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
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Pre-Effective Amendment No. ..............................
Post-Effective Amendment No. 8 .................. X
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and/or
REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT OF 1940 X
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Amendment No. 5 .................................... X
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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, 1997 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.
<PAGE>
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 15, 1997; 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
<PAGE>
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.
<TABLE>
<CAPTION>
<C> <S> <C>
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.
<PAGE>
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.......................The Planters Funds Management; Fund Ownership.
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.
</TABLE>
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, 1997, 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 NOR HAS THE SECURITIES AND EXCHANGE COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY
IS A CRIMINAL OFFENSE.
Prospectus dated September 30, 1997
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 8
NET ASSET VALUE 9
INVESTING IN THE FUND 9
Share Purchases 9
Minimum Investment Required 9
What Shares Cost 9
Reducing the Sales Charge 10
REDEEMING SHARES 11
By Telephone 11
By Mail 12
Accounts with Low Balances 13
SHAREHOLDER INFORMATION 13
Voting Rights 13
Massachusetts Partnership Law 13
EFFECT OF BANKING LAWS 14
TAX INFORMATION 14
Federal Income Tax 14
State of Tennessee Taxes 14
Other State and Local Taxes 15
PERFORMANCE INFORMATION 15
FINANCIAL STATEMENTS 16
INDEPENDENT ACCOUNTANTS' REPORT 26
ADDRESSES 27
SUMMARY OF FUND EXPENSES
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SHAREHOLDER TRANSACTION EXPENSES
<S> <C>
Maximum Sales Charge Imposed on Purchases (as a percentage of offering price) 2.00%
Maximum Sales 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 1.10%
Total Fund Operating Expenses(2) 1.10%
</TABLE>
(1) The management fee has been reduced to reflect the 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) Total Fund Operating Expenses are anticipated to be 1.85% 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 and
(2) redemption at the end of each time period $31 $54 $79 $151
</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)
Reference is made to the Independent Accountants' Report on page 26.
<TABLE>
<CAPTION>
YEAR ENDED JULY 31,
1997 1996 1995
1994(A)
<S> <C> <C> <C> <C>
NET ASSET VALUE, BEGINNING OF PERIOD $10.54 $10.46 $10.22
$10.50
INCOME FROM INVESTMENT OPERATIONS
Net investment income 0.45 0.50 0.51
0.44
Net realized and unrealized gain (loss) on investments 0.38 0.07 0.24
(0.31)
Total from investment operations 0.83 0.57 0.75
0.13
LESS DISTRIBUTIONS
Distributions from net investment income (0.46) (0.49) (0.51)
(0.41)
NET ASSET VALUE, END OF PERIOD $10.91 $10.54 $10.46
$10.22
TOTAL RETURN(B) 8.12% 5.57% 7.60%
1.19%
RATIOS TO AVERAGE NET ASSETS
Expenses 1.10% 0.86% 0.61%
0.56%*
Net investment income 4.23% 4.62% 4.93%
4.69%*
Expense waiver/reimbursement(c) 0.75% 0.80% 0.95%
0.87%*
SUPPLEMENTAL DATA
Net assets, end of period (000 omitted) $25,849 $29,668 $35,888
$42,400
Portfolio turnover 11% 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.
(c) This voluntary expense decrease is reflected in both the expense
and net investment income ratios shown above.
(See Notes which are an integral part of the Financial Statements)
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
Investors 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
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
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 limitations 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 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 adviser has a lending
relationship.
ADVISORY FEES. The 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 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
adviser has been managing trust assets for over 80 years. As of
December 31, 1996, the Trust Group of Union Planters had approximately
$4.6 billion under administration, of which it had investment
discretion over approximately $1 billion. The adviser has served as
adviser to the Fund since its inception.
As part of its 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: James Plunkett,
Senior Vice President in the Funds Management Division of Union
Planters National Bank, has been the Fund's portfolio Manager since
February 1997. Prior to joining Union Planters, Mr. Plunkett was
Senior Vice President in the Funds Management Division of Sunburst
Bank, Mississippi. Before that, he was an institutional financial
consultant with Merrill Lynch, Pierce, Fenner & Smith Incorporated.
