PLANTERS FUNDS, 485BPOS, 1996-09-26

PLANTERS FUNDS
485BPOS, 1996-09-26

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1933 Act File No. 33-49701
1940 Act File No. 811-7065

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. 6 ........... X

and/or

REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT OF 1940 X

Amendment No. 4 .......................... X

THE PLANTERS 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)
x on September 30, 1996 pursuant to paragraph (b)
60 days after filing pursuant to paragraph (a) (i)
on pursuant to paragraph (a) (i).
75 days after filing pursuant to paragraph (a)(ii)
on pursuant to paragraph (a)(ii) of Rule 485.
-----------------

If appropriate, check the following box:

This post-effective amendment designates a new effective date for a
previously filed post-effective amendment.

Registrant has filed with the Securities and Exchange Commission a
declaration pursuant to Rule 24f-2 under the Investment Company Act of
1940, and:

x filed the Notice required by that Rule on September 16, 1996; or
intends to file the Notice required by that Rule on or about
; or
------------
during the most recent fiscal year did not sell any securities pursuant
to Rule 24f-2 under the Investment Company Act of 1940, and, pursuant to
Rule 24f-2(b)(2), need not file the Notice.

Copies to:

Matthew J. Maloney, Esquire
Dickstein, Shapiro & Morin, L.L.P.
2101 L. Street, N.W.
Washington, D.C. 20037

CROSS REFERENCE SHEET

This Amendment to the Registration Statement of THE PLANTERS FUNDS,
which consists of one portfolio, Tennessee Tax-Free Bond Fund, is comprised
of the following:

PART A. INFORMATION REQUIRED IN A PROSPECTUS.

Prospectus Heading
(Rule 404(c) Cross Reference)

Item 1. Cover Page...............Cover Page.
Item 2. Synopsis.................Summary of Fund Expenses.
Item 3. Condensed Financial
Information............Financial Highlights; Performance
Information.
Item 4. General Description of
Registrant.............General Information; Investment
Information; Investment Objective;
Investment Policies; Tennessee Municipal
Securities; Investment Risks; Non-
Diversification; Investment Limitations.
Item 5. Management of the Fund...The Planters Funds Information;
Management of the Trust; Distribution of
Fund Shares; Administration of the Fund.
Item 6. Capital Stock and Other
Securities.............Dividends and Distributions; Shareholder
Information; Voting Rights;
Massachusetts Partnership Law; Effect of
Banking Laws; Tax Information; Federal
Income Tax; State of Tennessee Taxes;
Other State and Local Taxes.
Item 7. Purchase of Securities Being
Offered................Net Asset Value; Investing in the Fund;
Share Purchases; Minimum Investment
Required; What Shares Cost; Reducing the
Sales Charge; Certificates and
Confirmations.
Item 8. Redemption or Repurchase.Redeeming Shares; Accounts With Low
Balances.
Item 9. Pending Legal Proceedings None.

PART B. INFORMATION REQUIRED IN A STATEMENT OF ADDITIONAL INFORMATION.

Item 10. Cover Page...............Cover Page.
Item 11. Table of Contents........Table of Contents.
Item 12. General Information and
History..................General Information About the Fund;
Appendix.
Item 13. Investment Objectives and
Policies.................Investment Objective and Policies.
Item 14. Management of the Fund...The Planters Funds Management.
Item 15. Control Persons and Principal
Holders of Securities....Not Applicable.
Item 16. Investment Advisory and Other
Services.................Investment Advisory Services; Other
Services.
Item 17. Brokerage Allocation.....Brokerage Transactions.
Item 18. Capital Stock and Other
Securities...............Not Applicable.
Item 19. Purchase, Redemption and
Pricing of Securities Being
Offered..................Purchasing Shares; Determining Net Asset
Value; Redeeming Shares.
Item 20. Tax Status...............Tax Status.
Item 21. Underwriters.............Not Applicable.
Item 22. Calculation of Performance
Data.....................Total Return; Yield; Tax-Equivalent
Yield; Performance Comparisons.
Item 23. Financial Statements.....Filed in Part A.

- --------------------------------------------------------------------------------

- --------------------------------------------------------------------------------
TENNESSEE TAX-FREE BOND FUND
(A PORTFOLIO OF THE PLANTERS FUNDS)
PROSPECTUS

The shares of Tennessee Tax-Free Bond Fund (the "Fund") offered by this
prospectus represent interests in a non-diversified portfolio of securities
which is an investment portfolio in The Planters Funds (the "Trust"), an
open-end management investment company (a mutual fund).

The investment objective of the Fund is to provide current income exempt from
federal income tax and personal income taxes imposed by the state of Tennessee
and Tennessee municipalities. The Fund invests primarily in a portfolio of
municipal securities which are exempt from federal income tax and personal
income taxes imposed by the state of Tennessee and Tennessee municipalities
("Tennessee Municipal Securities"). These securities include those issued by or
on behalf of the state of Tennessee and Tennessee municipalities as well as
those issued by states, territories and possessions of the United States that
are not issued by or on behalf of Tennessee and its political subdivisions, but
which are exempt from Tennessee state income tax.

THE SHARES OFFERED BY THIS PROSPECTUS ARE NOT DEPOSITS OR OBLIGATIONS OF UNION
PLANTERS NATIONAL BANK, ARE NOT ENDORSED OR GUARANTEED BY UNION PLANTERS
NATIONAL BANK, OR ANY BANK, AND ARE NOT INSURED BY THE FEDERAL DEPOSIT INSURANCE
CORPORATION ("FDIC"), THE FEDERAL RESERVE BOARD OR ANY OTHER GOVERNMENT AGENCY.
INVESTMENT IN THESE SHARES INVOLVES INVESTMENT RISKS, INCLUDING THE POSSIBLE
LOSS OF PRINCIPAL.

This prospectus contains the information you should read and know before you
invest in the Fund. Keep this prospectus for future reference.

The Fund has also filed a Statement of Additional Information dated September
30, 1996, with the Securities and Exchange Commission ("SEC"). The information
contained in the Statement of Additional Information is incorporated by
reference into this prospectus. You may request a copy of the Statement of
Additional Information free of charge, obtain other information, or make
inquiries about the Fund by calling Union Planters Brokerage Services at
1-800-238-7125. The Statement of Additional Information, material incorporated
by reference into this document, and other information regarding the Trust is
maintained electronically with the SEC at Internet Web site
(http://www.sec.gov.).

THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.

Prospectus dated September 30, 1996

TABLE OF CONTENTS
- --------------------------------------------------------------------------------

SUMMARY OF FUND EXPENSES 1
- ------------------------------------------------------

FINANCIAL HIGHLIGHTS 2
- ------------------------------------------------------

GENERAL INFORMATION 3
- ------------------------------------------------------

INVESTMENT INFORMATION 3
- ------------------------------------------------------

Investment Objective 3
Investment Policies 3
Tennessee Municipal Securities 6
Investment Risks 6
Non-Diversification 6
Investment Limitations 7

THE PLANTERS FUNDS INFORMATION 7
- ------------------------------------------------------
Management of the Trust 7
Distribution of Fund Shares 8
Administration of the Fund 9

NET ASSET VALUE 9
- ------------------------------------------------------

INVESTING IN THE FUND 9
- ------------------------------------------------------

Share Purchases 9
Minimum Investment Required 10
What Shares Cost 10
Reducing the Sales Charge 11
Certificates and Confirmations 12
Dividends and Distributions 12

REDEEMING SHARES 12
- ------------------------------------------------------

Accounts with Low Balances 13

SHAREHOLDER INFORMATION 14
- ------------------------------------------------------

Voting Rights 14
Massachusetts Partnership Law 14

EFFECT OF BANKING LAWS 14
- ------------------------------------------------------

TAX INFORMATION 15
- ------------------------------------------------------

Federal Income Tax 15
State of Tennessee Taxes 15
Other State and Local Taxes 15

PERFORMANCE INFORMATION 16
- ------------------------------------------------------

FINANCIAL STATEMENTS 17
- ------------------------------------------------------

INDEPENDENT ACCOUNTANTS' REPORT 28

- ------------------------------------------------------

ADDRESSES 29
- ------------------------------------------------------

SUMMARY OF FUND EXPENSES
- --------------------------------------------------------------------------------

<TABLE>
<S> <C> <C>
SHAREHOLDER TRANSACTION EXPENSES
Maximum Charge Imposed on Purchases (as a percentage of offering price)............... 2.00%
Maximum Charge 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 Fee (as a percentage of amount redeemed, if applicable).................... None
Exchange Fee.......................................................................... None
ANNUAL FUND OPERATING EXPENSES
(As a percentage of average net assets)
Management Fee (after waiver)(1)...................................................... 0.00%
12b-1 Fee............................................................................. None
Other Expenses........................................................................ 1.07%
Total Fund Operating Expenses(2)............................................ 1.07%
</TABLE>

(1) The management fee has been reduced to reflect a 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 0.75%.

(2) The Total Fund Operating Expenses were 0.86% for the fiscal year ended July
31, 1996. Total Fund Operating Expenses in the table above reflect a
reduction in the voluntary waiver of the administrative personnel and
services fee for the fiscal year ended July 31, 1997. Total Fund Operating
Expenses are anticipated to be 1.82% absent the voluntary waiver of the
management fee (See (1) above).

The purpose of this table is to assist an investor in understanding the
various costs and expenses that a shareholder of the Fund will bear, either
directly or indirectly. For more complete descriptions of the various costs and
expenses, see "The Planters Funds Information," and "Investing in the Fund."
Wire-transferred redemptions of less than $5,000 may be subject to additional
fees.

<TABLE>
<CAPTION>
EXAMPLE 1 year 3 years 5 years 10 years
- -------------------------------------------------------- ------ ------- ------- --------
<S> <C> <C> <C> <C>
You would pay the following expenses on a $1,000
investment assuming (1) 5% annual return; (2) redemption
at the end of each time period; and (3) payment of the
maximum charge.......................................... $ 31 $53 $78 $148
</TABLE>

THE ABOVE EXAMPLE SHOULD NOT BE CONSIDERED A REPRESENTATION OF PAST OR
FUTURE EXPENSES. ACTUAL EXPENSES MAY BE GREATER OR LESS THAN THOSE SHOWN.

TENNESSEE TAX-FREE BOND FUND
(A PORTFOLIO OF THE PLANTERS FUNDS)

FINANCIAL HIGHLIGHTS
- --------------------------------------------------------------------------------
(FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD)
<TABLE>
<CAPTION>
YEAR ENDED JULY 31,
--------------------------------------
1996 1995 1994 (A)
- --------------------------------------------------- ------ --------- ---------
<S> <C> <C> <C>
NET ASSET VALUE, BEGINNING OF PERIOD $10.46 $ 10.22 $ 10.50
- ---------------------------------------------------
INCOME FROM INVESTMENT OPERATIONS
- ---------------------------------------------------
Net investment income 0.50 0.51 0.44
- ---------------------------------------------------
Net realized and unrealized gain (loss) on
investments 0.07 0.24 (0.31)
- --------------------------------------------------- ------ ------ ------
Total from investment operations 0.57 0.75 0.13
- ---------------------------------------------------
LESS DISTRIBUTIONS
- ---------------------------------------------------
Distributions from net investment income (0.49) (0.51) (0.41)
- --------------------------------------------------- ------ ------ ------
NET ASSET VALUE, END OF PERIOD $10.54 $ 10.46 $ 10.22
- --------------------------------------------------- ------ ------- -------
TOTAL RETURN (b) 5.57% 7.60% 1.19%
- ---------------------------------------------------
RATIOS TO AVERAGE NET ASSETS
- ---------------------------------------------------
Expenses 0.86% 0.61% 0.56%*
- ---------------------------------------------------
Net investment income 4.62% 4.93% 4.69%*
- ---------------------------------------------------
Expense waiver/reimbursement (c) 0.80% 0.95% 0.87%*
- ---------------------------------------------------
SUPPLEMENTAL DATA
- ---------------------------------------------------
Net assets, end of period (000 omitted) $29,668 $35,888 $42,400
- ---------------------------------------------------
Portfolio turnover 0% 3% 30%
- ---------------------------------------------------
</TABLE>

* Computed on an annualized basis.

(a) Reflects operations for the period from August 30, 1993 (date of initial
public investment) to July 31, 1994. For the period from August 5, 1993
(start of business) to August 29, 1993, all income was distributed to the
administrator.

(b) Based on net asset value, which does not reflect the sales charge or
contingent deferred sales charge, if applicable.

(See Notes which are an integral part of the Financial Statements)

GENERAL INFORMATION
- --------------------------------------------------------------------------------

The Trust was established as a Massachusetts business trust under a Declaration
of Trust dated May 14, 1993. The Declaration of Trust permits the Trust to offer
separate series of shares of beneficial interest representing interests in
separate portfolios of securities. The shares in any one portfolio may be
offered in separate classes. With respect to this Fund, as of the date of this
prospectus, the Board of Trustees ("Trustees") has not established separate
classes of shares.

Shares of the Fund are designed for customers of financial institutions such as
broker/dealers, banks, fiduciaries, and investment advisers as a convenient
means of accumulating an interest in a professionally managed, non-diversified
portfolio investing primarily in Tennessee Municipal Securities. A minimum
initial investment of $1,000 is required. The Fund is not likely to be a
suitable investment for non-Tennessee taxpayers or retirement plans since the
Fund invests in Tennessee Municipal Securities.

Except as otherwise noted in this prospectus, shares of the Fund are sold at net
asset value plus a sales charge and are redeemed at net asset value.

INVESTMENT INFORMATION
- --------------------------------------------------------------------------------

INVESTMENT OBJECTIVE

The investment objective of the Fund is to provide current income exempt from
federal income tax and personal income taxes imposed by the state of Tennessee
and Tennessee municipalities. The investment objective cannot be changed without
approval of shareholders of a majority of the Fund's shares. 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.

Interest income of the Fund that is exempt from the income tax described above
retains its exempt status when distributed to the Fund's shareholders. However,
income distributed by the Fund may not necessarily be exempt from state or
municipal taxes in states other than Tennessee.

INVESTMENT POLICIES

The Fund pursues its investment objective by investing primarily in a portfolio
of Tennessee Municipal Securities. As a matter of investment policy, which may
not be changed without shareholder approval, under normal market conditions at
least 80% of the Fund's income will be exempt from federal income tax (including
alternative minimum tax) and personal income tax imposed by the state of
Tennessee and Tennessee municipalities. Unless indicated otherwise, the other
investment policies of the Fund described below may be changed by the Trustees
without approval of shareholders. Shareholders will be notified before any
material changes in these policies become effective.

ACCEPTABLE INVESTMENTS. The Tennessee Municipal Securities in which the Fund
invests are:

- obligations issued by or on behalf of the state of Tennessee, its
political subdivisions, or agencies;

- debt obligations of any state, territory, or possession of the United
States, including the District of Columbia or any political subdivision of
any of these; and

- participation interests, as described below, in any of the above
obligations, the interest from which is, in the opinion of bond counsel
for the issuers or in the opinion of officers of the Fund and/or the
investment adviser to the Fund, exempt from both federal income tax and
the personal income taxes imposed by the state of Tennessee and Tennessee
municipalities.

CHARACTERISTICS. The Tennessee Municipal Securities in which the Fund
invests are rated "investment grade," i.e., Baa or above by Moody's
Investor Service, Inc. ("Moody's") or BBB or above by Standard & Poor's
Ratings Group ("S&P") or Fitch Investors Service, Inc. ("Fitch"). A
description of the rating categories is contained in the Appendix to the
Statement of Additional Information. In certain cases, the Fund's adviser
may choose bonds that are unrated if it judges the bonds to be of
comparable quality to one of the foregoing rating categories. Bonds rated
"BBB" by S&P or "Baa" by Moody's 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. The prices of fixed income securities fluctuate inversely to the
direction of interest rates. If the Fund purchases an investment grade
bond, and the rating of such bond is subsequently downgraded so that the
bond is no longer classified as investment grade, the Fund is not required
to sell the bond, but will consider whether such action is appropriate. As
a matter of investment policy, under normal market conditions, the Fund
will invest at least 65% of its assets in bonds.

PARTICIPATION INTERESTS. The Fund may purchase participation interests in
Tennessee Municipal Securities from financial institutions such as commercial
banks, savings associations and insurance companies. These participation
interests may take the form of participations, beneficial interests in a trust,
partnership interests or any other form of indirect ownership that allows the
Fund to treat the income from the investment as exempt from federal income tax.
The financial institutions from which the Fund purchases participation interests
frequently provide or secure irrevocable letters of credit or guarantees to
assure that the participation interests are of high quality.

VARIABLE RATE MUNICIPAL SECURITIES. Some of the Tennessee Municipal Securities
which the Fund purchases may have variable interest rates. Variable interest
rates are ordinarily based on a published interest rate or interest rate index.
Many variable rate municipal securities are subject to payment of principal on
demand by the Fund in not more than seven days. All variable rate municipal
securities will meet the quality standards for the Fund. The Fund's investment
adviser has been instructed by the Trustees to monitor the pricing, quality, and
liquidity of the variable rate municipal securities, including participation
interests held by the Fund, on the basis of published financial information and
reports of the rating agencies and other analytical services.

