate: October 27, 1925
Trustee
Chief Executive Officer, Vice Chairman and Director, Altec Industries,
Inc.; Director, Walker Companies; formerly, President, Altec Industries,
Inc. (1990-1993) and Chairman, Vantage Consulting (until 1989).
Charles G. Brown, III
P.O. Box 170100
Birmingham, AL 35217
Birthdate: November 27, 1953
Trustee
President, Tubular Products Company (since 1985); Managing Partner, Red
Hollow Partnership.
Russell W. Chambliss
Mason Corporation
P.O. Box 59226
Birmingham, AL 35259
Birthdate: December 26, 1951
Trustee
President (since 1989), Executive Vice President (1988), and Vice
President of Sales and Marketing (1984-1988), Mason Corporation.
D. Riley Stuart
P.O. Box 1028
Birmingham, AL 35201
Birthdate: November 27, 1927
Trustee
Chairman and Chief Executive Officer, Brice Building Company, Inc.
* This Trustee is deemed to be an "interested person" of the
Company as defined in the Investment Company Act of 1940, as
amended.
As of the date of this Statement of Additional Information,
the Trustees and Officers of the Company, as a group, owned less than 1%
of the outstanding shares of any Fund.
Trustees Compensation
AGGREGATE
NAME , COMPENSATION
POSITION WITH FROM
COMPANY COMPANY*#
William O. Vann, $4,980
Trustee and Chairman of
the Board
Thomas L. Merrill, Sr. $4,980
Trustee
Charles G. Brown, III $4,980
Trustee
Russell W. Chambliss $4,980
Trustee
D. Riley Stuart $4,980
Trustee
*Information is furnished for the fiscal year ended April 30, 1995. The
Company is the only investment company in the Fund Complex.
#The aggregate compensation is provided for the Company which is
comprised of four portfolios.
Shareholder and Trustee Liability. Under Massachusetts law,
shareholders of a business trust may, under certain circumstances, be
held personally liable as partners for the obligations of the trust.
However, the Company's Master Trust Agreement provides that shareholders
shall not be subject to any personal liability in connection with the
assets of the Company for the acts or obligations of the Company, and
that every note, bond, contract, order, or other undertaking made by the
Company shall contain a provision to the effect that the shareholders
are not personally liable thereunder. The Master Trust Agreement
provides for indemnification out of the trust property of any
shareholder held personally liable solely by reason of the investor
being or having been a shareholder and not because of the shareholder's
acts or omissions or some other reason. The Master Trust Agreement also
provides that the Company shall, upon request, assume the defense of any
claim made against any shareholder for any act or obligation of the
Company, and shall satisfy any judgment thereon. Thus, the risk of a
shareholder's incurring financial loss on account of shareholder
liability is limited to circumstances in which the Company itself would
be unable to meet its obligations.
The Master Trust Agreement further provides that all persons
having any claim against the Trustees or the Company shall look solely
to the trust property for payment; that no Trustee of the Company shall
be personally liable for or on account of any contract, debt, tort,
claim, damage, judgment, or decree arising out of or connected with the
administration or preservation of the trust property or the conduct of
any business of the Company; and that no Trustee shall be personally
liable to any person for any action or failure to act except by reason
of the Trustee's own bad faith, willful misfeasance, gross negligence or
reckless disregard of the Trustee's duties as a Trustee. With the
exception stated, the Master Trust Agreement provides that a Trustee is
entitled to be indemnified against all liabilities and expenses
reasonably incurred by the Trustee in connection with the defense or
disposition of any proceeding in which the Trustee may be involved or
with which the Trustee may be threatened by reason of being or having
been a Trustee, and that the Company will indemnify Officers of the
Company to the same extent that Trustees are entitled to
indemnification.
INVESTMENT ADVISORY AND OTHER SERVICE ARRANGEMENTS
Advisory Agreement. The advisory services provided by the
Adviser pursuant to an advisory agreement (the "Advisory Agreement")
between it and the Company, as well as the fees payable by the Company
to the Adviser for such services, are described in the Prospectus.
If the total expenses borne by the Fund in any fiscal year
exceed the expense limitations imposed by applicable state securities
regulations, the Adviser will bear the amount of such excess to the
extent required by such regulations in proportion to the fees otherwise
payable to it with respect to the Fund for such year. Such amount borne
will be limited to the amount of the fees paid to it for the applicable
period with respect to the Fund. As of the date of this Statement of
Additional Information, the most restrictive expense limitation
applicable to the Company limits its aggregate annual expenses,
including management and advisory fees but excluding interest, taxes,
brokerage commissions, and certain other expenses, to 2 1/2% of the
first $30 million of its average net assets, 2% of the next $70 million,
and 1 1/2% of its remaining average net assets.
The Advisory Agreement provides that the Adviser shall not
be liable for any error of judgment or mistake of law or for any loss
suffered by the Company in connection with the performance of the
Advisory Agreement, except a loss resulting from willful misfeasance,
bad faith or gross negligence on the Adviser's part in the performance
of its duties or from reckless disregard of its duties and obligations
thereunder.
The Advisory Agreement is terminable with respect to the
Fund by vote of the Trustees, or by the holders of a majority of the
outstanding voting securities of the Fund, at any time without penalty,
on 60 days' written notice to the Adviser. The Adviser may also
terminate its advisory relationship with respect to the Fund on 60 days'
written notice to the Company, and the Advisory Agreement terminates
automatically in the event of its assignment.
Because of the internal controls maintained by SouthTrust
Bank of Alabama, N.A. to restrict the flow of non-public information,
the Fund's investments are typically made without any knowledge of
SouthTrust Bank of Alabama, N.A. or its affiliates' lending
relationships with an issuer.
Distributor's Contract. The Company has entered into a
Distributor's Contract under which the Distributor, as agent, sells
shares of the Fund on a continuous basis. The Distributor has agreed to
use appropriate efforts to solicit orders for the purchase of shares of
the Fund, although it is not obligated to sell any particular amount of
shares.
Administrative Services Agreement. Federated Administrative
Services (the "Administrator"), which is a subsidiary of Federated
Investors, provides administrative personnel and services to the Company
for the fees set forth in the Prospectus.
The Administrative Services Agreement provides that the
Administrator shall not be liable under the Agreement except for its
willful misfeasance, bad faith or gross negligence in the performance of
its duties or from the reckless disregard by it of its duties and
obligations thereunder.
Custodian and Transfer Agency Agreements. State Street Bank
and Trust Company (the "Custodian") maintains custody of the Company's
assets pursuant to a custodian agreement (the "Custodian Agreement").
Under the Custodian Agreement, the Custodian (i) maintains a separate
account in the name of the Fund; (ii) holds and transfers portfolio
securities on account of the Fund; (iii) accepts receipts and makes
disbursements of money on behalf of the Fund; (iv) collects and receives
all income and other payments and distributions on account of the Fund's
securities; and (v) makes periodic reports to the Trustees concerning
the Fund's operations. The Custodian is authorized to select one or more
domestic banks or trust companies to serve as sub-custodian on behalf of
the Company, provided that, with respect to sub-custodians, the
Custodian remains responsible for the performance of all its duties
under the Custodian Agreement and holds the Company harmless from the
acts and omissions of any sub-custodian.
Federated Services Company (the "Transfer Agent"), a
subsidiary of Federated Investors, serves as the transfer and dividend
disbursing agent for the Company pursuant to the Fund Accounting and
Shareholder Recordkeeping Agreement.
PORTFOLIO TRANSACTIONS
Subject to the general supervision of the Trustees, the
Adviser makes decisions with respect to and places orders for all
purchases and sales of portfolio securities for the Fund. Portfolio
transactions of the Fund are placed with those securities brokers and
dealers that the Adviser believes will provide the best value in
transaction and research services for the Fund, either in a particular
transaction or over a period of time. Although some transactions involve
only brokerage services, many involve research services as well.
Transactions on U.S. stock exchanges involve the payment of
negotiated brokerage commissions. On exchanges on which commissions are
negotiated, the cost of transactions may vary among different brokers.
As of the date of the Prospectus, with respect to the Fund, there have
been no payments made for brokerage transactions.
Over-the-counter issues, including corporate debt and
government securities, are normally traded on a "net" basis (i.e.,
without commission) through dealers, or otherwise involve transactions
directly with the issuer of an instrument. With respect to over-the-
counter transactions, the Adviser will normally deal directly with
dealers who make a market in the instruments involved except in those
circumstances where more favorable prices and execution are available
elsewhere. The cost of securities purchased from underwriters includes
an underwriting commission or concession, and the prices at which
securities are purchased from and sold to dealers include a dealer's
mark-up or mark-down.
The Fund may participate, if and when practicable, in
bidding for the purchase of portfolio securities directly from an issuer
in order to take advantage of the lower purchase price available to
members of a bidding group. The Fund will engage in this practice,
however, only when the Adviser believes such practice to be in The
Fund's best interests.
The portfolio turnover rate of the Fund is calculated by
dividing the lesser of the Fund's annual sales or purchases of portfolio
securities (exclusive of purchases or sales of securities whose
maturities at the time of acquisition were one year or less) by the
monthly average value of the securities held by the Fund during the
year. The Fund may engage in short-term trading to achieve its
investment objectives. Portfolio turnover may vary greatly from year to
year as well as within a particular year.
In its Advisory Agreement, the Adviser agrees to select
broker/dealers in accordance with guidelines established by the Trustees
from time to time and in accordance with applicable law. In assessing
the terms available for any transaction, the Adviser shall consider all
factors it deems relevant, including the breadth of the market in the
security, the price of the security, the financial condition and
execution capability of the broker/dealer, and the reasonableness of the
commission, if any, both for the specific transaction and on a
continuing basis. In addition, the Advisory Agreement authorizes the
Adviser, subject to the prior approval of the Trustees, to cause the
Fund to pay a broker/dealer which furnishes brokerage and research
services a higher commission than that which might be charged by another
broker/dealer for effecting the same transaction, provided that the
Adviser determines in good faith that such commission is reasonable in
relation to the value of the brokerage and research services provided by
such broker/dealer, viewed in terms of either the particular transaction
or the overall responsibilities of the Adviser to the Fund. Such
brokerage and research services might consist of reports and statistics
on specific companies or industries, general summaries of groups of
bonds and their comparative earnings and yields, or broad overviews of
the securities markets and the economy.