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. 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:
MAXIMUM AVERAGE AGGREGATE
FEE DAILY NET ASSETS
0.150% on the first $250 million
0.125% on the next $250 million
0.100% on the next $250 million
0.075% on assets in excess of $750 million
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, Martin
Luther King 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
under "What Shares Cost," 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. As of
September 2, 1997, Union Planters Bank, Memphis, Tennessee, acting in
various capacities for numerous accounts, was the owner of record of
approximately 2,132,207 shares (90.18%) 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 SEC) 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, 1997
<TABLE>
<CAPTION>
PRINCIPAL CREDIT
AMOUNT
RATING* VALUE
<C> <S>
<C> <C>
LONG-TERM MUNICIPAL NOTES--96.6%
TENNESSEE--96.6%
$ 215,000 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 $ 231,492
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 1,033,790
1,000,000 Clarksville, TN, Electric System Refunding Revenue Bonds,
5.125%, 9/1/2011
NR 1,006,200
500,000 Clarksville, TN, Water Sewer & Gas Refunding Revenue Bonds,
6.125% (MBIA Insured)/ (Original Issue Yield: 6.15%), 2/1/2007
AAA 540,950
500,000 Clarksville, TN, Water Sewer & Gas Refunding Revenue Bonds,
6.125% (MBIA Insured)/ (Original Issue Yield: 6.328%), 2/1/2012
AAA 533,140
600,000 Germantown, TN, GO UT Refunding Bonds, 4.10%, 1/1/2000
AAA 605,208
600,000 Germantown, TN, GO UT, 4.20%, 1/1/2001
AAA 607,992
250,000 Jackson, TN Health Educational & Housing Facilities Board,
Hospital Revenue Bonds, 5.90% (Jackson-Madison County
General Hospital)/(MBIA Insured)/(Original Issue Yield: 5.95%),
4/1/2000
AAA 261,370
400,000 Jackson, TN, Water & Sewer Refunding Revenue Bonds, 5.125%
(AMBAC Insured)/(Original Issue Yield: 5.35%), 1/1/2010
AAA 406,292
440,000 Johnson City, TN Health & Education Facilities Board, Refunding
Revenue Bonds, 6.75% (Johnson City Medical Center Hospital)/
(MBIA Insured)/(Original Issue Yield: 6.912%), 7/1/2006
AAA 484,396
250,000 (a)Johnson City, TN Health & Education Facilities Board,
Revenue Bonds, 6.75% (MBIA Insured)/(United States Treasury
PRF)/(Original Issue Yield: 6.912%), 7/1/2006, prerefunded
7/1/2001 (@102)
AAA 277,760
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 514,700
</TABLE>
TENNESSEE TAX-FREE BOND FUND
<TABLE>
<CAPTION>
PRINCIPAL CREDIT
AMOUNT
RATING* VALUE
<C> <S>
<C> <C>
LONG-TERM MUNICIPAL NOTES--CONTINUED
TENNESSEE--CONTINUED
$ 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),
1/1/2008, prerefunded 1/1/2000 (@102)
AAA $ 542,870
1,000,000 Knox County, TN, GO UT, 4.75%, 2/1/2006
AA 1,025,310
1,030,000 Knoxville, TN Water System, Refunding Revenue Bonds
(Series M), 5.20% (Original Issue Yield: 5.45%), 3/1/2010
AA 1,051,826
1,000,000 Memphis-Shelby County, TN, Airport Refunding Revenue Bonds,
6.75% (Federal Express Corp.), 9/1/2012
BBB 1,097,840
1,500,000 Metropolitan Government Nashville & Davidson County,
TN HEFA, Refunding Revenue Bonds, 5.20% (Vanderbilt
University), 7/1/2018
AA 1,505,730
750,000 Metropolitan Government Nashville & Davidson County, TN,
Revenue Bonds (Series A), 6.00% (Original Issue Yield: 6.282%),
5/15/2017
AA 791,775
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 240,700
75,000 (a)Metropolitan Government Nashville & Davidson County, TN,
Water & Sewer Refunding Revenue Bonds, 7.25% (United States
Treasury PRF), 1/1/2006
A 75,956