MUNICIPAL LEASES. Municipal leases are obligations issued by state and local
governments or authorities to finance the acquisition of equipment and
facilities and may be considered to be illiquid. They may take the form of a
lease, an installment purchase contract, a conditional sales contract or a
participation certificate on any of the above. The lease payments and other
rights under the lease provide for and secure the payments on the certificates.
Lease obligations may be limited by municipal charter or the nature of the
appropriation for the lease. In particular, lease obligations may be subject to
periodic appropriation. If the entity does not appropriate funds for future
lease payments, the entity cannot be compelled to make such payments.
Furthermore, a lease may provide that the certificate

trustee cannot accelerate lease obligations upon default. The trustee would only
be able to enforce lease payments as they become due. In the event of a default
or failure of appropriation, it is unlikely that the trustee would be able to
obtain an acceptable substitute source of payment.

If the Fund purchases unrated municipal leases, the Trustees will be responsible
for determining on an ongoing basis, the credit quality of such leases and the
likelihood that a lease will not be canceled.

RESTRICTED AND ILLIQUID SECURITIES. The Fund may invest in restricted
securities. Restricted securities are any securities in which the Fund may
otherwise invest pursuant to its investment objective and policies but which are
subject to restriction upon resale under federal securities laws. To the extent
these securities are deemed to be illiquid, the Fund will limit its purchases,
together with other securities considered to be illiquid, to 15% of its net
assets.

INVESTING IN SECURITIES OF OTHER INVESTMENT COMPANIES. The Fund may invest in
the securities of other investment companies, but it will not own more than 3%
of the total outstanding voting stock of any investment company, invest more
than 5% of its total assets in any one investment company, or invest more than
10% of its total assets in investment companies in general. 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. The adviser
will waive its investment advisory fee on assets invested in securities of
open-end investment companies.

WHEN-ISSUED AND DELAYED DELIVERY TRANSACTIONS. The Fund may purchase securities
on a when-issued or delayed delivery basis. These transactions are arrangements
in which the Fund purchases securities with payment and delivery scheduled for a
future time. The seller's failure to complete these transactions may cause the
Fund to miss a price or yield considered to be advantageous. Settlement dates
may be a month or more after entering into these transactions, and the market
values of the securities purchased may vary from the purchase prices.
Accordingly, the Fund may pay more/ less than the market value of the securities
on the settlement date.

The Fund may dispose of a commitment prior to settlement if the adviser deems it
appropriate to do so. In addition, the Fund may enter into transactions to sell
its purchase commitments to third parties at current market values and
simultaneously acquire other commitments to purchase similar securities at later
dates. The Fund may realize short-term profits or losses upon the sale of such
commitments.

TEMPORARY INVESTMENTS. The Fund normally invests its assets so that at least
80% of its annual interest income is exempt from federal income tax and the
personal income taxes imposed by the state of Tennessee and Tennessee
municipalities and at least 65% of the value of its total assets will be
invested in bonds. From time to time, during periods of other than normal market
conditions, the Fund may invest in short-term tax exempt or taxable temporary
investments. These temporary investments include: notes issued by or on behalf
of municipal or corporate issuers; obligations issued or guaranteed by the U.S.
government, its agencies, or instrumentalities; other debt securities;
commercial paper; certificates of deposit of banks; and repurchase agreements
(arrangements in which the organization selling the Fund a bond or temporary
investment agrees at the time of sale to repurchase it at a mutually agreed upon
time and price).

The investment adviser will limit temporary investments to those rated within
the investment grade categories described under "Acceptable
Investments--Characteristics" (if rated) or of comparable quality (if unrated).

Although the Fund is permitted to make taxable, temporary investments, there is
no current intention of generating income subject to federal income tax or
personal income taxes imposed by the state of Tennessee or Tennessee
municipalities.

TENNESSEE MUNICIPAL SECURITIES

Tennessee Municipal Securities are generally issued to finance public works,
such as airports, bridges, highways, housing, hospitals, mass transportation
projects, schools, streets, and water and sewer works. They are also issued to
repay outstanding obligations, to raise funds for general operating expenses,
and to make loans to other public institutions and facilities.

Tennessee Municipal Securities include industrial development bonds issued by or
on behalf of public authorities to provide financing aid to acquire sites or
construct and equip facilities for privately or publicly owned corporations. The
availability of this financing encourages these corporations to locate within
the sponsoring communities and thereby increases local employment.

The two principal classifications of municipal securities are "general
obligation" and "revenue" bonds. General obligation bonds are secured by the
issuer's pledge of its full faith and credit and taxing power for the payment of
principal and interest. However, interest on and principal of revenue bonds are
payable only from the revenue generated by the facility financed by the bond or
other specified sources of revenue. Revenue bonds do not represent a pledge of
credit or create any debt of or charge against the general revenues of a
municipality or public authority. Industrial development bonds are typically
classified as revenue bonds.

INVESTMENT RISKS

Yields on municipal securities depend on a variety of factors, including: the
general conditions of the short-term municipal bond market and the municipal
bond market; the size and maturity of the particular offering; and the rating of
the issue. Further, any adverse economic conditions or developments affecting
the issuer or its municipalities could impact the Fund's portfolio. The ability
of the Fund to achieve its investment objective also depends on the continuing
ability of the issuers of Tennessee Municipal Securities and participation
interests, or the credit enhancers of either, to meet their obligations for the
payment of interest and principal when due. See the Fund's Statement of
Additional Information for a discussion of the state's economy.

Investing in municipal securities which meet the Fund's quality standards may
not be possible if the issuer or its municipalities do not maintain their
current credit ratings. In addition, certain constitutional amendments,
legislative measures, executive orders, administrative regulations, and voter
initiatives could result in adverse consequences affecting municipal securities.

NON-DIVERSIFICATION

The Fund is a non-diversified investment portfolio. As such, there is no limit
on the percentage of assets which can be invested in any single issuer. An
investment in the Fund, therefore, will entail greater risk than investment in a
diversified portfolio of securities because the higher percentage of investments

among fewer issuers may result in greater fluctuation in the total market value
of the Fund's portfolio. Any economic, political, or regulatory developments
affecting the value of the securities in the Fund's portfolio will have a
greater impact on the total value of the portfolio than would be the case if the
portfolio were diversified among more issuers.

The Fund intends to comply with Subchapter M of the Internal Revenue Code, as
amended. This undertaking requires that at the end of each quarter of the
taxable year: (a) with regard to at least 50% of the Fund's total assets, no
more than 5% of its total assets are invested in the securities of a single
issuer; and (b) no more than 25% of its total assets are invested in the
securities of a single issuer.

INVESTMENT LIMITATIONS

The Fund will not borrow money directly or through reverse repurchase agreements
(arrangements in which the Fund sells a portfolio instrument for a percentage of
its cash value with an agreement to buy it back on a set date) or pledge
securities except, under certain circumstances, the Fund may borrow up to
one-third of the value of its total assets and pledge assets as necessary to
secure such borrowings.

The above investment limitation cannot be changed without shareholder approval.

THE PLANTERS FUNDS INFORMATION
- --------------------------------------------------------------------------------

MANAGEMENT OF THE TRUST

BOARD OF TRUSTEES. The Trust is managed by a Board of Trustees. The Trustees
are responsible for managing the Trust's business affairs and for exercising all
the Trust's powers except those reserved for the shareholders. The Executive
Committee of the Board of Trustees handles the Board's responsibilities between
meetings of the Board.

INVESTMENT ADVISER. Pursuant to an investment advisory contract with the Trust,
investment decisions for the Fund are made by Union Planters National Bank
("Union Planters" or the "adviser"), the Fund's investment adviser, subject to
direction by the Trustees. The investment adviser continually conducts
investment research and supervision for the Fund and is responsible for the
purchase or sale of portfolio instruments, for which it receives an annual fee
from the assets of the Fund.

From time to time, to the extent consistent with the objective, policies and
restrictions of the Fund, the Fund may invest in securities of issuers with
which the investment adviser has a lending relationship.

ADVISORY FEES. The investment adviser receives an investment advisory fee
at an annual rate equal to 0.75% of the Fund's average daily net assets.
The fee paid by the Fund, while higher than the advisory fees paid by other
mutual funds in general, is comparable to fees paid by other mutual funds
with similar objectives and policies. The investment adviser has undertaken
to reimburse the Fund, up to the amount of the advisory fee, for operating
expenses in excess of limitations established by certain states. The
investment adviser may voluntarily choose to waive a portion of its fee or
reimburse the Fund for certain other expenses, but reserves the right to
terminate such waiver or reimbursement at any time at its sole discretion.

ADVISER'S BACKGROUND. Founded in 1869, Union Planters, a national banking
association, is a wholly-owned subsidiary of Union Planters Corporation
(the "Corporation") a multi-bank

holding company headquartered in Memphis, Tennessee. Union Planters is a
commercial bank offering a wide range of banking services to its customers.
The investment adviser has been managing trust assets for over 80 years. As
of December 31, 1995, the Trust Group of Union Planters had approximately
$1.1 billion under administration, of which it had investment discretion
over approximately $750 million. The adviser has served as investment
adviser to the Fund since its inception.

As part of it's regular banking operations, Union Planters 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 Union Planters. The lending relationship will not be a factor in
the selection of securities.

PORTFOLIO MANAGER. The following individual is primarily responsible for
the day-to-day management of the Fund's portfolio:

Stacey Wall has been the Fund's portfolio manager since 1996. Mr. Wall has
been the Senior Vice President and Trust Manager for Union Planters Trust &
Investment Management of Mississippi since 1991. Mr. Wall received is
B.B.A. form the University of Mississippi and is a graduate of the Cannon
Financial Institute in Advanced Trust Investments.

DISTRIBUTION OF FUND SHARES

Federated Securities Corp. is the principal distributor for shares of the Fund.
Federated Securities Corp. is a Pennsylvania corporation organized on November
14, 1969, and is the principal distributor for a number of investment companies.
Federated Securities Corp. is a subsidiary of Federated Investors.

PAYMENTS TO FINANCIAL INSTITUTIONS. The distributor, the adviser, or their
affiliates may offer to pay a fee from their own assets to financial
institutions as financial assistance for providing substantial marketing and
sales support. The support may include initiating customer accounts, providing
sales literature, or participating in sales, educational and training seminars
(including those held at recreational facilities). Such assistance will be
predicated upon the amount of shares the financial institution sells or may sell
and/or upon the type and nature of sales or marketing support furnished by the
financial institution. Any payments made by the distributor may be reimbursed by
the adviser or its affiliates.

The Glass-Steagall Act prohibits a depository institution (such as a commercial
bank or a savings association) from being an underwriter or distributor of most
securities. In the event the Glass-Steagall Act is deemed to prohibit depository
institutions from acting in the administrative capacities described above or
should Congress relax current restrictions on depository institutions the
Trustees will consider appropriate changes in the services.

State securities laws governing the ability of depository institutions to act as
underwriters or distributors of securities may differ from interpretations given
to the Glass-Steagall Act and, therefore, banks and financial institutions may
be required to register as dealers pursuant to state law.
ADMINISTRATION OF THE FUND

ADMINISTRATIVE SERVICES. Federated Services Company, Pittsburgh, Pennsylvania,
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. Federated Services Company provides these at an
annual rate as specified below:

<TABLE>
<CAPTION>
AVERAGE AGGREGATE DAILY
MAXIMUM NET ASSETS OF THE
ADMINISTRATIVE FEE FEDERATED FUNDS
- --------------------- ---------------------------------
<S> <C>
.15 of 1% on the first $250 million
.125 of 1% on the next $250 million
.10 of 1% on the next $250 million
on assets in excess of $750
.075 of 1% million
</TABLE>

The administrative fee received during any fiscal year shall be at least
$120,000 per Fund. Federated Services Company may voluntarily choose to waive a
portion of its fee.

NET ASSET VALUE
- --------------------------------------------------------------------------------

The Fund's net asset value per share fluctuates. It is determined by dividing
the sum of the market value of all securities and all other assets, less
liabilities, by the number of shares outstanding.

INVESTING IN THE FUND
- --------------------------------------------------------------------------------

SHARE PURCHASES

Shares are sold on days on which the New York Stock Exchange and Federal Reserve
Wire System are open for business. An individual investor can purchase shares of
the Fund by telephoning Union Planters Brokerage Services at 1-800-238-7125 or
by calling his financial institution (such as a bank or an investment dealer).
Orders through a financial institution are considered received when the Fund is
notified of the purchase order. Purchase orders through a registered
broker/dealer must be received by the broker before 4:00 p.m. (Eastern time) and
must be transmitted by the broker to the Fund before 5:00 p.m. (Eastern time) in
order for shares to be purchased at that day's price. Purchase orders through
other financial institutions must be received by the financial institution and
transmitted to the Fund before 4:00 p.m. (Eastern time) in order for shares to
be purchased at that day's price. It is the financial institution's
responsibility to transmit orders promptly.

Texas residents must purchase shares of the Fund through Federated Securities
Corp. at 1-800-618-8573. In connection with the sale of shares, the distributor
may, from time to time, offer certain items of nominal value to any shareholder
or investor. The Fund reserves the right to reject any purchase request.

Payment may be made by either check or federal funds. Payments should be made to
your financial institution, broker/dealer, Union Planters Brokerage Service or
Federated Securities Corp., as

appropriate. It is the Fund's policy to be as fully invested as possible so that
maximum interest may be earned. To this end, all payments from shareholders must
be in federal funds or be converted into federal funds before shareholders begin
to earn dividends.

MINIMUM INVESTMENT REQUIRED

The minimum initial investment in the Fund is $1,000. Subsequent investments
must be in amounts of at least $100.

WHAT SHARES COST

Shares of the Fund are sold at their net asset value next determined after an
order is received plus a sales charge as follows:

<TABLE>
<CAPTION>
SALES CHARGE AS A SALES CHARGE AS A
PERCENTAGE OF PERCENTAGE OF NET
AMOUNT OF TRANSACTION PUBLIC OFFERING PRICE AMOUNT INVESTED
- ---------------------------------- ---------------------- -------------------
<S> <C> <C>
Less than $250,000 2.00% 2.04%
$250,000 but less than $500,000 1.50% 1.52%
$500,000 but less than $1,000,000 1.00% 1.01%
$1,000,000 or more 0.00% --
</TABLE>

The net asset value is determined as of the close of trading (normally 4:00
p.m., Eastern time) on the New York Stock Exchange, Monday through Friday,
except on: (i) days on which there are not sufficient changes in the value of
the Fund's portfolio securities that its net asset value might be materially
affected; (ii) days during which no shares are tendered for redemption and no
orders to purchase shares are received; and (iii) the following holidays: New
Year's Day, Presidents' Day, Good Friday, Memorial Day, Independence Day, Labor
Day, Columbus Day, Veterans' Day, Thanksgiving Day and Christmas Day.

PURCHASES AT NET ASSET VALUE. Shares of the fund may be purchased at net asset
value, without a sales charge, by Trust customers of Union Planters and
employees and retired employees of Union Planters and its affiliates and their
spouses and children under 21.

No sales charge is imposed for shares purchased through bank trust departments,
investment advisers registered under the Investment Advisers Act of 1940, as
amended, insurance companies and credit unions. However, investors who purchase
shares through a trust department or investment adviser may be charged an
additional service fee by that institution.

DEALER CONCESSIONS. For sales of shares of the Fund, a dealer will normally
receive up to 85% of the applicable sales charge. Any portion of the sales
charge which is not paid to a dealer will be retained by the distributor.
However, the distributor, in its sole discretion, may uniformly offer to pay to
all dealers selling shares of the Fund, all or a portion of the sales charge it
normally retains. If accepted by the dealer, such additional payments will be
predicated upon the amount of Fund shares sold.

The sales charge for shares sold other than through registered broker/dealers
will be retained by the distributor. The distributor may pay fees to banks out
of the sales charge in exchange for sales and/or

administrative services performed on behalf of the bank's customers including
the initiation of customer accounts and purchases of shares.

REDUCING THE SALES CHARGE

The sales charge can be reduced on the purchase of shares of the Fund through:

- quantity discounts and accumulated purchases;

- signing a 13-month letter of intent; or

- using the reinvestment privilege.

QUANTITY DISCOUNTS AND ACCUMULATED PURCHASES. As shown in the table on the
previous page, larger purchases reduce the sales charge paid. The Fund will
combine purchases of shares made on the same day by the investor, his spouse,
and his children under age 21 when it calculates the sales charge.

If an additional purchase of shares is made, the Fund will consider the previous
purchases still invested in the Fund. For example, if a shareholder already owns
shares having a current value at the public offering price of $240,000 and
purchases $10,000 more at the current public offering price, the sales charge on
the additional purchase according to the schedule now in effect would be 1.50%,
not 2.00%.

To receive the sales charge reduction, Federated Securities Corp. must be
notified by the shareholder in writing or by the shareholder's financial
institution at the time the purchase is made that shares are already owned or
that purchases are being combined. The Fund will reduce the sales charge after
it confirms the purchases.

LETTER OF INTENT. If a shareholder intends to purchase 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
up to 2.00% of the total amount intended to be purchased in escrow (in shares)
until such purchase is completed.