Supplementary research information so received is in
addition to, and not in lieu of, services required to be performed by
the Adviser and does not reduce the advisory fees payable to the Adviser
by the Fund. It is possible that certain of the supplementary research
or other services received will primarily benefit one or more other
investment companies or other accounts for which investment discretion
is exercised. Conversely, the Fund may be the primary beneficiary of the
research or services received as a result of portfolio transactions
effected for such other account or investment company. The Fund may
obtain an agreement from a broker to pay to a third-party vendor of
goods or services to the Fund a portion of the commissions paid by the
Fund to that broker.
Portfolio securities will not be purchased from or sold to
the Adviser, the Distributor or any affiliated person (as defined in the
1940 Act) of the foregoing entities except to the extent permitted by an
exemptive order issued by the SEC or by applicable law (including Rule
17e-1 under the 1940 Act).
Investment decisions for the Fund and for other investment
accounts managed by the Adviser are made independently of each other in
light of differing conditions. However, the same investment decision may
be made for two or more of such accounts and executed on the same day.
In such cases, transactions in the same securities for multiple accounts
are allocated as to amount in a manner deemed equitable to each such
account. While in some cases this practice could have a detrimental
effect on the price or value of the security as far as the Fund is
concerned, in other cases it is believed to be beneficial to the Fund.
To the extent permitted by law, the Adviser may aggregate the securities
to be sold or purchased for the Fund with those to be sold or purchased
for other investment companies or accounts in executing transactions.
The Fund will not purchase securities during the existence
of any underwriting or selling group relating to such securities of
which the Adviser or any affiliated person (as defined in the 1940 Act)
thereof is a member, except pursuant to procedures adopted by the
Trustees in accordance with Rule 10f-3 under the 1940 Act.
PURCHASE, EXCHANGE AND REDEMPTION INFORMATION
The Company reserves the right, if conditions exist which
make cash payments undesirable, to honor any request for redemption or
repurchase of the Fund's shares by making payment in whole or in part in
securities chosen by the Company and valued in the same way as they
would be valued for purposes of computing the Fund's net asset value. If
payment is made in securities, a shareholder may incur transaction costs
in converting the securities into cash. The Company intends to elect,
however, to be governed by Rule 18f-1 under the 1940 Act so that the
Fund is obligated to redeem its shares solely in cash up to the lesser
of $250,000 or 1% of its net asset value during any 90-day period for
any one shareholder of the Fund.
Under the 1940 Act, the Fund may suspend the right of
redemption or postpone the date of payment upon redemption for any
period during which the New York Stock Exchange is closed (other than
customary weekend and holiday closings), or during which trading on said
Exchange is restricted, or during which (as determined by the SEC by
rule or regulation) an emergency exists as a result of which disposal or
valuation of portfolio securities is not reasonably practicable, or for
such other periods as the SEC may permit. (The Fund may also suspend or
postpone the recordation of the transfer of its shares upon the
occurrence of any of the foregoing conditions.)
The Company may suspend redemption rights or postpone
redemption payments (as well as suspend the recordation of the transfer
of shares) for such periods as are permitted under the 1940 Act. The
Company may also redeem shares involuntarily or make payment for
redemption in securities or other property if it appears appropriate to
do so in light of the Company's responsibilities under the 1940 Act.
The Company may redeem shares involuntarily as described
below under "Net Asset Value" to reimburse the Fund for any loss
sustained by reason of the failure of a shareholder to make full payment
for shares purchased by the shareholder, or to collect any charge
relating to a transaction effected for the benefit of a shareholder,
which is applicable to shares of the Fund as provided, from time to
time, in the Prospectus. In addition, due to the high cost of
maintaining accounts with low balances, the Company may redeem shares in
any account, except retirement plans, and pay the proceeds to the
shareholder, if the account balance falls below the required minimum
account balance due to shareholder redemptions. Before shares are
redeemed to close an account, a shareholder will be notified in writing
and allowed 30 days to purchase additional shares to meet the minimum
balance.
Shareholders may exchange all or part of their shares in the
Company as described in the Prospectus. Any rights an investor may have
to reduce (or have waived) the sales load applicable to an exchange, as
may be provided in the Prospectus, will apply in connection with any
such exchange.
By use of the exchange privilege, the investor authorizes
SouthTrust, the investor's SouthTrust Vulcan Funds Dealer, or the
Distributor to act on telephonic instructions from any person
representing himself or herself to be the investor and reasonably
believed by SouthTrust, a SouthTrust Vulcan Funds Dealer or the
Distributor to be genuine. The Transfer Agent must be notified of the
investor's prior ownership of Fund shares and account number. The
Transfer Agent records of such instructions are binding. The exchange
privilege may be modified or terminated at any time upon 60 days written
notice to shareholders.
Exchanging Securities for Fund Shares. The Fund may accept
securities in exchange for Fund shares. The Fund will allow such
exchanges only upon the prior approval of the Fund and a determination
by the Fund and the Adviser that the securities to be exchanged are
acceptable.
Any securities exchanged must meet the investment objective
and policies of the Fund, must have a readily ascertainable market
value, must be liquid and must not be subject to restrictions on resale.
The market value of any securities exchanged in an initial investment,
plus any cash, must be at least equal to the minimum investment in the
Fund.
Securities accepted by the Fund will be valued in the same
manner as the Fund values its assets. The basis of the exchange will
depend on the net asset value of Fund shares on the day the securities
are valued. One share of the Fund will be issued for each equivalent
amount of securities accepted.
Any interest earned on the securities prior to the exchange
will be considered in valuing the securities. All interest, dividends,
subscription, or other rights attached to the securities become the
property of the Fund, along with the securities.
If an exchange is permitted, it will be treated as a sale
for federal income tax purposes. Depending upon the cost basis of the
securities exchanged for Fund shares, a gain or loss may be realized by
the investor.
NET ASSET VALUE
In determining the approximate market value of portfolio
investments, the Company may employ outside organizations, which may use
a matrix or formula method that takes into consideration market indices,
matrices, yield curves and other specific adjustments. This may result
in the securities being valued at a price different from the price that
would have been determined had the matrix or formula method not been
used. All cash, receivables, and current payables are carried on the
Company's books at their face value. Other assets, if any, are valued at
fair value as determined in good faith under the supervision of the
Trustees.
PERFORMANCE INFORMATION
Yield and Performance of the Fund
The 30-day (or one month) standard yield described in the
Prospectus is calculated in accordance with the method prescribed by the
SEC for mutual funds:
Where:
a = dividends and interest earned during the period;
b = expenses accrued for the period (net of
reimbursements);
c = average daily number of shares outstanding during the
period entitled to receive dividends; and
d = maximum offering price per share on the last day of the
period.
For the purpose of determining interest earned on debt
obligations purchased by the Fund (variable "a" in the formula), the
Fund computes the yield to maturity of such instrument based on the
market value of the obligation (including actual accrued interest) at
the close of business on the last business day of each month, or, with
respect to obligations purchased during the month, the purchase price
(plus actual accrued interest). Such yield is then divided by 360 and
the quotient is multiplied by the market value of the obligation
(including actual accrued interest) in order to determine the interest
income on the obligation for each day of the subsequent month that the
obligation is in the portfolio. It is assumed in the above calculation
that each month contains 30 days. The maturity of a debt obligation with
a call provision is deemed to be the next call date on which the
obligation reasonably may be expected to be called or, if none, the
maturity date. For the purpose of computing yield on equity securities
held by the Fund, dividend income is recognized by accruing 1/360 of the
dividend rate of the security for each day that the security is held by
the Fund. With respect to mortgage or other receivables-backed debt
obligations purchased at a discount or premium, the formula generally
calls for amortization of the discount or premium. The amortization
schedule will be adjusted monthly to reflect changes in the market value
of such debt obligations. Expenses accrued for the period (variable "b"
in the formula) include all recurring fees charged by the Fund to all
shareholder accounts in proportion to the length of the base period and
the Fund's mean (or median) account size. Undeclared earned income will
be subtracted from the offering price per share (variable "d" in the
formula).
The Fund that advertises its "average annual total return"
computes such return by determining the average annual compounded rate
of return during specified periods that equates the initial amount
invested to the ending redeemable value of such investment according to
the following formula:
Where:
T = average annual total return;
ERV = ending redeemable value of shares held at the end
of the period;
P = hypothetical initial investment of $1,000; and
n = number of years.
The Fund that advertises its "aggregate total return"
computes such returns by determining the aggregate compounded rates of
return during specified periods that likewise equate the initial amount
invested to the ending redeemable value of such investment. The formula
for calculating aggregate total return is as follows:
Aggregate Total Return = (ERV) - 1
P
The calculations are made assuming that (1) all dividends
and capital gain distributions are reinvested on the reinvestment dates
at the price per share existing on the reinvestment date, (2) all
recurring fees charged to all shareholder accounts are included, and (3)
for any account fees that vary with the size of the account, a mean (or
median) account size in the Fund during the periods is reflected. The
ending redeemable value (variable "ERV" in the formula) is determined by
assuming complete redemption of the hypothetical investment after
deduction of all nonrecurring charges at the end of the measuring
period.
In reports or other communications to shareholders or in
advertising material, the Fund may compare its performance with that of
other mutual funds as listed in the rankings prepared by Lipper
Analytical Services, Inc., CDA Technologies, Inc., or similar
independent services, which monitor the performance of mutual funds or
with other appropriate indices of investment securities. In addition,
certain indices may be used to illustrate historic performance of select
asset classes. These may include, among others, the Lehman Brothers
Index of Baa-rated Corporate Bonds, the T-Bill Index, and the "Stocks,
Bonds and Inflation Index" published annually by Ibbotson Associates.
The performance information may also include evaluations of the Fund
published by ranking services and financial publications that are
nationally recognized, such as Business Week, Forbes, Fortune,
Institutional Investor, Money and The Wall Street Journal.
In addition to providing performance information that
demonstrates the actual yield or returns of a particular Fund over a
particular period of time, the Fund may provide certain other
information demonstrating hypothetical investment returns. Such
information may include, but is not limited to, illustrating the
compounding effects of a dividend in a dividend reinvestment plan or
certain benefits of tax-free investing.