120,000 (a)Metropolitan Government Nashville & Davidson County, TN,
Water & Sewer Refunding Revenue Bonds, 7.30% (United States
Treasury PRF), 1/1/2008
A 120,265
170,000 Montgomery County, TN Public Building Authority, Pooled
Financing Government Obligation Revenue Bonds, 7.50%
(Tennessee County Loan Pool)/(Prudential Insurance Co. of
America), 12/15/2000
AA- 172,237
800,000 Mount Juliet, TN Public Building Authority, Revenue Bonds
(Series O), 7.00% (MBIA Insured), 2/1/2006
AAA 886,320
1,000,000 Putnam County, TN, GO UT Bonds, 5.125% (MBIA Insured)/
(Original Issue Yield: 5.35%), 4/1/2011
AAA 1,009,780
</TABLE>
TENNESSEE TAX-FREE BOND FUND
<TABLE>
<CAPTION>
PRINCIPAL CREDIT
AMOUNT
RATING* VALUE
<C> <S>
<C> <C>
LONG-TERM MUNICIPAL NOTES--CONTINUED
TENNESSEE--CONTINUED
$ 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 $ 785,783
1,000,000 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
AAA 1,067,430
500,000 Shelby County, TN, GO UT Bonds (Series A), 5.10% (Original
Issue Yield: 5.25%), 3/1/2011
AA+ 506,565
250,000 Shelby County, TN, GO UT Refunding Bonds (Series B), 5.875%
(Original Issue Yield: 5.95%), 3/1/2007
AA+ 264,703
400,000 Sullivan County, TN Health Educational & Housing Facilities
Board, Revenue Bonds, 5.75% (Holston Valley Health Board)/
(Original Issue Yield: 5.93%), 2/15/2013
AAA 417,364
1,205,000 Tennessee Housing Development Agency, Refunding Revenue
Bonds (Series A), 5.70%, 7/1/2008
A+ 1,244,813
1,000,000 Tennessee Housing Development Agency, Refunding Revenue
Bonds (Series A), 5.85%, 7/1/2013
A+ 1,025,840
430,000 Tennessee Housing Development Agency, Revenue Bonds, 6.90%
(Homeownership Program)/( Issue U), 7/1/2005
A+ 456,002
500,000 Tennessee State Local Development Authority, Refunding
Revenue Bonds (Series A), 5.65%, 3/1/2007
AA- 530,640
495,000 Tennessee State Local Development Authority, Revenue Bonds,
6.10% (Community Provider Pooled Loan Program)/(Tennessee
State GTD), 10/1/2007
A- 540,169
500,000 Tennessee State School Board Authority, Higher Education
Facilities Revenue Bonds (Series A), 6.25% (Original Issue Yield:
6.309%), 5/1/2017
AA 529,625
195,000 Tennessee State School Board Authority, Refunding Revenue
Bonds (Series A), 5.75%, 5/1/2006
AA 195,661
700,000 Tennessee State, GO UT Bonds (Series A), 5.55%,
3/1/2010 AA+ 738,381 </TABLE> TENNESSEE TAX-FREE BOND FUND
<TABLE> <CAPTION>
PRINCIPAL CREDIT
AMOUNT
RATING* VALUE
<C> <S>
<C> <C>
LONG-TERM MUNICIPAL NOTES--CONTINUED
TENNESSEE--CONTINUED
$ 450,000 (a)Tennessee State, GO UT Bonds (Series B), 6.60% (Original Issue
Yield: 6.60%), 6/1/2004, prerefunded 6/1/2001 (@101.5)
AA+ $ 495,194
1,035,000 Williamson County, TN, GO UT Refunding Bonds, 6.00%
(Original Issue Yield: 6.217%), 3/1/2008
Aaa 1,161,756
TOTAL LONG-TERM MUNICIPAL NOTES (IDENTIFIED COST $24,152,990)
24,983,825
MUTUAL FUND--1.9%
485,482 Tennessee Municipal Cash Trust Fund (AT NET ASSET
VALUE) 485,482
TOTAL INVESTMENTS (IDENTIFIED COST
$24,638,472)(B) $ 25,469,307
</TABLE>
(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 of investments for federal tax purposes amounts to
$24,638,472. The net unrealized appreciation of investments on a
federal tax basis amounts to $830,835 which is comprised of $832,601
appreciation and $1,766 depreciation at July 31, 1997. * Please
refer to the Appendix of the Statement of Additional Information for
an explanation of the credit ratings. Current credit ratings are
unaudited. Note: The categories of investments are shown as a
percentage of net assets ($25,849,250) at July 31, 1997. 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 GTD --Guaranty HEFA --Health and Education