The amount held in escrow will be applied to the shareholder's account at the
end of the 13-month period unless the amount specified in the letter of intent
is not purchased. In this event, an appropriate number of escrowed shares may be
redeemed in order to realize the difference in the sales charge.

This letter of intent will not obligate the shareholder to purchase shares, but
if he does, each purchase during the period will be at the sales charge
applicable to the total amount intended to be purchased. This letter may be
dated as of a prior date to include any purchases made within the past 90 days
towards the dollar fulfillment of the letter of intent. Prior trade prices will
not be adjusted.

REINVESTMENT PRIVILEGE. If shares in the Fund have been redeemed, the
shareholder has a one-time right, within 30 days, to reinvest the redemption
proceeds at the next-determined net asset value without any sales charge.
Federated Securities Corp. must be notified by the shareholder in writing or by
the shareholder's financial institution of the reinvestment in order to
eliminate a sales charge. If the shareholder redeems shares in the Fund, there
may be tax consequences, and exercise of the reinvestment privilege may result
in additional tax considerations. Shareholders contemplating such transactions
should consult their own tax advisers.

CERTIFICATES AND CONFIRMATIONS

As transfer agent for the Fund, Federated Shareholder Services Company maintains
a share account for each shareholder of record. Share certificates are not
issued unless requested by contacting your financial institution, broker/dealer,
Union Planters Brokerage Services or Federated Securities Corp., as appropriate.

Detailed statements that include account balances, information on each purchase
or redemption, and a report of dividends are sent to each shareholder.

DIVIDENDS AND DISTRIBUTIONS

Dividends are declared and paid monthly to all shareholders invested in the Fund
on the record date.

Dividends are declared just prior to determining net asset value. Capital gains
realized by the Fund, if any, will be distributed at least once every 12 months.
Dividends and capital gains will be reinvested in additional shares on payment
dates at the ex-dividend date's net asset value without a sales charge, unless
cash payments are requested by writing to your financial institution,
broker/dealer, Union Planters Brokerage Services or Federated Securities Corp.,
as appropriate.

REDEEMING SHARES
- --------------------------------------------------------------------------------

The Fund redeems shares at their net asset value next determined after the Fund
receives the redemption request. Redemptions will be made on days on which the
Fund computes its net asset value. Telephone or written requests for redemption
must be received in proper form.

BY TELEPHONE. A shareholder may redeem shares by calling his financial
institution (such as a bank or an investment dealer) to request the redemption.
Shares will be redeemed at the net asset value next determined after the Fund
receives the redemption request from the financial institution. Redemption
requests through a registered broker/dealer must be received by the broker
before 4:00 p.m. (Eastern time) and must be transmitted by the broker to the
Fund before 5:00 p.m. (Eastern time) in order for shares to be redeemed at that
day's net asset value. Redemption requests through other financial institutions
must be received by the financial institution and transmitted to the Fund before
4:00 p.m. (Eastern time) in order for shares to be redeemed at that day's net
asset value. The financial institution is responsible for promptly submitting
redemption requests and providing proper written redemption instructions to the
Fund. The financial institution may charge customary fees and commissions for
this service.

For orders received before 4:00 p.m. (Eastern time), proceeds will normally be
wired the next day to the shareholder's account as instructed on the
shareholder's authorization form or a check will be sent to the address of
record. Proceeds delivered in the form of a check will be sent within seven days
after a proper request for redemption has been received, provided Federated
Shareholder Services Company has received the purchase price for the shares from
the shareholder. Before a financial institution may request redemption by
telephone on behalf of a shareholder, an authorization form permitting the Fund
to accept redemption requests by telephone must be completed.

Telephone redemption instructions may be recorded. If reasonable procedures are
not followed by the Fund, it may be liable for losses due to unauthorized or
fraudulent telephone instructions.

In the event of drastic economic or market changes, a shareholder may experience
difficulty in redeeming by telephone. If such a case should occur, it is
recommended that a redemption request be made in writing and be hand delivered
or sent by overnight mail to Federated Securities Corp. If, at any time, the
Fund should determine it necessary to terminate or modify this method of
redemption, shareholders would be promptly notified.

BY MAIL. Shareholders may redeem shares by sending a written request to
Federated Securities Corp., as appropriate. The written request should include
the shareholder's name, the Fund name, the account number, and the share or
dollar amount requested. If share certificates have been issued, they must be
properly endorsed and should be sent by registered or certified mail with the
written request. Shareholders should call Federated Securities Corp. at
1-800-618-8573 for assistance in redeeming by mail.

SIGNATURES. Shareholders requesting a redemption of any amount to be sent to an
address other than that on record with the Fund, or a redemption payable other
than to the shareholder of record, must have signatures on written redemption
requests guaranteed by:

- a trust company or commercial bank whose deposits are insured by the Bank
Insurance Fund, which is administered by the FDIC;

- a member of the New York, American, Boston, Midwest, or Pacific Stock
Exchange;

- a savings bank or savings association whose deposits are insured by the
Savings Association Insurance Fund, which is administered by the FDIC; or

- any other "eligible guarantor institution," as defined in the Securities
Exchange Act of 1934.

The Fund does not accept signatures guaranteed by a notary public.

The Fund and its transfer agent have adopted standards for accepting signature
guarantees from the above institutions. The Fund may elect in the future to
limit eligible signature guarantors to institutions that are members of a
signature guarantee program. The Fund and its transfer agent reserve the right
to amend these standards at any time without notice.

ACCOUNTS WITH LOW BALANCES

Due to the high cost of maintaining accounts with low balances, the Fund may
redeem shares in any account and pay the proceeds to the shareholder if the
account balance falls below the required minimum of $1,000 due to shareholder
redemptions.

Before shares are redeemed to close an account, the shareholder is notified in
writing and allowed 30 days to purchase additional shares to meet the minimum
requirement.

SHAREHOLDER INFORMATION
- --------------------------------------------------------------------------------

VOTING RIGHTS

Each share of the Fund gives the shareholder one vote in Trustee elections and
other matters submitted to shareholders for vote. All shares of all classes of
each portfolio in the Trust have equal voting rights except that in matters
affecting only a particular fund or class, only shares of that fund or class are
entitled to vote. As of September 3, 1996, Union Planters National Bank,
Memphis, Tennessee, acting in various capacities for numerous accounts, was the
owner of record of approximately 2,444,996 shares (87.10%) of the Fund, and
therefore, may, for certain purposes, be deemed to control the Fund and be able
to affect the outcome of certain matters presented for a vote of shareholders.

As a Massachusetts business trust, the Trust is not required to hold annual
shareholder meetings. Shareholder approval will be sought only for certain
changes in the Trust's or the Fund's operation and for the election of Trustees
under certain circumstances. Trustees may be removed by the Trustees or by
shareholders at a special meeting. A special meeting of the shareholders for
this purpose shall be called by the Trustees upon the written request of
shareholders owning at least 10% of the outstanding shares of all series in the
Trust entitled to vote.

MASSACHUSETTS PARTNERSHIP LAW

Under certain circumstances, shareholders may be held personally liable as
partners under Massachusetts law for acts or obligations of the Trust on behalf
of the Fund. To protect shareholders of the Fund, the Trust has filed legal
documents with Massachusetts that expressly disclaim the liability of
shareholders of the Fund for such acts or obligations of the Trust. These
documents require notice of this disclaimer to be given in each agreement,
obligation, or instrument that the Trust or its Trustees enter into or sign on
behalf of the Fund.

In the unlikely event that a shareholder of the Fund is held personally liable
for the Trust's obligations on behalf of the Fund, the Trust is required to use
the property of the Fund to protect or compensate the shareholder. On request,
the Trust will defend any claim made and pay any judgment against a shareholder
of the Fund for any act or obligation of the Trust on behalf of the Fund.
Therefore, financial loss resulting from liability as a shareholder of the Fund
will occur only if the Trust cannot meet its obligations to indemnify
shareholders and pay judgments against them from the assets of the Fund.

EFFECT OF BANKING LAWS
- --------------------------------------------------------------------------------

The Glass-Steagall Act and other banking laws and regulations presently prohibit
a bank holding company registered under the Federal Bank Holding Company Act of
1956 or any affiliate thereof from sponsoring, organizing or controlling a
registered, open-end investment company continuously engaged in the issuance of
its shares, and from issuing, underwriting, selling or distributing securities
in general. Such laws and regulations do not prohibit such a holding company or
affiliate from acting as investment adviser, transfer agent or custodian to such
an investment company or from purchasing shares of such a company as agent for
and upon the order of their customers. The Fund's adviser, Union Planters, is
subject to such banking laws and regulations.

Union Planters believes that it may perform the investment advisory services for
the Fund contemplated by its advisory agreement with the Trust without violating
the Glass-Steagall Act or other applicable banking laws or regulations. Changes
in either federal or state statutes and regulations relating to the permissible
activities of banks and their subsidiaries or affiliates, as well as further
judicial or administrative decisions or interpretations of present or future
statutes and regulations, could prevent Union Planters from continuing to
perform all or a part of the above services for its customers and/or the Fund.
In such event, changes in the operation of a Fund may occur, including the
possible alteration or termination of any automatic or other Fund share
investment or redemption services then being provided by Union Planters, and the
Trustees would consider alternative investment advisers and other means of
continuing available investment services. It is not expected that the Fund's
existing shareholders would suffer any adverse financial consequences (if
another adviser with equivalent abilities to Union Planters is found) as a
result of any of these occurrences.

TAX INFORMATION
- --------------------------------------------------------------------------------

FEDERAL INCOME TAX

The Fund expects to pay no federal income tax because it expects to meet
requirements of the Internal Revenue Code, as amended ("the Code"), applicable
to regulated investment companies and to receive the special tax treatment
afforded to such companies.

Dividends of the Fund representing net interest income earned on some temporary
investments and any realized net short-term gains are taxed as ordinary income.
Distributions representing net long-term capital gains realized by the Fund, if
any, will be taxable as long-term capital gains regardless of the length of time
shareholders have held their shares.

These tax consequences apply whether dividends are received in cash or as
additional shares. Information on the tax status of dividends and distributions
is provided annually.

STATE OF TENNESSEE TAXES

Under existing Tennessee law, shareholders of the Fund will not be subject to
Tennessee personal income taxes on Fund dividends to the extent that such
dividends represent "exempt-interest dividends" as defined in the Code, which
are directly attributable to (i) interest on obligations of the state of
Tennessee or any of its political subdivisions; or (ii) interest on certain
obligations of the United States, or any agency or instrumentality thereof.

To the extent that distributions by the Fund are derived from capital gains on
such obligations, or from dividends or capital gains on other types of
obligations, such distributions will be subject to Tennessee income taxes.

OTHER STATE AND LOCAL TAXES

Income from the Fund is not necessarily free from state income taxes in states
other than Tennessee or from personal property taxes. State laws differ on this
issue, and shareholders are urged to consult their own tax advisers regarding
the status of their accounts under state and local tax laws.
PERFORMANCE INFORMATION
- --------------------------------------------------------------------------------

From time to time the Fund advertises total return, yield, and tax-equivalent
yield. Total return represents the change, over a specified period of time, in
the value of an investment in shares after reinvesting all income and capital
gains distributions. It is calculated by dividing that change by the initial
investment and is expressed as a percentage.

The yield of the Fund is calculated by dividing the net investment income per
share (as defined by the Securities and Exchange Commission) earned by the Fund
over a thirty-day period by the maximum offering price per share of the Fund on
the last day of the period. This number is then annualized using semi-annual
compounding. The tax-equivalent yield of the Fund is calculated similarly to the
yield, but is adjusted to reflect the taxable yield that the Fund would have had
to earn to equal its actual yield, assuming a specific tax rate. The yield and
the tax-equivalent yield do not necessarily reflect income actually earned by
the Fund and, therefore, may not correlate to the dividends or other
distributions paid to shareholders.

The performance information reflects the effect of the sales charge, which, if
excluded, would increase the total return, yield, and tax-equivalent yield.

From time to time, advertisements for the Fund may refer to ratings, rankings,
and other information in certain financial publications and/or compare the
Fund's performance to certain indices.

TENNESSEE TAX-FREE BOND FUND
(A PORTFOLIO OF THE PLANTERS FUNDS)
PORTFOLIO OF INVESTMENTS
JULY 31, 1996
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PRINCIPAL CREDIT
AMOUNT RATING* VALUE
- ---------- -------------------------------------------------------- --------- -----------
<C> <C> <S> <C> <C>
LONG TERM MUNICIPAL NOTES--95.9%
- --------------------------------------------------------------------------
TENNESSEE--95.9%
--------------------------------------------------------
$ 465,000 Chattanooga-Hamilton County, TN Hospital Authority,
Refunding Revenue Bonds, 5.50% (Erlanger Medical
Center)/(FSA Insured)/(Original Issue Yield: 5.60%),
10/1/2006 AAA $ 476,425
--------------------------------------------------------
1,000,000 Chattanooga-Hamilton County, TN Hospital Authority,
Refunding Revenue Bonds, 5.50% (Erlanger Medical
Center)/(FSA Insured)/(Original Issue Yield: 5.85%),
10/1/2013 AAA 976,590
--------------------------------------------------------
1,130,000 Clarksville, TN, Electric System Refunding Revenue
Bonds, 5.125%, 9/1/2011 A 1,070,257
--------------------------------------------------------
500,000 Clarksville, TN, Water, Sewer & Gas Refunding Revenue
Bonds, 6.125% (MBIA Insured)/(Original Issue Yield:
6.15%), 2/1/2007 AAA 530,490
--------------------------------------------------------
500,000 Clarksville, TN, Water, Sewer & Gas Refunding Revenue
Bonds, 6.125% (MBIA Insured)/(Original Issue Yield:
6.328%), 2/1/2012 AAA 520,085
--------------------------------------------------------
250,000 Hamblen County, TN, GO UT Hospital Revenue Bonds, 4.90%
(AMBAC Insured), 5/1/2006 AAA 244,508
--------------------------------------------------------
250,000 Jackson, TN Health Educational & Housing Facilities
Board, Revenue Bonds, 5.90% (Jackson-Madison County
General Hospital)/(MBIA Insured)/(Original Issue Yield:
5.95%), 4/1/2000 AAA 261,048
--------------------------------------------------------
400,000 Jackson, TN, Water & Sewer Refunding Revenue Bonds,
5.125% (AMBAC Insured)/(Original Issue Yield: 5.35%),
1/1/2010 AAA 384,592
--------------------------------------------------------
440,000 Johnson City, TN, Health & Education Refunding Revenue
Bonds, 6.75% (MBIA Insured)/(Original Issue Yield:
6.912%), 7/1/2006 AAA 481,593
--------------------------------------------------------
</TABLE>

TENNESSEE TAX-FREE BOND FUND
- --------------------------------------------------------------------------------

<TABLE>
<CAPTION>
PRINCIPAL CREDIT
AMOUNT RATING* VALUE
- ---------- -------------------------------------------------------- --------- -----------
<S> <C> <S> <C> <C>
LONG TERM MUNICIPAL NOTES--CONTINUED
- --------------------------------------------------------------------------
$ 250,000 (a) Johnson City, TN, Health & Education Refunding Revenue
Bonds, 6.75% (MBIA Insured)/(Original Issue Yield:
6.912%)(United States Treasury PRF), 7/1/2001 (@102) AAA $ 276,640
--------------------------------------------------------
500,000 Knox County, TN Health Education & Housing Facilities
Board, Hospital Facilities Revenue Bonds (Series A),
4.90% (Fort Sanders Alliance)/(MBIA Insured)/(Original
Issue Yield: 5.099%), 1/1/2005 AAA 547,495
--------------------------------------------------------
500,000 (a) Knox County, TN Health Education & Housing Facilities
Board, Hospital Facilities Revenue Bonds (Series C),
7.00% (Fort Sanders Alliance)/(MBIA Insured)/(United
States Treasury PRF), 1/1/2000 (@102) AAA 492,130
--------------------------------------------------------
500,000 Knoxville, TN Gas System, Refunding Revenue Bonds, 5.05%
(Original Issue Yield: 5.10%), 3/1/2008 AA 486,100
--------------------------------------------------------
1,330,000 Knoxville, TN Water System, Refunding Revenue Bonds
(Series M), 5.20% (Original Issue Yield: 5.45%),
3/1/2010 AA 1,308,959
--------------------------------------------------------
1,500,000 Memphis-Shelby County, TN, Airport Refunding Revenue
Bonds, 6.75% (Federal Express Corp.), 9/1/2012 BBB 1,560,615
--------------------------------------------------------
1,500,000 Metropolitan Government Nashville & Davidson County, TN
Health Education Facilities Authority, Refunding Revenue
Bonds, 5.20% (Vanderbilt University), (Original Issue
Yield: 5.55%), 7/1/2018 AA 1,395,225
--------------------------------------------------------
230,000 Metropolitan Government Nashville & Davidson County, TN,
GO UT Refunding Bonds, 5.25% (Original Issue Yield:
5.45%), 5/15/2007 AA 232,532
--------------------------------------------------------
750,000 Metropolitan Government Nashville & Davidson County, TN,
Revenue Bonds (Series A), 6.00% (Original Issue Yield:
6.282%), 5/15/2017 AA 760,388
--------------------------------------------------------
230,000 Metropolitan Government Nashville & Davidson County, TN,
Water & Sewer Refunding Revenue Bonds, 5.20%
(FGIC Insured)/(Original Issue Yield: 5.53%), 1/1/2013 AAA 222,037
--------------------------------------------------------
75,000 Metropolitan Government Nashville & Davidson County, TN,
Water & Sewer Refunding Revenue Bonds, 7.25%, 1/1/2006 A 76,697
--------------------------------------------------------
</TABLE>