The performance of any investment is generally a function of
portfolio quality and maturity, type of investment and operating
expenses.
TAXES
The following summarizes certain additional tax
considerations generally affecting the Fund and their shareholders that
are not described in the Prospectus. No attempt is made to present a
detailed explanation of the tax treatment of the Fund or its
shareholders, and the discussion here and in the Prospectus is not
intended as a substitute for careful tax planning. Potential investors
should consult their tax advisers with specific reference to their own
tax situations.
General. The Fund has elected to be taxed separately as a
regulated investment company under Part I of Subchapter M of the
Internal Revenue Code of 1986, as amended (the "Code"). As a regulated
investment company, the Fund is exempt from federal income tax on its
net investment income and realized capital gains which it distributes to
shareholders, provided that it distributes an amount equal to the sum of
(a) at least 90% of its investment company taxable income (as that term
is defined in the Code determined without regard to the deduction for
dividends paid), if any, for the year, and (b) at least 90% of its net
tax-exempt income, if any, for the year (the "Distribution Requirement")
and satisfies certain other requirements of the Code that are described
below. Distributions of investment company taxable income and net tax-
exempt income made during the taxable year or, under specified
circumstances, within twelve months after the close of the taxable year
will satisfy the Distribution Requirement.
In addition, to satisfy the Distribution Requirement, the
Fund must derive with respect to a taxable year at least 90% of its
gross income from dividends, interest, certain payments with respect to
securities loans and gains from the sale or other disposition of stock
or securities or foreign currencies, or from other income derived with
respect to its business of investing in such stock, securities, or
currencies (the "Income Requirement") and derive less than 30% of its
gross income from the sale or other disposition of securities and
certain other investments held for less than three months (the "Short-
Short Gain Test"). Interest (including original issue discount and, in
the case of debt securities bearing taxable interest income, "accrued
market discount") received by the Fund at maturity or on disposition of
a security held for less than three months will not be treated as gross
income derived from the sale or other disposition of such security for
purposes of the Short-Short Gain Test. However, any other income which
is attributable to realized market appreciation will be treated as gross
income from the sale or other disposition of securities for this
purpose.
In addition to the foregoing requirements, at the close of
each quarter of its taxable year, at least 50% of the value of the
Fund's assets must consist of cash and cash items, U.S. government
securities, securities of other regulated investment companies, and
securities of other issuers (as to which the Fund has not invested more
than 5% of the value of its total assets in securities of such issuer
and as to which the Fund does not hold more than 10% of the outstanding
voting securities of such issuer) and no more than 25% of the value of
the Fund's total assets may be invested in the securities of any one
issuer (other than U.S. government securities and securities of other
regulated investment companies), or in two or more issuers which such
Fund controls and which are engaged in the same or similar trades or
businesses.
Distributions of net investment income received by the Fund
from investments in debt securities and any net realized short-term
capital gains distributed by the Fund will be taxable to shareholders as
ordinary income and will not be eligible for the dividends received
deduction for corporations.
The Fund intends to distribute to shareholders any excess of
net long-term capital gain over net short-term capital loss ("net
capital gain") for each taxable year. Such gain is distributed as a
capital gain dividend and is taxable to shareholders as long-term
capital gain, regardless of the length of time the shareholder has held
the shares, whether such gain was recognized by the Fund prior to the
date on which a shareholder acquired shares of the Fund and whether the
distribution was paid in cash or reinvested in shares.
In the case of corporate shareholders, distributions (other
than capital gain dividends) of the Fund for any taxable year generally
qualify for the dividends received deduction to the extent of the gross
amount of "qualifying dividends" received by the Fund for the year.
Generally, a dividend will be treated as a "qualifying dividend" if it
has been received from a domestic corporation.
The marginal tax rate on ordinary income for taxpayers
filing joint returns is 36% of taxable income in excess of $140,000
($115,000 for taxpayers filing individual returns) and 39.6% of taxable
income in excess of $250,000 for taxpayers filing either individual or
joint returns. Different taxable income thresholds apply in the cases of
married persons filing separately, heads of household and trusts.
Capital gains are subject to a 28% maximum stated rate. The maximum
marginal corporate income tax rate is 35% for taxable income (including
net capital gains) in excess of $10,000,000.
If for any taxable year the Fund does not qualify as a
regulated investment company, all of its taxable income will be subject
to tax at regular corporate rates without any deduction for
distributions to shareholders. In such event, all distributions (whether
or not derived from exempt-interest income) would be taxable as ordinary
income to the extent of the Fund's current and accumulated earnings and
profits, and would be eligible for the dividends received deduction in
the case of corporate shareholders.
Shareholders will be advised annually as to the federal
income tax consequences of distributions made by the Fund each year.
The Code imposes a non-deductible 4% excise tax on regulated
investment companies that fail to currently distribute an amount equal
to specified percentages of their ordinary taxable income and capital
gain net income (excess of capital gains over capital losses). The Fund
intends to make sufficient distributions or deemed distributions of its
ordinary taxable income and capital gain net income each calendar year
to avoid liability for this excise tax.
The Company will be required in certain cases to withhold
and remit to the United States Treasury 31% of taxable dividends or 31%
of the gross proceeds realized upon a redemption paid to any shareholder
(i) who has provided either an incorrect tax identification number or no
number at all; (ii) who is subject to backup withholding by the Internal
Revenue Service for failure to report the receipt of taxable interest or
dividend income properly; or (iii) who has failed to certify to the
Company that he or she is not subject to backup withholding or that he
or she is an "exempt recipient."
The foregoing general discussion of federal income tax
consequences is based on the Code and the regulations issued thereunder
as in effect on the date of this Statement of Additional Information.
Future legislative or administrative changes or court decisions may
significantly change the conclusions expressed herein, and any such
changes or decisions may have a retroactive effect with respect to the
transactions contemplated herein.
Although the Fund expects to qualify as a "regulated
investment company" and to be relieved of all or substantially all
federal income taxes, depending upon the extent of its activities in
states and localities in which its offices are maintained, in which its
agents or independent contractors are located or in which it is
otherwise deemed to be conducting business, the Fund may be subject to
the tax laws of such states or localities.
Taxation of Certain Financial Instruments. Special rules
govern the federal income tax treatment of financial instruments that
may be held by some of the Fund. These rules may have a particular
impact on the amount of income or gain that the Fund must distribute to
their respective shareholders to comply with the Distribution
Requirement, on the income or gain qualifying under the Income
Requirement and on their ability to comply with the Short-Short Gain
Test described above. Federal income tax law requires the holder of a
zero coupon security to recognize income with respect to the security on
an annual basis even though there is no cash flow until maturity. To
maintain its qualification as a regulated investment company and avoid
liability of federal income taxes, the Fund will be required to
distribute income accrued annually with respect to zero coupon
securities which it owns, and may have to sell portfolio securities
(perhaps at disadvantageous times) in order to generate cash to satisfy
these distribution requirements.
ADDITIONAL INFORMATION CONCERNING SHARES
The Company is a Massachusetts business trust. Under the
Company's Master Trust Agreement, the beneficial interests in the
Company may be divided into an unlimited number of full and fractional
transferable shares. The Master Trust Agreement authorizes the Company's
Trustees to classify or reclassify any unissued shares of the Company
into one or more Funds by setting or changing, in any one or more
respects, their respective designations, preferences, conversion or
other rights, voting powers, restrictions, limitations, qualifications
and terms and conditions of redemption. Pursuant to such authority, the
Trustees have authorized the issuance of four series of shares
representing interests in the Income Fund, the Treasury Obligations
Money Market Fund, the Bond Fund and the Stock Fund.
In the event of a liquidation or dissolution of the Company
or an individual Fund, shareholders of a particular Fund would be
entitled to receive the assets available for distribution belonging to
such Fund, and a proportionate distribution, based upon the relative net
asset values of the Company's respective Funds, of any general assets
not belonging to any particular Fund which are available for
distribution. Shareholders of the Fund are entitled to participate in
the net distributable assets of the particular Fund involved on
liquidation, based on the number of shares of the Fund that are held by
each shareholder.
The issuance of shares is recorded on the books of the Fund
and share certificates generally will not be issued.
Shareholders of the Company will vote together in the
aggregate and not separately by Fund except as otherwise required by law
or when the Trustees determine that the matter to be voted upon affects
only the interests of the shareholders of a particular Fund. Rule 18f-2
(the "Rule") under the 1940 Act provides that any matter required to be
submitted to the holders of the outstanding voting securities of an
investment company such as the Company shall not be deemed to have been
effectively acted upon unless approved by the holders of a majority of
the outstanding shares of the Fund affected by the matter. The Fund is
not affected by a matter unless it is clear that the interests of each
investment portfolio in the matter are substantially identical or that
the matter does not affect any interest of the investment portfolio.
Under the Rule, the approval of an investment advisory agreement or any
change in the fundamental investment policy would be effectively acted
upon with respect to an investment portfolio only if approved by a
majority of the outstanding shares of such investment portfolio.
However, the Rule also provides that the ratification of the appointment
of independent accountants, the approval of principal underwriting
contracts and the election of trustees may be effectively acted upon by
shareholders of the Company voting together in the aggregate without
regard to a particular investment portfolio.
Shares of the Company have noncumulative voting rights and,
accordingly, the holders of more than 50% of the Company's outstanding
shares (irrespective of investment portfolio) may elect all of the
Trustees. Shares have no preemptive rights and only such conversion and
exchange rights as the Trustees may grant in their discretion. When
issued for payment as described in the Prospectus, shares will be fully
paid and non-assessable by the Company.
Shareholder meetings, including meetings held to elect
Trustees, will not be held unless and until such time as required by
law. At that time, the Trustees then in office will call a shareholders'
meeting to elect Trustees. Except as set forth above, the Trustees will
continue to hold office and may appoint successor Trustees. The Master
Trust Agreement provides that meetings of the shareholders of the
Company shall be called by the Trustees upon the written request of
shareholders owning at least 10% of the outstanding shares entitled to
vote.
INDEPENDENT PUBLIC ACCOUNTANTS
Arthur Andersen LLP, are the independent public accountants
for the Fund.