Facilities Authority MBIA --Municipal Bond Investors Assurance PRF
- --Prerefunded UT --Unlimited Tax
(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, 1997
<TABLE>
<S> <C>
ASSETS:
Total investments in securities, at value (identified and tax cost $24,638,472) $
25,469,307
Cash
15,021
Income receivable
387,377
Receivable for shares
sold 5,400
Deferred
expenses 7,073
Total assets
25,884,178
LIABILITIES:
Accrued expenses
34,928
NET ASSETS for 2,369,821 shares outstanding $
25,849,250
NET ASSETS CONSIST OF:
Paid in capital $
25,080,622
Net unrealized appreciation of investments
830,835
Accumulated net realized loss on investments
(137,059)
Undistributed net investment income
74,852
Total Net Assets $
25,849,250
NET ASSET VALUE, OFFERING PRICE AND REDEMPTION PROCEEDS PER SHARE:
Net Asset Value Per Share ($25,849,250 / 2,369,821 shares outstanding)
$10.91
Offering Price Per Share (100/98.00 of $10.91)* $11.13 </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, 1997
<TABLE>
<S> <C> <C>
INVESTMENT INCOME:
Interest $ 1,488,966
EXPENSES:
Investment advisory fee $ 209,558
Administrative personnel and services fee 120,000
Custodian fees 26,689
Transfer and dividend disbursing agent fees and expenses 29,843
Directors'/Trustees' fees 10,080
Auditing fees 20,583
Legal fees 3,500
Portfolio accounting fees 49,665
Share registration costs 20,373
Printing and postage 9,914
Insurance premiums 2,773
Miscellaneous 13,651
Total expenses 516,629
Waiver of investment advisory fee (209,558)
Net expenses 307,071
Net investment income 1,181,895
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS:
Net realized gain on investments 67,723
Net change in unrealized appreciation of investments 884,764
Net realized and unrealized gain on investments 952,487
Change in net assets resulting from operations $ 2,134,382
</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
YEAR ENDED JULY 31,
<TABLE>
<CAPTION>
1997
1996
<S> <C> <C>
INCREASE (DECREASE) IN NET ASSETS:
OPERATIONS--
Net investment income $ 1,181,895 $
1,443,710
Net realized gain (loss) on investments ($67,723 net gain and
$51,494 net loss, respectively, as computed for federal tax purposes) 67,723
60,400
Net change in unrealized appreciation 884,764
284,790
Change in net assets resulting from operations 2,134,382
1,788,900
DISTRIBUTIONS TO SHAREHOLDERS--
Distributions from net investment income (1,214,918)
(1,444,519)
SHARE TRANSACTIONS--
Proceeds from sale of shares 1,420,926
1,564,767
Net asset value of shares issued to shareholders in payment of
distributions declared 110,472
136,585
Cost of shares redeemed (6,269,412)
(8,265,453)
Change in net assets resulting from share transactions (4,738,014)
(6,564,101)
Change in net assets (3,818,550)
(6,219,720)
NET ASSETS:
Beginning of period 29,667,800
35,887,520
End of period (including undistributed net investment income
of $74,852 and $107,875, respectively) $ 25,849,250 $
29,667,800
</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, 1997
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, 1997, 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. Investments in other
open-end regulated investment companies are valued at net asset 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, 1997, the Fund, for federal tax purposes, had a capital loss
carryforward of $137,059 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:
EXPIRATION YEAR EXPIRATION AMOUNT 2003 $85,565 2004 $51,494
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.