TENNESSEE TAX-FREE BOND FUND
- --------------------------------------------------------------------------------

<TABLE>
<CAPTION>
PRINCIPAL CREDIT
AMOUNT RATING* VALUE
- ---------- -------------------------------------------------------- --------- -----------
<S> <C> <S> <C> <C>
LONG TERM MUNICIPAL NOTES--CONTINUED
- --------------------------------------------------------------------------
$ 120,000 Metropolitan Government Nashville & Davidson County, TN,
Water & Sewer Refunding Revenue Bonds, 7.30%, 1/1/2008 A $ 120,457
--------------------------------------------------------
250,000 Metropolitan Government Nashville & Davidson County, TN,
Water & Sewer Revenue Bonds, 5.75% (AMBAC
Insured)/(Original Issue Yield: 6.15%), 1/1/2012 AAA 252,463
--------------------------------------------------------
1,370,000 Montgomery County, TN Public Building Authority, Pooled
Financing Government Obligation Revenue Bonds, 7.50%
(Tennessee County Loan Pool), (Prudential Insurance Co.
of America Insured), 12/15/2000 AA+ 1,387,851
--------------------------------------------------------
800,000 Mount Juliet, TN Public Building Authority, Revenue
Bonds (Series O), 7.00% (MBIA Insured), 2/1/2006 AAA 878,448
--------------------------------------------------------
1,200,000 Putnam County, TN, GO UT Bonds, 5.125% (MBIA
Insured)/(Original Issue Yield: 5.35%), 4/1/2011 AAA 1,145,124
--------------------------------------------------------
750,000 Shelby County, TN Health Education & Housing Facilities
Board, Refunding Revenue Bonds (Series A), 7.40%
(Methodist Health System, Inc.)/(MBIA Insured)/(Original
Issue Yield: 7.50%), 6/1/2003 AAA 800,453
--------------------------------------------------------
1,000,000 (a) Shelby County, TN Health Education & Housing Facilities
Board, Revenue Bonds, 6.00% (St. Joseph Hospital East,
Inc.)/(Original Issue Yield: 6.37%), 3/1/2005 (Escrowed
to Maturity) AAA 1,031,240
--------------------------------------------------------
500,000 Shelby County, TN, GO UT Bonds, (Series A), 5.10%
(Original Issue Yield: 5.25%), 3/1/2011 AA+ 482,280
--------------------------------------------------------
250,000 Shelby County, TN, GO UT Refunding Bonds (Series B),
5.875% (Original Issue Yield: 5.95%), 3/1/2007 AA+ 259,928
--------------------------------------------------------
750,000 Tennessee Housing Development Agency, Refunding Revenue
Bonds (Series A), 5.40%, 7/1/2004 A+ 753,803
--------------------------------------------------------
1,250,000 Tennessee Housing Development Agency, Refunding Revenue
Bonds (Series A), 5.70%, 1/1/2008 A+ 1,259,838
--------------------------------------------------------
1,205,000 Tennessee Housing Development Agency, Refunding Revenue
Bonds (Series A), 5.70%, 7/1/2008 A+ 1,214,483
--------------------------------------------------------
</TABLE>

TENNESSEE TAX-FREE BOND FUND
- --------------------------------------------------------------------------------

<TABLE>
<CAPTION>
PRINCIPAL CREDIT
AMOUNT RATING* VALUE
- ---------- -------------------------------------------------------- --------- -----------
<S> <C> <S> <C> <C>
LONG TERM MUNICIPAL NOTES--CONTINUED
- --------------------------------------------------------------------------
$1,800,000 Tennessee Housing Development Agency, Refunding Revenue
Bonds (Series A), 5.85%, 7/1/2013 A+ $ 1,802,376
--------------------------------------------------------
430,000 Tennessee Housing Development Agency, Revenue Bonds,
(Homeownership Program-Issue U), 6.90%, 7/1/2005 A+ 452,609
--------------------------------------------------------
500,000 Tennessee State Local Development Authority, Refunding
Revenue Bonds (Series A), 5.65%, 3/1/2007 AA- 518,725
--------------------------------------------------------
495,000 Tennessee State Local Development Authority, Revenue
Bonds, 6.10% (Community Provider Pooled Loan)/
(State Aid Withholding Guaranty), 10/1/2007 A- 517,067
--------------------------------------------------------
500,000 Tennessee State School Board Authority, Refunding
Revenue Bonds (Series A), 6.25% (Higher Education
Facility) (Original Issue Yield: 6.309%), 5/1/2017 AA 520,070
--------------------------------------------------------
195,000 Tennessee State School Board Authority (GO of
Authority), Refunding Revenue Bonds , 5.75%, 5/1/2006 AA 189,517
--------------------------------------------------------
700,000 Tennessee State, GO UT Bonds (Series A), 5.55%, 3/1/2010 AA+ 712,152
--------------------------------------------------------
450,000 (a) Tennessee State, GO UT Bonds (Series B), 6.60% (Original
Issue Yield: 6.60%), (United States Treasury PRF)
6/1/2001 (@ 101 1/2) AA+ 493,722
--------------------------------------------------------
250,000 Tennessee State, GO UT Refunding Bonds (Series A),
6.10%, 6/1/2000 AA+ 265,323
--------------------------------------------------------
1,035,000 Williamson County, TN GO UT Refunding Bonds, 6.00%
(Original Issue Yield: 6.216%), 3/1/2008 AA 1,103,993
-------------------------------------------------------- -----------
TOTAL LONG TERM MUNICIPAL SECURITIES
(IDENTIFIED COST $28,520,257) $28,466,328
-------------------------------------------------------- -----------
</TABLE>

TENNESSEE TAX-FREE BOND FUND
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PRINCIPAL CREDIT
AMOUNT RATING* VALUE
- ---------- -------------------------------------------------------- --------- -----------
SHORT TERM MUNICIPAL NOTES--2.7%
<S> <C> <C> <C> <C>
- --------------------------------------------------------------------------
$ 800,000 Metropolitan Nashville Tennessee AA, (Series 1993)
Weekly VRDNs (FGIC Insured)/(Societe Generale, Paris
LIQ)
(AT AMORTIZED COST) AAA $ 800,000
-------------------------------------------------------- -----------
TOTAL INVESTMENTS (B) (IDENTIFIED COST $29,320,257) $29,266,328
-------------------------------------------------------- -----------
</TABLE>

* Please refer to the Appendix of the Statement of Additional Information for
an explanation of the credit ratings. Current credit ratings are unaudited.

(a) The issuer of this security has placed U.S. government securities in escrow
with a trustee. The proceeds from the government securities will be used to
pay principal and interest on the security.

(b) The cost for federal tax purposes amounts to $29,320,257. The net unrealized
depreciation of investments on a federal tax basis amounts to $53,929, which
is composed of $275,589 appreciation and $329,518 depreciation at July 31,
1996.

Note: The categories of investments are shown as a percentage of net assets
($29,667,800) at July 31, 1996.

The following acronyms are used throughout this portfolio:

AMBAC--American Municipal Bond Assurance Corporation
FGIC--Financial Guaranty Insurance Company
FSA--Financial Security Assurance
GO--General Obligation
LIQ--Liquidity Agreement
MBIA--Municipal Bond Investors Assurance
PRF--Prerefunded
UT--Unlimited Tax
VRDNs--Variable Rate Demand Notes

(See Notes which are an integral part of the Financial Statements)

TENNESSEE TAX-FREE BOND FUND
(A PORTFOLIO OF THE PLANTERS FUNDS)

STATEMENT OF ASSETS AND LIABILITIES
JULY 31, 1996
- --------------------------------------------------------------------------------

<TABLE>
<S> <C> <C>
ASSETS:
- --------------------------------------------------------------------------------
Total investments in securities, at value (identified and tax cost
$29,320,257) $29,266,328
- --------------------------------------------------------------------------------
Income receivable 426,409
- --------------------------------------------------------------------------------
Receivable for shares sold 38,000
- --------------------------------------------------------------------------------
Deferred expenses 13,330
- -------------------------------------------------------------------------------- -----------
Total assets 29,744,067
- --------------------------------------------------------------------------------
LIABILITIES:
- --------------------------------------------------------------------------------
Payable to Bank $52,097
- ----------------------------------------------------------------------
Accrued expenses 24,170
- ---------------------------------------------------------------------- -------
Total liabilities 76,267
- -------------------------------------------------------------------------------- -----------
Net Assets for 2,814,322 shares outstanding $29,667,800
- -------------------------------------------------------------------------------- -----------
NET ASSETS CONSIST OF:
- --------------------------------------------------------------------------------
Paid in capital $29,818,636
- --------------------------------------------------------------------------------
Net unrealized depreciation of investments (53,929)
- --------------------------------------------------------------------------------
Accumulated net realized loss on investments (204,782)
- --------------------------------------------------------------------------------
Undistributed net investment income 107,875
- -------------------------------------------------------------------------------- -----------
Total Net Assets $29,667,800
- -------------------------------------------------------------------------------- -----------
NET ASSET VALUE, OFFERING PRICE AND REDEMPTION PROCEEDS PER SHARE:
- --------------------------------------------------------------------------------
Net Asset Value Per Share ($29,667,800 / 2,814,322 shares outstanding) $10.54
- -------------------------------------------------------------------------------- -----------
Offering Price Per Share (100/98 of $10.54)* $10.76
- -------------------------------------------------------------------------------- -----------
</TABLE>

* See "What Shares Cost" in the Prospectus.

(See Notes which are an integral part of the Financial Statements)

TENNESSEE TAX-FREE BOND FUND
(A PORTFOLIO OF THE PLANTERS FUNDS)

STATEMENT OF OPERATIONS
YEAR ENDED JULY 31, 1996
- --------------------------------------------------------------------------------

<TABLE>
<S> <C> <C> <C>
INVESTMENT INCOME:
- ----------------------------------------------------------------------------------
Interest $1,712,775
- ----------------------------------------------------------------------------------
EXPENSES:
- ----------------------------------------------------------------------------------
Investment advisory fee $ 234,612
- ---------------------------------------------------------------------
Administrative personnel and services fee 120,000
- ---------------------------------------------------------------------
Custodian fees 21,862
- ---------------------------------------------------------------------
Transfer and dividend disbursing agent fees and expenses 32,573
- ---------------------------------------------------------------------
Directors'/Trustees' fees 12,467
- ---------------------------------------------------------------------
Auditing fees 13,062
- ---------------------------------------------------------------------
Legal fees 1,473
- ---------------------------------------------------------------------
Portfolio accounting fees 52,466
- ---------------------------------------------------------------------
Share registration costs 16,862
- ---------------------------------------------------------------------
Printing and postage 3,264
- ---------------------------------------------------------------------
Insurance premiums 3,554
- ---------------------------------------------------------------------
Miscellaneous 8,482
- --------------------------------------------------------------------- ---------
Total expenses 520,677
- ---------------------------------------------------------------------
Waiver and reimbursements--
- ---------------------------------------------------------
Waiver of investment advisory fee $(234,612)
- ---------------------------------------------------------
Reimbursement of other operating expenses (17,000) (251,612)
- --------------------------------------------------------- --------- ---------
Net expenses 269,065
- ---------------------------------------------------------------------------------- ----------
Net investment income 1,443,710
- ---------------------------------------------------------------------------------- ----------
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS:
- ----------------------------------------------------------------------------------
Net realized gain on investments 60,400
- ----------------------------------------------------------------------------------
Net change in unrealized depreciation of investments 284,790
- ---------------------------------------------------------------------------------- ----------
Net realized and unrealized gain on investments 345,190
- ---------------------------------------------------------------------------------- ----------
Change in net assets resulting from operations $1,788,900
- ---------------------------------------------------------------------------------- ----------
</TABLE>

(See Notes which are an integral part of the Financial Statements)

TENNESSEE TAX-FREE BOND FUND
(A PORTFOLIO OF THE PLANTERS FUNDS)

STATEMENT OF CHANGES IN NET ASSETS
- --------------------------------------------------------------------------------

<TABLE>
<CAPTION>
YEAR ENDED JULY 31,
---------------------------
1996 1995
----------- ------------
<S> <C> <C>
INCREASE (DECREASE) IN NET ASSETS:
- -----------------------------------------------------------------
OPERATIONS--
- -----------------------------------------------------------------
Net investment income $ 1,443,710 $ 1,872,063
- -----------------------------------------------------------------
Net realized gain (loss) on investments ($51,494 net loss and
$153,288 net loss, respectively, as computed for federal tax
purposes) 60,400 (215,683)
- -----------------------------------------------------------------
Net change in unrealized appreciation (depreciation) 284,790 1,023,037
- ----------------------------------------------------------------- ----------- ------------
Change in net assets resulting from operations 1,788,900 2,679,417
- ----------------------------------------------------------------- ----------- ------------
DISTRIBUTIONS TO SHAREHOLDERS--
- -----------------------------------------------------------------
Distributions from net investment income (1,444,519) (1,887,110)
- ----------------------------------------------------------------- ----------- ------------
SHARE TRANSACTIONS--
- -----------------------------------------------------------------
Proceeds from sale of shares 1,564,767 3,372,891
- -----------------------------------------------------------------
Net asset value of shares issued to shareholders in payment of
distributions declared 136,585 145,754
- -----------------------------------------------------------------
Cost of shares redeemed (8,265,453) (10,823,155)
- ----------------------------------------------------------------- ----------- ------------
Change in net assets resulting from share transactions (6,564,101) (7,304,510)
- ----------------------------------------------------------------- ----------- ------------
Change in net assets (6,219,720) (6,512,203)
- -----------------------------------------------------------------
NET ASSETS:
- -----------------------------------------------------------------
Beginning of period 35,887,520 42,399,723
- ----------------------------------------------------------------- ----------- ------------
End of period (including undistributed net investment income of
$107,875 and $108,684, respectively) $29,667,800 $ 35,887,520
- ----------------------------------------------------------------- ----------- ------------
</TABLE>

(See Notes which are an integral part of the Financial Statements)

TENNESSEE TAX-FREE BOND FUND
(A PORTFOLIO OF THE PLANTERS FUNDS)

NOTES TO FINANCIAL STATEMENTS
JULY 31, 1996
- --------------------------------------------------------------------------------

(1) ORGANIZATION

The Planters Funds (the "Trust") is registered under the Investment Company Act
of 1940, as amended (the "Act") as an open-end, management investment company.
The financial statements included herein are only those of Tennessee Tax-Free
Bond Fund (the "Fund"), a non-diversified portfolio. At July 31, 1996, the Trust
did not offer any other portfolios. The investment objective of the Fund is to
provide current income exempt from federal income tax and personal income taxes
imposed by the state of Tennessee and Tennessee municipalities.

(2) SIGNIFICANT ACCOUNTING POLICIES

The following is a summary of significant accounting policies consistently
followed by the Fund in the preparation of its financial statements. These
policies are in conformity with generally accepted accounting principles.

INVESTMENT VALUATIONS--Municipal bonds are valued by an independent pricing
service, taking into consideration yield, liquidity, risk, credit quality,
coupon, maturity, type of issue, and any other factors or market data the
pricing service deems relevant. Short-term securities are valued at the
prices provided by an independent pricing service. However, short-term
securities with remaining maturities of sixty days or less at the time of
purchase may be valued at amortized cost, which approximates fair market
value.

INVESTMENT INCOME, EXPENSES AND DISTRIBUTIONS--Interest income and expenses
are accrued daily. Bond premium and discount, if applicable, are amortized
as required by the Internal Revenue Code, as amended (the "Code").
Distributions to shareholders are recorded on the ex-dividend date.

FEDERAL TAXES--It is the Fund's policy to comply with the provisions of the
Code applicable to regulated investment companies and to distribute to
shareholders each year substantially all of its income. Accordingly, no
provisions for federal tax are necessary.

At July 31, 1996, the Fund, for federal tax purposes, had a capital loss
carryforward of $204,782, which will reduce the Fund's taxable income
arising from future net realized gain on investments, if any, to the extent
permitted by the Code, and thus will reduce the amount of the distributions
to shareholders which would otherwise be necessary to relieve the Fund of
any liability for federal tax. Pursuant to the Code, such capital loss
carryforward will expire as follows:

<TABLE>
<CAPTION>
EXPIRATION YEAR EXPIRATION AMOUNT
----------------- -------------------
<S> <C>
2003 $153,288
2004 $ 51,494
</TABLE>

TENNESSEE TAX-FREE BOND FUND
- --------------------------------------------------------------------------------

WHEN-ISSUED AND DELAYED DELIVERY TRANSACTIONS--The Fund may engage in
when-issued or delayed delivery transactions. The Fund records when-issued
securities on the trade date and maintains security positions such that
sufficient liquid assets will be available to make payment for the
securities purchased. Securities purchased on a when-issued or delayed
delivery basis are marked to market daily and begin earning interest on the
settlement date.