MISCELLANEOUS
Counsel. The law firm of Bell, Boyd & Lloyd, Chicago,
Illinois, serves as counsel to the Trustees.
Control Persons and Principal Holders of
Securities. As of December __, 1995, there were no shareholders who
beneficially owned or more of the outstanding shares of the Fund.
Banking Laws. Banking laws and regulations currently
prohibit a bank holding company registered under the Federal Bank
Holding Company Act of 1956, or any bank or non-bank affiliate thereof
from sponsoring, organizing, controlling or distributing the shares of a
registered, open-end investment company continuously engaged in the
issuance of its shares, and prohibit banks generally from underwriting
securities, but such banking laws and regulations do not prohibit such a
holding company or affiliate or banks generally from acting as
investment adviser, administrator, transfer agent or custodian to such
an investment company, or from purchasing shares of such a company as
agent for and upon the order of customers. The Adviser and the Custodian
are subject to such banking laws and regulations.
The Adviser and the Custodian believe they may perform the
services for the Company contemplated by their respective agreements
with the Company without violation of applicable banking laws or
regulations. It should be noted, however, that there have been no cases
deciding whether bank and nonbank subsidiaries of a registered bank
holding company may perform services comparable to those that are to be
performed by these companies, and future changes in either federal or
state statutes and regulations relating to permissible activities of
banks and their subsidiaries or affiliates, as well as future judicial
or administrative decisions or interpretations of current and future
statutes and regulations, could prevent these companies from continuing
to perform such service for the Company.
Should future legislative, judicial, or administrative
action prohibit or restrict the activities of such companies in
connection with the provision of services on behalf of the Company, the
Company might be required to alter materially or discontinue its
arrangements with such companies and change its method of operations. It
is not anticipated, however, that any change in the Company's method of
operations would affect the net asset value per share of any Fund or
result in a financial loss to any customer.
Shareholder Approvals. As used in this Statement of
Additional Information and in the Prospectus, a "majority of the
outstanding shares" of the Fund or investment portfolio means the lesser
of (a) 67% of the shares of the particular Fund or portfolio represented
at a meeting at which the holders of more than 50% of the outstanding
shares of such Fund or portfolio are present in person or by proxy, or
(b) more than 50% of the outstanding shares of such Fund or portfolio.
APPENDIX
Description of Bond Ratings
The following summarizes the highest four ratings used by Standard &
Poor's Ratings Group ("S&P") for corporate and municipal debt:
AAA--Debt rated AAA has the highest rating assigned by S&P.
Capacity to pay interest and repay principal is extremely
strong.
AA--Debt rated AA has a very strong capacity to pay interest
and repay principal and differs from AAA issues only in a
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 for debt 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 payments. 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 BBB rating.
To provide more detailed indications of credit quality, the
AA, A and BBB ratings may be modified by the addition of a plus or minus
sign to show relative standing within these major rating categories.
The following summarizes the highest four ratings used by
Moody's Investors Service, Inc. ("Moody's") for corporate and municipal
long-term debt:
Aaa--Bonds that 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 edge." 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 that 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 that are rated A possess many favorable investment
attributes and are to be considered 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 that are rated Baa are considered 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.
Moody's applies numerical modifiers (1, 2 and 3) with
respect to corporate bonds rated Aa, A and Baa. The modifier 1 indicates
that the bond being rated ranks in the higher end of its generic rating
category; the modifier 2 indicates a mid-range ranking; and the modifier
3 indicates that the bond ranks in the lower end of its generic rating
category.
The following summarizes the highest four ratings used by
Duff & Phelps Credit Rating Co. ("D&P") for bonds:
AAA--Debt rated AAA is of the highest credit quality. The
risk factors are considered to be negligible, being only
slightly more than for risk-free U.S. Treasury debt.
AA--Debt rated AA is of high credit quality. Protection
factors are strong. Risk is modest but may vary slightly
from time to time because of economic conditions.
A--Bonds that are rated A have protection factors which are
average but adequate. However risk factors are more variable
and greater in periods of economic stress.
BBB--Bonds that are rated BBB have below average protection
factors but are still considered sufficient for prudent
investment. Considerable variability in risk during economic
cycles.
To provide more detailed indications of credit quality, the
AA, A and BBB ratings may be modified by the addition of a plus or minus
sign to show relative standing within these major categories.
The following summarizes the ratings used by IBCA Limited
and IBCA Inc. ("IBCA") for bonds:
Obligations rated AAA by IBCA have the lowest expectation of
investment risk. Capacity for timely repayment of principal
and interest is substantial, such that adverse changes in
business, economic or financial conditions are unlikely to
increase investment risk significantly.
IBCA also assigns a rating to certain international and U.S.
banks. An IBCA bank rating represents IBCA's current
assessment of the strength of the bank and whether such bank
would receive support should it experience difficulties. In
its assessment of a bank, IBCA uses a dual rating system
comprised of Legal Ratings and Individual Ratings. In
addition, IBCA assigns banks Long and Short-Term Ratings as
used in the corporate ratings discussed above. Legal
Ratings, which range in gradation from 1 through 5, address
the question of whether the bank would receive support
provided by central banks or shareholders if it experienced
difficulties, and such ratings are considered by IBCA to be
a prime factor in its assessment of credit risk. Individual
Ratings, which range in gradations from A through E,
represent IBCA's assessment of a bank's economic merits and
address the question of how the bank would be viewed if it
were entirely independent and could not rely on support from
state authorities or its owners.
The following summarizes the two highest ratings used by
Moody's for short-term notes and variable rate demand obligations:
MIG-1/VMIG-1. Obligations bearing these designations are of
the best quality, enjoying strong protection by established
cash flows, superior liquidity support or demonstrated broad-
based access to the market for refinancing.
MIG-2/VMIG-2. Obligations bearing these designations are of
high quality with margins of protection ample although not
as large as in the preceding group.
The three highest rating categories of D&P for short-term
debt are Duff 1, Duff 2, and Duff 3. D&P employs three designations,
Duff 1+, Duff 1 and Duff 1-, within the highest rating category. Duff 1+
indicates highest certainty of timely payment. Short-term liquidity,
including internal operating factors and/or access to alternative
sources of funds, is judged to be "outstanding, and safety is just below
risk-free U.S. Treasury short-term obligations." Duff 1 indicates very
high certainty of timely payment. Liquidity factors are excellent and
supported by good fundamental protection factors. Risk factors are
considered to be minor. Duff 1- indicates high certainty of timely
payment. Liquidity factors are strong and supported by good fundamental
protection factors. Risk factors are very small. Duff 2 indicates good
certainty of timely payment. Liquidity factors and company fundamentals
are sound. Although ongoing funding needs may enlarge total financing
requirements, access to capital markets is good. Risk factors are small.
Duff 3 indicates satisfactory liquidity and other protection factors
qualify issue as to investment grade. Risk factors are larger and
subject to more variation. Nevertheless, timely payment is expected.
D&P uses the fixed-income ratings described above under
"Description of Bond Ratings" for tax-exempt notes and other shortterm
obligations.
Description of Commercial Paper Ratings
Commercial paper rated A-1 by S&P indicates that the degree
of safety regarding timely payment is strong. Those issues determined to
possess extremely strong safety characteristics are denoted in A-1+.
Capacity for timely payment on commercial paper rated A-2 is
satisfactory but the relative degree of safety is not as high as for
issues designated A-1.
The rating Prime-1 is the highest commercial paper rating
assigned by Moody's. Issuers rated Prime-1 (or related supporting
institutions) are considered to have a superior capacity for repayment
of short-term promissory obligations. Issuers rated Prime-2 (or related
supporting institutions) are considered to have strong capacity for
repayment of short-term promissory obligations. This will normally be
evidenced by many of the characteristics of issuers rated Prime-1 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.
The highest rating of D&P for commercial paper is Duff 1.
D&P employs three designations, Duff 1 plus, Duff 1 and Duff 1 minus,
within the highest rating category. Duff 1 plus indicates highest
certainty of timely payment. Short-term liquidity, including internal
operating factors and/or ready access to alternative sources of funds,
is judged to be "outstanding, and safety is just below risk-free U.S.
Treasury short-term obligations". Duff 1 indicates very high certainty
of timely payment. Liquidity factors are excellent and supported by
strong fundamental protection factors. Risk factors are considered to be
minor. Duff 1 minus indicates high certainty of timely payment.
Liquidity factors are strong and supported by good fundamental
protection factors. Risk factors are very small.
G00204-04(9/95)
PART C. OTHER INFORMATION.
Item 24. Financial Statements and Exhibits:
(a) Financial Statements (to be filed by Amendment)
(b) Exhibits:
(1) (i) Copy of Master Trust Agreement of the
Registrant (1);
(ii) Amendment No. 1 to Master Trust Agreement
(2);
(iii) Copy of Amendment No. 4 to Master Trust
Agreement;+
(2) Copy of By-Laws of the Registrant (1);
(3) Not applicable;
(4) Copy of Specimen Certificate for Shares of Beneficial
Interest of the Registrant;+
(5) Copy of Investment Advisory Contract of the Registrant
(3);
(i) Form of Amendment to Investment Advisory
Contract dated September 1, 1995;+
(6) Conformed copy of Distributor's Contract of the
Registrant (5);
(i) Form of Exhibit D to Distributor's
Contract;+
(7) Not applicable;
(8) Conformed copy of Custodian Agreement of the
Registrant (5);
(9) (i) Conformed copy of Administrative Services
Agreement of Registrant (5);
(ii) Conformed copy of Amendment No.1 to
Administrative Services Agreement of
Registrant(6);
(iii) Conformed copy of Fund Accounting and
Shareholder Recordkeeping Agreement of
Registrant (5);
(iv) Conformed copy of Electronic
Communications and Recordkeeping
Agreement(6);
+Exhibits are filed electronically.
1. Response is incorporated by reference to Registrant's Initial
Registration Statement on Form N-1A filed on March 5, 1992 (File Nos.
33-46190 and 811-6580).
2. Response is incorporated by reference to Registrant's Pre-Effective
Amendment No. 1 on Form N-1A filed on May 1, 1992 (File Nos. 33-46190
and 811-6580).