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 its shares, have been deferred and are
being amortized over a period not to exceed 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 Board of 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,
1997 1996
<S> <C> <C>
Shares sold 132,996 148,617
Shares issued to shareholders in payment of distributions declared 10,391 12,949
Shares redeemed (587,888) (777,662)
Net change resulting from share transactions (444,501) (616,096)
</TABLE>
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. The Adviser can modify or terminate this voluntary
waiver at any time at its sole discretion. As of July 31, 1997,
Union Planters National Bank was the owner of record of approximately
2,134,983 shares which is 90.1% 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. The administrative fee received during the period of the
Administrative Services Agreement shall be at least $120,000 per
portfolio and $25,000 per each additional class of shares.
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, 1997, the Fund paid
$9,499 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, 1997, were as follows:
PURCHASES $3,092,190
SALES $7,451,473
6. 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, 1997, 30.4% 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 percentage of investments
insured by or supported (backed) by a letter of credit from any one
institution or agency did not exceed 22.9% of total investments.
INDEPENDENT ACCOUNTANTS' REPORT
To the Trustees and Shareholders of TENNESSEE TAX-FREE BOND FUND (a
Portfolio of The Planters Funds):
In our opinion, the accompanying statement of assets and liabilities,
including the portfolio of investments (except for the Credit Ratings)
(included on pages 16 through 20), and the related statements of
operations and of changes in net assets (included on pages 21 through
22) 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,
1997, 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, 1997 by correspondence with the custodian,
provide a reasonable basis for the opinion expressed above.
PRICE WATERHOUSE LLP
Boston, Massachusetts
September 15, 1997
ADDRESSES
Tennesse 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 and Trust Company
P.O. Box 8600
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
TENNESSEE TAX-FREE BOND FUND
PROSPECTUS
A Non-Diversified Portfolio
of The Planters Funds
An Open-End, Management Investment Company
September 30, 1997
[Graphic]
Union Planters National Bank Investment Adviser
[Graphic]
Federated Investors
Federated Securities Corp., Distributor
Cusip 727426108
3072709A (9/97)
[Graphic]
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 Tennessee Tax-Free Bond Fund (the "Fund") dated
September 30, 1997. This Statement is not a prospectus. To receive a
copy of the prospectus free of charge write or call Union Planters
Brokerage Services at 1-800-238-7125.
FEDERATED INVESTORS TOWER
PITTSBURGH, PENNSYLVANIA 15222-3779
Statement dated September 30, 1997
[Graphic]
Federated Investors
Federated Securities Corp., Distributor
Cusip 727426108
3072709B (9/97)
TABLE OF CONTENTS
GENERAL INFORMATION ABOUT THE FUND 1 INVESTMENT OBJECTIVE AND
POLICIES 1 Acceptable Investments 1 When-Issued and Delayed Delivery
Transactions 2 Temporary Investments 2 Repurchase Agreements 2
Portfolio Turnover 2 Investment Limitations 2 Investment Risks 3 THE
PLANTERS FUNDS MANAGEMENT 4 The Funds 7 Fund Ownership 8 Trustee
Compensation 8 Trustee Liability 9 INVESTMENT ADVISORY SERVICES 9
Adviser to the Fund 9 Advisory Fees 9 BROKERAGE TRANSACTIONS 9 OTHER
SERVICES 9 Fund Administration 9 Custodian and Portfolio Accountant
10 Transfer Agent 10 Independent Accountants 10 PURCHASING SHARES 10
DETERMINING NET ASSET VALUE 10 Valuing Municipal Bonds 10 Use of
Amortized Cost 10 REDEEMING SHARES 10 Redemption in Kind 10 TAX
STATUS 11 The Fund's Tax Status 11 Shareholder's Tax Status 11 TOTAL
RETURN 11 YIELD 11 TAX-EQUIVALENT YIELD 12 Tax-Equivalency Table 12
PERFORMANCE COMPARISONS 13 Economic and Market Information 13
APPENDIX 14
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 Investors Service, Inc. ("Fitch") 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:
* governmental 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;
* municipal notes and tax-exempt commercial paper; * serial bonds;
* tax anticipation notes sold to finance working capital needs of
municipalities in anticipation of receiving taxes;
* bond anticipation notes sold in anticipation of the issuance of
long-term bonds;
* pre-refunded municipal bonds whose timely payment of interest and
principal is ensured by an escrow of U.S. government obligations; and
* general 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, 1997, and 1996, the portfolio turnover rates were 11% and 0%,
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 limitation, 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 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.