CONCENTRATION OF CREDIT RISK--Since the Fund invests a substantial portion
of its assets in issuers located in one state, it will be more susceptible
to factors adversely affecting issuers of that state than would be a
comparable tax-exempt mutual fund that invests nationally. In order to
reduce the credit risk associated with such factors at July 31, 1996, 38.3%
of the securities in the portfolio of investments are backed by letters of
credit or bond insurance of various financial institutions and financial
guaranty assurance agencies. The value of investments insured by or
supported (backed) by a letter of credit from any one institution or agency
did not exceed 20.3% of total investments.

DEFERRED EXPENSES--The costs incurred by the Fund with respect to
registration of its shares in its first fiscal year, excluding the initial
expense of registering the shares, have been deferred and are being
amortized using the straight-line method over a period of five years from
the Fund's commencement date.

USE OF ESTIMATES--The preparation of financial statements in conformity
with generally accepted accounting principles requires management to make
estimates and assumptions that affect the amounts of assets, liabilities,
expenses and revenues reported in the financial statements. Actual results
could differ from those estimated.

OTHER--Investment transactions are accounted for on the trade date.

(3) SHARES OF BENEFICIAL INTEREST

The Declaration of Trust permits the Trustees to issue an unlimited number of
full and fractional shares of beneficial interest (without par value).
Transactions in shares were as follows:

<TABLE>
<CAPTION>
YEAR ENDED JULY 31,
----------------------
1996 1995
- ---------------------------------------------------------------------- -------- ----------
<S> <C> <C>
Shares sold 148,617 333,883
- ----------------------------------------------------------------------
Shares issued to shareholders in payment of distributions declared 12,949 14,443
- ----------------------------------------------------------------------
Shares redeemed (777,662) (1,066,291)
- ---------------------------------------------------------------------- -------- ----------
Net change resulting from share transactions (616,096) (717,965)
- ---------------------------------------------------------------------- -------- ----------
</TABLE>

TENNESSEE TAX-FREE BOND FUND
- --------------------------------------------------------------------------------

(4) INVESTMENT ADVISORY FEE AND OTHER TRANSACTIONS WITH AFFILIATES

INVESTMENT ADVISORY FEE--Union Planters National Bank, the Fund's investment
adviser, (the "Adviser"), receives for its services an annual investment
advisory fee equal to 0.75% of the Fund's average daily net assets. The Adviser
may voluntarily choose to waive any portion of its fee and/or reimburse certain
operating expenses of the Fund. The Adviser can modify or terminate this
voluntary waiver and/or reimbursement at any time at its sole discretion.

As of July 31, 1996, Union Planters National Bank was the owner of record of
approximately 2,451,999 shares, which is 87.2% of the Fund.

ADMINISTRATIVE FEE--Federated Services Company ("FServ") provides the Fund with
certain administrative personnel and services. The fee paid to FServ is based on
the level of average aggregate net assets of the Fund for the period.

TRANSFER AND DIVIDEND DISBURSING AGENT FEES AND EXPENSES--FServ, through its
subsidiary Federated Shareholder Services Company ("FSSC"), serves as transfer
and dividend disbursing agent for the Fund. The fee paid to FSSC is based on the
size, type, and number of accounts and transactions made by shareholders.

PORTFOLIO ACCOUNTING FEES--FServ maintains the Fund's accounting records for
which it receives a fee. The fee is based on the level of the Fund's average
daily net assets for the period, plus out-of-pocket expenses.

ORGANIZATIONAL EXPENSES--Organizational expenses of $35,622 were borne initially
by FServ. The Fund has agreed to reimburse FServ for the organizational expenses
during the five year period following effective date. For the period ended July
31, 1996, the Fund paid $6,260 pursuant to this agreement.

GENERAL--Certain of the Officers and Trustees of the Trust are Officers and
Directors or Trustees of the above companies.

(5) INVESTMENT TRANSACTIONS

Purchases and sales of investments, excluding short-term securities, for the
period ended July 31, 1996, were as follows:
<TABLE>
<S> <C>
- --------------------------------------------------------------------------------
PURCHASES $ --
- -------------------------------------------------------------------------------- ----------
SALES $7,180,727
- -------------------------------------------------------------------------------- ----------
</TABLE>

INDEPENDENT ACCOUNTANTS' REPORT

- --------------------------------------------------------------------------------
To the Trustees and Shareholders of

TENNESSEE TAX-FREE BOND FUND
(a Portfolio of the Planters Fund):

In our opinion, the accompanying statement of assets and liabilities, including
the portfolio of investments (except for the Credit Ratings), and the related
statements of operations and of changes in net assets and the financial
highlights (included on page 2 of the Prospectus) present fairly, in all
material respects, the financial position of the Tennessee Tax-Free Bond Fund
(the "Fund") at July 31, 1996, the results of its operations, the changes in its
net assets and the financial highlights for the periods indicated, in conformity
with generally accepted accounting principles. These financial statements and
financial highlights (hereinafter referred to as "financial statements") are the
responsibility of the Fund's management; our responsibility is to express an
opinion on these financial statements based on our audits. We conducted our
audits of these financial statements in accordance with generally accepted
auditing standards which require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements, assessing the
accounting principles used and significant estimates made by management and
evaluating the overall financial statement presentation. We believe that our
audits, which included confirmation of securities at July 31, 1996 by
correspondence with the custodian, provide a reasonable basis for the opinion
expressed above.

PRICE WATERHOUSE LLP
Boston, Massachusetts
September 12, 1996

ADDRESSES
- --------------------------------------------------------------------------------

<TABLE>
<S> <C> <C>
Tennessee Tax-Free Bond Fund Federated Investors Tower
Pittsburgh, Pennsylvania 15222-3779
- ----------------------------------------------------------------------------------------------
Distributor
Federated Securities Corp. Federated Investors Tower
Pittsburgh, Pennsylvania 15222-3779
- ----------------------------------------------------------------------------------------------
Investment Adviser
Union Planters National Bank P.O. Box 387
Memphis, Tennessee 38147
- ----------------------------------------------------------------------------------------------
Custodian
State Street Bank P.O. Box 8600
and Trust Company Boston, Massachusetts 02266-8600
- ----------------------------------------------------------------------------------------------
Transfer Agent, Dividend Disbursing Agent,
and Portfolio Accounting Services
Federated Shareholder Services Company Federated Investors Tower
Pittsburgh, Pennsylvania 15222-3779
- ----------------------------------------------------------------------------------------------
Independent Accountants
Price Waterhouse LLP 160 Federal Street
Boston, Massachusetts 02110
- ----------------------------------------------------------------------------------------------
</TABLE>

- --------------------------------------------------------------------------------

- --------------------------------------------------------------------------------
TENNESSEE TAX-FREE
BOND FUND
PROSPECTUS

A Non-Diversified Portfolio
of The Planters Funds
An Open-End, Management
Investment Company

September 30, 1996

Union Planters National Bank
Investment Adviser

LOGO

Cusip 727426108
3072709A (9/96)
LOGO

TENNESSEE TAX-FREE BOND FUND
(A PORTFOLIO OF THE PLANTERS FUNDS)
STATEMENT OF ADDITIONAL INFORMATION
This Statement of Additional Information should be read with the
prospectus of shares of Tennessee Tax-Free Bond Fund (the "Fund") dated
September 30, 1996. This Statement is not a prospectus itself. To
receive a copy of the prospectus write or call Union Planters Brokerage
Services at 1-800-238-7125.
FEDERATED INVESTORS TOWER
PITTSBURGH, PENNSYLVANIA 15222-3779
Statement dated September 30, 1996
Federated Securities Corp. is the distributor of the Fund
and is a subsidiary of Federated Investors.
Cusip 727426108
3072709B (8/96)

GENERAL INFORMATION ABOUT THE FUND 3
INVESTMENT OBJECTIVE AND POLICIES 3
ACCEPTABLE INVESTMENTS 3
WHEN-ISSUED AND DELAYED DELIVERY TRANSACTIONS 5
TEMPORARY INVESTMENTS 6
REPURCHASE AGREEMENTS 6
PORTFOLIO TURNOVER 7
INVESTMENT LIMITATIONS 7
INVESTMENT RISKS 10
THE PLANTERS FUNDS MANAGEMENT 5
THE FUNDS 19
FUND OWNERSHIP 20
TRUSTEE COMPENSATION 20
TRUSTEE LIABILITY 22
INVESTMENT ADVISORY SERVICES 22
ADVISER TO THE FUND 22
ADVISORY FEES 22
BROKERAGE TRANSACTIONS 23
OTHER SERVICES 25
FUND ADMINISTRATION 25
CUSTODIAN AND PORTFOLIO ACCOUNTANT 25
TRANSFER AGENT 25
INDEPENDENT AUDITORS 26
PURCHASING SHARES 26
DETERMINING NET ASSET VALUE 26
VALUING MUNICIPAL BONDS 26
USE OF AMORTIZED COST 26
REDEEMING SHARES 27
REDEMPTION IN KIND 27

TAX STATUS 28
THE FUND'S TAX STATUS 28
SHAREHOLDER'S TAX STATUS 28
TOTAL RETURN 29
YIELD 29
TAX-EQUIVALENT YIELD 30
TAX-EQUIVALENCY TABLE 30
PERFORMANCE COMPARISONS 32
ECONOMIC AND MARKET INFORMATION33
APPENDIX 34

GENERAL INFORMATION ABOUT THE FUND

The Fund is a portfolio in The Planters Funds (the "Trust"). The Trust
was established as a Massachusetts business trust under a Declaration of
Trust dated May 14, 1993.
INVESTMENT OBJECTIVE AND POLICIES

The Fund's investment objective is to provide current income exempt from
federal income tax and personal income taxes imposed by the state of
Tennessee and Tennessee municipalities. The investment objective cannot be
changed without the approval of shareholders.
ACCEPTABLE INVESTMENTS
The Fund invests primarily in a portfolio of municipal securities which are
exempt from federal income tax and personal income taxes imposed by the
state of Tennessee and Tennessee municipalities ("Tennessee Municipal
Securities"). The municipal securities in which the Fund invests include
those issued by or on behalf of the state of Tennessee and Tennessee
municipalities as well as those issued by states, territories, and
possessions of the United States which are exempt from federal income tax
and personal income taxes imposed by the state of Tennessee and Tennessee
municipalities.
CHARACTERISTICS
The Tennessee Municipal Securities in which the Fund invests have the
characteristics set forth in the prospectus. If ratings made by
Moody's Investors Service, Inc. ("Moody's"), Standard & Poor's Ratings
Group ("S&P") or Fitch's Investors Service, Inc. ("Fitch's") change
because of changes in those organizations or in their rating systems,
the Fund will try to use comparable ratings as standards in accordance
with the investment policies described in the Fund's prospectus.

TYPES OF ACCEPTABLE INVESTMENTS
Examples of Tennessee Municipal Securities include:
ogovernmental lease certificates of participation issued by state or
municipal authorities where payment is secured by installment
payments for equipment, buildings, or other facilities being leased
by the state or municipality;
omunicipal notes and tax-exempt commercial paper;
oserial bonds;
otax anticipation notes sold to finance working capital needs of
municipalities in anticipation of receiving taxes;
obond anticipation notes sold in anticipation of the issuance of
long-term bonds;
opre-refunded municipal bonds whose timely payment of interest and
principal is ensured by an escrow of U.S. government obligations;
and
ogeneral obligation bonds.
PARTICIPATION INTERESTS
The financial institutions from which the Fund purchases participation
interests frequently provide or secure from another financial
institution irrevocable letters of credit or guarantees and give the
Fund the right to demand payment of the principal amounts of the
participation interests plus accrued interest on short notice (usually
within seven days).
VARIABLE-RATE MUNICIPAL SECURITIES
Variable interest rates generally reduce changes in the market value
of municipal securities from their original purchase prices.
Accordingly, as interest rates decrease or increase, the potential for
capital appreciation or depreciation is less for variable-rate
municipal securities than for fixed-income obligations. Many municipal

securities with variable interest rates purchased by the Fund are
subject to repayment of principal (usually within seven days) on the
Fund's demand. The terms of these variable-rate demand instruments
require payment of principal and accrued interest from the issuer of
the municipal obligations, the issuer of the participation interests,
or a guarantor of either issuer.
MUNICIPAL LEASES
In determining the liquidity of municipal lease securities, the
adviser, under the authority delegated by the Board of Trustees
("Trustees"), will base its determination on the following factors:
(a) whether the lease can be terminated by the lessee; (b) the
potential recovery, if any, from a sale of the leased property upon
termination of the lease; (c) the lessee's general credit strength
(e.g., its debt, administrative, economic and financial
characteristics, and prospects); (d) the likelihood that the lessee
will discontinue appropriating funding for the leased property because
the property is no longer deemed essential to its operations (e.g.,
the potential for an event of nonappropriation); and (e) any credit
enhancement or legal recourse provided upon an event of
nonappropriation or other termination of the lease.
WHEN-ISSUED AND DELAYED DELIVERY TRANSACTIONS
These transactions are made to secure what is considered to be an
advantageous price or yield for the Fund. Settlement dates may be a month
or more after entering into these transactions, and the market values of
the securities purchased may vary from the purchase prices. No fees or
other expenses, other than normal transaction costs, are incurred. However,
liquid assets of the Fund sufficient to make payment for the securities to
be purchased are segregated on the Fund's records at the trade date. These
assets are marked to market daily and are maintained until the transaction

has been settled. The Fund does not intend to engage in when-issued and
delayed delivery transactions to an extent that would cause the segregation
of more than 20% of the total value of its assets.
TEMPORARY INVESTMENTS
From time to time, during periods of other than normal market conditions,
the Fund may invest in short-term tax-exempt or taxable temporary
investments.
REPURCHASE AGREEMENTS
The Fund requires its custodian to take possession of the securities
subject to repurchase agreements. To the extent that the original seller
does not repurchase the securities from the Fund, the Fund could receive
less than the repurchase price on any sale of such securities. In the event
that such a defaulting seller filed for bankruptcy or became insolvent,
disposition of such securities by the Fund might be delayed pending court
action. The Fund believes that under the regular procedures normally in
effect for custody of the Fund's portfolio securities subject to repurchase
agreements, a court of competent jurisdiction would rule in favor of the
Fund and allow retention or disposition of such securities. The Fund may
only enter into repurchase agreements with banks and other recognized
financial institutions such as broker/dealers which are found by the Fund's
adviser to be creditworthy pursuant to guidelines established by the
Trustees.
From time to time, such as when suitable Tennessee Municipal Securities are
not available, the Fund may invest a portion of its assets in cash. Any
portion of the Fund's assets maintained in cash will reduce the amount of
assets in Tennessee Municipal Securities and thereby affect the Fund's
yield.

PORTFOLIO TURNOVER
The Fund may trade or dispose of portfolio securities as considered
necessary to meet its investment objective. It is not anticipated that the
portfolio trading engaged in by the Fund will result in its annual rate of
portfolio turnover exceeding 100%. For the fiscal years ended July 31,
1996, and 1995, the portfolio turnover rates were 0% and 3%,
respectively.
INVESTMENT LIMITATIONS
SELLING SHORT AND BUYING ON MARGIN
The Fund will not sell any securities short or purchase any securities
on margin but may obtain such short-term credits as may be necessary
for clearance of purchases and sales of securities.
ISSUING SENIOR SECURITIES AND BORROWING MONEY
The Fund will not issue senior securities except that the Fund may
borrow money in amounts up to one-third of the value of its total
assets, including the amounts borrowed. The Fund will not borrow money
for investment leverage, but rather as a temporary extraordinary, or
emergency measure to facilitate management of the portfolio by
enabling the Fund to meet redemption requests when the liquidation of
portfolio securities is deemed to be inconvenient or disadvantageous.
The Fund will not purchase any securities while borrowings in excess
of 5% of its total assets are outstanding.
PLEDGING ASSETS
The Fund will not mortgage, pledge, or hypothecate its assets except
to secure permitted borrowings. In those cases, it may mortgage,
pledge, or hypothecate assets having a market value not exceeding 10%
of the value of its total assets at the time of the pledge.