3. Response is incorporated by reference to Registrant's Post-Effective
Amendment No. 1 filed on November 27, 1992 (File Nos. 33-46190 and
811-6580).
5. Response is incorporated by reference to Registrant's Post-Effective
Amendment No. 3 filed on June 24, 1994 (File Nos. 33-46190 and 811-
6580).
6. Response is incorporated by reference to Registrant's Post-Effective
Amendment No. 4 filed on June 23, 1995 (File Nos. 33-46190 and 811-
6580)
(10) Copy of Opinion and Consent of Counsel as to
legality of shares being registered (2);
(11) Not applicable;
(12) Not applicable;
(13) Copy of Purchase Agreement of the Registrant
(3);
(14) Not applicable;
(15) (i) Form of 12b-1 Agreement and Exhibit A to
the Agreement dated
September 1, 1995;+
(ii) Form of Plan and
Exhibit A to the Plan
dated September 1, 1995;+
(16) Not applicable;
(17) Copy of Financial Data Schedules;+
(18) Not applicable;
(19) Conformed copy of Power of Attorney;+
*Exhibits are filed electronically.
2. Response is incorporated by reference to Registrant's Pre-Effective
Amendment No. 1 on Form N-1A filed on May 1, 1992 (File Nos. 33-46190
and 811-6580).
Item 25. Persons Controlled by or Under Common Control with Registrant:
None
Item 26. Number of Holders of Securities:
Title of Class
Shares of beneficial interest Number of Record Holders
(no par value) as of September 5, 1995
Treasury Obligations
Money Market Fund 35
Bond Fund 65
Stock Fund 333
Item 27. Indemnification: (3)
Item 28. Business and Other Connections of Investment Adviser:
For a description of the other business of the Investment Adviser,
see the section entitled "Management of the Funds" in Part A.
To reach any of the following Officers and Directors of the
Investment Adviser, call SouthTrust Bank of Alabama, N.A.
(1) (2) (3)
Principal Occupation
or Other Employment
of a Substantial
Position with Nature During
Name the Adviser the Past Two Years
Julian W. Banton Director, Chairman, Banking.
President, and Chief
Executive Officer
Gene Bartow Director Athletic Director,
University of
Alabama at
Birmingham.
Thomas E. Bradford, Jr. Director Chairman and Chief
Executive Officer, Bradford & Company.
Dr. Merrill N. Bradley Director Surgeon (Retired)
Ronald G. Bruno Director Chairman, President
and Chief Executive Officer, Bruno's
Inc.
H.M. Burt, Jr. Director Chairman and Chief
Executive Officer Southern Tool
Inc.
David J. Cooper Director President,
Cooper/T. Smith Corporation
Sallie C. Creel Director Owner/Operator
Alabama Car Rental.
Paul E. Harris Director President and Chief
Executive Officer, Protective
and Industrial Insurance
Company
James C. Harrison Director President and Chief
Executive Officer, Protective and
Industrial
Insurance Company
Principal Occupation
or Other Employment
of a Substantial
Position with Nature During
Name the Adviser the Past Two Years
Chris H. Horgen Director Chairman and Chief
Executive Officer, Nichols Research
Corporation
W. Carl Jernigan Director Chairman and Chief
Executive Officer, Jay Electric
Rex J. Lysinger Director Chairman and Chief
Executive Officer, Energen Corporation
Dr. Judy M. Merritt Director President,
Jefferson State College
Emmet O'Neal, III Director Vice Chairman and
Chief Operating Officer,
O'Neal Steel Inc.
Van L. Richey Director President and Chief
Executive Officer, American Cast Iron
Pipe Co.
William E. Smith, Jr. Director Chairman and Chief
Executive Officer, Royal Cup, Inc.
R. Neal Travis Director President, South
Central Bell Telephone
Company
J. Mike Battle Executive Vice Banking; Formerly
President Executive Vice
Retail Division President, Pacific
Southwest Bank
Principal Occupation
or Other Employment
of a Substantial
Position with Nature During
Name the Adviser the Past Two Years
Fred C. Crum, Jr. Executive Vice Banking
President
Corporate Division
E. Frank Schmidt Executive Vice Banking
President Alabama Markets
Charles M. Murrell Executive Vice
President SouthTrust Banking
Data Services
R. Glenn Eubanks Executive Vice Banking
President
Commercial Division
William C. Patterson Executive Vice Banking
President
Credit Division
William E. Pearson, Jr. Executive Vice Banking
President
Administration/
Finance Division
C. Perry Relfe Executive Vice Banking
President
Trust and Financial
Services Division
Item 29. Principal Underwriters:
(a) Federated Securities Corp., the Distributor for shares of the
Registrant, also acts as principal underwriter for the
following open-end investment companies: Alexander Hamilton
Funds; American Leaders Fund, Inc.; Annuity Management
Series; Arrow Funds; Automated Government Money Trust;
BayFunds; The Biltmore Funds; The Biltmore Municipal Funds;
Blanchard Funds; Blanchard Precious Metals, Inc.; Cash Trust
Series, Inc.; Cash Trust Series II; DG Investor Series;
Edward D. Jones & Co. Daily Passport Cash Trust; Federated
ARMs Fund; Federated Equity Funds; Federated Exchange Fund,
Ltd.; Federated GNMA Trust; Federated Government Trust;
Federated High Yield Trust; Federated Income Securities
Trust; Federated Income Trust; Federated Index Trust;
Federated Institutional Trust; Federated Master Trust;
Federated Municipal Trust; Federated Short-Term Municipal
Trust; Federated Short-Term U.S. Government Trust; Federated
Stock Trust; Federated Tax-Free Trust; Federated Total Return
Series, Inc.; Federated U.S. Government Bond Fund; Federated
U.S. Government Securities Fund: 1-3 Years; Federated
U.S. Government Securities Fund: 3-5 Years;First Priority
Funds; First Union Funds; Fixed Income Securities, Inc.;
Fortress Adjustable Rate U.S. Government Fund, Inc.; Fortress
Municipal Income Fund, Inc.; Fortress Utility Fund, Inc.;
Fountain Square Funds; Fund for U.S. Government Securities,
Inc.; Government Income Securities, Inc.; High Yield Cash
Trust; Independence One Mutual Funds; Insurance Management
Series; Intermediate Municipal Trust; International Series
Inc.; Investment Series Funds, Inc.; Investment Series Trust;
Liberty Equity Income Fund, Inc.; Liberty High Income Bond
Fund, Inc.; Liberty Municipal Securities Fund, Inc.; Liberty
U.S. Government Money Market Trust; Liberty Utility Fund,
Inc.; Liquid Cash Trust; Managed Series Trust; Marshall
Funds, Inc.; Money Market Management, Inc.; Money Market
Obligations Trust; Money Market Trust; The Monitor Funds;
Municipal Securities Income Trust; Newpoint Funds; 111
Corcoran Funds; Peachtree Funds; The Planters Funds; RIMCO
Monument Funds; The Shawmut Funds; SouthTrust Vulcan Funds;
Star Funds; The Starburst Funds; The Starburst Funds II;
Stock and Bond Fund, Inc.; Sunburst Funds; Targeted Duration
Trust; Tax-Free Instruments Trust; Tower Mutual Funds;
Trademark Funds; Trust for Financial Institutions; Trust for
Government Cash Reserves; Trust for Short-Term U.S.
Government Securities; Trust for U.S. Treasury Obligations;
The Virtus Funds; Vision Fiduciary Funds, Inc.; Vision Group
of Funds, Inc.; and World Investment Series, Inc.
Federated Securities Corp. also acts as principal underwriter
for the following closed-end investment company: Liberty
Term Trust, Inc.- 1999.
(b)
(1) (2) (3)
Name and Principal Positions and Offices Positions and Offices
Business Address With Underwriter With Registrant
Richard B. Fisher Director, Chairman, Chief --
Federated Investors Tower Executive Officer, Chief
Pittsburgh, PA 15222-3779 Operating Officer, Asst.
Secretary, and Asst.
Treasurer, Federated
Securities Corp.
Edward C. Gonzales Director, Executive Vice President and
Federated Investors Tower President, Federated, Treasurer
Pittsburgh, PA 15222-3779 Securities Corp.
John W. McGonigle Director, Federated --
Federated Investors Tower Securities Corp.
Pittsburgh, PA 15222-3779
John B. Fisher President-Institutional Sales, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779
James F. Getz President-Broker/Dealer, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779
Mark R. Gensheimer Executive Vice President of --
Federated Investors Tower Bank/Trust, Federated
Pittsburgh, PA 15222-3779 Securities Corp.
Mark W. Bloss Senior Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779
Richard W. Boyd Senior Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779
Theodore Fadool, Jr. Senior Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779
Bryant R. Fisher Senior Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779
Christopher T. Fives Senior Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779
(1) (2) (3)
Name and Principal Positions and Offices Positions and Offices
Business Address With Underwriter With Registrant
James S. Hamilton Senior Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779
James M. Heaton Senior Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779
Keith Nixon Senior Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779
Solon A. Person, IV Senior Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779
Timothy C. Pillion Senior Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779
Thomas E. Territ Senior Vice President, --
Federated Investors Tower Federated Securities Corp
Pittsburgh, PA 15222-3779
John B. Bohnet Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779
Byron F. Bowman Vice President, Secretary, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779
Jane E. Broeren-Lambesis Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779
Mary J. Combs Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779
R. Edmond Connell, Jr. Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779
Kevin J. Crenny Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779
(1) (2) (3)
Name and Principal Positions and Offices Positions and Offices
Business Address With Underwriter With Registrant
Daniel T. Culbertson Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779
G. Michael Cullen Vice President, --
Federated Investors Tower Federated Securites Corp.