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:
* certificates of deposit (including those issued by domestic and foreign
branches of FDIC insured banks);
* obligations issued or guaranteed as to principal and interest by the
U.S. government or any of its agencies or instrumentalities; and
* repurchase 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,
over-building 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. 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. Mr. Donahue is the father of J. Christopher Donahue, Executive Vice
President of the Company.
Thomas G. Bigley
15 Old Timber Trail
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.; Director, Member
of Executive Committee, 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.; Director or
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.
Peter E. Madden
One Royal Palm Way
100 Royal Palm Way
Palm Beach, FL
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
203 Kensington Ct.
Pittsburgh, PA
Birthdate: October 6, 1926
Trustee
Chairman, Meritcare, Inc.; Director, Eat'N Park Restaurants, Inc.; Retired
from the law firm of Miller, Ament, Henny & Kochuba; 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; 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 and U.S.
Space Foundation; President Emeritus, University of Pittsburgh;
Founding Chairman, National Advisory Council for Environmental Policy
and Technology, Federal Emergency Management Advisory Board and Czech
Management Center, Prague; Director or Trustee of the Funds.
Marjorie P. Smuts
4905 Bayard Street
Pittsburgh, PA
Birthdate: June 21, 1935
Trustee
Public Relations/Marketing/Conference Planning; 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, Secretary and Treasurer
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, Treasurer 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 Officers, "Funds" includes
the following investment companies: 111 Corcoran Funds; 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 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; 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
Obligations Trust II; 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; Wesmark Funds; and World Investment Series, Inc.
FUND OWNERSHIP
Officers and Trustees own less than 1% of the Fund's outstanding
shares.
As of September 2, 1997, 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 2,132,207 shares (90.18%); National
Financial Services, for the exclusive benefit of its customers, New
York, New York, owned
approximately 184,981 shares (7.82%).
TRUSTEE COMPENSATION
AGGREGATE
NAME, COMPENSATION
POSITIONS WITH FROM
TRUST TRUST*#
John F. Donahue $0
Chairman and 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
Treasurer and 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, 1997.
# 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 or its affiliates' lending
relationships with an issuer. The 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 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, 1997, 1996, and
1995, the adviser earned advisory fees of $209,558, $234,612, and
$284,526, respectively, of which $209,558, $234,612, and $284,526,
respectively, was voluntarily waived. For the fiscal years ended July
31, 1997, 1996, and 1995 the adviser reimbursed operating expenses of
$0, $17,000 and $284,526, respectively. 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 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 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, 1997,
1996, and 1995, the Fund paid no 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, a subsidiary of Federated
Investors, served as the Fund's Administrator. For purposes of this
Statement of Additional Information, Federated Services Company and
Federated Administrative Services may hereinafter collectively be
referred to as the "Administrators." For the fiscal years ended July
31, 1997, 1996, and 1995, the Administrators earned $120,000,
$120,000, and $120,001, respectively, of which $0, $0, and $75,000,
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 its 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:
* derive at least 90% of its gross income from dividends, interest, and
gains from the sale of securities;
* derive less than 30% of its gross income form the sale of securities
held less than three months;
* invest in securities within certain statutory limits; and
* 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:
* the availability of higher relative yields; * differentials in
market values; * new investment opportunities; * changes in
creditworthiness of an issuer; or * an 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, 1997, and for the period from
August 30, 1993 (date of initial public investment) to July 31, 1997,
were 5.91% and 5.16%, 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, 1997, was
4.04% 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, 1997 was 6.12% 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 combined federal and state 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 1997
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- $41,201- $99,601- $151,751-OVER
RETURN 41,200 99,600 151,750 271,050 $271,050
SINGLE $1- $24,651- $59,751- $124,651-OVER
RETURN 24,650 59,750 124,650 271,050 $271,050
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:
* portfolio quality;
* average portfolio maturity;
* type of instruments in which the portfolio is invested;
* changes in interest rates and market value of portfolio securities;
* changes in the Fund's expenses; and
* 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:
* 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.
* 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 it 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
Fund. 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, thirty-seven percent of American households are pursuing
their financial goals through mutual funds. These investors, as well
as businesses and institutions, have entrusted over $3.5 trillion to
the more than 6,000 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.