UNDERWRITING
The Fund will not underwrite any issue of securities except as it may
be deemed to be an underwriter under the Securities Act of 1933 in
connection with the sale of securities in accordance with its
investment objective, policies, and limitations.
INVESTING IN COMMODITIES
The Fund will not buy or sell commodities, commodity contracts, or
commodity futures contracts.
INVESTING IN REAL ESTATE
The Fund will not purchase or sell real estate, including limited
partnership interests, although it may invest in municipal bonds
secured by real estate or interests in real estate.
LENDING CASH OR SECURITIES
The Fund will not lend any of its assets except portfolio securities
up to one-third of the value of its total assets. The Fund may,
however, acquire publicly or non-publicly issued municipal bonds or
temporary investments or enter into repurchase agreements in
accordance with its investment objective, policies and limitations.
DEALING IN PUTS AND CALLS
The Fund will not buy or sell puts, calls, straddles, spreads, or any
combination of these.
CONCENTRATION OF INVESTMENTS
The Fund will not purchase securities if, as a result of such
purchase, 25% or more of the value of its total assets would be
invested in any one industry or in industrial development bonds or
other securities, the interest upon which is paid from revenues of
similar types of projects. However, under other than normal market
conditions, the Fund may invest more than 25% of the value of its
assets in cash or cash items, securities issued or guaranteed by the

U.S. government, its agencies or instrumentalities, or instruments
secured by these money market instruments, i.e., repurchase
agreements.
The above investment limitations cannot be changed without shareholder
approval. The following limitations, however, may be changed by the
Trustees without shareholder approval. Shareholders will be notified before
any material change in these limitations becomes effective.
INVESTING IN ISSUERS WHOSE SECURITIES ARE OWNED BY OFFICERS AND TRUSTEES
OF THE FUND
The Fund will not purchase or retain the securities of any issuer if
the officers and Trustees of the Fund or its investment adviser,
owning individually more than 1/2% of the issuer's securities,
together own more than 5% of the issuer's securities.
INVESTING IN RESTRICTED SECURITIES
The Fund will not invest more than 10% of its total assets in
securities subject to restrictions on resale under the Securities Act
of 1933, except for commercial paper issued under Section 4(2) of the
Securities Act of 1933 and certain other restricted securities which
meet the criteria for liquidity as established by the Trustees.
INVESTING IN ILLIQUID SECURITIES
The Fund will not invest more than 15% of its net assets in illiquid
obligations, including repurchase agreements providing for settlement
in more than seven days after notice, and certain restricted
securities not determined by the Trustees to be liquid, including
certain municipal leases.
INVESTING IN NEW ISSUERS
The Fund will not invest more than 5% of the value of its total assets
in industrial development bonds where the principal and interest are
the responsibility of companies (or guarantors, where applicable) with

less than three years of continuous operations, including the
operation of any predecessor.
INVESTING IN MINERALS
The Fund will not purchase interests in oil, gas, or other mineral
exploration or development programs or leases, although it may invest
in securities of issuers which invest in or sponsor such programs.
Except with respect to borrowing money, if a percentage limitation is
adhered to at the time of investment, a later increase or decrease in
percentage resulting from any change in value or net assets will not
result in a violation of such restriction.
The Fund does not expect to borrow money or pledge securities in
excess of 5% of the value of its net assets during the coming fiscal
year.
For purposes of its policies and limitations, the Fund considers
certificates of deposit and demand and time deposits issued by a U.S.
branch of a domestic bank or savings association having capital,
surplus, and undivided profits in excess of $100,000,000 at the time
of investment to be `cash items.'' Cash items may include obligations
such as:
ocertificates of deposit (including those issued by domestic and
foreign branches of FDIC insured banks);
oobligations issued or guaranteed as to principal and interest by the
U.S. government or any of its agencies or instrumentalities; and
orepurchase agreements.
INVESTMENT RISKS
The Fund's performance can be expected to be closely tied to the prevailing
economic conditions of the state of Tennessee as a whole, its particular
geographic regions, and the industries located within the state.

Traditionally divided into three geographic regions, the State's economy
has historically been dominated by agriculture in the west, manufacturing
in the east, and government in the middle region. Though trade and services
have replaced agriculture in terms of total output, manufacturing continues
to be the largest single sector of the economy. While the Gross State
Product of Tennessee was in excess of $100 billion in 1991 and the state
placed 20th in national rank, manufacturing comprised 24% of total
production in that year. The recent decision by Saturn and Nissan to locate
automobile production facilities in the state suggests that manufacturing,
with its inherent susceptibility to economic downturns, will continue to
dominate.
Tennessee's economy experienced many of the problems associated with the
national economy during the past recession. Though it consistently remained
below the national average, the state's unemployment rate rose
significantly during the prior recessionary period. Also, overbuilding of
commercial and residential properties in prior years caused the state to
experience some difficulties with declining real estate values.
Along with the national economy, Tennessee has recently experienced a
significant recovery in economic activity. Although moderate rates of
economic growth in past recoveries along with a steady influx of transplant
corporations have helped the state avoid the dramatic "boom and bust" cycle
experienced by many sunbelt states, the recent recession did put pressure
on governmental receipts and outlays.
The constitution of the state requires a balanced budget. This
constraint along with relatively low debt and expenditure per capita ratios
has helped the state maintain its current long term bond rating of AAA by
S&P and Aaa by Moody's Investors Service Inc. While Tennessee is one of
only nine states which have such ratings, the ability of the state to

maintain this rating given the current economic and political environment
is by no means certain.

THE PLANTERS FUNDS MANAGEMENT

Officers and Trustees are listed with their addresses, birthdates, present
positions with The Planters Funds, and principal occupations.

John F. Donahue@*
Federated Investors Tower
Pittsburgh, PA
Birthdate: July 28, 1924
Chairman and Trustee
Chairman and Trustee, Federated Investors, Federated Advisers, Federated
Management, and Federated Research; Chairman and Director, Federated
Research Corp. and Federated Global Research Corp.; Chairman, Passport
Research, Ltd.; Chief Executive Officer and Director or Trustee of the
Funds. .

Thomas G. Bigley
28th Floor, One Oxford Centre
Pittsburgh, PA
Birthdate: February 3, 1934
Trustee
Chairman of the Board, Children's Hospital of Pittsburgh; formerly, Senior
Partner, Ernst & Young LLP; Director, MED 3000 Group, Inc.; Trustee,
University of Pittsburgh; Director or Trustee of the Funds.

John T. Conroy, Jr.
Wood/IPC Commercial Department
John R. Wood and Associates, Inc., Realtors
3255 Tamiami Trail North
Naples, FL
Birthdate: June 23, 1937
Trustee
President, Investment Properties Corporation; Senior Vice-President, John
R. Wood and Associates, Inc., Realtors; Partner or Trustee in private real
estate ventures in Southwest Florida; formerly, President, Naples Property
Management, Inc. and Northgate Village Development Corporation; Director or
Trustee of the Funds.

William J. Copeland
One PNC Plaza - 23rd Floor
Pittsburgh, PA
Birthdate: July 4, 1918
Trustee
Director and Member of the Executive Committee, Michael Baker, Inc.;
formerly, Vice Chairman and Director, PNC Bank, N.A., and PNC Bank Corp.;
Director, Ryan Homes, Inc.; Director or Trustee of the Funds.

James E. Dowd
571 Hayward Mill Road
Concord, MA
Birthdate: May 18, 1922

Trustee
Attorney-at-law; Director, The Emerging Germany Fund, Inc.; Trustee of the
Funds.

Lawrence D. Ellis, M.D.*
3471 Fifth Avenue, Suite 1111
Pittsburgh, PA
Birthdate: October 11, 1932
Trustee
Professor of Medicine, University of Pittsburgh; Medical Director,
University of Pittsburgh Medical Center - Downtown; Member, Board of
Directors, University of Pittsburgh Medical Center; formerly, Hematologist,
Oncologist, and Internist, Presbyterian and Montefiore Hospitals; Director
or Trustee of the Funds.

Edward L. Flaherty, Jr.@
Miller, Ament, Henny & Kochuba
205 Ross Street
Pittsburgh, PA
Birthdate: June 18, 1924
Trustee
Attorney of Counsel, Miller, Ament, Henny & Kochuba; Director, Eat'N Park
Restaurants, Inc.; formerly, Counsel, Horizon Financial, F.A., Western
Region; Director or Trustee of the Funds.

Edward C. Gonzales *
Federated Investors Tower

Pittsburgh, PA
Birthdate: October 22, 1930
President, Treasurer, and Trustee
Vice Chairman, Treasurer, and Trustee, Federated Investors; Vice President,
Federated Advisers, Federated Management, Federated Research, Federated
Research Corp., Federated Global Research Corp. and Passport Research,
Ltd.; Executive Vice President and Director, Federated Securities Corp.;
Trustee, Federated Shareholder Services Company; Trustee or Director of
some of the Funds; President, Executive Vice President and Treasurer of
some of the Funds.

Peter E. Madden
Seacliff
562 Bellevue Avenue
Newport, RI
Birthdate: March 16, 1942
Trustee
Consultant; Former State Representative, Commonwealth of Massachusetts;
formerly, President, State Street Bank and Trust Company and State Street
Boston Corporation; Director or Trustee of the Funds.

Gregor F. Meyer
Miller, Ament, Henny & Kochuba
205 Ross Street
Pittsburgh, PA
Birthdate: October 6, 1926
Trustee

Attorney, Member of Miller, Ament, Henny & Kochuba; Chairman, Meritcare,
Inc.; Director, Eat'N Park Restaurants, Inc.; Director or Trustee of the
Funds.

John E. Murray, Jr., J.D., S.J.D.
President, Duquesne University
Pittsburgh, PA
Birthdate: December 20, 1932
Trustee
President, Law Professor, Duquesne University; Consulting Partner, Mollica,
Murray and Hogue; Director or Trustee of the Funds.

Wesley W. Posvar
1202 Cathedral of Learning
University of Pittsburgh
Pittsburgh, PA
Birthdate: September 14, 1925
Trustee
Professor, International Politics; Management Consultant; Trustee, Carnegie
Endowment for International Peace, RAND Corporation, Online Computer
Library Center, Inc., National Defense University, U.S. Space Foundation
and Czech Management Center; President Emeritus, University of Pittsburgh;
Founding Chairman, National Advisory Council for Environmental Policy and
Technology, Federal Emergency Management Advisory Board and Czech
Management Center; Director or Trustee of the Funds.

Marjorie P. Smuts
4905 Bayard Street
Pittsburgh, PA
Birthdate: June 21, 1935
Trustee
Public relations/Marketing/Conference Planning, Manchester Craftsmen's
Guild; Restaurant Consultant, Frick Art & History Center; Conference
Coordinator, University of Pittsburgh Art History Department; Director or
Trustee of the Funds.

J. Christopher Donahue
Federated Investors Tower
Pittsburgh, PA
Birthdate: April 11, 1949
Executive Vice President
President and Trustee, Federated Investors, Federated Advisers, Federated
Management, and Federated Research; President and Director, Federated
Research Corp. and Federated Global Research Corp.; President, Passport
Research, Ltd.; Trustee, Federated Shareholder Services Company, and
Federated Shareholder Services; Director, Federated Services Company;
President or Executive Vice President of the Funds; Director or Trustee of
some of the Funds. Mr. Donahue is the son of John F. Donahue, Chairman and
Trustee of the Company.

John W. McGonigle
Federated Investors Tower

Pittsburgh, PA
Birthdate: October 26, 1938
Executive Vice President and Secretary
Executive Vice President, Secretary, and Trustee, Federated Investors;
Trustee, Federated Advisers, Federated Management, and Federated Research;
Director, Federated Research Corp. and Federated Global Research Corp.;
Trustee, Federated Shareholder Services Company; Director, Federated
Services Company; President and Trustee, Federated Shareholder Services;
Director, Federated Securities Corp.; Executive Vice President and
Secretary of the Funds; Treasurer of some of the Funds.

Richard B. Fisher
Federated Investors Tower
Pittsburgh, PA
Birthdate: May 17, 1923
Vice President
Executive Vice President and Trustee, Federated Investors; Chairman and
Director, Federated Securities Corp.; President or Vice President of some
of the Funds; Director or Trustee of some of the Funds.

Judith J. Mackin
Federated Investors Tower
Pittsburgh, PA
Birthdate: May 30, 1960
Vice President and Assistant Treasurer
Vice President and Assistant Treasurer of some of the Funds.

*This Trustee is deemed to be an ``interested person'' as defined in
the Investment Company Act of 1940.
@Member of the Executive Committee. The Executive Committee of the
Board of Trustees handles the responsibilities of the Board between
meetings of the Board.
THE FUNDS
As referred to in the list of Trustees and Officer, `Funds'' includes the
following investment companies: 111 Corcoran Funds; Annuity Management
Series; Arrow Funds; Automated Government Money Trust; Blanchard Funds;
Blanchard Precious Metals Fund, Inc.; Cash Trust Series II; Cash Trust
Series, Inc. ; DG Investor Series; Edward D. Jones & Co. Daily Passport
Cash Trust; Federated Adjustable Rate U.S. Government Fund, Inc.; Federated
American Leaders Fund, Inc.; Federated ARMs Fund; Federated Equity Funds;
Federated Equity Income Fund, Inc.; Federated Fund for U.S. Government
Securities, Inc.; Federated GNMA Trust; Federated Government Income
Securities, Inc.; Federated Government Trust; Federated High Income Bond
Fund, Inc.; Federated High Yield Trust; Federated Income Securities Trust;
Federated Income Trust; Federated Index Trust; Federated Institutional
Trust; Federated Insurance Series; Federated Master Trust; Federated
Municipal Opportunities Fund, Inc.; Federated Municipal Securities Fund,
Inc.; Federated Municipal Trust; Federated Short-Term Municipal Trust;
Federated Short-Term U.S. Government Trust; Federated Stock and Bond Fund,
Inc.; Federated Stock Trust; Federated Tax-Free Trust; Federated Total
Return Series, Inc.; Federated U.S. Government Bond Fund; Federated U.S.
Government Securities Fund: 1-3 Years; Federated U.S. Government Securities
Fund: 2-5 Years; Federated U.S. Government Securities Fund: 5-10 Years;
Federated Utility Fund, Inc.; First Priority Funds; Fixed Income
Securities, Inc.; Fortress Utility Fund, Inc.; High Yield Cash Trust;
Intermediate Municipal Trust; International Series, Inc.; Investment Series

Funds, Inc.; Investment Series Trust; Liberty Term Trust, Inc. - 1999;
Liberty U.S. Government Money Market Trust; Liquid Cash Trust; Managed
Series Trust; Money Market Management, Inc.; Money Market Obligations
Trust; Money Market Trust; Municipal Securities Income Trust; Newpoint
Funds; Peachtree Funds; RIMCO Monument Funds; Targeted Duration Trust; Tax-
Free Instruments Trust; The Planters Funds; The Starburst Funds; The
Starburst Funds II; The Virtus Funds; Trust for Financial Institutions;
Trust for Government Cash Reserves; Trust for Short-Term U.S. Government
Securities; Trust for U.S. Treasury Obligations; and World Investment
Series, Inc.
FUND OWNERSHIP
Officers and Trustees own less than 1% of the Fund's outstanding shares.
As of September 3, 1996, the following shareholders of record owned 5% or
more of the shares of the Fund: Union Planters National Bank, Memphis,
Tennessee, acting in various capacities for numerous accounts, owned
approximately 2,444,996 shares (87.10%); National Financial Services, New
York, New York, for the exclusive benefit of its customers, owned
approximately 236,076 shares (8.41%).

TRUSTEE COMPENSATION

AGGREGATE
NAME , COMPENSATION
POSITION WITH FROM
TRUST TRUST *#

John F. Donahue $0
Trustee

Thomas G. Bigley $1,033
Trustee
John T. Conroy, Jr. $1,135
Trustee
William J. Copeland $1,135
Trustee
James E. Dowd $1,135
Trustee
Lawrence D. Ellis, M.D. $1,033
Trustee
Edward L. Flaherty, Jr. $1,135
Trustee
Edward C. Gonzales $0
Trustee
Peter E. Madden $1,033
Trustee
Gregor F. Meyer $1,033
Trustee
John E. Murray, Jr. $1,033
Trustee
Wesley W. Posvar $1,033
Trustee
Marjorie P. Smuts$1,033
Trustee

*Information is furnished for the fiscal year ended July 31, 1996.
#The aggregate compensation is provided for the Trust which is comprised of
one portfolio. The Fund is the only investment company in the Fund Complex.