Pittsburgh, PA 15222-3779
Laura M. Deger Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779
Jill Ehrenfeld Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779
Mark D. Fisher Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779
Michael D. Fitzherald Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779
Joseph D. Gibbons Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779
Craig S. Gonzales Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779
Richard C. Gonzales Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779
Scott A. Hutton Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779
H. Joeseph Kenedy Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779
William E. Kugler Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779
Steven A. La Versa Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779
(1) (2) (3)
Name and Principal Positions and Offices Positions and Offices
Business Address With Underwriter With Registrant
Mark J. Miehl Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779
Richard C. Mihm Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779
J. Michael Miller Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779
Michael P. O'Brien Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779
Robert D. Oehlschlager Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779
Robert F. Phillips Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779
Eugene B. Reed Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779
Paul V. Riordan Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779
John C. Shelar, Jr. Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779
David W. Spears Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779
Jeffrey A. Stewart Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779
Jamie M. Teschner Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779
William C. Tustin Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779
(1) (2) (3)
Name and Principal Positions and Offices Positions and Offices
Business Address With Underwriter With Registrant
Paul A. Uhlman Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779
Richard B. Watts Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779
Michael P. Wolff Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779
Charlene H. Jennings Assistant Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779
J. Timothy Radcliff Assistant Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779
Denis McAuley Treasurer, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779
Thomas R. Donahue Asstistant Secretary, --
Federated Investors Tower Assistant Treasurer,
Pittsburgh, PA 15222-3779 Federated Securities Corp.
Joseph M. Huber Assistant Secretary, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779
David M. Taylor Assistant Secretary, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779
Item 30. 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
Federated Services Company Pittsburgh, PA 15222-3779
("Transfer Agent and Dividend Disbursing
Agent")
Federated Administrative Services
("Administrator")
SouthTrust Bank of Alabama, N.A. 420 North 20th Street
("Adviser") Birmingham, AL 35203
State Street Bank and Trust Company P.O. Box 8602
("Custodian") Boston, MA 02266-8206
Item 31. Management Services: Not applicable.
Item 32. Undertakings:
Registrant hereby undertakes to comply with the provisions of
Section 16(c) of the 1940 Act with respect to the removal of
Trustees and the calling of special shareholder meetings by
shareholders.
Registrant hereby undertakes to furnish each person to whom a
prospectus is delivered with a copy of the Registrant's latest
annual report to shareholders, upon request and without charge.
Registrant hereby undertakes to file a post-effective amendment on
behalf of the SouthTrust Vulcan Income Fund, which need not be
certified, within four to six months from the date of this Post-
Effective Amendment No. 5.
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933 and the
Investment Company Act of 1940, the Registrant, SOUTHTRUST VULCAN FUNDS,
certifies that it meets all of the requirements for effectiveness of
this Amendment to its Registration Statement pursuant to Rule 485(a)
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, hereunto duly authorized, in the City of Pittsburgh and
Commonwealth of Pennsylvania, on the 29th day of September, 1995.
SOUTHTRUST VULCAN FUNDS
BY: /s/Peter J. Germain
Peter J. Germain, Secretary
Attorney in Fact for William O. Vann
September 29, 1995
Pursuant to the requirements of the Securities Act of 1933, this
Amendment to its Registration Statement has been signed below by the
following person in the capacity and on the date indicated:
NAME TITLE DATE
By: /s/Peter J. Germain
Peter J. Germain Attorney In Fact September 29, 1995
SECRETARY For the Persons
Listed Below
NAME TITLE
William O. Vann* Chairman and Trustee
(Chief Executive Officer)
Edward C. Gonzales* President and Treasurer
(Principal Financial and
Accounting Officer
Thomas L. Merrill, Sr.* Vice Chairman and
Trustee
Charles G. Brown, III* Trustee
Russell W. Chambliss* Trustee
D. Riley Stuart* Trustee
* By Power of Attorney
Exhibit (1)(iii) on Form N-1A
Exhibit (10) under Item 601/Reg S-K
SOUTHTRUST VULCAN FUNDS
Amendment No. 4
to
MASTER TRUST AGREEMENT
dated March 4, 1992
This Master Trust Agreement is amended as follows:
A. Strike the first paragraph of Section 4.2 of Article IV from
the Master Trust Agreement and substitute in its place the following:
"Section 4.2. Establishment and Designation of Sub-Trusts.
Without limiting the authority of the Trustees set forth
in Section 4.1 to establish and designate any
additional series or class or to modify the rights and
preferences of any further Sub-Trusts, the Trustees
hereby establish and designate four Sub-Trusts: the
Treasury Money Market Fund, Bond Fund, Stock Fund and
Income Fund. The Shares of the Treasury Money Market
Fund, Bond Fund, Stock Fund and Income Fund and any
Shares of any further Sub-Trusts that may from time to
time be established and designated by the Trustees
shall (unless the Trustees otherwise determine with
respect to some further Sub-Trust at the time of
establishing and designating the same) have the
following relative rights and preferences:"
The undersigned Assistant Secretary of SouthTrust Vulcan Funds
hereby certifies that the above-stated amendment is a true and correct
Amendment to the Master Trust Agreement, as approved by the Board of
Trustees on August 4, 1995.
WITNESS the due execution hereof this 27th day of September, 1995.
/s/C. Todd Gibson
C. Todd Gibson, Assistant Secretary
Exhibit (4)
SOUTHTRUST VULCAN FUNDS
Number Shares
_____ _____
Account No. Alpha Code See Reverse Side For
Certain Definitions
THIS IS TO CERTIFY THAT is the owner of
CUSIP_____________
Fully Paid and Non-Assessable Shares of Beneficial Interest of SOUTHTRUST
VULCAN INCOME FUND, A PORTFOLIO OF SOUTHTRUST VULCAN FUNDS,hereafter called
the Trust, transferable on the books of the Trust by the owner in person or
by duly authorized attorney upon surrender of this certificate properly
endorsed.
The shares represented hereby are issued and shall be held subject to
the provisions of the Declaration of Trust and By-Laws of the Trust and all
amendments thereto, all of which the holder by acceptance hereof assents.
This Certificate is not valid unless countersigned by the Transfer
Agent.
IN WITNESS WHEREOF, the Trust has caused this Certificate to be signed
in its name by its proper officers and to be sealed with its seal.
Dated: SOUTHTRUST VULCAN FUNDS
Corporate Seal
1992
Massachusetts
/s/ Edward C. Gonzales
President and Treasurer
Countersigned Federated Services
Company (Boston)
Transfer Agent
By:
Authorized Signature
The following abbreviations, when used in the inscription on the face of this
Certificate, shall be construed as though they were written out in full
according to applicable laws or regulations;
TEN COM - as tenants in common UNIF GIFT MIN ACT-...Custodian...
TEN ENT - as tenants by the entireties (Cust) (Minors)
JT TEN - as joint tenants with right of under Uniform Gifts to Minors
survivorship and not as tenants Act.............................
in common (State)
Additional abbreviations may also be used though not in the above list.
For value received__________ hereby sell, assign, and transfer unto
Please insert social security or other
identifying number of assignee
______________________________________
_____________________________________________________________________________
(Please print or typewrite name and address, including zip code, of assignee)
_____________________________________________________________________________
_____________________________________________________________________________
______________________________________________________________________ shares
of beneficial interest represented by the within Certificate, and do hereby
irrevocably constitute and appoint __________________________________________
_____________________________________________________________________________
to transfer the said shares on the books of the within named Trust with full
power of substitution in the premises.
Dated______________________
NOTICE:______________________________
The signature to this assignment must
correspond with the name as written upon
the face of the certificate in every
particular, without alteration or
enlargement or any change whatever.
All persons dealing with , a Massachusetts business
trust, must look solely to the Trust property for the enforcement of any
claim against the Trust, as the Trustees, officers, agents or shareholders of
the Trust assume no personal liability whatsoever for obligations entered
into on behalf of the Trust.
THIS SPACE MUST NOT BE COVERED IN ANY WAY
DOCUMENT DESCRIPTION - SPECIMEN STOCK CERTIFICATE
Page One
A. The Certificate is outlined by an (color) one-half inch border.
B. The number in the upper left-hand corner and the number of shares in
the upper right-hand corner are outlined by octagonal boxes.
C. The cusip number in the middle right-hand area of the page is boxed.
D. The Massachusetts corporate seal appears in the bottom middle of the
page.
Page Two
The social security or other identifying number of the assignee
appears in a box in the top-third upper-left area of the page.
SouthTrust Vulcan Funds Page 1 7/18/95, ver.1
Exhibit 5(I) on Form N-1A
Exhibit (10) under Item 601/Reg S-K
AMENDMENT
to the
Investment Advisory Agreement
dated May 6, 1992 between
SouthTrust Vulcan Funds and
SouthTrust Bank of Alabama, N.A.
SouthTrust Vulcan Income Fund
The Investment Advisory Agreement ("Agreement") referred to above is
amended as follows:
1. Delete the second recital in its entirety and substitute in its
place the following:
"WHEREAS, the Company has four investment portfolios: the
Treasury Obligations Money Market Fund, the Bond Fund, the Stock
Fund and the Income Fund (the "Portfolios"); and "
2. Delete the first paragraph of Paragraph 7 in its entirety and
substitute in its place the following:
"7. Compensation. For the services provided and the
expenses
assumed pursuant to this Agreement, effective as of the
date hereof, the Company will pay SouthTrust and SouthTrust
will accept as full compensation therefor, subject to the
provisions of paragraph 6, above, a fee, computed daily and
paid monthly (in arrears), at an annual rate of .50% of the
average daily net assets of the Treasury Obligations Money
Market Fund, .60% of the average daily net assets of the
Bond Fund, .75% of the average daily net assets of the
Stock Fund and .60% of the average daily net assets of the
Income Fund."
Witness the due execution hereof this 1st day of September, 1995.
Attest: SouthTrust Bank of Alabama, N.A.
By:
Secretary Executive Vice President
Attest: SouthTrust Vulcan Funds
By:
Assistant Secretary Chairman
Page 1
Exhibit 6(I) on Form N-1A
Exhibit (10) under Item 601/Reg S-K
Exhibit D
to the
Distributor's Contract
SOUTHTRUST VULCAN FUNDS
Income Fund
The following provisions are hereby incorporated and made part of the
Distributor's Contract dated the 2nd day of April, 1993, between SouthTrust
Vulcan Funds and Federated Securities Corp. with respect to Portfolio of
the Funds set forth above.
1. The Trust hereby appoints FSC to engage in activities principally intended
to result in the sale of shares of the above-listed Portfolio ("Shares").