S&P 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 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 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.
S&P 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 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:
* Leading market positions in well established industries.
* High rates of return on funds employed.
* Conservative capitalization structure with moderate reliance on debt
and ample asset protection.
* Broad margins in earning coverage of fixed financial charges and
high internal cash generation.
* 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.
<PAGE>
Item 26. Number of Holders of Securities:
Number of Record Holders
TITLE OF CLASS (AS OF SEPTEMBER 2, 1997)
-------------- -------------------------
Tennessee Tax-Free Bond Fund
Shares of Beneficial Interest 25
(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, 1996, the Trust Group of
Union Planters had approximately $4.6 billion
under administration, of which it had
investment discretion over approximately $1
billion.
(b)
<TABLE>
<CAPTION>
Other Substantial
Position with Business, Profession,
NAME THE ADVISER VOCATION OR EMPLOYMENT
<S> <C> <C>
Benjamin W. Rawlins, Jr. Vice Chairman of the Chairman & Chief Exec.
Board, Chief Executive Officer, Union Planters
Kenneth W. Plunk Chairiman of the Board,
Chief Administrative Officer
and Director
Kirk P. Bailey President and Chief
Operation Officer and Director
Robert L. Booth, Jr. Executive Vice President
James A. Gurley Executive Vice President Executive Vice President, Union
Planters Corporation
Joel Katz Executive Vice President President and CEO, Union Planters
Mortgage Group
John W. Parker Executive Vice President Executive Vice President
and Chief Financial CFO, Union Planters
Officer Corporation
Armistead J. Smith Executive Vice President
Dianne K. Stigall Executive Vice President
John D. Temple Executive Vice President
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)
<PAGE>
David Wadlington Executive Vice President
M. Kirk Walters Senior Vice President,
Treasurer Senior Vice President,Treasurer,
and Chief Accounting Officer,
Union Planters Corporation
Jackson W. Moore Director President and COO, Union Planters
Corporation
Albert M. Austin Director Chairman, Cannon,
Austin and Cannon, Inc.
Edgar H. Bailey Director Vice Chairman, Union Planters
Corporation
George W. Bryan Director Senior Vice President, Sara Lee
Corporation
Ronald E. Carrier Director President, James Madison University
James H. Daughdrill, Jr. Director President, Rhodes College
Thomas R. Dyer Director Wyatt, Tarrant & Combs
Hanford F. Farell, Jr. Director Chairman, Farrell-Cooper Mining Co.
Arthur F. Fulmer, Jr. Director
Dr. Alvin O. Jackson Director Senior Pastor, Mississippi
Boulevard Christian Church
Parnell S. Lewis, Jr. Director President, Anderson Tilly Co.
Lloyd B. Lovitt, Jr. Director The Lovitt Co.
C.J. Lowrance, III Director President, Lowrance Brothers &
Co., Inc.
C. Penn Owen, Jr. Director Managing Partner, Bowdre Place
Dr. V. Lane Rawlins Director President, University of Memphis
Donald F. Schuppe Director Retired
Arthur N. Seessel, III Director President, Seessel's
Supermarkets
Leslie M. Stratton, III Director President, Leslie M. Stratton Co.
Richard A. Trippeer, Jr. Director President, R.A. Trippeer, Inc.
</TABLE>
Item 29. Principal Underwriters:
(a) Federated Securities Corp. the Distributor for shares of the
Registrant, acts as principal underwriter for the following open-end investment
companies, including the Registrant:
111 Corcoran Funds; 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 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
Obligations Trust II; 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 Planters Funds; The Virtus Funds; The Wachovia
Funds; The Wachovia Municipal 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.
<PAGE>
<TABLE>
<CAPTION>
(b)
(1) (2) (3)
Name and Principal Positions and Offices Positions and Offices
BUSINESS ADDRESS WITH DISTRIBUTOR WITH REGISTRANT
<S> <C> <C>
Richard B. Fisher Director, Chairman, Chief
Federated Investors Tower Executive Officer, Chief
Pittsburgh, PA 15222-3779 Operating Officer, Asst.
Secretary and Asst.
Treasurer, Federated
Securities Corp.