TRUSTEE LIABILITY
The Trust's Declaration of Trust provides that the Trustees will not be
liable for errors of judgment or mistakes of fact or law. However, they are
not protected against any liability to which they would otherwise be
subject by reason of willful misfeasance, bad faith, gross negligence, or
reckless disregard of the duties involved in the conduct of their office.
INVESTMENT ADVISORY SERVICES

ADVISER TO THE FUND
The Fund's investment adviser is Union Planters National Bank ("Union
Planters" or the "adviser"). Union Planters is a wholly-owned subsidiary of
Union Planters Corporation, a multi-bank holding company headquartered in
Memphis, Tennessee.
Because of the internal controls maintained by Union Planters to restrict
the flow of non-public information, Fund investments are typically made
without any knowledge of Union Planters National Bank or its affiliates'
lending relationships with an issuer. The investment adviser shall not be
liable to the Trust, the Fund or any shareholder of the Fund for any losses
that may be sustained in the purchase, holding, or sale of any security, or
for anything done or omitted by it, except acts or omissions involving
willful misfeasance, bad faith, gross negligence, or reckless disregard of
the duties imposed upon it by its contract with the Fund.
From time to time, to the extent consistent with the objective, policies
and restrictions of the Fund, the Fund may invest in securities of issuers
with which the investment adviser has a lending relationship.
ADVISORY FEES
For its advisory services, Union Planters receives an annual investment
advisory fee as described in the prospectus.
For the fiscal years ended July 31,1996, and 1995, and for the period
from August 5, 1993, (start of business) to July 31, 1994,

the investment adviser earned advisory fees of $234,612, $284,526, and
$249,876, respectively, of which $234,612, $284,526, and $237,172,
respectively, was voluntarily waived. For the fiscal year ended July 31,
1996, the adviser reimbursed $17,000 of operating expenses.
STATE EXPENSE LIMITATIONS
The investment adviser has undertaken to comply with the expense
limitations established by certain states for investment companies
whose shares are registered for sale in those states. If the Fund's
normal operating expenses (including the investment advisory fee, but
not including brokerage commissions, interest, taxes, and
extraordinary expenses) exceed 2.5% per year of the first $30 million
of average net assets, 2% per year of the next $70 million of average
net assets, and 1.5% per year of the remaining average net assets, the
investment adviser will reimburse the Trust for its expenses over the
limitation.
If the Fund's monthly projected operating expenses exceed this expense
limitation, the investment advisory fee paid will be reduced by the
amount of the excess, subject to an annual adjustment. If the expense
limitation is exceeded, the amount to be reimbursed by the investment
adviser will be limited, in any single fiscal year, by the amount of
the investment advisory fee. This arrangement is not part of the
advisory contract and may be amended or rescinded in the future.
BROKERAGE TRANSACTIONS

When selecting brokers and dealers to handle the purchase and sale of
portfolio instruments, the adviser looks for prompt execution of the order
at a favorable price. In working with dealers, the investment adviser will
generally use those which are recognized dealers in specific portfolio
instruments, except when a better price and execution of the order can be

obtained elsewhere. The adviser makes decisions on portfolio transactions
and selects brokers and dealers subject to review by the Trustees. The
adviser may select brokers and dealers who offer brokerage and research
services. These services may be furnished directly to the Fund or to the
investment adviser and may include: advice as to the advisability of
investing in securities; security analysis and reports; economic studies;
industry studies; receipt of quotations for portfolio evaluations; and
similar services. Research services provided by brokers may be used by the
adviser and other accounts. To the extent that receipt of these services
may supplant services for which the adviser or its affiliates might
otherwise have paid, it would tend to reduce their expenses. The adviser
and its affiliates exercise reasonable business judgment in selecting
brokers who offer brokerage and research services to execute securities
transactions. They determine in good faith that commissions charged by such
persons are reasonable in relationship to the value of the brokerage and
research services provided. For the fiscal years ended July 31, 1996,
1995, and for the period from August 5, 1993 (start of business) to July
31, 1994, the Fund paid $0, $0, and $650, respectively, in commissions on
brokerage transactions.
Although investment decisions for the Fund are made independently from
those of the other accounts managed by the adviser, investments of the type
the Fund may make may also be made by those other accounts. When the Fund
and one or more other accounts managed by the adviser are prepared to
invest in, or desire to dispose of, the same security, available
investments or opportunities for sales will be allocated in a manner
believed by the adviser to be equitable to each. In some cases, this
procedure may adversely affect the price paid or received by the Fund or
the size of the position obtained or disposed of by the Fund. In other

cases, however, it is believed that coordination and the ability to
participate in volume transactions will be to the benefit of the Fund.
OTHER SERVICES

FUND ADMINISTRATION
Federated Services Company, a subsidiary of Federated Investors, provides
administrative personnel and services to the Fund for a fee as described in
the prospectus. From March 1, 1994, to March, 1, 1996, Federated
Administrative Services served as the Fund's Administrator. Prior to March
1, 1994, Federated Administrative Services, Inc. served as the Fund's
Administrator. Both former Administrators are subsidiaries of Federated
Investors. For purposes of this Statement of Additional Information,
Federated Services Company, Federated Administrative Services, and
Federated Administrative Services, Inc. may hereinafter collectively be
referred to as the `Administrators.'' For the fiscal years ended July 31,
1996, 1995, and for the period from August 5, 1993 (start of business) to
July 31, 1994, the Administrators earned $120,000, $120,001, and $110,137,
respectively, of which $0, $75,000, and $53,269, respectively, was
voluntarily waived.
CUSTODIAN AND PORTFOLIO ACCOUNTANT
State Street Bank and Trust Company, Boston, MA, is custodian for the
securities and cash of the Fund. Federated Shareholder Services Company,
Pittsburgh, PA, provides certain accounting and recordkeeping services with
respect to the Fund's portfolio investments. The fee paid for this service
is based upon the level of the Fund's average net assets for the period
plus out-of-pocket expenses.
TRANSFER AGENT
Federated Services Company, through subsidiary, Federated Shareholder
Services Company, maintains all necessary shareholder records. For its

services the transfer agent receives a fee based on the size, type, and
number of accounts and transactions made by shareholders.
INDEPENDENT ACCOUNTANTS
The independent accountants for the Fund are Price Waterhouse LLP, Boston,
MA.
PURCHASING SHARES

Shares of the Fund are sold at their net asset value with a sales charge on
days the New York Stock Exchange and Federal Reserve Wire System are open
for business. The procedure for purchasing shares is explained in the
prospectus under "Investing in the Fund."
DETERMINING NET ASSET VALUE

Net asset value generally changes each day. The days on which net asset
value is calculated for the Fund are described in the prospectus.
VALUING MUNICIPAL BONDS
The Trustees use an independent pricing service to value municipal bonds.
The independent pricing service takes into consideration yield, stability,
risk, quality, coupon rate, maturity, type of issue, trading
characteristics, special circumstances of a security or trading market, and
any other factors or market data it considers relevant in determining
valuations for normal institutional size trading units of debt securities,
and does not rely exclusively on quoted prices.
USE OF AMORTIZED COST
The Trustees have decided that the fair value of debt securities authorized
to be purchased by the Fund with remaining maturities of 60 days or less at
the time of purchase shall be their amortized cost value, unless the
particular circumstances of the security indicate otherwise. Under this
method, portfolio instruments and assets are valued at the acquisition cost
as adjusted for amortization of premium or accumulation of discount rather

than at current market value. The Executive Committee continually assesses
this method of valuation and recommends changes where necessary to assure
that the Fund's portfolio instruments are valued at their fair value as
determined in good faith by the Trustees.
REDEEMING SHARES

Shares are redeemed at the next computed net asset value after the Fund
receives the redemption request. Redemption procedures are explained in the
prospectus under "Redeeming Shares." Although the Fund does not charge for
telephone redemptions, it reserves the right to charge a fee for the cost
of wire-transferred redemptions of less than $5,000.
REDEMPTION IN KIND
The Fund has elected to be governed by Rule 18f-1 of the Investment Company
Act of 1940, as amended under which the Fund is obligated to redeem shares
for any one shareholder in cash only up to the lesser of $250,000 or 1% of
the Fund's net asset value during any 90-day period.
Any redemption beyond this amount will also be in cash unless the Trustees
determine that payments should be in kind. In such a case, the Fund will
pay all or a portion of the remainder of the redemption in portfolio
instruments, valued in the same way as the Fund determines net asset value.
The portfolio instruments will be selected in a manner that the Trustees
deem fair and equitable. To the extent available, such securities will be
readily marketable.
Redemption in kind is not as liquid as a cash redemption. If redemption is
made in kind, shareholders receiving their securities could receive less
than the redemption value of their securities when they are sold or mature
and could incur certain transactions costs if they are sold.

TAX STATUS

THE FUND'S TAX STATUS
The Fund will pay no federal income tax because it expects to meet the
requirements of Subchapter M of the Internal Revenue Code, as amended,
applicable to regulated investment companies and to receive the special tax
treatment afforded to such companies. To qualify for this treatment, the
Fund must, among other requirements:
o derive at least 90% of its gross income from dividends, interest, and
gains from the sale of securities;
o derive less than 30% of its gross income from the sale of securities
held less than three months;
o invest in securities within certain statutory limits; and
o distribute to its shareholders at least 90% of its net income earned
during the year.
SHAREHOLDER'S TAX STATUS
No portion of any income dividend paid by the Fund is eligible for the
dividends received deduction available to corporations.
CAPITAL GAINS
Capital gains or losses may be realized by the Fund on the sale of
portfolio securities. Sales would generally be made because of:
othe availability of higher relative yields;
odifferentials in market values;
onew investment opportunities;
ochanges in creditworthiness of an issuer; or
oan attempt to preserve gains or limit losses.
Distributions of long-term capital gains are taxed as such, whether they
are taken in cash or reinvested, and regardless of the length of time that
the shareholder has owned shares. Any loss by a shareholder on shares held

for less than six months and sold after a capital gains distribution will
be treated as a long-term capital loss to the extent of the capital gains
distribution. Distributions of short-term capital gains, if any, are taxed
as ordinary income.
TOTAL RETURN

The Fund's average annual total returns based on offering price for the
one-year period ended July 31, 1996, and for the period from August 30,
1993 (date of initial public investment) to July 31, 1996, were 3.50% and
4.16%, respectively.
The average annual total return for the Fund is the average compounded rate
of return for a given period that would equate a $1,000 initial investment
to the ending redeemable value of that investment. The ending redeemable
value is computed by multiplying the number of shares owned at the end of
the period by the offering price per share at the end of the period. The
number of shares owned at the end of the period is based on the number of
shares purchased at the beginning of the period with $1,000, less any
applicable sales charge, adjusted over the period by any additional shares,
assuming the monthly reinvestment of all dividends and distributions.
YIELD

The Fund's yield for the thirty-day period ended July 31, 1996, was 4.32%
based on offering price.
The yield for the Fund is determined by dividing the net investment income
per share (as defined by the Securities and Exchange Commission) earned by
the Fund over a thirty-day period by the maximum offering price per share
of the Fund on the last day of the period. This value is then annualized
using semi-annual compounding. This means that the amount of income
generated during the thirty-day period is assumed to be generated each
month over a twelve-month period and is reinvested every six months. The

yield does not necessarily reflect income actually earned by the Fund
because of certain adjustments required by the Securities and Exchange
Commission and therefore, may not correlate to the dividends or other
distributions paid to shareholders.
To the extent that financial institutions and broker/dealers charge fees in
connection with services provided in conjunction with an investment in the
Fund, performance will be reduced for those shareholders paying those fees.
TAX-EQUIVALENT YIELD

The Fund's tax-equivalent yield for the thirty-day period ended July 31,
1996 was 6.55% based on offering price.
The tax-equivalent yield of the Fund is calculated similarly to the yield,
but is adjusted to reflect the taxable yield that the Fund would have had
to earn to equal its actual yield, assuming a state and federal combined
tax rate of 34%, and assuming that income is 100% tax-exempt.

TAX-EQUIVALENCY TABLE
The Fund may also use a tax-equivalency table in advertising and sales
literature. The interest earned by the municipal obligations in the Fund's
portfolio generally remains free from federal regular income tax, and often
is free from taxes imposed by the state of Tennessee and Tennessee
municipalities.* As the table below indicates, a "tax-free" investment is
an attractive choice for investors, particularly in times of narrow spreads
between tax-free and taxable yields.

TAXABLE YIELD EQUIVALENT FOR 1996

STATE OF TENNESSEE

TAX BRACKET:
FEDERAL 15.00% 28.00% 31.00% 36.00% 39.60%

COMBINED FEDERAL
AND STATE 21.00% 34.00% 37.00% 42.00% 45.60%

JOINT $1- $40,101- $96,901- $147,701- OVER
RETURN 40,100 96,900 147,700 263,750 $263,750

SINGLE $1- $24,001- $58,151- $121,301- OVER
RETURN 24,000 58,150 121,300 263,750 $263,750

TAX-EXEMPT
YIELD TAXABLE YIELD EQUIVALENT

1.50% 1.90% 2.27% 2.38% 2.59% 2.76%
2.00% 2.53% 3.03% 3.17% 3.45% 3.68%
2.50% 3.16% 3.79% 3.97% 4.31% 4.60%
3.00% 3.80% 4.55% 4.76% 5.17% 5.51%
3.50% 4.43% 5.30% 5.56% 6.03% 6.43%
4.00% 5.06% 6.06% 6.35% 6.90% 7.35%
4.50% 5.70% 6.82% 7.14% 7.76% 8.27%
5.00% 6.33% 7.58% 7.94% 8.62% 9.19%
5.50% 6.96% 8.33% 8.73% 9.48% 10.11%
6.00% 7.59% 9.09% 9.52% 10.34% 11.03%

Note: The maximum marginal tax rate for each bracket was used in
calculating the taxable yield equivalent. Furthermore, additional
state and local taxes paid on comparable taxable investments were not
used to increase federal deductions.
The above chart is for illustrative purposes only. It is not an
indicator of past or future performance of Fund shares.
* Some portion of the Fund's income may be subject to the federal
alternative minimum tax and state and local income taxes.
PERFORMANCE COMPARISONS

The performance of the Fund depends upon such variables as:
o portfolio quality;
o average portfolio maturity;
o type of instruments in which the portfolio is invested;
o changes in interest rates and market value of portfolio securities;
o changes in the Fund's expenses; and
o various other factors.
The Fund's performance fluctuates on a daily basis largely because net
earnings and offering price per share fluctuate daily. Both net earnings
and offering price per share are factors in the computation of yield and
total return as described above.
Investors may use financial publications and/or indices to obtain a more
complete view of the Fund's performance. When comparing performance,
investors should consider all relevant factors such as the composition of
any index used, prevailing market conditions, portfolio comparisons of
other funds, and methods used to value portfolio securities and compute
offering price. The financial publications and/or indices which the Fund
uses in advertising may include:

o LIPPER ANALYTICAL SERVICES, INC. ranks funds in various fund
categories by making comparative calculations using total return.
Total return assumes the reinvestment of all capital gains
distributions and income dividends and takes into account any change
in offering price over a specific period of time.
o MORNINGSTAR, INC., an independent rating service, is the publisher of
the bi-weekly Mutual Fund Values. Mutual Fund Values rates more than
1,000 NASDAQ-listed mutual funds of all types, according to their
risk-adjusted returns. The maximum rating is five stars, and ratings
are effective for two weeks.
Advertisements and other sales literature for the Fund may quote total
returns which are calculated on non-standardized base periods. The total
returns represent the historic change in the value of an investment in the
Fund based on monthly reinvestment of dividends over a specified period of
time.
Advertisements may quote performance information which does not reflect
the effect of the sales charge.
Advertising and other promotional literature may include charts, graphs and
other illustrations using the Fund's returns, or returns in general, that
demonstrate basic investment concepts such as tax-deferred compounding,
dollar-cost averaging and systematic investment. In addition, the Fund can
compare its performance, or performance for the types of securities in
which in invests, to a variety of other investments, such as bank savings
accounts, certificates of deposit, and Treasury bills.
ECONOMIC AND MARKET INFORMATION
Advertising and sales literature for the Fund may include discussions of
economic, financial and political developments and their effect on the
securities market. Such discussions may take the form of commentary on
these developments by the Fund portfolio managers and their views and

analysis on how such developments could affect the Funds. In addition,
advertising and sales literature may quote statistics and give general
information about the mutual fund industry, including the growth of the
industry, from sources such as the Investment Company Institute (`ICI'').
For example, according to the ICI, twenty-seven percent of American
households are pursuing their financial goals through mutual funds. These
investors, as well as businesses and institutions, have entrusted over $3
trillion to the more than 5,500 funds available.

APPENDIX

STANDARD AND POOR'S RATINGS GROUP ("S&P") MUNICIPAL BOND RATINGS
AAA--Debt rated "AAA" has the highest rating assigned by S&P. Capacity to
pay interest and repay principal is extremely strong.
AA--Debt rated "AA" has a very strong capacity to pay interest and repay
principal and differs from the higher rated issues only in small degree.
A--Debt rated "A" has a strong capacity to pay interest and repay principal
although it is somewhat more susceptible to the adverse effects of changes
in circumstances and economic conditions than debt in higher rated
categories.
BBB--Debt rated "BBB" is regarded as having an adequate capacity to pay
interest and repay principal. Whereas it normally exhibits adequate
protection parameters, adverse economic conditions or changing
circumstances are more likely to lead to a weakened capacity to pay
interest and repay principal for debt in this category than in higher rated
categories.