Pursuant to this appointment, FSC is authorized to select a group of
brokers ("Brokers") to sell Shares at the current offering price thereof
as described and set forth in the respective prospectuses of the Trust,
and to render administrative support services to the Trust and its
shareholders. In addition, FSC is authorized to select a group of
administrators ("Administrators") to render administrative support
services to the Trust and its shareholders.
2. Administrative support services may include, but are not limited to, the
following functions: 1) account openings: the Broker or Administrator
communicates account openings via computer terminals located on the
Broker's or Administrator's premises; 2) account closings: the Broker or
Administrator communicates account closings via computer terminals; 3)
enter purchase transactions: purchase transactions are entered through
the Broker's or Administrator's own personal computer or through the use
of a toll-free telephone number; 4) enter redemption transactions: Broker
or Administrator enters redemption transactions in the same manner as
purchases; 5) account maintenance: Broker or Administrator provides or
arranges to provide accounting support for all transactions. Broker or
Administrator also wires funds and receives funds for Trust share
purchases and redemptions, confirms and reconciles all transactions,
reviews the activity in the Trust's accounts, and provides training and
supervision of its personnel; 6) interest posting: Broker or
Administrator posts and reinvests dividends to the Trust's accounts; 7)
prospectus and shareholder reports: Broker or Administrator maintains and
distributes current copies of prospectuses and shareholder reports; 8)
advertisements: the Broker or Administrator continuously advertises the
availability of its services and products; 9) customer lists: the Broker
or Administrator continuously provides names of potential customers; 10)
design services: the Broker or Administrator continuously designs
material to send to customers and develops methods of making such
materials accessible to customers; and 11) consultation services: the
Broker or Administrator continuously provides information about the
product needs of customers.
3. During the term of this Agreement, the Trust will pay FSC for services
pursuant to this Agreement, a monthly fee computed at the annual rate of
.25 of 1% of the average aggregate net asset value of the shares of the
Income Fund held during the month. For the month in which this Agreement
becomes effective or terminates, there shall be an appropriate proration
of any fee payable on the basis of the number of days that the Agreement
is in effect during the month.
4. FSC may from time-to-time and for such periods as it deems appropriate
reduce its compensation to the extent the Portfolio's expenses exceed such
lower expense limitation as FSC may, by notice to the Trust voluntarily
declare to be effective.
5. FSC will enter into separate written agreements with various firms to
provide certain of the services set forth in Paragraph 1 herein. FSC, in
its sole discretion, may pay Brokers and Administrators a periodic fee in
respect of Shares owned from time to time by their clients or customers.
The schedules of such fees and the basis upon which such fees will be paid
shall be determined from time to time by FSC in its sole discretion.
6. FSC will prepare reports to the Board of Trustees of the Trust on a
quarterly basis showing amounts expended hereunder including amounts paid
to Brokers and Administrators and the purpose for such payments.
In consideration of the mutual covenants set forth in the Distributor's
Contract dated April 2, 1993 between SouthTrust Vulcan Funds and Federated
Securities Corp., SouthTrust Vulcan Funds executes and delivers this
Exhibit on behalf of and with respect to the Portfolio thereof, first set
forth in this Exhibit.
Witness the due execution hereof this 1st day of September, 1995
ATTEST: SOUTHTRUST VULCAN FUNDS
By:
Secretary President
(SEAL)
ATTEST: FEDERATED SECURITIES CORP.
By:
Secretary Executive Vice President
(SEAL)
1
Exhibit 15(I) on Form N-1A
Exhibit 10 under Item 601/Reg S-K
RULE 12b-1 AGREEMENT
This Agreement is made between the Institution executing this Agreement
("Administrator") and Federated Securities Corp. ("FSC") for the mutual funds
(referred to individually as the "Fund" and collectively as the "Funds") for
which FSC serves as Distributor of shares of beneficial interest or capital
stock ("Shares") and which have adopted a Rule 12b-1 Plan ("Plan") and approved
this form of agreement pursuant to Rule 12b-1 under the Investment Company Act
of 1940. In consideration of the mutual covenants hereinafter contained, it is
hereby agreed by and between the parties hereto as follows:
1. FSC hereby appoints Administrator to render or cause to be rendered sales
and/or administrative support services to the Funds and their
shareholders.
2. The services to be provided under Paragraph 1 may include, but are not
limited to, the following:
(a) communicating account openings through computer terminals located
on the Administrator's premises ("computer terminals"), through a
toll-free telephone number or otherwise;
(b) communicating account closings via the computer terminals, through a
toll-free telephone number or otherwise;
(c) entering purchase transactions through the computer terminals,
through a toll-free telephone number or otherwise;
(d) entering redemption transactions through the computer terminals,
through a toll-free telephone number or otherwise;
(e) electronically transferring and receiving funds for Fund Share
purchases and redemptions, and confirming and reconciling all such
transactions;
(f) reviewing the activity in Fund accounts;
(g) providing training and supervision of its personnel;
(h) maintaining and distributing current copies of prospectuses and
shareholder reports;
(i) advertising the availability of its services and products;
(j) providing assistance and review in designing materials to send to
customers and potential customers and developing methods of making
such materials accessible to customers and potential customers; and
(k) responding to customers' and potential customers' questions about
the Funds.
The services listed above are illustrative. The Administrator is not required
to perform each service and may at any time perform either more or fewer
services than described above.
3. During the term of this Agreement, FSC will pay the Administrator fees for
each Fund as set forth in a written schedule delivered to the
Administrator pursuant to this Agreement. FSC's fee schedule for
Administrator may be changed by FSC sending a new fee schedule to
Administrator pursuant to Paragraph 12 of this Agreement. For the payment
period in which this Agreement becomes effective or terminates, there
shall be an appropriate proration of the fee on the basis of the number of
days that the Rule 12b-1 Agreement is in effect during the quarter.
4. The Administrator will not perform or provide any duties which would cause
it to be a fiduciary under Section 4975 of the Internal Revenue Code, as
amended. For purposes of that Section, the Administrator understands that
any person who exercises any discretionary authority or discretionary
control with respect to any individual retirement account or its assets,
or who renders investment advice for a fee, or has any authority or
responsibility to do so, or has any discretionary authority or
discretionary responsibility in the administration of such an account, is
a fiduciary.
5. The Administrator understands that the Department of Labor views ERISA as
prohibiting fiduciaries of discretionary ERISA assets from receiving
administrative service fees or other compensation from funds in which the
fiduciary's discretionary ERISA assets are invested. To date, the
Department of Labor has not issued any exemptive order or advisory opinion
that would exempt fiduciaries from this interpretation. Without specific
authorization from the Department of Labor, fiduciaries should carefully
avoid investing discretionary assets in any fund pursuant to an
arrangement where the fiduciary is to be compensated by the fund for such
investment. Receipt of such compensation could violate ERISA provisions
against fiduciary self-dealing and conflict of interest and could subject
the fiduciary to substantial penalties.
6. The Administrator agrees not to solicit or cause to be solicited directly,
or indirectly at any time in the future, any proxies from the shareholders
of any or all of the Funds in opposition to proxies solicited by
management of the Fund or Funds, unless a court of competent jurisdiction
shall have determined that the conduct of a majority of the Board of
Directors of the Fund or Funds constitutes willful misfeasance, bad faith,
gross negligence or reckless disregard of their duties. This paragraph 6
will survive the term of this Agreement.
7. With respect to each Fund, this Agreement shall continue in effect for one
year from the date of its execution, and thereafter for successive periods
of one year if the form of this Agreement is approved at least annually by
the Directors of the Fund, including a majority of the members of the
Board of Directors of the Fund who are not interested persons of the Fund
and have no direct or indirect financial interest in the operation of the
Fund's Plan or in any related documents to the Plan ("Disinterested
Directors ") cast in person at a meeting called for that purpose.
8. Notwithstanding paragraph 7, this Agreement may be terminated as follows:
(a) at any time, without the payment of any penalty, by the vote of a
majority of the Disinterested Directors of the Fund or by a vote of
a majority of the outstanding voting securities of the Fund as
defined in the Investment Company Act of 1940 on not more than sixty
(60) days' written notice to the parties to this Agreement;
(b) automatically in the event of the Agreement's assignment as defined
in the Investment Company Act of 1940 or upon the termination of the
"Administrative Support and Distributor's Contract" or
"Distributor's Contract" between the Fund and FSC; and
(c) by either party to the Agreement without cause by giving the other
party at least sixty (60) days' written notice of its intention to
terminate.
9. The termination of this Agreement with respect to any one Fund will not
cause the Agreement's termination with respect to any other Fund.
10. The Administrator agrees to obtain any taxpayer identification number
certification from its customers required under Section 3406 of the
Internal Revenue Code, and any applicable Treasury regulations, and to
provide FSC or its designee with timely written notice of any failure to
obtain such taxpayer identification number certification in order to
enable the implementation of any required backup withholding.
11. This Agreement supersedes any prior service agreements between the parties
for the Funds.
12. This Agreement may be amended by FSC from time to time by the
following procedure. FSC will mail a copy of the amendment to the
Administrator's address, as shown below. If the Administrator does not
object to the amendment within thirty (30) days after its receipt, the
amendment will become part of the Agreement. The Administrator's
objection must be in writing and be received by FSC within such thirty
days.
13. This Agreement shall be construed in accordance with the Laws of the
Commonwealth of Pennsylvania.
SouthTrust Securities, Inc.
Address
City State Zip Code
Dated:______________ By:
Authorized Signature
Title
_________________________________
Print Name of Authorized Signature
FEDERATED SECURITIES CORP.
Federated Investors Tower
Pittsburgh, Pennsylvania 15222-3779
By:
Richard B. Fisher, President
SouthTrust Vulcan Funds
EXHIBIT A to 12b-1 Agreement with
Federated Securities Corp. ("FSC")
Portfolios
FSC will pay Administrator fees for the following portfolios (the "Funds")
effective as of the dates set forth below:
Name Date
Income Fund September 1, 1995
Administrative Fees
1. During the term of this Agreement, FSC will pay Administrator a quarterly
fee in respect of each Fund. This fee will be computed at the annual rate
of .25% of the average net asset value of Shares held during the quarter
in accounts for which the Administrator provides services under this
Agreement, so long as the average net asset value of Shares in each Fund
during the quarter equals or exceeds such minimum amount as FSC shall from
time to time determine and communicate in writing to the Administrator.