Edward C. Gonzales Director, Executive Vice
Federated Investors Tower President, Federated,
Pittsburgh, PA 15222-3779 Securities Corp.
Thomas R. Donahue Director, Assistant Secretary
Federated Investors Tower and 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
David M. Taylor Executive Vice President --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779
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
Laura M. Deger 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
Thomas E. Territ Senior Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779
Teresa M. Antoszyk Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779
John B. Bohnet Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779
Byron F. Bowman Vice President, Secretary, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779
Jane E. Broeren-Lambesis Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779
Mary J. Combs Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779
R. Edmond Connell, Jr. Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779
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 Securities Corp.
Pittsburgh, PA 15222-3779
William C. Doyle Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779
<PAGE>
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
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
Bruce E. Hastings Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779
Beth A. Hetzel 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
Brian G. Kelly Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779
H. Joseph Kennedy 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
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
Richard A. Recker 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
George D. Riedel Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779
Paul V. Riordan Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779
John Rogers Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779
Brian S. Ronayne Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779
Thomas S. Schinabeck 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
John A. Staley 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
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
<PAGE>
John F. Wallin 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 Assistant Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779
Terri E. Bush Assistant 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
</TABLE>
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
<PAGE>
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.
<PAGE>
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 25th day of September, 1997.
THE PLANTERS FUNDS
BY: /s/Gail Cagney
Gail Cagney, Assistant Secretary
Attorney in Fact for John F. Donahue
September 25, 1997
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 25, 1997
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
Exhibit (11) under N-1A
Exhibit 23 under Item 601/Reg SK
CONSENT OF INDEPENDENT ACCOUNTANTS
We hereby consent to the use in the Prospectus constituting part of
this Post-Effective Amendment No. 8 to the registration statement on
Form N-1A (the "Registration Statement") of our report dated September
15, 1997, relating to the financial statements and financial
highlights of Tennessee Tax-Free Bond Fund (a Portfolio of The
Planters Funds), which appears 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 26, 1997
<TABLE> <S> <C>
<S> <C>
<ARTICLE> 6
<SERIES>
<NUMBER> 01
<NAME> The Planters Funds
Tennessee Tax-Free Bond Fund
<PERIOD-TYPE> 12-Mos
<FISCAL-YEAR-END> Jul-31-1997
<PERIOD-END> Jul-31-1997
<INVESTMENTS-AT-COST> 24,638,472
<INVESTMENTS-AT-VALUE> 25,469,307
<RECEIVABLES> 392,777
<ASSETS-OTHER> 22,094
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 25,884,178
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 34,928
<TOTAL-LIABILITIES> 34,928
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 25,080,622
<SHARES-COMMON-STOCK> 2,369,821
<SHARES-COMMON-PRIOR> 2,814,322
<ACCUMULATED-NII-CURRENT> 74,852
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> (137,059)
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 830,835
<NET-ASSETS> 25,849,250
<DIVIDEND-INCOME> 0
<INTEREST-INCOME> 1,488,966
<OTHER-INCOME> 0
<EXPENSES-NET> 307,071
<NET-INVESTMENT-INCOME> 1,181,895
<REALIZED-GAINS-CURRENT> 67,723
<APPREC-INCREASE-CURRENT> 884,764
<NET-CHANGE-FROM-OPS> 2,134,382
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 1,214,918
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 132,996
<NUMBER-OF-SHARES-REDEEMED> 587,888
<SHARES-REINVESTED> 10,391
<NET-CHANGE-IN-ASSETS> (3,818,550)
<ACCUMULATED-NII-PRIOR> 107,875
<ACCUMULATED-GAINS-PRIOR> (204,782)
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 209,558
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 516,629
<AVERAGE-NET-ASSETS> 27,889,438
<PER-SHARE-NAV-BEGIN> 10.540
<PER-SHARE-NII> 0.450
<PER-SHARE-GAIN-APPREC> 0.380
<PER-SHARE-DIVIDEND> 0.460
<PER-SHARE-DISTRIBUTIONS> 0.000
<RETURNS-OF-CAPITAL> 0.000
<PER-SHARE-NAV-END> 10.910
<EXPENSE-RATIO> 1.10
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0.000
</TABLE>