NR--Indicates that no public rating has been requested, that there is
insufficient information on which to base a rating, or that S&P does not
rate a particular type of obligation as a matter of policy.
Plus (+) or minus (-): Ratings may be modified by the addition of a plus or
minus sign to show relative standing within the major rating categories.
MOODY'S INVESTORS SERVICE, INC., ("MOODY'S") MUNICIPAL BOND RATINGS
AAA--Bonds which are rated Aaa are judged to be of the best quality. They
carry the smallest degree of investment risk and are generally referred to
as "gilt edged." Interest payments are protected by a large or by an
exceptionally stable margin and principal is secure. While the various
protective elements are likely to change, such changes as can be visualized
are most unlikely to impair the fundamentally strong position of such
issues.
AA--Bonds which are rated Aa are judged to be of high quality by all
standards. Together with the Aaa group they comprise what are generally
known as high grade bonds. They are rated lower than the best bonds because
margins of protection may not be as large as in Aaa securities or
fluctuation of protective elements may be of greater amplitude or there may
be other elements present which make the long-term risks appear somewhat
larger than in Aaa securities.
A--Bonds which are rated A possess many favorable investment attributes and
are to be considered as upper medium grade obligations. Factors giving
security to principal and interest are considered adequate but elements may
be present which suggest a susceptibility to impairment sometime in the
future.
BAA--Bonds which are rated Baa are considered as medium grade obligations,
(i.e., they are neither highly protected nor poorly secured). Interest
payments and principal security appear adequate for the present but certain
protective elements may be lacking or may be characteristically unreliable

over any great length of time. Such bonds lack outstanding investment
characteristics and in fact have speculative characteristics as well.
NR--Not rated by Moody's.
Moody's applies numerical modifiers, 1, 2 and 3 in its generic rating
category; the modifier 1 indicates that the security ranks in the higher
end of its generic rating category; the modifier 2 indicates a mid-range
ranking; and the modifier 3 indicates that the issue ranks in the lower end
of its generic rating category.
FITCH INVESTORS SERVICE, INC., ("FITCH") LONG-TERM DEBT RATINGS
AAA--Bonds considered to be investment grade and of the highest credit
quality. The obligor has an exceptionally strong ability to pay interest
and repay principal, which is unlikely to be affected by reasonably
foreseeable events.
AA--Bonds considered to be investment grade and of very high quality. The
obligor's ability to pay interest and repay principal is very strong,
although not quite as strong as bonds rated "AAA". Because bonds rated in
the "AAA" and "AA" categories are not significantly vulnerable to
foreseeable future developments, short-term debt of these issuers is
generally rated F-1+.
A--Bonds considered to be investment grade and of high credit quality. The
obligor's ability to pay interest and repay principal is considered strong,
but may be more vulnerable to adverse changes in economic conditions and
circumstances than bonds with higher ratings.
BBB--Bonds considered to be investment grade and of satisfactory credit
quality. The obligor's ability to pay interest and repay principal is
considered to be adequate. Adverse changes in economic conditions and
circumstances, however, are more likely to have adverse impact on these
bonds, and therefore, impair timely payment. The likelihood that the

ratings of these bonds will fall below investment grade is higher than for
bonds with higher ratings.
NR--NR indicates that Fitch does not rate the specific issue.
Plus (+) or minus (-): Plus and minus signs are used with a rating symbol
to indicate the relative position of a credit within the rating category.
Plus and minus signs, however, are not used in the "AAA" category.
STANDARD AND POOR'S RATINGS GROUP MUNICIPAL NOTE RATINGS
SP-1--Very strong or strong capacity to pay principal and interest. Those
issues determined to possess overwhelming safety characteristics will be
given a plus sign (+) designation.
SP-2--Satisfactory capacity to pay principal and interest.
MOODY'S INVESTORS SERVICE, INC., SHORT-TERM LOAN RATINGS
MIG1/VMIG1--This designation denotes best quality. There is present strong
protection by established cash flows, superior liquidity support or
demonstrated broad-based access to the market for refinancing.
MIG2/VMIG2--This designation denotes high quality. Margins of protection
are ample although not so large as in the preceding group.
FITCH INVESTORS SERVICE, INC. SHORT-TERM DEBT RATINGS
F-1+--Exceptionally Strong Credit Quality. Issues assigned this rating are
regarded as having the strongest degree of assurance for timely payment.
F-1--Very Strong Credit Quality. Issues assigned this rating reflect an
assurance of timely payment only slightly less in degree than issues rated
F-1+.
F-2--Good Credit Quality. Issues carrying this rating have a satisfactory
degree of assurance for timely payment, but the margin of safety is not as
great as the F-1+ and F-1 categories.
STANDARD AND POOR'S RATINGS GROUP COMMERCIAL PAPER RATINGS
A-1--This highest category designation indicates that the degree of safety
regarding timely payment is strong. Those issues determined to possess

extremely strong safety characteristics are denoted with a plus sign (+)
designation.
A-2--Capacity for timely payment on issues with this designation is
satisfactory. However, the relative degree of safety is not as high as for
issues designated A-1.
MOODY'S INVESTORS SERVICE, INC., COMMERCIAL PAPER RATINGS
PRIME-1--Issuers rated PRIME-1 (or related supporting institutions) have a
superior capacity for repayment of short-term promissory obligations.
PRIME-1 repayment capacity will normally be evidenced by the following
characteristics:
o Leading market positions in well established industries.
o High rates of return on funds employed.
o Conservative capitalization structure with moderate reliance on debt
and ample asset protection.
o Broad margins in earning coverage of fixed financial charges and high
internal cash generation.
o Well-established access to a range of financial markets and assured
sources of alternate liquidity.
PRIME-2--Issuers rated PRIME-2 (or related supporting institutions) have a
strong capacity for repayment of short-term promissory obligations. This
will normally be evidenced by many of the characteristics cited above, but
to a lesser degree. Earnings trends and coverage ratios, while sound, will
be more subject to variation. Capitalization characteristics, while still
appropriate, may be more affected by external conditions. Ample alternate
liquidity is maintained.

PART C. OTHER INFORMATION

Item 24. Financial Statements and Exhibits:
(a) Financial Statements. (Filed in Part A)
(b) Exhibits:
(1) Copy of Declaration of Trust of the Registrant (2);
(2) Copy of By-Laws of the Registrant (2);
(3) Not applicable;
(4) Copy of Specimen Certificate for Shares of Beneficial
Interest of the Registrant (2);
(5) Conformed Copy of Investment Advisory Contract of the
Registrant (3);
(6) (i)Conformed Copy of the Distributor's Contract/
Administrative Support and Distributor's Contract
of the Registrant;(3)
(ii)Conformed Copy of Administrative Services
Agreement;(3)
(7) Not applicable;
(8) Conformed copy of Custodian Agreement of the
Registrant;(4)
(9) Conformed copy of Transfer Agency and Service Agreement
of the Registrant; (3)
(10) (i) Copy of Opinion and Consent of Counsel as to
legality of shares being registered (2);
(ii) Opinion and Consent of Special Counsel (2);
(11) Conformed Copy of Consent of Independent Public
Accountants;+
(12) Not applicable;

(13) Copy of Initial Capital Understanding (2);
(14) Not applicable;
(15) Not applicable;
(16) Schedule for Computation of Fund Performance Data;(3)
(17) Copy of Financial Data Schedule;+
(18) Not Applicable;
(19) Power of Attorney;(5)

+ All exhibits have been filed electronically.

(2) Response is incorporated by reference to Registrant's Pre-Effective
Amendment No. 1 on Form N-1A filed August 11, 1993. (File Nos.
33-49701 and 811-7065)
(3) Response is incorporated by reference to Registrant's Post-Effective
Amendment No. 1 on Form N1-A filed March 1, 1994. (File Nos. 33-49701
and 811-7065)
(4) Response is incorporated by reference to Registrant's Post-Effective
Amendment No. 2 on Form N1-A filed September 29, 1994. (File Nos. 33-
49701 and 811-7065)
(5) Response is incorporated by reference to Registrant's Post-Effective
Amendment No. 4 on Form N-1A filed September 26, 1995 (File Nos. 33-
49701 and 811-7065)

Item 25. Persons Controlled by or Under Common Control with Registrant:

None.

Item 26. Number of Holders of Securities:

Number of Record Holders
Title of Class (as of September 3, 1996)
Tennessee Tax-Free Bond Fund

Shares of Beneficial Interest 28
(no par value)

Item 27. Indemnification: (2)

Item 28. Business and Other Connections of Investment Adviser:

(a)Founded in 1869, Union Planters National Bank, a national
banking association, is a wholly-owned subsidiary of Union
Planters Corporation (the ``Corporation'') a multi-bank
holding company headquartered in Memphis, Tennessee. Union
Planters is a commercial bank offering a wide range of
banking services to its customers. The adviser has been
managing trust assets for over 80 years. As of December 31,
1995, the Trust Group of Union Planters had approximately
$1.1 billion under administration, of which it had investment
discretion over approximately $750 million.

(b)
Other Substantial
Position with Business, Profession,
Name the Adviser Vocation or Employment

Benjamin W. Rawlins, Jr. Chairman of the Chairman &
Chief Exec.
Board, Chief Executive Officer, Union Planters
Officer and Director Corporation

Kenneth W. Plunk President and Director

Robert L. Booth, Jr. Executive Vice President

Dianne K. Stigall Executive Vice President

John D. Temple Executive Vice President

Luke Yancey, III Executive Vice President

Peter G. Williston Secretary

Jackson W. Moore Director President, Union Planters
Corporation

Albert M. Austin Director Chairman, Cannon,
Austin and Cannon, Inc.

George W. Bryan Director Senior Vice President, Sara
Lee Corporation

Hanford F. Farell, Jr.Director Chairman, Farrell-Cooper
Mining Co.

Dr. Alvin O. Jackson Director Senior Pastor, Mississippi
Boulevard Christian Church
2. Response is incorporated by reference to Registrant's Pre-Effective
Amendment No. 1 on Form N-1A filed on August 11, 1993.
(File Nos. 33-49701 and 811-7065)

Parnell S. Lewis, Jr. Director President, Anderson Tilly Co.

C.J. Lowrance, III Director President, Lowrance Brothers &
Company, Inc.

C. Penn Owen, Jr. Director Managing Partner, Bowdre Place

Dr. V. Lane Rawlins Director President, University of
Memphis

Donald F. Schuppe Director Retired

Leslie M. Stratton, III Director President, Leslie M.
Stratton Co.

Richard A. Trippeer, Jr. Director President, R.A.
Trippeer, Inc.

Item 29. Principal Underwriters:

(a) Federated Securities Corp., the Distributor for shares of the
Registrant, also acts as principal underwriter for the following open-end
investment companies: 111 Corcoran Funds; Annuity Management Series; Arrow
Funds; Automated Government Money Trust; BayFunds; Blanchard Funds;
Blanchard Precious Metals Fund, Inc.; Cash Trust Series II; Cash Trust
Series, Inc.; DG Investor Series; Edward D. Jones & Co. Daily Passport Cash
Trust; Federated Adjustable Rate U.S. Government Fund, Inc.; Federated
American Leaders Fund, Inc.; Federated ARMs Fund; Federated Equity Funds;
Federated Equity Income Fund, Inc.; Federated Fund for U.S. Government
Securities, Inc.; Federated GNMA Trust; Federated Government Income
Securities, Inc.; Federated Government Trust; Federated High Income Bond
Fund, Inc.; Federated High Yield Trust; Federated Income Securities Trust;
Federated Income Trust; Federated Index Trust; Federated Institutional
Trust; Federated Insurance Series; Federated Investment Portfolios;
Federated Investment Trust; Federated Master Trust; Federated Municipal
Opportunities Fund, Inc.; Federated Municipal Securities Fund, Inc.;
Federated Municipal Trust; Federated Short-Term Municipal Trust; Federated
Short-Term U.S. Government Trust; Federated Stock and Bond Fund, Inc.;
Federated Stock Trust; Federated Tax-Free Trust; Federated Total Return
Series, Inc.; Federated U.S. Government Bond Fund; Federated U.S.
Government Securities Fund: 1-3 Years; Federated U.S. Government Securities
Fund: 2-5 Years; Federated U.S. Government Securities Fund: 5-10 Years;
Federated Utility Fund, Inc.; First Priority Funds; Fixed Income
Securities, Inc.; High Yield Cash Trust; Independence One Mutual Funds;
Intermediate Municipal Trust; International Series, Inc.; Investment Series
Funds, Inc.; Investment Series Trust; Liberty U.S. Government Money Market
Trust; Liquid Cash Trust; Managed Series Trust; Marshall Funds, Inc.; Money
Market Management, Inc.; Money Market Obligations Trust; Money Market
Trust; Municipal Securities Income Trust; Newpoint Funds; Peachtree Funds;

RIMCO Monument Funds; SouthTrust Vulcan Funds; Star Funds; Targeted
Duration Trust; Tax-Free Instruments Trust; The Biltmore Funds; The
Biltmore Municipal Funds; The Monitor Funds; The Planters Funds; The
Starburst Funds; The Starburst Funds II; The Virtus Funds; Tower Mutual
Funds; Trust for Financial Institutions; Trust for Government Cash
Reserves; Trust for Short-Term U.S. Government Securities; Trust for U.S.
Treasury Obligations; 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 Vice President
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 ViceExecutive Vice
Federated Investors Tower President, Federated, President
Pittsburgh, PA 15222-3779 Securities Corp.

Thomas R. Donahue Director, Assistant Secretary,
Federated Investors Tower Assistant Treasurer
Pittsburgh, PA 15222-3779 Federated Securities Corp.

John B. Fisher President-Institutional Sales, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779

James F. Getz President-Broker/Dealer, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779

Mark R. Gensheimer Executive Vice President of --
Federated Investors Tower Bank/Trust, 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

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

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

Dale R. Browne 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

R. Leonard Corton, Jr. Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779

Kevin J. Crenny Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779

Daniel T. Culbertson Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779

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. Fitzgerald Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779

Joseph D. Gibbons Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779

John K. Goettlicher 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

James E. Hickey Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779

H. Joeseph Kennedy 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

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

Thomas A. Peters III 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

Edward L. Smith 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

Richard Suder Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779

Jamie M. Teschner Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779

William C. Tustin Vice President, --

Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779

Paul A. Uhlman Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779

Miles J. Wallace 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

Edward J. Wojnarowski 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

Edward R. Bozek 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

Denis McAuley Treasurer, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779

Leslie K. Platt 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
Pittsburgh, PA 15222-3779

Federated Shareholder Services Company Federated Investors Tower
Transfer Agent, Dividend Pittsburgh, PA 15222-3779
Disbursing Agent, and Portfolio
Recordkeeper

Federated Services Company Federated Investors Tower

Administrator Pittsburgh, PA 15222-3779

State Street Bank and Trust Company P.O. Box 8600
Custodian Boston, MA 02266-8600

Union Planters National Bank P.O. Box 387
Adviser Memphis, Tennessee 38147

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.

SIGNATURES

Pursuant to the requirements of the Securities Act of 1933 and the
Investment Company Act of 1940, the Registrant, THE PLANTERS FUNDS
certifies that it meets all of the requirements for effectiveness of the
Amendment to its Registration Statement pursuant to Rule 485(b) under the

Securities Act of 1933 and has duly caused this Amendment to its
Registration Statement to be signed on its behalf by the undersigned,
thereto duly authorized, in the City of Pittsburgh and Commonwealth of
Pennsylvania, on the 26th day of September, 1996.

THE PLANTERS FUNDS

BY: /s/Gail Cagney
Gail Cagney, Assistant Secretary
Attorney in Fact for John F. Donahue
September 26, 1996

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/Gail Cagney
Gail Cagney Attorney In Fact September 26, 1995
ASSISTANT SECRETARY For the Persons
Listed Below

NAME TITLE

John F. Donahue* Chairman and Trustee

(Chief Executive Officer)

Edward C. Gonzales* President, Treasurer and Trustee
(Principal Financial and
Accounting Officer)

Thomas G. Bigley* Trustee

John T. Conroy, Jr.* Trustee

William J. Copeland* Trustee

James E. Dowd* Trustee

Lawrence D. Ellis, M.D.* Trustee

Edward L. Flaherty, Jr.* Trustee

Peter E. Madden* Trustee

Gregor F. Meyer* Trustee

John E. Murray, Jr.* Trustee

Wesley W. Posvar* Trustee

Marjorie P. Smuts* Trustee

* By Power of Attorney

CONSENT OF INDEPENDENT ACCOUNTANTS

We hereby consent to the use in the Prospectus constituting part of this
Post-Effective Amendment No. 6 to the registration statement on Form N-1A
(the `Registration Statement'') of our report dated September 12, 1996,
relating to the financial statements and financial highlights of the
Tennessee Tax-Free Bond Fund (a Portfolio of the Planters Funds) which are
included in such Prospectus. We also consent to the reference to us under
the heading `Independent Accountants'' in the Statement of Additional
Information which constitutes part of this Registration Statement

/s/ Price Waterhouse LLP
Price Waterhouse LLP

Boston, Massachusetts
September 25, 1996

<S> <C>

<ARTICLE> 6
<SERIES>
<NUMBER> 01
<NAME> The Planters Funds
Tennessee Tax-Free Bond Fund

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<FISCAL-YEAR-END> Jul-31-1996
<PERIOD-END> Jul-31-1996
<INVESTMENTS-AT-COST> 29,320,257
<INVESTMENTS-AT-VALUE> 29,266,328
<RECEIVABLES> 464,409
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<EQUALIZATION> 0
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<SHARES-REINVESTED> 12,949
<NET-CHANGE-IN-ASSETS> (6,219,720)
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<ACCUMULATED-GAINS-PRIOR> (265,182)
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<OVERDIST-NET-GAINS-PRIOR> 0
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<INTEREST-EXPENSE> 0
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<AVERAGE-NET-ASSETS> 31,337,382
<PER-SHARE-NAV-BEGIN> 10.460
<PER-SHARE-NII> 0.500
<PER-SHARE-GAIN-APPREC> 0.070
<PER-SHARE-DIVIDEND> 0.490
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<RETURNS-OF-CAPITAL> 0.000
<PER-SHARE-NAV-END> 10.540
<EXPENSE-RATIO> 0.86
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<AVG-DEBT-PER-SHARE> 0.000

</TABLE>