2. For the quarterly period in which the Agreement becomes effective or
terminates, there shall be an appropriate proration of any fee payable on
the basis of the number of days that the Agreement is in effect during the
quarter.
Exhibit 15(ii) on Form N-1A
Exhibit (10) under Item 601/Reg S-K
SOUTHTRUST VULCAN FUNDS
RULE 12B-1 PLAN
This Plan ("Plan") is adopted as of this 2nd day of April, 1993 by the
Board of Trustees of SouthTrust Vulcan Funds (the "Trust"), a
Massachusetts business trust with respect to certain classes of shares
("Classes") of the portfolios of the Trust (the "Funds") set forth in
exhibits hereto.
1. This Plan is adopted pursuant to Rule 12b-1 under the Investment
Company Act of 1940, as amended ("Act"), so as to allow the Trust to make
payments as contemplated herein, in conjunction with the distribution of
Classes of the Funds ("Shares").
2. This Plan is designed to finance activities of Federated Securities
Corp. ("FSC") principally intended to result in the sale of Shares to
include: (a) providing incentives to broker/dealers ("Brokers") to sell
Shares and to provide administrative support services to the Funds and
their shareholders; (b) compensating other participating financial
institutions and other persons ("Administrators") for providing
administrative support services to the Funds and their shareholders; (c)
paying for the costs incurred in conjunction with advertising and
marketing of Shares to include expenses of preparing, printing and
distributing prospectuses and sales literature to prospective
shareholders, Brokers or Administrators; and (d) other costs incurred in
the implementation and operation of the Plan. In compensation for
services provided pursuant to this Plan, FSC will be paid a fee in respect
of the following Classes set forth on the applicable exhibit.
3. Any payment to FSC in accordance with this Plan will be made
pursuant to the "Distributor's Contract" entered into by the Trust and
FSC. Any payments made by FSC to Brokers and Administrators with funds
received as compensation under this Plan will be made pursuant to the
"Rule 12b-1 Agreement" entered into by FSC and the Broker or
Administrator.
4. FSC has the right (i) to select, in its sole discretion, the Brokers
and Administrators to participate in the Plan and (ii) to terminate
without cause and in its sole discretion any Rule 12b-1 Agreement.
5. Quarterly in each year that this Plan remains in effect, FSC shall
prepare and furnish to the Board of Trustees of the Trust and the Board of
Trustees shall review, a written report of the amounts expended under the
Plan and the purpose for which such expenditures were made.
6. This Plan shall become effective with respect to each Class
(i) after approval by majority votes of: (a) the Trust's Board of
Trustees; (b) the members of the Board of the Trust who are not interested
persons of the Trust and have no direct or indirect financial interest in
the operation of the Trust's Plan or in any related documents to the Plan
("Disinterested Trustees"), cast in person at a meeting called for the
purpose of voting on the Plan; and (c) the outstanding voting securities
of the particular Class, as defined in Section 2(a)(42) of the Act and
(ii) upon execution of an exhibit adopting this Plan with respect to such
Class.
7. This Plan shall remain in effect with respect to each Class
presently set forth on an exhibit and any subsequent Classes added
pursuant to an exhibit during the initial year of this Plan for the period
of one year from the date set forth above and may be continued thereafter
if this Plan is approved with respect to each Class at least annually by a
majority of the Trust's Board of Trustees and a majority of the
Disinterested Trustees, cast in person at a meeting called for the purpose
of voting on such Plan. If this Plan is adopted with respect to a Class
after the first annual approval by the Trustees as described above, this
Plan will be effective as to that Class upon execution of the applicable
exhibit pursuant to the provisions of paragraph 6(ii) above and will
continue in effect until the next annual approval of this Plan by the
Trustees and thereafter for successive periods of one year subject to
approval as described above.
8. All material amendments to this Plan must be approved by a vote of
the Board of Trustees of the Trust and of the Disinterested Trustees cast
in person at a meeting called for the purpose of voting on it.
9. This Plan may not be amended in order to increase materially the
costs which the Classes may bear for distribution pursuant to the Plan
without being approved by a majority vote of the outstanding voting
securities of the Classes as defined in Section 2(a)(42) of the Act.
10. This Plan may be terminated with respect to a particular Class at any
time by: (a) a majority vote of the Disinterested Trustees; or (b) a vote
of a majority of the outstanding voting securities of the particular Class
as defined in Section 2(a)(42) of the Act; or (c) by FSC on 60 days'
notice to the Trust.
11. While this Plan shall be in effect, the selection and nomination of
Disinterested Trustees of the Trust shall be committed to the discretion
of the Disinterested Trustees then in office.
12. All agreements with any person relating to the implementation of this
Plan shall be in writing and any agreement related to this Plan shall be
subject to termination, without penalty, pursuant to the provisions of
Paragraph 10 herein.
13. This Plan shall be construed in accordance with and governed by the
laws of the Commonwealth of Pennsylvania.
EXHIBIT A
to the
Plan
SouthTrust Vulcan Funds
INCOME FUND
This Plan is adopted by SouthTrust Vulcan Funds with respect to the
portfolio of the Trust set forth above.
In compensation for the services provided pursuant to this Plan, FSC will
be paid a monthly fee computed at the annual rate of .25 of 1% of the average
aggregate net asset value of the Income Fund held during the month.
Witness the due execution hereof this 1st day of September, 1995.
SouthTrust Vulcan Funds
By:
Edward C. Gonzales
President
Exhibit 19 on Form N-1A
Exhibit (24) under Item 601/Reg S-K
POWER OF ATTORNEY
Each person whose signature appears below hereby constitutes and appoints
the Secretary and Assistant Secretary of VULCAN FUNDS and the Assistant General
Counsel of Federated Investors, and each of them, their true and lawful
attorneys-in-fact and agents, with full power of substitution and resubstitution
for them and in their names, place and stead, in any and all capacities, to sign
any and all documents to be filed with the Securities and Exchange Commission
pursuant to the Securities Act of 1933, the Securities Exchange Act of 1934 and
the Investment Company Act of 1940, by means of the Securities and Exchange
Commission's electronic disclosure system known as EDGAR; and to file the same,
with all exhibits thereto and other documents in connection therewith, with the
Securities and Exchange Commission, granting unto said attorneys-in-fact and
agents, and each of them, full power and authority to sign and perform each and
every act and thing requisite and necessary to be done in connection therewith,
as fully to all intents and purposes as each of them might or could do in
person, hereby ratifying and confirming all that said attorneys-in-fact and
agents, or any of them, or their or his substitute or substitutes, may lawfully
do or cause to be done by virtue thereof.
SIGNATURES TITLE DATE
/s/William O. Vann Trustee and Chairman May 5, 1993
William O. Vann of the Board
/s/Edward C. Gonzales President and Treasurer May 5, 1993
Edward C. Gonzales (Principal Executive Officer
Principal Financial and
Accounting Officer)
/s/Thomas L. Merrill, Sr. Trustee and Vice Chairman May 5, 1993
Thomas L. Merrill, Sr. of the Board
/s/Charles G. Brown, III Trustee May 5, 1993
Charles G. Brown, III
/s/Russell W. Chambliss Trustee May 5, 1993
Russell W. Chambliss
/s/D. Riley Stuart Trustee May 5, 1993
D. Riley Stuart
Sworn to and subscribed before me this 5th day of May, 1993
/s/Loretta Y. Crum
Notary Public
<TABLE> <S> <C>
<S> <C>
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<SERIES>
<NUMBER> 2
<NAME> VULCAN BOND FUND
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<PERIOD-END> Apr-30-1995
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<PER-SHARE-NII> 0.610
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</TABLE>
<TABLE> <S> <C>
<S> <C>
<ARTICLE> 6
<SERIES>
<NUMBER> 3
<NAME> VULCAN STOCK FUND
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> Apr-30-1995
<PERIOD-END> Apr-30-1995
<INVESTMENTS-AT-COST> 127,506,935
<INVESTMENTS-AT-VALUE> 140,759,834
<RECEIVABLES> 1,260,702
<ASSETS-OTHER> 73,366
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 142,093,902
<PAYABLE-FOR-SECURITIES> 3,692,946
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 120,190
<TOTAL-LIABILITIES> 3,813,136
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 123,264,614
<SHARES-COMMON-STOCK> 12,018,541
<SHARES-COMMON-PRIOR> 3,680,863
<ACCUMULATED-NII-CURRENT> 114,802
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 1,648,451
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 13,252,899
<NET-ASSETS> 138,280,766
<DIVIDEND-INCOME> 1,995,446
<INTEREST-INCOME> 310,555
<OTHER-INCOME> 0
<EXPENSES-NET> 637,186
<NET-INVESTMENT-INCOME> 1,668,815
<REALIZED-GAINS-CURRENT> 1,895,010
<APPREC-INCREASE-CURRENT> 13,350,921
<NET-CHANGE-FROM-OPS> 16,914,746
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 1,569,099
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 9,649,918
<NUMBER-OF-SHARES-REDEEMED> 1,319,808
<SHARES-REINVESTED> 7,567
<NET-CHANGE-IN-ASSETS> 101,166,694
<ACCUMULATED-NII-PRIOR> 15,086
<ACCUMULATED-GAINS-PRIOR> (246,559)
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 643,017
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 973,130
<AVERAGE-NET-ASSETS> 83,853,929
<PER-SHARE-NAV-BEGIN> 10.080
<PER-SHARE-NII> 0.200
<PER-SHARE-GAIN-APPREC> 1.430
<PER-SHARE-DIVIDEND> 0.200
<PER-SHARE-DISTRIBUTIONS> 0.000
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<PER-SHARE-NAV-END> 11.510
<EXPENSE-RATIO> 74
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0.000
</TABLE>
<TABLE> <S> <C>
<S> <C>
<ARTICLE> 6
<SERIES>
<NUMBER> 1
<NAME> VULCAN TREASURY OBLIGATIONS MONEY MARKET
FUND
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<PERIOD-END> Apr-30-1995
<INVESTMENTS-AT-COST> 315,453,563
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<INTEREST-INCOME> 12,715,233
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<NET-INVESTMENT-INCOME> 11,615,086
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</TABLE>
